Managing a Major Hotel Lawsuit: How Electronic Discovery Can Make - or Break - Your Case

By William A. Brewer III Managing Partner, Bickel & Brewer | January 06, 2010

Explosive Growth of Electronic Information - The Challenge

Information today is shared at the speed of light - in volumes never before imagined. A recent study from the University of California at Berkely estimates that worldwide e-mail generates about 400,000 terabytes of new information each year (more than 40,000 times the amount of information found in the entire print collection of the U.S. Library of Congress) and that instant messaging generates 5 billion messages per day. This communication explosion requires that hospitality companies, and their lawyers, focus their attention on developing efficient data management policies and procedures.

Although electronic data can be easier to search than paper documents, the sheer volume alone is often overwhelming. Separating business from personal communications can be extremely difficult. Even more daunting is the task of distinguishing relevant communication from non-relevant. In hospitality litigation, those challenges can result in enormous discovery burdens and related costs. Companies must rethink their approach to data storage, retention, classification, and retrieval.

Consequences of Poor Data Management

The recent demise of companies such as Enron, Worldcom and Global Crossing has put the spotlight on electronic communications and related document discovery. In the wake of these corporate scandals, the Sarbanes-Oxley Act of 2002 established new rules for corporate governance. Provisions of these rules apply, to some degree, to all publicly-traded companies, including those that make-up the hospitality industry.

One of the provisions of the Sarbanes-Oxley Act is Title VIII-Corporate and Criminal Fraud Accountability, in which Section 802 adds United States Code SS1519 and SS1520. These codes speak to the destruction, alteration or falsification of records in federal investigations and bankruptcy, and to the destruction of corporate audit records, respectively. The failure to comply with these codes can include fines, imprisonment, or both.

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Eco-Friendly Practices: Corporate Social Responsibility

The hotel industry has undertaken a long-term effort to build more responsible and socially conscious businesses. What began with small efforts to reduce waste - such as paperless checkouts and refillable soap dispensers - has evolved into an international movement toward implementing sustainable development practices. In addition to establishing themselves as good corporate citizens, adopting eco-friendly practices is sound business for hotels. According to a recent report from Deloitte, 95% of business travelers believe the hotel industry should be undertaking “green” initiatives, and Millennials are twice as likely to support brands with strong management of environmental and social issues. Given these conclusions, hotels are continuing to innovate in the areas of environmental sustainability. For example, one leading hotel chain has designed special elevators that collect kinetic energy from the moving lift and in the process, they have reduced their energy consumption by 50%  over conventional elevators. Also, they installed an advanced air conditioning system which employs a magnetic mechanical system that makes them more energy efficient. Other hotels are installing Intelligent Building Systems which monitor and control temperatures in rooms, common areas and swimming pools, as well as ventilation and cold water systems. Some hotels are installing Electric Vehicle charging stations, planting rooftop gardens, implementing stringent recycling programs, and insisting on the use of biodegradable materials. Another trend is the creation of Green Teams within a hotel's operation that are tasked to implement earth-friendly practices and manage budgets for green projects. Some hotels have even gone so far as to curtail or eliminate room service, believing that keeping the kitchen open 24/7 isn't terribly sustainable. The May issue of the Hotel Business Review will document what some hotels are doing to integrate sustainable practices into their operations and how they are benefiting from them.