SACRAMENTO, Calif.—A federal appeals court has upheld a damage award of nearly $5 million against the union that represents most California prison guards.

A U.S. District Court jury in Sacramento ruled in 2010 that the California Correctional Peace Officers Association defamed plaintiff Brian Dawe as the union tried to take over Corrections USA, a California-based national coalition of prison guard unions.

Jurors found that officials with the union and Corrections USA broke contracts and spread lies about Dawe, Corrections USA's founder and executive director. They awarded Dawe $12 million in damages, but a federal judge later reduced the amount.

The Ninth U.S. Circuit Court of Appeals upheld the $5 million award in a ruling dated Friday. Guard union spokesman JeVaughn Baker said Monday that the union has not decided whether to appeal.

The 28,000-member union had put up the deed to its West Sacramento headquarters as part of a bond while it appealed the decision. Baker said the union can pay the full damage award and is not in danger of losing the building.

"We're financially solvent and we have the cash on hand to cover the judgment," Baker said. "The ruling won't impede our ability to conduct our day-to-day operations and we'll continue to provide services to our members."

The union could seek a rehearing or appeal to the U.S. Supreme Court.

Dawe had argued that the appeals court should reinstate the full $12 million

judgment, but the court rejected his argument. While union officials acted with malice, Dawe and his company "did not suffer physical harm and CCPOA's conduct did not evince a reckless disregard of bodily health," the court ruled.

His attorney, Daniel Baxter, said Dawe is satisfied with the court's decision and does not plan to appeal.