WSJ: Texas Union Fights to Stay in Bankruptcy after Losing Defamation Case

HOUSTON – The Wall Street Journal reported that one of the country’s largest unions is trying to remain in bankruptcy as it confronts a $7.8 million defamation judgment against it won by Professional Janitorial Service of Houston Inc. in a Harris County court.

The Texas branch of the Service Employees International Union (SEIU) asked a judge to reject an effort by Professional Janitorial Service to have the union “liquidated or tossed out of bankruptcy altogether,” according to the article, Facing Judgment, Texas Union Fights to Stay in Bankruptcy (subscription required), by bankruptcy reporter Tom Corrigan.

In September 2016, the law firm of AZA, or Ahmad, Zavitsanos & Mensing, earned a jury verdict in favor of client Professional Janitorial Service in a trial over claims that the union disparaged the business more than 10 years ago as the union was trying to organize. Lawyers handling the case were AZA founding partner John Zavitsanos and lawyers Nathan Campbell and Adam Milasincic.

During the four-week trial, jurors heard evidence that SEIU officials systematically lied about the janitorial service to its customers and caused the company to lose millions of dollars. The evidence showed that union members rejoiced and took credit for causing the business losses.

After the verdict, union lawyers claimed in court papers that the janitorial service “is not seeking to collect on its judgment debt, but to destroy the local.”

Mr. Zavitsanos told the Wall Street Journal that the Texas union’s parent organization orchestrated a “sham bankruptcy” to delay collection of the judgment. “The union has shown not even a scintilla of remorse that what they did to this company was wrong,” Mr. Zavitsanos said. “It’s the height of irony that they now claim that we’re trying to put them out of business.”

The union sought Chapter 11 protection just days before a hearing over whether the organization should be required to set aside as much as $6 million in an appeal bond. Filing for Chapter 11 automatically freezes ongoing lawsuits.

The case is Professional Janitorial Service of Houston v Service Employees International Union, No. 2007-27181 in Harris County’s 61st District Court. The bankruptcy is No. 16-20483 In re Service Employees International Union – Texas filed in U.S. Bankruptcy Court in Corpus Christi.

AZA, or Ahmad, Zavitsanos & Mensing, is a Houston-based law firm that is home to true courtroom lawyers with a formidable track record in complex commercial litigation, including energy, intellectual property, and business dispute cases. AZA is recognized in Chambers USA 2016 among the best in Texas commercial law; U.S. News & World Report and The Best Lawyers in America as one of the country’s best commercial litigation firms for 2017; and Law360 as one of only 13 Texas Powerhouse law firms. National corporate counsel named AZA one of the country’s best in client service among law firms serving the Fortune 1000.