Former hotel owner sues Marriott over alleged labor conspiracy

NEW YORK Mon Jan 14, 2013 5:40pm EST

NEW YORK Jan 14 (Reuters) - A former hotel owner sued Marriott International Inc on Monday, accusing the hospitality company of conspiring with a labor organization to control which Marriott-branded hotels unionized.

The plaintiff, Madison 92nd Street Associates LLC, alleged that as a result of a conspiracy, workers at its hotel on 92nd Street in Manhattan unionized, which led to poor financial performance and ultimately forced the hotel into bankruptcy in 2011, five years after it opened.

The lawsuit, filed in Manhattan federal court, seeks in excess of $400 million in damages.

Madison alleged that in 2002 it was fraudulently induced to enter an agreement that gave Marriott affiliate Courtyard Management Corporation the rights to manage Madison's hotel under the Courtyard name.

Madison chose Marriott because of the assurance it received from Marriott that it was a non-union company and that Courtyard would employ a non-union workforce at the hotel, according to the lawsuit.

Madison alleged that at the time it had entered into the management agreement, Marriott was secretly negotiating with the New York Hotel and Motel Trades Council, AFL-CIO.

Those talks, according to the lawsuit, led to a deal in which Marriott agreed to help the union organize at certain Marriott branded hotels, including the 92nd Street hotel, in exchange for not doing so at Marriott's flagship properties in New York.

After Marriott and the union concluded the secret agreement, they negotiated another deal that increased the number of permanent employees at the 92nd Street hotel by more than 47 percent, Madison alleged. As a result of the agreement, the hotel's operating costs increased by $2 million annually while its net operating income dropped by approximately fifty percent to $4 million per year, according to the lawsuit.

"Marriott and Courtyard have fraudulently enriched themselves at the expense of hotel owners and workers throughout New York City for over a decade now," said Nicholas Gravante, Jr. of the law firm Boies, Schiller & Flexner, an attorney for Madison.

A spokesman for Marriott said the firm does not comment on pending litigation. John Turchiano, a spokesman for the New York Hotel and Motel Trades Council, said: "We have seen the lawsuit and feel that it is totally without merit."

The lawsuit filed Monday is part of a long-running dispute between Madison and Marriott over the 92nd Street hotel. In 2009, Madison sued Courtyard in New York state court. Madison recently amended its complaint in that case.

The case filed Monday is Madison 92nd Street Associates, LLC v. Marriott International, Inc, U.S. District Court, Southern District of New York, No. 13-0291.

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