Bickel & Brewer: Ten Million Dollar Jury Verdict Announced Against The
Ritz-Carlton Hotel Company
DALLAS, Feb. 4 /PRNewswire/ -- One of the hospitality industry's most
closely-watched trials has ended in victory for a hotel owner against The
Ritz-Carlton Hotel Company, LLC ("Ritz-Carlton"). Bickel & Brewer law firm has
announced that its client, Karang Mas Sejahtera ("KMS"), owner of the
exclusive Ritz-Carlton Bali Resort & Spa ("Ritz-Carlton Bali"), prevailed in a
case that may have wide-ranging implications on the manner in which hotel
management agreements are interpreted -- and enforced.
On January 25, following a three-week trial, a nine person jury in the
United States District Court in Greenbelt, Maryland, reached a unanimous
decision that Ritz-Carlton violated its fiduciary duties to KMS and the
Ritz-Carlton Bali. The jury awarded KMS $382,000 in actual damages and $10
million in punitive damages -- $5 million more than KMS had requested. The
landmark verdict also allows KMS to pursue millions more in attorneys' fees.
"The jury's decision affirms our client's position -- that Ritz-Carlton
breached its fiduciary duty from a financial, operational and competitive
point of view," says William A. Brewer III, partner at Bickel & Brewer and
counsel for KMS. "This case is of vital importance to the hospitality
industry, as it further underscores and clarifies the rights, responsibilities
and obligations of all parties involved in a hotel management agreement."
Filed more than three years ago, this lawsuit has become one of the
nation's most high-profile disputes between a hotel management company and
individual hotel owner. The case centers around the development and opening of
the Bulgari Bali Hotel, which began operation in September 2006, just three
miles from the KMS property. KMS demonstrated that Ritz-Carlton violated its
fiduciary duties by operating that competing property in disregard of KMS'
territorial rights and failing to recognize its responsibilities as an agent
of the Ritz-Carlton Bali. The Bulgari Bali, which is managed by Ritz-Carlton,
is the first resort in the upstart Bulgari Hotels & Resorts chain, a joint
venture between Marriott International (Ritz-Carlton's parent company) and
high-fashion Italian jeweler Bulgari SpA.
The Bulgari Bali Hotel opened under Ritz-Carlton management despite
concerns from KMS that the luxury hotel would violate the territorial
exclusivity provision KMS held with Ritz-Carlton. Among several other claims,
KMS alleged that the Bulgari property was benefiting from the use of the
Ritz-Carlton brand name in its marketing and promotion -- all in direct
violation of the operating agreement between the KMS and Ritz-Carlton.
"At the end of the day, we proved that our client suffered a material
breach of loyalty," says James S. Renard, partner at Bickel & Brewer who
joined Brewer as counsel for KMS. "We alleged -- and the jury emphatically
agreed -- that Ritz-Carlton was bound by a contractual obligation not to use
the Ritz-Carlton name and brand to operate another hotel on the Indonesian
Island of Bali without our client's consent."
Brewer says this jury verdict may be a seminal moment for the hospitality
industry. His law firm has been involved in many of them over the past several
decades, representing a wide range of internationally-known hotel franchisors,
management companies, owners, developers and investors. As an example, Bickel
& Brewer successfully argued Woolley v. Embassy Suites, Inc., the case in
which the court held that hotel management agreements are agency agreements
and, as such, are always terminable at the option of the owner. In 1999,
Bickel & Brewer extended Woolley by establishing that a franchise agreement
may also create an agency relationship between the franchisor and the hotel
owner.
"This case is like the Woolley cases in that it has the potential to
change the industry's legal landscape," Renard says. "This jury verdict
compels the industry to look more closely at management agreements -- and
evaluate the manner in which they are interpreted by all involved parties."
Brewer and Renard were joined in representing KMS by firm counsel Ken
Hickox, associate Rob Millimet and litigation consultant Christopher Mayzner.
Ritz-Carlton was represented by Kenneth Smurzynski and Malachi Jones of
Williams & Connolly.
About the Ritz-Carlton Bali Resort & Spa:
The Ritz-Carlton Bali Resort & Spa is located on the Island of Bali in the
Republic of Indonesia. Built on 173 acres, the resort features 368 guest
rooms, including 38 new cliff villas with breathtaking views of the Indian
Ocean. As one of Bali's premier resort locations, the Ritz-Carlton Bali offers
guests 12 restaurants and lounges, golf, tennis, indoor and outdoor pools, a
spa complex, and access to Kubu Beach, a stunning and secluded private cove.
Visit the Ritz-Carlton Bali Resort & Spa at
http://www.ritzcarlton.com/en/Properties/Bali.
About Bickel & Brewer:
Founded in 1984, Bickel & Brewer has earned a reputation as one of the
most aggressive and successful law firms in the United States practicing
exclusively in the field of complex commercial litigation and dispute
resolution. With offices in Dallas and New York, Bickel & Brewer represents a
wide spectrum of industry leaders -- from entrepreneurs to Fortune 500
corporations -- facing the most challenging of legal issues. Visit Bickel &
Brewer at http://www.bickelbrewer.com.
SOURCE Bickel & Brewer
Travis J. Carter, Carter Public Relations, on behalf of Bickel & Brewer,
+1-214-360-7815, tcarter@carterpr.net
