Is the Hotel Industry Due for Another Crash Course in Hospitality 101?

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Co-Authored By:  Peter Campbell Sode

Whether it’s the Hotel Shangri-La Hotel in Santa Monica, CA, the Millennium Broadway Hotel Times Square NYC, NY, the Comfort Suites Mission Valley Hotel, San Diego, CA or the Fontainebleau Miami Beach Hotel, Miami Beach, FL, allegations of discrimination are not new to the hotel industry. Unfortunately, the hospitality industry is subject to discrimination claims from guests and employees based on religion, race and disabilities.  As you can imagine, the term “discrimination” evokes a pantheon of emotions within the general public due to the fact that it has different connotations for different people.  Discrimination for any reason exerts a wide-ranging impact not only on those being discriminated against, but also on the parties responsible for the discrimination.

Discrimination is of particular importance to the hospitality industry because most, if not all, United States federal anti-discriminatory statues prohibit discrimination in places of public accommodation, inclusive of hotels and other business entities that provide lodging to the general public as a whole. Furthermore, the hospitality industry employs a large number of individuals in order to ensure that daily operations within hotels go as planned and thus, the hoteliers’ status as employers’ means that they absolutely have to be cognizant of anti-discriminatory laws and statutes that relate specifically to employees and their civil rights.

Religious Discrimination (Guests): Hotel Shangri-La in Southern California.

As a matter of fact, a recent high-profile legal dustup involving the famed Three Diamond Rated Hotel Shangri-La in Southern California demonstrates the need for hoteliers to understand the anti-discrimination laws in the context of daily hotel operations.  In July 2010, Tehmina Adaya, “the owner of the Hotel Shangri-La in Santa Monica discriminated against Jews during a charity event in July 2010.  The owner reportedly yelled ‘Get the [expletive] Jews out of my pool!’ and forced the party to pack up and leave” (See Miles). Kathleen Miles of the Huffington Post reported that the 18 participants in the Friends of the Israel Defense Forces charity event subsequently sued the hotel due to the fact that they had suffered negligent emotional distress and/or intentionally-inflicted emotional distress.  Miles stated that the lawsuits resulted in $100,000 in general damages to certain plaintiffs and $1.2 million in general damages to the group.  However, total damages increased when “a jury in California Superior Court ordered the hotel and owner to pay approximately $440,000 in additional punitive damages to the plaintiffs” (See Lowenfeld). In total, the Hotel Shangri-La’s discriminatory actions resulted in a damage award of  $1.65 million .

Racial Discrimination (Employee): Millennium Broadway Hotel, Times Square.

Hotel guests are not the only class of plaintiffs filing anti-discrimination lawsuits against hotels across the country. Hotel employees have also utilized the legal system to pursue remedies for their employers’ discriminatory actions.  The Three Diamond Rated Millennium Broadway Hotel in Times Square in Manhattan was hit by a discrimination lawsuit in 2011. In this particular lawsuit, Freddrick MacMillan, “who had been an employee of Millennium for over two decades, sued the hotel in Federal District Court alleging that he was forced to work in a racially hostile work environment” (See Hotel).  Mr. MacMillan asserted that he decided to sue the hotel because his status as the only African-American employee in the engineering department led to co-workers using “inappropriate racial terms in his presence in order to upset and harass him. Mr. MacMillan claimed that co-workers referred to him as ‘boy’ and one of them suspended a lynched voodoo doll hanging from a noose in a supervisor’s office. The doll remained…in the supervisor’s office until an union representative intervened” (Id.). Macmillan allegedly suffered because he had to work in a racially hostile environment and the jury that heard this particular case awarded Mr. MacMillan “$1,000,000 in punitive damages and $125,000 in compensatory damages” (Id.).

ADA Discrimination (Employee): Comfort Suites Mission Valley Hotel, San Diego.

An allegation under the American With Disabilities Act resulted in a discrimination lawsuit when “supervisors at the [Three Diamond Rated] Comfort Suites Mission Valley Hotel in San Diego denied a former front desk clerk diagnosed with autism access to a job coach that ‘would have helped the clerk learn to master his job using autism-specific training techniques.’ Supervisors also allegedly  made repeated disparaging remarks about his condition” (Dunning).  The supervisors in this particular case were bound and determined to wash their hands of this disabled employee and “after refusing on several occasions to allow the job coach into the hotel, the supervisors allegedly accused the clerk of mishandling a hotel guest’s packages and fired him” (See Dunning).

The fired clerk and the United States Equal Employment Opportunity Commission (EEOC) subsequently brought a discrimination lawsuit against the Comfort Suites Mission Valley Hotel due to the the company’s failure “to make a reasonable accommodation for the clerk’s disability, discrimination, and wrongful termination” (See Dunning).  The case was settled  and “according to the terms of the settlement, the former clerk will receive $125,000, while San Diego-based Partnership with Industry-the non-profit employment support organization that sent the job coach-will, receive $7,500” (Id.).  Total damages paid by the hotelier in this case amounted to $132,500.00.

Racial Discrimination: Fontainebleau Miami Beach Hotel in Miami, FL.

Finally, a recent incident involving the Four Diamond Rated Fontainebleau Miami Beach Hotel in Miami, Florida could provide a case study on why sensitivity to potential discrimination-related issues is critical to the hospitality industry.  According to the news, the racial discrimination allegations are that “a group of South Florida women claim they were recently turned away from a club inside Miami Beach’s famed Fontainebleau Miami Beach Hotel and they say it’s a case of racial discrimination” (See Shepard).  The alleged victims  claim  they ‘‘‘saw all these other white girls, you know, getting in…One of the security guards saw us and kind of felt bad and approached me.  He said ‘you know what, he’s not going to let you guys in because you’re black, you know that’” (Id.).  The alleged victims also claim that Rodrick Dudley, who was supposedly employed by the Fontainebleau Hotel as a club promoter, sent one member of the group a text message stating “It’s a double standard @ the fountainbleu.  White chics can be ok.  Black chics gotta look twice as good and they only cater to a so-called urban crowd on thursdays and sundays” (Id.).

As of press date, no lawsuit has been filed and Fontainebleau Management disputes the allegations. Although this incident has generated a large amount of publicity in the Miami area as well as nationwide, it is uncertain if the image of the Fontainebleau Hotel will be cast in a negative light.

The Cost of Litigation: $2.9M or Alternatively, $969K Per Each of the Three Hotels.

The dollar amounts paid out to resolve the previously mentioned hotel discrimination cases (Hotel Shangri-La, Millennium Broadway Hotel Times Square and Comfort Suites) totaled $2,907,500. The total settlement amount in these three cases effectively cost each hotel an average of $969,166.67 in damages.  In other words, each hotel averaged about $1M in damages – an enormous hit to the hotel’s bottom line. But in all probability, each hotel saw a significant diminution in its value.

The Lesson for the Hospitality Industry.

Therefore, the question of how hoteliers can protect themselves from financially crippling discrimination lawsuits takes on great importance.  The easiest way for hotels and their owners to prevent discrimination lawsuits from occurring is to familiarize themselves with federal laws against discrimination, how these federal statues work and the standards of evidence that such laws require of the plaintiffs to prove their case.

Title 42 of the Civil Rights Act, Chapter 21 – Civil Rights, Subchapter II – Public Accommodation

One federal anti-discrimination statue that relates to potential discrimination lawsuits against hotels and their proprietors is U.S. Code Title 42, Chapter 21, Subchapter II.[1]  This statue prohibits discrimination or segregation in places of public accommodation based on the equal access principle, which states that “all persons shall be entitled to the full and equal enjoyment of the goods, services, facilities, privileges, advantages, and accommodations of any place of public accommodation, as defined in this section, without discrimination or segregation on the ground of race, color, religion, or national origin”.[2] Hotels clearly fit under the umbrella of “places of public accommodation” and are subject to this statue.  Therefore, the Hotel Shangri-La Santa Monica incident fits under the umbrella of this statute. It remains to be seen if the allegations against the Fontainebleau Hotel Miami Beach also fall within this statute.  However, if hotel management and employees are made more aware of this federal law and the potential damages emanating from violations of this statute, they would have been less likely to expose themselves to damaging discrimination lawsuits.

Title VII of the Civil Rights Act of 1964, Volume 42.

Another federal anti-discrimination law that hoteliers absolutely have to be aware of is Title VII of the Civil Rights Act of 1964.  Volume 42 of the United States Code states that “Title VII prohibits employment discrimination based on race, color, religion, sex, and national origin”[3].  Furthermore, the United States Code makes it clear that Title VII is intended to grant US District Courts jurisdiction to grant injunctive relief against discrimination in public accommodations and provides the US Attorney General with the power to institute suits to protect Constitutional rights in public facilities.

Scope of Title VII of the Civil Rights Act of 1964,  Volume 42.

The three categories of discrimination covered by Title VII are disparate treatment, disparate impact, and failure to reasonably accommodate religious or disability needs.  If an individual wishes to bring a Title VII disparate treatment, disparate impact, or failure to reasonably accommodate discrimination claim, he or she has to file an complaint with the US Equal Employment Opportunity Commission.  The EEOC will usually perform a quick inspection regarding the individual’s allegations.  The EEOC will then issue the plaintiffs a “right to sue” letter authorizing them to bring a discrimination lawsuit under that particular statue.

Furthermore, if a plaintiff wishes to bring a Title VII claim, their suit must pass the three-step evidentiary analysis mandated by the Supreme Court in McDonnell Douglas Corp. v. Green.[4]  In order to pass the McDonnell Douglas test, the plaintiffs must first prove a prima facie case against the defendant[5].  Once a prima facie case is proven, the defendant has to provide a plausible, non-discriminatory reason for their actions. After the defendant has articulated their reason for acting in the manner in which they did, the plaintiffs have to demonstrate that the defendant’s stated reason for the behavior in question is merely pretext for discrimination.  Title VII covers the discrimination present in the Millennium Broadway Hotel in Times Square and Comfort Suites Mission Valley Hotel discrimination cases. Therefore, it would be prudent for hotel owners to familiarize themselves with this statue in order to avoid potential lawsuits.

Americans with Disabilities Act (ADA) and Americans with Disabilities Act Amendments Act (ADAAA). 

Other federal statues prohibiting hotels and other related business entities from engaging in discriminatory actions are the Americans with Disabilities Act (ADA) and the Americans with Disabilities Act Amendments Act (ADAAA).  These two laws prohibit discrimination against persons with all kinds of disabilities, inclusive of their activities as business patrons and employees.  The ADA mandates that public buildings facilitate equivalent access for people with disabilities and able-bodied persons.  Since all hotels are “places of public accommodation”, they fall under the umbrella of “public buildings” and thus are required to provide equal access to disabled persons.  The ADA also prohibits employment discrimination against disabled persons in the event that reasonable accommodations can be made for the person’s disability.  The level of expenses required for the reasonable accommodation threshold varies by company size and revenue.  Some small companies may not be required to make any reasonable accommodations at all, but most companies are required to provide at least some dollar amount of accommodation.

Let’s use the Comfort Suites Mission Valley Hotel case to examine the reasonable accommodation doctrine.  The autistic employee requested access to a job coach for brief sessions of job training.  It’s clear that the hotel in question did not have to pay for the job coach’s services, therefore this service can be classified as a reasonable accommodation since it obviously fell well below the company’s reasonable accommodation expense threshold (said service was free).  Since the Comfort Suites Mission Valley Hotel refused to allow their employee reasonable accommodations, they were in violation of the ADA and thus exposed to discriminatory lawsuits. The ADAAA was passed in 2008 and widens the scope of the ADA, and it is imperative that hotels and their owners/staff familiarize themselves with these two laws in order to avoid discriminatory lawsuits from disabled persons.  Furthermore, it’s imperative that lawyers who are retained by hotels obtain a working understanding of the ADA and ADAAA as well as US Code Title 42, Chapter 21, Subchapter II and Title VII of the Civil Rights Act of 1964 because by doing so, they will have a better understanding of how to handle discrimination cases against their clients.

Summary

It is rather obvious that hotels are extremely vulnerable to discrimination lawsuits of all kinds and that such lawsuits can be brought by patrons and employees alike.  As places of public accommodation and employers, hotels have a civic responsibility to ensure that they do not partake in discriminatory actions of any kind.  After all, no hotel owner wants to find his or her name associated with the negative publicity that discrimination brings and above all else, many hotel owners cannot afford a $1 million hit to their bottom line.  Take action!  Protect yourself by educating your employees about various forms of discrimination and how to avoid them.  Your wallet will thank you in the long run.

Table of Authorities

“Case Elements for Use in Reality Checking.  Air Force Alternative Dispute Resolution Program.  The United States Air Force.  n.d.  Web.  28 June 2013.

Dunning, Matt.  “EEOC settles discrimination lawsuit against hotel chain for firing autistic clerk.”  Business Insurance.  Business Insurance.  8 November 2011.  Web.  28 June 2013.

“Hotel Employee Wins Substantial Discrimination Verdict.”  New Jersey Employment Lawyer Blog.  Siegler & Traub, L.L.C.  20 December 2011.  Web.  28 June 2013.

Lowenfeld, Jonah.  “Jewish plaintiffs win Hotel Shangri-La discrimination lawsuit.”  The Jewish Journal.  The Jewish Journal.  15 August 2012.  Web.  28 June 2013.

Miles, Kathleen.  “Hotel Shangri-LA Discriminated Against Jews, Jury Finds.”  Huffington Post.  Huffington Post.  16 August 2012.  Web.  28 June 2013.

Shepard, William.  “Group Of South Florida Women Claim Racial Discrimination at Club Inside Fontainebleau.”  NBC Miami.  National Broadcasting Corporation.  21 May 2012.  Web.  28 June 2013.

Title VII of thttp://www.hlconvergeblog.com/wp-admin/post-new.phphe Civil Rights Act of 1964.  U.S. Equal Employment Opportunity Commission.  U.S. Equal Employment Opportunity Commission.  n.d.  Web.  28 June 2013.

42 U.S.C 2000a: US Code-Section 2000A: Prohibition against discrimination or segregation in places of public accommodation.  FindLaw.  FindLaw.  n.d.  Web.  28 June 2013.


[1]See 42 U.S.C. § 2000a et seq., Chapter 21 – Civil Rights, Subchapter II – Public Accommodation;  see also URL: codes.lp.findlaw.com/uscode/42/21/II/2000a. [2]See 42 U.S.C. § 2000a et seq., Chapter 21 – Civil Rights, Subchapter II – Public Accommodation. [3]See 42 U.S.C. 2000, Title VII et seq. [4] Seehttp://caselaw.lp.findlaw.com/cgi-bin/getcase.pl?court=us&vol=411&invol=792 [5] See “Case Elements for Use in Reality Checking” for more information regarding Title VII and prima facie case requirements under this statue.  URL: http://www.adr.af.mil/shared/media/document/AFD-070212-063.pdf   Originally published on Wednesday, October 30, 2013
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Richard Barrett-Cuetara
http://www.barrettcuetara.com/

Richard Barrett-Cuetara is Managing Member of Barrett-Cuetara, PLLC. He provides legal counsel to the hospitality industry on a wide range of matters including complex disputes involving cutting-edge legal issues. He provides both transactional counsel and assistance on litigation matters including the acquisition and disposition of hotels, alcoholic beverage issues, construction, encroachment, intra-brand competition and area of protection issues, franchise and disclosure matters, labor and employment, lease documentation and collection, hotel management and corporate governance agreements and insurance coverage issues.



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