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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Guest Service: A Culture of YES

In a recent global consumers report, 97% of the participants said that customer service is a major factor in their loyalty to a brand, and 76% said they view customer service as the true test of how much a company values them. And since there is no industry more reliant on customer satisfaction than the hotel industry, managers must be unrelenting in their determination to hire, train and empower the very best people, and to create a culture of exceptional customer service within their organization. Of course, this begins with hiring the right people. There are people who are naturally service-oriented; people who are warm, empathetic, enthusiastic, pleasant, thoughtful and optimistic; people who take pride in their ability to solve problems for the hotel guests they are serving. Then, those same employees must be empowered to solve problems using their own judgment, without having to track down a manager to do it. This is how seamless problem solving and conflict resolution are achieved in guest service. This willingness to empower employees is part of creating a Culture of Yes within an organization.  The goal is to create an environment in which everyone is striving to say “Yes”, rather than figuring out ways to say, “No”. It is essential that this attitude be instilled in all frontline, customer-facing, employees. Finally, in order to ensure that the hotel can generate a consistent level of performance across a wide variety of situations, management must also put in place well-defined systems and standards, and then educate their employees about them. Every employee must be aware of and responsible for every standard that applies in their department. The April issue of the Hotel Business Review will document what some leading hotels are doing to cultivate and manage guest satisfaction in their operations.