Legal Proceedings
−Removed: On October 24, 2019, the Company provided notice to Accor of the material breach of Accor’s responsibilities under the Accor management agreement for the Sofitel Chicago Magnificent Mile at 20 East Chestnut Street in Chicago, Illinois.
−Removed: On November 7, 2019, Accor filed a complaint against Ashford TRS Chicago II in the Supreme Court of the State of New York, New York County, seeking a declaratory judgment that no breach under the Accor management agreement has occurred and an injunction to prevent Ashford TRS Chicago II from terminating the Accor management agreement.
−Removed: Accor’s complaint was dismissed on or about February 27, 2020.
−Removed: On January 6, 2020, Ashford TRS Chicago II filed a complaint against Accor in the Supreme Court of the State of New York, New York County, alleging breach of the Accor management agreement and seeking damages and a declaration of its right to terminate the Accor management agreement.
−Removed: On July 20, 2020, Accor filed an Amended Answer and Counterclaims against Ashford TRS Chicago II, in which Accor asserted two causes of action:
−Removed: First, Accor asserted a counterclaim for declaratory judgment that Accor correctly calculated the amount payable to Ashford TRS Chicago II under the Accor management agreement to “cure” Accor’s performance test failure (the “Cure Amount”).
−Removed: Second, Accor asserted a counterclaim for breach of contract alleging that Ashford TRS Chicago II breached the Accor management agreement by wrongfully maintaining that the Cure Amount for the 2018 and 2019 Performance Test failure is $1,031,549 instead of $535,120.
−Removed: On February 16, 2022, the parties entered into a settlement agreement agreeing to:
−Removed: 1) amend the Accor management agreement;
−Removed: 2) dismiss the lawsuit and counterclaims;
−Removed: 3) stipulate to the failure of the performance tests and cure amounts for 2018 of $867,682 and 2019 of $784,919;
−Removed: and 4) arbitrate whether the performance tests for 2020 and 2021 were valid and/or required equitable adjustment.
−Removed: On February 23, 2022, Ashford TRS Chicago II and Accor filed a stipulation of discontinuance dismissing all claims, counterclaims, and cross-claims in the January 6, 2020 action with prejudice.
−Removed: Arbitration occurred on October 12 and 13, 2022.
−Removed: The arbitrator returned his decision on November 21, 2022, and the decision did not result in any additional amounts being owed to, or payable by, the Company.
−Removed: As a result of the settlement related to the 2018 performance test failure, the Company recorded a gain of approximately $868,000 in 2022, that is recorded as a reduction of management fees and included in “management fees” on the Company’s consolidated statement of operations.
On December 20, 2016, a class action lawsuit was filed against one of the Company’s hotel management companies in the Superior Court of the State of California in and for the County of Contra Costa alleging violations of certain California employment laws, which class action affects two hotels owned by subsidiaries of the Company.
The court has entered an order granting class certification with respect to:
−Removed: (1) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks;
−Removed: and (2) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment.
+Added: (i) a statewide class of non-exempt employees of our manager who were allegedly deprived of rest breaks as a result of our manager’s previous written policy requiring its employees to stay on premises during rest breaks;
+Added: and (ii) a derivative class of non-exempt former employees of our manager who were not paid for allegedly missed breaks upon separation from employment.
Notices to potential class members were sent out on February 2, 2021.
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however, the total number of employees in the class has not been definitively determined and is the subject of continuing discovery.
−Removed: While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe any potential loss to the Company is reasonably estimable at this time.
+Added: The opt-out period has been extended until such time that discovery has concluded.
+Added: In May 2023, the trial court requested additional briefing from the parties to determine whether the case should be maintained, dismissed, or the class de-certified.
+Added: After submission of the briefs, the court requested that the parties submit stipulations for the court to rule upon.
+Added: On February 13, 2024, the judge ordered the parties to submit additional briefing related to on-site breaks.
+Added: While we believe it is reasonably possible that we may incur a loss associated with this litigation, because there remains uncertainty under California law with respect to a significant legal issue, discovery relating to class members continues, and the trial judge retains discretion to award lower penalties than set forth in the applicable California employment laws, we do not believe that any potential loss to the Company is reasonably estimable at this time.
As of December 31, 2023, no amounts have been accrued.
+Added: On June 8, 2022 a lawsuit was filed against various Hilton entities on behalf of a class of all hourly employees at all Hilton-branded managed properties in California, including Hilton La Jolla Torrey Pines.
+Added: The complaint includes claims for unpaid wages, meal and rest break violations, and unreimbursed business expenses, along with various derivative claims including wage statement, final pay, and PAGA claims.
+Added: On November 30, 2023, Hilton mediated this litigation, but it did not result in a settlement.
+Added: At the end of the mediation, the mediator submitted a mediator’s proposal for approximately $3.5 million, which the parties are still considering.
+Added: The allocation to Hilton La Jolla Torrey Pines would be approximately $371,000, which has been accrued as of December 31, 2023.
We are also engaged in other legal proceedings that have arisen but have not been fully adjudicated.
To the extent the claims giving rise to these legal proceedings are not covered by insurance, they relate to the following general types of claims:
−Removed: employment matters, tax matters and matters relating to compliance with applicable law (for example, the ADA and similar state laws).
+Added: employment matters, tax matters and matters relating to compliance with applicable law (for example, the Americans with Disability Act and similar state laws).
The likelihood of loss from these legal proceedings is based on the definitions within contingency accounting literature.
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Based on the information available to us relating to these legal proceedings and/or our experience in similar legal proceedings, we do not believe the ultimate resolution of these proceedings, either individually or in the aggregate, will have a material adverse effect on our consolidated financial position, results of operations, or cash flow.
−Removed: However, our assessment may change depending upon the development of these legal proceedings, and the final results of these legal proceedings cannot be predicted with certainty.
−Removed: If we do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.
+Added: During the quarter ended September 30, 2023, we had a cyber incident that resulted in the potential exposure of certain employee personal information.
+Added: We have completed an investigation and have identified certain employee information that may have been exposed, but we have not identified that any customer information was exposed.
+Added: All systems have been restored.
+Added: We believe that we maintain a sufficient level of insurance coverage related to such events, and the related incremental costs incurred to date are immaterial.
+Added: In February of 2024, two class action lawsuits were filed related to the cyber incident.
+Added: The suits are currently pending in the U.S.
+Added: District Court for the Northern District of Texas.
+Added: We intend to vigorously defend these matters and do not believe that any potential loss is reasonably estimable at this time.
+Added: It is reasonably possible that the Company may incur additional costs related to the matter, but we are unable to predict with certainty the ultimate amount or range of potential loss.
+Added: Our assessment may change depending upon the development of any current or future legal proceedings, and the final results of such legal proceedings cannot be predicted with certainty.
+Added: If we ultimately do not prevail in one or more of these legal matters, and the associated realized losses exceed our current estimates of the range of potential losses, our consolidated financial position, results of operations, or cash flows could be materially adversely affected in future periods.
Mine Safety Disclosures
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.