Hotel & Motel Management - September 18, 2007 - (Page 15)

www.HotelMotel.com/digital_edition HotelMotel.com | H&MM September 18, 2007 Franchise Law tels International, the franchisor. The court indicated that these few requirements regarding hotel doors did not demonstrate that Choice had the right to control the means and the ends of security at the hotel. In the ﬁnal analysis, it is in the best interests of hotel franchisors and franchisees to exercise their best efforts to implement programs, procedures and business operations to minimize the threat of vicarious liability exposures. hmm@questex.com Mort Aronson is an attorney with the international law ﬁrm of Kilpatrick Stockton LLP, which is based in Atlanta. He can be reached at (404) 745-2414. Minimize liability suits with good operations policies IN THE details Minimize claim risk Set appropriate standards Give franchisees freedom Indicate hotel’s operators By Mort Aronson H&MM Columnist O ne of the great challenges facing the hotel franchising community is vicarious liability, where litigants attempt to hold the franchisor liable for claims they might have against the franchi- see. Such actions, if successful, increase claims and litigation because the franchisor as “the deep pocket” usually is subject to higher damage claims than the franchisee with more limited ﬁnancial resources. Both franchisor and franchisee share mutual beneﬁts in diffusing successful vicarious liability claims, holding the franchisor liable for claims arising at the franchised hotel property. In the vast majority of instances, the hotel franchisee has indemniﬁed its franchisor against such liability, thereby increasing its liability exposure if the claim against the franchisor succeeds. Further, as previously indicated, with the franchisor in the picture, the amount of the claim usually is exacerbated. To mitigate the prospects of successful vicarious liability claims, the franchisor should exercise good judgment, i.e., a “balancing act” between setting appropriate standards for the operation of its hotels while affording its hotel franchisees sufﬁcient independence in the day-to-day hotel operations. It is advisable to have signs in appropriate locations in the hotel (i.e., check-in desk, restaurant check-in, etc.) that the subject hotel is independently operated by the franchisee under a license/franchise agreement with the franchisor. In a recent case on this subject involving McDonald’s (Vandemark v. McDonald’s Corp., 153 N.H. 753, 904 A.2d 627 N.H. 2006), the court noted that vicarious liability turns on the company’s control over the instrumentality that caused the harm rather than general control ﬁnding that McDonald’s right to ensure uniformity and standardization of products and services did not make it vicariously liable where it did not exercise control over security policies. A recent hotel case went even further (Allen v. Choice Hotels, Miss. Ct. App. 2006) when it considered the means of control by indicating that although Choice required a minimum door width, a deadbolt lock, a peephole and a security bar on sliding doors, this was not enough to shift responsibility for safety to Choice Ho- Cornell Insights Employment law roundtable discusses harassment IN THE details Harassment policy needed Employees must report Employers must respond ‘well’ Prevention is best policy By Glenn Withiam H&MM Columnist ornell’s Center for Hospitality Research annually facilitates an employment law roundtable to examine the lessons found in the most recent employment-related court decisions. A key topic for the 2007 roundtable was an analysis of court cases involving employees’ complaints of sexual harassment. The analysis was conducted by Michael Heise, professor at the Cornell Law School; Zev Eigen, a doctoral candidate at Massachusetts Institute of Technology; and David Sherwyn, associate professor at the Cornell University School of Hotel Administration. In this column, I’ll explain how the results of their study can guide employers to prevent sexual harassment and, if harassment occurs, to avoid being found liable for that harassment. Roundtable participants are private practice lawyers, labor and employment law faculty, and in-house counsel and human resources executives from hospitality companies. Many of these attorneys regularly provide advice to employers who face sexual harassment claims. That advice is intended to help employers navigate the shoals created by two decisions of the U.S. Supreme Court in 1998. Although those decisions are nearly a decade old, the ramiﬁcations are still being explored. The Supreme Court made two holdings in these cases, known as Ellerth and Faragher. To begin, employers are liable for their supervisors’ sexual harassment if the harassment results in a tangible loss to the employee (e.g., termination, demotion). In this instance, employers have no defense. The complications arise from the other part of the Supreme Court’s holdings. Employers also can be liable when there is no tangible loss to the employ- ee. In this situation, however, an employer still can be found not liable if the employer satisﬁes a two-prong afﬁrmative defense. To avoid liability, employers must prove that, in the court’s words: the employer “exercised reasonable care to prevent and correct promptly any sexually harassing behavior,” and the plaintiff “unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer or to avoid harm otherwise.” The difﬁculty for employers and employees is that various federal circuit and dis- who maintained a “good policy” were considered to be providing reasonable care. Good policy means a written policy that is disseminated to all employees, in which the employee is not required to report the harassment to the harassing supervisor. Second, employees who did not report were found to be “unreasonable” if the company had a good policy. In fact, in situations where the employers “exercised reasonable care” and the employee failed to report, employers generally prevailed in summary judgment. Third, employers often prevailed even Taking ﬁrm measures helps to win over juries, and is the best way to prevent harrasment. trict courts have interpreted this language in ways that seem at times confounding. Indeed, some courts and juries seem to decide who should win and then make the law conform. That said, the analysis of summary judgment motions by Heise, Eigen and Sherwyn of 133 sexual harassment cases found that, as a rule, employers when the employee did report. In fact, the data showed that courts found reporting employees unreasonable if the employer responded well. However, not all cases are decided by summary judgment. Others go to a jury. Here the situation seems to be different. Whereas employers who have a policy to prevent sexual harass- ment will prevail in summary judgment motions if either the employee does not report or the employer responded well, juries seem to look for a greater level of effort from the employer. Our 2007 roundtable participants reported that their employer clients were able to prevail in jury trials because they offered sexual harassment training and provided toll-free reporting lines, among other steps. Consequently, the wisdom of the roundtable panel was that taking extra measures is not only favorable for winning over juries, but ﬁrm measures are the best way to rid the organization of harassment, will help the employer in settlement negotiations and will have a minimal, if any, negative effect at summary judgment. Employers should do all they can to prevent harassment. It is wise from a legal standpoint, and it should be a part of any human resources program. hmm@questex.com Glenn Withiam directs publications at The Center for Hospitality Research at the Cornell University School of Hotel Administration. He can be reached at grw4@cornell.edu. http://HotelMotel.com http://www.HotelMotel.com/digital_edition

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Hotel & Motel Management - September 18, 2007 Contents Vista Inns Redefines Business Model Conley Applies Satisfaction Theory to Boutique Hotels Questex Acquires Oxford Publishing Perspective At Your Risk Consultant’s Corner Sales Clinic Travel Trends On Finance Franchise Law Cornell Insights HotelWorld Update Training Trends Satisfaction Trends Management Trends Speakers Named, Registration Open for IH/M&RS Going Green Saves Green Trends & Stats Vacuums Go the Extra Mile Transactions Offsetting Emissions is Newest Sustainability Initiative Minibar Advancements Supplier News People on The Move ADA Compliance Can Be Easier With Programs Business Travelers Interested in Remote Check-In/Out Awards Markets Dictate Renovations vs. New Builds More Development Opportunities Available Top Hotel Companies Survey The Lodging Conference Previews Ad/Editorial Index Marketplace Classifieds Checking Out

Hotel & Motel Management - September 18, 2007

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