Sodexo v. SEIU: Is the SEIU an Ongoing Criminal Enterprise?

On March 17, 2011 Sodexo, Inc. filed a RICO lawsuit against the Service Employees International Union (SEIU) in the federal court in the Eastern District of Virginia for its “Clean Up Sodexo” campaign. Sodexo alleges this campaign targeted Sodexo leadership for “intimidation, threats, and other extortionate conduct.”In future weeks, SEIU Monitor will review multiple aspects of Sodexo’s complaint, and report various aspects from the legal case in order to answer the question- Is the SEIU an ongoing criminal enterprise?

Frequently Asked Questions about Sodexo v. SEIU

What was the purpose of SEIU’s “Clean Up Sodexo” Campaign?

SEIU’s goal was to force Sodexo to unilaterally start collecting dues from over 80,000 employees without the need for fair elections. This is different from the more traditional “plant-by-plant” unionizing approach, which targets individual locations and instead focuses on coercing the national organization leadership to force all Sodexo employees to start paying tribute to SEIU’s well paid management.

While federal law allows SEIU to take this approach, it does not allow for the kind of strong-arm tactics Sodexo is alleging SEIU used to intimidate and extort Sodexo leadership on a national scale. Sodexo alleges SEIU specifically targeted potential clients to jeopardize future service contracts.

What damages are Sodexo USA claiming?

Sodexo’s press release about their lawsuit states:

The complaint alleges that the SEIU, in face to face meetings, threatened Sodexo USA’s executives that it would harm Sodexo USA’s business unless they gave in to the union, and then carried out its threats through egregious behavior, including:

  • Throwing plastic roaches onto food being served by Sodexo USA at a high profile event;
  • Scaring hospital patients by insinuating that Sodexo USA food contained bugs, rat droppings, mold and flies;
  • Lying to interfere with Sodexo USA business and sneaking into elementary schools to avoid security;
  • Violating lobbying laws to steer business away from Sodexo USA, even at the risk of costing Sodexo USA employees their jobs; and
  • Harassing Sodexo USA employees by threatening to accuse them of wrongdoing.

In terms of more specific monetary damages, SEIU’s actions cost Sodexo a contract with the Department of Defense. This contract would have been worth approximately $765 Million. These damages combined with other contracts Sodexo alleges SEIU is responsible for interfering with, if proven, could be substantial enough to completely shut down the SEIU.

What is needed to prove that the SEIU is guilty in the RICO case?

Racketeer Influenced and Corrupt Organizations Act suits, or RICO suits as they’re commonly known, focus on prosecuting organization leadership for ordering criminal actions to take place. In this case, Sodexo is alleging that the SEIU leadership was using extortion to coerce Sodexo to recognize SEIU as the sole bargaining agent for their employees. This extortion took the form of threats and criminal actions that cost Sodexo damages in lost profits.

A previous case, Smithfield Foods, Inc. v. United Food and Commercial Workers (UFCW) establishes some important legal precedent here. To win the RICO suit against UFCW on the grounds of defamation via “smear campaign,” Smithfield Foods was held to the standard that UFCW’s allegedly defamatory statements needed to be made with “actual malice,” which the court found was not the case.

The National Agricultural Law Center had this analysis:

Smithfield’s characterization of its damages strongly indicated that they were “reputational” in nature, pointing to statements such as “the Smithfield brand name has been significantly tarnished” and the repeated mention of a loss of goodwill in its complaint… Therefore, the court held that at trial, Smithfield must prove both falsity and actual malice to recover for alleged reputational damages.

Reputational damage will only be one line of attack used by Sodexo—the courts will still have to determine standards for the SEIU’s alleged efforts to interfere with the potential client contracts. The monetary damages Sodexo claims go far beyond the reputational claims made by Smithfield.

Additionally, the evidence presented by Sodexo of SEIU-ordained actions such as using plastic roaches on to food certainly take this above and beyond the general smear campaign tactics alleged by Smithfield. One thing is for sure—this will be a very interesting case to watch.

Stay tuned! More analysis of this case will be forthcoming on this website in the next few weeks.