Federal Prosecutors Halt Starwood-Hilton Corporate Espionage Lawsuit
In an interesting turn in one of this year’s highest profile business law cases, federal prosecutors have asked the court to stop Starwood’s corporate espionage suit filed against Hilton as the lawsuit may compromise a criminal investigation currently underway.
According to USA Today, Starwood first sued Hilton in April 2009 alleging that the luxury hotel chain had taken electronic and physical copies of confidential documents and illicitly used the information to develop a competitor chain to the W Hotels brand, the luxury lifestyle/boutique hotel brand of Starwood. Later in January 2010, Starwood filed an amended complaint that further claimed that CEO Christopher Nassetta and other top Hilton executives were aware of Hilton’s use of confidential Starwood documentation (though Nassetta was not named as a party in the complaint).
The U.S .Attorney’s Office launched its investigation shortly after Starwood filed its complaint. Most recently, the federal government filed a 14-page document stating that prosecutors were looking into possible charges of computer fraud, theft of trade secrets, conspiracy and interstate transportation of stolen goods. The federal inquiry focuses on Ross Klein and Amar Lalvani, two Hilton executives who previously worked for Starwood.
The federal filing seeks to stay discovery in Starwood’s civil case until the criminal investigation is resolved. FBI agents and government prosecutors are interviewing individuals possibly involved with the matter. Previously, Starwood was utilizing the discovery process in its suit in an attempt to uncover what had transpired between witnesses and the U.S. Attorney’s Office.
Upon release of this story, Hilton publicly confirmed that it was involved in a government investigation, stating that it would “fully cooperate” with the federal government and that they supported its decision to stay discovery in the civil matter initiated by Starwood. Starwood declined to comment when contacted by USA Today.
Monheit is the managing lawyer at Monheit Law, outside Philadelphia, Pennsylvania. He has practiced law since 1989. Michael Monheit was the managing attorney of the law offices of Herbert Monheit — now Silverman and Fodera — a firm founded by... Michael Monheit→
