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Hotel Lawyers -- featured subjects and articles
Meet the Money® 2014

ADA defense and compliance

EB-5 financing

Workouts, bankruptcies & receiverships

Hotel Management Agreements

Hotel Franchise & License Agreements

Hotel industry trends

This is Jim Butler, author of www.HotelLawBlog.com and hotel lawyer. Please contact me at Jim Butler at jbutler@jmbm.com or 310.201.3526.

Published on:

24 September 2019

Click here for other cannabis-related articles.

The column below was first published in the October 2019 issue of Hotel Management and is reprinted with permission.

Why are so many hoteliers talking about cannabis hotels?
by
Jim Butler, Hotel Lawyer

Legal cannabis sales exceeded $10 billion in 2018, and are expected to exceed $20 billion by 2025. 33 states plus the District of Columbia have legalized marijuana for recreational  or medical purposes (or both). With all this activity, many sense an opportunity to generate more guests and profits by developing “cannabis hotels”.

Are you recommending your hotel clients dive into this?

No, except as a limited opportunity to explore carefully. Our law firm is extremely active in the hospitality industry and is one of few full-service firms in the country with a dedicated cannabis group, so we would certainly present a cannabis opportunity to the hotel industry if we thought it was viable. But we think cannabis is a “false flag” opportunity for hotels, presenting more problems than opportunities.

You say more problems than opportunities. Why?

Cannabis is still a Schedule 1 substance prohibited by Federal law. Federal agents can seize product and arrest people trafficking in cannabis products, even in states where it is legal.

The Federal illegality spooks banks with FDIC insurance. Does any hotel want to risk its banking relationships and lines of credit to dabble with cannabis?

The IRS can deny ordinary and necessary business deductions to taxpayers who traffic in Schedule 1 substances.

The regulatory situation is very complex with widely divergent state and local regulations, making it difficult or impossible to formulate uniform procedures and business approaches.

In many jurisdictions, it is likely that the property would lose all liquor licenses if it distributes cannabis products. CONTINUE READING →

Published on:

07 August 2019

Click here for the latest articles on Data Technology, Privacy & Security.

Many hotels operate internationally and are frequently subject to the European Union’s 2018 General Data Protection Regulation. The financial consequences of a breach can be significant, as recent fines imposed on Marriott International demonstrate.

Bob Braun, senior member of JMBM’s Global Hospitality Group® and Co-Chair of the Firm’s Cybersecurity & Privacy Group, explores the impact of last year’s breach on the hotel brand below.
Marriott’s GDPR Fine – Lessons to be Learned
by
Bob Braun, Cybersecurity Lawyer

On August 5, 2019, Marriott International announced that it had taken a $126 million charge in the second quarter, primarily as a result of the data breach it announced in 2018. Coincidentally, on July 9, 2019, The United Kingdom’s Information Commissioner’s Office (ICO), which enforces the General Data Protection Regulation in the UK, announced that it intends to impose a fine of £99,200,396 ($123,705,870) on Marriott for last year’s data breach. CONTINUE READING →

Published on:

24 July 2019

Click here for the latest articles on Resort Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

Another state Attorney General joins in the Resort Fee litigation – this time suing Hilton

On July 23, 2019, Attorney General Doug Patterson filed a lawsuit against Hilton, alleging that it has engaged in deceptive and misleading pricing practices and failure to disclose fees in violation of Nebraska’s consumer protection laws. The complaint seeks injunctive relief to force Hilton to advertise the true prices of its hotel rooms, provide damages for Nebraska consumers, statutory civil penalties of $2,000 for each violation, and costs for investigation and legal action. Click here to see the Nebraska complaint against Hilton.

This new lawsuit is particularly significant because it was filed just two weeks after the District of Columbia filed a similar suit against Marriott.

A new template for other Attorneys General and plaintiff’s class action lawyers?

Many industry observers believe that the two recent lawsuits against Marriott and Hilton provide a virtual “template” for other AGs and class action lawyers to mark up and file – potentially against all hotel franchise companies, hotel operators, and hotel owners involved with any hotel that has used Resort Fees or other mandatory fees or charges imposed on all hotel guests which are not included in the initially quoted room rate.

The conduct complained of in the DC and Nebraska lawsuits traces the pattern outlined by the January 2017 FTC Report as deceptive and misleading under the FTC Act and most state consumer protection laws (that are based on the FTC Act). Although these first two suits are against big hotel companies, they are just at the top of the pyramid and provide high-profile examples of targets for plaintiffs. Similar actions would likely exist against every other brand, operator or owner of a hotel using undisclosed Resort Fees in their advertised room rates. CONTINUE READING →

Published on:

09 July 2019

Click here for the latest articles on Resort Fee Litigation.

Note: If you are a consumer with a Junk Fee issue, please do NOT contact us! We do not represent consumers. We represent owners, developers, lenders, and management of hotels, restaurants, and other hospitality-related properties. We advise them on litigation, labor, regulatory compliance, contracts, transactions, financing, development, and strategies.

Hotel Lawyer: We hate to say “we told you so” on Resort Fee litigation

We have been watching the Resort Fee issue for several years. We have advised clients on litigation, compliance and risk mitigation strategies. We have provided counsel on Attorney General investigations. We understand the best defenses to consumer and government agency claims that Resort Fee practices constitute violations of state consumer protection actions, the Federal Trade Commission Act and other cause of action based on misrepresentation, consumer fraud, and unfair business practices.

We have cautioned that consumer frustration over this issue is very high, and government agencies have periodically shown significant interest in jumping on a populist bandwagon. But today, it looks like the situation may have finally reached a turning point.

Hotel Resort Fees litigation back in the news

On July 9, 2019, the Attorney General for the District of Columbia sued Marriott International in Superior Court for the District of Columbia over its policies and practices regarding “Resort Fees” and “drip pricing.” The lawsuit says that Marriott’s use of Resort Fee pricing misrepresents material facts (and tends to mislead consumers), and is an unlawful trade practice that violates the District’s Consumer Protection Act.

Resort Fees is a shorthand expression for all mandatory fees and charges imposed by a hotel on its guests which are not included in the quoted room rate. They may have a variety of names such as resort fees, service fees, amenity fees, destination fees, surcharges or otherwise. But the common feature is that they are non-optional charges to the guest which are not included in the initially quoted room rate.

Copy of the complaint in DC vs. Marriott

Click here to view a copy of the complaint.

Potential importance of this Resort Fee case

Resort Fees have been around since at least 1997, but by 2017 they were estimated to have grown to more than $2.7 billion. They seem to be gaining greater popularity with hoteliers and continue to be a top annoyance for hotel guest. The practices the new lawsuit complains of are widely used throughout the industry by a large number of hotel brands and operators.

While some hotel companies may seek to distinguish their practices from those of Marriott in this case, we believe that most Resort Fee cases will present similar liabilities, challenges and compliance problems that Marriott will face.

CONTINUE READING →

Published on:

13 June 2019

This year at Meet the Money® 2019, we asked attendees what they they see on the horizon for the hotel industry in 2019 and 2020 where are we in the cycle? What trends are emerging? What are the market’s strengths and weaknesses?

We’ve compiled some of the interesting answers we received in the video, below. Watch it and hear what opportunities and challenges industry executives see ahead.

CONTINUE READING →

Published on:

02 June 2019

Important data on Boutique, Lifestyle, and Soft Brands

Each year since 2016, The Highland Group has published the Boutique Hotel Report, an annual compilation of data describing the boutique hotel segment. Kim Bardoul, a partner with the group, specializes in boutique hotels and produces the report each year.

A resource for developers, consultants, appraisers, operators, lenders and brands, the report defines lifestyle, soft brand collections and independent boutique hotels; details room distribution; describes current market share and recent trends; and compares boutiques with traditional hotel types for RevPAR, F&B revenue, Trev PAR and EBITDA.

With boutique hotels one of the fastest-growing segments in the U.S. hospitality industry, and $20 billion in revenue in 2018, The Highland Group’s report is a valuable tool for anyone interested in how they might take advantage of their strong performance. Following are a couple of charts I found interesting, and that illustrate the data available in the full report.

Lifestyle and Soft Brand Collection supply increased dramatically from 2000 to 2018 – Lifestyle boutique rooms increased by 13% from 2017 to 2018, and Soft Brand Collection rooms increased by 32%. The charts below, provided in the report, illustrate this trend. CONTINUE READING →

Published on:

29 May 2019

JMBM’s ADA Compliance and Defense Group has defended more than 750 ADA lawsuits and DOJ investigations or actions brought against owners and operators of hotels and other businesses classified as “public accommodations” under the Americans with Disabilities Act (ADA). A federal Grand Jury has indicted a prolific ADA plaintiff for income tax evasion. More than just an interesting story, Marty Orlick explains how this might affect current and future ADA litigation.

 
Serial Plaintiff Who Filed Nearly 3,000 Americans with Disabilities Act (‘ADA’) Lawsuits is Indicted by a Federal Grand Jury and Faces Possible Imprisonment and Fines for Income Tax Evasion
by
Martin H. Orlick, Hotel Lawyer  & Chair,
JMBM’s ADA Compliance & Defense Group

In an ironic twist of fate, Scott N. Johnson, Esq., a disabled Sacramento attorney, who has filed nearly 3,000 ADA lawsuits as plaintiff, starting in the United States District Court for the Eastern District of California, now faces possible jail time for felony income tax fraud according to a Federal Grand Jury Indictment.

On May 23, 2019, United States Attorneys filed a Grand Jury Indictment, United States of America v. Scott Norris Johnson, accusing Johnson of three counts of “Making and Subscribing a False Tax Return” by failing to declare substantial income derived from ADA settlements on his U.S. Individual Income Tax Returns and his U.S. Corporation Income Tax Returns for the tax years 2012-2014.

According to the Indictment, from no later than “on or about January 28, 2008, SCOTT NORRIS JOHNSON owned and operated Disabled Access Prevents Injury, Inc. (“DAPI”), a corporation registered in the State of California. DAPI was treated as a C corporation for tax purposes.” The Indictment alleges that Johnson was DAPI’s sole shareholder and that DAPI “provided legal services associated with lawsuits that it filed on behalf of SCOTT NORRIS JOHNSON as the plaintiff.”
CONTINUE READING →

Published on:

28 May 2019

It’s hard to believe that another Meet the Money® is in the rear view mirror, and that we have our 30th year on the horizon in 2020! This year’s conference was another few days of energetic deal-making, networking and discussions about the current state of the industry.

Our focus at Meet the Money has always been financing and deals – connecting providers and consumers for profitable partnerships. It’s one of our goals as hotel lawyers, too; find out more about how the Global Hospitality Group® can help you.

Hotel Business has posted a video sharing some of my thoughts on hotel financing in the current market. I think this is a good time in the industry, with the potential for good deals and smooth sailing for the next couple of years. Watch the video below for the rest of my comments, and a quick look at this year’s conference.

CONTINUE READING →

Published on:

 

UPDATE: On December 23, 2020, the Fourth Appellate District Court dismissed the Riverside County District Attorney’s case against James Rutherford and his attorneys, on appeal. As reported in our May 21, 2019 blog below, the DA’s case alleged ADA serial plaintiff James Rutherford and the lawyers who regularly represent him were involved in abusive litigation. The Appellate Court dismissed this claim (see unpublished Opinion here) as the ADA lawsuits were protected by California’s litigation privilege. The Court wrote: “As we explain, the litigation privilege applies to the People’s complaint, and the People have not shown that an exception to the privilege applies.” It was our view then, and even more so after the Appellate Court’s decision, that the Riverside D.A.’s theory of the case led to the inevitable outcome. Perhaps the D.A.’s office will take a fresh look at the facts of the case and apply a new theory if it intends to pursue a case against serial ADA litigants.

21 May 2019

JMBM’s ADA Compliance and Defense team, led by my partner Marty Orlick, continues to help hotels and other businesses achieve compliance under the Americans With Disabilities Act (ADA), and has defended more than 750 ADA lawsuits and DOJ investigations or actions brought against owners and operators of “public accommodations.” Such properties include hotels, resorts, restaurants, timeshares, bed and breakfasts, spas, sports facilities, wineries, theaters and other commercial real estate, such as apartment communities, shopping centers, retail stores and banks.

Today, Marty shares some good news from Riverside, California, where the Riverside County District Attorney’s Office is seeking to stop abusive ADA lawsuits filed by serial litigants.

Riverside County DA drops the hammer on ADA litigant and counsel
to stop abusive litigation
by
Martin H. Orlick, Hotel Lawyer  & Chair,
JMBM’s ADA Compliance & Defense Group

In an extraordinary case charging ADA litigation abuse, the Riverside County District Attorney’s Office filed an action on behalf of the People of California seeking to permanently prevent serial ADA plaintiff James Rutherford and two law firms that regularly represent him (Manning Law and the Law Offices of Babak Hashemi, and individual members of the firms) from filing abusive lawsuits. The Complaint alleges that the defendants violated various Business & Professions Code sections designed to protect the public against “unlawful, unfair or fraudulent acts or practices” and seeks civil penalties not to exceed $2,500 for each violation and other equitable relief. Civil penalties in this case could exceed $800,000 if the allegations prove true.

The Complaint alleges that “Defendants filed 323 lawsuits based on alleged violations of the Americans with Disabilities Act” in federal and state courts. Many of these lawsuits were filed against hotels and retailers. According to court papers, the pleadings filed by the defendants follow a pattern of near-identical “allegations, except for the identity of the named defendants and the date of the alleged harm.”

This lawsuit is eerily similar to a lawsuit filed by the Arizona Attorney General against Peter Strojnik, Sr., who filed nearly 2,000 identical ADA lawsuits against Phoenix/Scottsdale businesses. Suspended from practicing law, Mr. Strojnik surrendered his license to avoid disbarment. Another lawyer in New Mexico also surrendered her license in lieu of disbarment over ADA litigation abuse. CONTINUE READING →

Published on:

10 May 2019

LOS ANGELES—Jim Butler, Chairman of JMBM’s Global Hospitality Group®, along with Jack Westergom of Manhattan Hospitality Advisors, will speak at the 4th Annual West Institutional Real Estate Investor Forum on June 5, 2019 in San Francisco on the topic of hotel investment. They will also conduct a roundtable discussion for investors who may be new to the hotel investment.

“Many institutional investors, family offices and other sophisticated real estate investors are looking to hotels to increase investment returns. While hotel investments can offer significantly higher cap rates and greater long-term profits, many investors realize they need experienced advisors to avoid pitfalls that might otherwise confront them,” said Butler. “This program will provide an introduction and guide to hotel investments for those looking into how this asset class fits into an investor’s portfolio.”

The morning presentation is entitled, “Time for a second look at Hotels: The hidden gem of asset classes.” It will cover the following:

  • Fundamentals of hotel investment
  • 3 reasons investors buy or build hotels
  • What makes hotels different
  • How much of a hotel’s value is due to the operating business
  • Which hotel agreements have the most impact on value. How much impact?
  • Who are the critical members of your hotel team
  • Case studies for hotel investment – greater upside if done well, greater downside if done badly
  • Why you should let experience be your guide CONTINUE READING →
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