The lawsuit between Starwood and the Parker Meridien Hotels is fascinating not just because it’s a window into agreements between loyalty programs and hotels that we don’t often get to see the details of but also because it reveals a ton about how the programs work.
In this case it’s alleged that because Starwood pays its hotels a ton more cash for award nights when hotels are nearly fully booked, the Parker Meridien hotels in Palm Springs and New York fudged their books to appear to be fully booked much more often — extracting more than an extra million dollars in reimbursements from SPG.
Reader Seth Theriault shared how to access all of the court documents related to the case online.
Now he emails with an update on the case.
The highlights are as follows:
– Starwood opposed the motion to dismiss (see Docket 13, 14, 15)
– The hotels introduced new arguments in their reply to the Starwood MTD opposition (See Docket 16 for the reply, Docket 19). Starwood’s application for a sur-reply was granted (filed under Docket 23).
– A protective order is in effect (Docket 21 and 22) for the sur-reply and for discovery (28 and 29). I guess we won’t be seeing any more juicy inside information.
– Starwood has a new whistleblower at the Palm Springs hotel (See Docket 30 and 31). It appears that a declaration from that person was filed under seal at Docket 32.
– Starwood and the hotels went back and forth on the motion to dismiss. In the end, the hotels got the fraud and unjust enrichment claims thrown out, but the declaratory judgement claim and breach of contract are going to JURY trial on 2/10/2014 (see Docket 35 and 36).
Very inside stuff, no new bombshells, and it sounds like we’ll have to wait awhile for much more movement here unless the case settles.
Thanks for the update, Seth!
Interesting indeed. Hereinafter, Starwood and others might be well advised to include arbitration clauses in their franchise agreements, as arbitration is private. The case very well may settle – its terribly expensive to bring a case to trial and parties can get cold feet. I do wonder if the pertinent agreements have attorney’s fees provisions, however. I also am left to wonder what the scope of the protective order is.
Arbitration can often be more expensive than a court. Arbitrators can let in everything including the kitchen sink (so as to prolong the hearings/increase fees). Lots of retired judges make fantastic livings milking arbitration hearings. I’ve had one die in the middle of interminable proceedings and another suffer huge heart attack. Another made us wait while he “squeezed in” a round the world cruise. I’d take a court any day.
Both of the above comments obviously not from lolyers. I bet @Paul is a great courtroom lawyer. His writing evokes images. I couldn’t “stand” sitting through five days on a jury trial. Weeks to months of not being able to fall asleep behind your dark sunglasses during the proceedings would be a fate worse than hell.
Arbitration is nothing other than an attempt by corporations and large organizations to get “home field” advantage in disputes. The large arbitration companies, like AAA, know where their bread is buttered and the results show it. Arbitration requires the participants to pay the arbitration company for court and staff time, it is not cheaper or quicker, it’s just less fair to the little guy (which is why brokerages and airlines and anybody else who can get it puts it into their documents).