Busting Shakedowns

Companies Finally Start Fighting Back Against Organized Shakedowns, 9/7/16, IBD

A Texas jury ordered the SEIU to pay $5.3 million in damages to a company over illegal pressure tactics the union employed in an organizing drive. (ZUMAPRESS.com/Newscom)

Justice: Three recent court victories got little in the way of headlines, but should be required reading for every corporate executive in the country. In each, companies refused to do what so many have done before -- tuck their tails in and settle out of court.

Exhibit A is a case involving Texas-based Professional Janitorial Service and its years-long battle with the Service Employees International Union. As it has done countless times before, the SEIU targeted the company with a vicious, all out "corporate campaign," designed to ruin the company's reputation and starve it of business, until it submitted to the SEIU's demands. In this case, the union created fliers, emails, and op-eds to smear the company's reputation. It sent thousands of letters to the firm's customers claiming that PJS was engaged in disreputable labor tactics. The SEIU's campaign to "kill PJS" was literally out of the manual. In this case, a document called "Contract Campaign Manual," which details strong-arm tactics the union encourages such as "jeopardizing relationships between the employer and lenders, investors, stockholders, customers, clients," threatening legal and regulatory action, and using the media to "damage an employer's public image."

Not content to give in to this form of extortion, PJS sued the union. As the Houston Chronicle noted, it was the first time the SEIU "has had to defend its tactics in front of a jury." And after hearing the sort of blackmail techniques SEIU had been using, the jury ordered it to cough up $5.3 million in damages to PJS.

This is a milestone victory that should embolden other companies to stand up for themselves, and discourage unions from making false and defamatory claims in the hopes that companies will simply cave.

Exhibit B is Chevron's decision to challenge an environmental lawsuit that aimed to extract $17.3 billion from the oil company. Instead of settling, which most companies end up doing, Chevron decided to sue the attorney, Steven Donziger, under the RICO statute. As attorney John Shu explained in an IBD commentary piece detailing the case, this was a "courageous strategic decision to fight back." And its victory, he says, "should improve the cost-benefit ratio for corporations who choose to fight fraudulent claims."

Exhibit C is a case filed by the Justice Department against FedEx, claiming that the delivery company broke the law by delivering drugs illegally ordered from online pharmacies. This case was part of Justice's broader effort -- called deferred and non-prosecution agreements -- that amount to an extortion racket where Justice forces companies to pay money and adopt various "remedies" to make the case go away. According to the Manhattan Institute's James Copland and Rafael Mangual, Justice collected more than $6 billion in 2015 through these agreements.

Rather than give in, FedEx took the case to court, and federal prosecutors dropped its case in June, two years after indicting FedEx but just one week after the trial started. FexEx "called the government's bluff and won its case," they said. Each of these cases amounted to nothing more than extortion on a scale the Mafia could never dream of. Companies are given a choice: Pay up or have your companies destroyed. While not every firm has the wherewithal and the determination to mount such fights, they all owe these and other companies a debt of gratitude. By remaining resolute, they've made it less likely that others will have to suffer the same fate.

http://www.investors.com/politics/editorials/companies-finally-start-fighting-back-against-organized-shakedowns/