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Judge Scheindlin

PLAINTIFFS SUED Hilton Hotels Corp., Doubletree Corp., and Red Lion Inc. for common-law fraud, negligent misrepresentation, and fraudulent omission arising from the Red Lion hotel franchise agreements plaintiffs entered into with defendants. Plaintiffs alleged they were victims of a “bait and switch” strategy through which defendants induced them to sign long-term franchise agreements by misrepresenting Hilton/Doubletree’s plans to retain the Red Lion hotel chain. Plaintiffs claimed that during their franchise negotiations with defendants, defendants had already decided to sell Red Lion to a smaller, less profitable hotel chain and that defendants pursued the franchise agreements with plaintiffs to increase Hilton/Doubletree’s profits in the planned resale of Red Lion. The court, among other things, denied defendants’ motion to dismiss, holding that plaintiffs may be able to show that defendants’ oral promises about their long-term plans to grow Red Lion were made with an intent not to perform.

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