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UNITEDSTATESDISTRICTCOURT SOUTHERNDISTRICTOFNEWYORK
STARWOOD HOTELS &RESORTS WORLDWIDE,INC., Plaintiff,
- against - No. 09 Civ. 3862 (SCR)
HILTON HOTELS CORPORATION N/K/A AMENDEDAND HILTON WORLDWIDE,ROSS KLEIN AND AMAR LALVANI, SUPPLEMENTALCOMPLAINT Defendants.
PlaintiffStarwoodHotels&ResortsWorldwide,Inc.(“Starwood”or“Plain- tiff”),byitsundersignedcounsel,asandforitsAmendedandSupplementalComplaint againstDefendantsHiltonHotelsCorporation,n/k/aHiltonWorldwide(“Hilton”),RossKlein
(“Klein”)andAmarLalvani (“Lalvani”)allegesas follows:
TABLEOFCONTENTS
THENATUREOFTHISLAWSUIT,THEPRELIMINARY INJUNCTIONAND 3 PROCEEDINGSTODATE...... INTRODUCTION...... 8 Summary of Hilton’sWrongful Conduct...... 8 TheKnowledge of Hilton’s ChiefExecutiveOfficer (ChristopherNassetta)and 9 Hilton’sPresident ofGlobalDevelopmentand RealEstate (StevenGoldman).... TheVolumeandSensitivity of Starwood Confidential InformationStolenby 17 Hilton...... Hilton’sUse of Starwood ConfidentialInformationAcrossAll of Hilton’sLux- 21 uryandLifestyle Brands, Including ItsWaldorfAstoria Collection...... Dozens of HiltonExecutives, IncludingatLeastFiveMembers of Hilton’sEx- 24 ecutiveCommittee,are InvolvedinHilton’sWrongdoing...... SUMMARYOFTHE RELIEFTOWHICHSTARWOODISENTITLED...... 28 SUBJECTMATTERJURISDICTION...... 31 Case 8:09-cv-03862-JSG Document 31 Filed 01/14/10 Page 2 of 134
PERSONALJURISDICTIONANDVENUE...... 32 THEPARTIES...... 32 PERSONSOF INTEREST...... 34 ADDITIONALPERSONSOF INTEREST...... 36 THEFACTS...... 37 HowStarwood CametoLearn of Hilton’sWrongdoing...... 37 Hilton’s InitialEffortstoMisleadStarwood...... 38 TheOngoingGrandJury Investigation ofHilton...... 40 Hilton’sHalf-Measured Reactionto ItsWrongdoing...... 41 Hilton’sExploitation of Starwood Confidential Information...... 43 TheDevelopmentandProtection of Starwood’sWandLuxury Brands...... 45 Hilton’s Recruitment of KleinandKlein’s Breach of HisObligationstoStar- 50 wood...... Hilton’s Recruitment of LalvaniandLalvani’s Breach of HisObligationsto 55 Starwood...... TheUnraveling of Hilton’sWrongful Conduct...... 59 HiltonUsesStarwood Confidential InformationtoDevelopNew Brandsandto 66 RepositionAll of Hilton’sExistingLuxuryandLifestyle Brands...... FIRST CLAIMFOR RELIEF: 73 Breach of Contract(Klein)...... SECOND CLAIMFOR RELIEF: 74 Breach of Contract(Lalvani)...... THIRD CLAIMFOR RELIEF: 75 Inducing Breach ofContract;Tortious InterferenceWithContractualRelations (AllDefendants)...... FOURTH CLAIMFOR RELIEF: 76 Fraud;AidingandAbettingFraud (AllDefendants)...... FIFTH CLAIMFOR RELIEF: 78 Misappropriation ofTradeSecrets (AllDefendants)...... SIXTH CLAIMFOR RELIEF: 79
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Unfair Competition(AllDefendants)...... SEVENTH CLAIMFOR RELIEF: 79 Theft/Conversion (AllDefendants)...... EIGHTH CLAIMFOR RELIEF: 80 Breach of FiduciaryDuty (KleinAndLalvani)...... NINTH CLAIMFOR RELIEF: 81 AidingandAbettingBreach of FiduciaryDuty (Hilton)...... TENTH CLAIMFOR RELIEF: 81 UnjustEnrichment(AllDefendants)...... ELEVENTH CLAIMFOR RELIEF: 82 Violation of ComputerFraudandAbuseAct (AllDefendants)...... THEWANTONNESSOFDEFENDANTS’WRONGFUL CONDUCT...... 83 PRAYERFOR RELIEF...... 84
THENATUREOF THIS LAWSUIT,THEPRELIMINARY INJUNCTIONANDPROCEEDINGS TODATE
1. StarwoodandHiltonare direct, head-to-headcompetitors.
2. Starwoodisoneoftheworld’slargesthotelandleisurecompanies.
Starwoodconductsitshotelandleisurebusinessbothdirectlyandthroughsubsidiaries.Star- wood’sbrandnamesinclude: St.Regis,TheLuxuryCollection,WHotels,Westin,Le
Méridien,Sheraton,FourPoints,aloftandElement.
3. Hiltonowns,operatesandfranchiseshotels,resortsandspasthrough- outtheUnitedStatesandthroughouttheworld.Hilton’sbrandnamesinclude:WaldorfAs- toria,WaldorfAstoriaCollection,PrestigePortfolio,ConradHotelsandResorts,DenizenHo- tels,DoubleTree,EmbassySuites,HiltonGardenInn,Hampton,HomewoodSuites,
Home2Suites,HiltonGrandVacationsandHilton.
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4. OnOctober24,2007,theBlackstoneGroup,aprivateequityfirm, completedtheacquisitionofHilton.Blackstonepaidover$20billioninatop-of-the-market, highlyleveraged buyout.
5. Fivedayslater,BlackstoneSeniorManagingDirectorJonathanGray announcedthehiringofChristopherNassetta(“Nassetta”)asPresidentandChiefExecutive
OfficerofHilton.Graystated:“I’veknownChrispersonallyfor15yearsandhaveworked successfullyside-by-sidewithhiminthepast.” Nassettastated: “Ialsolookforwardto workingwithBlackstone,whoIknowfromexperiencewillbeaterrificstrategicpartnerfor
Hiltongoingforward.”Thepressreported:“WithBlackstonehavingpaidasuper-premium price for Hilton,Nassettawill be underintense pressureto deliverimmediate results.”
6. But“intensepressure”—whetherfromBlackstoneorotherwise—is noexcuseforcorporateespionage,anditisnoexcuseforthemassivetheftandwidescaleuse ofconfidentialandproprietaryStarwoodinformationand/ortradesecretsengagedinbyDe- fendantsHilton,KleinandLalvani.
7. InMayandJune2008,HiltoninducedDefendantsKleinandLalvanito leaveStarwoodandcometowork for Hilton.
8. InNovember2008, fivemonthsbeforethislawsuitwasoriginallyfiled,
Hilton’sPresidentandChiefExecutiveOfficer,ChristopherNassetta,receivedaletterfroma
Hiltonexecutivewhistleblowerstatingthat:
“Numerousmanuals,detailedplans,budgets,marketingsystems,buildingspecifica- tionsandotherproprietarydocumentsfromStarwoodwerebroughttoHiltonbyMr. [Ross]Klein.Mr.KleinputsomeofthesehighlyproprietarydocumentsonHilton’s internalcomputerserver,andinstructedHiltonpersonneltousetheseproprietary StarwooddocumentsasadetailedplanforthemtofollowtodevelopandmodifyHil- ton’sluxuryandlifestylebrands.ItismyunderstandingthatStarwoodinvestedmil- lions of dollarsinthe developmentandimplementation of these plans.Icannotimag-
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inethattheyauthorizedHiltonor[RossKlein]tousetheStarwoodproprietaryinfor- mationtounfairlycompetewithStarwood.Itismyunderstandingthatmostofthese documentswerelabeled‘strictlyconfidential’andstampedwiththe‘St.Regis’,‘W’ and ‘TheLuxury Collection’logos.”
TheletterwaswrittenonbehalfoftheVicePresidentofSalesandMarketingforHilton’s
ConradHotels,andstatedthattheconcernedHiltonVicePresidentbelieved“Hiltonhadob- tainedpossessionofandwasusingproprietarymarketingandfinancialinformationbelonging toStarwood,todevelopandpromoteHilton’sluxuryandlifestylebrands”andthatshehad
“report[ed] herconcernsto hersupervisor.”
9. ButthisclearestofwarningsfellondeafearsbecauseHilton’ssenior managementwasalreadyawareoftherampantwrongdoingofDefendantsKleinandLalvani, and hadinducedKleinandLalvanito breachtheircontractswithStarwood.Hilton,Kleinand
Lalvani,andothersworkinginconcertwiththem,stolehundredsofthousandsofelectronic filesanddocumentsconstitutingconfidentialandproprietaryStarwoodinformationand/or tradesecrets(collectively,“StarwoodConfidentialInformation”)forusebyHiltonacrossall ofHilton’sluxuryandlifestyle brandsindirectcompetitionwithStarwood.
10. Asdetailedbelow,itwasnotuntilmonthslaterthatHiltonfirstin- formedStarwoodinaletterdatedFebruary5,2009thatStarwoodConfidentialInformation hadbeenfoundatHiltonandatthehomesofHiltonemployees.However,Hilton’sletterto
Starwoodwascalculatedmoretomisleadthandisclosebecauseitfailedtomention:(i)that
NassettahadbeeninformedofthetheftandextensiveuseofStarwoodConfidentialInforma- tionmonthsearlier;(ii)thatHiltonhadnotreturnedeverythingandstillwasinpossessionof hundredsofthousandsofpagesofStarwoodConfidentialInformation;(iii)thatHilton’s wrongfuluseofStarwoodConfidentialInformationhadnotceasedbutwasinfactcontinuing
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andaccelerating;(iv)thatHiltonexecutiveshadalreadydistributedStarwoodConfidential
InformationwithinHiltonforuseacrossallofHilton’sluxuryandlifestylebrandstocompete directlywithStarwood;and(v)thatHilton’swrongdoingwasknowntoandcondonedby dozensofHilton’sexecutives(includingatleastfiveofthetenmembersofHilton’sExecu- tive Committee,itsmostseniorexecutives).
11. InMarch2009,NassettaandDefendantsKleinandLalvaniannounced
Hilton’slaunchofanewlifestylebrandnamed“Denizen,”knowingthatDenizenhadbeen developedthroughthewrongfuluseofStarwoodConfidentialInformation.Nassetta,Klein andLalvanialsoknewthatHiltonwascontinuingwrongfullytouseStarwoodConfidential
Informationtodevelop,marketandrepositionitsotherluxuryandlifestylebrandsindirect competitionwithStarwood.
12. Thislawsuitwascommenced on April16, 2009.
13. Justsevendayslater,onApril23,2009,forgoodcauseshownthe
CourtenteredaPreliminaryInjunction(“PreliminaryInjunction”)ordering,amongother things,thatDefendantHiltonreturntoStarwoodanyandallStarwoodConfidentialInforma- tioninitspossession,custodyorcontrol,whereverlocated,andenjoiningHilton,Klein,Lal- vaniandtheirrespectiveofficers,agents,servants,attorneysandemployees,andallotherper- sonswhoareinactiveconcertorparticipationwiththem(including,withoutlimitation,de- signers,architects,consultantsandadvisors)fromknowinglyusing,directlyorindirectlyin anyway,anyStarwoodConfidentialInformation,includinganyinformationderivedthere- from.Forgoodcauseshown,onJuly22,2009,theCourtordered:“ThePreliminaryInjunc- tionshall,initsentirety, remainin full forceandeffectthroughoutthislitigation.”
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14. DespitethefactthatinitsFebruary2009correspondenceHiltonhad purportedtoreturnallStarwoodConfidentialInformation,followingtheCourt’sentryofthe
PreliminaryInjunctionHiltonhasdeliveredtoStarwoodhundredsofthousandsofpagesof documentsandcomputerfilesretrievedfromHiltonofficesandthehomesofHiltonemploy- eesaroundtheworld,andthereisnoendinsight.Deliveriesofdocumentspursuanttothe
PreliminaryInjunctioncontinue,anddocumentswerereceivedasrecentlyasyesterday, nearlyayearlater.
15. ThismountainofundisputedevidencefoundwithinHiltonincludese- mailsto,fromandinternallyamongHiltonseniormanagement,anddemonstratesbeyond doubt:
(i) thatHilton’sseniormanagementpersonallyinducedandusedStarwoodem- ployeestoserveascorporatespieswithinStarwoodtoprovideHiltonwith real-timeinformationaboutStarwood’sconfidentialdevelopmentplansand business opportunities;
(ii) thatHilton,KleinandLalvaniattemptedtoreplicateStarwood’sconfidential andproprietaryluxuryandlifestylebrandingexpertisebyinducingindividuals withvariedexperiencetobreachtheircontractualandfiduciaryobligationsto Starwoodandbythetheftofalargevarietyofconfidentialdocumentsand electronicinformation.
(iii) thatDefendantsKleinandLalvaniandothersworkingwiththemstoleforHil- tonhundredsofthousandsofelectronicandhard-copyStarwoodfiles,includ- ingfilescontainingsomeofStarwood’smostcompetitivelysensitiveinforma- tion;
(iv) thatHilton usedthestolenStarwood Confidential Informationacrossall of Hil- ton’sluxuryandlifestyle brands,includingwithoutlimitationHilton’sWaldorf AstoriaCollection,Hilton’sPrestigePortfolio,Hilton’sConradHotelsand Hilton’sDenizenHotelsbrands;inthedevelopmentofnewbrandsandpromo- tionalmedia;andintherebrandingandrepositioningofexistingbrandsindi- rectcompetitionwithStarwood;and
(v) thatHiltonmanagementwasawareofandtriedtocoverupHilton’swrongful conduct.
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16. Asdetailedbelow,atleast44Hiltonexecutiveswerepersonallyin- volvedinorawareofandcondonedHilton’swrongdoing.FiveofthemsitonHilton’sEx- ecutiveCommittee,itsmostseniormanagement.Whetherviewed
(i) intermsofthestaggeringvolumeofinformationstolen(hundredsofthousands of pages of paperandelectronic documents), or
(ii) intermsofthecommercialsensitivityofwhatwastaken(someofStarwood’s mostconfidentialandsecretinformation), or
(iii) intermsofwhoatHiltonwasinvolvedinorawareofHilton’swrongdoing (virtuallyHilton’sentireseniormanagement), or
(iv) intermsofthebreadthofwrongfulconduct(infectingallofHilton’sluxury andlifestylebrandsincludingHilton’sWaldorfAstoriaCollection,Hilton’s PrestigePortfolio,Hilton’s ConradHotels,andHilton’sDenizenHotels), thiscaseisextraordinary,andpresentstheclearestimaginablecaseofcorporateespionage, theftoftradesecrets,unfaircompetitionandcomputerfraud.HiltoncontinuestouseStar- woodConfidentialInformationand/orinformationderiveddirectlyorindirectlyfromStar- wood ConfidentialInformationacrossitsluxuryandlifestylebrands,andisincontempt of the
Preliminary Injunction.Hilton’sconductis outrageous.
INTRODUCTION
SummaryofHilton’s WrongfulConduct
17. E-mailsbetweenHiltonexecutivesjustweeksafterDefendantKlein’s arrivalatHiltonspeakofhavingKleinandhisteamwork“ASAPonHiltonizing”Starwood
Confidential Information“andsharingitwiththeExecGroupASAP.”
18. DozensofHiltonexecutives,includingatleastfiveofthetenmembers ofHilton’sExecutiveCommittee,wereawareofHilton’swrongfulpossessionanduseof
Starwood Confidential Information,andcondonedit.
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19. HiltonemployeesusingStarwoodConfidentialInformationwereurged tokeepittoaclosedgroup,whileothers,intheirownwords,“scrubbed”imagestoremove
StarwoodidentifiersfromthestoleninformationsothatStarwoodConfidentialInformation couldbemorefreelyroutedwithinHiltonforuseintherepositioningofHilton’sluxuryand lifestyle brands.
20. StarwoodConfidentialInformationstolenbyDefendantLalvaniwas uploadedtoHilton’sshareddrivesothatitcouldbemoreeasilyaccessedbyHiltonexecu- tivesacrossall of Hilton’sluxuryandlifestyle brands,andindeedtheentirecompany.
21. Hilton’smisconductispervasiveandwidespreadandatthesenior-most levels of theHiltonorganization.
22. Atthispoint,allofHilton’sluxuryandlifestylebrands,including, withoutlimitation,Hilton’sWaldorfAstoriaCollection,Hilton’sPrestigePortfolio,Hilton’s
ConradHotelsandHilton’sDenizenHotels,areinfectedbyHilton’stheftandwrongful use of
Starwood Confidential Information.
TheKnowledgeofHilton’sChiefExecutiveOfficer(ChristopherNassetta)and Hilton’sPresidentofGlobalDevelopment andReal Estate(StevenGoldman)
23. InMarch2008,justafewmonthsafterhejoinedHilton,Nassettaan- nouncedHilton’shiringofStevenR.Goldman(“Goldman”)asPresident,GlobalDevelop- mentandRealEstate,stating:“IamthrilledtowelcomeSteve[Goldman]toHiltonatwhatis a veryexcitingtimeinthecompany’shistory.Since I joinedthecompanythreemonthsago, I havebecomeevenmoreconvincedofthetremendousopportunitywehavetodrivethecom- pany’s growth, particularlyinternationally,tocreatethegloballeaderin ourindustry.”
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24. Within a month of his arrival at Hilton, Goldman forwarded two confi- dential Starwood documents to John Dent, Senior Vice President and Assistant General Coun- sel of Hilton’s Development Group by e-mail: (i) a confidential form of Starwood’s License
Agreement; and (ii) a confidential form of Starwood’s Operating Agreement. The terms of
Starwood’s License Agreements and Operating Agreements with owners of Starwood hotels are confidential and competitively sensitive.
25. Nassetta was not an absentee chief executive. Nassetta was personally involved in efforts to develop the high-end of Hilton’s business in the luxury and lifestyle space. Nassetta said as much in a May 2008 interview about his “First 120 Days at Hilton”:
“At [the] high end of the business there is no question we have work to do. We have the beginning of a strategy above the Hilton brand with Conrad and The Waldorf As- toria=Collection. It is in its infancy and we have a significant amount of work to do . . . . There is work to be done in accelerating growth at the high end of the busi- ness. There are a number of ways to accelerate growth. . . . A space we are not in that I have personally been spending a lot of time on is the boutique or lifestyle space. . . . We are hard at work and moving very quickly to develop a powerful con- cept in the lifestyle space. We should be ready to announce something in the next 90 to 120 days.”
26. Nassetta was very committed to, and was personally spending a lot of his time on, accelerating growth at the high end of the business, and set about a scheme to ac- celerate the growth of Hilton’s luxury and lifestyle brands in a very compressed time frame.
27. The cornerstone of Hilton’s plan involved putting in place upscale branding and development expertise. At the time, Nassetta was already personally recruiting
Defendant Ross Klein to join Hilton. At the time, Goldman was already personally recruiting
Defendant Amar Lalvani to join Hilton.
28. Hilton, Nassetta and Goldman knew that as President and Senior Vice
President of Starwood’s Luxury Brands Group, Defendants Klein and Lalvani had access to
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theforward-lookingstrategicdevelopmentplansapprovedatStarwood’shighestlevelforthe marketing,growthanddevelopment,worldwide,ofStarwood’sluxuryandlifestylehotel brands.
29. Hilton,NassettaandGoldmanknewthatKleinandLalvaniwereinti- matelyinvolvedinandawareofthestrategyandplannedfuturedevelopmentofStarwood’s luxuryandlifestylehotel brands:St.Regis,WHotelsandTheLuxury Collection.
30. Hilton,NassettaandGoldmanalsoknewthatbothKleinandLalvani hadwrittenagreementswithStarwoodthatrequiredKleinandLalvanitoprotectandsafe- guardtheconfidentiality of theStarwoodConfidential Informationtowhichthey hadaccess.
31. Hilton,NassettaandGoldmaninducedbothKleinandLalvanito breachtheircontractualand fiduciary obligationstoStarwood.
32. AsDefendantKleinhaspubliclystated,HiltonPresidentandChiefEx- ecutiveOfficer ChrisNassetta gave hima“Herculean”task:
“Goingbacktothecapital,Chris[Nassetta]wasverycommittedtothehorizonline. Itwouldhavebeenmucheasiertoputitinaboxandletitsitontheshelffora while . . . .When[mydevelopmentpartnerAmarLalvaniandI]workedwiththe [Hilton]executivecommittee,wethoughtthatlearning,theopportunityandthewin- dowallmeantthatitisworthittousethesetimesasthelitmustest . . . .Itwasn’ta rush.Itwasjustacompressedtimeframe....Partofthecostisalsospeedtomar- ket. . . .Inaddition,Chris[Nassetta]madeahugecommitmentfromtheHiltonen- gineaswell.”
33. Intryingtoachieve“speedtomarket,”withHilton’sknowledgeand assistance,DefendantsKleinandLalvaniinducedseveralStarwoodemployeestobreachtheir contractualandfiduciaryobligationstoStarwoodandtogethertheystoleamountainofhighly confidentialinformationfromStarwoodandopenlyuseditwithinHiltoninthedevelopment,
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branding,redevelopment,rebrandingandrepositioningofHilton’sluxuryandlifestylebrands in directcompetitionwithStarwood.
34. TheseriousnessofthewrongdoingengagedinbyHiltonwasnotlost onthosewithinHiltonwhowitnessedHilton’spossessionanduseofStarwoodConfidential
Information.InNovember2008,anexecutivewhistle-blowerwithinHiltonhadalettersent toNassettaregardingHilton’s rampantwrongdoing. Buttheseclearest of warnings directlyto
Hilton’ssenior-mostmanagementaboutHilton’swrongfulpossessionanduseofStarwood
ConfidentialInformation“todevelopandpromoteHilton’sluxuryandlifestylebrands”and
“to developandmodifyHilton’sluxuryandlifestyle brands”fell on deafears.
35. ItwasNassettawho,justmonthsearlier,hadpersonallyrecruitedDe- fendantKleintoleavehispositionasPresidentofStarwood’sLuxuryBrandsGroupandjoin
HiltonasGlobalHeadofHilton’sLuxury&LifestyleBrands.OnceatHilton,Kleinreported directlytoNassetta.
36. ItwasHilton’sPresidentofGlobalDevelopmentandRealEstate,Ste- venGoldman,who,justmonthsearlier,hadpersonallyrecruitedDefendantLalvanitoleave hispositionasSeniorVicePresidentofStarwood’sLuxuryBrandsGroupandjoinHiltonas
GlobalHeadofLuxury&LifestyleBrandDevelopment. AfterjoiningHilton,Defendant
Lalvani reportedtoGoldman.
37. NassettaandGoldmanweresuccessfulintheirpersonaleffortstore- cruitKleinandLalvani,andinJune2008HiltonannounceditshiringofDefendantsKlein andLalvani,and describedtheir portfolios of responsibility:
“ThesenewhireswillhelpadvanceHilton’sstrategicgoaloffurtherdevelopingits presenceintheluxuryandlifestylesectors....AtHilton,Mr.Kleinwilloverseethe company’sgloballuxuryandlifestylebrandportfolio,includingWaldorf=Astoria,
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theWaldorf=AstoriaCollectionandConrad,andwillspearheadthecompany’sentry intothelifestylesegment.Mr.LalvaniwillleadtheglobaldevelopmentofHilton’s luxuryandlifestylesegments.”
38. NassettaandGoldmanwereawareofKlein’sandLalvani’stheftof
StarwoodConfidentialInformationand,despitetheclearestnoticeofHilton’srampant wrongdoing,NassettaandGoldman,togetherwithDefendantsKleinandLalvani,continued tospearheadthedevelopmentofanewHiltonlifestylebrandandtherepositioningofHilton’s otherluxuryandlifestyle brands.
39. InMarch2009,Nassettapersonallyannouncedtheworldwidelaunch ofHilton’sDenizenHotelsBrand,stating:“Whilewecontinuetooperateinachallenging macroeconomicenvironment,theadditionofDenizenHotelsdemonstratesourcommitment tocontinuingtoinvestin our long-termgrowth.”
40. TheDenizenHotelsbrandwaswrongfullydevelopedthroughtheuse ofstolenStarwoodConfidential Information.
41. InannouncingitshiringofDefendantKlein,Hiltonfailedtodisclose that,whilestillatStarwood,DefendantKleinmisusedhispositionasPresidentofStarwood’s
LuxuryBrandsGrouptogatheruplargevolumesofStarwoodConfidentialInformationthat hetookhome,hadloadedonapersonallaptopcomputerand/orforwardedtoapersonale- mailaccount,andthathethentooktoHilton.KleintooksomuchStarwoodConfidentialIn- formationtoHiltonthat,inresponsetohisrepeatedrequeststohaveadditionalinformation senttohispersonale-mailaccount,hewasinformed:“Iamgoingtohavetoburnadiscof the rest of them.The filesizesarewaytoo bigtoemail.”
42. AfterKleinjoinedHiltonastheseniorexecutiveinchargeofHilton’s luxuryandlifestylebrands,KleinusedStarwoodemployeesascorporatespiesto provideHil-
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tonwithevenmoreStarwoodConfidentialInformationconcerningStarwood’songoingbusi- nessplans.AwarethatdoingsowasaviolationoftheirobligationstoStarwood,theycom- municatedsecretlybypersonale-mailaccounts,statingtoeachother,forexample:“fyi,Ido notckthisemail fromworksoitis ok tosendstuff on.”
43. AsHilton’sGlobalHeadofLuxury&LifestyleBrands,Kleinopenly usedStarwoodConfidentialInformationwithinHiltonacrossallofHilton’sluxuryandlife- stylebrands—includingHilton’sWaldorfAstoriaCollection,Hilton’sPrestigePortfolio,
Hilton’sConradHotels,andHilton’sDenizenHotels.NassettawasawareofKlein’swrong- doing.
44. InannouncingitshiringofDefendantLalvani,Hiltonfailedtodisclose thatStevenGoldman,Hilton’sPresidentofGlobalDevelopmentandRealEstate,usedDe- fendantLalvaniasacorporatespyforHiltoninsideStarwood.Inthisrole,whilestillem- ployedbyStarwoodLalvaniwillinglyprovidedcompetitivelysensitiveconfidentialinforma- tionrelatedtoStarwood’sbusinessanddevelopmentopportunitiesdirectlytoGoldman.For example,onMay15,2008,LalvanisentareportthatLalvanihadwrittenearlierthatdayto
Starwood’sPresidentofGlobalDevelopmentconcerningarecentmeetingwithahoteldevel- operaboutpotentialStarwooddealstohispersonale-mailaccount.Minuteslater,Lalvani forwardedthereportfromhispersonalaccountdirectlytoGoldmanatHilton.OnMay28,
2008,Lalvaniforwarded—firsttohispersonale-mailaccountandthendirectlytoGoldman atHilton—correspondencebetweenStarwood’sVicePresidentofDevelopmentfortheAsia
PacificregionandadeveloperwhowasinterestedinopeningaWbrandedhotelinThailand.
Inhise-mailtoGoldman,LalvanipresentedtheStarwoodopportunityasonethatHilton shouldseize:“Here’saninterestingone. . . .Ihavegoodconnectionswiththeowner.Lets
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discussprotocolduringmytransitionondealslikethissowedon’tmissthembutalsodealing withthe factwe don’t havealifestyle offeringyet.Thisis goingto be fun!!”
45. InanticipationofhisnewroleindevelopinglifestyleofferingsforHil- ton,LalvanimisusedhispositionasSeniorVicePresidentofStarwood’sLuxuryBrands
GroupbygatheringuplargevolumesofStarwoodConfidentialInformationthathetook home,hadloadedonapersonallaptopcomputerand/orforwardedtoapersonale-mailac- count,andthentooktoHilton.LalvanistoleStarwoodDealLogReportscontaininghighly sensitiveinformationabouteverydealinStarwood’sworldwidepipeline,aswellasmany otherhighlyconfidentialandcompetitivelysensitivedocuments.AfterhejoinedHiltonas
GlobalHeadofLuxury&LifestyleBrandDevelopment,LalvanidisseminatedStarwood
Confidential InformationwithinHiltonand useditacrossHilton’sluxuryandlifestyle brands.
46. AfterhejoinedHilton,LalvanisolicitedandobtainedadditionalStar- woodConfidentialInformationfromthosewithwhomhehadworkedatStarwoodandused
StarwoodConfidentialInformationforHilton’sbenefit.Forexample,LalvanicontactedStar- woodemployeeChristopherKochuba(whomhelaterrecruitedtoHilton)andaskedKochuba tosendhim“allof[Starwood’s]processmaps,criticalpath,programs,designerlists,and othermaterials.”LalvaniwasclearabouthisreasonsforneedingthisinformationatHilton, stating:“Ididn’tbringacopyofthatstuffandwouldbegreattohave.”WhenKochubare- spondedthathewouldsendtheStarwoodConfidentialInformationrequested,Lalvanifor- wardedKochuba’sresponsetoGoldman,stating:“Also,perthebelow,Iamgettingabunch ofthedocumentsandtemplatesweusedtouseatStarwoodsothatshouldbehelpful.”Hil- ton’sPresidentofGlobalDevelopmentandRealEstateknewwhatLalvaniwasdoing,and condonedit.
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47. HiltonpubliclyannouncedthatLalvaniwould“leadtheglobaldevel- opmentofHilton’sluxuryandlifestylesegments,”butdidnotdisclosethatwhilehewasstill employedatStarwoodDefendantLalvaniinformedGoldman:“Otherideaisbringover[to
Hilton]thecoreWteamwhichhascreatedanenormousamountofvalueandisveryloyalto metobuildanewbrandforyouguys.NotsureyourappetitebutIknowIcouldmakethat happenaswell.”
48. WiththeassistanceofKleinandLalvani,Hiltoncherry-pickedagroup ofStarwoodemployeeswithacrosssectionofluxuryandlifestylebrandexperience.Imme- diatelyupontheirarrivalatHilton,KleinandLalvanisettoworkputtingtheirtreasuretrove ofstolenStarwoodConfidentialInformationtousetoexpeditiouslydevelopthat“newbrand” forHilton:theDenizenHotel brand.
49. GoldmanwaspersonallyawareofLalvani’stheftofStarwoodConfi- dentialInformationandtheimproperusebyHiltonofStarwoodConfidentialInformation acrossHilton’sluxuryandlifestylebrands,includingHilton’sWaldorfAstoriaCollection,
Hilton’sPrestigePortfolio,Hilton’sConradHotels,andHilton’sDenizenHotelbrands,and notonlycondoneditbutcomplimentedLalvaniontheincorporationofStarwoodConfiden- tial InformationintoHilton developmentmaterials.
50. NassettawasalsoawareofanddidnothingtostopHilton’scontinued useofStarwoodConfidentialInformationacrossallofHilton’sluxuryandlifestylebrands— includingwithoutlimitationHilton’sWaldorfAstoriaCollection,PrestigePortfolio,Conrad
HotelsandDenizenHotels.BothNassettaandGoldmanpersonallyparticipatedwithDefen- dantsKleinandLalvaniinpresentationstoStarwoodownersusingStarwoodConfidential
Informationtocompete head-to-headwithStarwood.
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51. FivemonthsafterNassettawaspersonallyinformedinwritingofHil- ton’swrongfulpossessionanduseofStarwoodConfidential Information“todevelopandpro- moteHilton’sluxuryandlifestylebrands,”Nassetta,Goldman,KleinandLalvanitrumpeted ataninternationalhospitalityconventiontheworldwidelaunchofHilton’sDenizenHotels brand.AsNassetta,Goldman,KleinandLalvani—andbyextension,Hilton—wellknew, theDenizenHotelsbrandwasdevelopedinrecordtimethroughthetheftandwrongfuluseof
Starwood Confidential Information.
52. DenizenHotelswasnotshutdownuntiltheCourtenteredthePrelimi- nary Injunctioninthiscase.
TheVolume andSensitivityofStarwoodConfidentialInformationStolenbyHilton
53. Thisisnotacasewhereafewemployeestookwiththemtoanewjoba fewconfidentialmementosofapriorcareer.PursuanttothePreliminaryInjunction,todate
HiltonhasdeliveredtoStarwoodhundredsofthousandsofpagesofdocumentsandcomputer filesretrievedfromHiltonofficesandthehomesofHiltonemployeesaroundtheworld.Hil- toncontinuestodisgorgeinformationpursuanttothePreliminaryInjunction.Thevolumeof confidentialandproprietaryinformationofadirectcompetitorstolenbyHiltonisstaggering, andmay be unprecedented.
54. TheStarwoodConfidentialInformationretrievedfromHiltonoffices andthehomesofHiltonemployeesaroundtheworldpursuanttotheCourt’sPreliminaryIn- junctionincludessome of Starwood’smostcompetitivelysensitiveinformation:
· Starwood’s Forward-LookingStrategic DevelopmentPlans, containing Starwood’shighlyconfidentialandproprietarycurrentandprospectivestrategies forthedevelopmentofitsW,St.RegisandTheLuxuryCollectionbrands,in- cludingtheWHotelsWorldwideStrategic BrandPlans for 2007-2009and 2008- 2010;theSt.RegisStrategicBrandPlanfor2008-2010;TheLuxuryCollection StrategicBrandPlanfor2008-2010andTheLuxuryBrandsGroup3YearStra-
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tegicPlanfor2009-2011.ThesebrandplanswerecreatedforStarwood’sSenior LeadershipTeamandthebrandleaders,andwerestoredonalimitedaccess, password-protecteddrive.
· Starwood’sPrincipalTermPrioritizationWorksheets,containingStar- wood’shighlyconfidentialandproprietarycurrentandprospectivenegotiation andpricingstrategieswithownersrankedbyimportancetoStarwoodfornu- merousdealterms,includingperformancetests,terminationonsaleprovisions, residentialfees,technicalservicesfees,financing-relatedprovisions,investment requirements,legalissuesandmanyotherterms.DistributionofthePrincipal TermPrioritizationWorksheetswaslimitedevenwithinStarwood,andthefiles werestored on alimitedaccess, password-protected drive.
· Starwood’sDetailed “Gap”Analyses,analyzingthemarketand otherareas not beingmetbyStarwood’sluxurybrandsandwaysinwhichStarwoodwouldseek tofillthosegapsandstrengtheneachofitsluxurybrands.Distributionofthese materialswaslimitedevenwithinStarwood,andthefileswerestoredonalim- itedaccess, password-protected drive.
· Starwood’sPropertyImprovementPlan templatesforhowtocreate“theUl- timateWExperience”inconversionproperties,providingstep-by-stepdetails forhowtoconvertahotelpropertytoaWbrandedhotel.DistributionofProp- ertyImprovementPlanswaslimitedevenwithinStarwood,andthefileswere storedonalimitedaccess,password-protecteddrive.Theyareavailabletoown- ersordevelopersonlyasneededandsubjecttostrictconfidentialityandnon- disclosureagreements.
· Starwood’sconfidentialcomputerfiles containingthenames,addressesand othernon-publicinformationforitsLuxuryBrandsGroupowners,developers anddesignerscompiledbyStarwood. Distributionofthesefileswaslimited evenwithinStarwood,andthefileswerestoredonalimitedaccess,password- protected drive.
· RecentpresentationstoStarwood’sexecutiveleadershipteam containing currentandprospectivefinancial,brandingandmarketinginformationforStar- wood’sluxuryandlifestylebrands.Distributionofthesefileswaslimitedeven withinStarwood,andthefileswerestoredonalimitedaccess,password- protected drive.
· Starwood’ssite-specificProjectApprovalRequests,whichsetoutindetail thecosts,feestructures,terminationprovisionsandotherhighlysensitiveand competitivelyusefulinformationforStarwoodpropertiesandtargetedproperties worldwide. DistributionofthesefileswaslimitedevenwithinStarwood,and the fileswerestoredonalimitedaccess,password-protecteddrive.
· Confidentialandproprietarymarketinganddemographicstudies,confiden- tialtoStarwoodandusedbyStarwoodinitsglobalmarketinganddevelopment plans,forwhichStarwoodpaidthirdpartiesover$1,000,000. Distributionof thesefileswaslimitedevenwithinStarwood,andstoredonalimitedaccess, password-protecteddrive.Indeed,manyofthesematerialswerestoredonthe individualharddriveofStarwood’sVicePresidentofGlobalMarketResearch,
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andweredistributedonlyonalimited,as-neededbasistomembersofStar- wood’s brandingandmarketingteams.
· Starwood’sResidentialGuidelines,containingStarwood’sstrategiesandpro- prietarytoolkitsfordevelopingresidentialpropertieswithintheWandSt.Regis brands. Theseguidelineswerestoredonapassword-protecteddatabase,and providedonlytocertainownersanddeveloperswhoenteredintostrictconfiden- tialityand non-disclosureagreementswithStarwood. · Starwood’sWHotels“BrandinaBox”modulesandtrainingmaterials, containingStarwood’sproprietarytraining,operationalmaterialsandprocedures foropeninganewlifestylehotel,aswellasmaterialsforpromotionalstrategies anddetailedguidelinesonhowtolaunchanewbrand.The“BrandinaBox” moduleswereneverdistributedbeyondthesmallnumberofindividualsworking ontheir preparation.
· Starwood’sLuxuryBrandsGroup“BrandBibles,”brandhandbooks, brandimmersionmaterials,andbrandmarketingplans, containingdetailed plansforcurrentandprospectivebranding,marketing,developmentandexpan- sionofStarwood’sleadingluxuryandlifestylebrands,includingthecomplete setofproprietarydesigngenresandsignatureelementsforWandSt.Regis. ManyoftheseelementswerenotunveiledbyStarwooduntilwellinto2009,or havenotyetbeenunveiled. Distributionofthesematerialswaslimitedeven withinStarwood,andthefileswerestoredonalimitedaccess,password- protected drive. · Starwood’sDealLogReports,containingindetailthecontactinformationand dealnegotiationstatusofeveryStarwoodrealestateopportunity.Distributionof thesefileswaslimitedevenwithinStarwood,andthefileswerestoredonalim- itedaccess, password-protected drive.
· Starwood’sFinancialReports, containingclosely-held,property-specificin- formation.Thesematerialsweredistributedonlytoahandfulofthemostsenior leaders of Starwood’s brands.
· Starwood’sBrandStandards, containingeveryelementabrandedpropertyis requiredtopossessorimplement,andthepriceassociatedwitheachelement. Thesedocumentswereprovidedonlyto ownersanddeveloperswhoenteredinto strictconfidentialityand non-disclosureagreementswithStarwood.
· Starwood’sGuestSatisfactionandMeetingPlannerSatisfactionReports, containingconfidentialdataindicatingthestrengthsandweaknessesofparticu- larproperties.ThesematerialswerestoredontheindividualharddriveofStar- wood’sVicePresidentofGlobalMarketResearch,andweredistributedonlyon alimited,as-neededbasistomembersofStarwood’sbrandingandmarketing teams.
55. Virtuallyeverycategoryofdocumentsandinformationdefinedas
“ConfidentialInformation”intheemploymentagreementsthatDefendantsKleinandLalvani
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(andeachofthePersonsofInterest(definedbelow))signedwithStarwoodiscontainedinthe materialsfoundatHiltonandinthehomesofHiltonemployees.Thesematerialsweredevel- opedthroughtensofthousandsofhoursoftrialanderrorbyStarwood,ataninvestmentof manymillionsofdollars.Theyprovideastep-by-stepguidetodevelopingandlaunchinga newhotelbrandfromconceptiontoopening,tostrengtheningandrepositioningexistinglux- urybrandsandtocompetingunfairlywithStarwood. Quiteliterally,thematerialsinclude
Starwood’sblueprintsforbuildinga“BrandinaBox,”creatingalifestylebrand,negotiating withownersanddevelopers,implementingtherelateddevelopmentstrategy,marketinglife- stylebrands,andputtingitalltoworkontheground,includingoperatingmaterialsandpro- prietary brand-centrictrainingmanuals.
56. TheStarwoodConfidentialInformationfoundatHiltonisaveritable motherlodeofcomputerandhard-copyconfidentialinformationthathasbeencreatedor commissionedbyStarwoodatgreatexpenseinconnectionwiththedevelopmentandpromo- tionofStarwood’sluxuryandlifestylehotelbrands,includingSt.Regis,WandTheLuxury
Collection.ItwasmaintainedinconfidencewhileatStarwood,andfurtherprotectedthrough theuseofstrictconfidentialityandnon-disclosureagreementswithStarwoodemployeesand anyoneelsewhomayneedaccesstotheinformation.Thematerialcontainscurrentandpro- spectiveinformation,andconsistsofhighlyconfidentialandproprietarybusinessplans,cost andfeestructuresandothertradesecrets.Itincludeshighlysensitiveandcompetitivelyuse- fulinformationforStarwoodpropertiesandtargetedpropertiesaroundtheworldthatcanbe usedbyHiltonto undercut or outperformStarwoodincompetitivemarkets.
57. ThisinformationprovidesHiltonwiththemeanstobringacompetitive hotelbrandtomarketandtorepositionandre-launchitsexistingluxuryandlifestylebrands
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expeditiouslyandwithoutexpendingmanytensofmillionsofdollarsandmanyyearsonde- velopment,therebyavoidingtheinevitableandcostlytrialanderroranddelayalongtheway.
Instead,Hiltonhasexploitedthetimeandtensofmillionsofdollarsthatwereinvestedby
Starwoodtocreatethesematerials, unjustlyenrichingitselfthereby.
Hilton’sUseofStarwoodConfidentialInformationAcrossAllofHilton’s Luxury and Lifestyle Brands,IncludingIts WaldorfAstoriaCollection
58. ThestolenStarwoodConfidentialInformationwasnotkeptsecretby formerStarwoodemployeesfortheirownusesotheycouldlookgoodtotheirnewemployer.
WithindaysafterDefendantsKleinandLalvaniarrivedatHilton,StarwoodConfidentialIn- formationwasroutedaroundHiltonworldwide,toemployeesacrossallofHilton’sluxury andlifestyle brandsandacross officesandcontinents.
59. StarwoodConfidentialInformationwasuploadedbyHiltonemployees ontoHilton’ssharedcomputerdrivesothatitcouldbemoreeasilyaccessedbyHiltonem- ployeesinvolvedinthedevelopmentandmarketingofHilton’sluxuryandlifestylebrands, andbyemployeesthroughouttheentirecompany.
60. WithindaysofhisarrivalatHilton,LalvaniwasdistributingConfiden- tialStarwoodInformationacrossHilton’sluxuryandlifestylebrands,includingto,among others,PrethaMani,SeniorDirector of BrandGrowth for Hilton’sluxuryandlifestyle brands.
61. Hilton’swrongfuluseofStarwoodConfidentialInformationwasnot limitedtothe record-fast development ofHilton’sDenizenHotels brand.Starwood Confiden- tialInformationwasusedbyHilton“todevelopandpromoteHilton’sluxuryandlifestyle brands”and“todevelopandmodifyHilton’sluxuryandlifestylebrands”—i.e.,inthere-
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brandingandrepositioningofallofHilton’sluxuryandlifestylebrands—includingHilton’s
WaldorfAstoria Collection,Hilton’sPrestigePortfolio,andHilton’s ConradHotelsbrands.
62. EdRusso,SeniorDirectorofBrandManagementforHilton’sWaldorf
AstoriaCollection,sentaninternalHiltone-mailtoDefendantKleinjustweeksafterKlein’s arrivalatHilton,stating:“So,Iamveraciously[sic]readingtheseStRegisandWResiden- tialDevelopmentKits.Thewritingstyleissuperbandthecontentis quite relevant.”
63. IndiscussingHilton’s“newbuildcriticalpath,”internalHiltone-mails betweenBruceSneller,Hilton’sDirectorofNewHotelsandTransitions,andRichardWolf- man,Hilton’sSeniorDirectorofLifestyleBrandDevelopment,reflect:“Incaseyougot throughallthosechecklists—hereisonemoreImanagedtogetfromStarwood.Clearly,
Rossisusedtothisformat.”ChecklistsandtemplatesdevelopedbyStarwoodtoforcerigor- ousthoughtweretheresultofyearsofdevelopmentalexperience.ThefactthatHiltonlacked suchtoolsshowshowfarbehindStarwoodHiltonisintheevolutionofluxuryandlifestyle brands.
64. Hiltonexecutivessoughtimmediatelytoutilizetheanalyticalthinking setforthinthestolenStarwoodConfidentialInformation.Thus,inane-mailjustdaysafter
KleinjoinedHilton,AntoonHollantsVanLoocke,Hilton’sDirectorofBrandStandardsfor
Hilton’sConradHotelsbrand,reportedtohis“BrandTeam”:“Dearall,Pleasefindattached a firstattempttocomplete RossKlein’s (Starwoodsourced)GAPAnalysis.”
65. HiltonemployeesurgentlysoughtoutandusedStarwoodConfidential
InformationstolenbyDefendantAmarLalvaniacrossHilton’sluxuryandlifestylebrands.
Thus,inseekingoutcertainconfidentialStarwoodstrategicdevelopmentmaterials“from
Amar’sdiscs,”PrethaMani,Hilton’sSeniorDirectorofLuxuryandLifestyleBrandGrowth
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forHilton’sLuxuryandLifestyleBrands,askedRobinSwierk,Hilton’sSeniorCoordinator of BrandPerformance for Hilton’s ConradHotels:
“[W]ereyouabletoretrievethatstrategicdevelopmentlistofcities/countriesfrom Amar’sdiscs?MaybeyousentitandImissedit?Wenowneediturgently.Could yousendtome or showmewheretosearch?”
In response,SwierkinformedMani:
“IaskedJoytoputallofthosedocumentsonthes:drivesotheyarealllocatedin s:HPP/HPPDevelopment/W docs.”
66. Hiltonemployeesworkedasfastastheycouldto“Hiltonize”theStar- woodConfidentialInformationandtoshareitwithHilton’sExecutiveGroup“ASAP.”In- deed,withinweeksofKlein’sarrivalatHilton,RichardE.Mignault,Hilton’sVicePresident ofHumanResources&Administration,e-mailedKleinaboutStarwood Confidential Informa- tion relatingto generalmanager profiles for Starwood’sWandSt. Regis brands,stating:
“Furthertoourdiscussionsearliertoday,Ithinkweneedtohaveyourteamwork withyouASAPonHiltonizingthisandsharingitwiththeExecGroupASAP.In particular,Ithinkweneedtoimmediatelydealwithyour‘Brand’involvementinthe appointment of GMsaroundthe globe.”
67. Atthispoint,theintegrationofStarwoodConfidentialInformationinto
Hilton’ssystemsispervasive,andallofHilton’sluxuryandlifestylebrandshavebeenin- fectedbyHilton’swrongful use of Starwood Confidential Information.ThisincludesHilton’s
WaldorfAstoriaCollection,Hilton’sPrestigePortfolioandHilton’sConradHotelsbrand.
GiventhebroaddistributionofStarwoodConfidentialInformationthroughouttheHiltonor- ganization,itisimpossiblewithoutfullandcompletediscoverytoknowthefullextentofHil- ton’suseofStarwoodConfidentialInformationortheextenttowhichotherHiltonbrands mayalso haveimproperly usedStarwood’smaterials.
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DozensofHiltonExecutives,IncludingatLeastFiveMembersof Hilton’s ExecutiveCommittee, areInvolvedinHilton’sWrongdoing
68. Hilton’swrongfulpossessionanduseofStarwoodConfidentialInfor- mationwasknowntoliterallydozensofexecutiveswithintheHiltonorganization.Theseex- ecutivesinturnknewitwaswrongforHiltontopossessanduseStarwoodConfidentialIn- formation,andtheytriedtocoverit up.
69. Forexample,inJune2008,Hilton’sVicePresidentofHumanRe- sources&Administration,RichardE.Mignault,receivedStarwoodConfidentialInformation directlyfromRossKlein.MignaultforwardedthesematerialstoHilton’sSeniorVicePresi- dentofOrganizationalDevelopment&ChiefLearningOfficer,MartinC.Lowery,andcau- tioned,“[t]hinkthatweneedtobecarefulaboutsending‘Starwood’brandedstuffintothe wideraudience.IcantakethisupinmycallwithRosstomorrowandaskhimifheplanson distillingthisintoaHiltonPrestigePortfoliodocumentforinternalreview/discussion.”Low- eryresponded:“Absolutelyagree...onceRosshashisHPPversionheneedstobetheone to broachthiswith Ian,Joeandthe otherAreaPresidents.”
70. MollyMcKenzie-Swarts,Hilton’sExecutiveVicePresidentofHuman
Resources,andamemberofHilton’sExecutiveCommittee,wascopiedonthesee-mailscau- tioning“thatweneedtobecarefulaboutsending‘Starwood’brandedstuffintothewiderau- dience”and“distilling”StarwoodConfidentialInformationintoa“Hilton...documentfor internalreview/discussion.”ThereisnoindicationthatMcKenzie-Swartsvoicedanyobjec- tiontoHilton’s possessionandcontinued use of Starwood Confidential Information.
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71. InNovember2008,HeonHahm,Hilton’sDirectorofRecruitment,e- mailedSusanManrao(whohadservedasDefendantKlein’sspywithinStarwooduntilhe brought her overtoHilton):
“HiSusan.Jensharedtheattacheddocumentsthatyousentherasasampleofthe typesofprojectsthestylistwouldbeworkingon.I’mconcernedthattheseareall StarwooddocumentssoIhopeyouarenotsharingthemwithcandidatesasconcept documentsordistributingorutilizinginternallyeither.Pleaseconfirm.Thanksso much!!”
72. ManraosimplyarrangedfortheStarwooddocumentstobe,inHilton’s words,“scrubbed”sothatthe“images”identifyingthemasStarwooddocumentswouldbe deleted.Having“scrubbedimages”toremoveStarwoodidentifiersfromtheStarwoodCon- fidentialInformation,HiltoncontinuedtousetheStarwoodConfidentialInformationacross allofitsluxuryandlifestylebrands.DespiterecognizingthatHiltonshouldnothaveoruse
Starwood’sproprietarymaterials,HiltondidnotnotifyStarwoodofitspossessionofthema- terials or returnthematerialstoStarwood untilseveralmonthslater.AndHiltondid notcease usingStarwood Confidential Information.
73. Indeed,Hilton’shighestrankingofficers,NassettaandGoldman,both membersofHilton’sExecutiveCommittee,personallyaccompaniedDefendantsKleinand
LalvanionprospectingvisitstoStarwoodownersatwhichtheyusedStarwoodConfidential
Informationtocompetehead-to-headwithStarwood. NassettaandGoldmanknewofHil- ton’spossessionanduseofStarwoodConfidentialInformationandneverthelesspersonally participatedinthelaunchofHilton’sDenizenHotelsbrand,developedwithstolenStarwood
ConfidentialInformation.ThereisnoindicationthateitherNassettaorGoldmanvoicedany objectiontoHilton’s possessionandcontinued use of Starwood Confidential Information.
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74. RichardM.Lucas,Hilton’sExecutiveVicePresident,GeneralCounsel,
CorporateSecretary,andamemberofHilton’sExecutiveCommittee,knewofHilton’spos- sessionanduseofStarwoodConfidentialInformation. Lucas’sFebruary5,2009letterto
Starwoodismateriallyfalseandmisleading,andthereafterHiltoncontinuedtopossessand useStarwoodConfidentialInformation.ThereisnoindicationthatLucasvoicedanyobjec- tiontoHilton’s possessionandcontinued use of Starwood Confidential Information.
75. KevinJacobs,Hilton’sSeniorVicePresidentforCorporateStrategy andanothermemberofHilton’sExecutiveCommittee,askedKleintobesuretoshareStar- woodConfidentialInformationwithRobPalleschi,headofHilton’sDoubletreebrand,and withJimHolthouser,headofHilton’sEmbassySuitesbrand.ThereisnoindicationthatJa- cobsvoicedanyobjectiontoHilton’spossessionandcontinueduseofStarwoodConfidential
Information.
76. TheinformationthatHiltonwasforcedbytheCourt’sPreliminaryIn- junctiontoprovidedemonstratesthatatleastthefollowing44membersofHilton’smanage- ment—fiveofwhomsitonHilton’sten-memberExecutiveCommittee—sent,receivedor werecopiedoncorrespondencetransmittingStarwoodConfidentialInformationwithinHil- ton, or were personallyaware of Hilton’spossessionand use of it.
Name PositionwithHilton
ChristopherNassetta Presidentand ChiefExecutiveOfficer;member of Hilton’sExecu- tive Committee StevenGoldman President of GlobalDevelopment& RealEstate;member ofHil- ton’sExecutive Committee RichardM.Lucas ExecutiveVicePresident,General Counsel, CorporateSecretary; member of Hilton’sExecutive Committee MollyMcKenzie- ExecutiveVicePresident of Human Resources;member of Hil-
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Swarts ton’sExecutive Committee KevinJacobs SeniorVicePresident, CorporateStrategy;member of Hilton’sEx- ecutiveCommittee JohnDent SeniorVicePresidentandSenior Counsel of Hilton’s RealEstate andDevelopmentGroup MartinLowery SeniorVicePresident of OrganizationalDevelopmentand Chief LearningOfficer Richard Blamey SeniorVicePresident of BrandManagement, Conrad [UK office] RossKlein GlobalHead of Luxury&Lifestyle Brands; formermember ofHil- ton’sExecutiveManagementTeam AmarLalvani GlobalHead of Luxury&Lifestyle BrandDevelopment RobPalleschi Head of Hilton’sDoubletree brand JimHolthouser Head of Hilton’sEmbassySuites brand ChristopherKochuba VicePresident,PlanningandProgramming of GlobalLuxuryand Lifestyle Brands JeffDarnell VicePresident of BrandOperations ElieYounes VicePresident of Development (MiddleEast) RichardMignault VicePresident of Human ResourcesandAdministration Roberta Rinker-Ludloff VicePresident of SalesandMarketing,Conrad SusanManrao SeniorDirector of Designand BrandExperience ErinGreen SeniorDevelopmentDirector,LuxuryandLifestyle (Europeand Asia) ErinShaffer SeniorDirector, CommunicationsandPartnerships PrethaMani SeniorDirector of BrandGrowth,LuxuryandLifestyle Brands JohnPadwick SeniorDirector of LuxuryE-CommerceStrategies JulieWagner SeniorDirector,MarketingandAdvertising,LuxuryandLifestyle Brands RobynSwierk Senior Coordinatorof BrandPerformance, ConradHotels Edward Russo SeniorDirector of BrandManagement,WaldorfAstoria Collection StephanieToller SeniorDirector of GuestExperience RichardWolfman SeniorDirector,Lifestyle BrandDevelopment Tracy Curry SeniorDirector,Human Resources MarisaSzem SeniorDirector,Luxury BrandsTraining
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ShaynanGarrioch Director,Human Resources HeonHahm Director of Recruitment AntoonHollantsVan Director of BrandStandards, ConradHotels Loocke CarrollHutchings Director of BrandMarketing, ConradHotels KarenKennedy Director of BrandPerformance, ConradHotels (Singapore) BruceSneller Director of NewHotelsandTransitions BillPaxton Director of Facilities OshyPhillips SeniorManager of Brand Communications,LuxuryandLifestyle Brands (UnitedKingdom) NicolaPiggott SeniorManager of Brand Communications,Americas LaurenceMarkham Senior BrandMarketingManagerat ConradHotels& Resorts NganLe SeniorManager,Graphicsand Identity StephanieHeer BrandMarketingManager, ConradHotels Leah Corradino BrandMarketingManager,WaldorfAstoriaandWaldorfAstoria Collection AshleyAtkins Senior Coordinator,Luxury&LifestyleBrands MatDomaradzki DevelopmentCoordinator,LuxuryandLifestyle Brands
77. TheactionsandthefailurestoactintheserviceofHiltonofthe44in- dividualsidentifiedintheimmediatelyprecedingparagrapharetheactionsandfailuresof
Hilton, for whichHiltonis fully responsible.
SUMMARYOF THERELIEF TOWHICHSTARWOODIS ENTITLED
78. ThevolumeofStarwoodConfidentialInformationretrievedtodate fromHiltonofficesaroundtheworldandfromthehomesofHiltonemployeesisenormous andmaybeunprecedented.Despitethevolumereturnedtodate,however,defendantsHilton,
KleinandLalvanihaveyettofullydisgorgewhattheyandothersattheirurgingandrequest stole fromStarwoodand broughttoHilton.
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79. Hilton’swrongfuluseofStarwoodConfidentialInformationcuts acrossandinfectsallofHilton’sluxuryandlifestylebrands—includingHilton’sWaldorf
AstoriaCollection,Hilton’sPrestigePortfolio,Hilton’sConradHotelsandHilton’sDenizen
Hotelsbrands—andwasknowntoandencouragedbyHilton’smostseniormanagement withtheparticipationofdozensofmembersofHilton’smanagement.Hilton’swrongfuluse mayinfect otherHilton brandsaswell.
80. TheStarwood Confidential InformationfoundwithinHiltonofficesand inthehomesofHiltonmanagement-levelemployeesaroundtheworldhasunjustlyenriched
HiltonandhasprovidedHiltonwithanunfaircompetitiveadvantageacrossallluxuryand lifestyle brands gainedatStarwood’s directandsubstantialexpense.
81. Starwoodisentitledtoafullpanoplyoflegalandequitablerelief againstHilton,KleinandLalvani,including but notlimitedto:
(i) appropriatebehaviormodificationthroughpreliminaryandpermanentinjunc- tive relief;
(ii) Courtappointmentofoneormore“monitors”toassureHilton’scompliance withallinjunctionsandHilton’snon-use,directly,indirectlyorderivativelyof anyStarwood Confidential Informationorinformation derivedtherefrom;
(iii) euthanizingHilton’sterminallyinfectedDenizenHotels brand;
(iv) purgingStarwoodConfidentialInformationandallinformationderivedfrom StarwoodConfidentialInformationfromHilton’sluxuryandlifestylebrands —includingHilton’sWaldorfAstoriaCollection,Hilton’sPrestigePortfolio andHilton’s ConradHotels brands,andthewebsites promotingthem;
(v) imposinga“penaltybox”or“timeout”enjoiningforanappropriatetimepe- riodanyfurtherdevelopmentofHilton’sluxuryandlifestylebrandstocom- pensateStarwoodforHilton’sunjustenrichmentfromitswrongfuluseof StarwoodConfidentialInformationacrossallofHilton’sluxuryandlifestyle brands;
(vi) corrective disclosureto property owners of Hilton’swrongdoing;
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(vii) appropriatecompensatorymoney damages;
(viii) appropriate punitivedamages;and
(ix) findingDefendantsinciviland/orcriminalcontempt ofthePreliminary Injunc- tionandawardingsuch reliefasthe Court deemsappropriate.
82. Defendants,andtheirrespectiveofficers,agents,servants,employees, andattorneys,andallotherpersonswhoareinactiveconcertorparticipationwiththem(in- cluding,withoutlimitation,designers,architects,consultantsandadvisors),should be:
(i) preliminarilyandpermanentlyenjoinedfromusingorbenefitingfrom,directly orindirectly,theuseofStarwood’shighlyconfidential,proprietaryandtrade secretinformation,includingwithoutlimitationtheStarwoodConfidentialIn- formation; (ii) orderedimmediatelytoreturnallStarwoodConfidentialInformationintheir possession,custodyorcontrol,whereverlocated; (iii) orderedtopurgeallStarwoodConfidentialInformationandallinformationde- riveddirectlyorindirectlyfromStarwoodConfidentialInformationfromall Hiltoninformationandmaterial,includingwebsites; (iv) orderedimmediatelytodestroyandtocertifyunderoaththecompletedestruc- tion of allmaterialsderivedinanywaydirectly or indirectlyinwhole or in part fromanyStarwood Confidential Information; (v) orderedimmediatelytodestroyandtocertifyunderoaththecompletedestruc- tionofalldocumentsandinformationrelatingtothepromotionandroll-outof Hilton’sDenizenHotelbrand—thusrequiringHiltontostartoverwithoutthe benefit of anyStarwood Confidential Information; (vi) orderedtomakeappropriatecorrectivedisclosuretopropertyownersandin- dustry professionals of Hilton’swrongdoing; andDefendantHiltonshould be: (vii) orderedimmediatelytoengage,atHilton’sexpense,oneormore“monitors” acceptabletotheCourtandtoStarwoodwhoshallbeempoweredbytheCourt toinvestigateandreportHilton’scompliancewithallinjunctionsandHilton’s non-use,either directly orindirectly, of Starwood ConfidentialInformation; (viii) orderedimmediatelytoprovideadetailedaccountingofandimposeacon- structivetrustonallrevenuesderivedandallexpensessavedbyHiltonacross allofHilton’sluxuryandlifestylebrandsworldwide,andanyotherbrandsin- fectedbyStarwoodmaterials,fromHilton’swrongfuluseofStarwoodConfi- dential Information;
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(ix) enjoinedforareasonabletimefromanyexpansionofHilton’sluxuryandlife- stylebrands (e.g.,WaldorfAstoriaCollection,PrestigePortfolioandConrad Hotels)andanyotherbrandsthatwereinfectedwithStarwoodConfidentialIn- formation; (x) enjoinedforareasonabletimefrompursuinganyhotelowners,developersand investorsforhotelpropertiesinthelocationsidentifiedintheStarwoodConfi- dential Informationastargeted for Starwood properties; (xi) enjoinedforareasonabletimefromnegotiatingwithowners,developers,in- vestorsandanyotherpersonswithwhomStarwoodhascurrentmanagement contracts; andDefendantsHilton,KleinandLalvanishould be: (xii) orderedtodisgorgeallunjustenrichmentasaresultoftheirtakinganduseof Starwood Confidential Information; (xiii) ordered,jointlyandseverally,topayStarwoodcompensatorydamagesinan amounttobe provenattrial; (xiv) orderedtopayStarwoodpunitivedamagesinthemaximumamountpermitted bylaw;and (xv) orderedtoprovideStarwoodwithsuchotherandfurtherreliefastheCourt deemsjustand proper.
SUBJECTMATTER JURISDICTION
83. SubjectmatterjurisdictioninthisCourtexistsunder28U.S.C.§ 1332.
ThereiscompletediversityofcitizenshipbetweenPlaintiffandallDefendants,andthe amountincontroversyexceeds $75,000, exclusive of interestandcosts.
84. SubjectmatterjurisdictioninthisCourtalsoexistsunder28U.S.C.
§ 1331,astheEleventhClaimForReliefarisesundertheComputerFraudandAbuseAct,18
U.S.C.§ 1030. SubjectmatterjurisdictionovertheFirstthroughTenthClaimsForRelief alsoexistspursuantto28U.S.C.§ 1367becausethoseclaimsforreliefaresorelatedtothe
Eleventh ClaimForReliefasto form part of thesamecase orcontroversy.
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PERSONAL JURISDICTIONANDVENUE
85. PersonaljurisdictionoverallDefendantsisappropriateunderNew
York’slongarmstatute, C.P.L.R. § 302.
86. Inaddition,DefendantsKleinandLalvanieacharesubjecttoa“NON-
SOLICITATION, CONFIDENTIALITY AND INTELLECTUAL PROPERTY
AGREEMENT”withStarwoodinwhicheachofthemirrevocablyandunconditionallysub- mitstotheexclusivejurisdiction of thisCourt.
87. Venueinthis Courtisappropriate under28U.S.C. § 1391(a)(2).
88. Inaddition,DefendantsKleinandLalvanieacharesubjecttoa“NON-
SOLICITATION, CONFIDENTIALITY AND INTELLECTUAL PROPERTY
AGREEMENT”withStarwoodinwhicheachofthemirrevocablywaivesanyobjectionto thelayingofvenueinthisCourt,includinganyobjectionthatsuitinthisCourtisinconven- ient.TheirrespectiveemploymentagreementswithStarwoodareexpresslygovernedbythe lawsofNewYork,withoutregardtotheprinciplesofconflictsoflaws,andprovidethatany actionseekingequitablereliefforviolationoftheconfidentialityprovisionsthereofmaybe commencedinthis Court.
THEPARTIES
89. PlaintiffStarwoodisorganizedunderthelawsoftheStateofMaryland andhasitsprincipalplaceofbusinessat1111WestchesterAvenue,WhitePlains,NewYork
10604.Starwoodisoneoftheworld’slargesthotelandleisurecompanies.Starwoodcon- ductsitshotelandleisurebusinessbothdirectlyandthroughsubsidiaries.Starwood’sbrand namesinclude:St.Regis,TheLuxuryCollection,WHotels,Westin,LeMéridien,Sheraton,
FourPoints,aloftandElement.
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90. DefendantHiltonisorganizedunderthelawsoftheStateofDelaware andhasitsprincipalplaceofbusinessat7930JonesBranchDrive,McLean,Virginia22102.
Atthetimethisactionwascommenced,Hilton’s principalplace of businesswasinLosAnge- les,California.Hiltonowns,operatesandfranchiseshotels,resortsandspasthroughoutthe
UnitedStatesandthroughouttheworld.Hilton’sbrandnamesinclude:Waldorf-Astoria,The
WaldorfAstoriaCollection,ThePrestigePortfolio,ConradHotelsandResorts,DenizenHo- tels,DoubleTree,EmbassySuites,HiltonGardenInn,Hampton,HomewoodSuites,
Home2Suites,HiltonGrandVacationsandHilton.
91. DefendantKleinisacitizenoftheStateofCalifornia,withhisprinci- palresidenceinLosAngeles,California.UntilJune2008,KleinwasPresidentofStarwood’s
LuxuryBrandsGroup,andwasresponsiblenotonlyfortheWHotelgroup,butalsoforthe
St.RegisandTheLuxuryCollectionbrandsofStarwoodHotels.OnoraboutMay16,2008,
KleinsignedanemploymentagreementwithDefendantHilton. InJune2008,Hiltonan- nouncedKlein’semploymentasGlobalHeadofHilton’sLuxury&LifestyleBrands.After thislawsuitwasfiled,HiltonannouncedthatithadplacedKleinon“paidadministrative leave.”
92. DefendantLalvaniisacitizenoftheStateofCalifornia,withhisprin- cipalresidenceinPacificPalisades,California. UntilJune2008,LalvaniwasSeniorVice
PresidentofStarwood’sLuxuryBrandsGroup,andwasresponsibleforthedevelopmentof
Starwood’sluxuryandlifestylebrands,includingWHotels,St.RegisandTheLuxuryCol- lectionbrands. InJune2008,HiltonannouncedLalvani’semploymentasGlobalHeadof
Hilton’sLuxury&LifestyleBrandDevelopment. Afterthislawsuitwasfiled,Hiltonan- nouncedthatit hadplacedLalvani on “paidadministrativeleave.”
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PERSONSOFINTEREST
93. SusanManrao(“Manrao”)isacitizenoftheStateofCalifornia,with herprincipalresidenceinLosAltos,California. UntilAugust2008,ManraowasSenior
Manager,InteriorStyle&DesignStandardsforStarwood’sLuxuryBrandsGroup.InSep- tember2008,ManraobecameemployedbyDefendantHiltonasSeniorDirectorofDesign, workingintheHiltongroupheadedbyDefendantKlein. WhilestillatStarwood,Manrao servedasaspyforKleinand/orLalvani,feedingthemStarwoodConfidentialInformation.
AftershejoinedHilton,ManraousedanddisseminatedStarwoodConfidentialInformation withinHiltonforHilton’sbenefit. Afterthislawsuitwasfiled,HiltonplacedManraoon
“paidadministrativeleave.”
94. ChristopherKochuba(“Kochuba”)isacitizenoftheStateofCalifor- nia,withhisprincipalresidenceinSanFrancisco,California.UntilMay2008,Kochubawas
VicePresident,DevelopmentPlanning&DesignManagementforStarwood’sLuxuryBrands
Group. InJune2008,KochubabecameemployedbyDefendantHiltonasVicePresident,
PlanningandProgramming,GlobalLuxuryandLifestyleBrands,workinginthegroup headedbyDefendantKlein. WhilestillatStarwood,KochubaservedasaspyforKlein and/orLalvani,feedingthemStarwoodConfidentialInformation.AfterhejoinedHilton,Ko- chubausedanddisseminatedStarwoodConfidentialInformationwithinHiltonforHilton’s benefit.Afterthislawsuitwas filed,Hilton placedKochubaon“paidadministrativeleave.”
95. ErinShaffer(“Shaffer”)isacitizenoftheStateofCalifornia,withher principalresidenceinLosAngeles,California.UntilAugust2008,ShafferwasSeniorMan- ager,BrandMarketingforStarwood’sLuxuryBrandsGroup.InAugust2008,Shafferbe- cameemployedbyDefendantHiltonasSeniorDirector,CommunicationsandPartnerships,
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workinginthegroupheadedbyDefendantKlein.Afterthislawsuitwasfiled,Hiltonplaced
Shaffer on “paidadministrativeleave.”
96. JeffDarnell(“Darnell”)isacitizenoftheStateofCalifornia,withhis principalresidenceinWestlakeVillage,California. UntilOctober2008,Darnellwasthe
GeneralManageroftheWHotelLosAngeles.InOctober2008,Darnellbecameemployed byDefendantHiltonasVicePresident,BrandOperations,workinginthegroupheadedby
DefendantKlein.Afterthislawsuitwasfiled,HiltonplacedDarnellon“paidadministrative leave.”
97. StephanieHeer(“Heer”)isacitizenoftheStateofCalifornia,withher principalresidenceinLosAngeles,California.UntilNovember2008,HeerwastheMarket- ingManageroftheWHotelLosAngeles.InNovember2008,Heerbecameemployedby
DefendantHiltonasBrandMarketingManager,ConradHotels,workinginthegroupheaded byDefendantKlein.Afterthislawsuitwasfiled,HiltonplacedHeeron“paidadministrative leave.”
98. ErinGreen(“Green”),untilDecember2008,wasDirectorofWDevel- opmentfortheEurope,AfricaandMiddleEast(EAME)regionofStarwood.In2008,Green becameemployedbyDefendantHiltonasSeniorDevelopmentDirector,LuxuryandLife- styleforEuropeandAfrica,workinginthegroupheadedbyDefendantLalvani.Afterthis lawsuitwas filed,Hilton placedGreen on“paidadministrativeleave.”
99. ElieYounes(“Younes”),untilDecember2008,wasSeniorDirectorof
Acquisitions&DevelopmentfortheEurope,AfricaandMiddleEast(EAME)regionof
Starwood.In2008,YounesbecameemployedbyDefendantHiltonasVicePresidentofDe-
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velopment fortheMiddleEast,workinginthe group headedbyDefendantLalvani.Afterthis lawsuitwas filed,Hilton placedYounes on “paidadministrativeleave.”
100. LeahCorradino(“Corradino”)isacitizenoftheStateofCalifornia, withherprincipalresidenceinBeverlyHills,California.UntilNovember2008,Corradino wastheMarketingManageroftheWHotelSanDiego.InNovember2008,Corradinobe- cameemployedbyDefendantHiltonasBrandMarketingManager,WaldorfAstoria&Wal- dorfAstoriaCollection,workinginthegroupheadedbyDefendantKlein.Afterthislawsuit was filed,Hiltonannouncedthatit hadplaced Corradino on “paidadministrativeleave.”
101. Manrao,Kochuba,Shaffer,Darnell,Heer,Green,YounesandCor- radinoarecollectivelyreferredtohereinas“PersonsofInterest.”Theactionsandinactions ofthesePersonsofInterestintheserviceofHiltonareattributedtoHilton,andHiltonisfully responsible for them.
ADDITIONALPERSONSOFINTEREST
102. ChristopherNassetta(“Nassetta”)servesasHilton’sPresidentand
ChiefExecutiveOfficer,andisamemberofHilton’sExecutiveCommittee.Nassettaperson- ally recruitedDefendantKleintoleaveStarwoodandjoinHilton.
103. StevenGoldman(“Goldman”)joinedHiltoninMarch2008asPresi- dent,GlobalDevelopment&RealEstate.GoldmanservedasHilton’sPresidentofGlobal
Development&RealEstate,andwasamemberofHilton’sExecutiveCommittee.Goldman personally recruitedDefendantLalvanitoleaveStarwoodandjoinHilton.
104. RichardM.Lucas(“Lucas”)joinedHiltonasExecutiveVicePresident andGeneralCounselinJune2008.LucasservedasHilton’sGeneralCounselduringtherele- vant period,andisamember of Hilton’sExecutive Committee.
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105. MollyMcKenzie-Swarts(“McKenzie-Swarts”)wasappointedExecu- tiveVicePresident,HumanResources&DiversityinFebruary2007.McKenzie-Swartshas beenemployedatHiltonforover20years,servedasHilton’sExecutiveVicePresidentof
HumanResourcesduringtherelevantperiod,andwasamemberofHilton’sExecutiveCom- mittee.
106. KevinJacobs (“Jacobs”)joinedHiltonasSeniorVicePresident, Corpo- rateStrategyinJune2008. JacobsservedasHilton’sSeniorVicePresidentforCorporate
Strategy duringtherelevantperiod,andisamember of Hilton’sExecutive Committee.
107. Nassetta,Goldman,Lucas,McKenzie-SwartsandJacobsarecollec- tivelyreferredtoas“AdditionalPersonsof Interest.”
108. Priortothecommencementofthisaction,amongothers,eachofthe
AdditionalPersonsofInterestwaspersonallyawareofHilton’spossessionanduseofStar- woodConfidentialInformationinconnectionwiththedevelopment,promotion,modification and repositioning ofHilton’sluxuryandlifestyle brands.
109. AsfiveofthetenmembersofHilton’shighestrankinggovernance committee,theactionsandfailurestoactoftheAdditionalPersonsofInterestintheservice ofHiltonareattributedtoHilton,andHiltonis fully responsible for them.
THEFACTS
HowStarwoodCame to LearnofHilton’s Wrongdoing
110. Klein’semploymentandseparationagreementswithStarwoodpro- videdinpartthatKleinwouldnotsolicitStarwoodemployeestoleavetheirStarwoodem- ployment. AfterKleinjoinedHilton,Klein,amongothersatHilton,recruitedadditional
StarwoodemployeestojoinHilton.Theseincluded one ormore of thePersons of Interest.
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111. InlightofthecontinuedsolicitationofStarwoodemployees,inNo- vember 2008 StarwoodcommencedanarbitrationagainstKlein based on violationofthe non- solicitationprovisionsofhisemploymentcontractandhisseparationagreementwithStar- wood.Inconnectionwiththearbitration,StarwoodwroteletterstoHiltonandKleinasking themtopreserveallinformationrelevanttothearbitration.Atthetime,Starwoodhadnoidea thatKlein,andothersworkinginconcertwithhimandwithHilton,hadlootedStarwood’s computerandpaperfilesand hadstolenStarwood ConfidentialInformation for usebyHilton.
112. TheunauthorizedaccessingofStarwood’scomputersystemsandfiles andthetheftofStarwood’shighlyconfidentialandcompetitivelysensitivebusinessplansand otherconfidentialandproprietaryinformationwereunknowntoStarwooduntilFebruary
2009,whenHiltondeliveredtoStarwoodeightlargeboxesofcomputerharddrives,zip drives,thumbdrivesandpaperrecordscontainingmassivequantitiesofhighlyconfidential andproprietaryStarwoodfiles.OnthecomputerdrivesreturnedbyHiltonareover100,000 filesdownloadedfromStarwood’scomputersystemsandfilescontainingStarwoodConfi- dential Information.
113. IntheFebruary2009transmittalletteraccompanyingHilton’sdelivery ofthisvolumeofhighlyconfidentialmaterialtoStarwood,Hilton’sGeneralCounsel,Richard
M.Lucas,stated:“Intheprocessofimplementingalitigationholdofsuchmaterials[incon- nectionwiththeKleinarbitration],welearnedthatRoss[Kleinand]...otherHiltonemploy- eeswhoformerlyworkedforStarwood”had“broughttoHiltondocumentsormaterialsthat they developedoracquiredwhiletheyworkedforStarwood.”Lucasstated:“Wealsoaretak- ingstepstoensurethat no suchmaterials remainatHilton.”
Hilton’sInitial Efforts to MisleadStarwood
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114. Lucas’sletterwasmateriallyfalseandgrosslymisleading,andLucas knewit.
115. First,LucasfailedtoinformStarwoodthatmonthsearlier—andbe- foreStarwoodsentanylettersaskingthatinformationrelevanttotheKleinarbitrationbepre- served—Hilton’sPresidentandChiefExecutiveOfficer,ChristopherNassetta, hadbeenper- sonallyinformedinwritingbyaHiltonexecutivewhistleblowerthat“Hiltonhadobtained possessionofandwasusingproprietarymarketingandfinancialinformationbelongingto
Starwood,todevelopandpromoteHilton’sluxuryandlifestylebrands.”Lucaswasawareof thewhistleblower’sletterandthefactthatthestatementscontainedthereinaboutHilton’s wrongful possessionand use of Starwood Confidential Informationweretrue.
116. Second,anyinvestigationconductedbyHiltonandanystepstakento ensurethatnoStarwoodConfidentialInformationremainedatHiltonweresham. Inthe monthsafterLucas’sletter—andonlybecauseitwasorderedtodosobythePreliminary
Injunction—Hiltondeliveredhundredsofthousandsofpagesofelectronicfilesanddocu- ments,gatheredfromHiltonofficesaroundtheworldandthehomesofHiltonemployees, comprisingandreferringtoStarwoodConfidentialInformation.Agreatdealofthisinforma- tionhadnotbeenforwardedintheboxesthataccompaniedLucas’sletterandwaspriedoutof
Hilton only becauseofthePreliminary Injunction.
117. Third,Hilton’swrongfuluseofStarwoodConfidentialInformationse- cretlycontinuedandacceleratedevenafterLucas’sFebruary2009letter.Despiteknowing thatKleinandLalvani,andotherformerStarwoodemployees,hadstolenahugeamountof
StarwoodConfidentialInformationfromStarwoodandwereusingStarwoodConfidentialIn- formationatHiltoninconnectionwiththedevelopmentandrepositioningofHilton’sluxury
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andlifestylebrands,HiltoncontinuedtoemployKleinandLalvani,andcontinuedtohold
KleinandLalvaniouttothepublicasHilton’sluxuryandlifestylebrandleaders.AfterLu- cas’sletter,KleinandLalvaniaccompaniedNassettaandGoldmanasHiltonrepresentatives inmeetingswithownersanddeveloperswhowereincontractualrelationshipswithStarwood atwhichthefourofthempitcheddealsforHiltonusingStarwood’splaybook.AfterLucas’s letter,KleinandLalvanispearheadedHilton’sdevelopmentofanewlifestylebrandknownas
Hilton’sDenizenHotelsbrandthroughtheuseofStarwoodConfidentialInformation.De- spiteknowingthatitsDenizenHotelsbrandhadbeendevelopedthroughthewrongfuluseof
StarwoodConfidentialInformation,amonthafterLucas’sFebruary2009letterinforming
StarwoodthatproprietarymaterialshadbeenfoundwithinHilton,Hiltonannouncedthe worldwidelaunch ofitsDenizenHotels brandataninternational hospitalityconference.
118. DespiteknowingthatKleinandLalvani,andotherformerStarwood employees,hadstolenhugevolumesofStarwoodConfidentialInformationfromStarwood andwereusingthatStarwoodConfidentialInformationatHiltoninconnectionwiththede- velopmentandrepositioningofHilton’sluxuryandlifestylebrands,aftertheinitialCom- plaintinthisactionwasfiledonApril16,2009,Hiltonannouncedthatit“believesthislaw- suitiswithoutmeritandwillvigorouslydefenditself”andthatit“fullyintend[s]tomovefor- ward on the development of [its] newest brand,DenizenHotels.”
119. Hilton’sblusterandbravadoaboutthislawsuitbeing“withoutmerit” was baselessandlastedlessthanaweek.
TheOngoingGrand JuryInvestigation ofHilton
120. OnApril21,2009,Hiltonannouncedthatithadreceivedagrandjury subpoenafromtheUnitedStatesAttorney’sOfficefortheSouthernDistrictofNewYorkre-
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questingdocumentsrelatingtoHilton'semploymentofformerStarwoodemployeesandthe
Starwood Confidential InformationthatHilton returnedtoStarwoodinFebruary 2009.
121. Klein,Lalvani,thePersons of Interestand othercurrentandformerHil- tonexecutivesare now representedbycounsel.
122. ItisexpectedthattheywillpurporttoinvokerightsundertheFifth
Amendmentandwill refusetotestify.
Hilton’sHalf-MeasuredReaction to Its Wrongdoing
123. Afteritsreceiptofthegrandjurysubpoena,Hiltonknewthatitcould nolongerkeepsecretitscorporatewrongdoing.Butinreactingtothesituationthatitwasin,
Hiltontookaseriesof half-measures,eachcalculatedto hideHilton’swrongfulconduct.
124. Inthesummerof2008,HiltonannouncedthehiringofKleinandLal- vaniwithgreatfanfare.AfterthislawsuitwasfiledinApril2009,Hiltonannouncedthatit hadplacedDefendantsKlein,Lalvaniandthemembersofitsluxury&lifestylebrandsgroup on“paid”administrativeleave. ButHiltonhasbeensilentastotheircurrentemployment status.TheHiltonluxury&lifestyle brands group headedbyDefendantsKleinandLalvaniis infected byHilton’stheftandwrongfuluseofStarwoodConfidentialInformation,andshould be permanently disbanded.
125. HiltonannouncedtheworldwidelaunchofDenizenwithgreatfanfare.
AfterthislawsuitwasfiledinApril2009,Hiltonannouncedthatithadtemporarilysuspended developmentofitsDenizenHotelsbrand.ButHiltonhasbeensilentastowhetheritwillever beresuscitated.TheDenizenHotelsbrandisterminallyinfectedbyHilton’stheftandwrong- ful use of Starwood Confidential Information,andshould beeuthanized.
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126. HiltonannouncedthehiringofStevenGoldmanwithgreatfanfarein
2008.DespitehispersonalroleinusingDefendantLalvaniasacorporatespyandinthetheft andwrongfuluseofStarwoodConfidentialInformation,Goldmanremainedinhispositionas
Hilton’sPresidentofGlobalDevelopmentandRealEstateforfivemonthsafterthefilingof thislawsuitinApril2009,afterwhichhetooka“paid”leaveofabsence. ButHiltonhas neverannouncedGoldman’stermination,despiteknowingthatGoldmanwasverymuchper- sonallyinvolvedinthewrongdoing described herein.
127. Hiltonhasannouncednoactionatallwithrespecttodozensofother
HiltonexecutiveswhosolicitedconfidentialStarwoodConfidentialInformationand/orwere awarethatHiltonwasusingit,includingwithoutlimitationtheHiltonexecutiveslistedinthe chartabove.
128. Hiltonhasannouncednoactionatallwithrespecttothemembersof
Hilton’sExecutiveCommitteewhowerepersonallyawareofHilton’spossessionandwrong- fuluseofStarwoodConfidentialInformation,andwhoeitherdidnothingaboutitoraffirma- tivelycondonedit.
129. TheHiltonluxury&lifestylebrands—includingHilton’sWaldorfAs- toriaCollection,Hilton’sPrestigePortfolioandHilton’sConradHotelsbrands—areallin- fectedbyHilton’swrongful use of Starwood Confidential Information,andinjunctive reliefas prayedforhereiniswarranted.Hiltonknowsthis.ButHiltonhasnotannouncedanyaction toaddressitswrongfuluseofStarwoodConfidentialInformationinHilton’sWaldorfAstoria
Collection,Hilton’sPrestigePortfolioandHilton’s ConradHotels brands.
130. AndHiltoncontinueswrongfullytouseStarwoodConfidentialInfor- mationin head-to-headcompetitionwithStarwood.
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Hilton’s Exploitation ofStarwoodConfidentialInformation
131. Hilton’swrongfulexploitationofthestolenStarwoodConfidentialIn- formationisobvious.OnMarch10,2009,justninemonthsafterKleinandLalvanileftStar- wood for Hilton,Hiltonlaunchedits new brand underthe name“Denizen.”
132. Kleinhasrepresentedtothehospitalitypressthattheprocesstode- velopDenizenstartedin“June 2008, startedJune 10.”
133. KleinhasstatedthatthedevelopmentofDenizenwasdonein“acom- pressedtime frame.”
134. ThesimilaritiesoftheostensiblyKlein-developedDenizenconceptto
Starwood brands did not go unnoticed.
135. ThehospitalitypressinattendanceatHilton’sMarch10,2009launch ofDenizenreportedthatDenizenis“cutfromthesameclothasWinmanyrespects”andthat interms of “‘brandDNA’youcan’t help butthink of WHotels.”
136. Generally,evenforthemostexperiencedhoteloperatorsanddevelop- ers,ittakesyearstodevelopa newluxuryorlifestyle brand.AsKlein hasstated:“Part of the costisalsospeedtomarket.”ThetheftofStarwoodConfidentialInformationbyKleinand
Lalvani,andothersworkingwiththem,anditswrongfulusebyHiltonin,amongotheruses, developingandlaunchinganewupscalehotelbrandinrecordtime(months,notyears),isthe clearestimaginablecaseofcorporateespionage,theftoftradesecretsandunfaircompetition perpetratedby,among othermeans,computer fraud.
137. Starwoodisinactivenegotiationwiththirdpartiesregardingtheex- pansion of itsluxuryandlifestyle brands.Thestatus ofeverydealinStarwood’spipelinewas containedinDealLogReportsthatLalvanie-mailedtohispersonale-mailaccountafterhe
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wasrecruited byGoldmanbutpriortohisleavingStarwood.TheseDealLogReportscontain thecontactinformationforhotelownersseekingStarwoodbrands,thestatusofthenegotia- tionsbetweenStarwoodandthepotentialowners,thedegreetowhichStarwoodconsidered thedealapriority,andotherdetailedinformationabouteachdevelopmentopportunity.Other confidentialStarwoodinformationdetailingnegotiationsinStarwood’spipelineaswellas negotiationtacticswith ownerswascontainedintheStarwoodmaterials found atHilton.
138. Thereis no doubtthatHilton has usedandintendsto furtherwrongfully usetheStarwoodConfidentialInformationmisappropriatedbyKlein,Lalvaniandtheothers workinginconcertwiththemtoHilton’sowncompetitiveadvantage.InadditiontoHilton’s stealingofW’sbrandDNAtolaunchDenizen,priortothesuspensionoftheDenizenbrand, formerStarwoodemployeesstatedinpressinterviewsthatalthoughDenizenwasjust launched,Hiltonwasinnegotiationwith20developersandexpectedtoopenitsfirstDenizen
Hotelbyyear’send.Nassetta,Goldman,KleinandLalvaniapproachedownersandfranchi- seesofpropertiesundercontractwithStarwoodandwereusingStarwood’splaybookincom- peting for those properties.
139. ItisreportedthatHiltonisin“[a]ctivedevelopmentnegotiations . . . forresortsanddestinationsinkeycitiesthroughouttheglobe”withdevelopersregardingthe expansionofitsluxuryandlifestylebrands(sometimesreferredtoasHilton’s“Luxury&
Lifestyleportfolio”orthe“PrestigePortfolio”). InJanuary2009,Hiltonannouncedthatit enteredintofranchiselicenseagreementsforthreehotelsthatwerepreviouslyStarwood properties—HiltonHotelTahiti,whichwaspreviouslyoperatedasSheratonHotelTahiti;
HiltonMooreaLagoonResort&Spa,whichwaspreviouslytheSheratonMoorea;andHilton
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BoraBoraNuiResort&Spa,whichwaspreviouslytheBoraBoraNuiResort&Spaunder
Starwood’sLuxuryCollection.
TheDevelopmentandProtection ofStarwood’s W and Luxury Brands
140. Starwoodhasassumedaleadershippositioninmarketsworldwide basedonitssuperiorglobaldistribution,coupledwithstrongbrandsandbrandrecognition.
Starwood’sluxuryandlifestylebrandscontinuetocapturemarketsharefromitscompetitors byaggressivelycultivatingnewcustomerswhilemaintainingloyaltyamongtheworld’smost activetravelers.ThestrengthofStarwood’sbrandsisevidenced,inpart,bythesuperiorrat- ings received fromits hotel guestsand fromindustry publications.
141. Thehotelindustryishighlycompetitive.Competition,bothforhotel guestsandforowners,isgenerallybasedonstrengthofbrand,qualityandconsistencyof rooms,restaurantandmeetingfacilitiesandservices,attractivenessoflocations,availability ofaglobaldistributionsystem,price,theabilitytoearnandredeemloyaltyprogrampoints and other factors.HistoryshowsthatStarwoodcompetes favorablyintheseareas.
142. StarwoodandHiltonaredirect,head-to-headcompetitorsinthehotel andresortindustry.BecausebothStarwoodandHiltonalsoserveashoteloperatorsandfran- chisors—thatis,theymanageandfranchisehotelsforhotelowners,throughmanagementor licenseagreements—theircompetitivepositionisenhancedbytheirabilitytocontrolcosts andincreaserevenues,includingthefeesandothertermsnegotiatedwithhotelpropertyown- ers.Starwoodcompetesfavorablyintheseareasaswell,maintainingitscompetitiveedgein thisareaby protectingtheconfidentialityoftheterms of its dealswith hotel propertyowners.
143. Inthemid-1990s,Starwood’sthen-CEOBarrySternlichtconceivedof anewbrandforStarwood,abrandthatcametobeknownasWHotels.InDecember1998,
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thefirstWHotelopenedinNewYorkCity.Overthenextfiveyears,morethanadozenad- ditionalWHotelsopenedthroughoutthecountry.Throughsubstantialinvestmentsoftime andmoney,theWbrandgrewstrongerandmoredefined,includingthroughthedevelopment ofproprietarytrainingmethodsandmaterialsdesignedtosupportandstrengthenthebrand andtogiveitacompetitiveadvantage.TheWbrandrepresentsaunique,upscalehoteltar- getedtopatronsinterestedinahip,edgyandtrend-consciousdestination.Itisamodelthat manyhotelcompetitorshavesoughttoemulate,butthatnonehavebeenablesuccessfullyto employ,letalonescaleglobally.ThefailureofcompetitorstomatchStarwood’ssuccessin thisareaisattributabletotheuniquemeansbywhichStarwoodbuilds,maintains,operates and growsits brands,andtothestepsStarwoodtakesto protectitsmethods.
144. Recently,Starwoodhasalsospentconsiderableresourcesrepositioning andstrengtheningtwootherluxurybrands,St.RegisandTheLuxuryCollection.Asaresult ofStarwood’scontinuingeffortsingrowingitsluxuryandlifestylebrandsandbridgingthe gapsbetweentheminordertobettercapturetheluxuryandlifestyletravelmarket,WHotels,
St.RegisandTheLuxuryCollectiontogetherhavebecomeamodelforbrandinganddevel- opingluxuryandlifestyle hotels.
145. AlthoughtheresultsofStarwood’seffortsmaybesuperficiallyvisible tohotelvisitors,thefailureofcompetitorstoreplicatetheStarwoodexperienceorsuccessin theirownpropertiesisattributabletoStarwood’sproprietarymethodsofbranddevelopment, marketingandtraining,whichmethodsStarwood hasalwaysmaintainedinstrictconfidence.
146. InFebruary2003,StarwoodhiredDefendantKleintobeVicePresi- dent,ChiefMarketingOfficerforWHotels.AtthetimeofKlein’shiring,theWbrandhad alreadybecomethemostsuccessfulandiconicnewhotelandlifestylebrandinhistory,with
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some20hotelsopenorunderconstruction.InMay2005,KleinwaspromotedbyStarwood tothepositionofPresident,WHotelsWorldwide,inconnectionwithwhichKleinsigneda new set of employment agreements, including a “NON-SOLICITATION,
CONFIDENTIALITYANDINTELLECTUALPROPERTYAGREEMENT.” Trueand completecopiesofKlein’sMay2005employmentagreementswithStarwoodareattached heretoas Exhibit_1.Overtime,KleinwasfurtherpromotedbyStarwoodtothepositionof
President,LuxuryBrandsGroup.AsPresidentofStarwood’sLuxuryBrandsGroup,Klein wasresponsiblenotonlyfortheWHotelgroup,butalsoforStarwood’sSt.RegisandThe
LuxuryCollectiongroups,andhadaccesstothemostconfidentialandcompetitivelysensitive
Starwoodluxuryandlifestyle brandsinformation.
147. DefendantLalvanibeganworkatStarwoodinSeptember2004asVice
PresidentforWDevelopment.Inthisrole,hewasexpectedtoleadtheexpansionofWHo- telsglobally,launchingtheWHotelsbrandinEurope,AfricaandtheMiddleEast.InOcto- ber2006,LalvaniwaspromotedtothepositionofSeniorVicePresident,WDevelopment—
Global,andsubsequentlywasfurtherpromotedtoSeniorVicePresidentresponsibleforthe developmentofallofStarwood’sluxuryandlifestylebrands,includingW,St.RegisandThe
LuxuryCollection.InOctober2006,Lalvanisignedanewsetofemploymentagreements, including a “NON-SOLICITATION, CONFIDENTIALITY AND INTELLECTUAL
PROPERTYAGREEMENT.” TrueandcompletecopiesofLalvani’sOctober2006em- ploymentagreementswithStarwoodareattachedheretoas Exhibit_2.AsSeniorVicePresi- dentofDevelopmentforStarwood’sLuxuryBrandsGroup,Lalvanihadaccesstothemost confidentialandcompetitivelysensitiveStarwoodluxuryandlifestyle brandsinformation.
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148. EachofthePersonsofInterestissubjecttosimilarconfidentiality agreementsinconnectionwiththeirrolesworkingwithintheLuxuryBrandsGroupatStar- wood,whichprovidedthat,uponterminationoftheiremploymentwithStarwood,theywould returnallStarwoodConfidential Informationandwould notmake or keepanycopies,andthat theywouldnotdiscloseanyStarwoodConfidentialInformationtoanyone.Theagreements explicitly providethateachemployee:
“acknowledgesthatduringthecourseofhis/heremploymentwith[Starwood],Em- ployeewillreceive,andwillhaveaccessto,‘ConfidentialInformation’...of[Star- wood]andthatsuchinformationisaspecial,valuableanduniqueassetbelongingto [Starwood]....All[Documents(broadlydefined)]whichfromtimetotimemaybe inEmployee’spossession...relating,directlyorindirectly,tothebusinessof[Star- wood]shallbeandremainthepropertyof[Starwood]andshallbedeliveredbyEm- ployeeto[Starwood]immediatelyuponrequest,andinanyeventpromptlyuponter- minationofEmployee’semployment,and Employeeshallnotmakeorkeepany copiesorextractsoftheDocuments. . ..Employeeshallnotdisclosetoanythird personanyinformationconcerningthebusinessof[Starwood],including,without limitation,anytradesecrets,customerlistsanddetailsofcontractswithorrequire- mentsofcustomers,theidentityofanyownerofamanagedhotel,informationrelat- ingtoanycurrent,pastorprospectivemanagementagreementorjointventure,in- formationpertainingtobusinessmethods,salesplans,designplansandstrategies, managementorganization,computersystemsandsoftware,operatingpoliciesor manuals,...financialrecordsorotherfinancial,commercial,businessortechnical information relatingto [Starwood] . . . .” (Emphasisadded.)
149. HiltonknewthatDefendantsKleinandLalvani,andeachofthePer- sonsofInterest,hadagreementswithStarwoodrequiringeachofthemtohonorandsafeguard
StarwoodConfidentialInformation.HiltoninducedKleinandLalvaniandthePersonsofIn- terestto breachtheiragreementswithStarwood.
150. Inaddition,eachsuchagreement(andeveryStarwoodemployee,in- cludingDefendantsKleinandLalvaniandeachofthePersonsofInterest)wasexplicitlysub- jectto“allStarwoodpolicies,proceduresanddirectivesastheycurrentlyexistorastheymay beadoptedorchangedfromtimetotime,”whichincludedStarwood’sCodeofBusinessCon-
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duct. Amongotherthings,Starwood’sCodeofBusinessConductprovides—underthe heading“Protect Confidential Information” — thateachemployee:
“mustprotectandkeepconfidentialallnon-publicinformationbelongingto,inthe possessionof,oraboutourpropertyowners,ourpropertyfranchisees,ourcustomers and us. . . . Youmust notshareconfidentialinformationwithfriends, relatives or non- associatesordiscussconfidentialmattersinpublicplaces,suchaselevators,airplanes or restaurants. . . . These obligationscontinueevenafteryouleavethe Company.”
151. EveryStarwoodemployeeisrequiredtocertifycompliancewiththe
CodeofBusinessConductannually.Indoingso,DefendantsKleinandLalvani,andeachof thePersons of Interest,alsoagreed notto:
“(a)takeforyourselfpersonallyanyopportunitythatbelongstousorisdiscovered throughtheuseofourpropertyorinformationoryourposition;(b)useourproperty, information or position for personal gain; or (c)competewithus.”
152. Furthermore,DefendantsKleinandLalvani,andeachofthePersonsof
Interest,alsoacknowledgedthat“[a]nythingyoucreateorconceiveasaCompanyemployee orcontractorareworksmade for hire . . . .”
153. TheconfidentialityprovisionswithwhichStarwoodrequiresallem- ployees—includingDefendantsKleinandLalvani,andeachofthePersonsofInterest—to complyareessentialtomaintainingStarwood’sdistinctiveandcompetitivepositioninthe hotelindustry.
154. Theexplicitconfidentialityprovisionsreflectedintheindividualem- ploymentagreementsandinStarwood’s Code of Business Conductare bolsteredbyother pre- cautionstakenwithinStarwoodtoprotectitsconfidentialandproprietaryinformation.Data andothermaterialsaremaintainedonsecureserversandharddrives,forwhichaccessislim- itedtoparticulargroupsofemployeeswithinthecompany.Remoteaccessispermittedonly uponpropercertificationofanemployee’sStarwood-issuedcomputerthroughapassword-
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protectedremoteaccesssystem. EmployeesmaynotaccessStarwood’ssystemsthrough computersthatarenotproperlycertificatedbyStarwood’sinformationtechnologystaff.Nor areemployeespermittedtoforwardconfidentialmaterialstooutsidesystems,includingtheir own homes or personale-mailaccounts. In thisway,amongothers,Starwoodseeksto protect the propriety ofitsconfidentialinformationandtoensurethatitssecrets remainsecret.
155. DefendantsKleinandLalvani,andeachofthePersonsofInterest, flauntednotonlytheirfiduciaryandcontractualobligationstoStarwood,butStarwoodcom- panypolicyandgoodfaith,byorganizingandeffectingawholesaledownloadofStarwood
ConfidentialInformationforusebytheirnewemployer,DefendantHilton.Theydidthisin concertwithotherssurreptitiouslywhileundercontracttoStarwoodwithoutStarwood’s knowledgeorconsent.LalvaniandManraofurtherbreachedtheirfiduciaryandcontractual obligationstoStarwoodbyactingascorporatespieswhileemployedatStarwoodbyprovid- ing high-levelHiltonexecutiveswithStarwood ConfidentialInformation.
Hilton’sRecruitment ofKlein andKlein’s Breach ofHisObligations to Starwood
156. In2007,theBlackstoneprivateequitygroupacquiredHiltonforover
$20billioninatop-of-the-market,highlyleveragedtransaction.Asreportedinthehospitality press,“WithBlackstonehavingpaidasuper-premiumpriceforHilton,[CEOChristopher]
Nassettawill be underintense pressureto deliverimmediate results.”
157. Hiltonbeganactivelytoseekwaystoexpandandrefocusitsluxury brands,andtocompetemoredirectlywithWandStarwood’sluxurybrands.Becauseofits highlyleveragedfinancialcondition,asfinancialmarketsdeteriorated,timewasofthees- sencetoHiltontoenterthelifestylebrandsegmentandtorefocus,launchandexpanditslux- urybrands.Asreportedinthehospitalitypress,ChristopherNassetta,Hilton’sPresidentand
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ChiefExecutiveOfficer,“wasverycommittedtothehorizonline”andHilton’sbranddevel- opmentteamworkedin“acompressedtime frame.”
158. InFebruary2008,NassettabeganrecruitingDefendantKleintojoin
Hilton. AlmostimmediatelyafterbeginningdiscussionswithNassetta,Kleinsecretlymis- usedhispositionasPresidentofStarwood’sLuxuryBrandsGrouptorequestStarwoodCon- fidentialInformationfromStarwoodemployees,whichKleinthenforwardedtoapersonale- mailaccount.OnceKleinwasassignedaHiltone-mailaccount,hethenforwardedtheStar- woodmaterials he hadsecretedfromhispersonale-mailaccounttohisHiltone-mailaccount.
Inaddition,KleinbroughtapersonallaptopcomputerintoStarwood’sofficesandhadit loadedwithStarwoodConfidentialInformation.Uponinformationandbelief,Kleintookstill moreStarwood Confidential Informationhomewith himinthe form of hard-copydocuments.
159. TheinformationtakenbyKleinpriortohisdepartureforHiltonin- cluded,amongotherthings,suchinformationasthetermsbeingofferedtohotelownerson
Starwooddeals,detailedinformationrelatingtobrandperformancemetrics,detailedinforma- tionaboutdealsintheLuxuryBrandsGroup“pipeline”anddetailedpresentationsoutlining
Starwood’sbrandingstrategy.Muchofthisinformationwouldhaveservednobusinesspur- poseforanyprojectKleinwasthendirectlyinvolvedinatStarwood,butwouldbeimmensely usefultoHilton,oranyoneelselookingtobuildorstrengthenbrandscapableofcompeting withStarwood’sluxuryandlifestylebrands.NotalloftheStarwoodConfidentialInforma- tionstolenbyKleinandLalvani for Hilton’s benefit has beenreturned.
160. Suchforwardingofconfidentialinformationtonon-Starwoodservers wasforbiddenbyStarwoodpoliciesdesignedtopreservetheconfidentialityofitsinforma- tion.StarwoodpolicyrequiredthatanyaccesstoStarwoodmaterialsfromoutsideStarwood
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premisesbeaccomplishedthroughuseofstrictlycontrolled“virtualprivatenetwork”(or
“VPN”)remoteaccessprocedures. Throughuseofthissecureremoteaccessprocedure,
StarwoodemployeesareabletoworkremotelyonanydocumentsontheStarwoodsystem thattheyareauthorizedandhaveabusinessneedtoaccess. Undernocircumstanceswas
StarwoodConfidentialInformationtobeforwardedtoemployees’personale-mailaccounts, andtheavailabilityofStarwood’sVPNobviatedanylegitimate needto do so.
161. InadditiontoforwardingStarwoodConfidentialInformationtohisper- sonale-mailaccount,ortakingitwith himonapersonallaptopcomputer,whilehewasunder agreementtojoinHiltonandbeforeheleftStarwood,Kleinalsoaskedhispersonalassistant andotherswhowereunawarethatKleinsoonwouldbeleavingStarwoodtoworkforacom- petitortoundertakeamassive(andexpensive)projecttodigitallyarchivethousandsof“tear sheet”imagescollectedandcompiledintomeaningfulcollectionsoveryears.Thesecompila- tionswereusedinthebrandinganddesignworkcompletedfortheWandStarwood’sother luxurybrands,andwerethepropertyofStarwood.The“tearsheet”compilationswereyears inthemakingandhelpedenableKleinandotherStarwoodemployeestobringStarwood’s luxuryandlifestylebrandstolife.After havingtheStarwoodtearsheetcompilationsdigitally imaged,Kleinarrangedfortheimagestobesentto hispersonale-mailaccount,wherehewas abletoincludethemamongthematerialshebroughttoHiltontoassistHiltonindeveloping newHilton brandidentities,leveragingthetechniquesandtoolstaken fromStarwood.
162. OnMay16,2008,unbeknownsttoStarwood,Kleinsignedanem- ploymentagreementwithHilton(Klein’s“Hilton-KleinEmploymentAgreement”),andfaxed ittoHiltonfromStarwood’sNewYorkCityoffices.KleindidnotinformStarwoodthathe hadsignedanemploymentagreementwitha directcompetitor,Hilton.
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163. ThreedaysafterthedateofhissignatureonhisHilton-KleinEmploy- mentAgreement,onMay19,2008,KleininformedseniorexecutivesatStarwoodthathewas resigningfromthecompany.KleinstilldidnotinformStarwoodthathealreadyhadasigned employmentagreementwithoneofStarwood’sdirectcompetitors,Hilton. NordidKlein ceaserequestingStarwoodInformationfromhisstaff,orforwardingsuchmaterialtohisper- sonale-mailaccount,inpreparationforhisdeparturetoHilton.Instead,Kleincontinuedto stealStarwoodConfidentialInformation—includingupdateddesignerlists,copiesofStar- wood’sGlobalArchitectureandDesignReviewProcess,TheLuxuryCollection’s“Brand
Book”andotherproprietarymaterialsthatwerecloselyguardedbyStarwood—thatwould beusefultoHiltonindevelopingitsnewDenizenbrand,revampingitsexistingluxurybrands andcompetingwithStarwood.
164. WiththesignedHilton-KleinEmploymentAgreementinhand,andde- spitehavingalreadyimproperlyensuredcontinuingaccesstoStarwoodInformation,overthe nexttendaysKlein (i)beganshippingboxestoHilton,and(ii)negotiatedthetermsofasepa- rationagreementwithStarwood.
165. OnMay29,2008,Kleinshippedthreeboxesweighing150poundsdi- rectlytoHilton’sexecutive officesin BeverlyHills, California.
166. UnawarethatKleinhadalreadysignedanemploymentagreementwith
Hiltontwoweeksearlier,orthathewasalreadytakingalargeamountofStarwoodConfiden- tialInformationhomeandsendingmaterialstoHilton,onMay30,2008,Starwoodagreed withKleinonthetermsofaseparationagreement. AtrueandcompletecopyofKlein’s
SeparationAgreementisattachedheretoas Exhibit_3.Klein’sseparationagreementdidnot containacovenantagainstcompetition,anddidnotprohibitKleinfromgoingtoworkfora
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competitor.Itdid,however,prohibitKleinfromsolicitinganyStarwoodmanagement-level employeestojoinhim,andexplicitlyprohibitedKleinfromusingordisclosinganyStarwood confidentialinformation,includingtradesecretinformation,thatheobtainedduringhisem- ploymentwithStarwood.InhisseparationagreementKlein“acknowledgesthathehashad accessto[Starwood]ConfidentialInformation”andhe“agreesnottodisclose,communicate ordivulgeto,oruseforthedirectorindirectbenefitof,anyperson(including[Klein]),firm, associationorotherentity(otherthan[Starwood]oritsaffiliates)anyConfidentialInforma- tion.”
167. ForthepurposeoffraudulentlyinducingStarwoodtopayhimasub- stantialcashseverance(over$600,000),andacceleratingthevestingofcertainequity,among otherbenefits,KleinmadeanumberofknowinglyfalserepresentationstoStarwood,among whichwerehisrepresentationthathehadreturnedandwasnotretaininganyStarwoodconfi- dentialmaterials. In hisseparationagreementKlein falselystates:
“[Klein]herebyrepresentsandagreesthatonorbefore[May30,2008]:(i)[Klein] hasreturnedorwillreturnto[Starwood],andhasnotretainedorwillnotretainorigi- nalsoranycopiesofalldocuments,recordsormaterialsofanykind,whetherwritten orelectronicallycreatedorstored,whichcontain,relatetoorrefertoanyConfiden- tialInformation(‘ConfidentialMaterials’);and(ii)[Klein]hasnotdisclosedandwill notdiscloseanyConfidentialInformationorConfidentialMaterialstoanypersonor entitywithouttheexpresswrittenauthorizationofanauthorizedofficerof[Star- wood].”
TheserepresentationsbyKleinweremateriallyfalseandknownbyhimtobemateriallyfalse whenmade.Klein knowinglymadethesematerially falsestatementstoStarwoodforthepur- poseofdefraudingStarwoodintopayingKleinalargeseverancepaymenttowhichKlein,as a result of hiswrongfulconduct,otherwisewas notentitled.
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168. Inconsiderationforhiscontractualundertakingsintheseparation agreement,includinghisseparateagreementthathewouldnotuseordiscloseanyStarwood
Information,Kleinwaspaidasubstantialseverancethatheobtained byintentionallymislead- ingStarwoodastothenatureofhiscommitmenttoacompetitorandastohisintentionsto complywithitsnon-disclosureprovisions,andtowhichhewasnotthereforeentitled.Klein improperlyusedtheinformationthathestolefromStarwoodforthebenefitofHilton,and
Hilton has been unjustlyenrichedthereby.
169. AfterheleftStarwoodandtookupemploymentatHilton,byletter fromStarwood datedAugust 26, 2008, Kleinwas reminded ofhis
“obligationsnottodiscloseoruse[Starwood’s]ConfidentialInformation(asdefined in[Klein’sSeparation]Agreement).Youremainresponsibleforsafeguardingsuch ConfidentialInformationandforanydamagesthatmayresultfromyourpossession and/or use of suchinformation.” (Exhibit 4)
170. KleinviolatedhiscontractualandfiduciaryobligationstoStarwood.
KleindidnotsafeguardtheStarwoodConfidentialInformationofwhichhewasaware.Klein disclosedand usedStarwood Confidential Information for thebenefit of Hilton.
Hilton’sRecruitment of Lalvani andLalvani’s Breach ofHisObligations toStarwood
171. ParalleltoNassetta’s recruitment of Klein,inMarch 2008 StevenGold- man,PresidentofGlobalDevelopment&RealEstateatHilton,beganrecruitingLalvanito joinHilton.GoldmanwroteLalvani:“you’rethefirstguyonmylist.”Goldmaninformed
Lalvani:“Worstthingthathappensistheyfindoutyouaretalkingtomeandpayyouashit load ofmoneytostayandyou oweme drinks for life.”
172. LalvanipursuedGoldman’soverturesand,onoraboutMarch9,2008, incontraventionofhisfiduciaryandcontractualobligationstoStarwood,Lalvaniwroteto
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Goldmanfollowingupontheircommunications:“OtherideaisbringoverthecoreWteam whichhascreatedanenormousamountofvalueandisveryloyaltometobuildanewbrand foryou guys.Notsureyourappetite butI know I couldmakethat happenaswell.”
173. Asitturnsout,HiltonhadabigappetiteforStarwoodknow-how.
MuchlikeKleindidfollowinghisconversationswithNassetta,followinghisdiscussionswith
GoldmanandwhilehewasstillaStarwoodemployee,Lalvanibegangatheringalargevol- ume of confidentialStarwoodinformation,which heshippedfromhis officetohis home.
174. WhilestillaStarwoodemployee,Lalvanibeganactingasacorporate spyforHilton,feedingGoldmanwithcompetitivelysensitiveconfidentialinformationrelated toStarwood’sbusinessanddevelopmentopportunities.OnoraboutMay15,2008,whilestill employedbyStarwood,LalvanibeganprovidingGoldmanwithrealtimeinformationregard- ingStarwooddevelopmentopportunities.LalvaniforwardedtoGoldmanane-mailreporthe hadwrittentoSimonTurner,Starwood’sPresidentofGlobalDevelopment,reportingona recentmeetingwithahoteldeveloperconcerningpotentialStarwooddeals.Aftersendinghis reporttoTurner,Lalvaniforwardedthereportfirsttohispersonale-mailaccountandthento
GoldmanatHilton,writing:“Here’smy notetoSimon onmymeetingthismorning . . . . Will callyouina few.”
175. OnoraboutMay28,2008,Lalvani,inhisroleasacorporatespy,for- wardedfirsttohispersonale-mail,andthenagaintoGoldmanatHilton,aseriesofcorre- spondencebetweenStarwood’sVicePresidentofDevelopmentfortheAsiaPacificregion, andadeveloperinterestedinopeningaWbrandedhotelinThailand.Inhise-mailtoGold- man,LalvanipresentedtheStarwoodopportunityasonethatHiltonshouldseize,writing:
“Here’saninterestingone....Ihavegoodconnectionswiththeowner.Letsdiscussproto-
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colduringmytransitionondealslikethissowedon’tmissthembutalsodealingwiththefact we don’t havealifestyle offeringyet.Thisis goingto be fun!!”
176. AfterreceivingLalvani’se-mailcorrespondence,Goldmandidnotask
LalvanitoceasesendinghimStarwoodinformationanddidnotreprimandLalvaniforsend- ingtheStarwoodinformation.GoldmantooknostepstodiscourageLalvanitostopfeeding himinformationrelatedtoStarwood’sbusinessanddevelopmentopportunities. Instead,
GoldmanencouragedLalvanitobreachhisnon-solicitationagreementwithStarwood,and respondedtothee-mailbyinquiringwhethertheremightbeaplacewithinHiltonforaStar- woodemployeementionedinLalvani’scorrespondence,writing:“Whatdoyouthinkabout putting [him]intheMiddle [E]astto run developmentthere?”
177. OnMay29,2008,LalvaniinformedStarwoodthathewasresigning.
Onthemorningofthesameday,LalvaniandKochubaexchangede-mailsinwhichKochuba referredtothedeparturesofKlein,LalvaniandhimselftoHiltonstating:“Likeatripleplay!
Congratulations!”Lalvaniresponded:“Absolutely....It’sbeenquitearide!Seeyouon theWest Coast.”
178. StarwoodhadnoideathatLalvanihadstolenStarwoodInformation andwasworkinginconcertwithotherswhowerealsolootingStarwood’sconfidentialfiles.
StarwoodhadnoideathatLalvanihadbecomeacorporatespywhowassendingGoldman real-timeinformationrelatedtoStarwoodbusinessdeals.BecauseLalvani’snoticeofresig- nationwasunexpected,StarwoodaskedLalvanitoworkanothertwoweeks,untilJune14,so thattherecouldbeanorderlytransitionofhisworktoothers.StarwoodtrustedLalvanitobe honestandtohonorhisemploymentcommitments.Starwood’strustwasmisplacedasLal-
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vaniusedtheadditionaltimeandcontinuedaccesstofurtherlootStarwood’sconfidential files for the benefitofHilton.
179. OnJune2,2008,thefirstbusinessdayfollowingKlein’sresignation fromStarwoodandjusttwodaysafterLalvanigavenoticeofhisresignation,Hiltonan- nouncedthatKleinandLalvaniwouldbejoiningHilton,KleinasHilton’sGlobalHeadof
Luxury&LifestyleBrandsandLalvaniasHilton’sGlobalHeadofLuxury&LifestyleBrand
Development.
180. OnJune14,2008,Lalvani’semploymentwithStarwoodended. He immediately beganworkasHilton’sGlobalHead of Luxury&Lifestyle BrandDevelopment.
181. UnbeknownsttoStarwoodandwithoutStarwood’sconsent,buttrueto hispromisetoHiltontohelpre-createStarwood’sbrandinganddevelopmentgroupatHilton, betweenMarch9,2008andJune14,2008,Lalvanisecretlydownloadedfilescontaining
StarwoodConfidentialInformationtoapersonalUSBdriveandforwardedStarwoodConfi- dentialInformationtohispersonale-mailaddress,andtookthematerialswithhimforusein developingandmarketingbothHilton’snewDenizenbrandanditsluxurybrands.Themate- rialsstolenbyLalvaniareofthemostconfidentialandsensitivenature,andincludedetailed analysesofnegotiatingstrategiesdevelopedthroughyearsofexperienceandinconsultation withStarwoodpaidconsultants,alongwithProjectApprovalRequests(or“PARs”)setting forthindetailtheactualtermsofrecentlynegotiateddealswithkeypropertyowners,proprie- taryandclosely-heldcontactlistsforpropertyownersandfranchisees,andDealLogReports identifyingindetailthecontactinformationanddealnegotiationstatusofeverythen-current
Starwoodrealestateopportunity.Lalvani’stheftofthesematerialsisinclearcontravention ofhisfiduciaryandcontractualobligationstoStarwood.SincejoiningHilton,Lalvanihas
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beenheldoutbyHiltonandKleinastheindividual“whodoesdevelopmentonthe[Hilton] team.”KleinhassaidthatdevelopingDenizenin“acompressedtimeframe”wasa“Hercu- lean”task.Infact,inthedevelopmentofDenizen,Lalvaniimproperlyusedtheinformation thathestolefromStarwoodforthebenefitofHilton,andHiltonhasbeenunjustlyenriched thereby.
TheUnraveling ofHilton’s WrongfulConduct
182. ThePersonsofInterestwererecruitedbyHilton,Kleinand/orLalvani tojoinHilton.OnoraboutMay20,2008,ChristopherKochuba,VicePresidentofDevelop- mentPlanning&DesignManagementofStarwood’sLuxuryBrandsGroupannouncedhis resignationfromStarwood.Inane-mailthesamedayrespondingtoaninquiryifheknewof
Kochubaleaving,Kleinstated:“Ofcoursewe knew.”
183. OtherStarwoodemployeeswererecruitedbyHilton,Kleinand/orLal- vanitoleaveStarwoodtojoinHilton, butthey declined offerstojoinHilton.
184. BelievingKleintohavebreachedthenon-solicitationprovisionsofhis contractwithStarwood,butunawareofanyothermisconductbyKlein,Lalvaniorotherfor- meremployees,inNovember2008StarwoodinitiatedanarbitrationagainstKlein.Theonly issueraisedinthearbitrationwaswhetherKleinhadviolatedhiscontractnottosolicitStar- woodmanagement-levelemployeestojoinhimatHilton. Anarbitratorhasyettobeap- pointedand no proceedings have occurredinthearbitration.
185. InNovember2008,stillunawareofthewholesaletheftofStarwood
ConfidentialInformationbyKlein,Lalvani,andothersworkinginconcertwiththem,Star- woodsentletterstoKleinandHilton,requestingthattheypreserveallrelevantdocumentsin
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connectionwiththependingarbitration. TrueandcompletecopiesofStarwood’snon- spoliationlettersareattached heretoas Exhibits_5 and 6.
186. IttookHiltonalmostthreemonthstorespondtoStarwood’snon- spoliationletter.ByletterdatedFebruary5,2009from RichardM.Lucas,Hilton’sExecutive
VicePresident,GeneralCounselandCorporateSecretary,toKennethS.Siegel,Starwood’s
ChiefAdministrativeOfficerandGeneralCounsel,HiltondeliveredtoStarwoodeightlarge boxescontaining,amongotherthings,highlyconfidentialStarwoodcomputerandpaperre- cords.Atrueandcompletecopy of Hilton’sletterisattachedheretoas Exhibit 7.
187. Hilton’sFebruary 5,2009letterstatesinpart:
“[Y]ourequestedthatHiltonHotelsCorp.preserveallpotentiallyresponsivedocu- mentsandinformationinourpossession,custodyandcontrol.Intheprocessofim- plementingalitigationholdofsuchmaterials,welearnedthatRoss[Klein]hadcer- tainmaterialsthathedevelopedorobtainedwhileworkingforStarwood. . . .Based onacursoryreviewofthesedocumentsbycounsel,itappearsthatatleastsomeof thematerialsmightbethetypethatRoss’sseparationagreementwithStarwoodre- quireshimtoreturntoStarwood.WiththeconcurrenceofRossandhisattorneys,we are returningthemtoyou.”
TheHiltonletterwent on tostate:
“AfterlearningaboutthematerialsthatRoss[Klein]had,Hilton’sLegalDepart- ment . . .alsoinquiredwhetherotherHiltonemployeeswhoformerlyworkedfor Starwoodhadsimilarmaterials,andwedeterminedthatsomeofthemalsobroughtto Hiltondocumentsormaterialsthattheydevelopedoracquiredwhiletheyworkedfor Starwood.”
TheHiltonletterconcludedbystating:
“Enclosedwiththisletterarethematerialswehavecollected,alongwithsomeaddi- tionalmaterialsthatcertain ofthe formerStarwoodemployees hadat home.”
188. Klein’scounsel,RonaldNessimofBirdMarella,respondedtoStar- wood’snon-spoliationonFebruary9,2009,justdaysafterHiltonresponded. Atrueand completecopy of Nessim’sletterisattached heretoas Exhibit 8.
189. Nessim’sFebruary9, 2009 letterstatesin part:
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“Inconnectionwiththelitigation holdthatHiltonimplementedinconnectionwiththe pendingarbitrationproceedingagainstRossKlein,weandHiltonbecameawarethat Ross[Klein]hadcertainStarwoodmaterialsinhispossession....Atleastsomeof thesematerialsmightbethetypethatRoss’SeparationAgreementwithStarwoodre- quires himto returntoStarwood,andweagreedwithHiltonthatinabundance ofcau- tion,thesedocumentsshouldbereturned...aswellasotherStarwooddocuments possessedeitheratHiltonorathomebyotherStarwoodformeremployeesnowat Hilton . . . .”
Nessim’sletterwentontostatethatBirdMarellawasnowrepresentingthe other formerStar- woodemployeeswhowere found in possession of Starwoodmaterials.
190. TheletterstoStarwood fromHiltonandNessimwere nottruthful.Nei- therletterdisclosedthatearlierinNovember2008(beforeStarwood’snon-spoliationletter)
Hilton’sPresidentandChiefExecutiveOfficer,Nassetta,hadbeeninformedbyaHiltonex- ecutivethatKleinhadbroughttoHiltonalargevolumeofStarwoodConfidentialInformation thathewasusingatHilton“todevelopandpromoteHilton’sluxuryandlifestylebrands.”
NeitherletterdisclosedthatitsauthorwasawarethatHiltonpossessedStarwoodConfidential
InformationandhaddistributeditwithinHilton’sluxuryandlifestyle brandexecutives.
191. TheongoingeffortbyStarwoodtodeterminejustwhathadbeen downloadedfromStarwood’scomputersystemshastakenconsiderabletimeandresources; thefullextentofhowtheinformationmayhavebeenusedormanipulatedbyHiltonandthe individualdefendantsisnotyetfullyknown,butwillbecomefullyknownthroughdiscovery inthisaction.WhatisalreadyknownisthatonthecomputerdrivesreturnedtoStarwoodby
Hiltonareover100,000filesdownloadedfromStarwoodcomputers—amassiveamountof information.VirtuallyeverycategoryofdocumentsandinformationdefinedasConfidential
InformationintheStarwoodemploymentagreementsofKlein,LalvaniandtheotherStar-
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woodemployeesrecruitedtojoinHiltoniscontainedinthematerialsfoundatHiltonandin the homes of formerStarwoodemployees nowworkinginmanagement for Hilton.
192. AmongthemanymaterialstakentoHiltonbyKlein,Lalvaniandthe otherinterested persons recruitedbythemare:
(a) StrategicPlans(or“StratPlans”),settingforthindetailStarwood’sforward- lookingstrategiesandareasofstrategicopportunitiesfortheW,St.RegisandThe LuxuryCollectionbrandsoutthrough2011,explicitlylabeled“StrictlyConfiden- tial.”AccesstosuchstrategicplanswaslimitedtoaselectgroupofseniorStar- woodexecutives,and,ifnotkeptconfidential,wouldprovideacompetitorsuchas HiltonwiththemeanstoexploitStarwood’sopportunitiesandcompetitiveadvan- tages. (b) Detailed“gap”analysesanalyzingthemarketandotherareasnotbeingmetby Starwood’sluxurybrandsandwaysinwhichStarwoodwouldseektofillthose gapsandstrengtheneachofitsluxurybrands.Suchanalysiswasmaintainedin strictconfidencewithinaselectgroupofStarwoodexecutives,andwouldprovide acompetitorsuchasHiltonwithvaluablecompetitiveadvantagesindeveloping and re-positioningits ownluxury brands. (c) A“DevelopmentToolkit”forresidentialdevelopments(labeled,likemanyofthe materials,“Proprietary&Confidential”),providingstep-by-stepinstructionsfor launchinga brandedresidential development. (d) “BrandinaBox”modulesfortheWbrand,providingdetailed,step-by-stepopera- tionalinstructionsonhowtotakeabrandfromconceptiontohotelopening.The informationcontainedinthemoduleswouldhelpacompetitorsuchasHilton shavemonths,ifnotyears,offoflaunchinganewcompetitivehotelbrand,oron instituting operationalimprovements for itsexisting brands. (e) LuxuryBrandsGroup“BrandBibles,”providingafullanddetailedguidetothe brandsthatcanserveasashortcuttodevelopinganewbrand.Such“BrandBi- bles”werecloselyheld,withaccessprovidedonlytonecessaryemployeesandse- lect owners or developerssubjecttoastrictNon-DisclosureAgreement. (f) DetailedmarketingplansspecifictoStarwood’sbrandsplanssettingforthspecific marketing details. (g) Comprehensivebrandimmersionpresentationsandbrandguidelines,bothopera- tionalanddesign-oriented,includingthecompletesetofproprietarydesigngenres andsignatureelementsforW,TheLuxuryCollectionandSt.Regishotels,thatof- feramaptorecreatingeachofStarwood’sluxurybrands.Suchmaterialswould beparticularlyusefultoacompetitorsuchasHiltonthatisnotknownasbeinga design-drivencompanyorpossessinglifestylebrands. AswithotherStarwood materialsthatweremadeavailabletoassistownersinopeningStarwood-branded properties,suchmaterialsweresubjecttostrictNon-DisclosureAgreements.
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(h) SpecificplansoutliningStarwood’sconfidentialplanstointroducea“restro- lounge”conceptinitsWHotels.SuchaplanhadbeenindevelopmentatStar- woodforsome18months,andrepresentedauniquesolutiontoacommonbou- tique hotel problem: howtoincorporatediningintolobby barspaces.The“restro- lounge”conceptreflectedintheStarwoodConfidentialInformation—butkept confidentialbeforestolenbytheDefendants—wastoutedbyKleininhispublic statements describingHilton’s newDenizen brand. (i) Proprietarydemographic,psychographicandotherresearchcommissionedby StarwoodfromthirdpartyprofessionalsandusedbyStarwoodtohelpdevelop branding,marketing, developmentand operationalstrategy. (j) Detailed,step-by-stepproprietarypersonneltrainingmaterialsdevelopedandre- finedbyStarwood overanumberofyearsandatsubstantialcost.Starwood’spro- prietarytrainingsystemforitsWHotels,thedetailedmethodsofwhichwerepre- viouslyunknownoutsideofStarwood,wasrecognizedintheindustryasunique andbasedonitsowninternalresearchanddevelopmentefforts.Accesstothese materialswouldpermitcompetitorssuchasHiltontosubstantiallyandquickly improveitstrainingmethodsandcompetewithinakeyareaofhotelguestconcern atStarwood’sexpense. (k) Dealtermnegotiationworksheetsandnoteson“WDevelopmentstrategyfor2007 andbeyond,”settingforthindetailStarwood’snegotiationstrategieswithOwners rankedby“importancetoStarwood”fornumerousdealterms,including:Contract Terms,PlacementPrograms,PerformanceTests,TerminationonSale,Residential Fees,TechnicalServicesFees,FinancingRelatedProvisions,InvestmentRe- quirements,andLegalIssues.Thesematerialswereclearlyviewedashavingcur- rentcompetitivevaluetoLalvaniandHilton,andweredownloadedbyLalvanito aUSBdriveand,uponinformationandbelief,accessedbyLalvaniandHilton priortotheir returntoStarwood. (l) Site-specific“ProjectApproval Requests” (“PARs”)andletters of intent,whichset outindetailtheactualcosts,feestructures,terminationprovisions,radiusrestric- tionsandotherhighlysensitiveandcompetitivelyusefulinformation.ThePARs stolen byLalvanipertaintoStarwoodpropertiesandtargetedpropertiesaroundthe world,includingmanyofthesamemarketsforwhichHiltonhasjustrecentlyan- nouncedanintentionto open new properties. (m) “Property ImprovementPlans”(“PIPs”)forhowtocreate“theUltimateWExperi- ence”inconversionproperties,providingstep-by-stepdetailsforhowtoconverta hotelpropertytoaWbrandedhotel.AsKleinandLalvaniwouldappreciate,the PropertyImprovementPlanwouldbeimmenselyusefultoacompetitorsuchas HiltonthathasstateditsintentiontolaunchitsnewDenizenbrandthroughcon- versionofexistingproperties.Indeed,amongthedocumentsreturnedbyHiltonis adraft“PropertyImprovementandReprogrammingPlan”proposingtheconver- sionofaNewOrleanspropertytoa“NewHiltonLifestyleBrand.”TheProposal, datedSeptember3,2008,wasauthoredbyformerStarwoodemployeeChristopher Kochuba,andcopiestheformat,textandcontentofthemisappropriatedStarwood PropertyImprovementPlans.
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(n) DetailedDealLogReports,(labeledConfidentialandProprietary),whichcontain indetailthecontactinformationanddealnegotiationstatusofeveryStarwoodreal estate opportunity. (o) CompletecontactlistsforallLuxuryBrandsGroupowners,developersandde- signers,maintainednotbytheindividualdefendantsbutconfidentiallybyStar- woodonacentralizedbasis.Lalvanirequestedelectronicversionsoftheselists priortohisdeparture,andsubsequentlydownloadedthem,withothermaterialsto aUSB driveandtooktheStarwood-ownedcontactswith himtoHilton. (p) FinancialReportscontainingclosely-held,property-specificfinancialresults. Thesematerialsprovideahotelbyhotelindicationofhowthebrandisperforming and how onecouldcompete. (q) BrandStandardscontainingeveryelementabrandedpropertyisrequiredtopos- sessorimplement,andthepriceassociatedwitheachelement. Thesematerials provideahandbooktodevelopingeveryspaceinahotelandnormallytakeyears to develop. (r) Starwood’sGuestSatisfactionandMeetingPlannerSatisfactionReportscontain- ingconfidentialdataindicatingthestrengthsandweaknessesofparticularproper- ties.Thisinformationis highly usefultocompetitors.
193. AsKleinandLalvaniwerewellaware,theinformationinthehighly- proprietaryandconfidentialPARs,negotiationworksheets,DealLogreportsandinthe closely-heldcontactlistscouldbeusedbyHiltontoundercutorexploitStarwood’stermsand poachdealsorundermineStarwood’sexistingorfuturerelationshipswithpropertyowners.
Infact,representativesofHilton—includingNassetta,Goldman,KleinandLalvani—al- readyhavebeenapproachingownersandfranchiseesofpropertiesundercontractwithStar- woodandareusingStarwood’splaybookincompetingforthoseproperties.Hiltonhasal- readyannouncedthatatleastthreeformerStarwoodpropertiesarebeingre-brandedasHilton hotels.
194. Recognizingthehighlysensitive,proprietaryandcompetitivelyadvan- tageousnatureofmuchofthematerialsgeneratedinthecourseofanemployee’swork,in- cludingthetypesofmaterialsdescribedabove,Starwoodrequireseachemployeetoacknowl- edge,uponemployment[andyearlythereafter],thattheywill“protectandkeepconfidential
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allnon-publicinformationbelongingto,inthepossessionof,orabout...[Starwood]”and willnotsharesuchinformation“evenafter[they]leavetheCompany.”Assetforthabove, eachoftheindividualdefendantsagreedtokeepStarwoodInformationconfidentialwhen theysignedtheiremploymentagreements.
195. Strictconfidentialitywasalsorequiredofanypropertyownersorpo- tentialpropertyownerswhowerepermittedaccesstotheStarwoodConfidentialInformation.
Forexample,copiesofthe“WInteriorGuidelines”manualtakentoHilton—whichprovides detailedguidelinestothedesign,constructionandoperationalelementsrequiredforaprop- ertyto receivetheWimprimatur, provides on itscover,thatthemanual
“AND ALL MATERIALS, PROCEDURES AND SYSTEMS HEREIN CONTAINEDORDEPICTEDHAVEBEENDEVELOPEDBYANDARETHE SOLEANDEXCLUSIVEPROPERTYOF[STARWOOD]...THECONTENTS CONTAINPROPRIETARYTRADESECRETSTHATARETHEPRIVATEAND CONFIDENTIAL PROPERTY OF STARWOOD OR ITS AFFILIATES. UNAUTHORIZED USE, DISCLOSURE, OR REPRODUCTION OF ANY MATERIALCONTAINEDINTHISMANUALISEXPRESSLYPROHIBITED. THEWINTERIORGUIDELINESARETOBERETURNEDIMMEDIATELY UPONTHETERMINATIONOFANYRELATIONSHIPORAGREEMENT GIVING USER AUTHORIZATION TO POSSESS OR USE SUCH INFORMATIONORMATERIALS.... ANYTHREATENEDBREACHOR UNAUTHORIZEDORILLEGALUSESHALLSUBJECTTHEUSERTOALL REMEDIES, BOTHLEGALANDEQUITABLE,AVAILABLETOSTARWOOD.”
196. Klein,Lalvani,thePersonsofInterest,andothersworkinginconcert withthembreachedtheirobligationstoStarwoodbyobtainingStarwoodConfidentialInfor- mationpriorto,orinsomeinstances,after,theirdeparturefromStarwoodandtakingthatin- formationforuseatandforthebenefitofHilton.TheywrongfullyusedStarwoodConfiden- tial Information forthe benefit of HiltonandHilton has beenunjustlyenrichedthereby.
197. ThehighlyconfidentialandproprietaryStarwoodConfidentialInfor- mationanddocumentationthatHiltonhasinitspossessionprovidesastep-by-stepplaybook forcreatingandexpandinglifestyleorluxurybrands;implementingtherelateddevelopment
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strategy;marketingthebrand;andputtingittoworkontheground.Starwoodexpendedvast resourcestodevelopthisvirtualplaybookoverthecourseofmanyyears.ItstheftbyKlein,
LalvaniandothersworkinginconcertwiththemwholeftStarwoodforHilton—anditsob- vioususebyHiltoninthedevelopmentandlaunchofanewhotelbrandandintherecentre- positioningofHilton’sluxuryandlifestyleportfolio—istheclearestcaseimaginableofcor- porateespionage,theft of tradesecrets, unfaircompetitionandcomputer fraud.
HiltonUsesStarwoodConfidentialInformationtoDevelopNewBrands and to RepositionAll ofHilton’s Existing Luxury and Lifestyle Brands
198. HiltonandtheindividualdefendantsonHilton’sbehalfdidnotmerely taketheStarwoodConfidentialInformationandputitaside.AlthoughthefullextentofHil- ton’suseofStarwood’smaterialscannotbedeterminedwithoutfullandcompletediscovery, itisreadilyapparentthatHilton,Klein,Lalvaniandothersworkinginconcertwiththem, have beensteadilyminingtheStarwood Confidential Information.
199. Forexample,nosoonerhadHilton’sletterandtheeightboxesofStar- wood ConfidentialInformationarrived,when, on February 9, 2009, Hilton publiclyconfirmed that—withKleinandLalvaniatthehelm—HiltonwouldlaunchonMarch10,2009(ata pressconferenceassociatedwiththeInternationalHotelInvestmentForum(the“IHIF”)in
Berlin,Germany)anewglobal“lifestyle”hotelline,code-named“ProjectGlobal21.”Hilton openly declaredits direction:
“‘ProjectGlobal21isajunctionwherebusinessmeetspleasureforeverredefining howguestsstayandplay.Ourhotelswillbebornmodernthroughsmartdesign,cul- turalcharacterandsensitiveservicedelivery—everenhancinghowguestslivenow andhowguest[s]willliveinthefuture,’saidRossKlein,globalhead,luxury&life- stylebrands,HiltonFamilyofHotels.‘Together,withtheHiltonPrestigePortfolio, ProjectGlobal21willaddtothebalanceofglobalconnectivitywithlocaldestination flavor,offeringtravelersawealthofauthenticanduniqueexperiencesaroundthe globe.... Hiltonwilldeliveracaptivatingjourneythroughtheworldofthenew
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brandenlightenedwiththenextevolutioninhospitality....WeinviteallIHIFat- tendeestojoin us for this unforgettableevening.’”
200. Developingandlaunchinganewhotelbrandisaprocessthatrequires considerableinvestmentsoftimeandmoney.Evenforthemostexperiencedcompanies,it typicallytakesthreeto fiveyearstodevelop,launchand build-outa new hotel brandand open a newly branded hotel.Themore upscaleand refinedthe brand,thelongerittakes.
201. ButonMarch10,2009,justninemonthsafterKleinandLalvanijoined
Hilton,Hiltonlaunchedanewlifestylebrand—“Denizen”—attheIHIFindustrysympo- siuminBerlin. Denizenwasdevelopedbymeansofcorporateespionageandthetheftof highlyconfidentialand proprietaryStarwood Confidential Information.
202. ThehospitalitypresssubsequentlyobservedthatDenizenwas“cut fromthesameclothasW”:
“Hiltonannouncedtheirlatestbrand,Denizen,hereinBerlinthismorning.Denizen willbeHilton’s[entry]intothe‘lifestylebrand’categorypioneeredbyStarwoodHo- tels’Wbrand. Notcoincidentally,DenizenwillbeledbyformerWbossRoss Klein. . . . Denizensoundsto becut fromthesameclothasWinmany respects . . . .”
203. As reportedinthe hospitality press:
“IndustryanalystshavebeenanticipatingHilton’sexpansionintonewtrendybrands sinceitrecruitedtwoStarwoodHotelsexecutiveslastyearwhospecializeinluxury properties. “RossKlein,oneof[the]chiefdesignersofDenizen,washiredasglobalheadoflux- uryandlifestylebrands,andAmarLalvaniwastappedtobeHilton’sglobalheadof luxuryandlifestylebranddevelopment.Thetwoexecutivesworkedonthedevelop- mentofW,Starwood’sboutiquebrandthatinspiredothercompetingchainswith modern designandhiplobbylounges.”
204. Asanotherindustryreporterputit,intalkingaboutDenizen’s“‘brand
DNA’youcan’t help butthink of WHotels.”
205. UtilizationofStarwoodConfidentialInformationwaswidespread throughouttheHiltonorganization,andwasnotmerelyrestrictedtousebyformerStarwood
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employeesinthedevelopmentoftheDenizenbrand.Starwoodbrandedmaterialswereim- mediatelyroutedaroundHiltonofficesworldwideforuserelatedtothedevelopmentofDeni- zenaswellas for useintheexpansionand repositioning of otherHilton brands,includingHil- ton’sWaldorfAstoriaCollection,Hilton’sPrestigePortfolioandHilton’sConradHotels brands.Furthermore,StarwoodConfidentialInformationwassharedwithotherHiltonem- ployees,includinghighlevelexecutives,directorsandmanagers,acrossbrandsandweresent to outsidethird parties.Forexample,
a. InandaroundJune2008,aWHotels-brandedGapAnalysiswasroutedviae-mail amongseveralexecutivesinHilton’sluxuryandlifestylebrands,includingRich- ardBlamey,SeniorVicePresidentofBrandMarketingforHilton’sConradHotels brand;CarrollHutchings,DirectorofBrandMarketingforHilton’sConradHotels brand;KarenKennedy,DirectorofBrandPerformanceforHilton’sConradHotels brand;Roberta Rinker-Ludloff,VicePresidentofSalesandMarketingforHilton’s ConradHotelsbrand;RobynSwierk,SeniorCoordinatorofBrandPerformance forHilton’sConradHotelsbrand;JulieWagner,SeniorDirectorofMarketingand AdvertisingforHilton’sLuxuryandLifestyleBrands;PrethaMani,SeniorDirec- torofBrandGrowthforHilton’sLuxuryandLifestyleBrands;EdwardRusso, SeniorDirectorofBrandManagementforHilton’sWaldorfAstoriaCollection; StephanieToller,Hilton’sSeniorDirectorofGuestExperience;andAntoonHol- lants,DirectorofBrandStandardsforHilton’sConradHotelsbrand.ThisStar- wooddocumentwasthenturnedintoaGapAnalysisforHilton’sluxuryandlife- style brands.
b. OnoraboutJuly7,2008,aW-brandedmarketingplanpresentationwasfaxed fromafaxnumberassignedtoOshyPhillips,SeniorManagerofBrandCommuni- cationsforHilton’sLuxuryandLifestyleBrands,toRobertaRinker-Ludloff,Vice President of SalesandMarketing for Hilton’s ConradHotels brand.
c. OnoraboutJuly8,2008,W-brandedmaterialsweree-mailedfromTawannaBen- bow,Klein’sassistantatHilton,toJulieWagner,Hilton’sSeniorDirectorfor LuxuryandLifestyleBrandsMarketingandAdvertising,EdwardRusso,Senior DirectorofBrandManagementforHilton’sWaldorfAstoriaCollection,Stephanie Toller,Hilton’sSeniorDirectorofGuestExperience,RobertaRinker-Ludloff, VicePresidentofSalesandMarketingforHilton’sConradHotels,andRichard Blamey,SeniorVicePresident of BrandMarketing for Hilton’s Conrad brand.
d. OnoraboutSeptember9,2008,KochubasentJoyGray,amemberofHilton’s luxuryandlifestylebranddevelopmentteam,WDesignGuidelines,whichcon-
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tainedafullpagewarningthatthecontentsthereofwereproprietaryandconfiden- tialtradesecretsbelongingtoStarwood.Kochubanotedthathewouldbeusing theStarwoodmaterialsasa referencewhen hestartedwritingdesign guidelines for Hilton brands.
e. OnoraboutSeptember23,2008,andagainonoraboutNovember5,2008,Man- raoe-mailedDiannaWong,ofDiannaWongArchitecture,Starwoodbrandedma- terialsas“examples”ofmaterialsKleinwantedproducedforHilton’snewlife- style brand hotel.
f. OnoraboutOctober19,2008,RobynSwierk,Hilton’sSeniorCoordinatorof BrandPerformance,e-mailedStarwoodstrategicdevelopmentplanstoPretha Mani,Hilton’sSeniorDirector of LuxuryandLifestyle BrandGrowth.
g. OnoraboutNovember25,2008,Kochubae-mailedStarwood’sdesignerliststo MatDomaradzki,Hilton’sLuxury&LifestyleBrandDevelopmentCoordinator, and directedDomaradzkitocombineandeditthelists for useatHilton.
206. NotonlywereconfidentialStarwoodmaterialsfreelydistributedwithin
HiltonamongformerStarwoodemployeesandtoHiltonexecutivesacrossallofHilton’slux- uryandlifestyle brands,Starwoodmaterialswere uploadedtoHilton’ssharedcomputer drive, givingHiltonemployees quickandeasyaccesstoStarwoodbrandedmaterials.
207. HiltonemployeesreliedextensivelyontheStarwoodConfidentialIn- formation.Forexample,inseekingoutcertainconfidentialStarwoodstrategicdevelopment materials“fromAmar’sdiscs,”PrethaMani,Hilton’sSeniorDirectorofLuxuryandLifestyle
BrandGrowth, reportedthatthey“need[ed] [theStarwoodmaterials] urgently.”
208. Hiltonhasrecentlylaunchedawebsiteandrevealed otherbrandingma- terialsforitsWaldorfAstoriaCollection.Thatwebsiteandthosematerialsareinfectedwith
Starwood Confidential Information.
209. UnlessDefendantsHilton,KleinandLalvani,andallthoseworkingin concertwiththem,areenjoinedfromusinginanyway,directlyorindirectly,Starwood’s highlyconfidentialandproprietaryinformationandtradesecrets,Starwoodwillsufferirrepa-
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rableinjury. IneachoftheagreementssignedbyKleinandLalvaniwithStarwood,itis agreedthatanybreachoftheiragreementsinrespectoftheStarwoodConfidentialInforma- tionidentifiedtherein (andamongwhattheytooktoHilton):
“maycause[Starwood]irreparableharmforwhichthereisnoadequateremedyat law,andasaresultofthis,[Starwood]willbeentitledtotheissuancebyacourtof competentjurisdictionofaninjunction,restrainingorderorotherequitablereliefin favorof[Starwood],withoutthenecessityofpostingabond,restraining[Klein,Lal- vaniandtheotherinterestedpersons]fromcommittingorcontinuingtocommitany such violation.”
210. TheharmtoStarwoodisneitherremotenorspeculative,butactualand imminent,andonethatcannotberemediedifacourtwaitsuntiltheendoftrialtoresolvethe harm.Hiltonhasannouncedthatitiscurrentlyin“activenegotiation”withdevelopersre- gardingtheexpansionofitsluxuryandlifestylebrands.Hiltonhasalsoannouncedthatiten- teredintofranchiselicenseagreementsforthreehotelsthatwerepreviouslyStarwoodproper- ties—HiltonHotelTahiti,whichwaspreviouslyoperatedasSheratonHotelTahiti;Hilton
MooreaLagoonResort&Spa,whichwaspreviouslytheSheratonMoorea;andHiltonBora
BoraNuiResort&Spa,whichwaspreviouslytheBoraBoraNuiResort&SpaunderStar- wood’sLuxuryCollection. IncludedamongthematerialstakentoHiltonwasStarwood’s
PropertyImprovementPlanoutliningaplantoconverttheLuxuryCollectionBoraBoraNui propertytoaWHotel.HiltonhasrepositioneditsWaldorfAstoriaCollectionbrand,andhas launchedawebsitepromotingthisbrandthatisinfectedbyStarwoodConfidentialInforma- tion.Hilton,throughKlein,Lalvani,NassettaandGoldman,haspitcheddealsforHiltonto ownersanddeveloperswhowereincontractualrelationshipswithStarwoodusingStarwood’s playbook.
211. Furthermore,Hilton,throughKlein,publiclystatedpriortothislawsuit thatitintendedtoopenthefirstDenizenhotelsbytheendof2009orearly2010.Hilton,
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throughYounes,alsoannouncedthat,althoughDenizenwasjustlaunched,Hiltonwasal- readyinnegotiationwith20developers.KleinstatedthatheexpectedHiltontoannounce,
“within30days”ofitslaunch,signedcontractstoopenDenizenhotels.EventhoughHilton hassincesuspendedthedevelopmentofDenizen,absentactionbyacourt,Hiltonmayrene- gotiateorre-brandthesedealsundertheirWaldorfAstoriaCollection,PrestigePortfolio,
ConradHotels,Hilton or other brands.
212. ThatStarwood’shighlysuccessfulWlifestylebrandandluxuryhotel grouphasinspiredandinvitedcompetitionistobeexpected.Hiltonhasbeenespeciallyclear initsdesiretomimicStarwood’ssuccessfulbrandingandre-positioningofitsluxuryproper- ties.AsHilton hasdescribedit:
“AdesignatedteamofbrandswithintheHiltonFamilyofHotels,Hilton’sLuxury andLifestylebrandsofferglobalchoicestothemoderntraveler.Eachbrandwithin theportfoliohasadistinctpersonality—combined,theyillustrateHilton’songoing commitmenttomeetingtheneedsofachangingglobalconsumerintheexpanding luxurymarket.EncompassingDenizenHotels,ConradHotelsandResorts,Waldorf AstoriaandWaldorfAstoriaCollectionhotels,theHiltonLuxuryandLifestyle brandsblendculturedandtimelesstraditionswithmodernindigenoussettings,pro- vidingluxuryexperiences formodern businessandleisuretravelersalike.”
213. ButhereHilton,Klein,Lalvani,andothersworkinginconcertwith them,haveengagedincorporateespionageandthetheftofhighlyconfidentialandproprie- taryStarwoodinformationandtradesecretsinbreachof(oraidingthebreachof)contractual andfiduciarydutiesinordertoexpediteHilton’sentryorexpansionintonewhotelmarkets, andsubstantially reduceitscostsand risks of doingso.
214. KleinhasadmittedinthepressthattheonlyinvestmentthatHiltonhas madeinDenizenhasbeeninthe“intellectual”componentofthebrand. Thatintelligence, however,wasstolenfromStarwoodintheformoftheproprietaryandexplicitbranddevel- opment,marketing,andnegotiatingtoolscreatedthroughyearsofinvestmentoftensofmil-
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lionsofdollarsandcountlessemployeehoursbyStarwood.ThatinvestmentbyStarwood, whichStarwoodtookextensivestepstotrytoprotect,hasnowgonetoenrichingHiltoninits efforts unfairlytocompetewithStarwood.
215. Klein’sandLalvani’semploymentagreementswithStarwoodcarve out andexcludefromanyarbitrationallclaimsinvolvingtheallegedtaking,useordisclosureof tradesecretsandsimilarconfidentialorproprietaryinformation. Klein’sseparationagree- mentalsocarvesoutandexcludesfromthereleaseprovidedbyStarwoodtoKlein:(i)any obligationofKleinpursuanttoKlein’sNON-SOLICITATION,CONFIDENTIALITYAND
INTELLECTUALPROPERTYAGREEMENT;(ii)anyactbyKleinduringhisemployment thatwouldconstitutefraudorembezzlement;or(iii)anyactions,claimsordemandsrelatedto actionsoromissionsoccurringafterMay30,2008.Bythisaction,Starwoodseeksequitable reliefandmoneydamages. Klein’semploymentandseparationagreementseachacknowl- edgethatStarwoodshallbeentitledtoaninjunction,restrainingorder,orsuchotherequitable relief(withoutthenecessityofpostingabond)inacourtoflawrestrainingKleinfromcom- mittingorcontinuingtocommitanyviolationoftheconfidentialityprovisionsofhisem- ploymentandseparationagreements.
216. Bythisaction,Starwoodseeksequitablereliefandmoneydamages.
TheemploymentagreementsenteredintobyKleinandLalvani,andbythePersonsofInter- est,expresslyprovidethatStarwoodshallbeentitledtoaninjunction,restrainingorder,or suchotherequitablerelief(withoutthenecessityofpostingabond)inacourtoflawrestrain- ingeachofthemfromcommittingorcontinuingtocommitanyviolationoftheconfidential- ity provisions of theiremploymentagreements.
217. PlaintiffStarwood has no adequateremedyatlaw.
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FIRSTCLAIMFORRELIEF (Breach ofContract) (Klein)
218. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 217 asthough fullyset forth herein.
219. AsaconditionofhisemploymentwithStarwood,DefendantKlein signed and agreed to be bound by the terms of a NON-SOLICITATION,
CONFIDENTIALITYANDINTELLECTUALPROPERTYAGREEMENT.
220. Atallrelevanttimes,PlaintiffStarwoodperformeditsdutieswithre- spect to the NON-SOLICITATION, CONFIDENTIALITY AND INTELLECTUAL
PROPERTYAGREEMENTenteredintobyDefendantKlein.
221. DefendantKleinhasbreachedandcontinuestobreachhisobligations tomaintaintheconfidentialityofStarwood’shighlyconfidentialandproprietaryinformation under the NON-SOLICITATION, CONFIDENTIALITY AND INTELLECTUAL
PROPERTYAGREEMENT.
222. Inaddition,asaconditionofhisseverancefromStarwood,Defendant
Kleinsignedandagreedto be bound bytheterms of hisseparationagreement.
223. Atallrelevanttimes,PlaintiffStarwoodperformeditsdutieswithre- specttoDefendantKlein underKlein’sseparationagreement.
224. DefendantKleinhasbreachedandcontinuestobreachhisobligations tomaintaintheconfidentialityofStarwood’shighlyconfidentialandproprietaryinformation undertheseparationagreement.
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225. AsadirectandproximateresultofthewrongfulconductbyDefendant
Klein,PlaintiffStarwood hassufferedandcontinuestosufferirreparableinjury.
226. AsadirectandproximateresultofthewrongfulconductbyDefendant
Klein,PlaintiffStarwood hassufferedandcontinuestosuffersubstantialmoney damages.
SECONDCLAIMFORRELIEF (Breach ofContract) (Lalvani)
227. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 226 asthough fullyset forth herein.
228. AsaconditionofhisemploymentwithStarwood,DefendantLalvani signed and agreed to be bound by the terms of a NON-SOLICITATION,
CONFIDENTIALITYANDINTELLECTUALPROPERTYAGREEMENT.
229. Atallrelevanttimes,PlaintiffStarwoodperformeditsdutieswithre- spect to the NON-SOLICITATION, CONFIDENTIALITY AND INTELLECTUAL
PROPERTYAGREEMENTenteredintobyDefendantLalvani.
230. DefendantLalvani hasbreachedandcontinuestobreachhis obligations tomaintaintheconfidentialityofStarwood’shighlyconfidentialandproprietaryinformation under the NON-SOLICITATION, CONFIDENTIALITY AND INTELLECTUAL
PROPERTYAGREEMENT.
231. AsadirectandproximateresultofthewrongfulconductbyDefendant
Lalvani,PlaintiffStarwood hassufferedandcontinuestosufferirreparableinjury.
232. AsadirectandproximateresultofthewrongfulconductbyDefendant
Lalvani,PlaintiffStarwood hassufferedandcontinuestosuffersubstantialmoneydamages.
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THIRDCLAIMFORRELIEF (Inducing Breach ofContract; TortiousInterference WithContractualRelations) (AllDefendants) 233. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 232 asthough fullyset forth herein.
234. DefendantHilton knew of Klein’sandLalvani’scontractualobligations toStarwood. DefendantHiltonknewthatbothKleinandLalvanihadwrittenagreements withStarwoodrequiringthemtoprotectandsafeguardtheconfidentialityoftheStarwood
Confidential Informationtowhichthey hadaccess.
235. Byitswrongfulactions,DefendantHiltonintentionallyinducedKlein andLalvanito breachtheircontractswithStarwood.
236. Byitswrongfulactions,DefendantHiltontortiouslyinterferedwith
Starwood’scontractual relationswithKleinandLalvani.
237. DefendantsKleinandLalvaniknewofthePersonsofInterest’scon- tractualobligationstoStarwood.DefendantsKleinandLalvaniknewthatthePersonsofIn- teresthadwrittenagreementswithStarwoodrequiringthemtoprotectandsafeguardthecon- fidentiality of theStarwood Confidential Informationtowhichthey hadaccess.
238. BytheirwrongfulactionsasHiltonexecutives,DefendantsKleinand
LalvaniandthusDefendantHiltonintentionallyinducedthePersons of Interesttobreachtheir contractswithStarwood.
239. BytheirwrongfulactionsasHiltonexecutives,DefendantsKleinand
LalvaniandthusDefendantHiltontortiouslyinterferedwithStarwood’scontractualrelations withthePersons of Interest.
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240. AsadirectandproximateresultofthewrongfulconductofDefen- dants,PlaintiffStarwood hassufferedandcontinuestosufferirreparableinjury.
241. Asadirectandproximateresultoftheirwrongfulconduct,Defendants havebeenunjustlyenriched,andPlaintiffStarwoodhassufferedandcontinuestosuffersub- stantialmoney damages.
FOURTHCLAIMFORRELIEF (Fraud;Aiding andAbettingFraud) (AllDefendants) 242. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 241 asthough fullyset forth herein.
243. AtthetimeStarwoodandKleinenteredintotheseparationagreement,
DefendantKleinacknowledgedthathehadaccesstoStarwoodConfidentialInformation.
KleinrepresentedtoStarwoodthathehadreturnedorwouldreturnallsuchinformationto
StarwoodbyMay30,2008,andthathehadnotretainedandwouldnotretainoriginalsorany copiesofdocuments,recordsormaterialsofanykind,whetherwrittenorelectronicallycre- atedorstored,whichcontain,relatetoorrefertoanyStarwoodConfidentialInformation.
KleinalsorepresentedthathewouldnotuseordiscloseanyStarwoodConfidentialInforma- tion.Theserepresentationswerecollateraltoandseparate fromthe obligationsthatKleinwas underbyvirtue of histhen-existingemploymentagreementwithStarwood.
244. AtthetimethatKleinmadetheseandotherrepresentationstoStar- wood,theywerefalseandKleinknewthemtobefalse.AtthetimethatKleinmadethese andotherrepresentationshewasalreadycopyingStarwoodConfidentialInformationontohis personalcomputer,hewasalreadye-mailingStarwoodConfidentialInformationtohisper- sonale-mailaccount,hewasalreadytakingStarwoodConfidentialInformationhome,andhe
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wasalreadyshippingboxesdirectlytoHilton’sexecutiveofficesinBeverlyHills,California
—allwithouttheauthorization or agreement of Starwood.
245. KleinliedtoStarwoodandmadeknowinglyfalserepresentationsinor- dertoinduceStarwoodintoenteringintotheseparationagreementand,amongotherbenefits, payingKleinover$600,000incashseverancepaymentstowhich,asaresultofhiswrongful conduct,hewasnototherwiseentitled,aswellastoconcealthefactthatKleinwasalready stealingStarwood Confidential Informationto be used for thebenefit of Hilton.
246. Klein’srepresentationsthathewouldnottake,useordiscloseanyStar- woodConfidentialInformationwereknowinglyfalsewhenmadeandweremadebyKleinfor the purpose of defraudingStarwood.
247. KleindidnotinformStarwoodthat,twoweeksbeforeKleinsignedhis separationagreementwithStarwood,Kleinhadalreadysignedanemploymentagreement withDefendantHiltonandthat,inconcertwithLalvani,andothers,Kleinhadalreadyknow- inglyandintentionallytakenStarwoodConfidential InformationincontraventionofStarwood policyandhisexistingfiduciaryandcontractualobligationswiththeintentionofprovidingit toand usingit forthe benefit of Hilton.
248. ThePresidentandChiefExecutiveOfficerofHiltonhadpersonallyre- cruitedKleintojoinHilton.MembersofHilton’smanagementwereawareofKlein’swrong- doing.LalvaniwasawareofKlein’swrongdoing.HiltonandLalvaniknowinglyandsub- stantiallyassistedKleinandaidedandabettedKlein’s fraud.
249. StarwoodjustifiablyreliedonKlein’srepresentationsthathewouldnot take,useordiscloseStarwoodConfidentialInformationwhenStarwoodenteredintothesepa- rationagreementandagreedtoprovidethebenefitsdetailedinthatagreement,includingbut
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notlimitedtothepaymenttoKleinofover$600,000incashseverancepaymentsandacceler- ated vesting of equity.
250. KleinhasfraudulentlyobtainedStarwoodConfidentialInformationfor theunjustenrichmentofHilton,Lalvaniandhimself.Lalvani,whoalsolootedStarwood’s files,andHilton,forwhosebenefittheinformationwasstolen,wereawareofKlein’sfalse statementstoStarwood,andknowinglyandsubstantiallyparticipatedinKlein’swrongdoing.
MembersofHiltonmanagementconspiredwithKleinandsoughttocoverupKlein’swrong- doing.
251. Asadirectandproximateresultoftheirwrongfulconduct,Defendants
Hilton,KleinandLalvanihavebeenunjustlyenrichedandPlaintiffStarwoodhassuffered andcontinuestosuffermoney damages.
FIFTHCLAIMFORRELIEF (Misappropriation of TradeSecrets) (AllDefendants)
252. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 251 asthough fullyset forth herein.
253. Bytheirwrongfulactions,Defendantshaveknowinglymisappropriated andusedStarwoodtradesecretsinbreachoftheiragreements,confidentialrelationshipsand fiduciary dutiestoStarwood.
254. Bytheirwrongfulactions,includingdiscoveryofStarwood’stradese- cretsthroughimpropermeans,Defendantshaveknowinglymisappropriatedandused,or aidedandabettedthemisappropriationandmisuse of, Starwoodtradesecrets.
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255. AsadirectandproximateresultofthewrongfulconductofDefen- dants,PlaintiffStarwood hassufferedandcontinuestosufferirreparableinjury.
256. Asadirectandproximateresultoftheirwrongfulconduct,Defendants havebeenunjustlyenriched,andPlaintiffStarwoodhassufferedandcontinuestosuffer money damages.
SIXTHCLAIMFORRELIEF (UnfairCompetition) (AllDefendants)
257. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 256 asthough fullyset forth herein.
258. Bytheirwrongfulactions,Defendantshaveknowinglymisappropriated confidentialandproprietaryinformationforuseinHilton’sbusinessandhaveengagedinun- faircompetitionwithStarwood.
259. AsadirectandproximateresultofthewrongfulconductofDefen- dants,PlaintiffStarwood hassufferedandcontinuestosufferirreparableinjury.
260. Asadirectandproximateresultoftheirwrongfulconduct,Defendants havebeenunjustlyenriched,andPlaintiffStarwoodhassufferedandcontinuestosuffer money damages.
SEVENTHCLAIMFORRELIEF (Theft/Conversion) (AllDefendants)
261. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 260 asthough fullyset forth herein.
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262. Bytheirwrongfulactions,Defendantshaveintentionallystolenand convertedStarwoodconfidentialandproprietaryinformationandtradesecretstotheexclu- sion of Starwood’s rights.
263. AsadirectandproximateresultofthewrongfulconductofDefen- dants,PlaintiffStarwood hassufferedandcontinuestosufferirreparableinjury.
264. Asadirectandproximateresultoftheirwrongfulconduct,Defendants havebeenunjustlyenriched,andPlaintiffStarwoodhassufferedandcontinuestosuffer money damages.
EIGHTHCLAIMFORRELIEF (Breaches ofFiduciaryDuty) (Klein, Lalvani)
265. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 264 asthough fullyset forth herein.
266. Asmanagement-levelemployeesentrustedwithconfidentialandpro- prietaryinformationandtradesecrets,DefendantsKleinandLalvanieachowedatallrelevant times fiduciary dutiestoPlaintiffStarwood.
267. DefendantsKleinandLalvanieachbreachedthatdutybysurrepti- tiouslystealingStarwood ConfidentialInformationthroughimpropermeansand bymaking or intendingtomakeimproperuseofthatinformationandthosesecretsforpurposescontraryto
Starwood’sinterests.LalvanibreachedfiduciarydutiesowedtoStarwoodbyactingasacor- poratespyforHiltonandbyprovidingHiltonwithStarwood’sconfidentialinformationand business opportunities.
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268. AsadirectandproximateresultofthewrongfulconductofDefen- dants,PlaintiffStarwood hassufferedandcontinuestosufferirreparableinjury.
269. AsadirectandproximateresultofthewrongfulconductofDefen- dants,PlaintiffStarwood hassufferedandcontinuestosuffermoney damages.
NINTHCLAIMFORRELIEF (Aiding andAbetting Breaches ofFiduciaryDuty) (Hilton)
270. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 269 asthough fullyset forth herein.
271. DefendantHiltonknewofthefiduciarydutiesowedtoStarwoodby
DefendantsKleinandLalvani.
272. Byitswrongfulactions,DefendantHiltonknowinglyinducedandpar- ticipatedinKlein’sandLalvani’s breaches of their fiduciaryobligationstoStarwood.
273. AsadirectandproximateresultofthewrongfulconductofDefendant
Hilton,PlaintiffStarwood hassufferedandcontinuestosufferirreparableinjury.
274. AsadirectandproximateresultofthewrongfulconductofDefendant
Hilton,PlaintiffStarwood hassufferedandcontinuestosuffermoney damages.
TENTHCLAIMFORRELIEF (UnjustEnrichment) (AllDefendants)
275. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 274 asthough fullyset forth herein.
276. Bytheirwrongfulactions,Defendantshavebeenunjustlyenrichedat
Starwood’sexpense.
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277. ItisagainstequityandgoodconsciencetopermitDefendantstoretain the benefits derivedfromtheirwrongfulconduct.
278. AsadirectandproximateresultofthewrongfulconductofDefen- dants,PlaintiffStarwood hassufferedandcontinuestosufferirreparableinjury.
279. AsadirectandproximateresultofthewrongfulconductofDefen- dants,PlaintiffStarwood hassufferedandcontinuestosuffermoney damages.
ELEVENTHCLAIMFORRELIEF (Violation ofComputerFraud andAbuseAct) (AllDefendants)
280. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 279 asthough fullyset forth herein.
281. Starwood’scomputersandcomputersystemsare“protectedcom- puters” underthefederal ComputerFraudandAbuseAct, 18 U.S.C. § 1030(e)(2).
282. Bytheirwrongfulactions,Defendants(andothersworkingundertheir directionandattheirexpressinstruction)intentionallyaccessedStarwood’sprotectedcom- putersystem,withoutauthorizationand/orinexcessofauthorizedaccess,andtherebyob- tainedinformation fromStarwood’s protectedcomputersystem.
283. Bytheirwrongfulactions,Defendantsknowinglyandwithintenttode- fraud,accessedStarwood’sprotectedcomputersystem,withoutauthorizationand/orinexcess ofauthorizedaccess.
284. Bytheirwrongfulactions,Defendantsfurtheredtheintendedfraud,ob- tainedunauthorizeduseofStarwood’sprotectedcomputersystem,andobtainedStarwood’s proprietaryinformation,the value of suchexceeding $5,000in valueinany oneyear period.
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285. ThewrongfulconductofKleinandLalvaniwasdonewithinducement fromandwiththeknowledgeandparticipationofDefendantHiltonanditsexecutives,orfor thebenefitofDefendantHilton,suchthatHiltonisequallyresponsibleforthewrongfulcon- duct of KleinandLalvani.
286. Bytheirwrongfulactions,DefendantsintentionallyaccessedStar- wood’sprotectedcomputersystemwithoutauthorization,andasaresultofsuchconduct, causedStarwood damageandloss.
287. ThewrongfulactionsofDefendantshavecausedlosstoStarwoodthat exceeds$5,000invalueduringanyoneyearperiod,inthatStarwoodhasspentfarinexcess of $5,000 in respondingtothe offenseandconductingadamageassessment.
288. TheactivityofDefendantsconstitutesaviolationofthefederalCom- puterFraudandAbuseAct,18U.S.C.A.§1030(a)(2)C),(a)(4),(a)(5)C),andStarwoodisen- titledto fullcompensatory damages underthatAct.
THE WANTONNESSOFDEFENDANTS’ WRONGFULCONDUCT
289. Plaintiffrepeatsandreallegeseachandeveryallegationsetforthin paragraphs onethrough 288 asthough fullyset forth herein.
290. DefendantHiltonknowinglyandintentionallyinducedDefendants
KleinandLalvanitobreachtheirobligationsandduties,includingfiduciaryobligations,to
Starwood,andpaidthem,andothers,tostealStarwoodConfidentialInformationsothatHil- toncouldbettercompeteagainstStarwood. TheconductofDefendantHiltonasalleged hereinisintentional,outrageous,andexhibitsahighdegreeofmoralculpability.Itisnotthe conduct of rogueHiltonemployees. Rather,itisthe outrageousconduct ofHilton’smostsen- iormanagement,includingdozensofHiltonexecutivesanditsChiefExecutiveOfficer,who
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actedwithafraudulentmotiveandwillfullyandwantonlydisregardedtherightsofStarwood.
HiltonhascontinuedtouseStarwoodConfidentialInformationand/orinformationderived directlyorindirectlytherefromacrossitsluxuryandlifestylebrandsinviolationofthePre- liminaryInjunction,andhasdemonstratedsuchwantondishonestyastoimplyacriminalin- differencetocivil obligations for whichverysubstantial punitive damagesareappropriate.
291. TheconductofDefendantKleinasallegedhereinisintentional,outra- geous,andexhibitsahighdegreeofmoralculpability.Kleinactedwithafraudulentmotive andwillfullyandwantonlydisregardedtherightsofStarwood.Kleinhasdemonstratedsuch wantondishonestyastoimplyacriminalindifferencetocivilobligationsforwhichverysub- stantial punitive damagesareappropriate.
292. TheconductofDefendantLalvaniasallegedhereinisintentional,out- rageous,andexhibitsahighdegreeofmoralculpability.Lalvaniactedwithafraudulentmo- tiveandwillfullyandwantonly disregardedthe rightsofStarwood.Lalvanihas demonstrated suchwantondishonestyastoimplyacriminalindifferencetocivilobligationsforwhichvery substantial punitivedamagesareappropriate.
PRAYERFORRELIEF
WHEREFORE,PlaintiffStarwoodHotels& ResortsWorldwide, Inc. prays asset forthaboveand for the followingrelief:
(i) preliminarilyandpermanentlyenjoiningDefendants,andtheirrespectiveofficers, agents,servants,employeesandattorneys,andallotherpersonswhoareinactive concertorparticipationwiththemwhoreceiveactualnoticeoftheorderbyper- sonalservice or otherwise, from using orbenefiting, directlyorindirectly, fromthe useofStarwood’sconfidential,proprietaryandtradesecretinformation,including withoutlimitationtheStarwood Confidential Information; (ii) preliminarilyandpermanentlyenjoiningDefendants,andtheirrespectiveofficers, agents,servants,employeesandattorneys,andallotherpersonswhoareinactive
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concertorparticipationwiththemwhoreceiveactualnoticeoftheorderbyper- sonalserviceorotherwise,immediatelytoreturnallStarwoodConfidentialInfor- mationintheir possession,custody or control,whereverlocated; (iii) preliminarilyandpermanentlyenjoiningDefendants,andtheirrespectiveofficers, agents,servants,employeesandattorneys,andallotherpersonswhoareinactive concertorparticipationwiththemwhoreceiveactualnoticeoftheorderbyper- sonalserviceorotherwise,immediatelytodestroyandtocertifyunderoaththede- structionofallmaterialsderivedinanywaydirectlyorindirectlyinwholeorin part fromanyStarwood Confidential Information; (iv) purgingallStarwoodConfidentialInformationandallinformationderiveddirectly orindirectlyfromStarwoodConfidentialInformationfromallinformationand material,includingwebsitesandpreliminarilyandpermanentlyenjoiningHilton fromanyfurtheruseofanyinformation(includingwebsites)derivedinwholeor in part, directly orindirectly fromStarwood Confidential Information; (v) preliminarilyandpermanentlyenjoiningDefendants,andtheirrespectiveofficers, agents,servants,employeesandattorneys,andallotherpersonswhoareinactive concertorparticipationwiththemwhoreceiveactualnoticeoftheorderbyper- sonalserviceorotherwise,immediatelytodestroyandtocertifyunderoaththede- structionofalldocumentsandinformationrelatingtothepromotionandroll-out ofHilton’sDenizenbrand—thusrequiringHiltontostartoverwithoutthebenefit ofitstheft of Starwood Confidential Information; (vi) orderingDefendantstomakeappropriatecorrectivedisclosuretopropertyowners andindustry professionals of Hilton’swrongdoing; (vii) orderingtheappointmentofoneormoremonitorswithappropriatepowersofin- quirytoinvestigateandreportconcerningHilton’scompliancewithallinjunctions andHilton’snon-use,eitherdirectlyorindirectly,ofStarwoodConfidentialIn- formation; (viii) preliminarilyandpermanentlyenjoiningDefendants,andtheirrespectiveofficers, agents,servants,employeesandattorneys,andallotherpersonswhoareinactive concertorparticipationwiththemwhoreceiveactualnoticeoftheorderbyper- sonalserviceorotherwise,toprovideadetailedaccountingofandimposeacon- structivetrustonallrevenuesderivedandexpensessavedbyHiltonfromtheuse oftheStarwood Confidential Information; (ix) preliminarilyandpermanentlyenjoiningHiltonforareasonabletimefromanyex- pansion,ofHilton’sluxuryandlifestylebrands (e.g.,WaldorfAstoriaCollection, PrestigePortfolioandConradHotels)thatwereinfectedwithStarwoodConfiden- tial Information; (x) preliminarilyandpermanentlyenjoiningDefendants,andtheirrespectiveofficers, agents,servants,employeesandattorneys,andallotherpersonswhoareinactive concertorparticipationwiththemwhoreceiveactualnoticeoftheorderbyper- sonalserviceorotherwise,forareasonabletimefrompursuinganyhotelowners,
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