REPORT FROM THE U.S.—Starwood Hotels & Resorts Worldwide alleges in a new court filing that Hilton Worldwide executives knew of and tried to cover up the theft of trade secrets by former Starwood employees.
Starwood last April sued Hilton 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 recruited to Hilton in May and June 2008.
Included in the allegedly stolen files were marketing documents, budgets, plans and other proprietary information related to Starwood’s own proposed lifestyle brand that it intended to launch in its W properties, “the Zen Den.” In March 2009, Hilton announced its own lifestyle brand: “Denizen.”
In a filing Thursday in the U.S. Southern District of New York, Starwood claims Hilton executives—including CEO Christopher Nassetta and president of global development and real estate Steven Goldman—knew of and condoned the actions taken by Klein and Lalvani. At least 44 Hilton executives knew about the theft of Starwood materials, the filing alleges.
Download the full court filing as a PDF.
“This is not a case where a few employees took with them to a new job a few confidential mementos of a prior career,” the filing states. “Pursuant to the preliminary injunction, to date Hilton has delivered to Starwood hundreds of thousands of pages of documents and computer files retrieved from Hilton offices and the homes of Hilton employees around the world.”
The filing adds, “The volume of confidential and proprietary information of a direct competitor stolen by Hilton is staggering, and may be unprecedented.”
Starwood is asking the court to appoint one or more “monitors” who would be responsible for ensuring that Hilton complies with all injunctions and does not further use Starwood documents. Starwood has also asked for the creation of a “penalty box” or “time out” for further development of Hilton’s luxury or lifestyle brands.
"Since filing the initial complaint, Starwood has learned that Hilton's misconduct was far more pervasive in terms of the staggering volume and commercial sensitivity of the information stolen, the widespread participation and personal involvement of Hilton's senior management, and the dissemination and use of Starwood confidential information across all of Hilton's luxury and lifestyle brands," Kenneth Siegel, Starwood's chief administrative officer and general counsel, said in a statement. "This case is about restoring a level playing field for fair competition, not just substantial monetary damages. We will do whatever it takes to protect our brands and intellectual property for the benefit of our investors, associates, owners and customers."
Wayward Starwood documents are still being returned by Hilton to the company, and Starwood documents arrived as recently as Wednesday, according to the filing. Some of the documents were “scrubbed” so as to remove Starwood logos, making them less likely to be noticed as they were passed around among Hilton’s employees.
A Hilton spokesperson declined to comment on the filing, citing company policy to stay quiet on pending litigation.
The complaint further alleges that in November 2008 a corporate whistle-blower within Hilton sent a letter to Nassetta informing him of the Starwood documents. That letter “fell on deaf ears” the filing states.