Starwood asked to stop spy lawsuit against Hilton

US federal prosecutors have requested that Starwood Hotels & Resorts Worldwide’s corporate espionage lawsuit against Hilton Worldwide be halted for six months so as not to interfere with a criminal investigation into the matter.

The US government is seeking a six-month stay of discovery in the civil suit. The government, which has already begun interviewing 'certain individuals' intends to conduct more interviews with witnesses during the next several months, the filing said.

The request to stop the lawsuit is because officials are concerned about the potential ramifications of the similarity between the civil and criminal proceedings.

“A stay is appropriate, because, among other things, the plaintiff in this action has actively pursued discovery with a view towards finding out what has occurred between various witnesses and the United States Attorney’s Office,” the filing states. “Moreover, potential defendants in the criminal case would otherwise be able to use the broad civil discovery rules to obtain information that they could not obtain in the criminal case and then tailor their testimony and defenses to conform with the government’s proof.”

Among the evidence the government said Starwood has subpoenaed include: all documents between defendants concerning the criminal investigation; all documents concerning communication with the U.S. Attorney’s Office; and copies of subpoenas connected with the investigation.

“In sum, the government will suffer irreparable prejudice if the parties are permitted to obtain civil discovery prior to the conclusion of the government’s criminal investigation,” the filing reads.

Article continues below...

Starwood last April sued Hilton and accused the its along with former Starwood executives Ross Klein and Amar Lalvani, who were responsible for overseeing Hilton’s luxury and lifestyle brands and segments, of pilfering massive amounts of electronic files after being recruited to Hilton in May and June 2008.

Included in the allegedly stolen files were marketing documents, budgets, plans and other proprietary information related to Starwood’s own proposed lifestyle brand that it intended to launch in its W properties, “the Zen Den.” In March 2009, Hilton announced its own lifestyle brand: “Denizen.”

In a filing on January 14 this year in the US Southern District of New York, Starwood claims Hilton executives including CEO Christopher Nassetta and president of global development and real estate Steven Goldman, knew of and condoned the actions taken by Klein and Lalvani. At least 44 Hilton executives knew about the theft of Starwood materials, the filing alleges.

Source: Hotel News Now