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Legal Fight Between the San Jose Fairmont Hotel and the
 National Venture Capital Association Goes Public
Norovirus Infection vs Non-payment of Bill

By Scott Herhold, San Jose Mercury News, Calif.McClatchy-Tribune Business News

Nov. 12, 2006 -- This is the year for San Jose to be kicked in the face. First our mayor was indicted in a garbage scandal for essentially acting like a politician. Then Lew Wolff abandoned our city for the cosmopolitan allure of an empty plot in Fremont as the site of a new ballpark. And at five minutes before midnight, Nvidia broke off a deal with John Sobrato to occupy his empty high-rise downtown.

Yes, I know the Oakland A's and the 49ers may or may not be getting closer. And not all of the disappointment is cause for weeping. Rejection reflects a city's ambition, in the same way that a teenager turned down for a date at least has shown enough pulse to ask.

But what sends me howling to my rooftop is San Jose's penchant for contorting its fragile body politic and delivering the blow to itself.

An outbreak

That brings me to the legal fight between the Fairmont Hotel and the National Venture Capital Association, which was first reported by the Business Journal.

Here's the gist: Last April 26 and 27, the venture capitalists held a conference at the Fairmont. When it was done, more than 100 who attended fell sick with gastrointestinal ailments, including diarrhea and vomiting. A probe by the county health department pointed to a food handler -- known as "Foodhandler A" -- who came to work sick and infected the food, notably one day's pastrami sandwiches.

The venture capitalists are not amused. "We feel as if the conference was ruined based on conditions that existed at the Fairmont," said Emily Mendell, the NVCA's vice president for strategic affairs, who says one participant crashed her rental car in the Fairmont's parking area because she was throwing up.

So the venture capitalists, who put down a $150,000 deposit with the Fairmont, have refused to pay the remaining $139,000 on their bill. And last month, after talks failed, the Fairmont sued the NVCA in Santa Clara County Superior Court to recover the money.

"The bodies could not reach an agreement," said Cyril Isnard, general manager of the Fairmont, when I asked him why the hotel had sued. Pressed about the NVCA's view that the conference was ruined, he added, "We do not agree."

The Fairmont remains a quality operation. Isnard says this is first time something like this has happened. You can also make a case for the hotel's tough stance. Nobody runs an effective business by quickly rolling over in contract disputes. After all, 139K is 139K. "We do everything to preserve our reputation," said Isnard. "That shouldn't impact how we handle our differences."

Bad publicity

But sorry: I come down on the other side. I think of the lawsuit as a self-inflicted wound that should be stopped before it hemorrhages.

First, it brings nothing but bad publicity to the Fairmont. The county health department report, which was assembled after an online survey of venture capitalists at www.surveymonkey.com, leaves little doubt the infection started with a food handler.

Second, the Fairmont may not fully understand who their adversaries are. This isn't the Fellowship of Reconciliation. Venture capitalists serve on the boards of a huge swath of companies that hold conferences. They have clout. And some of them have said they won't recommend San Jose as a destination.

"At this point, we're not planning to return to San Jose, and certainly not to the Fairmont," said the NVCA's Mendell. "One of the things driving that is their unwillingness to work with us on a settlement."

Online Extra

Go to www.mercurynews.com/news to view the Fairmont's lawsuit and the Santa Clara County Health department report.

Contact Scott Herhold at sherhold@mercurynews.com or (408) 920-5877.

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Copyright (c) 2006, San Jose Mercury News, Calif.

Distributed by McClatchy-Tribune Business News. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA. NASDAQ-NMS:NVDA,


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