Posted on: Tuesday, August 27, 2002

Court lifts fine on Teamsters

By Frank Cho
Advertiser Staff Writer

A federal appeals court yesterday overturned a lower court's ruling that the Hawai'i Teamsters union had defamed Young Laundry & Drycleaning during contract negotiations four years ago.

The 3-0 decision by a panel of the 9th U.S. Circuit Court of Appeals lifts a $985,000 fine that had been imposed by the lower court, plus a lingering fear among labor groups that they could be sued by employers for statements made during collective bargaining.

The appeals court said Teamsters President Mel Kahele's statements during negotiations about Young Laundry's financial condition were protected speech that could not be used as a basis for a lawsuit.

"We believe this decision is a great victory for the Teamsters Union and for organized labor everywhere," Kahele said yesterday from the union's Kalihi headquarters. "We feel vindicated."

Kahele said that if the appeals court had let the ruling stand, it would have had a "chilling effect" on labor organizations in Hawai'i and the West Coast, which are under the 9th Circuit's jurisdiction.

Young Laundry president and owner Michael Drace could not be reached for comment yesterday.

Drace could appeal the decision to the U.S. Supreme Court.

About 130 employees at Young Laundry belonged to Teamsters Local 996 when they went on strike Oct. 8, 1998, seeking better pay and benefits. Two months later, Young Laundry hired permanent replacements for the striking employees.

In 1999, Drace filed a lawsuit against the union seeking $3.5 million in damages, alleging Kahele and his assistants had disseminated fraudulent and defamatory information to the public and the government.

The company also charged that the Teamsters had violated the federal Hobbs Act and Racketeer Influenced and Corrupt Organizations Act, as well as mail fraud statutes, during the strike.

Hawai'i U.S. District Court Judge Helen Gilmor agreed, and ordered the union to pay $985,000. With interest and unemployment costs added, the figure could have reached $1.5 million.

But Judge Alfred Goodwin, who drafted yesterday's appeals court opinion, wrote: "Freedom of speech is an essential component of the labor-management relationship. Collective bargaining will not work, nor will labor disputes be susceptible to resolution, unless both labor and management are able to exercise their right to engage in uninhibited, robust and wide-open debate."

Reach Frank Cho at 525-8088, or at fcho@honoluluadvertiser.com