Court Enjoins Hilton, Executives in Starwood Suit

NEW YORK (Reuters) – Starwood Hotels & Resorts (HOT.N) said on Friday a U.S. district judge entered a preliminary injunction against Hilton Hotels and two of its executives preventing them from developing its luxury brand further, the latest development in Starwood’s lawsuit against Hilton.

In a release, Starwood said Judge Stephen C. Robinson of the Southern District of New York entered a preliminary injunction in connection with the lawsuit, which will remain in effect for at least 90 days.

Hilton is further ordered to return to Starwood any and all Starwood information in its possession, Starwood said.

The move was agreed to by Starwood, Hilton, and the two executives, Ross Klein and Amar Lalvani.

Earlier this month, Starwood sued rival Hilton Hotels and the two executives, accusing the pair of ex-Starwood workers of stealing trade secrets to develop Hilton’s luxury brand, Denizen Hotels. [ID:nN16293349]

This week Hilton Hotels said it received a federal grand jury subpoena for documents related to the allegations. The privately held company said it decided to suspend temporarily the development of its Denizen brand, but cited no reason. [ID:nN21472635]

Klein and Lalvani spearheaded Hilton’s attempts to launch Denizen Hotels, a luxury line intended to be Hilton’s answer to Starwood’s W Hotels chain. Klein served as head of luxury and lifestyle brands, and Lalvani was head of development for the segment.

Both Klein and Lalvani were involved in the branding of the W, but left for Hilton last year.

Hilton, which was taken private by Blackstone (BX.N), hired the pair to develop Hilton’s own top-end chain and reinvigorate the Hilton name, which has been slow in entering the luxury market.

The court’s move prohibits Hilton and the two executives from further developing the Denizen brand and orders branding, staffing and marketing of the chain to cease.

Further, Hilton and the two executives may not engage in discussion with prospective buyers or developers about the Denizen brand.

The injunction applies to anyone involved in developing the brand. Hilton said earlier this week that the entire team was on paid administrative leave. (Reporting by Deepa Seetharaman, editing by Dave Zimmerman)