The Franchise Memorandum

A federal court in Maryland recently granted a motion for class certification by consumers who brought negligence, breach of contract, and consumer protection claims against hotel franchisor Marriott International and data security company Accenture. In re Marriott Int'l Customer Data Sec. Breach Litig., 2023 WL 8247865 (D. Md. Nov. 29, 2023). The consumers’ claims arose from a data breach in which hackers gained access to the consumers' personal information from a guest information database. The district court partially granted the consumers’ motion to certify classes and subclasses for monetary damages, liability issues, and injunctive or declaratory relief. After Marriott and Accenture received permission to appeal, the Fourth Circuit vacated the order certifying the classes and remanded for the district court to determine whether the consumers had waived their right to assert a class action by agreeing to certain Marriott terms and conditions. The provision on which Marriott relied stated that any disputes arising out of the program “will be handled individually without any class action, and will be governed by, construed and enforced in accordance with the laws of the State of New York’ and that the exclusive jurisdiction for any claim would be in the state or federal courts in the State of New York.

The district court concluded that Marriott waived its right to rely on the “class waiver” found in the choice of law and venue provision of its terms because Marriott requested that all of the consumers’ cases be consolidated into a multi-district litigation (MDL)—the antithesis of handling claims individually—and when Marriott sought the MDL, it asked for the consolidation to eliminate duplicate discovery, avoid conflicting rulings, reduce litigation costs, and separately litigating each of the 59 related actions would offer no benefit. Further, Marriott requested that the MDL be assigned to the District of Maryland (where it is headquartered), which is inconsistent with the choice of law and venue provision. The court further reasoned that, because Marriott has clearly waived 5/6 of the choice of law and venue provision, it could not cherry-pick the provision regarding class actions merely because it has not fared as well as it had hoped in the bellwether process. Finally, the district court noted that even if Marriott has not waived its right to rely on the choice of law and venue provision, the adhesive provision buried on the last page of the terms cannot direct the court to ignore the provisions of Rule 23 of the Federal Rules of Civil Procedure and therefore recertified the classes.