Milum Textile Services

National Labor Relations Board - Administrative Judge Opinions

May 30, 2012

28-CA-020898 (N.L.R.B. May. 30, 2012)

JD(SF)–26-12
Phoenix, AZ
UNITED STATES OF AMERICA
BEFORE THE NATIONAL LABOR RELATIONS BOARD
DIVISION OF JUDGES
MILUM TEXTILE SERVICES CO.
and Case Nos. 28-CA-20898
28-CA-20906
UNITE HERE! 28-CA-20973
28-CA-21050
28-CA-21203
John Giannopoulos, Atty
for the General Counsel.
Laurie A. Laws, Atty (Farley, Robinson & Larsen)
Daniel B. Pasternak, Atty (Greenberg
Traurig, LLP) for the Respondent.
Paul L. More, Atty (Davis, Cowell & Bowe LLP)
for the Charging Party
SUPPLEMENTAL DECISION
STATEMENT OF THE CASE
Mary Miller Cracraft, Administrative Law Judge. This case is before me on remand from
the Board, Milum Textile Services Co., 357 NLRB No. 169 (2011),1 for a determination of
whether the Acting General Counsel sustained his burden of showing that a district court
complaint filed by Milum Textile Services Co. (Respondent) against Charging Party UNITE
HERE! (the Union) was baseless, and if so, whether it was retaliatory.
Having fully considered the General Counsel’s and Respondent’s briefs on these issues
as well as the record as a whole, I make the following findings of fact and conclusions of law.
FINDINGS OF FACT
A. BACKGROUND
As more fully set forth in the Board’s Decision, Respondent launders restaurant and
healthcare linens at its commercial laundry facility in Phoenix, Arizona. The Union officially
began an organizing campaign of Respondent’s employees on March 3, 2006.2 On March 10,
the Union, through Milum Exposed, “An Independent website in the Public Interest by UNITE
HERE,” wrote identical letters to at least two of Respondent’s customers warning of the risk of
contaminated linens and urging those customers not to use Respondent’s services. Further, a

1 The underlying hearing was conducted by Administrative Law Judge Joseph Gontram on various
dates in March and April 2007. Following Judge Gontram’s death on July 18, 2007, prior to issuance of
his decision in this case, the case was transferred to Administrative Law Judge Lana H. Parke, who
issued her decision on October 5, 2007. Judge Parke has since retired.
2 All dates are in 2006 unless otherwise referenced.
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2
Union press release, UNITE HERE Media Alert, dated April 24, advised the public:
SCOTTSDALE AND PHOENIX RESTAURANT CUSTOMERS BE AWARE: TABLE LINENS
AND NAPKINS EXPOSED TO BLOOD AND BACTERIA AT LOCAL LAUNDRY.”
On April 26, Respondent filed a complaint and motion for temporary restraining order 5
(TRO) against the Union in the United States District Court, District of Arizona, in Milum Textile
Services Co. v. UNITE HERE, Case 06-CV-1163. The motion for TRO was based solely on
Section 303 of the Labor-Management Relations Act, 29 U.S.C. §303, which provides a cause
of action for damages due to an illegal secondary boycott as defined in Section 8(b)(4) of the
National Labor Relations Act (the Act), 29 U.S.C. §158(b)(4). On April 27, the District Court 10
dismissed the motion for TRO. As the Board stated, (Milum Textile Services, 357 NLRB No.
169, slip op. at 2);
The court denied the motion [for TRO]. It found that the expressive activity the
Respondent sought to enjoin arose out of a labor dispute and therefore the 15
Respondent would have to prove malice and actual damages in order to prevail
on its claim. The court found that the Respondent had offered no proof of either
of those essential elements of its claim. The court further found that the
petitioned-for relief would constitute a highly disfavored prior restraint on speech.
20
Although the motion for TRO was dismissed, the district court complaint remained on the
court’s docket. This complaint alleged five causes of action: illegal secondary boycott,
intentional interference with economic relationships, intentional interference with prospective
economic advantage, libel, and common law fraud. On May 26, Respondent filed a Notice of
Voluntary Case Dismissal of the district court complaint. According to the docket sheet, no other 25
substantive actions took place in the district court complaint proceeding between April 27, the
date of dismissal of the motion for TRO, and May 26, when Respondent moved for voluntary
dismissal of the district court complaint.
The unfair labor practice complaint herein alleges that filing and maintenance of the 30
district court complaint from April 26 through May 26 was unlawful as baseless and retaliatory in
violation of Section 8(a)(1) of the Act. This issue was remanded due to the Board’s clarification
regarding the General Counsel’s burden to prove baselessness as well as the Board’s recent
decision in Allied Mechanical Services, 357 NLRB No. 101 (2011), regarding retaliatory
lawsuits.35
B. ALLEGED BASELESSNESS OF LAWSUIT
In BE&K Construction Co. v. NLRB, 536 U.S. 516, 536-537 (2002), the Court held that
the Board could not find every unsuccessful litigation baseless because the lawsuit had a 40
retaliatory motive. Thus, the Board held on remand that a lawsuit lacks a reasonable basis or is
“objectively baseless” if “no reasonable litigant could realistically expect success on the merits.”
BE&K, 351 NLRB 451, 457 (2007); see also Ray Angelini, Inc., 351 NLRB 206, 208-209 (2007),
quoting Bill Johnson’s Restaurants v. NLRB, 461 U.S. 731, 747 (1983) (“if the plaintiff’s position
is plainly foreclosed as a matter of law or is otherwise frivolous, it lacks a reasonable basis.”)45
On remand herein, the Board held that at the district court complaint stage, the
“baseless” prong of the analysis is: “whether a plaintiff, with the factual information in its
possession and whatever additional factual information a reasonable potential litigant would
have acquired prior to filing, could reasonably have believed it had a cause of action upon which 50
relief could eventually be granted.” Milum Textile, supra, slip op. at 6-7.
JD(SF)–26–12
3
Further, the Board noted that the district court action was not a completed action but one
maintained for a limited amount of time. Thus, the Board stated, Id. slip op. at 7,
[T]he General Counsel had to prove that the Respondent, when it filed its
complaint or during the time before it voluntarily dismissed the action, did not 5
have and could not reasonably have believed it could acquire through discovery
or other means evidence needed to prove essential elements of its causes of
action.
* * * *
The General Counsel must prove not simply that summary judgment would have 10
been granted had the Union moved for it prior to the voluntary dismissal, but that
Respondent would not have been able to present a colorable argument in
opposition to the grant of summary judgment at that time.
Thus, the Board explicated, the judge must determine the elements of the causes of 15
action and then evaluate the record evidence to determine whether General Counsel has
proven that Respondent did not have and could not reasonably have believed it could acquire
through discovery or other means, evidence needed to prove essential elements of its causes of
action. Id.
20
On remand, the Board noted that in Bill Johnson’s, supra, 461 U.S. at 746, fn. 11, the
Court recommended that guidance be drawn from summary judgment and directed verdict
jurisprudence. Milum Textile, slip op. at 7. Thus, when there is an absence of proof to support a
nonmoving party’s case, in a motion made prior to close of discovery, the nonmoving party may
present via affidavit an explanation of why it cannot present evidence needed to support its 25
claim at that time. Id. Further, the Board advised on remand:
A judge must determine the elements of the causes of action that the General
Counsel has placed at issue and then evaluate the evidence offered by the
General Counsel to prove that the Respondent did not have, and could not 30
reasonably have believed it could acquire through discovery or other means,
evidence needed to prove essential elements of its causes of action, and
consider also evidence offered by the Respondent to prove the contrary,
including evidence in the nature of a statement under Fed. R. Civ. P. 56(d).
Id.35
As relevant herein, Rule 56 provides as follows:
(a) Motion for Summary Judgment or Partial Summary Judgment. A party
may move for summary judgment identifying each claim or defense – or the part 40
of each claim or defense – on which summary judgment is sought. The court
shall grant summary judgment when the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter
of law. . . . (c) Procedures. (1) Supporting Factual Positions. A party asserting
that a fact cannot be or is genuinely disputed must support the assertion by: (A) 45
citing to particular parts of materials in the record, including depositions,
documents, electronically stored information, affidavits or declarations,
stipulations, . . . admissions, interrogatory answers, or other materials; (B)
showing that the materials cited do not establish the absence or presence of a
genuine dispute, or that an adverse party cannot produce admissible evidence to 50
support the facts. . . . (4) Affidavits or Declarations. An affidavit or declaration
used to support or oppose a motion must be made on personal knowledge, set
JD(SF)–26–12
4
out facts that would be admissible in evidence, and show that the affiant or
declarant is competent to testify on the matters stated. (d) When Facts Are
Unavailable to the Nonmovant. If a nonmovant shows by affidavit or
declaration that, for specified reasons, it cannot present facts essential to justify
its opposition, the court may: (1) defer considering the motion or deny it; (2) allow 5
time to obtain affidavits or declarations or to take discovery; or (3) issue any
other appropriate order.
As stated above, no party relied upon any evidence that could have been acquired
through discovery or other means. No party offered any affidavit in support of an assertion that 10
particular facts could or could not be genuinely disputed. The sole focus of the briefs on remand
is with regard to the letters and the press release. In their briefs, the parties discuss only the
Union’s letters and press release as the sole basis for all counts of the district court complaint.3
This is consistent with the evidence on the record as a whole. In other words, Respondent does
not contend that it could have acquired through discovery or other means, any additional 15
evidence needed to prove essential elements of its causes of action.
First Cause of Action: Section 303 Action for Damages due to Illegal Secondary Boycott
Elements of the Cause of Action for Damages for Illegal Secondary Boycott20
In order to sustain an action for damages pursuant to Section 303,4 a plaintiff must show
that a labor organization or its agents threatened, coerced, or restrained any person with the
object of forcing or requiring such person to cease doing business with any other person, i.e., a
violation of Section 8(b)(4),5 and that the plaintiff was injured in his business or property due to 25
the union’s illegal threat, coercion or restraint. See, e.g., Mead’s Market v. Retail Clerks Local
839, 523 F.2d 1371, 1374 (9th Cir. 1975) (employer may sue for damages due to activity defined
as an unfair labor practice in section 8(b)(4)); Sheet Metal Workers Local 223 v. Atlas Sheet
Metal Co., 384 F.2d 101, 108, 109 (5th Cir. 1967)(plaintiff must show that union violated section
8(b)(4) and employer sustained damages due to the 8(b)(4) activity).30
In general, consumer handbilling, even though technically a “secondary” activity, is not
prohibited by Section 8(b)(4)(B). In Edward J. DeBartolo Corp. v. Building & Construction
Trades Council (Florida Gulf Coast), 485 U.S 568, 580 (1988) (DeBartolo II) the Court held that
handbilling addressed to consumers or the public is not prohibited by Section 8(b)(4)(ii)(B) if it is 35
not accompanied by picketing or coercive conduct.

3 Respondent’s Brief on Remand at 18-19; General Counsel’s Brief on Remand at 9-10.
4 Section 303 of the Act, 29 U.S.C. Sec. 187, provides, (a) It shall be unlawful, for the purpose of this
section only, in an industry or activity affecting commerce, for any labor organization to engage in any
activity or conduct defined as an unfair labor practice in section 8(b)(4) of the Act. (b) Whoever shall be
injured in his business or property by reason of any violation of subsection (a) may sue therefore in any
district court of the United States . . . without respect to the amount in controversy, or in any other court
having jurisdiction of the parties, and shall recover the damages by him sustained and the cost of the suit.
5 Section 8(b)(4)(ii)(B), 29 U.S.C. Sec. 158(b)(4)(ii)(B), provides, inter alia,(b) It shall be an unfair
labor practice for a labor organization or its agents (4)(ii) to threaten, coerce, or restrain any person
engaged in commerce or in an industry affecting commerce, where in either case an object thereof is –
(B) forcing or requiring any person to cease using, selling, handling, transporting, or otherwise dealing in
the products of any other producer, processor, or manufacturer, or to cease doing business with any
other person. . . .
JD(SF)–26–12
5
The right of action under Section 303(b) is not dependent on a prior determination by the
NLRB of violation of 8(b)(4)(B) or 10(l).6 Longshoremen v. Juneau Spruce Corp., 342 U.S. 237,
244 (1952). Although a finding of violation of Section 8(b)(4)(B) by the Board is usually given
preclusive effect in a Section 303 action, see, e.g., Paramount Transp. Sys. v. Teamsters Local
150, 529 F.2d 1284, 1286 (9th Cir.), cert. denied, 426 U.S. 908 (1976), the refusal to issue 5
complaint alleging a Section 8(b)(4)(B) violation is not given similar treatment. W.R. Grace and
Co. v. Local Union No. 759, International Union of United Rubber Workers of America, 652 F.2d
1248, 1256 (5TH Cir. 1981), cert. granted on other ground, 458 U.S. 1105 (1982), affirmed, 461
U.S. 757 (1983). Thus, the fact that Respondent’s unfair labor practice charge in Case 28-CC-
1008, alleging a violation of Section 8(b)(4)(ii)(B), was dismissed by the Regional Director for 10
Region 28 and that the dismissal was upheld by the NLRB Office of Appeals is not dispositive of
the 8(b)(4)(B) issue addressed here.
Analysis
15
Based on the record as a whole, I find that the General Counsel has shown that
Respondent did not have and could not reasonably have believed it could acquire through
discovery or other means, evidence needed to prove an essential element of its Section 303
cause of action in that the record is devoid of any evidence of threat, coercion, or restraint, a
necessary element for proving an illegal secondary boycott.20
The Acting General Counsel’s evidence included Respondent’s district court complaint
(GC Ex 8), in which Respondent averred that the Union, through “letters, fliers,7 and a press
release” containing knowingly false and misleading facts, commenced a “course of conduct”
with the intent of damaging Respondent’s reputation and causing Respondent’s customers to 25
cease doing business with Respondent. Respondent further averred that it suffered irreparable
injury, loss of reputation and pecuniary damages as a direct and proximate result of the Union’s
acts.
The affidavit of Craig Milum in Support of Motion for TRO (GC Ex 11, paragraph 4) 30
states that the press release (attached to the affidavit as Exhibit B) issued by the Union
indicates that the Union would be “picketing” one of Respondent’s customers on Thursday, April
27. However, the record contains no evidence of picketing as that term is commonly used, i.e.,
persons carrying picket signs and patrolling back and forth before an entrance to a business or
worksite,8 and the press release referenced in the affidavit merely announces that a delegation 35
from the Union, including its president, would speak, giving the date and location. Thus, I
conclude based on the record as a whole that Respondent’s district court complaint could not
have relied on any picketing or other allegedly coercive conduct but relied solely on the letters

6 Sec. 10(l) of the Act, 29 U.S.C. Sec. 160(l), provides exclusive jurisdiction for the NLRB to seek
injunctions against unlawful secondary boycott activity. Burlington Northern RR v. Brotherhood of
Maintenance of Way Employees, 481 U.S. 429, 448 (1987), cited by the Board on remand, Milum, slip op.
at 8.
7 The nature of “fliers” is not explicated further. Attachments to the district court complaint consisted of
two letters to customers of Respondent and the press release.
8 Further, in Carpenters Local 1506 (Eliason & Knuth of Arizona, 355 NLRB No. 159 (2010), slip op.
at 7, the Board disavowed an earlier, broader definition of picketing in Lumber & Sawmill Workers Local
2797 (Stolze Land & Lumber Co.), 156 NLRB 388, 394 (1965) (“The important feature of picketing
appears to be the posting by a labor organization . . . of individuals at the approach to a place of
business to accomplish a purpose which advances the cause of the union, such as keeping employees
away from work or keeping customers away from the employer’s business” as flatly inconsistent with
DeBartolo II.
JD(SF)–26–12
6
and a press release. This finding is consistent with the briefs of the parties on remand, in that no
party contends any activity beyond the letters and the press release.
I find that the Union’s press release and letters truthfully advised the public of the nature
of the primary dispute and the secondary employer’s relationship to it. See, e.g., DeBartolo II, 5
485 U.S. at 575 (noting that handbills therein truthfully revealed the existence of a labor dispute
and urged the public not to patronize the retailers in the mall). The letters and the press release
stated that the restaurants utilized linens that Milum laundered, thus advising the public that the
nature of the primary dispute was with conditions at Milum. The letters and the press release
identified the secondary employers’ relationships to Milum by announcing that these secondary 10
employers utilized Milum to launder their linens. I conclude, based upon the above evidence as
well as the record as a whole, that the General Counsel’s evidence proves that the literature
truthfully advised the public of the nature of the primary dispute and the secondary employers’
relationships to it. Thus, a reasonable reading of both documents indicates without doubt that
the primary dispute is with Respondent and not with Respondent’s customers.15
Respondent defends the baselessness allegation in its brief on remand arguing that the
Union made statements in the press release and letters based solely on hearsay. Respondent
avers that distribution of the press release and letters to secondary employers and customers
elevates the inflammatory nature of the statements. Thus, Respondent claims that its district 20
court complaint did not contain knowingly frivolous claims or intentional falsehoods. However, all
of these arguments miss the point. Not one of these arguments relies on any evidence or basis
for thinking that there was unlawful secondary activity, which is an essential element of a
Section 303 action.
25
In its brief on remand, Respondent relies exclusively on the letters and the press release
to meet the criteria for illegal secondary boycott. I am unaware of any evidence on which
Respondent could rely to make the claim that it could have acquired through discovery or other
means, further evidence of illegal secondary activity. Having fully considered the facts that
Respondent set forth in its district court complaint and supporting documentation as well as the 30
record as a whole, I find that the announced actions of the Union in connection with the press
release as well as the letters constitute the lawful secondary activity of consumer handbilling as
envisioned in DeBartolo II.9 See also Carpenters Local 1506 (Eliason & Knuth of Arizona), 355
NLRB No. 159, slip op. at 6 (2010), citing Mine Workers District 2 (Jeddo Coal Co.), 334 NLRB
677, 686 (2001); Service Employees Local 87 (Trinity Building Maintenance), 312 NLRB 715, 35
743 (1993), enfd. 103 F3d 139 (9th Cir. 1996).
Simply stated, the General Counsel has proven that the Union was engaged in lawful
handbilling. There is no evidence or tangible fact-based claim that Respondent could have
acquired, through discovery or other means, evidence of illegal secondary boycott.10 Under 40
these circumstances, viewing the facts in a light most favorable to Respondent, as on a motion

9 The secondary activity in DeBartolo involved revealing the existence of a labor dispute with a
primary employer and urging potential customers of secondary employers, that is mall retailers, not to
patronize the mall retailers because the mall ownership paid substandard wages.
10 Although the General Counsel also argues that no damages have been proven and that, in fact,
Respondent stated on several occasions that its business had not been damaged by the Union’s actions,
I find that this evidence, alone, does not constitute proof Respondent could not have proven damages or
that Respondent did not have and could not reasonably have believed it could acquire through discovery
or other means, evidence needed to prove damages. Cf. Intercity Maintenance Co. v. Local 254, Service
Employees International Union, 241 F.3d 82, 89-90 (1
st
Cir.), cert. denied 534 U.S. 818 (2001).
JD(SF)–26–12
7
for summary judgment, I find that the Acting General Counsel has shown that no genuine issue
of material fact existed and that the Union was entitled to judgment as a matter of law. I further
find that the Acting General Counsel has proven that Respondent could not reasonably have
believed it could acquire through discovery or other means, evidence needed to prove essential
elements of its Section 303 cause of action. 5
Thus, I conclude that the Acting General Counsel has proven that when Respondent
filed its district court complaint and during the time before it voluntarily dismissed the action,
Respondent did not have and could not reasonably have believed it could acquire through
discovery or other means evidence needed to prove the element of threat, restraint or coercion, 10
an essential element of its cause of action for damages due to illegal secondary boycott.
Respondent’s district court complaint cause of action for damages caused by an illegal
secondary boycott was therefore baseless.
Second, Third, and Fourth Causes of Action: Intentional Interference with Economic 15
Relations,11 Intentional Interference with Prospective Economic Advantage,12 and Libel13
Because these three causes of action are analyzed under the same standard, they will
be discussed together. As the Board noted on remand, an action for tortious interference is
subject to the partial preemption for actual malice articulated in Linn v. Plant Guard Workers, 20
383 U.S. 53 (1996). See Beverly Hills Foodland, Inc. v. Food & Commercial Workers Local 655,
39 F.3d 191, 196 (8th Cir. 1994) (applying Linn requirement of actual malice to tortious
interference claim). Milum Textile, slip op. at 4. The Board explained that actual malice requires
proof that statements were published with knowledge that they were false or with reckless
disregard of whether they were false or not. New York Times v. Sullivan, 376 U.S. 254, 280 25
(1964). Id. Finally, the Board explained that ill will or ordinary malice should not be confused

11 Arizona follows the Restatement (Second) of Torts, Sec. 766 (1977) in determining the elements of
intentional interference with contractual relations. A prima facie case of intentional interference with
contractual (economic) relations is shown by proving (1) a valid contractual relationship, (2) knowledge of
the contractual relationship, (3) intentional interference with the contract inducing or causing a breach, (4)
damages resulting from the disruption and (5) improper interference. The interference must be intentional.
Intent may be shown by proof that defendant intended or knew that “a particular result was substantially
certain to be produced by its conduct.” Snow v. W. Sav. & Loan Ass’n, 152 Ariz. 27, 34, 730 P.2d 204,
212 (1986) (en banc). To determine whether the defendant’s interference was improper, the following
facts are considered: (a) the nature of the actor’s conduct; (b) the actor’s motive; (c) the interest of the
other with which the actor’s conduct interferes; (d) the interest sought to be advanced by the actor; (e) the
social interest in protecting the freedom of action of the actor and the contractual interests of the other; (f)
the proximity or remoteness of the actor’s conduct to interference; and (g) the relations between the
parties. Id. at 494 (quoting Restatement (Second) of Torts Sec. 767), giving the greatest weight to the first
two factors.
12 Arizona recognizes the tort of intentional interference with business expectancies
(prospective economic advantage). Edwards v. Anaconda Co., 115 Ariz. 313, 315, 565 P.2d 190,
193 (Ct. App. 1977); Pre-Fit Door, Inc. v. Dor-Ways, Inc., 13 Ariz. App. 438, 440 (1970), following
the Restatement of Torts Sec. 766, providing that “one who, without a privilege to do so, induces
or otherwise purposely causes a third person not to . . . enter into or continue a business relations
with another is liable to the other for the harm cause thereby.” See, e.g., Edwards v. Anaconda,
supra, 13 Ariz. App. at 315, 565 P.2d at 193.
13 In Arizona, “[a] defamation action compensates damage to reputation or good name caused by the
publication of false information.” Godbehere v. Phoenix Newspapers, Inc., 162 Ariz. 335, 341, 783 P.2d
781, 787 (Ariz. 1989). To prevail in an action for libel, a plaintiff must establish that the allegedly
defamatory statement (1) was a false statement of actual fact, (2) was published, (3) and tended to harm
the plaintiff’s reputation.
JD(SF)–26–12
8
with “actual malice” citing Harte-Hanks Communications v. Connaughton, 491 U.S. 657, 666
(1989) (“the actual malice standard is not satisfied merely through a showing of ill will or ‘malice’
in the ordinary sense of the term.”) Id.
Thus, even though tortious interference claims do not typically require proof of false 5
claims or untruth as an element, in the labor context, when the libel and tortious interference
claims are based on union statements and conduct occurring during a labor dispute, actual
malice applies to these claims. As the court stated in Beverly Hills Foodland, supra, 39 F.3d at
196:
10
We note the malice standard required for actionable defamation claims during
labor disputes must equally be met for a tortious interference claim based on the
same conduct or statements. This is only logical as a plaintiff may not avoid the
protection afforded by the Constitution and federal labor law merely by the use of
creative pleading. Here Foodland has alleged the distribution of the Union 15
handbill tortiously interfered with its business relations with customers. Because
the statements within the handbill are afforded protection under federal labor law,
the conduct of distributing the handbills must be afforded the same protection.
[footnote omitted].
20
In its district court complaint, Respondent alleged that the same actions underlying its
claim for damages pursuant to Section 303 were also the basis for its claims of tortious
interference. Thus the factual paragraphs of the district court complaint numbered 1-8 detail
Respondent’s claims for intentional interference (the second and third causes of action) by
realleging by reference the facts which were alleged in the 303 action. Respondent’s district 25
court complaint thereafter alleged a contractual relationship with its customers and the Union’s
intentional interference with these relationships by seeking to cause Respondent’s customers to
cease doing business with Respondent.
Thus, it cannot be disputed that Respondent’s claims for tortious interference arise out of 30
the labor dispute between Respondent and the Union. This factual finding leads to the legal
conclusion that Respondent’s second and third causes of action are partially preempted by Linn
and that Respondent was obligated to prove actual malice to prevail in the district court action.
The Board further noted on remand that when an allegedly defamatory statement arises 35
from a labor dispute, an action for libel is also subject to the partial preemption articulated in
Linn v. Plant Guard Workers, 383 U.S. 53, 61 (1996) for actual malice, that is plaintiff must
establish that the statements were made with knowledge of their falsity or with reckless
disregard for their truth or falsity. The district court complaint incorporates by reference the facts
underlying its Section 303 action in the libel pleadings. Thus, in order to prove libel under the 40
circumstances herein, a plaintiff must show that a false statement was published with
knowledge that it was false or with reckless disregard of the truth or falsity of the matter. In
discussing this standard and prior cases interpreting the standard, the Court stated in St. Amant
v. Thompson, 390 U.S. 727, 731 (1968),
45
These cases are clear that reckless conduct is not measured by whether a
reasonably prudent man would have published, or would have investigated
before publishing. There must be sufficient evidence to permit the conclusion that
the defendant in fact entertained serious doubts as to the truth of the publication.
Publishing with such doubts shows reckless disregard for truth or falsity and 50
demonstrates actual malice.
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9
Analysis
Because the letters and the press release contain the statements at issue,14 an
examination of these documents for actual malice follows. A point by point comparison of the
language of the letters with the Union’s source for the statements in the letters, reveals that the 5
Union closely adhered to the language in governmental reports or to employee reports of
conditions.
 The letters caution of “risk of contamination” based upon employee reports of
mixing restaurant linens with medical linens in the washers. Organizer Daisy 10
Pitkin testified that workers told her that this statement was true. (Tr. 1693). For
instance, the Union’s study “Compromising on Quality” (GC Ex 6, Exhibit D,
pages 1-4, sets out worker reports of failure to mark carts in the washing and
drying department clearly for dirty laundry or clean laundry, worker reports of
mixing clean and dirty linens in the linen pressing department, and failure to 15
provide shoe covers for movement from the soil side to the clean side for soil sort
workers.
 The letters advise, “Government investigations in 2002 found dirty and
dangerous conditions -- that may produce linens that could be a risk to your
business.” Three sentences follow. Thus, this sentence must be judged based on 20
the three sentences that follow.
 The first sentence states, “[Respondent] jeopardized the separation of soiled and
clean linen by using the same bins for both. ADEQ. Notice of Violation.” The
evidence introduced by General Counsel reveals that in the context of an annual
solid waste inspection, the Arizona Department of Environmental Quality (ADEQ) 25
inspection report (GC Ex 139) dated September 16, 2002, commented, “Vehicles
pick up dirty laundry and deliver clean laundry. Per Transportation Management
Plan, ‘Medical waste shall not be transported in a vehicle with clean linens.’” No
violation was cited for this comment. However, a fair reading of the ADEQ
comment supports the Union’s statement that ADEQ found that a vehicle 30
transporting medical waste was also used to transport clean linens and that this
was contrary to the transportation management plan. Respondent notes that the
inspection report deals with medical waste – not linens and that the document
was admitted not for the truth of the matters asserted therein, but for the fact that

14 In the factual summary of its brief on remand, Respondent notes that as a component of the
corporate campaign against Milum, a March 2006 Union news letter entitled, “UNITE! Arizona Laundry
Workers Organizing For Justice” asserted that Milum paid “poverty” wages. This evidence was offered in
support of the libel claim in its district court complaint. (Tr. 1688; 2028-29; R Ex 14; Tr 2148-49, Rejected
R Ex 30). Although Respondent’s brief does not address the “poverty” wages issue in the legal analysis
portion of its brief on remand, I find that the “poverty” wages statement is entitled to wide latitude as
campaign propaganda. Linn, supra, 383 U.S. at 60, citing Stewart-Warner Corp., 102 NLRB 1153, 1158
(1953). Moreover, there is no evidence that the Union knew the “poverty” characterization was false or
that it made the “poverty” characterization with knowledge of the truth or falsity of the statement. Although
Respondent asserts that the Union area contracts have lower wages for some job classifications, this can
have no bearing on the “poverty” characterization, as campaign propaganda. See also, Steam Press
Holdings, Inc. v. Hawaii Teamsters and Allied Workers Union, Local 996, 302 F.3d 998, 1006-1008 (9
th
Cir. 2002), cert. denied 537 U.S. 1232 (2003)(statement of union president that owner was “making
money” and “hiding money” in holding company not defamatory but rather were rhetorical device setting
forth opinion – not fact); DHL Express, Inc., 355 NLRB No. 144, slip op. at 14 (2010) (containing a
summary of the law regarding “hotly contested labor campaigns” containing statements of opinion or
figurative expression not capable of being proved true or false).
JD(SF)–26–12
10
the witness, Daisy Pitkin, relied on it. (Tr 1716). Neither of these arguments
convinces me that the statement was made was knowledge that it was false or
with reckless disregard for the truth or falsity of the statement.
 Further, the letters state, “[Respondent] did not train workers on quality control
procedures. AZ OSHA” Union organizer Daisy Pitkin testified that she relied on 5
statements of employees that they were not trained on quality control
procedures. General Counsel produced a milumexposed document purportedly
reporting the results of interviews with employees of Respondent which indicated
that 75 percent of those surveyed reported never receiving health and safety
training from Respondent.15 There is no AZ OSHA report in the record. A US 10
OSHA report in the record cites Respondent for blood borne pathogen violations.
Respondent admits that one of these was for failure to train employees on
protective equipment. (Respondent’s Brief on remand, footnote 37). A 2002
ADEQ violation states that Respondent failed to maintain an emergency
procedure for handling spills or accidents. (GC Ex 139, pp 11-12). Based upon 15
this evidence, I find that the statement was not made with reckless disregard for
the truth or falsity of the statement.
 The third sentence states, “[Respondent] has shown a disregard for Blood Borne
Pathogenes (sic) Exposure Control Standards. AZ OHSA [sic].” At least one
witness testified that she sorted linens contaminated with blood and containing 20
needles and was not given gloves or a gown that fastened. In addition, General
Counsel produced an undated milumexposed document (GC Ex 6, Exhibit “D”)
which cites a September 2002 OSHA finding of five serious violations of OSHA’s
blood borne pathogen regulations and providing a url citation containing general
definitions and standards. Finally, General Counsel produced a 2002 US 25
Department of Labor OSHA report showing an opening date of June 10, 2002,
and a closing date of October 13, 2004, citing serious violations of the standard
for “bloodborne pathogens.” 16 Based upon these source materials, I find that this
sentence was not made with reckless disregard for the truth or falsity of the
statement. Rather, the sentence had a basis in fact.30
 Finally, the letters conclude with a general statement not accusing Respondent of
any malfeasance but stating, “Healthcare linens that are improperly cleaned may
contain types of pathogenic bacteria, fungi and viruses. Milum Exposed is
dedicated to informing the public of important issues in infection control.
35
A point by point review of the press release reveals the following comparison of press
release statements and authorities upon which they are purportedly based.
 SCOTTSDALE AND PHOENIX RESTAURANT CUSTOMERS BE AWARE: TABLE
LINENS AND NAPKINS EXPOSED TO BLOOD AND BACTERIA AT LOCAL 40
LAUNDRY. In fact, the Union sponsored report, “Compromising on Quality: Conditions
at Milum Textile Services Jeopardize Linen Quality” based on employee participation
cites instances of employee reports of mixing dirty and clean items in the washing and

15 Curiously, after publication of the letters, a May 4, 2006, Industrial Commission of Arizona, Division
of Occupational Safety and Health (AZ OSHA) cited Respondent for failure to provide training to each
employee required to use personal protective equipment and found failure to give effective employee
training as required in the Lockout/Tagout Program set forth at 29 CFR 1910.147(c)(7)(i)(A) and (C).
16 The May 4, 2006, AZ OSHA citation found “Soil sort area: The employer did not provide
handwashing facilities readily accessible to employees with occupational exposure to bloodborne
pathogens.”
JD(SF)–26–12
11
drying department where carts are not marked clearly for dirty laundry and clean
laundry, in the linen pressing department where employees reported mixing clean and
dirty items in the same bin, and by failure of laundry workers who move from the soil
side to the clean side to be provided shoe covers.
 The press release continues with a factual statement that the Union will hand out copies 5
of its “Compromising on Quality” and describes the above findings of the report
concluding, “Employees report instances of mixing restaurant linens with medical linens
contaminated with blood and feces. The study reveals that the restaurant customers
cannot be assured of the quality of the linen used in these establishments.” The study,
“Compromising on Quality,” cited as the source for these statements sets out employee 10
reports as stated in the press release.
 The press release notes violations of basic standards for cleanliness in routinely failing
to maintain a separation of clean and soiled linen (as mentioned above), failure to train
workers on quality assurance or other job responsibilities (also based on “Compromising
on Quality”), and violation of OSHA standards for blood borne pathogens. As with the 15
letter, above, the General Counsel’s evidence for the blood borne pathogen OSHA
violation was produced in GC Ex 61.
 The press release then concludes with further information about events at the press
release, setting out customers of Milum, and providing phone, email and internet
sources for further information.20
Thus I find that the statements in the press release, just as the statements in the letters,
adhere closely to the findings of government agencies and the statements of employees. There
are no facially obvious errors in the press release and the letters. The letters appropriately
attribute statements to current employees. Thus, a fair reading of these statements is not that 25
the stated conditions exist per se but that employees report that these conditions exist.
Moreover, even if these statements were not attributed to the employees when the statements
were published, the fact that employee statements were relied upon does not automatically
require a finding of actual malice, as Respondent argues, unless the Union had a high degree of
awareness of the probably falsity of such assertions. See, e.g., Holbrook v. Harmon Automotive, 30
58 F.3d 222, 226 (6th Cir. 1995) (actual malice not shown where record contained no evidence
of any reason employer should doubt reports of three long-time, trusted management
employees). There is no evidence on the record as a whole indicating that the Union entertained
any doubts regarding the employees’ assertions.
35
Similarly, the Union’s literature relies on and paraphrases government findings noting
that they were 4 years old at the time of the press release and letters. The letters accurately
note the 2002 date of the government findings. Under these circumstances, reliance on 2002
governmental findings does not alone constitute evidence of actual malice in the circumstances
herein. See, e.g., Chicago District Council of Carpenters Pension Fund v. Reinke Insulation Co., 40
464 F.3d 651, 655 (7th Cir. 2006) (union’s reliance on preliminary report based on incomplete
records did not constitute evidence of actual malice).
Not only was there no colorable argument, based on the evidence available at the time
the district court action was filed, that the Union was guilty of actual malice in publication of the 45
letters and the press release but the evidence also reveals that Respondent could not have
prevailed on a motion for summary judgment when the facts were considered in a light most
favorable to it. Indeed, many of the statements are statements that the Respondent would be
likely to know to be true. As to others, there is no basis to believe that Respondent could
reasonably believe it could acquire evidence that supported the claim that these were untrue, 50
much less that they were made by the Union with knowledge of their falsity or with reckless
disregard for the truth or falsity. No party asserts that further evidence might reasonably have
JD(SF)–26–12
12
been acquired regarding any of these three causes of action. Thus, I find that Acting General
Counsel has proven that Respondent, when it filed its complaint or before the time it voluntarily
dismissed the action, did not have and could not have believed it could acquire through
discovery or other means, evidence needed to prove essential elements of its cause of action
for intentional interference with economic relations, intentional interference with prospective 5
economic advantage or libel.
Fifth Cause of Action: Fraud
Elements of the Cause of Action for Fraud10
Under Arizona law, all nine elements of common law fraud must be proven to maintain
the claim. Nielson v. Flashberg, 101 Ariz. 335, 338-339, 419 P.2d 514, 517-518 (Ariz. 1966).
The elements of common law fraud are: (1) the defendant made a representation to the plaintiff,
(2) the representation was false, (3) the representation was material, (4) the defendant knew the 15
representation was false, (5) the defendant intended that the plaintiff would rely upon and act
upon the representation reasonably contemplated by the defendant, (6) the plaintiff did not know
that the representation was false, (7) the plaintiff relied on the truth of the representation, (8) the
plaintiff’s reliance was reasonable and justified under the circumstances and (9) as a result, the
plaintiff was harmed. Id. at 338-339. See also, Echols v. Beauty Built Homes, Inc., 132 Ariz. 20
498, 500, 647 P.2d 629, 631 (1982), cited by Respondent.
Analysis
In analyzing the first four causes of action in the district court complaint, it is abundantly 25
clear that Respondent claims to know that the Union’s representations were false. Yet a claim
for fraud requires that an innocent, unknowing plaintiff rely on facts that the defendant sets out.
Respondent is not such a plaintiff. Thus, the facts in this case do not lend themselves to any
analysis of Respondent being harmed by its “reliance” on the Union’s literature. Moreover, I
have found in the preceding section that the Union did not know any of its assertions were false 30
and the Union did not act with reckless disregard of the falsity of the assertions. Thus, I find that
the Acting General Counsel has proven that Respondent could not have prevailed on a motion
for summary judgment and that when it filed its complaint or before the time it voluntarily
dismissed the action, it did not have and could not have acquired through discovery or other
means, evidence needed to prove fraud.35
As the Ninth Circuit Court of Appeals stated, albeit in a different context,
Hence, we affirm the district court’s conclusion that the Hotel failed to state the
requisite predicate acts of mail and wire fraud. The Union did not obtain property 40
by deceiving the Hotel or its customers; the Union was simply carrying on a
strategy in a protracted labor dispute. The Union’s conduct may have been
vexatious or harassing, but it was not acquisitive. The purpose of the mail fraud
and wire fraud proscriptions is to punish wrongful transfers of property from the
victim to the wrongdoer, not to salve wounded feelings.45
Monterey Plaza Hotel LP v. Local 483 of the Hotel Employees and Restaurant Employees
Union, AFL-CIO, 215 F.3d 923, 926-927 (9th Cir. 2000). Similar policies obtain in this case. The
Union’s actions were not an attempt to defraud Respondent but were part of a labor dispute.
50
Respondent’s Motion to Reopen the Record
JD(SF)–26–12
13
In its brief on remand, Respondent states that it does not waive or abandon any
arguments with regard to my refusal to reopen the record on remand. By motion of February 27,
2012, Respondent requested that the record be reopened in order to obtain evidence excluded
by Judge Joseph Gontram in the underlying unfair labor practice hearing regarding “the truth or
falsity of the union’s statements, the existence of malice on the part of the union, and the 5
damage suffered by Respondent as a result of the statements.” Because Respondent’s
assertions are relevant to the Board’s clear suggestion that Rule 56 procedures might be used
on remand, I will treat the motion to reopen the record as a declaration pursuant to Rule 56(d)
that Respondent claims it cannot produce facts essential to justify its position because Judge
Gontram excluded the evidence. 10
Assuming Respondent’s motion to reopen constitutes a declaration pursuant to Rule
56(d), it must nevertheless be denied because no admissible facts essential to justify its
opposition are set forth in the motion. At the hearing before Judge Gontram, Respondent was
allowed to question Union organizing director Daisy Pitkin about the basis for statements in the 15
letters and the press release. Judge Gontram also noted that Respondent could recall Ms. Pitkin
if further issues arose. Judge Gontram also allowed Respondent to introduce documentary
evidence outside the four corners of the district court complaint. Although the judge rejected this
evidence, the documents were preserved in the rejected exhibit file. Respondent did not
specifically rely on the rejected evidence in its motion to reopen the record, but I have examined 20
this rejected evidence and, with one exception discussed supra,17 find that it is not relevant to
any issue before me. See, in general, Oak Harbor Freight Lines, Inc., 358 NLRB No. 41, slip op.
fn. 2 (2012)(without regard to whether the judge erred in not admitting the proffered evidence,
the result would not change even if the evidence had been admitted). As to the issue of malice
or more appropriately, actual malice, this is a question of law reached, in this case, after 25
examination of the statements and any supporting documentation. Finally, with respect to
damages, evidence regarding damages, peculiarly within the knowledge of Respondent, was
never offered by Respondent in the underlying unfair labor practice hearing even though the
issue was raised in the complaint allegation regarding the allegedly baseless and retaliatory
district court lawsuit. Reopening the record to allow introduction of such evidence would violate 30
due process concepts by allowing Respondent a “second bite of the apple.” Finally, no affidavit
was offered on this issue even though the Board’s remand clearly encouraged such procedure.
C. ALLEGED RETALIATORY MOTIVE
35
In Allied Mechanical, Services, 357 NLRB No. 101, slip op. at 10-11 (2011), the Board
determined that retaliatory motive of a baseless lawsuit could be inferred from, among other
things, “enduring and unlawful animus,”18 from evidence indicating that the lawsuit was filed in
40

17 See discussion of the libel cause of action and rejected R Ex 30, supra, fn. 14.
18 The evidence of such animus included agreeing to recognize the union only in settlement of a
Gissel (NLRB v. Gissel Packing Co., 395 U.S. 575 (1969)) unfair labor practice complaint, failure to come
to terms on a contract, instances of unlawful refusal to reinstate striking employees, overall bad faith
bargaining including discharging striking employees, making unilateral changes, bypassing the union and
refusal to furnish information, refusing to hire job applicants due to their union affiliation, withdrawal of
recognition and other unilateral changes; a statement by the president of the company that he intended to
“get even” with the union, and other unfair labor practices.
JD(SF)–26–12
14
response to protected activity,19 from evidence that the lawsuit was retaliatory on its face,20 and
from the lawsuit’s obvious lack of merit.
For instance, in this very case the Board found retaliatory motive for filing the TRO was
evidenced by the pleadings which the Board held were “retaliatory on its face” in seeking to 5
enjoin the protected activity of peaceful distribution of handbills advertising a labor dispute to
Respondent’s customers and broadly seeking to restrain all communication with customers.
Milum Textile, supra, slip op. at 5-6. Thus, the Board concluded, Respondent’s TRO motion did
not reflect “only a subjectively genuine desire to test the legality of the conduct”21 that was
targeted in the TRO. A second basis for determining that the TRO was retaliatory was that 10
Respondent’s other conduct, set out below, demonstrated animus against the Union. Id. slip op.
at 6:
 retaliation against employees who attempted to publicize the labor dispute by
discharging employee Denise Knox shortly after she appeared on a news program about 15
the union campaign,
 unlawful discharge of employee Soe Moe Min,
 suspension of employee Evangelina Guzman because she refused to take off a Union
button,
 granting a benefit of providing nametags in order to discourage employees from 20
engaging in union activity,
 promulgating and maintaining a rule prohibiting employees from wearing Union buttons
while working,
 creating the impression of surveillance by operating a security video camera in its
lunchroom, 25
 impliedly threatening to reduce employee wages if they selected the Union as their
bargaining representative, and
 interrogating employees during preparation for the hearing in the underlying unfair labor
practice case.
30
Further animus was demonstrated when Respondent called the Union “cockroaches” and
“monsters” and compared the Union campaign to an organized crime shakedown. Based on the
over breadth of the remedy sought by the TRO as well as evidence of animus, the Board
concluded that Respondent had a retaliatory motive in filing the TRO motion against the Union.
35
I find that the identical evidence of animus led to the filing of the district court complaint
at the same time that the TRO was filed. Moreover, the timing of filing of the district court
complaint reveals it was filed in response to protected activity. The district court complaint was
filed 2 days after publication that the Union planned to distribute information to the public at a
shopping center where two of Respondent’s restaurant customers maintained their businesses. 40
Finally, I find the lawsuit was retaliatory on its face. The district court complaint seeks to enjoin
protected public handbilling and requests as a remedy that the Union be enjoined from “directly
or indirectly sending or transmitting via any medium any unsolicited letters or documents to
[Respondent’s] customers, or verbally contacting or communicating with [Respondent’s]

19 The lawsuit claimed that the union had filed numerous unfair labor practice charges and engaged in
lawful strikes.
20 The lawsuit sought an award of money damages from the union based on the union’s statutorily
protected conduct of filing unfair labor practice charges, engaging in lawful strikes, and operating a job
targeting program.
21 BE&K, supra, 536 U.S. at 533-534.
JD(SF)–26–12
15
customers or the customers of [Respondent’s] customers. The Respondent requests special
and general damages, costs, and attorneys’ fees Thus, I find that Respondent’s baseless
lawsuit was filed for a retaliatory motive and violates Section 8(a)(1) of the Act.
CONCLUSION OF LAW5
By filing and maintaining a baseless and retaliatory federal district court lawsuit against
the Union, Respondent has engaged in unfair labor practices affecting commerce within the
meaning of Section 8(a)(1) and Section 2(6) and (7) of the Act.
10
AMENDED REMEDY
The Board’s Order in Milum Textile, supra, slip op. at 10, orders Respondent to cease
and desist from filing preempted or baseless, retaliatory lawsuits. 22 That cease and desist
language is broad enough to encompass the holding herein. I further recommend that the Order 15
issued in Milum, slip op. at 10-11, be revised by adding the following phrase to paragraph 2(b)
of the Order: “and its unlawful district court lawsuit for Section 303 damages, intentional
interference with economic relations, intentional interference with prospective economic
advantage, libel, and fraud” between the word “order,” and before the word “with” to result in the
following revised paragraph 2(b):20
Reimburse the Union for all legal and other expenses incurred in the defense of
the Respondent’s unlawful motion for a temporary restraining order and its
unlawful district court lawsuit for Section 303 damages, intentional interference
with economic relations, intentional interference with prospective economic 25
advantage, libel, and fraud, with interest as described in the remedy section of
this decision, as amended.
On these findings of facts and conclusions of law and on the entire record, I issue the
following recommended order:2330
ORDER
The Respondent, Milum Textile Services Co., Phoenix, Arizona, its officers, agents,
successors, and assigns, have already been ordered to post at its facility, the Notice attached
as the Appendix in Milum Textile, Id., slip op. at 32-33. The Notice contains a paragraph that 35
appropriately remedies the violation found herein; to wit: ”WE WILL NOT file any lawsuit against
the Union with the unlawful purpose of retaliating against the Union.”
Dated, Washington, D.C., May 30, 2012.
40
____________________
Mary Miller Cracraft
Administrative Law Judge

22 In Milum Textile, supra, 357 NLRB, slip op. at 10, the Board ordered Respondent to “Cease and
desist from (b) Instituting and pursuing any lawsuit against the Union that is preempted by federal law or
that lacks a reasonable basis and is motivated by an intent to retaliate against activity protected by
Section 7 of the Act.”
23 If no exceptions are filed as provided by Sec. 102.46 of the Board’s Rules and Regulations, the
findings, conclusions, and recommended Order shall be, as provided in Sec. 102.48 of the Board’s Rules,
be adopted by the Board and all objections to them shall be deemed waived for all purposes.