Vice President, Labor Policy, U.S. Chamber of Commerce
January 04, 2017
A union in Texas has filed for bankruptcy protection after being found liable for its overly-aggressive campaign against a Houston janitorial company. As this blog noted not too long ago, the union involved—Local 5 of the Service Employees International Union (SEIU)—recently got slapped with a $5.3 million verdict (plus an additional $2.5 million for pre-judgment interest) following a trial that incredibly lasted almost ten years.
The trouble in this case began when the SEIU decided to bring its so-called “Justice for Janitors” campaign to Houston sometime around 2005. The union succeeded in obtaining bargaining concessions from the five largest janitorial service firms in the city, but one firm, Professional Janitorial Services (PJS) refused to give in to the union’s demand for card check recognition and instead insisted on a secret ballot election, which is completely within its rights under federal law.
This supposedly objectionable behavior by PJS (i.e., exerting its legal rights) was not well-received by Local 5’s leadership, which allegedly turned its energy toward a campaign to “kill PJS.” Using a now well-known playbook for organizing campaigns, Local 5 employed a variety of harassing tactics designed to pressure PJS into acceding to the union’s demands.
Those tactics included filing 19 unfair labor practice (ULP) charges with the National Labor Relations Board as well as a class action lawsuit, all of which the company said were dismissed. Yet, the Local 5 used the filing of those actions as the basis to claim that PJS was mistreating its employees and violating the law.
The SEIU also allegedly communicated with new PJS clients to ‘warn’ them about the company’s supposedly deficient track record. One building manager said in a deposition that she fired PJS after protesters stormed her conference rooms while tenants were using them, and PJS reportedly lost a dozen contracts due to the SEIU’s behavior.
Rather than capitulate to this sort of harassment, though, PJS fought back in court. It filed suit in 2007, and the case dragged its way through the court system for nine years until the recent verdict. During the trial, PJS attorneys revealed the objectionable tactics that the SEIU promoted as a roadmap to disparage the company in order to put it out of business.
Ultimately, the jury delivered a well-deserved victory to the company with its multimillion dollar award for the loss of business resulting from Local 5’s disparagement. The judge in the case subsequently dismissed the SEIU’s attempt to secure a retrial. As a result, in December 2016 Local 5 sought chapter 11 protections at the U.S. Bankruptcy Court in Corpus Christi, Texas, saying it could not afford to pay the fines imposed.
In response to the union’s claim, the owner of PJS—a trained accountant— reportedly said, “Since the SEIU claims it has insufficient funds to pay for the damage it caused my company, I look forward to combing through its finances to find every hidden dollar…You cannot pay 10 lawyers to try to stop me from beating you in a courtroom and then claim you have no money.”
Whether or not the company ever receives the award it is owed, the irony of this story is that the campaign to kill PJS backfired and ultimately led to Local 5’s own bankruptcy instead.