Three colorful cases, four legal lessons

Medical justice
((Getty/yavdat)) Photo credit: Getty/yavdat

The general manager and the chief engineer of a Pennsylvania Sheraton both worked for a management company hired by the hotel. In cahoots, the couple created a counterfeit company that submitted invalid invoices that exceeded $2 million for services never supplied. The daring duo also instructed vendors to inflate invoices by up to 20 percent and the pair pocketed the pilfered profits. The two were captured for these capers, spent time perched in prison, and were required to render restitution. Additionally, the hotel owner sued civilly, eyeing the management company’s insurance. Ahhhh, but—the policy excluded criminal and corrupt actions by employees. Attempting to circumvent that clause, the management company argued the culprits were employed by the bogus business only (!). No surprise: The court concluded the wrongdoers worked for the management company, and so the insurance business was liberated from liability.

At a Washington, D.C., Omni Hotel, the director of sales and marketing learned she was paid less than her male colleagues, a big blunder. She complained, suffered retaliation and allegedly was constructively terminated. She sued for discrimination; the hotel sought to compel arbitration. Five years earlier the human resources director had “instructed” her to sign an agreement for mandatory arbitration. The HR director told her the document was related to union matters that largely did not concern her team, and so she signed without reading it (!). Preferring a court to arbitration, she sought to rescind the arbitration agreement due to misrepresentation about its contents. This argument was unavailing. The law requires contracting parties to do due diligence before signing. Plaintiff was a senior employee, the document was two pages only, and a cursory review would have revealed its applicability to her. The court thus dismissed the lawsuit in favor of arbitration.

A conventioneer at a Missouri Ritz-Carlton needed a replacement key for his room in the wee hours after drinking heavily. He inadvertently asked for a key to a room other than his own, and the desk attendant gave it to him (!). When the guest entered the room he noticed unidentified individuals in the beds but did not question their presence. Rather, he undressed and climbed in with a sleeping 9-year-old girl. Inappropriate physical contact followed. Her parents were awakened and ousted him from the room. The boarder was blocked by security, cops were called and the guest was arrested. Firing followed. He sued the hotel (!) claiming it was negligent for botching the key distribution. True, but the Ritz-Carlton could not have anticipated the assault or foreseen the firing. Therefore, no duty was due by the hotel here to guard the guest from his own gaffe.

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HOTEL OPTIMIZATION PART 2 | SEPTEMBER 10 & 24, 2020

Survival in these times is highly dependent on a hotel's ability to quickly adapt and pivot their business to meet the current needs of travelers and the surrounding community. Join us for Optimization Part 2 – a FREE virtual event – as we bring together top players in the industry to discuss alternative uses when occupancy is down, ways to boost F&B revenue, how to help your staff adjust to new challenges and more, in a series of panels focused on how you can regain profitability during this crisis.


The takeaways are transparent: Contracts mean what they say. Crime doesn’t pay. Read all agreements before signing. And be very careful about dispensing room keys. 

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