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Courts deny Hilton’s request for dismissal
June 17 2010

U.S. District Court denies dismissal in Starwood v. Hilton case of corporate espionage, sites allegations are “facially plausible” and Starwood is entitled to offer evidence to support the claims.

NEW YORK—A judge denied a request from Hilton to dismiss the complaint filed by Starwood in the case of alleged misuse of proprietary information.

In response to a motion to dismiss filed 26 February 2010, U.S. District Court Judge Stephen C. Robinson said there was plausible reason to continue the legal action, according to the judge’s opinion documents filed yesterday.

What’s more, the judge offers commentary on the nature of the alleged theft of information, although this opinion is not a substitute for the trial process.

Starwood Hotels & Resorts Worldwide last April sued Hilton Worldwide and accused the hotelier along with former Starwood executives Ross Klein and Amar Lalvani, who were responsible for overseeing Hilton’s luxury and lifestyle brands and segments, of pilfering massive amounts of electronic files after being hired by Hilton in May and June 2008.

  • Read, "Feds ask to halt Starwood-Hilton espionage lawsuit."
  • Read, “Starwood-Hilton espionage case update.”
  • Read, “Starwood: Top Hilton execs knew about corporate espionage.”
  • Hilton had questioned the court’s federal jurisdiction in this case, but it was concluded this type of information breach would be included under the Computer Fraud and Abuse Act. 

    “… this is the case of the ‘corporate spy,’ a company employee who essentially perpetrates a fraud against the company by obtaining the employer’s information under false pretenses,” Robinson said in the document. “In this scenario, the employee has lawful access to the employer’s information—but has obtained this access through trickery and deceit.”

    Hilton issued a statement that emphasized no truth has been asserted by the judge’s conclusion.

    "Today’s decision by the Court is a procedural ruling that has no impact on the ultimate outcome of the case or what the plaintiff must prove if the case goes to trial. The Court’s decision draws no conclusion as to whether the plaintiff’s allegations are true, or if its allegations will be sufficient proof at trial. The ruling merely allows the case to move forward to the next phase.”

    The judge also provided further guidance on the terms of Klein’s separation agreement.

    Starwood’s complaints related to breach of confidentiality and non-disclosure provisions of Klein’s separation agreement with Starwood are exempted from arbitration, according to the court documents. The fraud claims against Klein will be sent to arbitration.

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