This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies.  Find out more here  Close
Starwood sues Hilton for espionage, theft of trade secrets
April 20 2009

Starwood Hotels filed a lawsuit against Hilton and its senior executives Ross Klein, global head of Hilton luxury & lifestyle brands, and Amar Lalvani, global head of Hilton luxury & lifestyle brand development.

WHITE PLAINS, New York – Starwood Hotels & Resorts Worldwide, Inc. on Friday announced it has filed a lawsuit against Hilton Hotels Corporation and its senior executives Ross Klein, Global Head of Hilton Luxury & Lifestyle Brands, and Amar Lalvani, Global Head of Hilton Luxury & Lifestyle Brand Development, in the United States District Court for the Southern District of New York. The lawsuit alleges that Klein, former President, Starwood Luxury Brands Group, and Lalvani, former Senior Vice President, Starwood Luxury Brands Group, aided and abetted by Hilton, stole massive amounts of proprietary and highly confidential Starwood information which was used to expedite Hilton’s entry into the lifestyle hotel market, reposition its luxury brands and substantially reduce its costs and risks of doing so.

Klein and Lalvani were recruited to Hilton in June 2008 following its highly leveraged $20+ billion acquisition by Blackstone Group (NYSE: BX). The lawsuit alleges that Klein and Lalvani, directly and through other Starwood luxury brands employees they recruited to Hilton, stole more than 100,000 electronic files – truckloads of documents when printed – before and after they joined Hilton, in violation of both their contractual and fiduciary duties. The lawsuit also alleges that among the stolen materials was confidential information about Starwood’s W® hotel brand which Hilton used in the development of its Denizen brand.

Kenneth Siegel, Starwood’s Chief Administrative Officer and General Counsel, said: “Starwood seeks to avoid litigation, but the egregiousness of the conduct and the volume of highly confidential documents taken left us no choice but to take this strong action to protect our brands and intellectual property for the benefit of our investors, associates, owners and customers. The wholesale looting of proprietary Starwood information, including a step-by-step playbook for creating a lifestyle luxury hotel brand, unfairly enabled Hilton to launch a new brand in only nine months instead of the usual three to five years.”

Siegel continued: “Over the past 10 years, we’ve invested an enormous amount of time and tens of millions of dollars to create and develop our W® brand. The result of these efforts is a clear leadership position in the lifestyle luxury category with 29 W® hotels operating and more than 20 opening around the world in the next three years. As a market leader, we expect and welcome fair competition because it keeps us focused on innovation and delivering an ever-better experience to our consumers. This, however, is a blatant case of theft of trade secrets, computer fraud and unfair competition.”

In November 2008, Starwood initiated arbitration with Klein over the non-solicitation provisions in his employment contract and separation agreement, and put Hilton on notice to preserve relevant information. Three months later, and just days before Hilton announced the launch of its new lifestyle brand, Starwood received from Hilton eight large boxes of hard copy documents as well as computer hard drives, zip drives, and thumb drives containing more than 100,000 electronic files downloaded from Starwood computers, much of it highly proprietary. It was at this point that Starwood first became aware of the theft.

In delivering this mountain of confidential material to Starwood, Hilton informed Starwood that Klein and “other Hilton employees who formerly worked for Starwood” had “brought to Hilton documents or materials that they developed or acquired while they worked for Starwood.” Hilton also told Starwood that former employees had additional Starwood materials “at home.”

The materials taken by Klein and Lalvani and others working in concert with them are among Starwood’s most competitively sensitive information, including but not limited to:

  • Forward-looking strategic development plans and confidential financial information on Starwood’s lifestyle and luxury brands;
  • Proprietary current and prospective negotiation strategies with owners and non-public contact information for owners, developers and designers of its lifestyle and luxury brands;
  • Step-by-step details on how to convert a hotel property to a lifestyle luxury hotel, including training materials, operational materials, marketing and promotional strategies, brand handbooks, proprietary design details and other signature elements; and
  • Marketing and demographic studies for which Starwood paid substantial sums to third parties.

Starwood is seeking preliminary and permanent injunctive relief and compensatory and punitive damages from Hilton, Klein and Lalvani. The lawsuit seeks a court order enjoining Hilton from using or benefiting from Starwood’s confidential information, requiring Hilton and the individual defendants immediately to return all Starwood confidential information, and requiring Hilton and the individual defendants to certify the destruction of all materials derived in any way from Starwood confidential information, including plans for the promotion and roll-out of Hilton’s Denizen brand. Starwood is also requesting that Hilton be ordered to provide a detailed accounting of all revenues and expense savings derived from the use of the Starwood
confidential information and other appropriate relief.

To download a copy of thecomplaint, click here. Or, please email Stephanie Pillersdorf (sp@sardverb.com) or Carrie Bloom (cbloom@sardverb.com).

About Starwood Hotels & Resorts Worldwide, Inc.

Starwood Hotels & Resorts Worldwide, Inc. is one of the leading hotel and leisure companies in the world with more than 940 properties in approximately 97 countries and 145,000 employees at its owned and managed properties. Starwood Hotels is a fully integrated owner, operator and franchisor of hotels, resorts and residences with the following internationally renowned brands: St. Regis®, The Luxury Collection®, W®, Westin®, Le Méridien®, Sheraton®, Four Points® by Sheraton, and the recently launched Aloft®, and Element SM. Starwood Hotels also owns Starwood Vacation Ownership, Inc., one of the premier developers and operators of high quality vacation interval ownership resorts. For more information, please visit www.starwoodhotels.com.

CONTACTS:
K.C. Kavanagh
Starwood Hotels & Resorts Worldwide, Inc.
(914) 640-8339

George Sard/Stephanie Pillersdorf/Carrie Bloom
Sard Verbinnen & Co
(212) 687-8080

COMMENTS   Show All
Login or enter a name   Post Your Comment  Check to follow this thread via email alerts (must be logged in)
(4000 characters max)

Comments that include links or URLs will be removed to avoid instances of spam. Also, comments that include profanity, lewdness, personal attacks, solicitations or advertising, or other similarly inappropriate or offensive comments or material will be removed from the site. You are fully responsible for the content you post. The opinions expressed in comments do not necessarily reflect the opinions of Hotel News Now or its parent company, STR and its affiliated companies. Please report any violations to our editorial staff

TRENDING
Floating hotels riding high-performance wave
Shanghai Jin Jiang agrees to buy Louvre Hotels
For this GM, it’s about ‘finding the squirrel’
STR, Tourism Economics release 2015 forecast
Here’s the hotel stay of the future
Social media bookings enter new frontier
VIDEO
Wyndham focused on management
Greg Mount talks RLHC's turnaround
The Lodging Conference in review: Day Two
The Lodging Conference in review: Day One
US supply growth not a problem
LATEST NEWS
Shareholders’ voice rings louder in Europe
Will TripAdvisor’s booking arm disrupt OTAs?
How to choose the best franchise contract
Hotel Earnings Tracker: Q3 2014
Data-based decisions feed RM-sales ecosystem
Local hotel development a ‘street fight’
Contact Us
Hotel News Now
18500 Lake Rd.
Suite 310
Rocky River, Ohio 44116
        
Copyright © 2004 - 2014 Hotel News Now, a division of STR, Inc. All Rights Reserved.   Privacy