SACRAMENTO -- California's politically powerful prison guards union will appeal a $12 million verdict by a federal jury in a defamation and breach of contract case, the union's lawyer said Saturday.

The jury in Sacramento federal court awarded more than $10 million in punitive damages Friday to former officials of Corrections USA, a California-based national coalition of prison guard unions. That's on top of $2.6 million awarded by the same jury earlier in the week for financial losses.

More than $12 million of the verdict is against the California Correctional Peace Officers Association. The union was accused in the three-year-old lawsuit of taking over Corrections USA and removing its previous officers. The balance of the award is against Corrections USA and two of its officers.

The jury found officials with the union and Corrections USA broke contracts, spread lies about Corrections USA's founder and two other plaintiffs, and harmed their financial future as the union was seizing control of the national organization.

"The message this verdict sent was scorched earth tactics and bullying tactics by CCPOA are not acceptable. Maybe the next time CCPOA will think twice," said Daniel Baxter, the attorney for Corrections USA's founder and former executive director, Brian Dawe.

The jury also found in favor of Dawe's company, Flat Iron Mountain Associates, and another former Corrections USA officer.

The union's general counsel and chief operating officer, David Sanders, predicted the damages award will be overturned on appeal.

"I disagree with the premise that we were bullying anybody," he said. "We're going to march forward with the appeal, we're confident that ultimately our side will be vindicated, and we'll move on doing the best we can for our members."

The 30,000-member union can pay the full damages award if it must, despite testimony that it spends about what it collects in union dues each year and has seen its net worth plummet in the last four years, Sanders said.

The union has been fighting a running battle with Gov. Arnold Schwarzenegger's administration during that time.

It and other unions lost their lawsuits seeking to prevent Schwarzenegger from imposing unpaid furloughs on state employees to help close the state's massive budget deficit. Correctional officers have been working without a contract since the administration ended lucrative benefits negotiated by a previous governor.

But the union still carries political weight. Schwarzenegger last week blamed the union's influence on Republican state lawmakers for briefly stalling the Legislature's approval of changes to the state employees' pension system. That further delayed passage of the state budget during a record 100-day impasse.

The union has more than $6 million budgeted this year for lobbying, political campaign contributions and advertising, Baxter said, citing trial testimony Friday by Jeff Nicolaysen, the union's chief financial officer.

The West Sacramento-based union collects about $29 million in member dues and this year is budgeted to spend more than it takes in, Baxter said. It owns two Sacramento homes valued at about $300,000 each and rents an apartment for union officials, according to Baxter and an account of Nicolaysen's testimony in The Sacramento Bee.

The union's net worth has dropped from $16.5 million in 2006 to about $4.7 million, which Nicolaysen blamed in part on legal costs and members who refuse to pay dues.

It has $11 million budgeted in pay and benefits for about 85 employees this year. Its $7.7 million payroll works out to an average annual salary of about $90,000.

The union pays $230,000 for half a skybox at Sacramento Kings professional basketball games, and $23,000 for a box at Sacramento River Cats minor league baseball games.

"There's no indication from the information I have ... that they're in the poorhouse," Baxter said. "You've got the Kings tickets, you've got the political contributions -- they're things that are nice to have, but they're baubles, they're not necessary to sustain the organization."

Sanders agreed the union could restructure its budget to pay the verdict if it loses its appeal. But he defended the spending. For instance, sports tickets are used for charitable events or to entertain guests, he said.

"We spend money on all sorts of things that we believe have a direct benefit to the membership," Sanders said. "Everything we do is very carefully targeted to benefit the membership."