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A janitorial business that had sued a local union for heavy-handed tactics in an attempt to get it to unionize failed to present sufficient evidence of harm in order to recover damages for defamation, the 1st U.S. Circuit Court of Appeals has ruled. In making its finding, the federal appeals court relied on a U.S. Supreme Court case that requires proof of harm even though common law allows presumption of damages. Providence, R.I. attorney John B. Lawlor Jr., who represented the defendant in Intercity Maintenance Co. v. Local 254, Service Employees International Union, said the 1st U.S. Circuit’s decision appears to be “breaking new ground” because there is not much precedent in the lower courts on the issue of harm in defamation cases in the context of a labor dispute. In some states, including Rhode Island, when there is a finding of libel, plaintiffs are allowed to presume damages at common law, Lawlor said. “The point of this holding is that federal labor law is to the contrary and requires proof of damages,” he said. But, Providence attorney Vincent F. Ragosta Jr., who represented Intercity, said his client is considering appealing the March 2 1st Circuit decision to the U.S. Supreme Court, challenging the U.S. District Court and the federal appeals court’s reading of the U.S. Supreme Court case Linn v. United Plant Guard Workers, Local 114, 383 U.S. 53 (1966). “It begs the question, why given strong evidence is a union not held accountable for its behavior,” Ragosta said. For defamatory statements, the Court in Linn adopted a standard applicable to public officials from New York Times Co. v. Sullivan, 376 U.S. 254, 280 (1964). Linn explicitly requires proof of harm and pre-empts not only non-malicious libels, but also reliance on the common law presumption of damages in those jurisdictions where libel is actionable. HARM NECESSARY TO RECOVER DAMAGES “Therefore, plaintiffs who endure even malicious libels during a labor dispute must present evidence of harm from defamation in order to recover, notwithstanding the law of states such as Rhode Island in which damages would otherwise be presumed,” the 1st Circuit wrote. According to the court, Intercity could not rest on an unsubstantiated allegation of injury to its reputation. “Having correctly concluded that Linn pre-empted Intercity from relying on the common law presumption of damages, the district court held that the evidence of actual loss due to reputational harm and consequent lost profits was insufficient as a matter of law,” wrote Senior Circuit Judge Frank M. Coffin. The 1st Circuit agreed with the lower court that Intercity “offered no more than a scintilla of evidence to prove losses stemming from diminished reputation.” Ragosta said his client did present sufficient evidence of damages even without presumption. “The court says we have to show evidence of actual loss to reputational harm. We think that is contrary to Linn,” Ragosta said. “We will argue that Linn should be applied so that once you prove malice, which we did in this case, we should recover damages for defamation in a labor context.” Intercity brought suit after Local 254 allegedly threatened Intercity when it refused to have its 80 employees join the union. Local 254 then allegedly engaged in a series of activities to pressure Intercity to join, including picketing one of its largest clients and distributing printed handbills that contained grave accusations about the company’s treatment of its employees. Ragosta noted the federal district court’s finding that his client succeeded in proving that the defendants are “lawless, marauding, disingenuous, character assassins who deserve their comeuppance.” The district court, and the 1st Circuit concurred, however, that Intercity “failed to allege and prove specific or special damages.” “Had appellant shown that it lost the contracts as a result of [union official's] libelous letters or the defamatory handbills, then such proof of a ‘specific item of pecuniary loss’ would have satisfied the damages element required by Linn,” the 1st Circuit concluded. NEGATIVE INFERENCES In another action within this case, the 1st Circuit remanded for retrial a claim that Local 254 violated the Labor Management Relations Act for unlawful secondary activity in violation of Sec. 303 of that act. In doing so, the court ruled the lower court reasoning was in error because the court impermissibly drew negative inferences against Intercity. Under that act, indirect efforts to pressure a secondary employer are unfair labor practices. In this case, one of Intercity’s customers, Blue Cross Blue Shield, was considered a secondary employer. One of the union’s representatives threatened to picket Blue Cross unless it ceased doing business with Intercity, this threat was also made to Intercity’s owner and to two attorneys involved in the case. “Despite this strong evidence of Local 254′s improper secondary activity, the court did not let the claim go to the jury,” the 1st Circuit wrote. The lower court entered judgment for Local 254 on the ground that Intercity had failed to offer sufficient evidence that it lost the Blue Cross account because of the union’s unlawful conduct. Instead, the court inferred that Intercity lost the Blue Cross contract because the company was not the lowest bidder. A jury should be allowed to determine whether certain evidence was of value to the plaintiff’s case, the 1st Circuit concluded. In addition, the timing of events would permit a jury to infer that Intercity’s loss was caused by Local 254′s conduct, according to the federal appeals court. “Our feeling on remand is that we have a very strong case,” Ragosta said. “Intercity had (Blue Cross’s) business for five years. The union comes on the scene and makes threatening statements. It would be reasonable for a jury to conclude Intercity didn’t get the contract because of the union’s activities.” Lawlor said his client’s position on remand is that Intercity did not get the contract because it was not the low bidder.

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