Hilton settles suit with Starwood

Friday, 31 December 2010 01:24 - - {{hitsCtrl.values.hits}}

NEW YORK (Reuters) - Hotel operator Hilton Worldwide said it agreed to certain business restrictions for two years as part of a settlement of a lawsuit concerning misappropriation of trade secrets from Starwood Hotels & Resorts Worldwide.

“Hilton Worldwide regrets the circumstances surrounding the dispute with Starwood Hotels & Resorts Worldwide and is pleased to bring an end to this prolonged litigation,” Hilton Chief Executive Officer Christopher Nassetta said in a statement.

Several Starwood spokespeople were not available for comment.

In April 2009, Starwood accused executives Ross Klein and Amar Lalvani — who jumped ship to Hilton to start a new brand of hotels — of taking hundreds of thousands of electronic documents with them.

The two were to develop a new Hilton hotel line called Denizen, using confidential information from Starwood, the suit said.

Hilton said additional terms of the settlement are confidential.

Under the terms of the settlement that are filed publicly with the court, an independent monitor is to be appointed to ensure that Hilton does not use Starwood information set out under the agreement. It also forbids Hilton from buying or franchising any Starwood Lifestyle Brand hotel that Starwood operates.

It also bars Hilton for two years from hiring any Starwood employee for its Hilton Luxury & Lifestyle Brands Group. That group includes Waldorf Astoria Hotels & Resorts, Waldorf Astoria Collection, Conrad Hotels & Resorts, Denizen and any other luxury or lifestyle brand that Hilton develops.

Additionally, it forbids Hilton from launching a brand similar to Denizen.

Hilton, owned by Blackstone Group LP, in June lost its bid to dismiss the case and have all the Starwood claims settled through arbitration.

Starwood is based in White Plains, while Hilton is based in McLean, Virginia.

The case is Starwood Hotels & Resorts Worldwide Inc v. Hilton Hotels Corp et al, U.S. District Court, Southern District of New York, No. 09-03862.