Electronic Discovery in Hotel Litigation: A Masters Class For Industry Principals

By William A. Brewer III Managing Partner, Bickel & Brewer | April 16, 2010

I once suggested in this publication that electronic discovery (e-discovery) can make - or break - a case in bet-the-business hospitality litigation. That column (http://hotelexecutive.com/business_review/190/managing-a-major-hotel-lawsuit-how-electronic-discovery-can-make-–-or-break-–-your-case ) generated widespread interest among industry owners, operators, managers and investors seeking to understand the importance of e-discovery and the vital role it plays in the litigation process. In this expansive follow-up column, I offer a "master's class" on the topic that discusses what industry principals should know regarding the preservation of evidence. I firmly believe that in this era of mega-cases, few things are more important than understanding one's obligation to collect, store and produce electronic information.

With the proliferation of electronically-created and stored information, discovery of electronic information ("e-discovery") is a complex and expensive part of any significant piece of litigation. What many business executives do not appreciate is that a party's failure to comply with the rules regarding e-discovery – in particular, those governing the preservation of electronically stored evidence – can lead to harsh penalties. Thus, it is critical that hotel industry principals – owners, asset managers, operators, lenders and others – understand their obligations to preserve relevant corporate records and, thereafter, to collect and produce such records to the opposing party after litigation has begun. As one court recently noted: "By now, it should be abundantly clear that the duty to preserve means what it says and that a failure to preserve records – paper or electronic – and to search in the right places for those records, will inevitably lead to the spoliation [destruction] of evidence."

In addition to the federal statutes and rules that mandate the preservation of corporate documents of public companies and companies operating in specific industries, the obligation to preserve evidence, including electronically stored information, also arises from court-imposed preservation rules that apply to all companies, public, private, large and small. The key questions that executives must answer are:

  • When does the duty to preserve evidence arise?
  • What evidence must be preserved?
  • How do I ensure that evidence is not destroyed?

Fortunately, the law governing e-discovery is developing rapidly, and courts have provided guidance to these and related questions.

The Duty To Preserve: Triggering Events

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Social Media: Getting Personal

There Social media platforms have revolutionized the hotel industry. Popular sites such as Facebook, Twitter, Pinterest, Instagram, Snapchat, YouTube and Tumblr now account for 2.3 billion active users, and this phenomenon has forever transformed how businesses interact with consumers. Given that social media allows for two-way communication between businesses and consumers, the emphasis of any marketing strategy must be to positively and personally engage the customer, and there are innumerable ways to accomplish that goal. One popular strategy is to encourage hotel guests to create their own personal content - typically videos and photos -which can be shared via their personal social media networks, reaching a sizeable audience. In addition, geo-locational tags and brand hashtags can be embedded in such posts which allow them to be found via metadata searches, substantially enlarging their scope. Influencer marketing is another prevalent social media strategy. Some hotels are paying popular social media stars and bloggers to endorse their brand on social media platforms. These kinds of endorsements generally elicit a strong response because the influencers are perceived as being trustworthy by their followers, and because an influencer's followers are likely to share similar psychographic and demographic traits. Travel review sites have also become vitally important in reputation management. Travelers consistently use social media to express pleasure or frustration about their guest experiences, so it is essential that every review be attended to personally. Assuming the responsibility to address and correct customer service concerns quickly is a way to mitigate complaints and to build brand loyalty. Plus, whether reviews are favorable or unfavorable, they are a vital source of information to managers about a hotel's operational performance.  The February Hotel Business Review will document what some hotels are doing to effectively incorporate social media strategies into their businesses.