Exclusive Resorts Files Suit Against Private Retreats

By: Destination Club News
Date: December 20, 2003

Exclusive Resorts would like to be concentrating on acquiring members for their new club, but instead are struggling about where to direct their potential clients to learn more about the new luxury travel concept.

Nearly three years before Exclusive Resorts launched, Rob McGrath, Founder and CEO at Private Retreats, Exclusive Resorts' primary competitor, registered the domain www.exclusiveresorts.com. Sitting on the site until now, McGrath elected to "fire up" the site for two days just as Exclusive Resorts planned a substantial marketing campaign, where confused site viewers found "Under Construction" messages at McGrath's site rather than visiting Exclusive Reosrts' official site www.exclusiveresortsllc.com.

The reason? McGrath has accused Exclusive Resorts of playing "very dirty, competitive pool."

In April of 2002, McGrath and Private Retreats allege that they were approached by Brad Handler under the guise of being interested in joining the club. The former eBay in-house lawyer fit the prospective member profile well and Private Retreats assigned thier Executive Vice President of Membership, Lisa Nier-Coulson, to assist Handler in his evaluation. According to Nier-Coulson's records, Handler called repeatedly over three months in 2002 with "questions, questions and more questions." Nier-Coulson estimates that over 100 hours were spent helping Handler from various Private Retreats' employees.

Private Retreats goes on to state that Handler put down a $5,000 reservation deposit to make three trips, all of which were canceled. Handler would receive the club's marketing materials and a list of members that Private Retreats released to Handler for reference checks. McGrath now believes that these exchanges were used to craft Exclusive Resorts' offering, where Handler is the Chief Executive Officer and Co-Founder.

"He picked our brains and then tried to pick off our customers," McGrath said. "We never expected to have this market all to ourselves, but we also never expected competitors to be this nasty and below-the-belt."

Handler's retort was "For him to even insinuate that a lawyer and law professor would do these things is very serious business. These (would be) violations of the code of ethics for the practice of business...and law."

On July 15, 2002, Handler asked for a refund of his $5,000 deposit, stating that the club was not for him. "I don't want to invest in a company with my dollars if I don't understand how they make money."

On December 8th of this year, Exclusive Resorts asked a federal judge to stop Private Retreats from sitting on the site, accusing the club of "cyber-squatting," defined as "registering, trafficking in, or using a domain name with bad faith intent to profit from the goodwill of a trademark belonging to someone else."

According to court records, Steve Case, former AOL chairman who just took over 50% ownership in Exclusive Resorts, has launched a $3 million advertising campaign and many have been inadvertantly finding the site owned by McGrath rather than the club's official site, www.exclusiveresortsllc.com.

"We were certainly disappointed that we had to go to court to stop one of our competitors from trading on our name," said Handler.

McGrath's comments struck a similar tone. "We're all in this for the long haul. At least now we all have a better idea of what we're up against."

Both clubs are currently undertaking major expansions as McGrath has recently launched Distinctive Retreats, a more upscale version of Private Retreats, that allows members unlimited access to a portfolio of $2.5 million homes while Exclusive Resorts has just acquired the assets of two smaller competitors The Odyssey Club and Mirabella Estates.