eTeam, Inc. v. Hilton Worldwide Holdings, Inc.

Staffing company eTeam, Inc. (plaintiff) sued Hilton Worldwide, Inc., and Hilton Worldwide Holdings, Inc. (collectively Hilton) (defendants) after former eTeam employee Jackline Ongwenyi ran up a huge hotel bill. ETeam had authorized a five-day stay at a Hilton hotel for Ongwenyi on eTeam’s corporate credit account. After the five days, Ongwenyi continued staying at the hotel for 15 months, even after eTeam terminated her employment. The hotel charged eTeam’s credit account every seven to 10 days, resulting in $82,884 of unauthorized charges. Franchisee BRE Select Hotels Operating LLC (BRE) operated the hotel under a franchise agreement that specified BRE alone had exclusive day-to-day control over the business and operations as an independent contractor with no agency relationship with Hilton. However, the franchise agreement incorporated a detailed manual that required franchisees to adhere to Hilton standards and gave Hilton extensive control over operations far beyond that necessary to protect its brand and trademarks. For example, BRE could not make personnel decisions and had to use a management company and hotel managers that Hilton approved. All management employees also had to be trained by Hilton. Hilton also controlled room cleaning and food service, down to the specific number and type of coffee packets maids left in each room and the seconds food-service employees had to wash their hands under hot water. Most critically, Hilton delineated highly specific rules and procedures BRE had to use under the franchise agreement to process reservations and payments for rooms. Hilton nonetheless moved for summary judgment, arguing it was a franchisor with no control over day-to-day operations and therefore could not be legally responsible for eTeam’s bill.