Protorae Law
Mike Holm | LeClairRyan | UBP Team

Unfair Business Practices

This blog focuses on unfair business and trade practices such as business conspiracy, breach of fiduciary duty, misappropriation of trade secrets and other proprietary information, fraud, tortious interference with contracts and other unfair business practices that are not neatly defined. Since we are located in Tysons Corner, Virginia, many of the cases discussed will come from Virginia, Maryland and the District of Columbia courts. We hope the reader finds this blog instructive.

  • James (Jim) B. Kinsel
    Jim Kinsel is a trial attorney who focuses on business litigation and unfair business practice claims, including business conspiracies, trade secret misappropriation, fiduciary duty breaches and other business torts.

  • W. Michael (Mike) Holm
    Mike Holm is a senior trial lawyer who has represented numerous business entities in bet-the-company and other unfair business practices cases.

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Thursday, May 28, 2009

The "Employee Paradox" Webinar Materials Are Now Available Online

On May 21, 2009, the Williams Mullen Unfair Business Practices Team conducted its first webinar in its four-part Summer series. The webinar was entitled The Employee Paradox: The Best Employees Can Cause the Greatest Damage to Your Company.

The webinar addressed the fiduciary obligations of corporate officers, directors and employees, restrictive covenants such as noncompetition and non-soliciation clauses in employment contracts, and protecting against corporate raiding. The webinar also supplied a checklist for hiring new employees.

To hear the webinar: click here. To download the powerpoint presentation: click here. The webinar speakers were three members of Williams Mullen's Unfair Business Practices Team: David Burton, Sean Gibbons and Mike Lord.

The Team's next webiner is entitled "Beware the Government Contract: How to Protect Your Company's Assets from the Government and Other Contractors." To register for this June 17 webinar, click here.

Thursday, May 21, 2009

Starwood Hotels & Resorts Worldwide, Inc. Sues Hilton Hotels Corporation

For an excellent example of the high-stakes nature of unfair business practices cases, Starwood Hotels & Resorts Worldwide, Inc. ("Starwood") sued Hilton Hotels Corporation ("Hilton") and several former Starwood employees on April 16, 2009. The allegations, if proven, are remarkable.

Starwood claims that Hilton recruited the President and Senior Vice President of Starwood's Luxury Brands Group to join Hilton. The executives were allegedly involved in developing Starwood's luxury hotel brands: the St. Regis, W Hotels and The Luxury Collection. The allegations are a worst-case-scenario for a company because the executives were alleged to have both misused Starwood's confidential information and recruited a group of senior-level Starwood employees to work for Hilton.

Specifically, Starwood alleges that its former executive requested "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 e-mail account, and which he then took to and used at and for Hilton." The Complaint outlines specific Starwood files that were taken to Hilton, including: Starwood's Forward-Looking Strategic Development Plans, Starwood's Property Improvement Plan, and confidential computer files containing the names and addresses of Luxury Brands Group owners, developers and designers compiled by Starwood. In total, Starwood alleges that its former executives took over 100,000 of its files to Hilton.

The complaint also alleges that after Starwood asked Hilton to preserve information relating to one of the employees who switched companies Hilton delivered to Starwood 'eight large boxes of computer hard drives, zip drives, thumb drives and paper records containing massive quantities of highly confidential and proprietary Starwood files . . . , including over 100,000 files downloaded from Starwood’s computers systems and files.

To read the entire complaint (without exhibits), click here.

Hilton’s response to the Complaint is also remarkable because Hilton takes corrective action almost immediately. A week after Starwood filed the case, Hilton agreed to a "Preliminary Injunction and Order Entered on Consent of All Defendants." The Order recites Hilton’s steps to attempt to cure any damages suffered by Hilton. First, on April 21, "Hilton placed [the executives] and their entire luxury and lifestyle team . . . on paid administrative leave of absence, and suspended all further development of the [competing] brand." Second, Hilton agreed to be enjoined from "knowingly using directly or indirectly in any way the Starwood Information, including without information contained therein or derived therefrom." Third, "all other persons who are in active concert or participation with them who receive actual notice of this order by personal service or otherwise, are hereby preliminary enjoined and shall cease all further development of the [competing] brand . . . ." The Order contains additional agreed upon actions, and it can be found by clicking here.

In addition, the parties agreed to stay the litigation pending further order of the court. It is a good bet that Starwood and Hilton are working to settle this dispute.