Recognizing a Case For Lawsuits Over Bad Hotel Publicity

By Steven D. Weber Managing Partner, Stark Weber PLLC | June 10, 2018

Eventually every hospitality player is the subject of a negative news story, webpage, or some other source.  Such negative publicity may be the result of a disaster, an unfortunate occurrence, and possibly entirely of no fault of the hospitality industry player.  Evaluating how to respond to such events and circumstances is critical.  Maybe negative publicity cannot be entirely avoided, but are there circumstances when negative publicity is actionable such that any damage can be compensated for? 

Due to the internet, negative publicity may never be erased and may continue harming a hospitality brand for years to come.  Hospitality players - and all other business entities - need to understand their options when confronted with such circumstances. 

There are millions of stories in the news and on review sites about hospitality industry players.  Some of these stories or reviews take on a life of their own and can hurt a brand.  Claims may exist, like business defamation, disparagement, or tortious interference that may allow a hospitality brand to hold the maker of certain statements accountable for them.  Such claims may exist in the hospitality industry context.

In a federal case from California, Monterey Plaza Hotel v. Hotel Employees Local 483, the court recited allegations that one of the defendants filed unfair labor practice charges against the plaintiff.  In a newscast about the labor dispute, another of the defendants allegedly said that certain firings were illegal.  The plaintiff filed a complaint alleging a single cause of action for defamation against certain defendants alleging that the statement on the newcast "that the federal government had found that the firings were illegal was false and exposed plaintiff to 'hatred, contempt, and ridicule.'"  The plaintiff appealed from a lower court decision granting the defendants' motion to strike plaintiff's defamation complaint. 

On appeal, the appellate court sustained the striking of the defamation complaint.  The court reasoned that while the statement at issue could have been construed as false, the plaintiff had not met its burden of pleading a claim because the "plaintiff has failed to establish a prima facie case of slander in its pleadings and supporting declarations that defendants made a false statement with malice."  The court stated that "considering the broadcast as a whole, a viewer could not have reasonably understood [the defendant's] statement to mean that there had been a final determination that plaintiff had illegally fired the two employees."

In another case,  Hotel Saint George Assocs. v. Morgenstern, which was considered by a New York federal court, the plaintiff "alleged in its complaint that defendants have publicly and falsely accused plaintiff of failing to maintain adequate security at the Hotel and that defendants had worked to create a perception that there has been an increase in crime in and around the Hotel."  The plaintiff "alleged that these false accusations have resulted in damages reasonably believed to be in excess of seven million dollars."  Among other claims, the plaintiff asserted a defamation claim. 

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Coming up in December 2018...

Hotel Law: New Administration - New Policies

In a business as large as a hotel and in a field as broad as the law, there are innumerable legal issues which affect every area of a hotel's operation. For a hotel, the primary legal focus includes their restaurant, bar, meeting, convention and spa areas of their business, as well as employee relations. Hotels are also expected to protect their guests from criminal harm and to ensure the confidentiality of their personal identity information. These are a few of the daily legal matters hotels are concerned with, but on a national scale, there are also a number of pressing issues that the industry at large must address. For example, with a new presidential administration, there could be new policies on minimum wage and overtime rules, and a revised standard for determining joint employer status. There could also be legal issues surrounding new immigration policies like the H-2B guest-worker program (used by some hotels and resorts for seasonal staffing), as well as the uncertain legal status of some employees who fall under the DACA program. There are also major legal implications surrounding the online gaming industry. With the growing popularity of internet gambling and daily fantasy sports betting, more traditional resort casinos are also seeking the legal right to offer online gambling. Finally, the legal status of home-sharing companies like Airbnb continues to make news. Local jurisdictions are still trying to determine how to regulate the short-term apartment rental market, and the outcome will have consequences for the hotel industry. The December issue of Hotel Business Review will examine these and other critical issues pertaining to hotel law and how some companies are adapting to them.