Judge orders Teamsters to pay Young Laundry $985,000

By David Waite
Advertiser Staff Writer

A federal judge has ordered the Hawai'i Teamsters union to pay Young Laundry & Drycleaning at least $985,000 after concluding union officials deliberately misled workers about the company's financial condition, resulting in a lengthy strike.

The amount could be as much as $1.5 million once interest and unemployment costs are added.

Jared Jossem, an attorney for Young Laundry, called the case unique because the judge found that the union leaders disregarded the truth by failing to inform its members of the company's "dire financial situation."

The union said the decision will have a "chilling effect" on labor organizations faced with employers seeking concessions. The union said it is confident the decision will be overturned on appeal.

In a 90-page order issued Friday, U.S. District Judge Helen Gillmor said Hawai'i Teamsters leader Mel Kahele and assistant Jesse Torres willfully misrepresented the laundry's financial condition to the company's unionized workers before they went on strike in October 1998.

The strike ended in May 1999 after laundry workers voted to decertify the union.

Gillmor found that the company repeatedly offered to let the union examine its financial records to prove it could not afford to give raises, but that Kahele decided not to have the union's accountant review the records or to share the truth about the company's financial condition with union members.

Gillmor said the union acted in "reckless disregard as to the truth or falsity of their defamatory statements" and added that the union "acted with malice in making untruthful statements to Young Laundry & Drycleaning employees."

She found that there was "clear and convincing evidence that (the union) acted with reckless disregard as to the truth of the statements on Sept. 29 prior to the strike," just hours before a strike vote was taken.

In a statement issued yesterday, Hawai'i Teamsters officials said they were disappointed that Gillmor concluded that the union made a "defamatory statement while communicating with its members during the course of contentious labor negotiations."

"We do not believe the evidence supports this finding, or the award of almost $1 million," the statement said. "... We believe that if this decision is allowed to stand, it will have a chilling effect on unions that are faced with ever-increasing demands by employers for concessions in negotiations. We are confident the appellate court will agree that unions have the right, guaranteed by federal labor law, to communicate freely with their members during negotiations."

Union leaders and their attorneys could not be reached for further comment last night.

Young Laundry president and owner Michael Drace said the judgment will help the nearly 100-year-old Honolulu-based company stay in business.

"While we did not win as much as we had hoped for, the courts decision, if paid off, will assure our survival for the foreseeable future," Drace said. The company had been seeking about $3.5 million in damages from the union.

Jossem, who with associate Lynne Toyofuku represented the laundry, said union officials have every right to communicate with members during negotiations, but may not deliberately misrepresent the facts, including a company's financial condition.

"It has been my experience that most labor leaders in Hawai'i recognize the truth when sharing information with employees because killing a company is not good for the work force," Jossem said.

The company employs about 150 workers, many of whom were Teamsters members who went back to work after the decertification vote, Jossem said. He said the company was forced to reduce wages in the wake of the strike in order to survive. He said an attempt by the Teamsters to reestablish the union, after the decertification vote, failed due to lack of interest.

The Young Laundry case is unique, Jossem said, because it was proven that the Teamsters leaders "ordered their CPA to stop looking at the company's books" and hours later were telling workers there was ample money for raises.

"Employees in Hawai'i tend to trust union leadership. When a union leader stands in front of the members and tells them things that are not true to get them riled up to go out on strike, then, yes, this decision tells employees that their union leaders had better be honest in those communications," Jossem said.

Reach David Waite at dwaite@honoluluadvertiser.com or 525-8030.