A suit filed by Starwood Hotels in 2009 April

In 2009 April, Starwood, which runs the W line of hotels, among others, filed suit against Hilton and two former Starwood executives, alleging that the executives, who ultimately went to work for Hilton, smuggled more than 100,000 documents and electronic files out of Starwood — and that Hilton used the information to create a new luxury hotel brand, called Denizen.

The complaint, filed in federal district court in White Plains, N.Y., alleged that in their last months at Starwood before joining Hilton in 2008 summer, two executives, Ross Klein and Amar Lalvani, smuggled out thousands of confidential documents via email and in direct shipments from Starwood to their homes and to Hilton.
The more than 100,000 electronic and paper documents contained “Starwood’s most competitively sensitive information,” information that pertained in large part to the secrets behind Starwood’s luxury W Hotels.

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.”

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 in 2009 March.

„This is the clearest imaginable case of corporate espionage, theft of trade secrets, unfair competition and computer fraud,” the complaint alleges.

A new filing in the case in 2010 January

According to The Wall Street Journal, after Starwood filed the suit, Hilton placed the two high-ranking employees (Lalvani and Klein) named in Starwood’s suit, on paid administrative leave “pending Hilton’s review of the situation,” according to a statement. The hotel company also placed its luxury and lifestyle development team—many of them former Starwood employees—on paid administrative leave.

Some days ago, on January 14, Starwood raised new allegations about the role of top Hilton Worldwide executives in the escalating corporate-espionage case.
Now Starwood amended the complaint — filed in federal court in White Plains, N.Y., alleging that Hilton’s misconduct reached the highest levels of the chain’s management, including its chief executive officer, Christopher Nassetta, and its head of global development, Steven Goldman.

A suit filed by Starwood Hotels in 2009 April

In 2009 April, Starwood, which runs the W line of hotels, among others, filed suit against Hilton and two former Starwood executives, alleging that the executives, who ultimately went to work for Hilton, smuggled more than 100,000 documents and electronic files out of Starwood — and that Hilton used the information to create a new luxury hotel brand, called Denizen.

The complaint, filed in federal district court in White Plains, N.Y., alleged that in their last months at Starwood before joining Hilton in 2008 summer, two executives, Ross Klein and Amar Lalvani, smuggled out thousands of confidential documents via email and in direct shipments from Starwood to their homes and to Hilton.
The more than 100,000 electronic and paper documents contained “Starwood’s most competitively sensitive information,” information that pertained in large part to the secrets behind Starwood’s luxury W Hotels.

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.”

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 in 2009 March.

„This is the clearest imaginable case of corporate espionage, theft of trade secrets, unfair competition and computer fraud,” the complaint alleges.

A new filing in the case in 2010 January

According to The Wall Street Journal, after Starwood filed the suit, Hilton placed the two high-ranking employees (Lalvani and Klein) named in Starwood’s suit, on paid administrative leave “pending Hilton’s review of the situation,” according to a statement. The hotel company also placed its luxury and lifestyle development team—many of them former Starwood employees—on paid administrative leave.

Some days ago, on January 14, Starwood raised new allegations about the role of top Hilton Worldwide executives in the escalating corporate-espionage case.
Now Starwood amended the complaint — filed in federal court in White Plains, N.Y., alleging that Hilton’s misconduct reached the highest levels of the chain’s management, including its chief executive officer, Christopher Nassetta, and its head of global development, Steven Goldman. The complaint says that the alleged theft was known to and condoned by at least five of the ten members of Hilton’s executive committee.

A Hilton spokeswoman declined all comment. Goldman’s lawyer said: “The new allegations are false, and the U.S. attorney’s office has told us that Mr. Goldman is not a subject or target of its investigation.”

Perhaps the feds aren’t looking at Goldman but the U.S. attorney for Manhattan continues to investigate whether Hilton Worldwide and its former executives should face criminal charges for stealing trade secrets and other intellectual property.

The following are part of a letter sent on Thursday by Christopher Nassetta to other Hilton employees:

“The amended complaint does not name any additional defendants beyond Ross Klein, Amar Lalvani and the company, nor does the amended complaint add any legal causes of action beyond those alleged in the original complaint.
. . .
As this is a legal matter, I am not able to provide you with further details, but I do want to assure you that we take these matters very seriously and they are being addressed at the highest levels of the organization.
...
To recap some of the key responsive steps taken by Hilton: In November 2008 when Hilton’s top management first became aware that former Starwood employees Mr. Klein and Mr. Lalvani had brought Starwood materials with them to Hilton, Hilton’s legal department commenced an internal investigation that resulted in Hilton returning to Starwood several boxes of materials that originated at Starwood. In April 2009, without any discussion with Hilton, Starwood filed its original complaint in this action and issued a press release. Since the original complaint was filed by Starwood, Hilton terminated Mr. Klein and Mr. Lalvani and has discontinued its Denizen brand.”

The delivery mentioned in the letter is true, in February 2009, Hilton delivered to Starwood a batch of Starwood confidential documents, which included among other things details on development sites and marketing strategies. Hilton’s general counsel attached a letter to the boxes saying that much of the material appeared “to be neither sensitive nor confidential” and were being returned “in an abundance of caution.”

The filing on January 14 alleges for the first time that Christopher Nassetta had knowledge of the documents about three months before Hilton began returning them to Starwood. The complaint alleges that at least 44 Hilton managers were sent, received or copied on Starwood confidential documents.