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BEVERLY HILLS, CA-The battle between Starwood Hotels & Resorts Worldwide Inc. and Hilton Hotels Corp. over the launch of Hilton’s latest offering, an upscale lifestyle brand named Denizen Hotels, took another twist yesterday. In a stunning move, Hilton revealed that it has “temporary suspended” the development of the Denizen brand and placed the chain’s top executives on paid administrative leave.

As reported in GlobeSt.com late last week, Starwood filed a corporate espionage lawsuit against Hilton in US District Court for the Southern District of Manhattan. The suit alleges that two former Starwood employees—Ross Klein and Amar Lalvani—stole trade secrets pertaining to Starwood’s W hotels that were then used to develop the Denizen flag. In June of last year, Klein was named global head of luxury and lifestyle brands for Hilton and Lalvani was tapped as global head of luxury and lifestyle development.

According to a press release from Hilton, Klein, Lalvani and their luxury and lifestyle team members have been placed on paid administrative leave while Hilton reviews the situation.

In the statement, Hilton acknowledges the receipt of a federal grand jury subpoena from the US attorney’s office “requesting documents relating to Hilton’s employment of former employees of Starwood and material which Hilton returned to Starwood in February of 2009.”

Prior to coming to Hilton, Klein served as president of Starwood’s luxury brand group, while Lalvani was senior vice president of the luxury group and global head of W development.

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