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When O’Melveny & Myers partners Robert Welsh and F. Curt Kirschner won more than $17 million for a chain of hospitals last week, it marked their first jury verdict in what they say is a growing area of their labor practice � suing unions over their tactics in “corporate campaigns.” Kirschner uses the term “corporate campaign” to describe a union’s attempts during an organizing effort to put pressure on a company by, for instance, striking at its public image. Union-side lawyers, who may call them “comprehensive campaigns,” describe the strategy as one that involves a broad investigation into an employer’s conduct. “The development of corporate campaigns is a relatively recent phenomenon from labor unions,” said Kirschner, a San Francisco-based partner who has long advised Sutter Health, the plaintiff in last week’s Placer County case. “So responses to those campaigns � including the use of affirmative litigation against them � is even newer.” “These cases are exceedingly difficult to win because of the constitutional protections given to workers and the unions representing them in a labor dispute,” said Michael Rubin, a partner at union-side Altshuler, Berzon, Nussbaum, Rubin & Demain. And, “even if the employer can overcome that hurdle, they then face the very difficult burden of quantifying damages.” In Sutter Health v. UNITE HERE, the hospital network accused the union of mailing libelous postcards to potential patients of Sutter’s maternity wards. The union’s alleged goal: to force the hospital network to exert pressure on Angelica Textile Services, a commercial launderer that had been locked in a labor dispute with UNITE HERE. The postcards warned that “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.” According to lawyers on both sides, the jury delivered a verdict for more than $17 million in compensatory damages, but decided not to award any punitive damages. Jeffrey Berman, a Los Angeles partner in the labor and employment group at Sidley Austin, called last week’s verdict “earthshaking” in light of its size. It made news this week in the Daily Labor Report, a national publication for labor lawyers, the management-side attorney said Wednesday, adding that one client had already called him up asking for a copy. “I think that [these cases] are not common,” he said. But, “I would expect to see them become more common, as corporate campaigns become more common and widespread.” He predicted any appeal will attract intense interest. UNITE HERE, a hotel and garment workers’ union, is considering it, according to Davis, Cowell & Bowe partner Elizabeth Lawrence, its lead attorney at the trial that ended last week. Among other grounds, the San Francisco-based Lawrence said, the union may fight the jury instructions. The union asserted at trial that the postcard arose from a labor dispute, that Sutter Health is a public figure, and that the issue raised was one of public concern, Lawrence said. But the superior court judge did not see it that way, and so did not apply the most stringent standards laid out in New York Times Co. v. Sullivan. Lawrence agreed employers are becoming more aggressive in their litigation strategies. “I think there’s a greater emphasis on shutting down the unions’ efforts to communicate their message,” she said. “That’s what we’re seeing, more and more.” Welsh, who presented Sutter’s case at trial, said one of his witnesses was a woman he’d hired from Field Research Corp. to help prove the extent of the damage: she had surveyed the people who had received the postcard to gauge their reactions. Sutter’s lawyers say the Placer County case was also unusual for them, because they weren’t representing the union’s primary target at the time. Welsh, now based in Century City, began incorporating the litigation strategy into his practice in the late 1990s, when he worked at Mitchell Silberberg & Knupp, where he represented an apparel manufacturer targeted by a corporate campaign. His client sued a union over behavior like violating court injunctions and misappropriating trade secrets. But that litigation, along with a few similar suits Kirschner has filed at O’Melveny & Myers, had so far ended with negotiated resolutions, they said � until this Sutter case. O’Melveny & Myers has more litigation pending, though. Welsh notes the firm is representing Cintas, a large uniform company based in Cincinnati, in a lawsuit against UNITE HERE in Ohio state court for defamation and misappropriation of trade secrets. The firm was also involved in some initial work for a federal class action over alleged privacy violations in Pennsylvania against UNITE HERE, which was filed on behalf of Cintas employees, Welsh said, though East Coast firm Spector Gadon & Rosen is now representing the class.

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