U.S. judge tosses suit vs Marriott over failed hotel

NEW YORK, July 28 Mon Jul 28, 2014 6:02pm EDT

NEW YORK, July 28 (Reuters) - A federal judge on Monday dismissed a lawsuit filed against Marriott International Inc , which had blamed the hospitality company for the bankruptcy of a hotel on the Upper East Side of Manhattan.

The plaintiff, Madison 92nd Street Associates LLC, accused Marriott and a labor organization of conspiring to control which Marriott-branded hotels unionized.

The lawsuit said that as a result of the conspiracy, workers at a Marriott hotel on 92nd Street in Manhattan unionized, which led to the property's poor financial performance and ultimately forced the hotel into bankruptcy in 2011, five years after it opened.

U.S. District Judge Colleen McMahon of Manhattan issued an order on Monday dismissing the lawsuit, which had sought in excess of $400 million in damages.

Madison 92nd Street Associates contended that in 2002 it was fraudulently induced to enter an agreement giving Marriott affiliate Courtyard Management Corp 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 said 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, the union for hotel workers in the metropolitan New York City area and the region that includes Albany, the state capital.

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.

In her order on Monday, McMahon wrote that the conspiracy cited by the plaintiff was not what had locked Madison into non-union labor. Rather, according to McMahon, it was the original management agreement between Madison and Marriott, which gave Marriott "absolute discretion with respect to all personnel employed at the Hotel."

A representative of Madison 92nd Street Associates did not immediately return a call seeking comment.

The case is Madison 92nd Street Associates, LLC v. Marriott International, Inc, U.S. District Court, Southern District of New York, No. 13-0291. (Reporting by Andrew Longstreth; Editing by Jan Paschal)