HEALTH v.UNITE HERE

















Filed 7/21/10









CERTIFIED
FOR PARTIAL PUBLICATION*







IN THE COURT OF
APPEAL OF THE STATE OF CALIFORNIA

THIRD APPELLATE
DISTRICT

(Placer)

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>

SUTTER HEALTH et al., Plaintiffs and Appellants, v. UNITE HERE, Defendant and Appellant.

C054400 (Super.Ct.No. SCV17938)

APPEAL
from a judgment of the Superior Court
of Placer
County, Charles D. Wachob, Judge. Reversed.



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



Levy,
Ram & Olson, Karl Olson, Erica L. Craven; Thomas W. Newton; Stephen J.
Burns; Karlene W. Goller; Jonathan R. Donnellan, Kristina E. Findikyan; Judith
L. Fanshaw; 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, Sarah A. Stofferahn; Jones Day, F. Curt
Kirschner, Jr. and Christopher T. Scanlan for Plaintiffs and Appellants.





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 â€