HospitalityLawyer.com | December 2012 Issue Hospitality Lawyer Magazine

HospitalityLawyere-magazine

focusing on legal, safety & security solutions

December | 2012

Healthcare 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

3 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 ARTICLE22 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

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TEN

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HospitalityLawyer.com | December 2012 3

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Editor’s NoteAbout HospitalityLawyer.comHospitalityLawyer.com brings together the hospitality industry’s legal safety and security solutions, products, and services. We strive to provide quality articles on the latest hospitality legal issues, news, trends, and best practices. Our articles are written by hotel and restaurant law experts and solution providers who have significant legal, safety and security knowledge and experience. They provide practical tips with current, insightful analysis and information.

I encourage you to visit our website at www.hospitalitylawyer.com, where you can view industry alerts, law libraries, white papers, e-newsletters and webinars; and search for law firms, attorneys and safety and security products for hotels, restaurants and country clubs. Current industry news and updates can also be found on our social media channels.

Article ContributionsHave an interesting article that you want to contribute to the Hospitality Lawyer e-magazine? Send it over! I encourage law firms, solution providers and hospitality industry leaders to send in a copy or summary of your article idea to me directly, so we can discuss if it fits our editorial needs.

Suggestions from ReadersTo ensure that we provide the best and most relevant articles to our readers, we ask you to feel free to provide feedback or ideas on interesting topics that you like to read. We will in turn, do our best to make it happen.

Janet Le Editor & Publisher

4 Hospitality Lawyer e-Magazine | December 2012

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February 12th - 13thHospitality Law Conference1. General Sessions2. Food & Beverage Track3. Human Resources & Labor Relations Track4. Lodging Track

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WHO SHOULD ATTEND: The conference is designed for corporate counsel, attorneys and paralegals practicing in the hospitality industry, owners, investors, developers, deal makers, management companies, operators, risk managers, security and loss prevention personnel, CFOs, comptrollers, accountants, HR and IT professionals, franchise service directors, and hospitality law faculty and students.

REGISTRATION: Visit the registration website at: http://www.regonline.com/2013HospitalityLawConference

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Pre-Conference Workshops1. Restaurant & Hotel Corporate Counsel Only 2. The Convergence of Risk Management, Legal Compliance and Loss Prevention

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N O R T H AM E R I CA • E U R O P E • M I D D L E E AST • AS IA • L AT I N AM E R I CA

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Alvarez & Marsal draws on a deep operational heritage and hands-on approach to deliver comprehensive performance improvement, turnaround management, business advisory and interim management services that produce meaningful-and lasting-results when time is of the essence. Our clients range from global enterprises to middle market companies that are both publicly held or privately owned, as well as large and mid-cap private equity firms, corporate management and hoards of directors.

Alvarez & Marsal Real Estate Advisory Services advises owners, investors, lenders and users of real estate — enabling clients to combat current economic-related challenges, as well as position them for future success. We recognize that hotels, resorts, timeshare, tourism and entertainment facilities are operating in a rapidly changing environment. We stand ready to provide services throughout the entire real estate lifecycle — from pre-acquisition due diligence to exit strategies, including real estate asset management.

LEADERSHIP. PROBLEM SOLVING. VALUE CREATION.

For more information on A&M’s Real Estate Advisory Services, please contact the following individuals:

Chuck Bedsole Managing Director Hospitality Advisory Services +1 214 438 1014 [email protected]

www.alvarezandmarsal.com

N O R T H AM E R I CA • E U R O P E • M I D D L E E AST • AS IA • L AT I N AM E R I CA

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Alvarez & Marsal draws on a deep operational heritage and hands-on approach to deliver comprehensive performance improvement, turnaround management, business advisory and interim management services that produce meaningful-and lasting-results when time is of the essence. Our clients range from global enterprises to middle market companies that are both publicly held or privately owned, as well as large and mid-cap private equity firms, corporate management and hoards of directors.

Alvarez & Marsal Real Estate Advisory Services advises owners, investors, lenders and users of real estate — enabling clients to combat current economic-related challenges, as well as position them for future success. We recognize that hotels, resorts, timeshare, tourism and entertainment facilities are operating in a rapidly changing environment. We stand ready to provide services throughout the entire real estate lifecycle — from pre-acquisition due diligence to exit strategies, including real estate asset management.

LEADERSHIP. PROBLEM SOLVING. VALUE CREATION.

For more information on A&M’s Real Estate Advisory Services, please contact the following individuals:

Chuck Bedsole Managing Director Hospitality Advisory Services +1 214 438 1014 [email protected]

www.alvarezandmarsal.com

You don’t have to wait until the 2013 Hospitality Law Conference and the inaugural Hotel Owner-Management Summit to start networking.

We encourage everyone to participate in our market-leading social media conversation. Take advantage of the opportunity to stay abreast of all the latest industry news and happenings, while engaging in ongoing social dialogue with industry professionals and thought leaders. Get connected today by joining the conversation in the following 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

Social Networking


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.

Onity Hotel Lock Security Issues - Recommendations for Hotel Operators

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Recommendations for Hotels with Onity Locks Installed

To date, Onity has proposed a number of solutions, including the insertion of a mechanical cap into the communications/power port to block access by foreign programmable devices.

Contact Onity

If your hotel has Onity locks on guest room doors, please contact Onity immediately to discuss the best solution for your property. At a minimum, we recommend you install the caps to block access to the information/power port. Please note, Onity has indicated that, with a small percentage of locks, the installation of the cap may cause the lock to overheat so we recommend that you monitor your locks after installation for this issue and, if necessary, contact Onity directly regarding any necessary replacement locks.

Front Desk Placard and Response to Guest Inquiries

For hotels with Onity locks, we recommend that you place a placard at the front desk reminding guests to: (1) store their valuables in the hotel’s safety deposit box and (2) use all locks on the doors to secure their rooms. You may also want to post the safety instructions on the back of guest room doors. We also recommend that you provide all front desk staff with an update on this issue so that they can respond to guest inquiries. If your guests inquire about this issue and you have Onity locks, we suggest the following statement:

“This is a serious issue that is affecting the entire hotel industry. Your safety and security is our highest priority and we are working with Onity to address this issue. We have implemented the fix provided by Onity, but we always recommend that you follow standard safety precautions and engage all locks to secure your room.”

If Your Hotel Does Not Have Onity Locks Installed

If your hotel does not have Onity locks installed, we don’t recommend taking any action, but suggest that you respond with the following statement if guests

inquire about this issue:

“We do not have Onity locks installed at our hotel.”

If You are Contacted by the Media About this Issue

If your property has Onity locks and you decide to comment about steps your property is taking, please consider using the following statement:

“This is a serious issue that is affecting the entire hotel industry. However, the safety and security of our guests is always our highest priority and we are working with the manufacturer of the locks, to address this issue.”

With a career that expands more than fifteen years of law enforcement experience and twenty-one years of private sector safety and security management experience, Tom is knowledgably and adept in a variety of law enforcement, safety and security related principals and programs.

Prior to becoming an independent hospitality centric safety and security consultant, Tom spent 9 years with Hilton Hotels Corporation most recently serving as the Director - Enterprise Information Security Office Incident Response Team. In this role he was responsible for directing and supporting all aspects of risk management, monitoring, reporting, and investigations of all real or suspected breaches of Hilton’s Privacy and Information Security operations across an enterprise consisting of 3000+ hotel properties in 77 countries.

Navigating Your Insurance Claim Can Be 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.

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No electricity, gas or ruNNiNg water?Make sure your guests and your profits are still safe.

Property damage and business interruption losses require experienced, credible and trusted claims professionals. that’s why owners, operators and developers turn to BDO 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 SChweerSmanaging [email protected]

Navigating Your Insurance Claim Can Be 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.com

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Hospitality & Tourism Expertise

These are our experts and we stand behind their work. Contact an expert directly to discuss your case.

Engineers, Architects, Scientists & Fire Investigators

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Donald J. Decker, CPP, CPM [email protected]

Premises Security

Lisa A. Thorsen, Ed.D., [email protected]

Supervised Care / Day Care

Michael J. McCabe, Jr., Ph.D., [email protected]

Toxicology

Richard L. Frongillo [email protected]

Skiing / Winter SportsBarry E. Parsons, FMP [email protected]

Food Safety

Maria K. Bella, AFOIT, CPOI, [email protected]

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Elizabeth A. [email protected]

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Brian O’Donel [email protected]

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No electricity, gas or ruNNiNg water?Make sure your guests and your profits are still safe.

Property damage and business interruption losses require experienced, credible and trusted claims professionals. that’s why owners, operators and developers turn to BDO 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 SChweerSmanaging [email protected]

Crime Prevention Through Environmental Design:

Parking Lot and Parking Garage Security


he hospitality industry provides for the safety and security of its patrons and

employees on its premises. This responsibility extends to all parts of the premises to which patrons and employees may be expected to go and to those parts of the premises that the business has led the patrons and employees to believe they can go. Security is one of the most important issues confronting the hospitality industry today.

Parking lots and parking garages are facilities used by businesses to accommodate the vehicles of their patrons and employees. These facilities take up a large amount of area, but have low levels of activity compared to the business they support. There will only be a small percentage of people in the parking facility compared to inside of the building of the business. As a result, parking facilities have become likely locations for criminal activity. Facilities that experience a lot of property crime create a heightened risk for violent crime.

There are some general problems inherent in parking facilities that make the security of patrons and employees challenging. A criminal’s vehicle most likely will not be noticed in a parking facility. Also, parked vehicles provide a hiding place for a criminal and can block the distribution of lighting to the area that a criminal may be located. Security is more problematic for parking garages. Parking garages allow more vehicles to be parked on the same amount of land. The ability to see

and be seen in one’s surroundings, known as natural surveillance, is reduced in parking garages. This is because parking garages can be partially or fully enclosed, elevated above ground, having multiple levels, or have ramps that provide access to the multiple floors of the facility.

An effective way to determine if the security in a parking facility is adequate is to conduct a security survey. A security survey identifies the vulnerabilities of a facility by determining what threat exists against the present site security. By conducting a security survey, the owner and/or manager is proactively analyzing the property for crime foreseeability. Crime foreseeability is the reasonable expectation of a criminal act to occur. If a crime is not foreseeable, it doesn’t mean that the crime isn’t possible. It means that the crime

T

“For a security measure to be preventative, it

has to be designed to physically

stop a potential criminal from committing a

crime.”

was not reasonably foreseeable at that time, at that location, and under those conditions.

There is no perfect security solution when determining how to address the security of a property. Flawless crime prevention is not reasonably obtainable and not required, but providing reasonable security is.

Reasonable security measures should deter or prevent criminal activity. For a security measure to be a deterrence, it has to have a psychological effect on a potential criminal. It discourages the potential criminal from committing a criminal act. Examples of deterrents are adequate illumination of a parking lot, closed circuit television (CCTV), and signs posted indicating security guards patrol the area. For a security measure to be preventative, it has to be designed to physically stop a potential criminal from committing a crime. Examples of preventative security measures are a locked door and a security guard stopping people from entering an area.

Security measures can be active or passive. Active security measures are the result of direct human involvement and the use of specialized equipment. Examples of active security measures are actively monitored CCTV and security guards. Passive security measures are the security measures that incorporate the concepts of Crime Prevention Through Environmental Design (CPTED). CPTED incorporates psychological barriers for deterring a potential criminal’s

behavior. By properly utilizing the concepts of CPTED, deterrence of criminal activity can occur.

CPTED Concepts:

1. Lighting

Lighting is an important security measure in a parking facility. Adequate lighting is a deterrence to criminal activity. It can contribute to the other CPTED concepts and active security measures.

2. Natural Surveillance

Natural surveillance is a concept that applies to everyone that is in or near a parking facility. Not only does it apply to people in the parking lot or parking garage, it applies to people outside of the parking facility or inside the business associated with the parking facility. The ability of people walking by a parking lot or looking out the window of a business to view the activities going on inside the parking facility enhances the security of the facility. In some parking facilities, adequate natural surveillance may be all that is needed to provide reasonable security.

3. Access Control

Access control is an important means of reducing criminal opportunity. Access control is gained through controlling the entering and exiting of pedestrians and vehicles. Proper security of the perimeter of the parking facility enhances access control of the facility.

4. Signs and Graphics

Signs and graphics that are properly located in a parking facility can help pedestrians find where they want to go and minimize their chances of becoming a victim of crime. Additionally, a sign indicating the area is under surveillance or there are security patrols of the area may be a deterrence to a criminal. A graphic is described as a symbol that sends a message in a picturesque manner. An example is a CCTV camera indicating the area is under surveillance.

5. Natural Territorial Reinforcement

Natural territorial reinforcement provides a distinct boundary between public and private areas. The purpose of these boundaries is to send a message to a potential intruder to avoid this area. Natural territorial reinforcement is achieved by landscaping, signs, and fences. It is important to remember to allow for the natural surveillance of the area from the outside; keep landscaping at the proper height and have fencing that is open in its design.

In addition to the preceding five concepts of CPTED, the following two concepts have evolved and are also considered part of CPTED:

1. Maintenance of the Area

The maintenance of the area is important to suggest to any potential intruder that the area is well cared for and crime-free.

Garbage or debris, left in the area, suggests that the area is not cared for and there is no one responsible for the area. Abandoned vehicles should be removed from the area. It is important to portray the image that someone cares for the area and is responsible for it.

2. Support by Legitimate Activity

There may be areas that are difficult to protect because of their location. These areas can benefit from the placement of a legitimate activity. These legitimate activities can include having a Police substation or a maintenance shop or offices located in the immediate area. Active security measures can complement the overall CPTED features in a parking facility. Active security measures can help compensate for a deficiency of CPTED features. An example of this is a parking lot that is a dead end and there is no natural surveillance of the parking lot from the building. Natural surveillance of the parking lot area becomes less and less as a person walks farther away from the building towards the end of the parking lot, where fewer people have parked their vehicles. The lack of natural surveillance can be addressed by CCTV and/or the presence of security personnel patrolling the parking lot. Some active security measures are:

1. Security Personnel

One of the best crime prevention methods is the presence of security personnel. It is important that the security personnel be

recognizable and visible. They should be properly equipped to perform their duties. Security guards should conduct proper random patrols of an area. This would prevent the predictability of the whereabouts of a security patrol by a criminal.

2. CCTV

CCTV provides surveillance that can detect criminal activities and record the camera footage. Conspicuous CCTV can be a deterrent to a criminal. There are some difficulties in monitoring parking facilities because of shadows, spaces between parked vehicles; and columns, ramps, and walls in parking garages.

The effectiveness of security measures decreases without a meaningful response to a situation. Proper policies and procedures have to be in place, so appropriate personnel respond to the situation.

The hospitality industry has a responsibility to provide for the reasonable safety and security of its employees and patrons. Parking facilities have become one of the most likely locations for criminal activity on a commercial property. Proper CPTED concepts can provide a deterrence to

criminal activity. Active security measures can help compensate for the lack of natural surveillance and access control. Policies and procedures should be established for a proper response to any safety and security incident.

Don is a trained and experienced p r e m i s e s s e c u r i t y and police professional with more than 35 years of

relevant experience. He has a B.S. in Criminal Justice. Don is a certified protection professional and certified in patron management. His career included the security of VIPs, patrons, volunteers, and employees of various facilities and events. He worked with the Secret Service providing security for the President and Vice President of the United States, and worked with the Governor’s Security Unit providing security for the governor of New Jersey. Don was involved in the security at the U.S. Open Golf Championship, the World Pair Driving Championship, events at Giants Stadium, the Midland Run and Lollapalooza.

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ow that the election is over and we know who’s running the country for the next few years, is it too much to think that we might get

some kind of comprehensive immigration reform? It seems that the time is right for a big change. President’s Bush and Obama were not successful in getting Congress to take action. President Obama recently instituted some controversial but popular reforms on his own without waiting for Congress. The fact that those actions may have helped him get re-elected has not gone unnoticed by Congressional representatives, who are likely to take action. But the question is when.

The federal government does not move at the speed of business. So it’s important to plan based on current law, not on what might get through Congress next year or even later. The legislative process can take months, and laws enacted won’t go into effect until even later, after regulations have been drafted and vetted. It’s important to understand your current

options and the timelines associated with them while you urge Congress to fix the broken immigration system in the future.

Here are some ideas about options the hospitality industry can expect to have available for 2013. The letter and number designations in the sections below are the government’s codes for particular employment-based classifications.

TN Status: Canadians and Mexicans in some professions can get employment authorization quickly

The North American Free Trade Agreement (NAFTA) provides options for quick (often approved on-the-spot in less than an hour), inexpensive (as little as $50 in government fees), and long-lasting employment (up to three years at a time) of citizens of Canada or Mexico. The candidate must satisfy the minimally-

Immigration & the Hospitality Industry: What’s Expected for 2013?

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described educational requirements for a limited group of professions, such as accountant, computer systems analyst and hotel manager. Management consultants are also possible, but don’t call someone a consultant just because there isn’t a NAFTA profession for the service you need.

For more information, see http://1.usa.gov/8o0t6m.

L and EB-1 Status: Executives and Managers can be transferred from related businesses

The government makes it relatively easy to transfer a person from one related business entity outside the U.S. to another in the U.S. That person must have worked in an executive, managerial, or specialized knowledge capacity for that entity outside the U.S. for at least one year within the past three, and be coming to the U.S. to work in one of those capacities. The two businesses must be related, either in terms of corporate relationship or ownership by the same person or group of people.

This process can be used for temporary positions, approved for up to seven (7) years, or “permanent” employment, which many people call a “green card.” It requires a mail-in filing for most people, taking from two weeks (if an expediting fee of $1,225 is paid) to several months for review, except for Canadians, who can present them at a border or port of entry for an on-the-spot decision. Initial filing fees total $825 and, for everyone but Canadians, a visa must be applied for and issued at a U.S. consulate outside the country.

For more information, see http://1.usa.gov/cI9arF, http://1.usa.gov/aCcNY, and http://1.usa.gov/901kqE.

E-3 and H-1B: Occupations that require a degree or equivalent can be filled, with some limitations

“Specialty Occupations” present another great option for U.S. employment of transferred employees or new hires. The general rule for these jobs is that the job requires a particular kind of college degree or the equivalent of that degree based on education and/or experience, and the person has that degree

or equivalent. Classically, this applies to jobs such as accountants, engineers, and computer professionals, among others. It can be difficult to get approval for jobs that some people (and the government) don’t normally associate with a particular degree, such as Sales Managers, Market Research Analysts, or Public Relations Specialists. But it can be worth exploring.

The current challenge with the H-1B classification is you can only hire people who already have that classification; a person who has not already been approved for employment with that classification can’t get it until October 2013. Anyone hoping to be considered for one of the H 1B’s to be allocated at that time should plan to submit the filing on April 1, 2013, the first day on which filings will be accepted. Only 65,000 new H-1B’s are available for each fiscal year, and they can all be allocated within as little as a few days or weeks. Fortunately, Australian citizens have a virtual equivalent to the H-1B in the form of the E-3 status, which is open for applications year-round.

Both of these classifications require multiple government filings and approvals, with government-charged filing fees starting as low as $825 for an E-3, and $1,575 for an H-1B. Visa fees add to those charges. Approval of an E-3 is for two years, but renewable indefinitely, whereas the H-1B can only be approved for as many as six years, in three year increments.

For more information, see http://1.usa.gov/boasGi and http://1.usa.gov/8VIT7E.

You can expect that the H-1B classification will be the subject of great debate in Congress. Many employers claim that businesses are suffering because of the lack of available, highly educated U.S. workers and the restriction on the number of new H-1B approvals. Don’t be surprised to see higher government-charged fees in exchange for an increase in the numbers.

E-2: Foreign-owned businesses in the U.S. might have another option

It might be possible to open an additional employment-based immigration option if the business operating in the U.S. happens to have


significant (50% or more) foreign ownership or investment. The U.S. has treaties with many countries that make it possible to hire citizens of the foreign country, whether they are still in that country or already in the U.S., to provide executive, managerial, or “essential” services.

The E-2 process may involve a filing at a U.S. consulate overseas and/or a mail-in petition in the U.S. Government-charged filing fees at consulates start at $270, with the possibility of additional fees associated with the particular country. Mail-in filings in the U.S. have a $325 filing fee. Mail-in filings can take one month or more for review, and visas can take that long or longer, depending on the availability of appointments.

You can determine whether such a treaty exists for a specific country by checking the Department of State’s Visa Reciprocity page at http://www.travel.state.gov/visa/reciprocity/index.htm.

F-1 and J-1: Foreign students and exchange visitors can help in a pinch

Remember those days when you were performing an internship while in school, working during summer vacation, or in that first job after graduation? Options may exist for you to employ foreign students in almost any kind of job, but you must be very careful to follow the rules. Employment of F-1 students during the school year is limited, but many students approved for “curricular practical training” or “optional practical training” can be available for up to a full year of full-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 be an excellent option for students interested in summer work/travel.

For more information, see http://1.usa.gov/3ud5QV. and http://1.usa.gov/2xD0jS.

Everybody’s still talking about EB-5 and Regional Centers

Many in the hospitality industry have identified a source of significant funds through the EB-5 program, which includes Regional Centers as one variant.

Investors can get a “green card” for themselves and qualifying family members if their investment of at least either $500,000 or $1 million results in the employment of at least 10 U.S. workers. The investor must be engaged in the management of the U.S. business, either through the exercise of day-to-day managerial control or through policy formulation. For more information, see http://1.usa.gov/4h1syb.

Don’t forget – the Form I-9 is for Everybody, not just “foreign” employees

Everything I’ve noted above is employment, which means that you must complete a Form I-9 for all of them, just like you do for every single employee in your workforce. Government audits are becoming more common, but less widely publicized, and fines for “paperwork” violations can be surprisingly large.

Some of you are registered in the E-Verify program. I would not be surprised if E-Verify, or some version of it, becomes a requirement for all employers as a part of comprehensive immigration reform. But until then, it is optional for most employers except certain federal contractors and their subcontractors. State and local legislation, such as in Arizona, have imposed E-Verify registration, too, so be sure you understand the requirements established by the federal and state or local governments in whose jurisdiction you operate.You can learn much more at I-9 Central, at http://www.uscis.gov/I-9Central.

How about transfers from the U.S. to provide services elsewhere or simply providing management services to entities outside the U.S.?

It certainly makes business sense to “export” your knowledge base to improve the bottom line of a foreign entity, whether corporately related or simply as a matter of selling your expertise. But a word of caution is due, including for work to be done in countries like Canada and the U.K., where it’s easy to get into the country for months at a time without a visa. Don’t forget – these are different countries, with


different laws, including immigration, employment and tax laws. The fact that it’s easy to talk on the phone or work together over the internet does not mean that you might not be required to navigate time-consuming procedures and get government approvals in advance of entering the other country.

This is one of the reasons that our firm is a member of the Globalaw network of law firms, with offices in more than 160 countries. It’s also why I am the co-chair of that organization’s Cross Border Labor Initiative, which regularly meets and shares information about varying immigration and employment standards so that we can get our clients to the right lawyer in the target country for quick, effective advice.

Conclusion

Business moves quickly – government bureaucracy does not. Don’t expect much change to actually take place this coming year. But be prepared to let your Congressional representatives know what you need in terms of changes to our immigration laws. Other

than that, the best things that you can do are to plan well in advance and to understand the current rules, timelines and costs required to meet your needs for 2013.

Gregg Rodgers is an owner in the Seattle office of Garvey Schubert Barer, a full-service law firm of more than 100 attorneys with offices in Alaska, Beijing, New York, Portland, Seattle and Washington, D.C. He concentrates his practice on the areas of immigration (business, healthcare

professionals, and families) and employment law. Mr. Rodgers provides legal advice to individuals, business owners, managers, and executives on each of these areas. He conducts audits and advises clients on Form I-9 and E-Verify compliance. He also conducts training sessions for clients, trade associations, and educational groups, on immigration and on labor and employment law issues.

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GSBLaw.com 888.768.5939

Health Care Reform

A Summary of Benefits and Coverage (SBC) must be provided to all group health plan enrollees by the first day of the first annual open enrollment period beginning on and after September 23, 2012. This means that if your group health plan is operated on a calendar year basis, you must provide SBCs to enrollees as part of your upcoming annual open enrollment period for coverage that takes effect January 1, 2013.

Health FSAs must be redesigned for the 2013 plan year to limit annual account balances to $2,500. In addition, employers must begin reporting the aggregate cost of employer-sponsored health coverage provided to employees in 2012 on Form W-2 reporting required to be sent out by January 31, 2013.

Ensure that your group health plan SPDs have been properly amended to reflect the updated claims procedures and the

new definition of dependent, as mandated by the Patient Protection and Affordable Care Act of 2010 (PPACA).

Group Health Plans, Generally

The Women’s Health and Cancer Rights Act of 1998 (WHCRA) requires group health plans to provide an annual written notice to participants and beneficiaries of the availability of medical and surgical benefits under the plan with respect to mastectomy and breast reconstruction. Including the WHCRA notice as part of your open enrollment materials is one way to fulfill your annual notice obligations.Sponsors of group health plans must notify employees annually concerning the availability of state premium assistance through Medicaid or the Children’s Health Insurance Program (CHIP). The CHIP Reauthorization Act of 2009 imposes this notice requirement, which can be met by including

Healthcare Benefits Update: Will You Be Ready For 2013?

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?

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the DOL’s model “Employer CHIP Notice” as part of your annual open enrollment materials. For calendar year plans, the Employer CHIP Notice must be provided no later than January 1, 2013 .

Qualified Retirement Plans

If you sponsor a Safe Harbor 401(k) Plan, you must prepare and distribute the annual safe harbor notice to all eligible employees for the 2013 plan year by December 1, 2012.

401(k) plans operated on a calendar year basis must provide participants and beneficiaries with an annual written notice about the qualified default investment alternatives offered under the plan by December 1, 2012. This notice cannot be provided as part of an SPD or SMM.

Single-employer defined benefit (DB) plans operated on a calendar year basis must be amended by no later than December 31, 2012 to comply with Section 436 of the Tax Code to restrict benefit accruals, distributions from, and amendments to an underfunded DB plan. The IRS has released Section 436 model amendment language that can be used when drafting the required plan amendment.

January 31, 2013 marks the end of the second five-year remedial amendment cycle and deadline for filing of a determination letter request for a Cycle B plan. To preserve reliance on the plan’s continued tax qualification, plan sponsors of Cycle B plans (meaning sponsors with an EIN ending in digits 2 or 7, and sponsors of multiple employer plans) need to ensure that their plans have timely adopted all interim and discretionary amendments and that determination letter requests are submitted to the IRS no later than January 31, 2013.

Additional Medicare Tax

Beginning in 2013, certain employees may see an increase in the amount of payroll taxes withheld from their wages. This is because a second Medicare tax, one the IRS refers to as an “Additional Medicare Tax,” will begin being assessed on individuals earning more than $200,000 or married couples filing jointly earning more than $250,000.

Currently, employers are required to withhold 1.45% in Medicare taxes directly from an employee’s wages and to make a “matching” employer contribution equal to 1.45%. Self-employed individuals must pay 2.9% of their earnings in Medicare tax, which represents both an individual and employer

contribution. Note that under current tax law, all wages are subject to Medicare tax.

The Additional Medicare Tax rate will add 0.9% to the amount that some individuals will have to pay in 2013. The additional 0.9% will kick in only when the wages paid to an individual for the 2013 calendar year go above $200,000. It should be noted that this is an additional tax that will apply only to individuals – there is no employer matching requirement.

The IRS has confirmed that employers have the obligation to withhold the Additional Medicare Tax from an employee when the employee’s wages or compensation exceed $200,000. The employee may, however, get a refund of the Additional Tax if the combined wages of the employee and spouse do not exceed $250,000 when filing a joint return.

And remember to be sure to also consider all forms of compensation when determining when an employee’s wages exceed $200,000 and trigger the Additional Medicare Tax. For example, the imputed cost of group-term life

insurance coverage in excess of $50,000, noncash fringe benefits and receipt by an employee of third-party sick pay should be factored in the determination. The IRS also expects to release revised Forms 941 and 943 in the future.

Callan Carter is a partner in the San F r a n c i s c o o f f i c e , w o r k i n g exclusively in the firm’s E m p l o y e e B e n e f i t s

Practice Group. Callan has practiced employee benefits law since 1997. She advises clients on plan design, drafting, implementation and termination of qualified retirement plans, health and welfare plans, fringe benefit programs, equity compensation and non-qualified deferred compensation arrangements.

For more information contact the author at [email protected].


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If possible, don’t serve alcohol. This is easier to do if you simply have a catered lunch at the company’s offices.

Invite spouses and significant others so that there will be someone there to help keep an eye on your employees and, if necessary, get them home safely.

Always serve food if you serve alcohol, and always have plenty of non-alcoholic beverages available.

If your party is a dinner, consider serving only wine or beer (plus non-alcoholic alternatives) with the meal.

If you do serve alcohol, do not have an “open bar” where employees can drink as much as they want. Instead have a cash bar or use a ticket system to limit the number of drinks. Close the bar at least an hour before you plan to end the party. Switch to coffee and soft drinks from there on.

Let your managers know that they will be considered to be “on duty” at the party. They should be instructed to keep an eye on their subordinates to ensure they do not drink too much. Instruct managers that they are not to attend any “post party” parties.

Consumption of alcohol lowers inhibitions, and impairs judgment. This can result in employees saying and doing things that they would not

ordinarily do. Remind employees that, while you encourage everyone to have a good time, your company’s normal workplace standards of conduct will be in force at the party, and misconduct at or after the party can result in disciplinary action.

Hire professional bartenders (don’t use supervisors!) and instruct them to report anyone who they think has had too much. Ensure that bartenders require positive identification from guests who do not appear to be substantially over 21.

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 provide hotel rooms for intoxicated employees.

Never, never, hang mistletoe! Yep, we’re not kidding. Take a look at item number 4 again, and you’ll see why.

Mike Mitchell is a partner in the New Orleans office. His practice includes traditional labor law matters such as collective bargaining, arbitration, union avoidance and unfair labor practice proceedings before the National Labor Relations Board.

With the Holiday Season in full swing, many employers ask us about the wisdom of holding company parties where alcohol will be served. They generally want to know about the risk involved if an employee drinks too much at the party and misbehaves, or worse, injures or kills someone on the way home. So with the usual tip of the hat to David Letterman, here is our “holiday party top ten” list.

TopWays To Hold A Company Party –

Without Getting Sued

10

9

8

7

6

5

4

3

2

1


How Old is Your Hotel Staff?

ou may not know, and that’s not surprising. According to the National Study of Business Strategy and Workforce

Development, only about 1/3 of employers have adequately analyzed their workforce demographics. But the reality is that your workforce is aging. In every industry all across America, the workforce demographics are shifting to an older workforce population. Employment among people aged 55 and older has increased to an all-time high of 40.4% (Bureau of Labor Statistics) and the percentage of those 65 and over reached 18.2% this year -up

11.6 % from the beginning of the recession in December 2007. A number of factors, such as the elimination of mandatory retirement, longer life expectancy and better health play a role, but by and large people are holding onto their jobs longer simply due to economic frailties such as unemployment within their households, inadequate retirement savings and dwindling social security benefits.

The concern for the hospitality industry is that many of the jobs, such as those in housekeeping, are physically demanding jobs. The injury rate by house-keepers is already higher than occupations commonly recognized as dangerous, including

Adapting to an Aging Workforce

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coal mining and building construction, and an aging work force doesn’t bode well to reduce those risks. In years past, the rigorous demands of housekeeping have always kept the turnover rate high for the hospitality industry –usually above 60% compared to 3% national average- with new entrants to the labor force quickly filling the vacated positions. But today, the turnover ratio for the hospitality industry is at an all time low (29.1%) and the average age among the 436,000+ U.S. housekeepers is 40 years old and climbing.

While lower turnover rates usually mean higher profits, hotel operators should be concerned about the aging workforce. During the recession, managers were able to effectively manage profitability and performance mainly through controlling labor cost. From 2009 to 2010, U.S. hotels spent 3 .4% less on labor costs per occupied room (a measure of work- load or level of service). While those measures may have created short term efficiencies, there are very real concerns that the added demands of less employees having to do more combined with an aging workforce may translates into escalating age-related injuries and insurance costs as well as have negative impacts on quality and productivity in the long term.

Although older workers typically have fewer injuriesthan their younger counterparts, when an injury does occur, the injury tends to be more severe and itusually takes significantly longer for the worker torecover. Studies suggest older workers take an average of 15 days off per injury compared to one day off for younger workers. There is also data that shows older workers are less likely to return to work after an injury – in some cases over 80% less likely, compared to 12% for a worker in his 20s. Likewise, as the workforce ages, the incidences of disability rise 20% for workers in the 45 to 54 year-old range, andapproximately 42% for workers in the 65+ age range.Lost-time injuries have a far more negative impact to your insurance premiums than frequency. Meaning,an employer who has several small injuries with limited or no time away from work typically pays farless in insurance rates than an employee who has

only had a couple of severe lost-time injuries.

DiscriminationYou may think that firing or forcing out older workers may be the best solution, but it rarely is. Older workers generally have more experience, have better work habits, are more loyal and have a higher commitment to quality. If that’s not convincing enough, consider this: Along with the increase in older workers, age discrimination claims have risen correspondingly. The number of age discrimination claims filed with the Equal Employment Opportunity Commission has risen 23.5% in the past two years, making it the fastest growing category of discrimination cases. The ADEA (Age Discrimination in Employment Act) prohibits an employer from refusing to hire or fire, or otherwise discriminate against a person age 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.

So What Can You Do?

In almost every personal trait desired by employers- from honesty and integrity to pride and motivation- seasoned employees score higher than their younger counterparts. The unique experience, skills and values they bring allow employers to maximize productivity and easily translates into an increased competitive advantage and bottom line savings. But as they grow older, management needs to realize a potential depreciation in their skills and ability- especially in physically demanding jobs-


may be occurring. Consequently, hotel operators need to continuously assess the nature of the work that needs to be done and the abilities of the staff they have performing those duties. Where possible, a modification in job duties may be necessary.

Similarly, employers should look to invest in tools or training that encourages or allows the work to be performed with less physical strain or greater comfort. There are many new devices on the market that assist housekeepers with lifting heavy mattresses during bed making duties, ease pushing heavy linen and amenity carts or simply reduce the routine performance of strenuous, awkward reaching, kneeling or exertions during daily room cleaning activities.

Although, “investing” in anything during an economic recovery may seem counter-intuitive, increasing employee’s safety and health, regardless of age, has repeatedly been shown to lower the risk of injuries, improve productivity and have a positive affect on a company’s employee satisfaction, customer service scores and financial performance. In fact, a recent report by Liberty Mutual’s Safety Index suggests “95% of businesses report workplace safety initiatives have a positive impact on a company’s financial performance” and a study by OSHA’s Office of Regulatory Analysis indicates companies that implement effective ergonomic and safety and programs can expect returns of $4 to $6 for every $1 invested.

Preparing for the future is just common sense.Investing in tools and resources that allows your employees to perform their jobs better, safer and

more efficiently isn’t only practical, it’s essential in today’s changing workforce landscape.

Chris Montross Is Vice President Market & Brand Development For CKI Solutions, Which Offers Products And Programs That Solve Problems And Mitigate Risks Associated With Housekeeping Duties And

Guestroom Maintenance.!!!

For More Information On CKI Risk Solutions, Please Contact Us At 888.222.2217 Or Visit

Www.Ckisolutions.US.

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.

So What Can You Do?

In almost every personal trait desired by employers- from honesty and integrity to pride and motivation- seasoned employees score higher than their younger counterparts. The unique experience, skills and values they bring allow employers to maximize pro-ductivity and easily translates into an increased competitive advantage and bottom line savings. But as they grow older, management needs to realize a potential depreciation in their skills and ability- especially in physically demanding jobs- may be occurring. Consequently, hotel operators need to continuously assess the nature of the work that needs to be done and the abilities of the staff they have performing those duties. Where possible, a modifi-cation in job duties may be necessary. Similarly, employers should look to invest in tools or training that encourages or allows the work to be performed with less physical strain or greater comfort. There are many new decvices on the market that assist housekeepers with lifting heavy mattresses during bed making duties, ease pushing heavy linen and amenity carts or simply reduce the routine per-formance of strenuous, awkward reaching, kneeling or exertions during daily room cleaning activities.

Although, “investing” in anything during an economic recovery may seem counter-intuitive, increasing employee’s safety and health, regardless of age, has repeatedly been shown to lower the risk of injuries, improve productivity and have a positive affect on a company’s employee satisfaction, customer service scores and financial performance. In fact, a recent report by Liberty Mutual’s Safety Index suggests “95% of businesses report workplace safety initiatives have a positive impact on a company’s financial performance” and a study by OSHA's Office of Regulatory Analysis indicates companies that imple-ment effective ergonomic and safety and programs can expect returns of $4 to $6 for every $1 invested.

Preparing for the future is just common sense. Investing in tools and resources that allows your employees to perform their jobs better, safer and more efficiently isn’t only practical, it’s essential in today’s changing workforce landscape.

Chris Montross Is Vice President Market & Brand

Development For CKI Solutions, Which Offers

Products And Programs That Solve Problems And

Mitigate Risks Associated With Housekeeping Duties

And Guestroom Maintenance.

We Can Help

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! Eliminate Injuries Related To Bed Making

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CWT Safety & Security helps companies of all sizes manage the complex and changing requirements of corporate duty of care and focus on the essential aspects of traveler safety. CWT’s o�erings are designed to support travelers, travel managers and security managers throughout the trip life cycle, from booking through safe return, by:

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Helping companies of all sizes.

CWT SAFETY & SECURITYCWT SAFETY & SECURITYWherever you go, we’ll be there.Wherever you go, we’ll be there.


his past month, the United States Supreme Court granted a writ of certiorari

to review the most recent decision of the United States Court of Appeals for the Second Circuit in American Express Travel Related Services Co. v. Italian Colors Restaurant (“In re Amex Merchants’ Litigation”). See No. 12-133, 2012 US LEXIS 8697(Nov. 9, 2012). The Second Circuit has addressed the arbitration clause and class action waiver in this case three times since 2009, and it has been to the Supreme Court once before already. It is back at the Supreme Court because, following remand to the Second Circuit in 2010, the Court of Appeals—as it had done twice before—reversed the trial court’s decision in favor of individual arbitration, once again determining that the relevant arbitration and class action waiver clauses at issue were unenforceable.

The Supreme Court has not yet squarely addressed the question of whether or under what conditions a class action waiver might not comport with the Federal Arbitration Act (the “FAA,” 9 U.S.C. §§ 1-16). The Supreme Court’s upcoming decision could determine whether plaintiffs can relatively easily avoid such clauses in the future.

Background

The enforcement of contractual arbitration and class action waiver clauses has been the subject of significant litigation in the past few years. The Supreme Court has been strongly supportive of arbitration, and has indicated some support for class action waivers. Not all lower courts have demonstrated the same deference, however.

Plaintiffs in the In re Amex Mercants’ Litigation case are merchants (not consumers) who accept Amex cards for customer purchases. Amex and its chief competitors, Visa and Mastercard, earn revenue by withholding a “merchant discount fee” from each charged transaction. Plaintiffs allege that Amex charges a supra- competitive fee that exceeds the fee charged by Visa and Mastercard under circumstances that constitute a violation of federal antitrust law.

The contract that permits the American Express Company (“Amex”) to charge a fee is its Card Acceptance Agreement (the “Agreement”) with merchants. The Agreement is a form contract. Merchants do not negotiate its terms with Amex. It contains an “Honor All Cards” provision, which requires that merchants accept both Amex’s charge cards (where the customer pays in full at the end

of the month) and Amex’s credit cards (where the customer can pay over time, like a typical credit card). According to the plaintiffs, legitimate reasons permit Amex to charge a higher fee with respect to its charge cards. But when Amex charges a higher fee for its credit card, plaintiffs allege that it does so by improperly using the “Honor All Cards” provision of the Agreement to create an illegal “tying arrangement” between the two different card products all in violation of Section 1 of the Sherman Act, 15 U.S.C. § 1; see e.g., Northern Pacific Railway Co. v. United States, 356 U.S. 1, 5-6 (1958) (defining a tying arrangement as “an agreement by a party to sell one product but only on the condition that the buyer also purchases a different (or tied) product . . . .”).

In addition to its “Honor All Cards” provisions, the Amex Agreement contains a mandatory arbitration clause and class action waiver clause. These clauses preclude merchants from suing in court or commencing any arbitration other than on an individual (non-class) basis. Plaintiffs challenged this clause by filing suit in the United States District Court for the Southern District of New York rather than commencing an arbitration.

U.S. Supreme Court Will Hear Landmark Class Action Waiver Case: American Express Co. v. Italian Colors Restaurant

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Amex I

On March 16, 2006, the District Court determined that the enforceability of the class action (or class arbitration) waiver was a matter to be decided by arbitrators and granted Amex’s motion to compel arbitration under the FAA. In re Amex Merchants’ Litig., No. 06-1871, 2006 U.S. Dist. LEXIS 11742 (S.D.N.Y. March 16, 2006). The plaintiffs promptly appealed. In a January 30, 2009, opinion the Second Circuit reversed, concluding that the plaintiffs had properly raised a question of the enforceability of the class waiver provision, and, by extension, the arbitrability of the dispute, and that the issues were therefore for decision by a court, not an arbitrator. It further determined that the class waiver provision was unenforceable under the FAA because its enforcement would effectively preclude any action by plaintiffs. See In re Amex Merchants’ Litig, 554 F.3d 300 (2d Cir. 2009) (“Amex I”).

In reaching these conclusions, the Second Circuit noted both the strong federal policy in favor of arbitration and recent debates surrounding class waivers in mandatory arbitration clauses. Id. at 302-03. But it also cited the Supreme Court’s decision in Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 82 (2000),

for the proposition that a party may seek to invalidate an arbitration agreement on the grounds that arbitration would be prohibitively expensive if the plaintiff can show the likelihood of incurring such costs. Amex I, 554 F.3d at 315 (also citing Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614 (1985), and Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991)).

Although the Second Circuit recognized that, in the Supreme Court decisions it cited, the Supreme Court had enforced the underlying arbitration clauses, the Second Circuit claimed that a collective remedy was available in those cases, unlike in Amex I. It then concluded that the plaintiffs’ evidence showed that they could not pursue their claims as individual arbitrations. The plaintiffs’ expert had, for example, opined that an average single merchant might need to spend hundreds of thousands of dollars in order to claim only several thousand dollars in damages. The Second Circuit rejected the analysis (offered both by Amex and the District Court) that trebling of damages under the Clayton Act and the availability of attorneys’ fees for a prevailing party would make an individual claim economically feasible. Instead, the Second Circuit held that to enforce the Agreement would “grant Amex

de facto immunity from antitrust liability by removing the plaintiffs’ only reasonably feasible means of recovery.” Id. at 320. Amex responded with a petition for a writ of certiorari. See American Express Co. v. Italian Colors Restaurant, 130 S. Ct. 4201 (2010).

Amex II

The Supreme Court granted Amex’s petition for certiorari and remanded the case for further consideration following its decision in Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 130 S. Ct. 1758 (2010). In that case, the Supreme Court held that a party cannot be forced to submit to class arbitration without evidence that it had agreed to such a collective procedure (and that silence is not sufficient evidence of such consent).

On remand, however, the Second Circuit determined that Stolt-Nielsen had no real effect on the issues before it. It concluded that Stolt-Nielsen stands for the proposition that one party cannot initiate class arbitration against another party absent a contractual agreement to do so, but that Stolt-Nielsen did not mean that a contractual clause barring class arbitration is per se enforceable. In re Am. Express Merchants’ Litig., 634 F.3d 187, 193 (2d Cir. 2011) (Amex II).


In reaching this conclusion in Amex II, the Second Circuit once again found that plaintiffs had demonstrated that the class waiver in the arbitration clause at issue would preclude plaintiffs from bringing Sherman Act claims against Amex. Id. at 196. This time, the Second Circuit panel also seemed especially convinced that, as a matter of public policy, plaintiffs must never be deprived (even indirectly) of the protections of the federal antitrust laws.See id. at 197-98. It flatly rejected Amex’s argument that Stolt-Nielsen disallowed the use of public policy as a basis to void contractual language. Instead, the panel held that Stolt-Nielsen only forbids using public policy to interpret the parties’ intent in a contract to find that they had agreed to a class arbitration procedure. Id. at 199- 200.

Amex III

On April 11, 2011, the Second Circuit placed a hold on its mandate in Amex II to allow Amex to file another petition for a writ of certiorari. While the mandate was on hold, the Supreme Court decided AT&T Mobility LLC v. Concepcion, 131 S. Ct. 1740 (2011). The parties then submitted supplemental briefing to the Second Circuit on the potential impact of Concepcion.

The Second Circuit held, however, that Concepcion did not alter its prior analysis. See In re Am. Express Merchants’ Litig., 667 F.3d 204 (2d Cir. Feb. 1, 2012) (Amex III). In its view, the decision in Concepcion, like the decision in Stolt-Nielsen, did not render class waivers per se enforceable. Instead, the Second Circuit held that both cases are simply applications of the principle that parties cannot be forced into a class wide arbitration unless they have agreed to that procedure. Id at 213. The panel therefore described the Supreme Court’s decision in Concepcion as offering “a path for analyzing whether a state contract law is preempted by the FAA,” id., not whether a class waiver is necessarily enforceable if plaintiffs demonstrate that enforcement would preclude their ability to vindicate federal statutory rights, id. at 214.

The Second Circuit denied rehearing en banc on May 29, 2012. In the concurring opinion to the order denying rehearing, Justice Pooler reiterated that the holding in Amex III “rests squarely on the vindication of statutory rights analysis—an issue untouched in Concepcion.” In re Am. Express Merchants’ Litig., 681 F.3d 139 (2d Cir. 2012).

Looking Ahead

Having granted certiorari, the Supreme Court is expected to hear oral argument on Amex III early next year. The question on which it granted review is “[w]hether the Federal Arbitration Act permits courts, invoking the ‘federal substantive law of arbitrability,’ to invalidate arbitration agreements on the ground that they do not permit class arbitration of a federal-law claim.” See Question Presented and Grant of Cert., American Express Co. v. Italian Colors Restaurant, No. 12-133, available at http://www.supremecourt.gov/qp/12-00133qp.pdf (last visited Nov. 14, 2012). A decision would most likely be announced in June 2013 and could be meaningful not only in the commercial context, but perhaps in shedding light on how the Supreme Court might address issues such as the National Labor Relations Board’s recent decision in D.R. Horton Inc., 357 NLRB No. 184 (2012) (deeming the “right” to file a class action or class arbitration a concerted protected activity and on that basis invalidating an arbitration agreement that allegedly violated federal labor law by requiring individual arbitration).

The dissent to the order denying rehearing en banc in the Second Circuit argued that Concepcion “teaches that the FAA does not


allow courts to invalidate class-action waivers even if ‘class proceedings are necessary to prosecute small-dollar claims that might otherwise slip through the legal system.’” 681 F.3d at 143, quoting Concepcion, 131 S. Ct. at 1753. This argument will likely carry weight with the majority of the Supreme Court that has in the past strictly upheld party choice in arbitration clauses. Whether it will be powerful enough for a reversal is yet unknown, but there is one other factor favoring Amex:

Justice Sotomayor, who originally sat on the Second Circuit panel in Amex I, is recused from the case. She was in the minority in Concepcion and thus might have been a voice against reversal in Amex III.

For more information on the content of this alert, please contact your Nixon Peabody attorney or:

Paige L. Berges at [email protected] or (212) 940-3029.

Christopher M. Mason at [email protected] or (212) 940-3017.

FTC Warns Hotel Operators that Price Quotes that Exclude ‘Resort Fees’ and Other Mandatory Surcharges May Be Deceptive

The Federal Trade Commission has warned 22 hotel operators that their online reservation sites may violate the 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 “drip pricing,” a pricing technique in which firms advertise only part of a product’s price and reveal other charges as the customer goes through the buying process. According to the FTC letters, “One common complaint consumers raised involved mandatory fees hotels charge for amenities such as newspapers, use of onsite exercise or pool facilities, or internet access, sometimes referred to as ‘resort fees.’ These mandatory fees can be as high as $30 per night, a sum that could certainly affect consumer purchasing decisions.” The warning letters also state that consumers often did not know they would be required to pay resort fees in addition to the quoted hotel rate.

“Consumers are entitled to know in advance the total cost of their hotel stays,” said Federal Trade Commission Chairman 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 American consumers.”

The letters strongly encourage the companies to review their websites and ensure that their ads do not misrepresent the total price consumers can expect to pay.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.


Find-a-LawyerNeeding legal advice or representation for your company?

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• Global exposure to the hospitality community, including in house counsel and private attorneys seeking local counsel and assistance

• Attorney listing in Find-a-Lawyer on the Hospitalitylawyer.com website

• Branded article placement opportunities in content-focused Hospitality Lawyer e-magazine

• Access to the complete catalog of past Hospitality Law Conference presentations and white papers

• Access to hospitality forms, checklists, and procedures• Discounts to the annual Hospitality Law Conference

SolutionsStoreThe HospitalityLawyer.com Solutions Store offers a variety of safety and security products, services, and solutions from companies with solutions specifically for hotels, restaurants, and country clubs. Please view our webiste for the full list.

Cost Segregation ServicesData Privacy & PCI-DSS ComplianceEducation & TrainingEmployee HiringEmergency ResponseExpert WitnessesHuman TraffickingInsurance Services for Hotels & RestaurantsLegalHotel & Restaurant Safety Products, Services, and SolutionsHotel & Restaurant Security Products, Services, and SolutionsPayment ProcessingThreat Assessment and Threat Management

RESOURCES

HospitalityLawyer.com | December 2012 Issue Hospitality Lawyer Magazine

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Transcript of HospitalityLawyer.com | December 2012 Issue Hospitality Lawyer Magazine