Waldorf Astoria Beverly Hills Sued For Corporate Espionage

Filed Under: Hilton, Hotels

The Peninsula Beverly Hills is suing the Waldorf Astoria Beverly Hills and Hilton over what they call corporate espionage.

Waldorf Astoria Beverly Hills lawsuit

This week the Peninsula Beverly Hills has filed court papers accusing Hilton of engaging in corporate espionage and unfair business practices by stealing thousands of proprietary documents around the same time that the nearby Waldorf Astoria Beverly Hills opened.

According to the lawsuit, a former Peninsula Beverly Hills guest relations manager was conspiring with Hilton to steal more than 45,000 confidential documents, including guest lists, financials personnel records, marketing plans, and operating protocols.

According to the complaint, Hilton executives engaged in an “orchestrated scheme to raid and steal the Peninsula’s trade secrets” before the June 2017 opening, saving them millions of dollars in startup costs.

Waldorf Astoria Beverly Hills

Apparently a “mole” had shared proprietary files for 14 months — from September 2015 to November 2016 — including sharing information on Middle Eastern guests, which are obviously highly desired at these hotels.

Hilton is also accused of covering up this scheme. The Peninsula uncovered this in early 2017, and Hilton’s General Counsel allegedly reported back that a thorough internal investigation showed no trace of the Peninsula’s proprietary information.

According to the lawsuit:

“This was not true. Hilton was intimately involved with every aspect of the opening of the Waldorf Hotel, including the misappropriation of Peninsula’s information. Hilton, by and through its top lawyers, covered up its culpability.”

Because of this claim, Peninsula initially believed the thefts were the rogue actions of one employee, rather than something that was orchestrated on a higher level.

But after a legal fight of two years, the Peninsula gained access to the former guest relation manager’s personal computer and phone, which they claim showed that he had been a willing “pawn in the Hilton Defendant’s scheme to steal Peninsula’s trade secrets.” Records show that he had met with the managing director of the Waldorf Astoria and others while still working at the Peninsula.

Peninsula Beverly Hills

This isn’t Hilton’s first espionage lawsuit

This isn’t the first time that Hilton has been hit with a major espionage lawsuit. Back in 2010 Hilton reached a settlement whereby they had to pay Starwood $75 million, and signed a permanent injunction prohibiting them from using Starwood’s data.

With this, Hilton was accused of stealing trade secrets involving W Hotels. According to that lawsuit, in 2008 a Starwood executive left the company, and shared thousands of pages of documents with Hilton so that they could introduce a competing lifestyle brand, to be called “Denizen.”

With the settlement, Hilton also had to agree to not launch a competing brand to W until at least January 2013.

Hilton has been sued in the past for stealing W Hotels trade secrets

Bottom line

These are quite some accusations being made against the Waldorf Astoria Beverly Hills and Hilton. I’ll be curious to see what ends up coming of this case.

Based on what we know it sure seems like the Peninsula has reason to be upset, though I wonder how high up this went at Hilton, and if this was happening entirely on the property level, or if corporate was involved here as well.

Comments
  1. “Based on what we know it sure seems like the Peninsula has reason to be upset…”

    You mean, “Based on what’s alleged in this lawsuit…”? Always take court filings with a grain of salt.

  2. Fascinating to see what lengths some businesses will go to. No offense, but this type of (scandalous) story is more the type of article I’ve come to expect from VFTW. 😉

    Send Winston into the Waldorf to do some sleuthing, no one will ever suspect a pet so cute.

  3. Sadly there are a lot of high level managers/executives who believes there are few, if any, limits on what you should do to make money.

    Somewhere society flunked on teaching ethics and right vs. wrong.

  4. That’s one of the best peninsula hotel around. Frankly speaking, people who stays at peninsula hotel in Beverly Hills would not consider a Waldorf…. they would choose four seasons before a Waldorf unless Waldorf is the only other game in town which in LA it’s not.

  5. I still don’t understand what Hilton stole and how that would be useful. If they took guest information and proactively reached out to potential guests, then the guests should be suing Peninsula for not protecting their data.

    I would also imagine “high value guests” get their data sold to companies all the time for the purposes of marketing. So rather than pay an airline or credit card company for the customer list, Hilton just stole it. That’s about all I see. The lobby design and breakfast menu don’t seem like trade secrets to me.

  6. I just skimmed through the complaint (what can I say, it’s a slow morning on my desk). Obviously, it’s only Peninsula’s claims, not Hilton’s response, but the gist of it is that Hilton used a rogue Peninsula employee who later worked for the WA BH to provide Hilton with a slew of trade secrets, especially involving marketing to UHNWI from the Middle East, and then directly tried to solicit some of those people to choose WA BH over the Peninsula. Part of the complaint is that those trade secrets allowed Hilton to “jump start” the WA BH as the brand flagship in a high-profile, high-prestige, competitive market, and that this did not just involve one or two errant employees at Hilton but went to the top of Hilton corporate in McLean VA.

    Will be very interesting to see how it plays out in court. I stayed at the Peninsula in October – it’s a wonderfully intimate property with prompt and responsive service delivery. Can’t compare the WA BH since I haven’t stayed there, but tellingly as a prior commenter noted, I never even really considered the WA for my stay even though it’s basically across the street. They don’t strike me as really in the same market segment, though there probably is overlap.

  7. I wonder if Paris Hilton wanted to steal the Peninsula’s lasagna recipe for her youtube channel 😉

    (if u know u know haha)

  8. I’m confused as to what Peninsula stands to gain from airing their dirty laundry. Why telegraph your worst-in-practice employee management and data security to your clientele via the courts?

  9. @ rich: I disagree with your assumption that schools and society flunk in teaching people ethics. When it comes to integrity and character, nobody can teach you those values. It is either you have it or you do not. Everything starts at home. If parents fail to provide discipline and guidance to their kids by age 8, then there is no time to catch up. Look at Pompeo and Esper: They both graduated top class at West Point. Observe their current behavior and conduct in their respective positions. It is a disgrace to West Point class of 86.

  10. @Tortuga monetary compensation? Punishment for wrongdoing? Win back clients (show them that they’re staying with immoral company)? Why does anybody bother suing when they’re wronged…?

    @globetrotter “nobody can teach you those values” then proceeds to say exactly who teaches those values

    @lucky I’m curious if Hilton loses this lawsuit and is shown to 100% be in the wrong would you stay at the WA Beverly Hills again?

  11. @globetrotter Ethics and morals are taught in all schools in Japan at a young age. So even if the parents are jerks, there is a better chance the kid will turn out to be a decent citizen. That’s one reason why crime is so low in Japan. People are taught to always do the right thing at a young age even if their parents won’t and it works for the most part. Of course there is still corruption and crime, but at least it’s at a reasonable level.

  12. This reminds me of the whole BA and VS thing, when BA would send staff over to T3 to greet arriving VS passengers… (they had broken in to VS’s computer system). When the VS J class passenger stepped out of the VS chauffeured car, a BA rep would tell them there was a delay and offer them Concorde one way, F class on the return, taking them over to BA’s terminal.

    THIS is probably why Branson decided to halt the 30% sale to KL/AF and co. He remembers, and the whole DL stealing Latam away from AA (even if that deal was going badly) reminded him of BA, and also probably made him wary of DL.

    These practices can have a devastating impact on business.

    This is actually a good story to post here. Be AWARE of where you are putting your money…the lizards are greedy!

  13. @Ham

    Japan is a well-known player in corporate espionage (stealing of trade secrets, technology, etc.), especially back during the late 80s and early 90s (Hitachi vs IBM, etc.). Books have been written about it. It’s patriotic and ethical if it is done for the sake of Japan’s economic advancement.

  14. The Peninsula is far superior to the Waldorf in my eyes. Not sure why anyone would switch. Hotel Bel Air or BH Hotel yes but not the Waldorf.

  15. This actually goes on a lot more often than you’d imagine.

    At the same time, some of this “proprietary” information is freely available around the ‘net if you know where to look. I certainly have a nice collection of purloined PDFs from various industries that I obtained through the internet.

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