Judge Dismisses Hyatt Suit Against WIBC For Hyatt Hotels Corp., it was a gamble. For the Women's International Bowling Congress, Inc. (WIBC),it was a matter of honor. For meeting and event planners, it's a potential lesson inlaw. What was expected to be one of the highest profile trials in the meeting industry ended recently when U.S. District Court Magistrate Judge Leslie G. Foschio dismissed Hyatt's lawsuit against the WIBC for breach of contract. The group had failed to use nearly half the 4,735 room nights reserved at the Hyatt for its annual meeting and championship , which was held April 4 through May 25, 1996 in Buffalo, N.Y.
The contract between Hyatt and the WIBC contained neither anclause nor cut-off provisions. After the contract was signed in 1993, Hyatt sent an addendum to the WIBC asking the group to agree it would "be able to fill (its) room commitment at the headquarter hotel." The WIBC, however, did not sign the addendum. A total of 2,265 room nights were actually used by WIBC convention attendees. Hyatt subsequently filed the suit on August 27, 1997, to recover lost revenues from the unused rooms, an estimated $200,000.
According to John S. Foster, Esq., attorney and spokesman for the WIBC, the "assumption by everyone was that the cut-off was 30 days out from the arrival dates," at which time control of the room block reverted back to Hyatt. He says housing forms used by WIBC's travel agency and faxed to hotels, told attendees to contact hotels directly for reservations 30 days or less prior to their arrival date.
The Hyatt was the headquarters hotel for the citywide event; 41 other hotels served as overflow properties. According to Foster, part of the problem may have been that the bowling alley where the tournament was held was miles away from the Hyatt, and that bowlers may have chosen to book hotels closer to the tournament facility.
In his judgment, Judge Foschio remarks: "It makes no economic sense that WIBC would expose itself to substantially more damages based on the failure of individual participants, over whom the WIBC had no control, to choose the Hyatt Regency Buffalo as their hotel, than it expressly agreed to assume if non-attendance by prospective participants unexpectedly forced cancellation of the entire convention."
In Foster's view, "Hyatt basically considered this a collections case. They looked at the WIBC as a deadbeat client who wouldn't pay its hotel bill. . . .WIBC certainly spent more in legal fees than what they were getting sued for."
Hyatt had until September 25, 1999, to appeal Foschio's decision to dismiss the suit. At press time, Hyatt attorney Jonathan T. Howe, JD, president of Howe & Hutton in Chicago, said that Hyatt was still considering a variety of responses to the dismissal. Foster says, however, that he thought an appeal would be very unlikely.
What are the ramifications for meeting planners and indeed for the industry? Lawyers for both sides agree that it is not precedent-setting in legal terms, but they do consider the case a legal lesson of sorts for everyone.
Howe views the outcome as "not a major blow against either side." Rather, he considers the decision an educational device that could provide some guidance when association meeting planners are considering housing agreements with hotels. "It's a good example of whyshould have attrition clauses," Howe says. "It's a security blanket."
In that respect, Foster agrees. "This underscores the fact that every meeting planner needs to treat contracts seriously," he says. "It's all about what's not in the contract."
Jed R. Mandel, a partner in the Chicago-based law firm of Neal, Gerber & Eisenberg, says that as an observer, he sees no surprises in the decision. "You can't overlay an attrition benefit on a contract that doesn't have one to begin with," Mandel says.
According to Foster, the WIBC, with nearly 1.7 million members, has been holding its annual tournament for more than 70 years. "It's a cost-conscious group that goes to secondary cities," Foster says. He adds that the group had done business with Hyatt before the lawsuit but not since.