Legal News

Starwood Not Feeling the Zen Over Hilton?s New Hotel Chain

By Ashby Jones

Ever since the (partial) resolution of the Barbie/Bratz smackdown, we’ve been searching for another good tale of alleged corporate espionage to sink our teeth into. Now, thanks to a suit filed by Starwood Hotels on Thursday afternoon, we have it, and once again our life feels complete, centered, balanced. Almost like we’re sitting in a “den of zen.”

Imagine our surprise, then, when while reading through the suit, we discover that that exact phrase — “den of zen” — could well play a pivotal role in the suit, in which Starwood is accusing Hilton Hotels and two former Starwood executives of using stolen confidential Starwood documents to develop a new luxury hotel chain. Click here for the WSJ story, written by Tamara Audi and the erstwhile Law Blogger, Peter Lattman.

The complaint (link not yet available), filed in federal district court in White Plains, N.Y., alleges that Ross Klein and Amar Lalvani, two former Starwood executives who joined Hilton last summer, stole more than 100,000 electronic and paper documents containing “Starwood’s most competitively sensitive information,” information that pertained in large part to the secrets behind Starwood’s luxury W Hotels.

In addition to monetary damages, Starwood is seeking a court order that could, in effect, force Hilton to cancel the rollout of the Denizen Hotels chain, which it unveiled last month.

In a statement, Hilton said it “believes this lawsuit is without merit and will vigorously defend itself. We fully intend to move forward on the development of our newest brand, Denizen Hotels.”

The case opens a window into the inner workings of the hotel business, where companies spend years studying consumers, analyzing fashion and social trends, fabrics, room lighting, building costs and food choices.

According to Starwood’s complaint, Hilton began courting the Starwood executives in February and March of 2008. It was at that time, the suit alleges, that Klein “secretly misused his position” at Starwood to compile and steal confidential information.

The complaint alleges that in their last months at Starwood, the two executives smuggled out thousands of confidential documents via email and in direct shipments from Starwood to their homes and to Hilton.

Among the information it claims Klein and Lalvani took was a concept called the “zen den” that Starwood planned to implement at W Hotels. Hilton executives have referred to the Denizen brand as a “den of zen,” the complaint alleges, adding, “within Starwood the name has a familiar ring.”

Full post as published by Law Blog - WSJ.com on April 17, 2009 (boomark / email).