NEWS ITEM

California Court of Appeal Reverses $17.3 Million Defamation Award Against Labor Union

Holds that Federal Labor Law Precludes Liability Absent "Actual Malice"

July 21, 2010 - The California Court of Appeal today reversed a $17.3 million judgment against a labor union for allegedly defaming a major hospital chain. The Court of Appeal held that the trial court had erred by failing to instruct the jury that the hospital chain was required to prove the union acted with actual malice.

The defamation lawsuit was filed by Sutter Health hospitals against the labor union UNITE HERE based on a postcard that the union had mailed to prospective hospital patients during a labor dispute involving a laundry contractor used by Sutter. The case went to trial in Placer County Superior Court, and the trial judge instructed the jury that the union could be held liable for defamation if union employees acted negligently.

The Court of Appeal reversed, holding that the postcard communication had been sent in furtherance of the union's goals during a labor dispute and that federal labor law therefore precluded the imposition of liability unless Sutter proved with clear and convincing evidence that union employees acted with "actual malice" -- that is, with knowledge that the communication was false or with reckless disregard for whether the communication was true or false. The Court of Appeal also concluded that the instructional error was not harmless and therefore reversed the judgment and returned the case to the trial court for further proceedings.

Altshuler Berzon LLP represented UNITE HERE on appeal.

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