HospitalityLawyer.com | December 2012 Issue Hospitality Lawyer Magazine

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HospitalityLawyer.com, a leader in hospitality and travel legal, safety, security and risk solutions, distributes a monthly e-magazine devoted to the latest trends, issues and happenings from the industry.

For more information, please visit http://www.hospitalitylawyer.com.

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HospitalityLawyer.com | December 2012 Issue Hospitality Lawyer Magazine

  1. 1. focusing on legal, safety & security solutionsHospitalityLawyer e-magazine December | 2012Healthcare Benefits Update: Will You Be Ready For 2013? Immigration & the Hospitality Industry: What’s Expected for 2013? Onity Hotel Lock Security Issues - Recommendations for Hotel Operators Top 10 Ways to Hold a Company Party - Without Getting Sued Crime Prevention Through Environmental Design: Parking Lot and Parking Garage Security Adapting to an Aging Workforce U.S. Supreme Court Will Hear Landmark Class Action Waiver Case: American Express Co. v. Italian Colors Restaurant
  2. 2. 3 CONTENTS Editor’s Note 4 2013 Hotel Owner-Management Summit 5 2013 Hospitality Law Conference 8 Onity Hotel Lock Security Issues - Recommendations for Hotel Operators By: Thomas McElroy 12 Crime Prevention Through Environmental Design: Parking Lot and Parking Garage Security By: Donald Decker 18 Immigration & the Hospitality Industry: What’s Expected for 2013? By: Gregg Rodgers FEATURED ARTICLE 22 Healthcare Benefits Update: Will You Be Ready For 2013? By: Callan Carter 25 Top 10 Ways to Hold a Company Party - Without Getting Sued By: Mike Mitchell 26 Adapting to an Aging Workforce By: Chris Montross 30 U.S. Supreme Court Will Hear Landmark Class Action Waiver Case: American Express Co. v. Italian Colors Restaurant By: Paige Berges & Christopher M. Mason 33 FTC Warns Hotel Operators that Price Quotes that Exclude ‘Resort Fees’ and Other Mandatory Surcharges May Be Deceptive 34 Resources 35 Sponsors
  3. 3. Editor’s NoteAbout HospitalityLawyer.com Article ContributionsHospitalityLawyer.com brings together the hospitality Have an interesting article that you want toindustry’s legal safety and security solutions, products, contribute to the Hospitality Lawyer e-magazine?and services. We strive to provide quality articles on Send it over! I encourage law firms, solution providersthe latest hospitality legal issues, news, trends, and and hospitality industry leaders to send in a copy orbest practices. Our articles are written by hotel and summary of your article idea to me directly, so we canrestaurant law experts and solution providers who discuss if it fits our editorial needs.have significant legal, safety and security knowledgeand experience. They provide practical tips with Suggestions from Readerscurrent, insightful analysis and information. To ensure that we provide the best and most relevant articles to our readers, we ask you to feel free toI encourage you to visit our website at www. provide feedback or ideas on interesting topics thathospitalitylawyer.com, where you can view industry you like to read. We will in turn, do our best to makealerts, law libraries, white papers, e-newsletters and it happen.webinars; and search for law firms, attorneys andsafety and security products for hotels, restaurantsand country clubs. Current industry news and updatescan also be found on our social media channels. Janet Le Editor & Publisher H L worldwide legal, safety and security solutions HospitalityLawyer.comHospitalityLawyer.com MARKETING/MAGAZINE SERVICES2450 Louisiana, Ste. 400-416 Janet LeHouston, TX 77006 Director of MarketingOffice: (713) 963-8800 Fax: (713) 627-9934 janet@hospitalitylawyer.comEDITOR AND PUBLISHER Permissions/Reprints/Subscription--Janet Le janet@hospitalitylawyer.comjanet@hospitalitylawyer.com Hospitality Lawyer e-Magazine is published monthly byEXECUTIVE EDITOR HL.com, Inc. dba HospitalityLawyer.com, 2450 Louisiana,Stephen Barth Texas 77006, (713)-963-8800, info@hospitalitylawyer.com.stephenbarth@hospitalitylawyer.com Subscription rates; free to general pubic upon request.ADVERTISING/SALESElizabeth BennettDirector of Business Development and Allianceselizabeth@hospitalitylawyer.comKris McDanielsBusiness Development and Marketing Strategykris@hospitalitylawyer.comAll editorial content is copyrighted. No article may be reproduced by any means without express, written permission from the publisher.Reprint or PDF versions of the articles are available by contacting the publisher. Statements of fact or opinion are the responsibility ofthe authors and do not necessarily represent the opinion of the publisher. Advertising in the publication does not imply endorsementby the publisher. The editor reserves the right to accept or reject any article or advertisement. HospitalityLawyer.com | December 2012 3
  4. 4. HOTEL 2013 OWNER MANAGEMENT SUMMIT OMNI HOUSTON HOTEL - FOUR RIVERWAY - HOUSTON, TX - 77056The11th AnnualHospitality Law Conference features the inauguralHotel Owner-Management Summitconverging hospitality thought leaders from around the nationto break down silos and create cross-functional dialogues on thelatest trends and most pressing issues in the hospitality field.4 Hospitality Lawyer e-Magazine | December 2012
  5. 5. February 11th Hotel Owner-ManagementSummit1. New Hotel Development2. Management Agreements3. Hotel Investment Boot CampPre-Conference Workshops1. Restaurant & Hotel Corporate CounselOnly2. The Convergence of Risk Management,Legal Compliance and Loss PreventionFebruary 12th - 13thHospitality Law Conference1. General Sessions2. Food & Beverage Track3. Human Resources & Labor Relations Track4. Lodging TrackWHO SHOULD ATTEND:The conference is designed for corporate counsel, attorneys and paralegals practicing in thehospitality industry, owners, investors, developers, deal makers, management companies, operators,risk managers, security and loss prevention personnel, CFOs, comptrollers, accountants, HR and ITprofessionals, franchise service directors, and hospitality law faculty and students.REGISTRATION: D I RDLINE:Visit the registration website at: BDEA 013http://www.regonline.com/2013HospitalityLawConference LYIONY 14, 2 00! R TEARN CLE - CPE - HRCI - EI AGISTRANUAR 2 E V E$ SA 5 www.hospitalitylawconference.com | 713.963.8800 | info@hospitalitylawyer.com December 2012RE HospitalityLawyer.com | JA
  6. 6. LEAD E R S H I P. PROB LE M SOLVI NG. VALU E CR EATION.Alvarez & Marsal draws on a deep operational heritage and For more information onhands-on approach to deliver comprehensive performance A&M’s Real Estate Advisoryimprovement, turnaround management, business advisory Services, please contact theand interim management services that produce meaningful- following individuals:and lasting-results when time is of the essence. Our clientsrange from global enterprises to middle market companies Chuck Bedsole Managing Directorthat are both publicly held or privately owned, as well as large Hospitality Advisory Servicesand mid-cap private equity firms, corporate management and +1 214 438 1014hoards of directors. ebedsole@alvarezandmarsal.comAlvarez & Marsal Real Estate Advisory Services advises owners,investors, lenders and users of real estate — enabling clientsto combat current economic-related challenges, as well asposition them for future success. We recognize that hotels,resorts, timeshare, tourism and entertainment facilities areoperating in a rapidly changing environment. We stand ready © Copyright 2012 Alvarez & Marsal Holdings, LLC. All rights reserved.to provide services throughout the entire real estate lifecycle— from pre-acquisition due diligence to exit strategies,including real estate asset management. www.alvarezandmarsal.com N O R T H A M E R I C A • E U R O P E • M I D D L E E A S T • A S I A • L AT I N A M E R I C A
  7. 7. Social NetworkingYou don’t have to wait until the 2013 HospitalityLaw Conference and the inaugural Hotel Owner-Management Summit to start networking.We encourage everyone to participate in our market-leading socialmedia conversation. Take advantage of the opportunity to stay abreastof all the latest industry news and happenings, while engaging inongoing social dialogue with industry professionals and thoughtleaders. Get connected today by joining the conversation in thefollowing ways: @Hospitality_Law Follow us on Twitter to receive the latest general industry news and updates. Don’t forget to tag conference-related tweets with #HLC13. @HotelOwnerMgmt Follow us on our new Hotel Owner-Management group to get in the conversation with hotel developers, owners, and management groups. Don’t forget to tag conference-related tweets with #HOMS13. Hospitality Lawyer Like us on Facebook to receive conference updates and the latest industry news at http://facebook.com/HospitalityLawyer Hospitality Legal, Risk, Safety & Security Join the discussion on LinkedIn with industry leaders and peers on current hot topics at http://www.linkedin.com/groups/Hospitality-Legal-Risk-Safety-Security-922967/about
  8. 8. Onity Hotel Lock Security Issues - Recommendations for Hotel Operators Y ou may have read or seen the story that has exploded all over the web and news about the Onity hotel lock hackings that surfaced recently when Matthew Allen Cook was arrested last month in Houston, Texas for breaking into several Houston hotel rooms with an electronic device. The TODAY Show even featured a segment on the issue regarding the tool developed by hackers to open Onity electronic locks, which can be concealed in magic markers or iPhone cases. Tom McElroy, a principal at The Hospitality Security Consulting Group, LLC, provides recommendations to hotel operators who use Onity locks.8 Hospitality Lawyer e-Magazine | December 2012
  9. 9. Recommendations for Hotels with Onity Locks inquire about this issue:Installed “We do not have Onity locks installed at our hotel.”To date, Onity has proposed a number of solutions,including the insertion of a mechanical cap into If You are Contacted by the Media About this Issuethe communications/power port to block access byforeign programmable devices. If your property has Onity locks and you decide to comment about steps your property is taking, pleaseContact Onity consider using the following statement:If your hotel has Onity locks on guest room doors, “This is a serious issue that is affecting the entireplease contact Onity immediately to discuss the hotel industry. However, the safety and securitybest solution for your property. At a minimum, we of our guests is always our highest priority and werecommend you install the caps to block access to are working with the manufacturer of the locks, tothe information/power port. Please note, Onity has address this issue.”indicated that, with a small percentage of locks, theinstallation of the cap may cause the lock to overheat With a career that expandsso we recommend that you monitor your locks after more than fifteen years of lawinstallation for this issue and, if necessary, contact enforcement experience andOnity directly regarding any necessary replacement twenty-one years of privatelocks. sector safety and security management experience, TomFront Desk Placard and Response to Guest is knowledgably and adept inInquiries a variety of law enforcement, safety and security relatedFor hotels with Onity locks, we recommend that you principals and programs.place a placard at the front desk reminding guests to:(1) store their valuables in the hotel’s safety deposit Prior to becoming an independent hospitality centricbox and (2) use all locks on the doors to secure safety and security consultant, Tom spent 9 yearstheir rooms. You may also want to post the safety with Hilton Hotels Corporation most recently servinginstructions on the back of guest room doors. We also as the Director - Enterprise Information Securityrecommend that you provide all front desk staff with Office Incident Response Team. In this role he wasan update on this issue so that they can respond to responsible for directing and supporting all aspectsguest inquiries. If your guests inquire about this issue of risk management, monitoring, reporting, andand you have Onity locks, we suggest the following investigations of all real or suspected breaches ofstatement: Hilton’s Privacy and Information Security operations across an enterprise consisting of 3000+ hotel“This is a serious issue that is affecting the entire properties in 77 countries.hotel industry. Your safety and security is our highestpriority and we are working with Onity to addressthis issue. We have implemented the fix providedby Onity, but we always recommend that you followstandard safety precautions and engage all locks tosecure your room.”If Your Hotel Does Not Have Onity Locks InstalledIf your hotel does not have Onity locks installed, wedon’t recommend taking any action, but suggest thatyou respond with the following statement if guests HospitalityLawyer.com | December 2012 9
  10. 10. No electricity, gas orruNNiNg water?Make sure your guests and your profits are still safe.Property damage and business interruption losses require experienced, credible andtrusted claims professionals. that’s why owners, operators and developers turn toBDO Consulting with their property and business interruption insurance claims.the way we see it, helping our clients through the claims process is all about service.and service is what BDO Consulting is all about. Clark SChweerS managing Director 301-634-0281 cschweers@bdo.com BDO COnsulting insuranCe Claim serviCes www.bdoconsulting.com © 2011 BDO usa, llP. all rights reserved. www.bdo.com
  11. 11. Navigating Your Insurance Claim Can Be We know these waters ® Treacherous® When it comes to property insurance claims, things get complicated fast, and it’s not always apparent at first what you’re up against. The insurance company has their own adjuster and a team of experts to scrutinize your claim. When you choose to work with Goodman-Gable-Gould/ Adjusters International, you bring the power of our experience to the process. We guide you to your best possible financial recovery. 800.858.3900 www.ggg-ai.comHospitality & Tourism Expertise Aquatics & Drowning Premises Security Maria K. Bella, AFOIT, CPOI, LGI Donald J. Decker, CPP, CPM mbella@robsonforensic.com ddecker@robsonforensic.com 800.813.6736 800.695.3139 Food Safety Skiing / Winter Sports Barry E. Parsons, FMP Richard L. Frongillo BarryE.Parsons@robsonforensic.com RichardL.Frongillo@robsonforensic.com 800.813.6736 800.813.6736 Dram Shop & Liquor Liability Supervised Care / Day Care Elizabeth A. Trendowski Lisa A. Thorsen, Ed.D., C.R.C etrendowski@robsonforensic.com lthorsen@robsonforensic.com 800.631.6605 800.813.6736 Grounds Maintenance Toxicology Brian O’Donel Michael J. McCabe, Jr., Ph.D., DABT bodonel@robsonforensic.com mmccabe@robsonforensic.com 800.813.6736 800.813.6736These are our experts and we stand behind their work. Contact an expert directly to discuss your case. www.robsonforensic.com Engineers, Architects, Scientists & Fire Investigators 800.813.6736
  12. 12. Crime Prevention ThroughEnvironmental Design:Parking Lot and Parking Garage Security
  13. 13. T he hospitality industry and be seen in one’s surroundings, provides for the safety and known as natural surveillance, is security of its patrons and reduced in parking garages. Thisemployees on its premises. This is because parking garages can beresponsibility extends to all parts of partially or fully enclosed, elevatedthe premises to which patrons and above ground, having multipleemployees may be expected to go levels, or have ramps that provideand to those parts of the premises access to the multiple floors of thethat the business has led the facility.patrons and employees to believethey can go. Security is one of themost important issues confronting “For a securitythe hospitality industry today. measure to beParking lots and parking garagesare facilities used by businesses to preventative, itaccommodate the vehicles of theirpatrons and employees. These has to be designedfacilities take up a large amountof area, but have low levels of to physicallyactivity compared to the businessthey support. There will only be asmall percentage of people in the stop a potentialparking facility compared to insideof the building of the business. criminal fromAs a result, parking facilities havebecome likely locations for criminal committing aactivity. Facilities that experiencea lot of property crime create a crime.”heightened risk for violent crime. An effective way to determine ifThere are some general problems the security in a parking facility isinherent in parking facilities that adequate is to conduct a securitymake the security of patrons survey. A security survey identifiesand employees challenging. A the vulnerabilities of a facility bycriminal’s vehicle most likely will determining what threat existsnot be noticed in a parking facility. against the present site security.Also, parked vehicles provide a By conducting a security survey,hiding place for a criminal and the owner and/or manager iscan block the distribution of proactively analyzing the propertylighting to the area that a criminal for crime foreseeability. Crimemay be located. Security is more foreseeability is the reasonableproblematic for parking garages. expectation of a criminal act toParking garages allow more occur. If a crime is not foreseeable,vehicles to be parked on the same it doesn’t mean that the crime isn’tamount of land. The ability to see possible. It means that the crime HospitalityLawyer.com | December 2012 13
  14. 14. was not reasonably foreseeable behavior. By properly utilizing theat that time, at that location, and concepts of CPTED, deterrence ofunder those conditions. criminal activity can occur.There is no perfect security CPTED Concepts:solution when determininghow to address the securityof a property. Flawless crime 1. Lightingprevention is not reasonablyobtainable and not required, but Lighting is an important securityproviding reasonable security is. measure in a parking facility. Adequate lighting is a deterrenceReasonable security measures to criminal activity. It canshould deter or prevent contribute to the other CPTEDcriminal activity. For a security concepts and active securitymeasure to be a deterrence, measures.it has to have a psychologicaleffect on a potential criminal. It 2. Natural Surveillancediscourages the potential criminalfrom committing a criminal Natural surveillance is a conceptact. Examples of deterrents that applies to everyone that isare adequate illumination of in or near a parking facility. Nota parking lot, closed circuit only does it apply to people intelevision (CCTV), and signs the parking lot or parking garage,posted indicating security guards it applies to people outside ofpatrol the area. For a security the parking facility or inside themeasure to be preventative, it business associated with thehas to be designed to physically parking facility. The ability ofstop a potential criminal from people walking by a parking lotcommitting a crime. Examples of or looking out the window of apreventative security measures business to view the activitiesare a locked door and a security going on inside the parking facilityguard stopping people from enhances the security of theentering an area. facility. In some parking facilities, adequate natural surveillanceSecurity measures can be active may be all that is needed toor passive. Active security provide reasonable security.measures are the result of directhuman involvement and the 3. Access Controluse of specialized equipment.Examples of active security Access control is an importantmeasures are actively monitored means of reducing criminalCCTV and security guards. Passive opportunity. Access controlsecurity measures are the security is gained through controllingmeasures that incorporate the the entering and exiting ofconcepts of Crime Prevention pedestrians and vehicles. ProperThrough Environmental Design security of the perimeter of the(CPTED). CPTED incorporates parking facility enhances accesspsychological barriers for control of the facility.deterring a potential criminal’s
  15. 15. 4. Signs and Graphics Garbage or debris, left in the area, suggests that the area is not caredSigns and graphics that are for and there is no one responsibleproperly located in a parking for the area. Abandoned vehiclesfacility can help pedestrians should be removed from thefind where they want to go area. It is important to portray theand minimize their chances of image that someone cares for thebecoming a victim of crime. area and is responsible for it.Additionally, a sign indicating thearea is under surveillance or there 2. Support by Legitimateare security patrols of the areamay be a deterrence to a criminal. ActivityA graphic is described as a There may be areas that aresymbol that sends a message in a difficult to protect because ofpicturesque manner. An example their location. These areas canis a CCTV camera indicating the benefit from the placementarea is under surveillance. of a legitimate activity. These legitimate activities can include5. Natural Territorial having a Police substation orReinforcement a maintenance shop or offices located in the immediate area.Natural territorial reinforcement Active security measures canprovides a distinct boundary complement the overall CPTEDbetween public and private areas. features in a parking facility.The purpose of these boundaries Active security measures canis to send a message to a potential help compensate for a deficiencyintruder to avoid this area. Natural of CPTED features. An exampleterritorial reinforcement is of this is a parking lot that is aachieved by landscaping, signs, dead end and there is no naturaland fences. It is important to surveillance of the parking lot fromremember to allow for the natural the building. Natural surveillancesurveillance of the area from the of the parking lot area becomesoutside; keep landscaping at the less and less as a person walksproper height and have fencing farther away from the buildingthat is open in its design. towards the end of the parking lot, where fewer people have parkedIn addition to the preceding five their vehicles. The lack of naturalconcepts of CPTED, the following surveillance can be addressedtwo concepts have evolved and by CCTV and/or the presence ofare also considered part of CPTED: security personnel patrolling the parking lot. Some active security measures are:1. Maintenance of theArea 1. Security PersonnelThe maintenance of the area One of the best crime preventionis important to suggest to any methods is the presence ofpotential intruder that the area security personnel. It is importantis well cared for and crime-free. that the security personnel be
  16. 16. recognizable and visible. They criminal activity. Active securityshould be properly equipped to measures can help compensateperform their duties. Security for the lack of natural surveillanceguards should conduct proper and access control. Policies andrandom patrols of an area. This procedures should be establishedwould prevent the predictability for a proper response to any safetyof the whereabouts of a security and security incident.patrol by a criminal. Don is a2. CCTV trained and experiencedCCTV provides surveillance that premisescan detect criminal activities securityand record the camera footage. and policeConspicuous CCTV can be a professionaldeterrent to a criminal. There are with moresome difficulties in monitoring than 35parking facilities because of years ofshadows, spaces between parked relevant experience. He has a B.S. invehicles; and columns, ramps, and Criminal Justice. Don is a certifiedwalls in parking garages. protection professional and certified in patron management.The effectiveness of security His career included the securitymeasures decreases without of VIPs, patrons, volunteers, anda meaningful response to a employees of various facilities andsituation. Proper policies and events. He worked with the Secretprocedures have to be in place, so Service providing security for theappropriate personnel respond to President and Vice President ofthe situation. the United States, and worked with the Governor’s SecurityThe hospitality industry has a Unit providing security for theresponsibility to provide for the governor of New Jersey. Don wasreasonable safety and security involved in the security at the U.S.of its employees and patrons. Open Golf Championship, theParking facilities have become World Pair Driving Championship,one of the most likely locations for events at Giants Stadium, thecriminal activity on a commercial Midland Run and Lollapalooza.property. Proper CPTED conceptscan provide a deterrence to
  17. 17. America’s Largest Independent Insurance Brokerage Devoted Exclusively to the Hospitality Marketplace Specialists Educators Passion People Process Risk Management Division P3 Contact Petra, Hospitality’s Insurance & Loss Prevention SpecialistsHospitality Risk Reports / Updates VIDEOS 800 • 466 • 8951 HospitalityRiskSolutions.com BLOG www.PetraRiskSolutions.com 13950 Cerritos Corporate Dr., Suite A, Cerritos, CA 90703 I Petra Pacific Insurance Service, Inc. • Lic. #0817715
  18. 18. Immigration & the Hospitality Industry: What’s Expected for 2013? N ow that the election is over and we know options and the timelines associated with them while who’s running the country for the next few you urge Congress to fix the broken immigration years, is it too much to think that we might get system in the future. some kind of comprehensive immigration reform? It seems that the time is right for a big change. Here are some ideas about options the hospitality President’s Bush and Obama were not successful in industry can expect to have available for 2013. The getting Congress to take action. President Obama letter and number designations in the sections recently instituted some controversial but popular below are the government’s codes for particular reforms on his own without waiting for Congress. employment-based classifications. The fact that those actions may have helped him get re-elected has not gone unnoticed by Congressional TN Status: Canadians and Mexicans in representatives, who are likely to take action. But the question is when. some professions can get employment authorization quickly The federal government does not move at the speed of business. So it’s important to plan based on current The North American Free Trade Agreement (NAFTA) law, not on what might get through Congress next provides options for quick (often approved on-the- year or even later. The legislative process can take spot in less than an hour), inexpensive (as little as $50 months, and laws enacted won’t go into effect until in government fees), and long-lasting employment even later, after regulations have been drafted and (up to three years at a time) of citizens of Canada or vetted. It’s important to understand your current Mexico. The candidate must satisfy the minimally-18 Hospitality Lawyer e-Magazine | December 2012
  19. 19. described educational requirements for a limited or equivalent. Classically, this applies to jobs such asgroup of professions, such as accountant, computer accountants, engineers, and computer professionals,systems analyst and hotel manager. Management among others. It can be difficult to get approval forconsultants are also possible, but don’t call someone jobs that some people (and the government) don’ta consultant just because there isn’t a NAFTA normally associate with a particular degree, such asprofession for the service you need. Sales Managers, Market Research Analysts, or Public Relations Specialists. But it can be worth exploring.For more information, see http://1.usa.gov/8o0t6m. The current challenge with the H-1B classificationL and EB-1 Status: Executives and is you can only hire people who already have that classification; a person who has not already beenManagers can be transferred from approved for employment with that classificationrelated businesses can’t get it until October 2013. Anyone hoping to be considered for one of the H 1B’s to be allocated atThe government makes it relatively easy to transfer that time should plan to submit the filing on April 1,a person from one related business entity outside 2013, the first day on which filings will be accepted.the U.S. to another in the U.S. That person must have Only 65,000 new H-1B’s are available for each fiscalworked in an executive, managerial, or specialized year, and they can all be allocated within as little asknowledge capacity for that entity outside the U.S. a few days or weeks. Fortunately, Australian citizensfor at least one year within the past three, and be have a virtual equivalent to the H-1B in the form ofcoming to the U.S. to work in one of those capacities. the E-3 status, which is open for applications year-The two businesses must be related, either in terms round.of corporate relationship or ownership by the sameperson or group of people. Both of these classifications require multiple government filings and approvals, with government-This process can be used for temporary positions, charged filing fees starting as low as $825 for anapproved for up to seven (7) years, or “permanent” E-3, and $1,575 for an H-1B. Visa fees add to thoseemployment, which many people call a “green card.” charges. Approval of an E-3 is for two years, butIt requires a mail-in filing for most people, taking from renewable indefinitely, whereas the H-1B can onlytwo weeks (if an expediting fee of $1,225 is paid) to be approved for as many as six years, in three yearseveral months for review, except for Canadians, who increments.can present them at a border or port of entry for anon-the-spot decision. Initial filing fees total $825 and, For more information, see http://1.usa.gov/boasGifor everyone but Canadians, a visa must be applied and http://1.usa.gov/8VIT7E.for and issued at a U.S. consulate outside the country. You can expect that the H-1B classification will be theFor more information, see http://1.usa.gov/cI9arF, subject of great debate in Congress. Many employershttp://1.usa.gov/aCcNY, and http://1.usa.gov/901kqE. claim that businesses are suffering because of the lack of available, highly educated U.S. workers andE-3 and H-1B: Occupations that require the restriction on the number of new H-1B approvals. Don’t be surprised to see higher government-chargeda degree or equivalent can be filled, fees in exchange for an increase in the numbers.with some limitations E-2: Foreign-owned businesses in the“Specialty Occupations” present another great optionfor U.S. employment of transferred employees or U.S. might have another optionnew hires. The general rule for these jobs is that thejob requires a particular kind of college degree or It might be possible to open an additionalthe equivalent of that degree based on education employment-based immigration option if theand/or experience, and the person has that degree business operating in the U.S. happens to have HospitalityLawyer.com | December 2012 19
  20. 20. significant (50% or more) foreign ownership or Investors can get a “green card” for themselves and investment. The U.S. has treaties with many countries qualifying family members if their investment of that make it possible to hire citizens of the foreign at least either $500,000 or $1 million results in the country, whether they are still in that country or employment of at least 10 U.S. workers. The investor already in the U.S., to provide executive, managerial, must be engaged in the management of the U.S. or “essential” services. business, either through the exercise of day-to-day managerial control or through policy formulation. The E-2 process may involve a filing at a U.S. consulate overseas and/or a mail-in petition in the For more information, see http://1.usa.gov/4h1syb. U.S. Government-charged filing fees at consulates start at $270, with the possibility of additional fees Don’t forget – the Form I-9 is associated with the particular country. Mail-in filings in the U.S. have a $325 filing fee. Mail-in filings can for Everybody, not just “foreign” take one month or more for review, and visas can take employees that long or longer, depending on the availability of appointments. Everything I’ve noted above is employment, which means that you must complete a Form I-9 for all of You can determine whether such a treaty exists for them, just like you do for every single employee in a specific country by checking the Department of your workforce. Government audits are becoming State’s Visa Reciprocity page at http://www.travel. more common, but less widely publicized, and fines state.gov/visa/reciprocity/index.htm. for “paperwork” violations can be surprisingly large. F-1 and J-1: Foreign students and Some of you are registered in the E-Verify program. I would not be surprised if E-Verify, or some version exchange visitors can help in a pinch of it, becomes a requirement for all employers as a part of comprehensive immigration reform. But Remember those days when you were performing an until then, it is optional for most employers except internship while in school, working during summer certain federal contractors and their subcontractors. vacation, or in that first job after graduation? Options State and local legislation, such as in Arizona, have may exist for you to employ foreign students in almost imposed E-Verify registration, too, so be sure you any kind of job, but you must be very careful to follow understand the requirements established by the the rules. Employment of F-1 students during the federal and state or local governments in whose school year is limited, but many students approved jurisdiction you operate. for “curricular practical training” or “optional practical You can learn much more at I-9 Central, at http:// training” can be available for up to a full year of full- www.uscis.gov/I-9Central. time service. J-1 “exchange visitors” have come under more challenging protocols, but if one is authorized to work for you, such as at a seasonal resort, it can How about transfers from the U.S. to be an excellent option for students interested in provide services elsewhere or simply summer work/travel. providing management services to For more information, see http://1.usa.gov/3ud5QV. entities outside the U.S.? and http://1.usa.gov/2xD0jS. It certainly makes business sense to “export” your knowledge base to improve the bottom line of a Everybody’s still talking about EB-5 and foreign entity, whether corporately related or simply Regional Centers as a matter of selling your expertise. But a word of caution is due, including for work to be done in Many in the hospitality industry have identified a countries like Canada and the U.K., where it’s easy to source of significant funds through the EB-5 program, get into the country for months at a time without a which includes Regional Centers as one variant. visa. Don’t forget – these are different countries, with20 Hospitality Lawyer e-Magazine | December 2012
  21. 21. ▶ GSBLaw.com 888.768.5939different laws, including immigration, employment than that, the best things that you can do are to planand tax laws. The fact that it’s easy to talk on the well in advance and to understand the current rules,phone or work together over the internet does not timelines and costs required to meet your needs formean that you might not be required to navigate 2013.time-consuming procedures and get governmentapprovals in advance of entering the other country. Gregg Rodgers is an owner in the Seattle office of GarveyThis is one of the reasons that our firm is a member Schubert Barer, a full-serviceof the Globalaw network of law firms, with offices in law firm of more than 100more than 160 countries. It’s also why I am the co-chair attorneys with offices in Alaska,of that organization’s Cross Border Labor Initiative, Beijing, New York, Portland,which regularly meets and shares information about Seattle and Washington, D.C.varying immigration and employment standards so He concentrates his practicethat we can get our clients to the right lawyer in the on the areas of immigrationtarget country for quick, effective advice. (business, healthcare professionals, and families) and employment law. Mr.Conclusion Rodgers provides legal advice to individuals, business owners, managers, and executives on each of theseBusiness moves quickly – government bureaucracy areas. He conducts audits and advises clients ondoes not. Don’t expect much change to actually take Form I-9 and E-Verify compliance. He also conductsplace this coming year. But be prepared to let your training sessions for clients, trade associations, andCongressional representatives know what you need educational groups, on immigration and on laborin terms of changes to our immigration laws. Other and employment law issues. HospitalityLawyer.com | December 2012 21
  22. 22. Healthcare Benefits Update:Will You Be Ready For 2013? 2 013 will mark not just the start of a new calendar year, but also new compliance obligations for employee benefits professionals. Now is the time to review your employee benefit plans and take the steps necessary to ensure continued compliance in 2013. We have outlined a number of key provisions impacting welfare, benefit, and retirement plans below, including some that may need to be implemented prior to 2013. Will you be prepared? Health Care Reform new definition of dependent, as mandated by the Patient A Summary of Benefits and Protection and Affordable Care Coverage (SBC) must be provided Act of 2010 (PPACA). to all group health plan enrollees by the first day of the first Group Health Plans, annual open enrollment period beginning on and after September Generally 23, 2012. This means that if your The Women’s Health and Cancer group health plan is operated on Rights Act of 1998 (WHCRA) a calendar year basis, you must requires group health plans to provide SBCs to enrollees as part provide an annual written notice of your upcoming annual open to participants and beneficiaries enrollment period for coverage of the availability of medical and that takes effect January 1, 2013. surgical benefits under the plan with respect to mastectomy and Health FSAs must be redesigned breast reconstruction. Including for the 2013 plan year to limit the WHCRA notice as part of your annual account balances to $2,500. open enrollment materials is one In addition, employers must begin way to fulfill your annual notice reporting the aggregate cost obligations. of employer-sponsored health Sponsors of group health plans coverage provided to employees must notify employees annually in 2012 on Form W-2 reporting concerning the availability of required to be sent out by January state premium assistance through 31, 2013. Medicaid or the Children’s Health Insurance Program (CHIP). The Ensure that your group health CHIP Reauthorization Act of 2009 plan SPDs have been properly imposes this notice requirement, amended to reflect the updated which can be met by including claims procedures and the
  23. 23. the DOL’s model “Employer CHIP January 31, 2013 marks the endNotice” as part of your annual of the second five-year remedialopen enrollment materials. For amendment cycle and deadlinecalendar year plans, the Employer for filing of a determination letterCHIP Notice must be provided no request for a Cycle B plan. Tolater than January 1, 2013 . preserve reliance on the plan’s continued tax qualification, planQualified Retirement sponsors of Cycle B plans (meaning sponsors with an EIN ending inPlans digits 2 or 7, and sponsors of multiple employer plans) needIf you sponsor a Safe Harbor to ensure that their plans have401(k) Plan, you must prepare and timely adopted all interim anddistribute the annual safe harbor discretionary amendments andnotice to all eligible employees for that determination letter requeststhe 2013 plan year by December are submitted to the IRS no later1, 2012. than January 31, 2013.401(k) plans operated on acalendar year basis must provide Additional Medicare Taxparticipants and beneficiaries withan annual written notice about Beginning in 2013, certainthe qualified default investment employees may see an increasealternatives offered under the in the amount of payroll taxesplan by December 1, 2012. This withheld from their wages. Thisnotice cannot be provided as part is because a second Medicareof an SPD or SMM. tax, one the IRS refers to as an “Additional Medicare Tax,”Single-employer defined benefit will begin being assessed on(DB) plans operated on a calendar individuals earning more thanyear basis must be amended by $200,000 or married couplesno later than December 31, 2012 filing jointly earning more thanto comply with Section 436 of $250,000.the Tax Code to restrict benefitaccruals, distributions from, and Currently, employers are requiredamendments to an underfunded to withhold 1.45% in MedicareDB plan. The IRS has released taxes directly from an employee’sSection 436 model amendment wages and to make a “matching”language that can be used employer contribution equal towhen drafting the required plan 1.45%. Self-employed individualsamendment. must pay 2.9% of their earnings in Medicare tax, which represents both an individual and employer
  24. 24. contribution. Note that under insurance coverage in excess ofcurrent tax law, all wages are $50,000, noncash fringe benefitssubject to Medicare tax. and receipt by an employee of third-party sick pay should beThe Additional Medicare Tax rate factored in the determination. Thewill add 0.9% to the amount that IRS also expects to release revisedsome individuals will have to Forms 941 and 943 in the future.pay in 2013. The additional 0.9%will kick in only when the wages Callan Carterpaid to an individual for the 2013 is a partnercalendar year go above $200,000. in the SanIt should be noted that this is Franciscoan additional tax that will apply o f f i c e ,only to individuals – there is no workingemployer matching requirement. exclusively in the firm’sThe IRS has confirmed that Employeeemployers have the obligation Benefitsto withhold the Additional Practice Group. Callan has practicedMedicare Tax from an employee employee benefits law since 1997.when the employee’s wages or She advises clients on plan design,compensation exceed $200,000. drafting, implementation andThe employee may, however, get a termination of qualified retirementrefund of the Additional Tax if the plans, health and welfarecombined wages of the employee plans, fringe benefit programs,and spouse do not exceed equity compensation and non-$250,000 when filing a joint return. qualified deferred compensation arrangements.And remember to be sureto also consider all forms of For more information contact thecompensation when determining author at CCarter@laborlawyers.when an employee’s wages exceed com.$200,000 and trigger the AdditionalMedicare Tax. For example, theimputed cost of group-term life
  25. 25. Top10 Ways To Hold A Company Party – Without Getting SuedWith the Holiday Season in full swing, many employers ask us about the wisdom of holding companyparties where alcohol will be served. They generally want to know about the risk involved if anemployee drinks too much at the party and misbehaves, or worse, injures or kills someone on the wayhome. So with the usual tip of the hat to David Letterman, here is our “holiday party top ten” list.10 If possible, don’t serve alcohol. This is easier to do if you simply have a catered lunch at the ordinarily do. Remind employees that, while you encourage everyone to have a good time, company’s offices. your company’s normal workplace standards of conduct will be in force at the party, and 9 Invite spouses and significant others so that there will be someone there to help keep an eye misconduct at or after the party can result in disciplinary action. on your employees and, if necessary, get them home safely. 3 Hire professional bartenders (don’t use supervisors!) and instruct them to report anyone 8 Always serve food if you serve alcohol, and always have plenty of non-alcoholic beverages available. who they think has had too much. Ensure that bartenders require positive identification from guests who do not appear to be substantially over 21. 7 If your party is a dinner, consider serving only wine or beer (plus non-alcoholic alternatives) with the meal. 2 Arrange for no-cost taxi service for any employee who feels that he or she should not drive home. At management’s discretion, be prepared to 6 If you do serve alcohol, do not have an “open bar” where employees can drink as much as provide hotel rooms for intoxicated employees. they want. Instead have a cash bar or use a ticket system to limit the number of drinks. Close the 1 Never, never, hang mistletoe! Yep, we’re not kidding. Take a look at item number 4 again, bar at least an hour before you plan to end the and you’ll see why. party. Switch to coffee and soft drinks from there on. Mike Mitchell is a partner in the New Orleans office. 5 Let your managers know that they will be His practice includes considered to be “on duty” at the party. They traditional labor law should be instructed to keep an eye on their matters such as collective subordinates to ensure they do not drink too bargaining, arbitration, much. Instruct managers that they are not to union avoidance and unfair attend any “post party” parties. labor practice proceedings before the National Labor 4 Consumption of alcohol lowers inhibitions, and impairs judgment. This can result in employees saying and doing things that they would not Relations Board. HospitalityLawyer.com | December 2012 25
  26. 26. Adapting to an Aging Workforce How Old is Your Hotel Staff? 11.6 % from the beginning of the recession in Y December 2007. A number of factors, such as ou may not know, and that’s not the elimination of mandatory retirement, longer surprising. According to the National life expectancy and better health play a role, Study of Business Strategy and Workforce but by and large people are holding onto their Development, only about 1/3 of employers jobs longer simply due to economic frailties have adequately analyzed their workforce such as unemployment within their households, demographics. But the reality is that your inadequate retirement savings and dwindling workforce is aging. In every industry all across social security benefits. America, the workforce demographics are shifting to an older workforce population. The concern for the hospitality industry is that Employment among people aged 55 and older many of the jobs, such as those in housekeeping, has increased to an all-time high of 40.4% are physically demanding jobs. The injury rate by (Bureau of Labor Statistics) and the percentage house-keepers is already higher than occupations of those 65 and over reached 18.2% this year -up commonly recognized as dangerous, including26 Hospitality Lawyer e-Magazine | December 2012
  27. 27. coal mining and building construction, and an aging Discriminationwork force doesn’t bode well to reduce those risks. In You may think that firing or forcing out older workersyears past, the rigorous demands of housekeeping may be the best solution, but it rarely is. Older workershave always kept the turnover rate high for the generally have more experience, have better workhospitality industry –usually above 60% compared habits, are more loyal and have a higher commitmentto 3% national average- with new entrants to the to quality. If that’s not convincing enough, considerlabor force quickly filling the vacated positions. But this: Along with the increase in older workers, agetoday, the turnover ratio for the hospitality industry discrimination claims have risen correspondingly.is at an all time low (29.1%) and the average age The number of age discrimination claims filed withamong the 436,000+ U.S. housekeepers is 40 years the Equal Employment Opportunity Commissionold and climbing. has risen 23.5% in the past two years, making it the fastest growing category of discrimination cases.While lower turnover rates usually mean higher The ADEA (Age Discrimination in Employment Act)profits, hotel operators should be concerned about prohibits an employer from refusing to hire or fire,the aging workforce. During the recession, managers or otherwise discriminate against a person age 40 orwere able to effectively manage profitability and over, solely on the basis of age, and recent changesperformance mainly through controlling labor cost. to the ADEA make age discrimination cases thatFrom 2009 to 2010, U.S. hotels spent 3 .4% less on much harder to defend for employers.labor costs per occupied room (a measure of work-load or level of service). While those measuresmay have created short term efficiencies, there arevery real concerns that the added demands of lessemployees having to do more combined with anaging workforce may translates into escalating age-related injuries and insurance costs as well as havenegative impacts on quality and productivity in thelong term.Although older workers typically have fewer injuriesthan their younger counterparts, when an injurydoes occur, the injury tends to be more severe and itusually takes significantly longer for the worker torecover. Studies suggest older workers take anaverage of 15 days off per injury compared to oneday off for younger workers. There is also data thatshows older workers are less likely to return to workafter an injury – in some cases over 80% less likely,compared to 12% for a worker in his 20s. Likewise, asthe workforce ages, the incidences of disability rise So What Can You Do?20% for workers in the 45 to 54 year-old range, and In almost every personal trait desired by employers-approximately 42% for workers in the 65+ age range. from honesty and integrity to pride and motivation-Lost-time injuries have a far more negative impact to seasoned employees score higher than theiryour insurance premiums than frequency. Meaning, younger counterparts. The unique experience, skillsan employer who has several small injuries with and values they bring allow employers to maximizelimited or no time away from work typically pays far productivity and easily translates into an increasedless in insurance rates than an employee who has competitive advantage and bottom line savings.only had a couple of severe lost-time injuries. But as they grow older, management needs to realize a potential depreciation in their skills and ability- especially in physically demanding jobs- HospitalityLawyer.com | December 2012 27
  28. 28. 40 or over, solely on the basis of age, and recent changes to the ADEA make age discrimination cases that much harder to defend for employers. may be occurring. Consequently, hotel operators So What continuously assess the nature of the work need to Can You Do? that needs to be done and the abilities of the staff In almost every personal trait desired by employers- they have performing those duties. Where possible, a from honesty and integrity to pride and motivation- seasoned employees scoremay be than their younger modification in job duties higher necessary. counterparts. The unique experience, skills and values theyemployers should lookto maximize pro- Similarly, bring allow employers to invest in tools ductivity and that encourages into allows the work to or training easily translates or an increased competitive advantageless physical line savings. But be performed with and bottom strain or greater as they grow older, management needson realize a comfort. There are many new devices to the market that assist housekeepers with lifting heavy mattresses potential depreciation in their skills and ability- especially in physically demanding jobs- may be linen during bed making duties, ease pushing heavy occurring. Consequently,simplyoperators the routine and amenity carts or hotel reduce need to continuously assess strenuous, ofawkward that needs performance of the nature the work reaching, to be done or exertions during daily roomhave kneeling and the abilities of the staff they cleaning performing those duties. Where possible, a modifi- activities. We Can Help The Bed MadeEZ® Is Proven To: cation in job duties may be necessary. Similarly, employers should look to invest in tools or training Although, “investing” in anything during an economic that encourages or allows the work to be performed with less physical seem or greater comfort. increasing recovery may strain counter-intuitive, There are many new decvicesandthe market that assist age, has employee’s safety on health, regardless of !! Eliminate Injuries Related To Bed Making ! Reduce Workers’ Compensation Costs housekeepers withshown heavy mattresses of injuries, repeatedly been lifting to lower the risk during bed making duties, ease and have a positive affect improve productivity pushing heavy linen and ! Reduce Indirect Costs amenitycompany’s employee satisfaction,per- on a carts or simply reduce the routine customer ! Improve Productivity formancescores and financial performance. In fact, service of strenuous, awkward reaching, kneeling or exertionsreport by Liberty cleaning activities. a recent during daily room Mutual’s Safety Index ! Improve Employee Satisfaction suggests “95% of businesses report workplace safety Although, “investing” in anything during an economic ! Improve Regulatory Agency Relations recovery may seem positive impact on a company’s initiatives have a counter-intuitive, increasing financial performance” and a study by OSHA’s Office employee’s safety and health, regardless of age, has ! Increase Competitive Advantage of Regulatory Analysis indicates companies that repeatedly been shown to lower the risk of injuries, improve productivity and have a positive affect on and implement effective ergonomic and safety a company’s can expectsatisfaction, customer service programs employee returns of $4 to $6 for every $1 invested. scores and financial performance. In fact, a recent report by Liberty Mutual’s Safety Index suggests “95% of businesses report just common sense. Preparing for the future is workplace safety initiatives have a positivetools and resources that allows your Investing in impact on a company’s financial performance” and a study by OSHAs Office of employees to perform their jobs better, safer and Regulatory Analysis indicates companies that imple- more efficiently isn’t only ment effective ergonomic and safety and programs practical, it’s essential in today’s can expect returns of $4 to $6 for every $1 invested. changing workforce landscape. Preparing for the future is just common sense. Investing in tools and resources that allows your Chris Montross Is Vice President employees to perform Market & better, safer and their jobs Brand Development more efficiently isn’t only practical, it’s essential in For CKI Solutions, Which today’s changing workforce landscape. Offers Products And Programs Chris Montross Is Vice Solve Problems And That President Market & Brand Development Mitigate Risks Which Offers With For CKI Solutions, Associated Products And Programs That Solve Problems And For More Information On CKI Risk Solutions, Mitigate RisksHousekeeping Duties And Associated With Housekeeping Duties Guestroom Maintenance. And Guestroom Maintenance. Please Contact Us At 888.222.2217 Or Visit!!! Www.Ckisolutions.US.28 Hospitality Lawyer e-Magazine | December 2012
  29. 29. CWT SAFETY & SECURITY Wherever you go, we’ll be there.Helping companies of all sizes.CWT Safety & Security helps companies of all sizes manage the complex and changingrequirements of corporate duty of care and focus on the essential aspects of travelersafety. CWT’s offerings are designed to support travelers, travel managers and securitymanagers throughout the trip life cycle, from booking through safe return, by: Anticipating disruptions to travel so travelers can avoid problems and companies can avoid unnecessary costs and risks Locating travelers quickly, for any reason Communicating with travelers via multiple means—email, SMS, voice Assisting travelers in need with rebooking, evacuation, monitoringFor more information, please contact cwtbusinessdevelopment@carlsonwagonlit.comor go to www.carlsonwagonlit.com
  30. 30. U.S. Supreme Court Will Hear Landmark Class Action Waiver Case: American Express Co. v. Italian Colors Restaurant T Background his past month, the United of the month) and Amex’s credit States Supreme Court cards (where the customer can granted a writ of certiorari The enforcement of contractual pay over time, like a typical credit to review the most recent arbitration and class action waiver card). According to the plaintiffs, decision of the United States clauses has been the subject of legitimate reasons permit Amex Court of Appeals for the Second significant litigation in the past few to charge a higher fee with respect Circuit in American Express Travel years. The Supreme Court has been to its charge cards. But when Related Services Co. v. Italian strongly supportive of arbitration, Amex charges a higher fee for its Colors Restaurant (“In re Amex and has indicated some support credit card, plaintiffs allege that it Merchants’ Litigation”). See No. for class action waivers. Not all does so by improperly using the 12-133, 2012 US LEXIS 8697(Nov. lower courts have demonstrated “Honor All Cards” provision of the 9, 2012). The Second Circuit has the same deference, however. Agreement to create an illegal addressed the arbitration clause “tying arrangement” between and class action waiver in this case Plaintiffs in the In re Amex the two different card products three times since 2009, and it has Mercants’ Litigation case are all in violation of Section 1 of the been to the Supreme Court once merchants (not consumers) who Sherman Act, 15 U.S.C. § 1; see before already. It is back at the accept Amex cards for customer e.g., Northern Pacific Railway Co. v. Supreme Court because, following purchases. Amex and its chief United States, 356 U.S. 1, 5-6 (1958) remand to the Second Circuit competitors, Visa and Mastercard, (defining a tying arrangement in 2010, the Court of Appeals— earn revenue by withholding a as “an agreement by a party to as it had done twice before— “merchant discount fee” from each sell one product but only on the reversed the trial court’s decision charged transaction. Plaintiffs condition that the buyer also in favor of individual arbitration, allege that Amex charges a supra- purchases a different (or tied) once again determining that the competitive fee that exceeds product . . . .”). relevant arbitration and class the fee charged by Visa and action waiver clauses at issue were Mastercard under circumstances In addition to its “Honor All Cards” unenforceable. that constitute a violation of provisions, the Amex Agreement federal antitrust law. contains a mandatory arbitration The Supreme Court has not yet clause and class action waiver squarely addressed the question The contract that permits the clause. These clauses preclude of whether or under what American Express Company merchants from suing in court conditions a class action waiver (“Amex”) to charge a fee is its or commencing any arbitration might not comport with the Card Acceptance Agreement (the other than on an individual (non- Federal Arbitration Act (the “FAA,” “Agreement”) with merchants. class) basis. Plaintiffs challenged 9 U.S.C. §§ 1-16). The Supreme The Agreement is a form contract. this clause by filing suit in the Court’s upcoming decision could Merchants do not negotiate its United States District Court for determine whether plaintiffs can terms with Amex. It contains an the Southern District of New relatively easily avoid such clauses “Honor All Cards” provision, which York rather than commencing an in the future. requires that merchants accept arbitration. both Amex’s charge cards (where the customer pays in full at the end30 Hospitality Lawyer e-Magazine | December 2012
  31. 31. Amex I for the proposition that a party may de facto immunity from antitrust seek to invalidate an arbitration liability by removing the plaintiffs’On March 16, 2006, the District agreement on the grounds that only reasonably feasible meansCourt determined that the arbitration would be prohibitively of recovery.” Id. at 320. Amexenforceability of the class action expensive if the plaintiff can show responded with a petition for a writ(or class arbitration) waiver was a the likelihood of incurring such of certiorari. See American Expressmatter to be decided by arbitrators costs. Amex I, 554 F.3d at 315 (also Co. v. Italian Colors Restaurant, 130and granted Amex’s motion to citing Mitsubishi Motors Corp. S. Ct. 4201 (2010).compel arbitration under the v. Soler Chrysler-Plymouth, Inc.,FAA. In re Amex Merchants’ Litig., 473 U.S. 614 (1985), and Gilmer Amex IINo. 06-1871, 2006 U.S. Dist. LEXIS v. Interstate/Johnson Lane Corp.,11742 (S.D.N.Y. March 16, 2006). 500 U.S. 20 (1991)). The Supreme Court grantedThe plaintiffs promptly appealed. Amex’s petition for certiorariIn a January 30, 2009, opinion Although the Second Circuit and remanded the case forthe Second Circuit reversed, recognized that, in the Supreme further consideration followingconcluding that the plaintiffs had Court decisions it cited, the its decision in Stolt-Nielsen S.A.properly raised a question of the Supreme Court had enforced the v. AnimalFeeds Int’l Corp., 130 S.enforceability of the class waiver underlying arbitration clauses, Ct. 1758 (2010). In that case, theprovision, and, by extension, the the Second Circuit claimed that a Supreme Court held that a partyarbitrability of the dispute, and collective remedy was available cannot be forced to submit to classthat the issues were therefore in those cases, unlike in Amex arbitration without evidence thatfor decision by a court, not an I. It then concluded that the it had agreed to such a collectivearbitrator. It further determined plaintiffs’ evidence showed that procedure (and that silence isthat the class waiver provision they could not pursue their claims not sufficient evidence of suchwas unenforceable under the as individual arbitrations. The consent).FAA because its enforcement plaintiffs’ expert had, for example,would effectively preclude any opined that an average single On remand, however, the Secondaction by plaintiffs. See In re Amex merchant might need to spend Circuit determined that Stolt-Merchants’ Litig, 554 F.3d 300 (2d hundreds of thousands of dollars Nielsen had no real effect onCir. 2009) (“Amex I”). in order to claim only several the issues before it. It concluded thousand dollars in damages. that Stolt-Nielsen stands for theIn reaching these conclusions, The Second Circuit rejected the proposition that one party cannotthe Second Circuit noted both analysis (offered both by Amex and initiate class arbitration againstthe strong federal policy in favor the District Court) that trebling of another party absent a contractualof arbitration and recent debates damages under the Clayton Act agreement to do so, but thatsurrounding class waivers in and the availability of attorneys’ Stolt-Nielsen did not mean thatmandatory arbitration clauses. fees for a prevailing party a contractual clause barring classId. at 302-03. But it also cited would make an individual claim arbitration is per se enforceable.the Supreme Court’s decision in economically feasible. Instead, the In re Am. Express Merchants’ Litig.,Green Tree Fin. Corp.-Alabama v. Second Circuit held that to enforce 634 F.3d 187, 193 (2d Cir. 2011)Randolph, 531 U.S. 79, 82 (2000), the Agreement would “grant Amex (Amex II). HospitalityLawyer.com | December 2012 31
  32. 32. In reaching this conclusion in The Second Circuit held, however, Looking Ahead Amex II, the Second Circuit once that Concepcion did not alter its again found that plaintiffs had prior analysis. See In re Am. Express Having granted certiorari, the demonstrated that the class Merchants’ Litig., 667 F.3d 204 (2d Supreme Court is expected to hear waiver in the arbitration clause Cir. Feb. 1, 2012) (Amex III). In its oral argument on Amex III early at issue would preclude plaintiffs view, the decision in Concepcion, next year. The question on which from bringing Sherman Act claims like the decision in Stolt-Nielsen, it granted review is “[w]hether the against Amex. Id. at 196. This did not render class waivers per se Federal Arbitration Act permits time, the Second Circuit panel enforceable. Instead, the Second courts, invoking the ‘federal also seemed especially convinced Circuit held that both cases are substantive law of arbitrability,’ to that, as a matter of public policy, simply applications of the principle invalidate arbitration agreements plaintiffs must never be deprived that parties cannot be forced into on the ground that they do not (even indirectly) of the protections a class wide arbitration unless they permit class arbitration of a federal- of the federal antitrust laws.See id. have agreed to that procedure. law claim.” See Question Presented at 197-98. It flatly rejected Amex’s Id at 213. The panel therefore and Grant of Cert., American argument that Stolt-Nielsen described the Supreme Court’s Express Co. v. Italian Colors disallowed the use of public policy decision in Concepcion as offering Restaurant, No. 12-133, available as a basis to void contractual “a path for analyzing whether a at http://www.supremecourt.gov/ language. Instead, the panel held state contract law is preempted by qp/12-00133qp.pdf (last visited that Stolt-Nielsen only forbids the FAA,” id., not whether a class Nov. 14, 2012). A decision would using public policy to interpret waiver is necessarily enforceable most likely be announced in June the parties’ intent in a contract if plaintiffs demonstrate that 2013 and could be meaningful to find that they had agreed to a enforcement would preclude not only in the commercial class arbitration procedure. Id. at their ability to vindicate federal context, but perhaps in shedding 199- 200. statutory rights, id. at 214. light on how the Supreme Court might address issues such as the Amex III The Second Circuit denied National Labor Relations Board’s rehearing en banc on May 29, 2012. recent decision in D.R. Horton Inc., On April 11, 2011, the Second In the concurring opinion to the 357 NLRB No. 184 (2012) (deeming Circuit placed a hold on its order denying rehearing, Justice the “right” to file a class action mandate in Amex II to allow Amex Pooler reiterated that the holding or class arbitration a concerted to file another petition for a writ in Amex III “rests squarely on the protected activity and on that of certiorari. While the mandate vindication of statutory rights basis invalidating an arbitration was on hold, the Supreme Court analysis—an issue untouched in agreement that allegedly violated decided AT&T Mobility LLC v. Concepcion.” In re Am. Express federal labor law by requiring Concepcion, 131 S. Ct. 1740 Merchants’ Litig., 681 F.3d 139 (2d individual arbitration). (2011). The parties then submitted Cir. 2012). supplemental briefing to the The dissent to the order denying Second Circuit on the potential rehearing en banc in the Second impact of Concepcion. Circuit argued that Concepcion “teaches that the FAA does not32 Hospitality Lawyer e-Magazine | December 2012
  33. 33. allow courts to invalidate class- Justice Sotomayor, who originally For more information on theaction waivers even if ‘class sat on the Second Circuit panel content of this alert, please contactproceedings are necessary to in Amex I, is recused from the your Nixon Peabody attorney or:prosecute small-dollar claims that case. She was in the minority inmight otherwise slip through the Concepcion and thus might have Paige L. Berges at pberges@legal system.’” 681 F.3d at 143, been a voice against reversal in nixonpeabody.com or (212) 940-quoting Concepcion, 131 S. Ct. Amex III. 3029.at 1753. This argument will likelycarry weight with the majority of Christopher M. Mason at cmason@the Supreme Court that has in the nixonpeabody.com or (212) 940-past strictly upheld party choice 3017.in arbitration clauses. Whetherit will be powerful enough for areversal is yet unknown, but thereis one other factor favoring Amex:FTC Warns Hotel Operators that Price Quotes that Exclude‘Resort Fees’ and Other Mandatory Surcharges May Be DeceptiveThe Federal Trade Commission has warned 22 hotel operators that their online reservation sites may violatethe law by providing a deceptively low estimate of what consumers can expect to pay for their hotel rooms.The warning letters cited consumer complaints that surfaced at a recent conference the FTC held on “drippricing,” a pricing technique in which firms advertise only part of a product’s price and reveal other chargesas the customer goes through the buying process. According to the FTC letters, “One common complaintconsumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsiteexercise or pool facilities, or internet access, sometimes referred to as ‘resort fees.’ These mandatory fees canbe as high as $30 per night, a sum that could certainly affect consumer purchasing decisions.” The warningletters also state that consumers often did not know they would be required to pay resort fees in addition tothe quoted hotel rate.“Consumers are entitled to know in advance the total cost of their hotel stays,” said Federal Trade CommissionChairman Jon Leibowitz. “So-called ‘drip pricing’ charges, sometimes portrayed as ‘convenience’ or ‘service’fees, are anything but convenient, and businesses that hide them are doing a huge disservice to Americanconsumers.”The letters strongly encourage the companies to review their websites and ensure that their ads do notmisrepresent the total price consumers can expect to pay.The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair businesspractices and to provide information to help spot, stop, and avoid them. To file a complaint in English orSpanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enterscomplaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminallaw enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a varietyof consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for thelatest FTC news and resources. HospitalityLawyer.com | December 2012 33
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