Arisia Suffers Reverse in Contract Dispute with Aloft

Nicholas “phi” Shectman, President of Arisia, Inc., reports the group has suffered a major setback in litigation over the Boston convention’s cancellation of plans to use two strike-affected hotels for the 2019 event. An arbitrator has made a large award to one of the hotels, the Aloft (under Marriott management). Con organizers are questioning whether the event can survive a second decision of that magnitude.

Shectman’s statement explains the immediate situation:

Last month, Arisia participated in an arbitration hearing for the dispute with the Aloft Boston Seaport District hotel over our strike response and move to the Boston Park Plaza Hotel for 2019.

Yesterday (July 9th), Arisia received notification that arbitration in the Aloft case went against us. The arbitrator agreed with Marriott’s arguments and awarded them $44,000 plus fees. They have 20 days to state an exact schedule of fees they will ask for; we expect it to be in the range of $10,000 – $20,000. As a high end, a penalty of $65,000 is something that Arisia can absorb, but only just. We still expect to win the Westin Boston Waterfront arbitration due to differences in contract wording, and we expect Marriott believes they will win. A loss there would incur a similar cost.

Losing both cases would exceed Arisia’s financial resources. The Arisia Eboard is actively investigating what would happen next, and what we can and cannot do in various dissolution scenarios. We expect to know soon what these scenarios might cost us.  We are also still learning what our legal obligations would be for gracefully wrapping up operations in case we must dissolve, including expenditures like making grants, the 2020 convention, paying our storage costs, and so on. Bankruptcy proceedings themselves can take considerable time, and can involve additional legal costs.

Tomorrow morning (July 11th) is the hearing for the Westin arbitration. We are also in negotiations with the Marriott lawyers for a possible settlement.  We expect to have more news to share publicly on both of those topics in the coming weeks.

41 thoughts on “Arisia Suffers Reverse in Contract Dispute with Aloft

  1. If you can avoid it, don’t sign a contract specifying arbitration unless you are the larger business by a substantial margin. Change the contract language to set the venue as State Court. Statistically arbitration favors the larger party and State Courts favor the smaller party. Everyone always says it does not matter and saves money in the event of a dispute, but the reality is most costs are the same and you notice it is always the larger party making the cost argument because they have run the numbers…
    The Balticon hotel contract specifies state court as the venue for dispute resolution for example. I slipped that in along with other items just in case..

  2. I wonder why they weren’t willing to settle for making a statement to the effect of “While we support the strikers, we cannot get out of our contract and we cannot afford the penalties for walking away from it.” It’s bad if they felt obliged to make a political statement they knew they couldn’t afford.

  3. @ Greg. As I recall, Arisia anticipated that the strike would still be ongoing at the time of the convention so they made alternate arrangements. I would be interested to know about other planned events at the Marriot around this time, are there other who cancelled and got sued?

  4. Arisia would have been in for a firestorm of criticism if they had asked their members to cross a picket line. Pick your poison: no hotel, or no members. This would be a good topic for SMOFcon. Fandom needs a standard contract clause for strikes and lockouts.

  5. It’s not just convention attendees who would not cross a picket line, but lots of panelist, artists, and performers.

    You also would have lost at least 50% of staff.

  6. Tom Becker: Arisia would have been in for a firestorm of criticism if they had asked their members to cross a picket line.

    That was my impression, too, from reading the unofficial Arisia group on FB. And realpolitk aside, the decision makers sounded like they thought it was the right thing to do.

  7. For example, the head of logistics (me) not only refused to cross a pocket line, I refused to let Arisia’s stuff enter the hotel. (People who felt differently were welcome to take care of their own area’s stuff.)

  8. As I would not be a slave, I will not be a master. Crossing a picket line is an act of collaboration with evil, and I would not ever consider such a thing; and I’m certain I am by no means alone in fandom.

  9. If the strike had still been going on when Arisia started, and Arisia was still in the striking hotel, nobody would have attended it.

  10. @Greg Hullender: the statement that they utterly couldn’t get out of their contract would have been met with disbelief; AFAICT, most fans are sufficiently clueful to know that contract disputes are subject to judgment, where anything can happen. I have wondered whether Arisia’s very new management considered the cost of a second public black eye (after the mess with the ~abuser president), but I was nowhere near any of those discussions. As noted below, if the convention had stayed and the strike not been settled, it would have been short (at least) of staff — plus there was the question of whether they’d have a convention-capable hotel. (I live in Boston, so I saw a fair amount of coverage; it sounded like the hotel was not a great place to be even with low between-convention occupancy.) My suspicion is that they decided too soon — back when I was still a member of the American Chemical Society, their much larger annual meeting moved from San Francisco to Las Vegas for the same reason, possibly closer to the conference (memory of ~37 years ago is uncertain) — but a paid staff can put in the hours to make things happen where a volunteer group may not be able to, especially when the volunteer group is working close to major holidays, when even paid people can be unavailable for discussions. (The ACS meeting was in early summer.) The SF hotel strike ended up being settled before the meeting — don’t ask me how much the move affected the settlement — but I saw nothing afterward about SF hotels either suing the ACS or demanding arbitration. I suspect not picking on somebody their size contributed to any choice of action; Arisia is comparatively disadvantaged in this regard.

    @Ron Newman: I think you overestimate how monolithic fandom (even the part that attends Arisia) is. How many at-the-door memberships Arisia would have lost (and how much of their sleeping-room block would not have been filled, and what an arbitrator would have thought if the Westin demanded the additional failure-to-fill fees that are almost certainly in the contract) is anyone’s guess, but “all of them” seems unlikely.

    Just after the strike was settled, I was told offline (by an ex-officer, which may have affected the spin of what I heard) that Arisia was specifically asked just before their change-of-venue announcement to hold on a decision because the Westin was about to have an agreement. If true, that may have been a factor in the arbitration.

    I am a bit surprised that the Aloft decision was rendered first; I don’t see how the overflow hotel would have been usable if the convention couldn’t happen at the Westin. (I can just see another arbitrator deciding that the Westin gets nothing — that would be amusing, for those of us amused by Teapot Dome, around which Fall was convicted of receiving a bribe from Doheny, after which Doheny was acquitted of bribing Fall.) I wonder about the skills of both the contract writers and the people dealing with the arbitration.

  11. I don’t go to Arisia, but I do volunteer at Boskone which is held in the same hotel a month later. (Two cons in the winter in Boston is one too many cons for me.) Had the strike continued into February, my wife and I had no intention of crossing that picket line and would have found something else to do Presidents Day weekend. So yes, attendance and staffing would have been impacted to a large degree. And Arisia needs more staff than Boskone as they are larger.

    ETA: That’s over and above the moral decision to not cross a picket line. If Arisia ends up bankrupt from this, I hope fandom can do something to support them or make another con in Boston possible.

    I wonder of Boskone is a separate legal entity from NESFA? If this had happened to Boskone would the NESFA club house and other assets be protected?

  12. given everything happening at the time, they should have cancelled for the year.

    they claimed they wouldn’t do so because of concerns over bankruptcy…but where are they now?

    on the threshhold of bankruptcy.

  13. Steve Davidson: You’re not thinking this through. They did cancel — with the two hotels that are now collecting large penalties from them.

    Cancelling the event altogether — same situation, but without having held the convention. And if the convention generated a surplus (I don’t know) they need it to pay these obligations.

  14. In most contracts I have seen (and as a translator, I’ve seen a lot), strikes and lock-outs are explicitly mentioned as part of the force majeure clause that frees both parties from contract obligations, in case a contract cannot be fulfilled due to unforeseeable events. It seems, this was not the case here.

  15. Cora Buhlert: How long in advance of the event are these strike conditions operative? Do they release parties a couple of months before the event?

  16. @steve davidson: I don’t see the management issues as grounds for canceling — and if they had canceled, they could also have been on the hook for (e.g.) refunds. I wouldn’t be surprised if they felt that canceling would also have permanently cost them a lot of because-it’s-there members.

  17. my understanding is that there was a force majeure clause in at least the Westin contract, and probably also the Aloft contract, which specifically mentioned labor disputes. And Arisia invoked it.

  18. @Mike Glyer
    I don’t think I’ve ever seen time limitations in the force majeure clause, just “If one party is unable to fulfil its contractual obligations due to [insert long laundry list of potential problems here], the other party shall have the right to cancel the contract.” But then, I mostly deal with manufacturing contracts (ships, trucks, cranes, etc…) not hotel contracts. But the principle should be the same.

    @Ron Newman
    If the contract had a force majeure clause that specifically mentions labour disputes, then IMO Arisia was fully within their rights to invoke force majeure. Not that that necessarily stops companies from sueing. We’ve had a couple of cases where the German government paid damages for contracts cancelled in cases (This new road toll law has been declared unconstitutional. Due to overwhelming public pressure, we have decided to shut down all nuclear power stations sooner than expected) which IMO were clearly force majeure.

  19. The Westin was too large for the number of people still attending Arisia after the rape claims hit the media and fans and guests were already withdrawing memberships. The strike seemed to be a godsend, an excellent legal reason to cancel at the Westin and switch to a smaller, venue while people caught their breath and worked through the organizational problems. At the Westion, even people not aware of the charges would have felt like the last few peas at the bottom of an an empty can. I suggest that moving to a smaller venue was the right business, political, and moral move while everybody caught their breath, even if it turns out in the end to cost significant funds for the con.

  20. Cora:

    I don’t think I’ve ever seen time limitations in the force majeure clause, just “If one party is unable to fulfil its contractual obligations due to

    The question then is whether the hotel really was unable to fulfil its contractual obligations. If I understand the situation correctly the hotel have two separate and somewhat reasonable arguments they can use to say that they could have delivered:

    The strike ended before the date of the con. If Arisia had just waited a bit then the con could have been held at the contracted hotel with no adverse effect for Arisia.
    The hotel was open despite the strike, and even if the strike had lasted longer the hotel could still have delivered the services in the contract. While guest would have had to cross a picket line, that is not a significant breach of the hotel’s obligations. (This is weaker than (1) IMO but I wouldn’t be completely surprised if a court or arbitrator accepts it.)

    There may be language in the contract that affects how strong these arguments are. There are also lots of details like the timeline and whether some functions of the hotel was closed that may be relevant.

  21. @ Johan P: “having to cross a picket line” is, I think, the problem here. If the consumer considers “crossing a picket line” to be a non-negotiable no-no, the hotel can’t, in fact, deliver the services for which they were retained. I think one of the points here is if the hotel did say “give us a small number of days, before pulling out” and Arisia didn’t, that could well be seen as acting too early.

    But a “you have a strike, our guests will not cross a picket line, what can we do?” is a perfectly sensible and reasonable position (in my mind).

    And for a thing, where people need to book rooms, etc, etc, there’s a cut-off substantially before the event date, when you ,em>need to be able to say “we will be in venue X, there will be room deals in hotels X, Y, Z”. And while that cut-off may be qsueezed a few days either way, it can’t be squeezed months.

  22. The hotel was open despite the strike, and even if the strike had lasted longer the hotel could still have delivered the services in the contract

    While the strike was going on, I read reports from other cities that the hotels were substantially understaffed and could not provide a standard of service that the convention and its attendees would have expected.

  23. I suspect that even though the impact on Marriott would have been the same, they wouldn’t have made a claim if Arisia had just cancelled.

  24. Some answers to question explicitly or implicitly asked above (Context – I’ve been heavily involved in Arisia’s relationship with its hotels starting in 2012, serving both as Hotel Liaison for 2 conventions and being the main point of contact on contract and sales questions between The Westin and Arisia from 2012 to 2018. I had stepped back from that role about a year ago, at the same time our existing sales contact retired, but stepped back in last fall given the crisis the organization was facing.):

    The Force Majeure/Impossibility clause in both contracts specified strike. The decision about the Aloft hinged on the notice period. The Aloft contract only talks about the Hotel’s inability to perform, whereas The Westin contract talks about the ability to perform of both groups – we cancelled once we realized we would not be able to perform our obligations under the contract.

    When we did an informal poll of our senior staff, a large percentage (I do not remember the number and don’t want to incorrectly guess) were unwilling to cross a picket line. It was a higher number than we were expecting, but was pretty clear to the leadership team that Arisia could not run a convention in a striking hotel. We made this clear to Hotel Management on the phone prior to officially cancelling in writing, as required by the contract.

    What Chip says above is not the entire story. We told Hotel Management we had a deadline by which we needed to make a decision, in part to comply with the terms of notice outlined in the contract with The Westin. About an hour before that deadline, they asked us for another week, as they believed a resolution was close, and said that the union would be able to confirm that. When we reached out to our contact at the union, they said that they were not, so we waited several additional hours past our deadline, but still within the notice period, before officially cancelling. An announcement that they had come to an agreement happened the next day, which would have been outside of the notice period outlined in the contract.

  25. Arisia weathering the rape accusations but going down for being on the right side of a labor dispute…would be a very 2019 thing.

  26. @Ron Newman: your response to @Johan P’s 2nd point is what I was hearing locally; my read is that Arisia in a still-striking Westin would have resembled some genre post-crash dystopia more closely than people paying $150 or more per night would appreciate.

    The problem with saying “our members wouldn’t have crossed picket lines” is that is (a) unprovable (Arisia AFAICT did not poll its membership — I certainly didn’t get anything, and I’d had a membership for several months by then) and (b) not part of the contract; given the low rate of union membership, a court could assume (absent a clause in the contract) that most of the members would cross. This assumption is probably incorrect, but arguments that the membership skews liberal would also require data.

    I am glad I didn’t have to be involved in this decision; we can say in retrospect that Arisia should have given the hotel more time, or that moving the convention on less notice would have been possible if the hotel hadn’t reached an agreement, but we’d need one of Piper’s cross-time conveyors to know for sure.

  27. Chip: Arisia had given the hotel a drop-dead deadline. While rumors of a nearing strike settlement were prevalent enough to have made the Boston Globe that day, it was just rumors.

    While Arisia may not have surveyed its membership, some of the area directors surveyed their staff, and it didn’t look good. And given the elevator failures on load-in, Arisia would have had to happen without most of its gear.

  28. To add info and correct some miss-conceptions that folks not as close to this have:

    [Disclaimer] I’ve was involved heavily in Arisia’s hotel relations in the prior decade; both in hotel contracts and as at-con liaision. I’ve occasionally involved this decade, but nothing as intimate as previously. The last contract I negotiated was with the [overflow hotel] The Renaissance for Arisia 2013.

    The contracts now are similar in many respects to earlier ones; but each year things evolve. The biggest change has been the the Westin the last few years has (in my opinion), viewed Arisia as a ‘captive customer’ and has been steadily making it more expensive and difficult to do business with them. However, the Force Majeure clauses today are mostly the same as we had 20 years ago.

    The main problem is see with the Aloft contract is the Force Majeure clause mentioned only the [Aloft] hotel’s ability to perform. We should have also considered the possibility that any cancellation of the Aloft contract might be caused by events in the Westin (ie, the strike). In hindsight I think future contracts with overflow hotels should modify this clause to include the possibility of inability of the primary hotel to perform.

    With regards to the Westin, it’s not quite as clear. The Force Majeure clause (appended below) specifically mentions strikes, but also specifies written notice “within 5 days”. The entire clause was originally written to deal with natural disasters, etc (eg, snow storms, hurricanes); and the assumption was that you’d discover the problem a few days before the con and be forced to cancel. When those clauses were originally written we never gave much thought to a problem that might crop up months ahead of time.

    What we should have done is either of:
    1. Keep on planning to hold the con as normal, then cancel at the last second when load-in is about to start but it’s obvious the convention can’t be held.
    2. When the strike started. go to the hotel within the 5-day notice period and either notify them at that time that if the strike isn’t resolved by XXX date you’ll have to cancel, or even better, negotiate a contract addendum that explicitly sets out the dates by which the strike has to be settled or otherwise it’s canceled.

    What Arisia actually did is mostly wait, hoping the strike would settle; then after finding a replacement hotel, we officially notified the Westin we would cancel if it wasn’t settled by the deadline date the replacement hotel specified.

    So the “jury is still out” on the arbitration between the Westin [Marriott] and Arisia. It depends upon who wins, and if Arisia loses how much money we lose. And even then it’s not clear what will happen since a lot will depend upon what Marriott wants. If they want future business with Arisia they’ll probably discuss an offer of a long-term contract in exchange for a reduction of penalty that allows Arisia to still function. If they want to make an example of Arisia for other non-profits then they’ll take a hard line and force Arisia into bankruptcy.

    [And on the bright side, this whole thing will make a great SMOFcon panel.]

    /Skip

    Extracts from the 2016 contract:

    Cancellation:
    [Complete language snipped, but basically either party can cancel “from contract signing through arrival date for $50,000… amount will apply for each year cancelled”.]

    Force Majeure:
    Except as otherwise provided in this Agreement, neither party shall have the right to terminate their obligations under this Agreement. This Agreement is, however, subject to termination for cause without liability to the terminating party, upon written notice to the other party within five (5) days of, or receipt of notice of, any of the following occurrences:
    a. The parties’ performance under this Agreement is subject to acts of God, war, government regulation, terrorism, disaster, strikes, civil disorder, curtailment of transportation facilities, or any other emergency of a comparable nature beyond the parties’ control, making it impossible, illegal or which materially affects a party’s ability to perform its obligations under this Agreement.
    b. In the event that either party shall make a voluntary or involuntary assignment for the benefit of creditors or enter into bankruptcy proceedings prior to the date of the Group’s convention, the other party shall have the right to cancel this Agreement without liability upon written notice to the other.
    c. The Hotel shall promptly notify the Group if there is a change in the management company which operates the Hotel prior to the convention, in which event Group shall have the right to terminate this Agreement without liability upon written notice to the Hotel. In the event of termination under this section, the Hotel shall refund all deposits and/or prepayments made by the Group within five (5) days of the notice of termination.

    Severe Weather:
    In the event of severe weather, as determined by the declaration of a state of emergency, or any closing of Logan Airport, Manchester Airport (NH), TF Green Airport(RI), South Station, Back Bay Station, I-95,I-93 or the Massachusetts Turnpike on the Friday and Saturday arrival dates of each year’s convention, the convention will be credited for the full number of room nights reserved by any persons identified as part of the Convention, regardless of the rate, as if all such persons had arrived to take the rooms reserved. Additionally, the hotel will forgive all room penalty charges normally charged as “no-shows” with guaranteed reservation.

  29. @ Nchanter: My understanding is only based on hearsay, that the force majeure clause for the Aloft included notifying the hotel a specific number of days after the event that caused a party to invoke it. Do I have this correct? In which case Arisia would have had to make the decision within that number of days after the strike began.
    @ Mike: litigation is different from arbitration.

  30. Maybe an occasion for Arisia to ask the striking union for help? “We went to bat for you guys and got stomped, now we’re going to be extinguished if we don’t pay this judgment, can you share some of the burden with us?”

  31. This is complicated. On the one hand Arisia signed contracts for the hotel and willingly broke the contracts which have financial penalties. On the other a significant number of voting members and the board of Arisia Inc. said that they would not cross a picket line during a proposed strike and have strong moral feelings about the matter.

    Simple solution: If you have said, voted, or strongly believe that Arisia shoud break their contract over going against a strike line then simply send $60,000/number of people to Arisia incorporated to cover this expense.

    Moral decisions come with benefits and consequences. Benefits are to be enjoyed (“I held my moral ground by refusing to support a hotel with a strike”) and consequences must be paid (“The legally binding contract was cancelled and fees apply”). You can’t have the benefits without paying the consequences. To do otherwise is morally inconsistent.

    Lest I sound like a hollow shell, I lived this same dilemma recently in my own life: I turned down a job offer that would have paid me $58,623.33 more per year because they included a last minute requirement for a drug test. My moral values from 30 years ago stated that drug tests are idiotic when applied to an entire company and I would never piss in a cup for a job (disclaimer: I do piss in a cup for my pilot’s license, but that is a valid reason IMO as I may be flying over your house). Therefore I have maintained my moral compass and have paid the direct cost of $58,623.33 a year.

    The decision was never in doubt: Sure it’s a drop in the bucket, but a drop in the right bucket (credit Don H).

    We’re old enough to live our personal values: If people do then I am sure Arisia will be fine, and there will be no issues with bankruptcy.

  32. The hotel contracts contain a Force Majeure clause that specifically includes strikes.

  33. @Nico Kadel-Garcia: you have a … singular … definition of “too large” a facility. Arisia reported over 2600 bodies-on-site; the first Seaport Arisia was capped at 3700 (IIRC), although IIRC recent ones have cracked 4000. I find it implausible that the number of people who showed up “would have felt like the last few peas at the bottom of an an empty can.” Note that Arisia also reported ~600 members who didn’t come; the con could not have counted on fitting into a smaller hotel. (IIRC, it was capped at 2500 during the previous run at the hotel they moved to.)

    @Matthew Ryan: the striking union(s?) represent people who are barely scraping by on good days; I doubt there is any extra money for your proposal.

    @Chris Zach (CZ): you are ignoring the entire discussion, with evidence from people directly involved, about whether the hotel could make a reasonable guarantee of performance early enough to make a move/no-move decision possible. This is not merely Arisia taking a high moral position; a struck Westin (as noted repeatedly above) would have been (at least) close to uninhabitable. I also note that your suggestion contravenes the purpose of incorporating.

  34. Chris Zach:

    ” To do otherwise is morally inconsistent.”

    I’ve always found this kind of expression totally useless. First because it depends on everyone accepting the moral of the person making the statement, second because I don’t feel any need to be morally consistent in my actions. My morals might be the same, but how I act on them depends on how much it will cost me and others, how much time it will take and how much it will inconvenience me.

    Also, the idea that a person who wouldn’t buy a 150 dollar ticket should be obliged to send 60 000 dollar to Arisia in compensation is so mindbogglingly stupid that my only conclusion is that you are trolling on an anti-union basis.

    And no, no taking a job is not the same as giving someone 60 000 dollar.

  35. Pingback: AMAZING NEWS FROM FANDOM: 7/14/19 - Amazing Stories

  36. In the contracts for many church events a “force majeure” clause is included in the contract with strikes listed as one of the events that could trigger it.

  37. Pingback: Second Arbitration Decision Goes Against Arisia | File 770

  38. Hampus: CZ suggested each person pay $60k divided by the number of people. Of course with recent news the number would be higher than 60k. Stay tuned…

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