HospitalityLawyer.com | December 2012 Issue Hospitality Lawyer Magazine

focusing on legal, safety & security solutions

HospitalityLawyer
e-magazine
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

CONTENTS
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 ARTICLE
22 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
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

Editor’s Note
About HospitalityLawyer.com Article Contributions
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Editor & Publisher

H L worldwide legal, safety and security solutions
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HospitalityLawyer.com | December 2012 3

HOTEL

2013
OWNER
MANAGEMENT
SUMMIT
OMNI HOUSTON HOTEL - FOUR RIVERWAY - HOUSTON, TX - 77056

The
11th Annual
Hospitality Law Conference
features the inaugural
Hotel Owner-Management Summit
converging hospitality thought leaders from around the nation
to break down silos and create cross-functional dialogues on the
latest trends and most pressing issues in the hospitality field.

4 Hospitality Lawyer e-Magazine | December 2012

February 11th
Hotel Owner-Management
Summit
1. New Hotel Development
2. Management Agreements
3. Hotel Investment Boot Camp

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

February 12th - 13th
Hospitality Law Conference
1. General Sessions
2. Food & Beverage Track
3. Human Resources & Labor Relations Track
4. Lodging Track

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: D
I RDLINE:
Visit the registration website at: BDEA 013
http://www.regonline.com/2013HospitalityLawConference
LYIONY 14, 2 00!
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SA 5
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HospitalityLawyer.com | JA

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that are both publicly held or privately owned, as well as large Hospitality Advisory Services
and mid-cap private equity firms, corporate management and +1 214 438 1014
hoards of directors. ebedsole@alvarezandmarsal.com
Alvarez & Marsal Real Estate Advisory Services advises owners,
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to combat current economic-related challenges, as well as
position them for future success. We recognize that hotels,
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operating in a rapidly changing environment. We stand ready © Copyright 2012 Alvarez & Marsal Holdings, LLC. All rights reserved.

to provide services throughout the entire real estate lifecycle
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N O R T H A M E R I C A • E U R O P E • M I D D L E E A S T • A S I A • L AT I N A M E R I C A

Social Networking
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

Onity Hotel Lock Security Issues -
Recommendations for Hotel Operators

Y 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.


Recommendations for Hotels with Onity Locks inquire about this issue:
Installed
“We do not have Onity locks installed at our hotel.”
To date, Onity has proposed a number of solutions,
including the insertion of a mechanical cap into If You are Contacted by the Media About this Issue
the communications/power port to block access by
foreign programmable devices. If your property has Onity locks and you decide to
comment about steps your property is taking, please
Contact Onity consider using the following statement:

If your hotel has Onity locks on guest room doors, “This is a serious issue that is affecting the entire
please contact Onity immediately to discuss the hotel industry. However, the safety and security
best solution for your property. At a minimum, we of our guests is always our highest priority and we
recommend you install the caps to block access to are working with the manufacturer of the locks, to
the information/power port. Please note, Onity has address this issue.”
indicated that, with a small percentage of locks, the
installation of the cap may cause the lock to overheat With a career that expands
so we recommend that you monitor your locks after more than fifteen years of law
installation for this issue and, if necessary, contact enforcement experience and
Onity directly regarding any necessary replacement twenty-one years of private
locks. sector safety and security
management experience, Tom
Front Desk Placard and Response to Guest is knowledgably and adept in
Inquiries a variety of law enforcement,
safety and security related
For hotels with Onity locks, we recommend that you principals and programs.
place a placard at the front desk reminding guests to:
(1) store their valuables in the hotel’s safety deposit Prior to becoming an independent hospitality centric
box and (2) use all locks on the doors to secure safety and security consultant, Tom spent 9 years
their rooms. You may also want to post the safety with Hilton Hotels Corporation most recently serving
instructions on the back of guest room doors. We also as the Director - Enterprise Information Security
recommend that you provide all front desk staff with Office Incident Response Team. In this role he was
an update on this issue so that they can respond to responsible for directing and supporting all aspects
guest inquiries. If your guests inquire about this issue of risk management, monitoring, reporting, and
and you have Onity locks, we suggest the following investigations of all real or suspected breaches of
statement: Hilton’s Privacy and Information Security operations
across an enterprise consisting of 3000+ hotel
“This is a serious issue that is affecting the entire properties in 77 countries.
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


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Make sure your guests and your profits are still safe.
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the way we see it, helping our clients through the claims process is all about service.
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Maria K. Bella, AFOIT, CPOI, LGI Donald J. Decker, CPP, CPM
mbella@robsonforensic.com ddecker@robsonforensic.com
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Food Safety Skiing / Winter Sports
Barry E. Parsons, FMP Richard L. Frongillo
BarryE.Parsons@robsonforensic.com RichardL.Frongillo@robsonforensic.com
800.813.6736 800.813.6736
Dram Shop & Liquor Liability Supervised Care / Day Care
Elizabeth A. Trendowski Lisa A. Thorsen, Ed.D., C.R.C
etrendowski@robsonforensic.com lthorsen@robsonforensic.com
800.631.6605 800.813.6736
Grounds Maintenance Toxicology
Brian O’Donel Michael J. McCabe, Jr., Ph.D., DABT
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800.813.6736 800.813.6736

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

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Crime Prevention Through
Environmental Design:
Parking Lot and Parking Garage Security

T
he hospitality industry and be seen in one’s surroundings,
provides for the safety and known as natural surveillance, is
security of its patrons and reduced in parking garages. This
employees on its premises. This is because parking garages can be
responsibility extends to all parts of partially or fully enclosed, elevated
the premises to which patrons and above ground, having multiple
employees may be expected to go levels, or have ramps that provide
and to those parts of the premises access to the multiple floors of the
that the business has led the facility.
patrons and employees to believe
they can go. Security is one of the
most important issues confronting “For a security
the hospitality industry today.
measure to be
Parking lots and parking garages
are facilities used by businesses to preventative, it
accommodate the vehicles of their
patrons and employees. These has to be designed
facilities take up a large amount
of area, but have low levels of to physically
activity compared to the business
they support. There will only be a
small percentage of people in the
stop a potential
parking facility compared to inside
of the building of the business.
criminal from
As a result, parking facilities have
become likely locations for criminal
committing a
activity. Facilities that experience
a lot of property crime create a
crime.”
heightened risk for violent crime.
An effective way to determine if
There are some general problems the security in a parking facility is
inherent in parking facilities that adequate is to conduct a security
make the security of patrons survey. A security survey identifies
and employees challenging. A the vulnerabilities of a facility by
criminal’s vehicle most likely will determining what threat exists
not be noticed in a parking facility. against the present site security.
Also, parked vehicles provide a By conducting a security survey,
hiding place for a criminal and the owner and/or manager is
can block the distribution of proactively analyzing the property
lighting to the area that a criminal for crime foreseeability. Crime
may be located. Security is more foreseeability is the reasonable
problematic for parking garages. expectation of a criminal act to
Parking garages allow more occur. If a crime is not foreseeable,
vehicles to be parked on the same it doesn’t mean that the crime isn’t
amount of land. The ability to see possible. It means that the crime


was not reasonably foreseeable behavior. By properly utilizing the
at that time, at that location, and concepts of CPTED, deterrence of
under those conditions. criminal activity can occur.

There is no perfect security CPTED Concepts:
solution when determining
how to address the security
of a property. Flawless crime 1. Lighting
prevention is not reasonably
obtainable and not required, but Lighting is an important security
providing reasonable security is. measure in a parking facility.
Adequate lighting is a deterrence
Reasonable security measures to criminal activity. It can
should deter or prevent contribute to the other CPTED
criminal activity. For a security concepts and active security
measure to be a deterrence, measures.
it has to have a psychological
effect on a potential criminal. It 2. Natural Surveillance
discourages the potential criminal
from committing a criminal Natural surveillance is a concept
act. Examples of deterrents that applies to everyone that is
are adequate illumination of in or near a parking facility. Not
a parking lot, closed circuit only does it apply to people in
television (CCTV), and signs the parking lot or parking garage,
posted indicating security guards it applies to people outside of
patrol the area. For a security the parking facility or inside the
measure to be preventative, it business associated with the
has to be designed to physically parking facility. The ability of
stop a potential criminal from people walking by a parking lot
committing a crime. Examples of or looking out the window of a
preventative security measures business to view the activities
are a locked door and a security going on inside the parking facility
guard stopping people from enhances the security of the
entering an area. facility. In some parking facilities,
adequate natural surveillance
Security measures can be active may be all that is needed to
or passive. Active security provide reasonable security.
measures are the result of direct
human involvement and the 3. Access Control
use of specialized equipment.
Examples of active security Access control is an important
measures are actively monitored means of reducing criminal
CCTV and security guards. Passive opportunity. Access control
security measures are the security is gained through controlling
measures that incorporate the the entering and exiting of
concepts of Crime Prevention pedestrians and vehicles. Proper
Through Environmental Design security of the perimeter of the
(CPTED). CPTED incorporates parking facility enhances access
psychological barriers for control of the facility.
deterring a potential criminal’s

4. Signs and Graphics Garbage or debris, left in the area,
suggests that the area is not cared
Signs and graphics that are for and there is no one responsible
properly located in a parking for the area. Abandoned vehicles
facility can help pedestrians should be removed from the
find where they want to go area. It is important to portray the
and minimize their chances of image that someone cares for the
becoming a victim of crime. area and is responsible for it.
Additionally, a sign indicating the
area is under surveillance or there 2. Support by Legitimate
are security patrols of the area
may be a deterrence to a criminal.
Activity
A graphic is described as a
There may be areas that are
symbol that sends a message in a
difficult to protect because of
picturesque manner. An example
their location. These areas can
is a CCTV camera indicating the
benefit from the placement
area is under surveillance.
of a legitimate activity. These
legitimate activities can include
5. Natural Territorial having a Police substation or
Reinforcement a maintenance shop or offices
located in the immediate area.
Natural territorial reinforcement Active security measures can
provides a distinct boundary complement the overall CPTED
between public and private areas. features in a parking facility.
The purpose of these boundaries Active security measures can
is to send a message to a potential help compensate for a deficiency
intruder to avoid this area. Natural of CPTED features. An example
territorial reinforcement is of this is a parking lot that is a
achieved by landscaping, signs, dead end and there is no natural
and fences. It is important to surveillance of the parking lot from
remember to allow for the natural the building. Natural surveillance
surveillance of the area from the of the parking lot area becomes
outside; keep landscaping at the less and less as a person walks
proper height and have fencing farther away from the building
that is open in its design. towards the end of the parking lot,
where fewer people have parked
In addition to the preceding five their vehicles. The lack of natural
concepts of CPTED, the following surveillance can be addressed
two concepts have evolved and by CCTV and/or the presence of
are also considered part of CPTED: security personnel patrolling the
parking lot. Some active security
measures are:
1. Maintenance of the
Area 1. Security Personnel
The maintenance of the area
One of the best crime prevention
is important to suggest to any
methods is the presence of
potential intruder that the area
security personnel. It is important
is well cared for and crime-free.
that the security personnel be

recognizable and visible. They criminal activity. Active security
should be properly equipped to measures can help compensate
perform their duties. Security for the lack of natural surveillance
guards should conduct proper and access control. Policies and
random patrols of an area. This procedures should be established
would prevent the predictability for a proper response to any safety
of the whereabouts of a security and security incident.
patrol by a criminal.
Don is a
2. CCTV trained and
experienced
CCTV provides surveillance that premises
can detect criminal activities security
and record the camera footage. and police
Conspicuous CCTV can be a professional
deterrent to a criminal. There are with more
some difficulties in monitoring than 35
parking facilities because of years of
shadows, spaces between parked relevant experience. He has a B.S. in
vehicles; and columns, ramps, and Criminal Justice. Don is a certified
walls in parking garages. protection professional and
certified in patron management.
The effectiveness of security His career included the security
measures decreases without of VIPs, patrons, volunteers, and
a meaningful response to a employees of various facilities and
situation. Proper policies and events. He worked with the Secret
procedures have to be in place, so Service providing security for the
appropriate personnel respond to President and Vice President of
the situation. the United States, and worked
with the Governor’s Security
The hospitality industry has a Unit providing security for the
responsibility to provide for the governor of New Jersey. Don was
reasonable safety and security involved in the security at the U.S.
of its employees and patrons. Open Golf Championship, the
Parking facilities have become World Pair Driving Championship,
one of the most likely locations for events at Giants Stadium, the
criminal activity on a commercial Midland Run and Lollapalooza.
property. Proper CPTED concepts
can provide a deterrence to

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Immigration & the
Hospitality Industry:
What’s Expected for 2013?
N
ow that the election is over and we know options and the timelines associated with them while
who’s running the country for the next few you urge Congress to fix the broken immigration
years, is it too much to think that we might get system in the future.
some kind of comprehensive immigration reform?
It seems that the time is right for a big change. Here are some ideas about options the hospitality
President’s Bush and Obama were not successful in industry can expect to have available for 2013. The
getting Congress to take action. President Obama letter and number designations in the sections
recently instituted some controversial but popular below are the government’s codes for particular
reforms on his own without waiting for Congress. employment-based classifications.
The fact that those actions may have helped him get
re-elected has not gone unnoticed by Congressional TN Status: Canadians and Mexicans in
representatives, who are likely to take action. But the
question is when. some professions can get employment
authorization quickly
The federal government does not move at the speed
of business. So it’s important to plan based on current The North American Free Trade Agreement (NAFTA)
law, not on what might get through Congress next provides options for quick (often approved on-the-
year or even later. The legislative process can take spot in less than an hour), inexpensive (as little as $50
months, and laws enacted won’t go into effect until in government fees), and long-lasting employment
even later, after regulations have been drafted and (up to three years at a time) of citizens of Canada or
vetted. It’s important to understand your current Mexico. The candidate must satisfy the minimally-


described educational requirements for a limited or equivalent. Classically, this applies to jobs such as
group of professions, such as accountant, computer accountants, engineers, and computer professionals,
systems analyst and hotel manager. Management among others. It can be difficult to get approval for
consultants are also possible, but don’t call someone jobs that some people (and the government) don’t
a consultant just because there isn’t a NAFTA normally associate with a particular degree, such as
profession for the service you need. Sales Managers, Market Research Analysts, or Public
Relations Specialists. But it can be worth exploring.
For more information, see http://1.usa.gov/8o0t6m.
The current challenge with the H-1B classification
L and EB-1 Status: Executives and is you can only hire people who already have that
classification; a person who has not already been
Managers can be transferred from approved for employment with that classification
related businesses can’t get it until October 2013. Anyone hoping to be
considered for one of the H 1B’s to be allocated at
The government makes it relatively easy to transfer that time should plan to submit the filing on April 1,
a person from one related business entity outside 2013, the first day on which filings will be accepted.
the U.S. to another in the U.S. That person must have Only 65,000 new H-1B’s are available for each fiscal
worked in an executive, managerial, or specialized year, and they can all be allocated within as little as
knowledge capacity for that entity outside the U.S. a few days or weeks. Fortunately, Australian citizens
for at least one year within the past three, and be have a virtual equivalent to the H-1B in the form of
coming to the U.S. to work in one of those capacities. the E-3 status, which is open for applications year-
The two businesses must be related, either in terms round.
of corporate relationship or ownership by the same
person or group of people. Both of these classifications require multiple
government filings and approvals, with government-
This process can be used for temporary positions, charged filing fees starting as low as $825 for an
approved for up to seven (7) years, or “permanent” E-3, and $1,575 for an H-1B. Visa fees add to those
employment, which many people call a “green card.” charges. Approval of an E-3 is for two years, but
It requires a mail-in filing for most people, taking from renewable indefinitely, whereas the H-1B can only
two weeks (if an expediting fee of $1,225 is paid) to be approved for as many as six years, in three year
several months for review, except for Canadians, who increments.
can present them at a border or port of entry for an
on-the-spot decision. Initial filing fees total $825 and, For more information, see http://1.usa.gov/boasGi
for everyone but Canadians, a visa must be applied and http://1.usa.gov/8VIT7E.
for and issued at a U.S. consulate outside the country.
You can expect that the H-1B classification will be the
For more information, see http://1.usa.gov/cI9arF, subject of great debate in Congress. Many employers
http://1.usa.gov/aCcNY, and http://1.usa.gov/901kqE. claim that businesses are suffering because of the
lack of available, highly educated U.S. workers and
E-3 and H-1B: Occupations that require the restriction on the number of new H-1B approvals.
Don’t be surprised to see higher government-charged
a degree or equivalent can be filled, fees in exchange for an increase in the numbers.
with some limitations
E-2: Foreign-owned businesses in the
“Specialty Occupations” present another great option
for U.S. employment of transferred employees or U.S. might have another option
new hires. The general rule for these jobs is that the
job requires a particular kind of college degree or It might be possible to open an additional
the equivalent of that degree based on education employment-based immigration option if the
and/or experience, and the person has that degree business operating in the U.S. happens to have


significant (50% or more) foreign ownership or Investors can get a “green card” for themselves and
investment. The U.S. has treaties with many countries qualifying family members if their investment of
that make it possible to hire citizens of the foreign at least either $500,000 or $1 million results in the
country, whether they are still in that country or employment of at least 10 U.S. workers. The investor
already in the U.S., to provide executive, managerial, must be engaged in the management of the U.S.
or “essential” services. business, either through the exercise of day-to-day
managerial control or through policy formulation.
The E-2 process may involve a filing at a U.S.
consulate overseas and/or a mail-in petition in the For more information, see http://1.usa.gov/4h1syb.
U.S. Government-charged filing fees at consulates
start at $270, with the possibility of additional fees Don’t forget – the Form I-9 is
associated with the particular country. Mail-in filings
in the U.S. have a $325 filing fee. Mail-in filings can for Everybody, not just “foreign”
take one month or more for review, and visas can take employees
that long or longer, depending on the availability of
appointments. Everything I’ve noted above is employment, which
means that you must complete a Form I-9 for all of
You can determine whether such a treaty exists for them, just like you do for every single employee in
a specific country by checking the Department of your workforce. Government audits are becoming
State’s Visa Reciprocity page at http://www.travel. more common, but less widely publicized, and fines
state.gov/visa/reciprocity/index.htm. for “paperwork” violations can be surprisingly large.

F-1 and J-1: Foreign students and Some of you are registered in the E-Verify program.
I would not be surprised if E-Verify, or some version
exchange visitors can help in a pinch of it, becomes a requirement for all employers as a
part of comprehensive immigration reform. But
Remember those days when you were performing an until then, it is optional for most employers except
internship while in school, working during summer certain federal contractors and their subcontractors.
vacation, or in that first job after graduation? Options State and local legislation, such as in Arizona, have
may exist for you to employ foreign students in almost imposed E-Verify registration, too, so be sure you
any kind of job, but you must be very careful to follow understand the requirements established by the
the rules. Employment of F-1 students during the federal and state or local governments in whose
school year is limited, but many students approved jurisdiction you operate.
for “curricular practical training” or “optional practical You can learn much more at I-9 Central, at http://
training” can be available for up to a full year of full- www.uscis.gov/I-9Central.
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 How about transfers from the U.S. to
be an excellent option for students interested in provide services elsewhere or simply
summer work/travel. providing management services to
For more information, see http://1.usa.gov/3ud5QV. entities outside the U.S.?
and http://1.usa.gov/2xD0jS.
It certainly makes business sense to “export” your
knowledge base to improve the bottom line of a
Everybody’s still talking about EB-5 and foreign entity, whether corporately related or simply
Regional Centers as a matter of selling your expertise. But a word
of caution is due, including for work to be done in
Many in the hospitality industry have identified a countries like Canada and the U.K., where it’s easy to
source of significant funds through the EB-5 program, get into the country for months at a time without a
which includes Regional Centers as one variant. visa. Don’t forget – these are different countries, with


▶

GSBLaw.com 888.768.5939

different laws, including immigration, employment than that, the best things that you can do are to plan
and tax laws. The fact that it’s easy to talk on the well in advance and to understand the current rules,
phone or work together over the internet does not timelines and costs required to meet your needs for
mean that you might not be required to navigate 2013.
time-consuming procedures and get government
approvals in advance of entering the other country. Gregg Rodgers is an owner
in the Seattle office of Garvey
This is one of the reasons that our firm is a member Schubert Barer, a full-service
of the Globalaw network of law firms, with offices in law firm of more than 100
more than 160 countries. It’s also why I am the co-chair attorneys with offices in Alaska,
of that organization’s Cross Border Labor Initiative, Beijing, New York, Portland,
which regularly meets and shares information about Seattle and Washington, D.C.
varying immigration and employment standards so He concentrates his practice
that we can get our clients to the right lawyer in the on the areas of immigration
target country for quick, effective advice. (business, healthcare
professionals, and families) and employment law. Mr.
Conclusion Rodgers provides legal advice to individuals, business
owners, managers, and executives on each of these
Business moves quickly – government bureaucracy areas. He conducts audits and advises clients on
does not. Don’t expect much change to actually take Form I-9 and E-Verify compliance. He also conducts
place this coming year. But be prepared to let your training sessions for clients, trade associations, and
Congressional representatives know what you need educational groups, on immigration and on labor
in terms of changes to our immigration laws. Other and employment law issues.


Healthcare Benefits Update:
Will You Be Ready For 2013?

2 013 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?

Health Care Reform new definition of dependent,
as mandated by the Patient
A Summary of Benefits and Protection and Affordable Care
Coverage (SBC) must be provided Act of 2010 (PPACA).
to all group health plan enrollees
by the first day of the first Group Health Plans,
annual open enrollment period
beginning on and after September
Generally
23, 2012. This means that if your
The Women’s Health and Cancer
group health plan is operated on
Rights Act of 1998 (WHCRA)
a calendar year basis, you must
requires group health plans to
provide SBCs to enrollees as part
provide an annual written notice
of your upcoming annual open
to participants and beneficiaries
enrollment period for coverage
of the availability of medical and
that takes effect January 1, 2013.
surgical benefits under the plan
with respect to mastectomy and
Health FSAs must be redesigned
breast reconstruction. Including
for the 2013 plan year to limit
the WHCRA notice as part of your
annual account balances to $2,500.
open enrollment materials is one
In addition, employers must begin
way to fulfill your annual notice
reporting the aggregate cost
obligations.
of employer-sponsored health
Sponsors of group health plans
coverage provided to employees
must notify employees annually
in 2012 on Form W-2 reporting
concerning the availability of
required to be sent out by January
state premium assistance through
31, 2013.
Medicaid or the Children’s Health
Insurance Program (CHIP). The
Ensure that your group health
CHIP Reauthorization Act of 2009
plan SPDs have been properly
imposes this notice requirement,
amended to reflect the updated
which can be met by including
claims procedures and the

the DOL’s model “Employer CHIP January 31, 2013 marks the end
Notice” as part of your annual of the second five-year remedial
open enrollment materials. For amendment cycle and deadline
calendar year plans, the Employer for filing of a determination letter
CHIP Notice must be provided no request for a Cycle B plan. To
later than January 1, 2013 . preserve reliance on the plan’s
continued tax qualification, plan
Qualified Retirement sponsors of Cycle B plans (meaning
sponsors with an EIN ending in
Plans digits 2 or 7, and sponsors of
multiple employer plans) need
If you sponsor a Safe Harbor to ensure that their plans have
401(k) Plan, you must prepare and timely adopted all interim and
distribute the annual safe harbor discretionary amendments and
notice to all eligible employees for that determination letter requests
the 2013 plan year by December are submitted to the IRS no later
1, 2012. than January 31, 2013.

401(k) plans operated on a
calendar year basis must provide Additional Medicare Tax
participants and beneficiaries with
an annual written notice about Beginning in 2013, certain
the qualified default investment employees may see an increase
alternatives offered under the in the amount of payroll taxes
plan by December 1, 2012. This withheld from their wages. This
notice cannot be provided as part is because a second Medicare
of an SPD or SMM. tax, one the IRS refers to as
an “Additional Medicare Tax,”
Single-employer defined benefit will begin being assessed on
(DB) plans operated on a calendar individuals earning more than
year basis must be amended by $200,000 or married couples
no later than December 31, 2012 filing jointly earning more than
to comply with Section 436 of $250,000.
the Tax Code to restrict benefit
accruals, distributions from, and Currently, employers are required
amendments to an underfunded to withhold 1.45% in Medicare
DB plan. The IRS has released taxes directly from an employee’s
Section 436 model amendment wages and to make a “matching”
language that can be used employer contribution equal to
when drafting the required plan 1.45%. Self-employed individuals
amendment. must pay 2.9% of their earnings
in Medicare tax, which represents
both an individual and employer

contribution. Note that under insurance coverage in excess of
current tax law, all wages are $50,000, noncash fringe benefits
subject to Medicare tax. and receipt by an employee of
third-party sick pay should be
The Additional Medicare Tax rate factored in the determination. The
will add 0.9% to the amount that IRS also expects to release revised
some individuals will have to Forms 941 and 943 in the future.
pay in 2013. The additional 0.9%
will kick in only when the wages Callan Carter
paid to an individual for the 2013 is a partner
calendar year go above $200,000. in the San
It should be noted that this is Francisco
an additional tax that will apply o f f i c e ,
only to individuals – there is no working
employer matching requirement. exclusively
in the firm’s
The IRS has confirmed that Employee
employers have the obligation Benefits
to withhold the Additional Practice Group. Callan has practiced
Medicare Tax from an employee employee benefits law since 1997.
when the employee’s wages or She advises clients on plan design,
compensation exceed $200,000. drafting, implementation and
The employee may, however, get a termination of qualified retirement
refund of the Additional Tax if the plans, health and welfare
combined wages of the employee plans, fringe benefit programs,
and spouse do not exceed equity compensation and non-
$250,000 when filing a joint return. qualified deferred compensation
arrangements.
And remember to be sure
to also consider all forms of For more information contact the
compensation when determining author at CCarter@laborlawyers.
when an employee’s wages exceed com.
$200,000 and trigger the Additional
Medicare Tax. For example, the
imputed cost of group-term life

Top10 Ways To Hold A Company Party –
Without Getting Sued
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.

10 If possible, don’t serve alcohol. This is easier
to do if you simply have a catered lunch at the
ordinarily do. Remind employees that, while
you encourage everyone to have a good time,
company’s offices. your company’s normal workplace standards
of conduct will be in force at the party, and

9 Invite spouses and significant others so that
there will be someone there to help keep an eye
misconduct at or after the party can result in
disciplinary action.
on your employees and, if necessary, get them
home safely.
3 Hire professional bartenders (don’t use
supervisors!) and instruct them to report anyone

8 Always serve food if you serve alcohol, and
always have plenty of non-alcoholic beverages
available.
who they think has had too much. Ensure that
bartenders require positive identification from
guests who do not appear to be substantially
over 21.

7 If your party is a dinner, consider serving only
wine or beer (plus non-alcoholic alternatives)
with the meal. 2 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

6 If you do serve alcohol, do not have an “open
bar” where employees can drink as much as
provide hotel rooms for intoxicated employees.

they want. Instead have a cash bar or use a ticket
system to limit the number of drinks. Close the 1 Never, never, hang mistletoe! Yep, we’re not
kidding. Take a look at item number 4 again,
bar at least an hour before you plan to end the and you’ll see why.
party. Switch to coffee and soft drinks from
there on. Mike Mitchell is a partner
in the New Orleans office.

5
Let your managers know that they will be His practice includes
considered to be “on duty” at the party. They traditional labor law
should be instructed to keep an eye on their matters such as collective
subordinates to ensure they do not drink too bargaining, arbitration,
much. Instruct managers that they are not to union avoidance and unfair
attend any “post party” parties. labor practice proceedings
before the National Labor

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


How Old is Your Hotel Staff? 11.6 % from the beginning of the recession in

Y
December 2007. A number of factors, such as
ou may not know, and that’s not the elimination of mandatory retirement, longer
surprising. According to the National life expectancy and better health play a role,
Study of Business Strategy and Workforce but by and large people are holding onto their
Development, only about 1/3 of employers jobs longer simply due to economic frailties
have adequately analyzed their workforce such as unemployment within their households,
demographics. But the reality is that your inadequate retirement savings and dwindling
workforce is aging. In every industry all across social security benefits.
America, the workforce demographics are
shifting to an older workforce population. The concern for the hospitality industry is that
Employment among people aged 55 and older many of the jobs, such as those in housekeeping,
has increased to an all-time high of 40.4% are physically demanding jobs. The injury rate by
(Bureau of Labor Statistics) and the percentage house-keepers is already higher than occupations
of those 65 and over reached 18.2% this year -up commonly recognized as dangerous, including


coal mining and building construction, and an aging Discrimination
work force doesn’t bode well to reduce those risks. In You may think that firing or forcing out older workers
years past, the rigorous demands of housekeeping may be the best solution, but it rarely is. Older workers
have always kept the turnover rate high for the generally have more experience, have better work
hospitality industry –usually above 60% compared habits, are more loyal and have a higher commitment
to 3% national average- with new entrants to the to quality. If that’s not convincing enough, consider
labor force quickly filling the vacated positions. But this: Along with the increase in older workers, age
today, the turnover ratio for the hospitality industry discrimination claims have risen correspondingly.
is at an all time low (29.1%) and the average age The number of age discrimination claims filed with
among the 436,000+ U.S. housekeepers is 40 years the Equal Employment Opportunity Commission
old and climbing. has risen 23.5% in the past two years, making it the
fastest growing category of discrimination cases.
While lower turnover rates usually mean higher The ADEA (Age Discrimination in Employment Act)
profits, hotel operators should be concerned about prohibits an employer from refusing to hire or fire,
the aging workforce. During the recession, managers or otherwise discriminate against a person age 40 or
were able to effectively manage profitability and over, solely on the basis of age, and recent changes
performance mainly through controlling labor cost. to the ADEA make age discrimination cases that
From 2009 to 2010, U.S. hotels spent 3 .4% less on much harder to defend for employers.
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 injuries
than their younger counterparts, when an injury
does occur, the injury tends to be more severe and it
usually takes significantly longer for the worker to
recover. 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
So What Can You Do?
20% for workers in the 45 to 54 year-old range, and
In almost every personal trait desired by employers-
approximately 42% for workers in the 65+ age range.
from honesty and integrity to pride and motivation-
Lost-time injuries have a far more negative impact to
seasoned employees score higher than their
your insurance premiums than frequency. Meaning,
younger counterparts. The unique experience, skills
an employer who has several small injuries with
and values they bring allow employers to maximize
limited or no time away from work typically pays far
productivity and easily translates into an increased
less in insurance rates than an employee who has
competitive advantage and bottom line savings.
only had a couple of severe lost-time injuries. But as they grow older, management needs to
realize a potential depreciation in their skills and
ability- especially in physically demanding jobs-


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.
may be occurring. Consequently, hotel operators
So What continuously assess the nature of the work
need to Can You Do?
that needs to be done and the abilities of the staff
In almost every personal trait desired by employers-
they have performing those duties. Where possible, a
from honesty and integrity to pride and motivation-
seasoned employees scoremay be than their younger
modification in job duties higher necessary.
counterparts. The unique experience, skills and
values theyemployers should lookto maximize pro-
Similarly, bring allow employers to invest in tools
ductivity and that encourages into allows the work to
or training easily translates or an increased
competitive advantageless physical line savings. But
be performed with and bottom strain or greater
as they grow older, management needson realize a
comfort. There are many new devices to the market
that assist housekeepers with lifting heavy mattresses
potential depreciation in their skills and ability-
especially in physically demanding jobs- may be linen
during bed making duties, ease pushing heavy
occurring. Consequently,simplyoperators the routine
and amenity carts or hotel reduce need to
continuously assess strenuous, ofawkward that needs
performance of the nature the work reaching,
to be done or exertions during daily roomhave
kneeling and the abilities of the staff they cleaning
performing those duties. Where possible, a modifi-
activities.
We Can Help
The Bed MadeEZ® Is Proven To:
cation in job duties may be necessary. Similarly,
employers should look to invest in tools or training
Although, “investing” in anything during an economic
that encourages or allows the work to be performed
with less physical seem or greater comfort. increasing
recovery may strain counter-intuitive, There are
many new decvicesandthe market that assist age, has
employee’s safety on health, regardless of
!! Eliminate Injuries Related To Bed Making
! Reduce Workers’ Compensation Costs
housekeepers withshown heavy mattresses of injuries,
repeatedly been lifting to lower the risk during
bed making duties, ease and have a positive affect
improve productivity pushing heavy linen and ! Reduce Indirect Costs
amenitycompany’s employee satisfaction,per-
on a carts or simply reduce the routine customer ! Improve Productivity
formancescores and financial performance. In fact,
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a recent during daily room Mutual’s Safety Index ! Improve Employee Satisfaction
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Although, “investing” in anything during an economic ! Improve Regulatory Agency Relations
recovery may seem positive impact on a company’s
initiatives have a counter-intuitive, increasing
financial performance” and a study by OSHA’s Office
employee’s safety and health, regardless of age, has ! Increase Competitive Advantage
of Regulatory Analysis indicates companies that
repeatedly been shown to lower the risk of injuries,
improve productivity and have a positive affect on and
implement effective ergonomic and safety a
company’s can expectsatisfaction, customer service
programs employee returns of $4 to $6 for every $1
invested.
scores and financial performance. In fact, a recent
report by Liberty Mutual’s Safety Index suggests
“95% of businesses report just common sense.
Preparing for the future is workplace safety initiatives
have a positivetools and resources that allows your
Investing in impact on a company’s financial
performance” and a study by OSHA's Office of
employees to perform their jobs better, safer and
Regulatory Analysis indicates companies that imple-
more efficiently isn’t only
ment effective ergonomic and safety and programs
practical, it’s essential in today’s
can expect returns of $4 to $6 for every $1 invested.
changing workforce landscape.
Preparing for the future is just common sense.
Investing in tools and resources that allows your
Chris Montross Is Vice President
employees to perform Market & better, safer and
their jobs Brand Development
more efficiently isn’t only practical, it’s essential in
For CKI Solutions, Which
today’s changing workforce landscape.
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Chris Montross Is Vice Solve Problems And
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U.S. Supreme Court Will Hear Landmark Class
Action Waiver Case:
American Express Co. v. Italian Colors Restaurant

T Background
his past month, the United of the month) and Amex’s credit
States Supreme Court cards (where the customer can
granted a writ of certiorari The enforcement of contractual pay over time, like a typical credit
to review the most recent arbitration and class action waiver card). According to the plaintiffs,
decision of the United States clauses has been the subject of legitimate reasons permit Amex
Court of Appeals for the Second significant litigation in the past few to charge a higher fee with respect
Circuit in American Express Travel years. The Supreme Court has been to its charge cards. But when
Related Services Co. v. Italian strongly supportive of arbitration, Amex charges a higher fee for its
Colors Restaurant (“In re Amex and has indicated some support credit card, plaintiffs allege that it
Merchants’ Litigation”). See No. for class action waivers. Not all does so by improperly using the
12-133, 2012 US LEXIS 8697(Nov. lower courts have demonstrated “Honor All Cards” provision of the
9, 2012). The Second Circuit has the same deference, however. Agreement to create an illegal
addressed the arbitration clause “tying arrangement” between
and class action waiver in this case Plaintiffs in the In re Amex the two different card products
three times since 2009, and it has Mercants’ Litigation case are all in violation of Section 1 of the
been to the Supreme Court once merchants (not consumers) who Sherman Act, 15 U.S.C. § 1; see
before already. It is back at the accept Amex cards for customer e.g., Northern Pacific Railway Co. v.
Supreme Court because, following purchases. Amex and its chief United States, 356 U.S. 1, 5-6 (1958)
remand to the Second Circuit competitors, Visa and Mastercard, (defining a tying arrangement
in 2010, the Court of Appeals— earn revenue by withholding a as “an agreement by a party to
as it had done twice before— “merchant discount fee” from each sell one product but only on the
reversed the trial court’s decision charged transaction. Plaintiffs condition that the buyer also
in favor of individual arbitration, allege that Amex charges a supra- purchases a different (or tied)
once again determining that the competitive fee that exceeds product . . . .”).
relevant arbitration and class the fee charged by Visa and
action waiver clauses at issue were Mastercard under circumstances In addition to its “Honor All Cards”
unenforceable. that constitute a violation of provisions, the Amex Agreement
federal antitrust law. contains a mandatory arbitration
The Supreme Court has not yet clause and class action waiver
squarely addressed the question The contract that permits the clause. These clauses preclude
of whether or under what American Express Company merchants from suing in court
conditions a class action waiver (“Amex”) to charge a fee is its or commencing any arbitration
might not comport with the Card Acceptance Agreement (the other than on an individual (non-
Federal Arbitration Act (the “FAA,” “Agreement”) with merchants. class) basis. Plaintiffs challenged
9 U.S.C. §§ 1-16). The Supreme The Agreement is a form contract. this clause by filing suit in the
Court’s upcoming decision could Merchants do not negotiate its United States District Court for
determine whether plaintiffs can terms with Amex. It contains an the Southern District of New
relatively easily avoid such clauses “Honor All Cards” provision, which York rather than commencing an
in the future. requires that merchants accept arbitration.
both Amex’s charge cards (where
the customer pays in full at the end


Amex I for the proposition that a party may de facto immunity from antitrust
seek to invalidate an arbitration liability by removing the plaintiffs’
On March 16, 2006, the District agreement on the grounds that only reasonably feasible means
Court determined that the arbitration would be prohibitively of recovery.” Id. at 320. Amex
enforceability of the class action expensive if the plaintiff can show responded with a petition for a writ
(or class arbitration) waiver was a the likelihood of incurring such of certiorari. See American Express
matter to be decided by arbitrators costs. Amex I, 554 F.3d at 315 (also Co. v. Italian Colors Restaurant, 130
and granted Amex’s motion to citing Mitsubishi Motors Corp. S. Ct. 4201 (2010).
compel arbitration under the v. Soler Chrysler-Plymouth, Inc.,
FAA. In re Amex Merchants’ Litig., 473 U.S. 614 (1985), and Gilmer Amex II
No. 06-1871, 2006 U.S. Dist. LEXIS v. Interstate/Johnson Lane Corp.,
11742 (S.D.N.Y. March 16, 2006). 500 U.S. 20 (1991)). The Supreme Court granted
The plaintiffs promptly appealed. Amex’s petition for certiorari
In a January 30, 2009, opinion Although the Second Circuit and remanded the case for
the Second Circuit reversed, recognized that, in the Supreme further consideration following
concluding that the plaintiffs had Court decisions it cited, the its decision in Stolt-Nielsen S.A.
properly raised a question of the Supreme Court had enforced the v. AnimalFeeds Int’l Corp., 130 S.
enforceability of the class waiver underlying arbitration clauses, Ct. 1758 (2010). In that case, the
provision, and, by extension, the the Second Circuit claimed that a Supreme Court held that a party
arbitrability of the dispute, and collective remedy was available cannot be forced to submit to class
that the issues were therefore in those cases, unlike in Amex arbitration without evidence that
for decision by a court, not an I. It then concluded that the it had agreed to such a collective
arbitrator. It further determined plaintiffs’ evidence showed that procedure (and that silence is
that the class waiver provision they could not pursue their claims not sufficient evidence of such
was unenforceable under the as individual arbitrations. The consent).
FAA because its enforcement plaintiffs’ expert had, for example,
would effectively preclude any opined that an average single On remand, however, the Second
action by plaintiffs. See In re Amex merchant might need to spend Circuit determined that Stolt-
Merchants’ Litig, 554 F.3d 300 (2d hundreds of thousands of dollars Nielsen had no real effect on
Cir. 2009) (“Amex I”). in order to claim only several the issues before it. It concluded
thousand dollars in damages. that Stolt-Nielsen stands for the
In reaching these conclusions, The Second Circuit rejected the proposition that one party cannot
the Second Circuit noted both analysis (offered both by Amex and initiate class arbitration against
the strong federal policy in favor the District Court) that trebling of another party absent a contractual
of arbitration and recent debates damages under the Clayton Act agreement to do so, but that
surrounding class waivers in and the availability of attorneys’ Stolt-Nielsen did not mean that
mandatory arbitration clauses. fees for a prevailing party a contractual clause barring class
Id. at 302-03. But it also cited would make an individual claim arbitration is per se enforceable.
the Supreme Court’s decision in economically feasible. Instead, the In re Am. Express Merchants’ Litig.,
Green Tree Fin. Corp.-Alabama v. Second Circuit held that to enforce 634 F.3d 187, 193 (2d Cir. 2011)
Randolph, 531 U.S. 79, 82 (2000), the Agreement would “grant Amex (Amex II).


In reaching this conclusion in The Second Circuit held, however, Looking Ahead
Amex II, the Second Circuit once that Concepcion did not alter its
again found that plaintiffs had prior analysis. See In re Am. Express Having granted certiorari, the
demonstrated that the class Merchants’ Litig., 667 F.3d 204 (2d Supreme Court is expected to hear
waiver in the arbitration clause Cir. Feb. 1, 2012) (Amex III). In its oral argument on Amex III early
at issue would preclude plaintiffs view, the decision in Concepcion, next year. The question on which
from bringing Sherman Act claims like the decision in Stolt-Nielsen, it granted review is “[w]hether the
against Amex. Id. at 196. This did not render class waivers per se Federal Arbitration Act permits
time, the Second Circuit panel enforceable. Instead, the Second courts, invoking the ‘federal
also seemed especially convinced Circuit held that both cases are substantive law of arbitrability,’ to
that, as a matter of public policy, simply applications of the principle invalidate arbitration agreements
plaintiffs must never be deprived that parties cannot be forced into on the ground that they do not
(even indirectly) of the protections a class wide arbitration unless they permit class arbitration of a federal-
of the federal antitrust laws.See id. have agreed to that procedure. law claim.” See Question Presented
at 197-98. It flatly rejected Amex’s Id at 213. The panel therefore and Grant of Cert., American
argument that Stolt-Nielsen described the Supreme Court’s Express Co. v. Italian Colors
disallowed the use of public policy decision in Concepcion as offering Restaurant, No. 12-133, available
as a basis to void contractual “a path for analyzing whether a at http://www.supremecourt.gov/
language. Instead, the panel held state contract law is preempted by qp/12-00133qp.pdf (last visited
that Stolt-Nielsen only forbids the FAA,” id., not whether a class Nov. 14, 2012). A decision would
using public policy to interpret waiver is necessarily enforceable most likely be announced in June
the parties’ intent in a contract if plaintiffs demonstrate that 2013 and could be meaningful
to find that they had agreed to a enforcement would preclude not only in the commercial
class arbitration procedure. Id. at their ability to vindicate federal context, but perhaps in shedding
199- 200. statutory rights, id. at 214. light on how the Supreme Court
might address issues such as the
Amex III The Second Circuit denied National Labor Relations Board’s
rehearing en banc on May 29, 2012. recent decision in D.R. Horton Inc.,
On April 11, 2011, the Second In the concurring opinion to the 357 NLRB No. 184 (2012) (deeming
Circuit placed a hold on its order denying rehearing, Justice the “right” to file a class action
mandate in Amex II to allow Amex Pooler reiterated that the holding or class arbitration a concerted
to file another petition for a writ in Amex III “rests squarely on the protected activity and on that
of certiorari. While the mandate vindication of statutory rights basis invalidating an arbitration
was on hold, the Supreme Court analysis—an issue untouched in agreement that allegedly violated
decided AT&T Mobility LLC v. Concepcion.” In re Am. Express federal labor law by requiring
Concepcion, 131 S. Ct. 1740 Merchants’ Litig., 681 F.3d 139 (2d individual arbitration).
(2011). The parties then submitted Cir. 2012).
supplemental briefing to the The dissent to the order denying
Second Circuit on the potential rehearing en banc in the Second
impact of Concepcion. Circuit argued that Concepcion
“teaches that the FAA does not


allow courts to invalidate class- Justice Sotomayor, who originally For more information on the
action waivers even if ‘class sat on the Second Circuit panel content of this alert, please contact
proceedings are necessary to in Amex I, is recused from the your Nixon Peabody attorney or:
prosecute small-dollar claims that case. She was in the minority in
might otherwise slip through the Concepcion and thus might have Paige L. Berges at pberges@
legal system.’” 681 F.3d at 143, been a voice against reversal in nixonpeabody.com or (212) 940-
quoting Concepcion, 131 S. Ct. Amex III. 3029.
at 1753. This argument will likely
carry weight with the majority of Christopher M. Mason at cmason@
the Supreme Court that has in the nixonpeabody.com or (212) 940-
past strictly upheld party choice 3017.
in arbitration clauses. Whether
it will be powerful enough for a
reversal is yet unknown, but there
is one other factor favoring Amex:

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.


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