During a nationwide corporate campaign against Angelica, a company that provides linens to hospitals, UNITE HERE investigated Angelica's compliance with health and safety regulations. The union claimed to have found evidence that Angelica delivered linens that were dirty, stained, foul-smelling and possibly smeared with blood or feces. The union sent a report of its findings to many of Angelica's customers, including Sutter Health, a northern California hospital chain. After the chain refused to meet with the union to discuss its labor dispute with Angelica, in March of 2005, UNITE HERE mailed a postcard to current and former patients of Sutter Health, as well as women of childbearing age who lived near Sutter Health facilities, urging them to protect their newborns from potentially infectious conditions at the hospital. The front of the postcard pictured a sleeping infant and stated, "Expecting? You may be bringing home more than your baby if you deliver at a Sutter birthing center."

Sutter Health immediately sued UNITE HERE in California State Court for defamation, trade libel, and intentional interference with prospective economic relations. A jury awarded Sutter $17 million in damages, but that award was subsequently overturned because of a faulty jury instruction. Six years later, on July 5, 2011, the union and Sutter announced a settlement under which the union will pay Sutter $6 million. Sutter said it will use the money to invest in patient care. As for the union, UNITE HERE President Wilhelm issued a letter of apology to Sutter admitting that the postcard mailed to its customers was "offensive and in poor taste." Predictably, Wilhelm said the union leaders who oversaw the mailing are no longer with the union. Apparently, Wilhelm is referring to leaders who, along with co-President Bruce Raynor, broke from the union in 2009 to form Workers United, an affiliate of the SEIU.