HEALTH v. HERE

186 Cal.App.4th 1193

113 Cal.Rptr.3d 132

SUTTER HEALTH et al., Plaintiffs and Appellants,

v.UNITE HERE, Defendant and Appellant.

No. C054400.

Court of Appeal, Third District, California.

July 21, 2010.

Review Denied Nov. 10, 2010.

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Altshuler Berzon, Michael Rubin, Scott A. Kronland and Stacey Leyton, San Francisco, for Defendant and Appellant.

Levy, Ram & Olson, Karl Olson, Erica L. Craven, San Francisco; Thomas W. Newton, Sacramento; Stephen J. Burns, Sacramento; Karlene W. Goller, Los Angeles; Jonathan R. Donnellan, Kristina E. Findikyan; Judith L. Fanshaw, La Jolla; and Margaret C. Crosby for California Newspaper Publishers Association, McClatchy Newspapers, Inc., McClatchy Company, Los Angeles Times Communications LLC, Hearst Corporation, The Associated Press, Copley Press, Inc., American Civil Liberties Union of Northern California and California First Amendment Coalition, as Amici Curiae on behalf of Defendant and Appellant.

O'Melveny & Myers, Robert C. Welsh, Los Angeles, Sarah A. Stofferahn, San Francisco; Jones Day, F. Curt Kirschner, Jr. and Christopher T. Scanlan, San Francisco, for Plaintiffs and Appellants.

SCOTLAND, P.J.

In an effort to force a nationwide laundry company to employ only union members and to improve their working conditions, a labor union commenced a campaign utilizing a variation of a technique known as secondary picketing. The campaign was directed at a group of hospitals that used the services of the laundry company. The union mailed postcards to prospective clients of the hospitals, warning them that the hospitals had their laundry cleaned by a company that did not ensure the cleaned linens would be free of blood, feces, and other harmful pathogens. The postcards were intended to (1) dissuade people from using the hospitals because of the laundry company's shortcomings, thus (2) put pressure on the hospitals to stop using the laundry company's services, which would (3) persuade the laundry company to agree to the union's demands in order to avoid the loss of the hospitals' business.

The hospitals fought back. Armed with evidence that their inspection control and linen handling policies ensured the delivery of hygienically clean laundry to all their patients, but that the union's postcard campaign had caused fewer patients to use the hospitals, the hospitals sued the union for defamation, trade libel, and intentional interference with prospective economic relations.

The union appeals from the $17 million judgment entered after a jury found in favor of the hospitals.

We agree with the union that the court committed harmful error by refusing to instruct the jury that the hospitals had the burden of proving by clear and convincing evidence that the union made the defamatory publication with actual malice, i.e., with knowledge of its falsity or with reckless disregard of whether it was true or false.

As we will explain, binding federal law holds that this actual malice burden of proof applies to plaintiffs who seek state remedies for defamatory labor dispute publications, and that such publications include those directed at “secondary targets,” i.e., companies using the services of a company that is engaged in a labor dispute with an employee union. The postcard publication in this case was such a labor dispute communication because the union used it to advance the union's primary dispute with the laundry company by exerting pressure on the hospitals to stop using the laundry's services if the labor dispute was not resolved. Instead of giving the required actual malice instruction, the trial court told the jury that the union could be liable if it failed to use reasonable care to determine the truth or falsity of the publication. This was harmful error because the instruction omitted a vital element of the case and misinformed the jury regarding the hospital's burden of proof.

Accordingly, we shall reverse the judgment. In the unpublished parts of this opinion, we will address some of the union's other claims of error for guidance to the trial court on remand.

FACTS

This case has its genesis in a labor dispute between UNITE HERE and Angelica Textile Services, Inc. (Angelica). UNITE HERE, a labor union, is the collective bargaining representative for about 450,000 workers employed in the garment industry, industrial laundries, and food service establishments across North America. Angelica is the largest healthcare laundry company in the United States, with approximately 31 laundry facilities nationwide.

By early 2005, UNITE HERE represented over 2,500 workers at approximately 21 Angelica facilities, including workers at the laundry facilities used by Sutter Health hospitals (collectively Sutter Health).

UNITE HERE had begun a nationwide campaign in 2003 to organize the workers at all of Angelica's commercial laundry facilities. Healthcare laundries were a big priority because, according to UNITE HERE, such workers face some of the worst and most hazardous working conditions. The “Angelica campaign” was designed to improve the working conditions and strengthen the union in the shops where UNITE HERE represented workers employed by Angelica, and to bring those protections to workers in unorganized shops.

UNITE HERE began investigating Angelica's physical facilities and their compliance with health and safety regulations. The union had received complaints from workers that, because of unsanitary conditions and inadequate separation between “clean” and “soiled” areas of the laundry, clean linens were being exposed to blood, feces, human tissue, and other hazards. According to the union, Angelica was not regularly disinfecting work areas and was not providing hepatitis B vaccines and training on blood-borne pathogens to workers in the laundry area. UNITE HERE members visited a number of Angelica shops to see if such unsanitary conditions were unique to a few shops or part of a larger pattern. Similar conditions were observed at all of the shops. Indeed, the Occupational Safety and Health Administration (OSHA) cited Angelica for putting clean linen in dirty carts, not providing workers with protective equipment, and having working conditions that caused workers to step in blood and feces.

UNITE HERE wrote to Angelica to complain about the company's noncompliance with OSHA's blood-borne pathogen standards, urging it to remedy the sanitation and housekeeping problems in its soiled linen departments. Angelica did not respond.

Sutter Health used laundry facilities owned and operated by Golden State Services, Inc.—facilities which Angelica acquired in December 2004. The laundry workers had a bargaining agreement with UNITE HERE that remained in effect until December 2006.

In May 2004, UNITE HERE prepared a report, “Compromising on Quality,” which presented evidence that Angelica's failure to maintain a sanitary workplace “leads to the delivery of soiled, smeared, and smelly linens” to hospitals. The report (1) summarized the results of UNITE HERE's “systematic investigation of the working conditions and quality control throughout Angelica's nation-wide system of healthcare laundries,” and (2) incorporated the results of interviews with hundreds of Angelica workers across the country, people from each stage of the production process, and hospital materials management personnel. For example, an employee reported receiving “clean” linens with clots of blood or feces. Hospitals reported that, with varying degrees of frequency, Angelica delivered linens that were “smeared, stained, tattered, damp, foul-smelling, and torn.” A materials management employee at an Angelica client hospital reported that linen delivered by Angelica smelled “like urine and BM.” The report stated that Angelica's practices violated OSHA's requirements, as well as those of the Joint Commission on Accreditation of Healthcare Organizations (JCAHO).

UNITE HERE sent its “Compromising on Quality” report to many of Angelica's customers, including Sutter Health. The union also wrote to Sutter Health's vice president for procurement about Angelica's problems; advised Sutter Health of the labor dispute; warned that, if it continued to do business with Angelica, Sutter Health could face service interruptions; and suggested that Sutter Health meet with representatives of UNITE HERE.

A few months after Angelica acquired the laundry facilities used by Sutter Health, UNITE HERE began escalating its campaign to organize all of the Angelica workers nationwide. According to UNITE HERE, Angelica had not been responsive to the union's health and safety concerns, and the hospitals had not contacted UNITE HERE. The only response from one medical center was to ask the union to stop leafleting in front of its hospital. UNITE HERE, which had hoped to avoid a strike, began planning one for May 2005 at Angelica facilities in New York, Kansas, Texas, North Carolina, Florida, and some facilities in southern California.

Meanwhile, around late March 2005, UNITE HERE mailed numerous postcards (1) warning that Angelica, the laundry service used by Sutter Health did not ensure its linens were free of harmful pathogens, and (2) urging potential Sutter Health patients to protect their newborns because Sutter Health may not be taking sufficient precautions against potential infections.

One side of the postcard stated: “EXPECTING? [¶] You may be bringing home more than your baby if you deliver at a Sutter birthing center.” The other side said: “You will do anything to protect your vulnerable newborn from infection—but your Sutter birthing center may not be taking the same precautions. Reports have surfaced that Angelica, the laundry service utilized by Sutter, does not ensure that ‘clean’ linens are free of blood, feces, and harmful pathogens. [¶] Protect your newborn. [¶] Choose your birthing center wisely. [¶]...