MANHATTAN (CN) – After the Blackstone Group bought Hilton Hotels Corp. for more than $20 billion in 2007, Hilton lured away two top executives from its competitor Starwood Hotels & Resorts Worldwide – but not until the execs had swiped more than 100,000 documents to use in developing Hilton’s new Denizen hotel brand, Starwood claims in Federal Court.
Starwood accuses Hilton and its own former execs of corporate espionage, theft of trade secrets, unfair competition and computer fraud.
According to the 48-page complaint, with 43 pages of attachments: “Starwood and Hilton are direct, head-to-head competitors. In 2007, the Blackstone Group, a private equity group, acquired Hilton for over $20 billion in a top-of-the-market, highly leveraged buyout. As reported in the press: ‘With Blackstone having paid a super-premium price for Hilton, (CEO Christopher Nassetta) will be under intense pressure to deliver immediate results.’ [Parentheses in complaint.] This case involves the ransacking and theft of more than 100,000 electronic and hard copy filed containing Starwood’s most competitively sensitive information, and the improper use by Hilton of that information in the development of Hilton’s new Denizen hotel brand and in unfair competition with Starwood. The large volume of confidential information taken is extraordinary. This is the clearest imaginable case of corporate espionage, theft of trade secrets, unfair competition and computer fraud.”
Starwood also sued the former president of its Luxury Brands Group, Amar Lalvani, and the group’s former senior vice president, Ross Klein.
Starwood claims that after Hilton CEO Nassetta began recruiting Klein to join Hilton, in February 2008, “Klein immediately misused his position as president of Starwood’s Luxury Brands Group to request large volumes of confidential information from Starwood employees, which he took home, had loaded on a personal laptop computer and/or forwarded to a personal email account, and which he then took to and used at and for Hilton. Klein lied to Starwood, stole confidential information, and through fraud and deceit extracted a severance payment of more than $600,000.”
Starwood claims that Hilton’s president of global development and real estate, Steven Goldman, began recruiting Lalvani to join Hilton in March 2008. And it claims that “Before joining Goldman at Hilton, Lalvani, too, misused his position at Starwood and secretly downloaded large quantities of confidential documents, which he brought with him to and used at Hilton.”
Starwood claims the stolen documents contained information about its St. Regis hotels, W Hotels and The Luxury Collection.
Starwood is represented by Charles Gilman with Cahill Gordon & Reindel.