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ASSESSING CORPORATE SOCIAL RESPONSIBILITY IN
       HOSPITALITY ORGANIZATIONS USING LAWSUITS
                                                                       AS A GAUGE

                                                                            Melissa Dallas

                                                                  Missouri State University



       This study identifies and describes major lawsuits against Fortune 500 hotel,
foodservice, and casino corporations over the past ten years and suggests that these suits
are one indicator of Corporate Social Responsibility (CSR). Lawsuits claiming fraud,
discrimination, unjust enrichment, copyright infringement, and wrongful death which
ended in settlements or jury awards above $2 million are included. This research follows
the methodology of a 2006 study which examined similar claims against Fortune 100
companies.




KEYWORDS: Corporate social responsibility, hospitality lawsuits, ethics



       In the early to mid-part of the last decade, it seemed as if claims of major

corporate misconduct were occurring almost weekly. Successful companies including

WorldCom and Enron filed for bankruptcy due to the fraudulent activities of their

corporate leaders. High profile Chief Executive Officers including Dennis Koslowski of

Tyco International and John Rigas of Adelphia Communications were convicted of a

variety of crimes. The reputations of major corporations were tainted and stock values

plummeted.
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 2



       This era was filled with ethical and legal misdeeds, and brought the need for

increased Corporate Social Responsibility (CSR) to the forefront. Corporate Social

Responsibility, often called corporate conscience, mandates self-regulation and

accountability to all current and potential stakeholders. Research into the practices and

economic impact of CSR has been surfacing in a number of fields, but little has been

done in the hospitality arena. A recent study examined social responsibility patterns in the

top ten hotel companies (Holcomb et al., 2007). The socially responsible behaviors

included in this study were self-reported on websites and in annual and CSR reports, and

focused primarily on philanthropic and diversity initiatives. Similarly, an exploratory

study was undertaken which examined self-reported philanthropic initiatives undertaken

by lodging properties throughout the United States in an attempt to quantify the “social”

aspect of CSR (McGehee, 2009).

       The concept of CSR is broader though and also encompasses economic, ethical,

and legal corporate behaviors (Carroll, 1991). Many describe law as “codified ethics” or,

conversely, describe ethics as “legal compliance plus.” Thus, one way to study CSR

patterns within the ethical and legal context is to categorically examine recent lawsuits

and their outcomes.

       A recent study found that forty corporations listed in the 1999 Fortune 100 were

considered “unethical,” defined as engaging in fraud (accounting, securities, or

consumer), discriminatory practices, undisclosed executive pay, antitrust activities, patent

infringement, or other violations of the law (Clement, 2006). The most frequent type of

misconduct resulting in decisions, settlements, or fines of greater than $2 million was

accounting fraud (20 firms), followed by securities fraud (13 firms), consumer fraud (11
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 3



firms), discriminatory practices (six firms), antitrust activities (four firms), undisclosed

executive pay (two firms), patent infringement (two firms), and other violations of the

law (three firms). The most egregious violations occurred in the insurance and financial

services industries, and none of the forty firms were primarily engaged in the hospitality

industry.

       Clement also recognized that a company that settles a lawsuit before it goes to

court is not necessarily admitting a wrong. Rather, settling out of court may be in the best

economic interest of the company in that the settlement may cost less than litigation. It is

also important to note that larger corporations are statistically vulnerable to more

lawsuits, and that current public interest, at any point in time, often results in an increased

number of associated lawsuits.

       This study follows Clement’s methodology and focuses on two major segments of

the hospitality industry from the 2010 Fortune 500: 1) Food Services and 2) Hotels,

Casinos, and Resorts. The Fortune 500 was used rather than the Fortune 100 in order to

capture hospitality firms to include in the study. Suits decided or settled between 2001

and 2010 will be included, expanding the study from Clement’s five years to ten years.

Finally, settlements and awards under $2 million will generally not be mentioned. To

date, no comprehensive study has focused on lawsuits filed against leading hospitality

firms as an indicator of CSR. Thus, the major purpose of this study is to identify and

describe major lawsuits and their outcomes as they relate to the ethical and legal

parameters of CSR. The results of this study will necessarily be limited since relatively

few hospitality firms are included in the Fortune 500 and the number of lawsuits will be
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 4



less. However, this study will demonstrate the need to categorically examine lawsuits as

they relate to the most flagrant violations of ethics and law which are both pillars of CSR.



Corporate Classification Methodology

        Out of the 2010 Fortune 500 list, ten companies were classified in the “food

service” or “hotel, casino, and resort” category (Fortune 500, 2010). The companies,

shown in Tables 1 and 2, include four in the food service industry and six in the hotels,

casinos, and resorts industry, respectively, and are listed in order of their Fortune 500

rank.



Table 1
Food Service Companies Included in the 2010 Fortune 500
Corporation                                          Revenue Fortune 500 Rank
                                                   ($ million)
McDonald’s                                           22,744.7             108
Yum! Brands                                          10,836.0             216
Starbucks                                             9,774.6             241
Darden Restaurants                                    7,217.5             311


Table 2
Hotel, Casino, and Resort Companies Included in the 2010 Fortune 500
Corporation                                          Revenue Fortune 500 Rank
                                                   ($ million)
Marriott International                               10,908.0             213
Harrah’s Entertainment (aka Caesars                   8,907.4             264
Entertainment Corporation as of 11/10)
MGM Mirage                                             5,978.6                   360
Starwood Hotels and Resorts                            4,712.0                   438
Las Vegas Sands                                        4,563.1                   456
Host Hotels and Resorts                                4,216.0                   492
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 5



       A study of lawsuits and statutory violations from 2001 through 2010 for each of

these companies was conducted online through the Wall Street Journal, The New York

Times, and Lexis/Nexis databases. As well, general search terms including the company’s

name, “lawsuit,” and “million” were used. The searches were conducted numerous times

using different search engines to best ensure that the major lawsuits and statutory

violations were captured.

       Lawsuits that were both litigated and settled out of court as well as suits which are

under appeal are included. None of these searches revealed any incidences of undisclosed

executive pay, antitrust violations, or patent infringements by any of the ten hospitality

companies included in this study. However, some of these companies were unsuccessful

defendants in lawsuits claiming unjust business enrichment, copyright infringement, and

wrongful death. Each of these lawsuits and their outcomes will be discussed separately.



Accounting, Securities, and Consumer Lawsuits Claiming Fraud

       While the hospitality industry has had its share of lawsuits, none were as

monumental as those faced by the financial services and telecommunications industries

during the past decade. In fact, over the past ten years, only five lawsuits filed against

major hospitality firms claiming accounting, securities, or consumer fraud resulted in an

out-of-court settlement or jury award of $2 million or more. The $2 million minimum

threshold, in line with that used in Clement’s study, generally excluded lawsuits which

solely resulted in compensatory-based awards or settlements. meaning that the plaintiff

was awarded back pay, lost benefits, and such. Rather, the $2 million mark most often
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 6



included both compensatory and punitive damages, meant to simultaneously make the

plaintiff “whole” while “punishing” the defendant.

       When analyzing the lawsuits pertaining to the financial settlement or damages, a

natural break was clearly apparent. Many suits fell into the aforementioned target

categories, but were settled or adjudicated in the $500,000 range. The damages in these

suits were normally compensatory, meaning that the plaintiff was awarded back pay, lost

benefits, and such. The $2 million dollar minimum used in this study captured major

settlements and judgments, many of which carried with them punitive damages in

addition to compensatory damages, hence, the higher settlement or adjudicated amount.

These settlements and awards ranged from $2 million to $12.5 million. The figures,

though, pale in comparison to Clement’s findings of forty-four fraud-related lawsuits

filed against Fortune 100 companies from 2000 to 2005, some of which resulted in

awards or settlements of $1 billion or more (Clement, 2006).

       It is worth mentioning though that, early last decade, five major hotel firms

including Marriott and Starwood settled class action lawsuits in which plaintiffs claimed

they were charged undisclosed fees in the form of “energy surcharges.” These suits were

settled out of court, often requiring the hotel company to issue a $10 voucher for a future

stay (Stellin, 2003). Certain food service companies faced similar lawsuits including

Pizza Hut and its parent company, Yum! Brands. The dollar amount of the potential

settlement of these suits, though, was much higher than the actual payout amounts since

not all plaintiffs chose to redeem their vouchers. None of these lawsuits will be included

since the actual dollar amount of these settlements to date has not been determined.
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 7



       The casino segment has also faced its share of recent lawsuits and these bear

mentioning. A number of investors filed suits against Las Vegas Sands Corporation’s

CEO Sheldon Adelson and Board members in the Nevada state court claiming that

securities fraud and mismanagement were responsible for the huge decline in stock

values, but the suits were dismissed in November 2009 (Green, 2009). Two similar

lawsuits filed in federal court in 2010 have not yet been decided or settled (Green, 2010).

Six separate lawsuits against MGM Mirage claiming securities fraud were recently

granted class action status, but have also not yet been decided or settled (Lowinger v.

MGM Mirage, 2009). Neither of these pending class action suits will be included in the

table below since both are requesting unspecified compensatory damages which cannot

be quantified for the purpose of this study.

       The much-publicized class action suit filed by Hindus and vegetarians against

McDonald Corporation’s undisclosed use of beef tallow in the production of their French

fries resulted in the highest settlement or award in this category. The settlement required

McDonald’s to donate $10 million to vegetarian, Hindu and/or Sikh, children’s hunger

relief, and Jewish charitable organizations. As well, they agreed to write a letter of

apology to the affected groups and to establish an advisory board charged with making

dietary recommendations to the corporation ((Block, Sharma, and Singh v. McDonald’s,

2001). In addition, McDonald’s agreed to pay plaintiffs’ attorney fees and to pay $4,000

to each of the eleven plaintiffs.
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 8



Table 3
Major Lawsuits Claiming Accounting, Securities, and Consumer Fraud
Company          Year Nature of         Description                       Award/Settlement
                      Misdeed                                             Amount
McDonald’s       2002 Consumer          Class action suit filed by        $12.5 million
Corporation           fraud             vegetarians and Hindus            settlement
                                        claiming McDonald’s
                                        deliberately misled customers
                                        by failing to disclose the use
                                        of beef tallow in the
                                        production of French fries
                                        (Block, Sharma, and Singh v.
                                        McDonald’s, 2001)
McDonald’s       2005    Consumer       Plaintiffs claimed McDonald’s     $8.5 million
Corporation              fraud          did not lower the amount of       settlement
                                        trans fat in their cooking oil
                                        after promising that they
                                        would (Fettke v. McDonald’s
                                        Corp., 2003)
Harrah’s         2010    False          Class action suit claimed the     $8 million jury
Entertainment            advertising    timing for the use of birthday    award
                                        club vouchers was misleading
                                        (Smerling v. Harrah's
                                        Entertainment, Inc., 2006)
McDonald’s       2003    Fraud,         Plaintiff, a long-time multiple   Initial $16.5 million
Corporation              recession of   franchisee, claimed she was       jury award; $10
                         a release,     wrongfully forced out of the      million in punitive
                         and unfair     system (Darling v.                damages overturned
                         business       McDonald’s Corp., 2006)           on appeal; settled for
                         practices                                        remainder
Marriott         2003    Antitrust      Suit filed by In Town Hotels      $2 million
International            violation      claiming mismanagement,           settlement
                                        fraud, overcharging for
                                        services, and commercial
                                        bribery (In Town Limited
                                        Partnership v. Marriott
                                        International, Inc., 2002)


                A number of obesity-related lawsuits filed against McDonald’s followed

this settlement and were dismissed on a variety of grounds. Similarly, a number of

lawsuits were filed claiming that McDonald’s French fries contained gluten although
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 9



McDonald’s claimed they did not (In re McDonald’s French Fries Litig., 2009). The

gluten-related suits were denied class action status in 2009 due to a district court judge’s

explanation that “individual issues of law clearly predominate over common issues,

making a nationwide class unmanageable”. To date, none of these claims has proceeded

on an individual basis.

       The increased public attention to the use of trans fats in cooking led to two other

well-publicized lawsuits filed against McDonald’s and Yum! Brands, the parent company

of KFC. McDonald’s settled their suit, filed by watchdog group BanTransFat.com and

another plaintiff, for $8.5 million in 2006. The American Heart Association received $7

million of the settlement and the remaining $1.5 million was used to fund a public

education initiative about the potential dangers of trans fats (“McDonald’s Settles,”

2005). In 2006, the Center for Science in the Public Interest, another watchdog group,

filed a similar lawsuit against KFC, but the suit was dropped in 2007 when KFC

voluntarily stopped frying their chicken in oil with trans fats (“CSPI Withdraws, 2006).

       The third case involved a false advertising and truth-in-advertising class action

suit filed against Harrah’s Entertainment in 2010. Harrah’s gave away $15 vouchers as

part of their customer loyalty program, but unreasonably restricted the hours in which the

vouchers could be redeemed. A jury awarded the 80,000 class action members $100 each

in statutory damages for a total of $8 million (Parry, 2010).

       In the fourth case, a long-time franchisee filed suit against McDonald’s

Corporation claiming fraud, recession of a release, and unfair business practices. The

franchisee openly criticized some of McDonald’s policies as they pertained to franchise

requirements, and claimed that she was “forced out of the system.” A jury awarded the
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 10



plaintiff $16.5 million of which $10 million was punitive (Edison, 2007). Upon appeal,

the $10 million in punitive damages was overturned and, upon the plaintiff’s death, her

estate settled out of court with McDonald’s for the remainder (Kirkland and Ellis LLP).

       The last lawsuit included in Table 3 was filed by In Town Hotels against Marriott

International and claimed mismanagement and overcharging for services. In Town also

challenged Marriott’s vertical ties with Avendra, a procurement services company that is

half-owned by Marriott. The suit was settled in 2003 when Marriott agreed to forego $2

million in fees owed by In Town from the Charleston Marriott Town Center property

(Browning, 2008).



Discrimination Lawsuits

       The leading hospitality companies in this study fared well as compared to those in

Clément’s study regarding discrimination-based lawsuits. Since 2008, though, twenty-

eight lawsuits claiming sexual harassment were filed against Harrah’s Atlantic City, part

of Harrah’s Entertainment (Dunn, 2010). The plaintiffs are seeking injunctive relief and

punitive damages. All of these suits are still pending.

       Another case worth mentioning was filed in 2002 by celebrity chef Timothy Dean

against the St. Regis Washington Hotel in Washington, D.C. The plaintiff claimed racial

discrimination in that Marriott’s management team tried to force him out of business and

harassed him due to his race (Shiver, 2005). The $50 million lawsuit was settled out of

court for an undisclosed amount.

       There were many other relatively high-profile suits filed claiming discrimination

based on race, religion, national origin, gender, and sexual orientation, but in many cases,
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 11



they were settled out of court. In suits that went before a jury, the awards were less than

the $2 million threshold of this study.



Undisclosed Executive Pay

       While no incidences of undisclosed executive pay per se were revealed, The New

York Times reported that Chairman, Chief Executive, and Treasurer of the Las Vegas

Sands, Sheldon G. Adelson, received $3.6 million in salary and bonuses in 2005 due to

“improper interpretation” of his employment contract. This was almost $1 million more

than he was entitled to had the contract been interpreted correctly (Morgenson, 2006). An

additional $1.8 million was awarded to four other top executives at the Las Vegas Sands

due to the same “misinterpretation.” The Compensation Committee of the Sands admitted

the error, but let all five executives keep the excess bonus payments based on “the

outstanding performance of the company in 2005.”



Other Notable Lawsuits

       The two lawsuits listed in Table 4 were included since each has a direct bearing

on CSR as it pertains to both law and ethics. The settlement or award in each case was

above the $2 million threshold as well, and involved intellectual property rights and

unjust enrichment claims.
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 12



Table 4
Other Lawsuits
Company         Year Nature of              Description                           Award/Settlement
                     Misdeed                                                               Amount
Las Vegas       2009 Unjust                 Suit filed by three individuals           $42.5 million
Sands                business               who claimed they were key in                 settlement
                     enrichment             helping the Las Vegas Sands
                                            secure a gambling license in
                                            Macau (Stutz, 2009)
Yum!            2001     Breach of          Plaintiffs filed suit claiming      $41.9 million upheld
Brands                   implied            that Taco Bell modeled its                     on appeal
                         contract and       popular icon after their
                         copyright          “Psycho Chihuahua” cartoon
                         infringement       character (Wrench LLC v.
                                            Taco Bell Corp., 1999)


         The first lawsuit was filed by three individuals who claimed that they were

integral in assisting the Las Vegas Sands to obtain a Macau gambling license. Such

licenses are notoriously difficult to acquire. In 2009, the Las Vegas Sands paid $42.5

million to settle the suit. The Sands still faces a possible new trial in a suit filed by

another individual who also claimed he assisted in the Sand’s acquisition of the gambling

license. The plaintiff in this case is seeking $58.6 million in damages. A lower court in

Nevada initially ruled in favor of the plaintiff, but was overturned by the state‘s supreme

court which ruled that “a district judge shouldn’t have admitted a hearsay statement

during the trial: (O’Keefe, 2010). Since this ruling was procedural rather than

substantive, it is likely that the suit will be refiled.

         The second suit was highly publicized and involved the creative ownership of a

talking Chihuahua that catapulted the brand image of Taco Bell. Two plaintiffs asserted

copyright infringement and breach of contract. They claimed to have developed the

"Psycho Chihuahua" cartoon character which was then transformed by Taco Bell into the
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 13



live Chihuahua which became a national icon. The five-year court battle ended in a $41.9

million verdict for the plaintiffs.



Discussion and Further Research

        This study was not designed to be exhaustive and in many ways is limited. The

number of lawsuits filed against these hospitality companies regarding a key area of CSR

was far fewer and the settlements and jury awards were markedly less than those

identified in Clement’s study. However, the sample size is only one-tenth of the size of

Clement’s sample and the number of lawsuits resulting in awards exceeding $2 million is

small. Nevertheless, the results seem to indicate that using qualified lawsuits as one

indicator of CSR is a useful measurement tool because it objectively ferrets out the most

egregious examples of disregard for ethical and legal principles. As well, the study

establishes the effectiveness of its methodology in identifying significant awards.

        A more conclusive examination of the ethical and legal profile of the hospitality

industry would require a significantly broader study. Such a study should expand the

definition of the industry, perhaps including segments such as airlines and entertainment,

as well as extending the scope of the examination to the Fortune 1000 instead of the

Fortune 500. It might also be revealing if certain industry segments could be identified as

experiencing higher rates of litigation pertaining to CSR. An investigation of actions

initiated by the Securities and Exchange Commission could also be included. Finally,

loosening some of the qualifying parameters, such as the amount of awards or

settlements, might cast a wider net and permit more detailed study of the types of firms

involved.
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 14



                                    REFERENCES

Block, Sharma, Singh et. al. v. McDonald’s, No. 01CH9137 (Cir. Ct. of Cook County, Ill.
       June 6, 2001).

Browning, L. (2008, July 28). Marriott and owner of hotel settle lawsuit. The New York
      Times, p. C4.

Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral
        management of organizational stakeholders. Business Horizons, 34(4), 39-48.

Clement, R. W. (2006). Just how unethical is American business? Business Horizons,
      49(4), 313-327.

CSPI withdraws from lawsuit after KFC cuts trans fat. (2006, October 30). Retrieved
      from: http://www.cspinet.org/new/200610301.html

Darling v. McDonald’s Corp., WL 164986 (Cal. Ct. Spp. Jan. 24, 2006) (unpublished).

Dunn, M. (2010, April 28). Bridgeton attorney brings four new lawsuits against Harrah’s.
      Retrieved from
      http://www.nj.com/cumberland/index.ssf/2010/04/bridgeton_attorney_brings_fou
      r.html

Edison, C. (2007, April 30). Franchising is a fast growing commerce with one opening
       every eight seconds but dangers lurk - Apparently especially for McDonald's
       franchise owners. Retrieved from http://www.lawfuel.com/show-
       release.asp?ID=12002

Fettke v. McDonald’s Corp., Case No. 044109 (Cal. Sup. Ct. 2003). See also
        BanTransFat.com v. McDonald’s Corp., Case No. 034828 (Cal. Sup. Ct. 2003).

Fortune 500. (2010, May 3). Retrieved from
      http://money.cnn.com/magazines/fortune/fortune500/2010/full_list

Green, S. (2009, November 6). Judge dismisses suits blaming Las Vegas Sands for stock
       drop. Las Vegas Sun. Retrieved from
       http://www.lasvegassun.com/news/2009/nov/06/judge-dismisses-suits-blaming-
       las-vegas-sands-stoc/

Green, S. (2010, July 22). Shareholders file another lawsuit against Las Vegas Sands
       Corp. Las Vegas Sun. Retrieved from
       http://www.lasvegassun.com/news/2010/jul/22/shareholders-file-another-lawsuit-
       against-las-vega/
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 15



Holcomb, J. L., Upchurch, R. S., & Okumus, F. (2007). Corporate social responsibility:
      What are top hotel companies reporting? International Journal of Contemporary
      Hospitality Management, 9(6), 461-475.

In re McDonald’s French Fries Litig., ___ F.Supp.2d ___ (N.D. Ill. May 6, 2009).

In Town Limited Partnership v. Marriott International, Inc., No. 2:02-0481 (S.D.W.V.
      filed May 23, 2002).

Kirkland & Ellis LLP, Lawyer Search: Jonathan C. Bunge, P.C. – Partner. (n.d.)
       Retrieved from
       http://www.kirkland.com/sitecontent.cfm?contentID=220&itemID=8099

Lowinger v. MGM Mirage, et al. Filed August 19, 2009. Case No. 2:09-cv-01558-RCL-
      LRL, U.S. District Court for the District of Nevada. Khachatur Hovhannisyan v.
      MGM Mirage, et al. Filed October 19, 2009. Case No. 2:09-cv-02011-LRH-RJJ,
      U.S. District Court for the District of Nevada. On November 4, 2009, the Court
      entered an Order consolidating for all purposes the Lowinger and Hovhannisyan
      actions before the Honorable Robert C. Jones, with such consolidated actions
      captioned as “In re MGM Mirage Securities Litigation.”

Marriott International loses $11 million verdict in wrongful death case. (2002, July 25).
       Retrieved from http://injuryissues.com/find/article-1582.html

McDonald’s settles trans fats lawsuits. (2005, February 12). New York Times. Retrieved
     from http://www.nytimes.com/2005/02/12/business/12food.html

McGehee, N. G., Wattanakamolchai, S., Purdue, R. R., and Calvert, E. O. (2009).
     Corporate social responsibility within the U.S. lodging industry: An exploratory
     approach. Journal of Hospitality & Tourism Research, 33(3), 417-437.

Morgenson, G. (2006, May 31). Big bonuses still flow, even if bosses miss goals.
      Retrieved from http://corpwatch.org/article,php?id=13633

O’Keefe, K. (2010, November 21). Court throws out ruling against Las Vegas Sands. The
      Wall Street Journal. Retrieved from
      http://online.wsj.com/article/SB1000142405274870417040457562405186147564
      6.html

Parry, W. (2010, September 29). Harrah's casinos ordered to pay $8 million for
       misleading ads. Las Vegas Review-Journal. Retrieved from
       http://www.lvrj.com/business/harrah-s-casinos-ordered-to-pay--8-million-for-
       misleading-ads-103913854.html
Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 16



Shiver, H. (2005, March 2). New chapter in his story: Chef opens restaurant.” The
        Baltimore Sun. Retrieved from http://articles.baltimoresun.com/2005-03-
        02/news/0503010145_1_timothy-dean-jean-louis-chef/2

Smerling v. Harrah's Entertainment, Inc., 389 NJ Super. 181, 186-87 (App. Div. 2006).

Stellin, S. (2003, July 13). Hotel bills with add-ons galore. The New York Times.
         Retrieved from
         http://query.nytimes.com/gst/fullpage.html?sec=travel&res=940CEFDB123DF93
         0A25754C0A9659C8B63

Stutz, Howard (2009, August 1). Lawsuit settlement plays factor in Law Vegas Sands net
        loss. Law Vegas Review-Journal. Retrieved from
        http://www.lvrj.com/business/52168992.html

Wrench LLC v. Taco Bell Corp., 51 F. Supp. 2d 840 (W.D. Mich. 1999).




Submitted January 4, 2012

First Revision Submitted April 10, 2012

Accepted June 3, 2012

Refereed Anonymously



Melissa Dallas, J.D. (melissadallas@missouristate.edu) is a professor in the Hospitality
and Restaurant Administration Department in the College of Natural and Applied
Sciences at Missouri State University.

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HospitalityLawyer.com | Melissa Dallas Case Study | Assessing Corporate Social Responsibility in Hospitality Organizations Using Lawsuits as a Gauge by Melissa Dallas

  • 1. ASSESSING CORPORATE SOCIAL RESPONSIBILITY IN HOSPITALITY ORGANIZATIONS USING LAWSUITS AS A GAUGE Melissa Dallas Missouri State University This study identifies and describes major lawsuits against Fortune 500 hotel, foodservice, and casino corporations over the past ten years and suggests that these suits are one indicator of Corporate Social Responsibility (CSR). Lawsuits claiming fraud, discrimination, unjust enrichment, copyright infringement, and wrongful death which ended in settlements or jury awards above $2 million are included. This research follows the methodology of a 2006 study which examined similar claims against Fortune 100 companies. KEYWORDS: Corporate social responsibility, hospitality lawsuits, ethics In the early to mid-part of the last decade, it seemed as if claims of major corporate misconduct were occurring almost weekly. Successful companies including WorldCom and Enron filed for bankruptcy due to the fraudulent activities of their corporate leaders. High profile Chief Executive Officers including Dennis Koslowski of Tyco International and John Rigas of Adelphia Communications were convicted of a variety of crimes. The reputations of major corporations were tainted and stock values plummeted.
  • 2. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 2 This era was filled with ethical and legal misdeeds, and brought the need for increased Corporate Social Responsibility (CSR) to the forefront. Corporate Social Responsibility, often called corporate conscience, mandates self-regulation and accountability to all current and potential stakeholders. Research into the practices and economic impact of CSR has been surfacing in a number of fields, but little has been done in the hospitality arena. A recent study examined social responsibility patterns in the top ten hotel companies (Holcomb et al., 2007). The socially responsible behaviors included in this study were self-reported on websites and in annual and CSR reports, and focused primarily on philanthropic and diversity initiatives. Similarly, an exploratory study was undertaken which examined self-reported philanthropic initiatives undertaken by lodging properties throughout the United States in an attempt to quantify the “social” aspect of CSR (McGehee, 2009). The concept of CSR is broader though and also encompasses economic, ethical, and legal corporate behaviors (Carroll, 1991). Many describe law as “codified ethics” or, conversely, describe ethics as “legal compliance plus.” Thus, one way to study CSR patterns within the ethical and legal context is to categorically examine recent lawsuits and their outcomes. A recent study found that forty corporations listed in the 1999 Fortune 100 were considered “unethical,” defined as engaging in fraud (accounting, securities, or consumer), discriminatory practices, undisclosed executive pay, antitrust activities, patent infringement, or other violations of the law (Clement, 2006). The most frequent type of misconduct resulting in decisions, settlements, or fines of greater than $2 million was accounting fraud (20 firms), followed by securities fraud (13 firms), consumer fraud (11
  • 3. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 3 firms), discriminatory practices (six firms), antitrust activities (four firms), undisclosed executive pay (two firms), patent infringement (two firms), and other violations of the law (three firms). The most egregious violations occurred in the insurance and financial services industries, and none of the forty firms were primarily engaged in the hospitality industry. Clement also recognized that a company that settles a lawsuit before it goes to court is not necessarily admitting a wrong. Rather, settling out of court may be in the best economic interest of the company in that the settlement may cost less than litigation. It is also important to note that larger corporations are statistically vulnerable to more lawsuits, and that current public interest, at any point in time, often results in an increased number of associated lawsuits. This study follows Clement’s methodology and focuses on two major segments of the hospitality industry from the 2010 Fortune 500: 1) Food Services and 2) Hotels, Casinos, and Resorts. The Fortune 500 was used rather than the Fortune 100 in order to capture hospitality firms to include in the study. Suits decided or settled between 2001 and 2010 will be included, expanding the study from Clement’s five years to ten years. Finally, settlements and awards under $2 million will generally not be mentioned. To date, no comprehensive study has focused on lawsuits filed against leading hospitality firms as an indicator of CSR. Thus, the major purpose of this study is to identify and describe major lawsuits and their outcomes as they relate to the ethical and legal parameters of CSR. The results of this study will necessarily be limited since relatively few hospitality firms are included in the Fortune 500 and the number of lawsuits will be
  • 4. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 4 less. However, this study will demonstrate the need to categorically examine lawsuits as they relate to the most flagrant violations of ethics and law which are both pillars of CSR. Corporate Classification Methodology Out of the 2010 Fortune 500 list, ten companies were classified in the “food service” or “hotel, casino, and resort” category (Fortune 500, 2010). The companies, shown in Tables 1 and 2, include four in the food service industry and six in the hotels, casinos, and resorts industry, respectively, and are listed in order of their Fortune 500 rank. Table 1 Food Service Companies Included in the 2010 Fortune 500 Corporation Revenue Fortune 500 Rank ($ million) McDonald’s 22,744.7 108 Yum! Brands 10,836.0 216 Starbucks 9,774.6 241 Darden Restaurants 7,217.5 311 Table 2 Hotel, Casino, and Resort Companies Included in the 2010 Fortune 500 Corporation Revenue Fortune 500 Rank ($ million) Marriott International 10,908.0 213 Harrah’s Entertainment (aka Caesars 8,907.4 264 Entertainment Corporation as of 11/10) MGM Mirage 5,978.6 360 Starwood Hotels and Resorts 4,712.0 438 Las Vegas Sands 4,563.1 456 Host Hotels and Resorts 4,216.0 492
  • 5. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 5 A study of lawsuits and statutory violations from 2001 through 2010 for each of these companies was conducted online through the Wall Street Journal, The New York Times, and Lexis/Nexis databases. As well, general search terms including the company’s name, “lawsuit,” and “million” were used. The searches were conducted numerous times using different search engines to best ensure that the major lawsuits and statutory violations were captured. Lawsuits that were both litigated and settled out of court as well as suits which are under appeal are included. None of these searches revealed any incidences of undisclosed executive pay, antitrust violations, or patent infringements by any of the ten hospitality companies included in this study. However, some of these companies were unsuccessful defendants in lawsuits claiming unjust business enrichment, copyright infringement, and wrongful death. Each of these lawsuits and their outcomes will be discussed separately. Accounting, Securities, and Consumer Lawsuits Claiming Fraud While the hospitality industry has had its share of lawsuits, none were as monumental as those faced by the financial services and telecommunications industries during the past decade. In fact, over the past ten years, only five lawsuits filed against major hospitality firms claiming accounting, securities, or consumer fraud resulted in an out-of-court settlement or jury award of $2 million or more. The $2 million minimum threshold, in line with that used in Clement’s study, generally excluded lawsuits which solely resulted in compensatory-based awards or settlements. meaning that the plaintiff was awarded back pay, lost benefits, and such. Rather, the $2 million mark most often
  • 6. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 6 included both compensatory and punitive damages, meant to simultaneously make the plaintiff “whole” while “punishing” the defendant. When analyzing the lawsuits pertaining to the financial settlement or damages, a natural break was clearly apparent. Many suits fell into the aforementioned target categories, but were settled or adjudicated in the $500,000 range. The damages in these suits were normally compensatory, meaning that the plaintiff was awarded back pay, lost benefits, and such. The $2 million dollar minimum used in this study captured major settlements and judgments, many of which carried with them punitive damages in addition to compensatory damages, hence, the higher settlement or adjudicated amount. These settlements and awards ranged from $2 million to $12.5 million. The figures, though, pale in comparison to Clement’s findings of forty-four fraud-related lawsuits filed against Fortune 100 companies from 2000 to 2005, some of which resulted in awards or settlements of $1 billion or more (Clement, 2006). It is worth mentioning though that, early last decade, five major hotel firms including Marriott and Starwood settled class action lawsuits in which plaintiffs claimed they were charged undisclosed fees in the form of “energy surcharges.” These suits were settled out of court, often requiring the hotel company to issue a $10 voucher for a future stay (Stellin, 2003). Certain food service companies faced similar lawsuits including Pizza Hut and its parent company, Yum! Brands. The dollar amount of the potential settlement of these suits, though, was much higher than the actual payout amounts since not all plaintiffs chose to redeem their vouchers. None of these lawsuits will be included since the actual dollar amount of these settlements to date has not been determined.
  • 7. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 7 The casino segment has also faced its share of recent lawsuits and these bear mentioning. A number of investors filed suits against Las Vegas Sands Corporation’s CEO Sheldon Adelson and Board members in the Nevada state court claiming that securities fraud and mismanagement were responsible for the huge decline in stock values, but the suits were dismissed in November 2009 (Green, 2009). Two similar lawsuits filed in federal court in 2010 have not yet been decided or settled (Green, 2010). Six separate lawsuits against MGM Mirage claiming securities fraud were recently granted class action status, but have also not yet been decided or settled (Lowinger v. MGM Mirage, 2009). Neither of these pending class action suits will be included in the table below since both are requesting unspecified compensatory damages which cannot be quantified for the purpose of this study. The much-publicized class action suit filed by Hindus and vegetarians against McDonald Corporation’s undisclosed use of beef tallow in the production of their French fries resulted in the highest settlement or award in this category. The settlement required McDonald’s to donate $10 million to vegetarian, Hindu and/or Sikh, children’s hunger relief, and Jewish charitable organizations. As well, they agreed to write a letter of apology to the affected groups and to establish an advisory board charged with making dietary recommendations to the corporation ((Block, Sharma, and Singh v. McDonald’s, 2001). In addition, McDonald’s agreed to pay plaintiffs’ attorney fees and to pay $4,000 to each of the eleven plaintiffs.
  • 8. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 8 Table 3 Major Lawsuits Claiming Accounting, Securities, and Consumer Fraud Company Year Nature of Description Award/Settlement Misdeed Amount McDonald’s 2002 Consumer Class action suit filed by $12.5 million Corporation fraud vegetarians and Hindus settlement claiming McDonald’s deliberately misled customers by failing to disclose the use of beef tallow in the production of French fries (Block, Sharma, and Singh v. McDonald’s, 2001) McDonald’s 2005 Consumer Plaintiffs claimed McDonald’s $8.5 million Corporation fraud did not lower the amount of settlement trans fat in their cooking oil after promising that they would (Fettke v. McDonald’s Corp., 2003) Harrah’s 2010 False Class action suit claimed the $8 million jury Entertainment advertising timing for the use of birthday award club vouchers was misleading (Smerling v. Harrah's Entertainment, Inc., 2006) McDonald’s 2003 Fraud, Plaintiff, a long-time multiple Initial $16.5 million Corporation recession of franchisee, claimed she was jury award; $10 a release, wrongfully forced out of the million in punitive and unfair system (Darling v. damages overturned business McDonald’s Corp., 2006) on appeal; settled for practices remainder Marriott 2003 Antitrust Suit filed by In Town Hotels $2 million International violation claiming mismanagement, settlement fraud, overcharging for services, and commercial bribery (In Town Limited Partnership v. Marriott International, Inc., 2002) A number of obesity-related lawsuits filed against McDonald’s followed this settlement and were dismissed on a variety of grounds. Similarly, a number of lawsuits were filed claiming that McDonald’s French fries contained gluten although
  • 9. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 9 McDonald’s claimed they did not (In re McDonald’s French Fries Litig., 2009). The gluten-related suits were denied class action status in 2009 due to a district court judge’s explanation that “individual issues of law clearly predominate over common issues, making a nationwide class unmanageable”. To date, none of these claims has proceeded on an individual basis. The increased public attention to the use of trans fats in cooking led to two other well-publicized lawsuits filed against McDonald’s and Yum! Brands, the parent company of KFC. McDonald’s settled their suit, filed by watchdog group BanTransFat.com and another plaintiff, for $8.5 million in 2006. The American Heart Association received $7 million of the settlement and the remaining $1.5 million was used to fund a public education initiative about the potential dangers of trans fats (“McDonald’s Settles,” 2005). In 2006, the Center for Science in the Public Interest, another watchdog group, filed a similar lawsuit against KFC, but the suit was dropped in 2007 when KFC voluntarily stopped frying their chicken in oil with trans fats (“CSPI Withdraws, 2006). The third case involved a false advertising and truth-in-advertising class action suit filed against Harrah’s Entertainment in 2010. Harrah’s gave away $15 vouchers as part of their customer loyalty program, but unreasonably restricted the hours in which the vouchers could be redeemed. A jury awarded the 80,000 class action members $100 each in statutory damages for a total of $8 million (Parry, 2010). In the fourth case, a long-time franchisee filed suit against McDonald’s Corporation claiming fraud, recession of a release, and unfair business practices. The franchisee openly criticized some of McDonald’s policies as they pertained to franchise requirements, and claimed that she was “forced out of the system.” A jury awarded the
  • 10. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 10 plaintiff $16.5 million of which $10 million was punitive (Edison, 2007). Upon appeal, the $10 million in punitive damages was overturned and, upon the plaintiff’s death, her estate settled out of court with McDonald’s for the remainder (Kirkland and Ellis LLP). The last lawsuit included in Table 3 was filed by In Town Hotels against Marriott International and claimed mismanagement and overcharging for services. In Town also challenged Marriott’s vertical ties with Avendra, a procurement services company that is half-owned by Marriott. The suit was settled in 2003 when Marriott agreed to forego $2 million in fees owed by In Town from the Charleston Marriott Town Center property (Browning, 2008). Discrimination Lawsuits The leading hospitality companies in this study fared well as compared to those in Clément’s study regarding discrimination-based lawsuits. Since 2008, though, twenty- eight lawsuits claiming sexual harassment were filed against Harrah’s Atlantic City, part of Harrah’s Entertainment (Dunn, 2010). The plaintiffs are seeking injunctive relief and punitive damages. All of these suits are still pending. Another case worth mentioning was filed in 2002 by celebrity chef Timothy Dean against the St. Regis Washington Hotel in Washington, D.C. The plaintiff claimed racial discrimination in that Marriott’s management team tried to force him out of business and harassed him due to his race (Shiver, 2005). The $50 million lawsuit was settled out of court for an undisclosed amount. There were many other relatively high-profile suits filed claiming discrimination based on race, religion, national origin, gender, and sexual orientation, but in many cases,
  • 11. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 11 they were settled out of court. In suits that went before a jury, the awards were less than the $2 million threshold of this study. Undisclosed Executive Pay While no incidences of undisclosed executive pay per se were revealed, The New York Times reported that Chairman, Chief Executive, and Treasurer of the Las Vegas Sands, Sheldon G. Adelson, received $3.6 million in salary and bonuses in 2005 due to “improper interpretation” of his employment contract. This was almost $1 million more than he was entitled to had the contract been interpreted correctly (Morgenson, 2006). An additional $1.8 million was awarded to four other top executives at the Las Vegas Sands due to the same “misinterpretation.” The Compensation Committee of the Sands admitted the error, but let all five executives keep the excess bonus payments based on “the outstanding performance of the company in 2005.” Other Notable Lawsuits The two lawsuits listed in Table 4 were included since each has a direct bearing on CSR as it pertains to both law and ethics. The settlement or award in each case was above the $2 million threshold as well, and involved intellectual property rights and unjust enrichment claims.
  • 12. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 12 Table 4 Other Lawsuits Company Year Nature of Description Award/Settlement Misdeed Amount Las Vegas 2009 Unjust Suit filed by three individuals $42.5 million Sands business who claimed they were key in settlement enrichment helping the Las Vegas Sands secure a gambling license in Macau (Stutz, 2009) Yum! 2001 Breach of Plaintiffs filed suit claiming $41.9 million upheld Brands implied that Taco Bell modeled its on appeal contract and popular icon after their copyright “Psycho Chihuahua” cartoon infringement character (Wrench LLC v. Taco Bell Corp., 1999) The first lawsuit was filed by three individuals who claimed that they were integral in assisting the Las Vegas Sands to obtain a Macau gambling license. Such licenses are notoriously difficult to acquire. In 2009, the Las Vegas Sands paid $42.5 million to settle the suit. The Sands still faces a possible new trial in a suit filed by another individual who also claimed he assisted in the Sand’s acquisition of the gambling license. The plaintiff in this case is seeking $58.6 million in damages. A lower court in Nevada initially ruled in favor of the plaintiff, but was overturned by the state‘s supreme court which ruled that “a district judge shouldn’t have admitted a hearsay statement during the trial: (O’Keefe, 2010). Since this ruling was procedural rather than substantive, it is likely that the suit will be refiled. The second suit was highly publicized and involved the creative ownership of a talking Chihuahua that catapulted the brand image of Taco Bell. Two plaintiffs asserted copyright infringement and breach of contract. They claimed to have developed the "Psycho Chihuahua" cartoon character which was then transformed by Taco Bell into the
  • 13. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 13 live Chihuahua which became a national icon. The five-year court battle ended in a $41.9 million verdict for the plaintiffs. Discussion and Further Research This study was not designed to be exhaustive and in many ways is limited. The number of lawsuits filed against these hospitality companies regarding a key area of CSR was far fewer and the settlements and jury awards were markedly less than those identified in Clement’s study. However, the sample size is only one-tenth of the size of Clement’s sample and the number of lawsuits resulting in awards exceeding $2 million is small. Nevertheless, the results seem to indicate that using qualified lawsuits as one indicator of CSR is a useful measurement tool because it objectively ferrets out the most egregious examples of disregard for ethical and legal principles. As well, the study establishes the effectiveness of its methodology in identifying significant awards. A more conclusive examination of the ethical and legal profile of the hospitality industry would require a significantly broader study. Such a study should expand the definition of the industry, perhaps including segments such as airlines and entertainment, as well as extending the scope of the examination to the Fortune 1000 instead of the Fortune 500. It might also be revealing if certain industry segments could be identified as experiencing higher rates of litigation pertaining to CSR. An investigation of actions initiated by the Securities and Exchange Commission could also be included. Finally, loosening some of the qualifying parameters, such as the amount of awards or settlements, might cast a wider net and permit more detailed study of the types of firms involved.
  • 14. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 14 REFERENCES Block, Sharma, Singh et. al. v. McDonald’s, No. 01CH9137 (Cir. Ct. of Cook County, Ill. June 6, 2001). Browning, L. (2008, July 28). Marriott and owner of hotel settle lawsuit. The New York Times, p. C4. Carroll, A. B. (1991). The pyramid of corporate social responsibility: Toward the moral management of organizational stakeholders. Business Horizons, 34(4), 39-48. Clement, R. W. (2006). Just how unethical is American business? Business Horizons, 49(4), 313-327. CSPI withdraws from lawsuit after KFC cuts trans fat. (2006, October 30). Retrieved from: http://www.cspinet.org/new/200610301.html Darling v. McDonald’s Corp., WL 164986 (Cal. Ct. Spp. Jan. 24, 2006) (unpublished). Dunn, M. (2010, April 28). Bridgeton attorney brings four new lawsuits against Harrah’s. Retrieved from http://www.nj.com/cumberland/index.ssf/2010/04/bridgeton_attorney_brings_fou r.html Edison, C. (2007, April 30). Franchising is a fast growing commerce with one opening every eight seconds but dangers lurk - Apparently especially for McDonald's franchise owners. Retrieved from http://www.lawfuel.com/show- release.asp?ID=12002 Fettke v. McDonald’s Corp., Case No. 044109 (Cal. Sup. Ct. 2003). See also BanTransFat.com v. McDonald’s Corp., Case No. 034828 (Cal. Sup. Ct. 2003). Fortune 500. (2010, May 3). Retrieved from http://money.cnn.com/magazines/fortune/fortune500/2010/full_list Green, S. (2009, November 6). Judge dismisses suits blaming Las Vegas Sands for stock drop. Las Vegas Sun. Retrieved from http://www.lasvegassun.com/news/2009/nov/06/judge-dismisses-suits-blaming- las-vegas-sands-stoc/ Green, S. (2010, July 22). Shareholders file another lawsuit against Las Vegas Sands Corp. Las Vegas Sun. Retrieved from http://www.lasvegassun.com/news/2010/jul/22/shareholders-file-another-lawsuit- against-las-vega/
  • 15. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 15 Holcomb, J. L., Upchurch, R. S., & Okumus, F. (2007). Corporate social responsibility: What are top hotel companies reporting? International Journal of Contemporary Hospitality Management, 9(6), 461-475. In re McDonald’s French Fries Litig., ___ F.Supp.2d ___ (N.D. Ill. May 6, 2009). In Town Limited Partnership v. Marriott International, Inc., No. 2:02-0481 (S.D.W.V. filed May 23, 2002). Kirkland & Ellis LLP, Lawyer Search: Jonathan C. Bunge, P.C. – Partner. (n.d.) Retrieved from http://www.kirkland.com/sitecontent.cfm?contentID=220&itemID=8099 Lowinger v. MGM Mirage, et al. Filed August 19, 2009. Case No. 2:09-cv-01558-RCL- LRL, U.S. District Court for the District of Nevada. Khachatur Hovhannisyan v. MGM Mirage, et al. Filed October 19, 2009. Case No. 2:09-cv-02011-LRH-RJJ, U.S. District Court for the District of Nevada. On November 4, 2009, the Court entered an Order consolidating for all purposes the Lowinger and Hovhannisyan actions before the Honorable Robert C. Jones, with such consolidated actions captioned as “In re MGM Mirage Securities Litigation.” Marriott International loses $11 million verdict in wrongful death case. (2002, July 25). Retrieved from http://injuryissues.com/find/article-1582.html McDonald’s settles trans fats lawsuits. (2005, February 12). New York Times. Retrieved from http://www.nytimes.com/2005/02/12/business/12food.html McGehee, N. G., Wattanakamolchai, S., Purdue, R. R., and Calvert, E. O. (2009). Corporate social responsibility within the U.S. lodging industry: An exploratory approach. Journal of Hospitality & Tourism Research, 33(3), 417-437. Morgenson, G. (2006, May 31). Big bonuses still flow, even if bosses miss goals. Retrieved from http://corpwatch.org/article,php?id=13633 O’Keefe, K. (2010, November 21). Court throws out ruling against Las Vegas Sands. The Wall Street Journal. Retrieved from http://online.wsj.com/article/SB1000142405274870417040457562405186147564 6.html Parry, W. (2010, September 29). Harrah's casinos ordered to pay $8 million for misleading ads. Las Vegas Review-Journal. Retrieved from http://www.lvrj.com/business/harrah-s-casinos-ordered-to-pay--8-million-for- misleading-ads-103913854.html
  • 16. Dallas / ASSESSING CORPORATE SOCIAL RESPONSIBILITY 16 Shiver, H. (2005, March 2). New chapter in his story: Chef opens restaurant.” The Baltimore Sun. Retrieved from http://articles.baltimoresun.com/2005-03- 02/news/0503010145_1_timothy-dean-jean-louis-chef/2 Smerling v. Harrah's Entertainment, Inc., 389 NJ Super. 181, 186-87 (App. Div. 2006). Stellin, S. (2003, July 13). Hotel bills with add-ons galore. The New York Times. Retrieved from http://query.nytimes.com/gst/fullpage.html?sec=travel&res=940CEFDB123DF93 0A25754C0A9659C8B63 Stutz, Howard (2009, August 1). Lawsuit settlement plays factor in Law Vegas Sands net loss. Law Vegas Review-Journal. Retrieved from http://www.lvrj.com/business/52168992.html Wrench LLC v. Taco Bell Corp., 51 F. Supp. 2d 840 (W.D. Mich. 1999). Submitted January 4, 2012 First Revision Submitted April 10, 2012 Accepted June 3, 2012 Refereed Anonymously Melissa Dallas, J.D. (melissadallas@missouristate.edu) is a professor in the Hospitality and Restaurant Administration Department in the College of Natural and Applied Sciences at Missouri State University.