The Anticipated Rise in Human Trafficking Lawsuits Targeting the Hotel Industry

By Emily Adams Associate, Weinberg Wheeler Hudgins Gunn & Dial | September 13, 2020

This article was co-authored by Shubhra Mashelkar, Partner, Weinberg Wheeler Hudgins Gunn & Dial

The number of civil lawsuits filed against business entities such as hotel and motel chains more than doubled from 2018 to 2019, according to the 2019 Federal Human Trafficking Report published by the Human Trafficking Institute. In 2019 alone, no less than 125 hotel and motel related entities were sued in state and federal courts throughout the country in connection with human trafficking. Id. The number of civil filings is expected to only increase as plaintiffs who allegedly survived human trafficking that was perpetuated on hotel and motel properties continue to receive rulings in their favor.

Federal Anti-Trafficking Laws

Federal human trafficking laws began as criminal statutes only, but have since evolved to include corresponding civil remedies. The Trafficking Victims Protection Act ("TVPA") was first signed into law in October of 2000 under the Clinton Administration for the stated purpose of "combat[ting] trafficking in persons, especially into the sex trade, slavery, and involuntary servitude." The TVPA established strict federal criminal penalties for perpetrators of human trafficking and also established an interagency task force to monitor and combat trafficking and provide services and resources to trafficking survivors.

The TVPA has been reauthorized several times since its original passage; in 2003, 2005, 2008, 2013, 2015 and most recently in 2019. With each subsequent reauthorization the TVPA has been expanded in scope. The most recent version of the TVPA is commonly referred to as the Trafficking Victims Protection Reauthorization Act ("TVPRA").

Pursuant to the TVPRA, a person has committed the criminal offense of forced labor when he or she:

[K]nowingly provides or obtains the labor or services of a person by any one of, or by any combination of, the following means--(1) by means of force, threats of force, physical restraint, or threats of physical restraint to that person or another person; (2) by means of serious harm or threats of serious harm to that person or another person; (3) by means of the abuse or threatened abuse of law or legal process; or (4) by means of any scheme, plan or pattern intended to cause the person to believe that, if that person did not perform such labor or services, that person or another person would suffer serious harm or physical restraint. (18 U.S.C.A. § 1589(a)(1-4)).

Likewise, a person has committed the criminal offense of sex trafficking as defined by the TVPRA when he or she:

Knowingly […] recruits, entices, harbors, transports, provides, obtains, advertises, maintains, patronizes, or solicits by any means a person […] knowing that means of force, threats of force, fraud, coercion […] or any combination of such means will be used to cause the person to engage in a commercial sex act, or that the person has not attained the age of 18 years and will be caused to engage in a commercial sex act. (18 U.S.C.A. § 1591(a)).

The TVPRA now also imposes criminal liability on anyone who "knowingly benefits, financially or by receiving anything of value, from participation in a venture which has engaged in [forced labor or sex trafficking]" as described above. (18 U.S.C.A. § 1589(b); 18 U.S.C.A. § 1591(a)(2)).

Amongst the numerous reauthorizations of the TVPRA, of particular import to the hospitality industry is the 2003 Reauthorization, which provided an avenue for civil lawsuits to be filed by a victim of human trafficking against the actual perpetrators "or whoever knowingly benefits, financially or by receiving anything of value from participation in a venture which that person knew or should have known has engaged in an act in violation of this chapter." (18 U.S.C.A. § 1595). 

It is through this civil remedy provision that dozens of hotel and motel-related entities have been sued in federal courts throughout the country for allegedly reaping the financial benefits of sex trafficking.

State Anti-Trafficking Laws

In the same year that the federal TVPRA was expanded to include a civil remedy, the state of Washington became the first state to criminalize human trafficking (including forced labor, sex trafficking and involuntary servitude). By 2013, every state in the United States criminalized forced labor and sexual servitude. (Wash. Rev. Code Ann. § 9A.40.100 (West)).

Recently, state lawmakers have expanded their respective criminal statutes to allow businesses and corporations to be prosecuted for trafficking crimes under certain circumstances. For example, in states including Alabama, Georgia, Mississippi and Rhode Island, businesses can be fined on a per offense basis for violations of human trafficking statutes.

While states have not yet designated a civil cause of action against corporations for participation in human trafficking, state laws such as Racketeer Influenced and Corrupt Organizations (RICO) statutes provide potential avenues for victims of sex trafficking to file a civil lawsuit against hospitality industry entities.

Human Trafficking Lawsuits Pending Against Hospitality Entities

Relying upon the TVPRA's civil remedy mechanism described above, and believed to be the first lawsuit of its kind, a woman named Lisa Ricchio sued a Massachusetts motel and its managers in federal court in October of 2015, for allegedly benefitting financially from her forced sex trafficking. (Ricchio v. Bijal, Inc. d/b/a Shangri-La Motel, et al., No. 1:15-cv-13519 (D. Mass filed October 7, 2015)).

Ricchio also named the man who she alleged enticed and held her captive in the motel as a defendant alongside the motel and its managers. Id. Ricchio settled with the motel and its managers in early 2020. During the pendency of her case, dozens of human trafficking lawsuits against hotel and motel entities were filed in state and federal courts throughout the country.

In December of 2019, plaintiffs in 38 human trafficking lawsuits pending in 12 different federal courts petitioned the United States Judicial Panel on Multidistrict Litigation to centralize the actions. (In Re: Hotel Industry Sex Trafficking Litigation, MDL No. 2928, ECF No. 1 (December 9, 2019)). The plaintiffs argued that their cases involved similar failures by the various hotel chains to prevent and respond to the alleged sex trafficking that occurred at the hotel properties. Id. Specifically, the plaintiffs argued that the defendants "knew or should have known that plaintiffs were being trafficked, and that defendants participated and knowingly financially benefited by renting rooms to the alleged traffickers in violation of the TVPRA." Id.

Ultimately, the panel denied the plaintiffs' motion for centralization, finding that each plaintiff's alleged sex trafficking involved more unique aspect issues (such as different geographic locales, different witnesses, and different indicia of sex trafficking during differing time periods). (In Re: Hotel Industry Sex Trafficking Litigation, MDL No. 2928, ECF No. 265 (February 5, 2020)). As a result, the lawsuits alleging violations of the TVPRA (and in some instances, state anti-trafficking laws) will proceed in a minimum of 12 district courts in the coming months.

To date, TVPRA lawsuits against hotel and motel defendants have survived the motion to dismiss stage in Massachusetts, Ohio, Georgia and Pennsylvania federal courts.  In addition to statute of limitations defenses, much of briefing has focused upon the scienter or "knowing" component of the TVPRA, which provides a civil remedy against one who "knowingly benefits, financially or by receiving anything of value from participation in a [human trafficking] venture." (18 U.S.C. §1595(a)). Most recently, the United States District Court for the Southern District of Ohio interpreted the statutory language as follows:

Defendants need not have actual knowledge of the sex trafficking in order to have participated in the sex trafficking venture for civil liability under the TVPRA, otherwise the "should have known" language in § 1595(a) would be meaningless. This Court finds Plaintiff has alleged sufficient facts to show Defendants "participated in a venture" under § 1595 by alleging that Defendants rented rooms to people it knew or should have known were engaged in sex trafficking. (A.C. v. Red Roof Inns, Inc., No. 2:19-CV-4965, 2020 WL 3256261, at *7 (S.D. Ohio June 16, 2020).

Additional defense nuances include whether the entity is a franchisor or the operator/manager entity. For example, in a set of TVPRA cases pending in the Northern District of Georgia, plaintiffs, who are proceeding anonymously as Jane Doe 1, 2, 3 and 4 named a variety of defendants including local hotel operator/managers, franchisees, franchisors and corporate parent entities. United States District Court Judge McCrary "Billy" Ray dismissed certain defendants in April of 2020, explaining that:

Plaintiff has failed to allege that the Franchisor and Corporate Affiliate Defendants ever dealt with the Plaintiff herself, nor has she ever made any allegations that would make such interactions plausible. The fact that a franchisor may conduct inspections of a franchised property by itself is insufficient to impart knowledge of trafficking activity upon a franchisor or that a franchisor should have known of such trafficking activity. (Doe 3 v. Red Roof Inns, Inc., 1:19-CV-03843-WMR, 2020 WL 1872333, at *3 (N.D. Ga. Apr. 13, 2020).

The Georgia plaintiffs have appealed the dismissal of franchisor entities to the 11th Circuit Court of Appeals, and the Georgia plaintiffs' claims against the franchisee and operator/manager defendants are stayed pending the outcome of the appeal.

Ms. Mashelkar This article was co-authored by Shubhra Mashelkar. Shubhra R. Mashelkar is an Atlanta-based partner with the law firm of Weinberg Wheeler Hudgins Gunn & Dial, LLC. Her practice principally focuses on civil litigation with emphasis on product liability, environmental and toxic tort, professional liability and catastrophic injury. Ms. Mashelkar has a broad range of litigation experience, having litigated and resolved cases involving serious injury and wrongful death in Arkansas, California, Florida, Georgia, Illinois, Louisiana, Michigan and Mississippi. She serves as regional trial counsel for a manufacturer of products containing asbestos. Ms. Mashelkar is also a member of the American Bar Association, Atlanta Bar Association, Georgia Asian Pacific American Bar Association and South Asian Bar Association of Georgia. Additional areas of practice include class actions, consumer litigation, healthcare, medical device/pharmaceutical, premises liability & negligent security, transportation and professional liability.  

Ms. Adams Emily Adams is an associate with the law firm of Weinberg Wheeler Hudgins Gunn & Dial, LLC. She focuses her practice principally on complex commercial litigation with an emphasis on products liability, healthcare litigation and matters involving regulatory compliance. Ms. Adams' corporate defense experience ranges from single plaintiff matters to large scale multidistrict litigations. In addition to her corporate defense practice, she provides pro bono legal services through multiple non-profit organizations serving individuals in need throughout the greater Atlanta area. Examples include the Truancy Intervention Project, GA, Kids in Need of Defense and the Atlanta Volunteer Lawyers Foundation. Ms. Adams also serves as an alumni coach for the Emory Law Mock Trial Society. Emily Adams can be contacted at +1 404-591-9606 or eadams@wwhgd.com Please visit http://www.wwhgd.com/ for more information. Extended Biography

HotelExecutive retains the copyright to the articles published in the Hotel Business Review. Articles cannot be republished without prior written consent by HotelExecutive.

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You hereby authorize HotelExecutive's Internet Payment Service Provider to charge your credit card to pay for your membership to HotelExecutive. You further authorize HotelExecutive's Internet Payment Service Provider to charge your credit card for any and all purchases of products, services in association with HotelExecutive. You agree to be personally liable for all charges incurred by you in association with your access or other use of any content provided by HotelExecutive or any third party in association with HotelExecutive. You acknowledge and agree that your liability for all such charges shall continue after termination of your access or any type of membership arrangement with HotelExecutive.

In the event that you have chosen to have your membership automatically rebilled, unless and until you notify HotelExecutive that you wish to cancel or terminate your membership to HotelExecutive, you hereby agree and authorize HotelExecutive's Internet Payment Service Provider to automatically renew your membership to HotelExecutive on a continuing basis and to charge your credit card (or other payment means you have selected) to pay for the ongoing cost of your membership. You hereby further authorize HotelExecutive's Internet Payment Service Provider to charge your credit card (or other approved payment means you have selected) for any and all purchases of products, services and entertainment provided to in, at, through or in association with HotelExecutive.

13. PRIVACY POLICY

The following is the Privacy Policy for HotelExecutive

We can be reached via telephone, email, or online at our contact page. When you visit our site we do not log any information regarding your domain or email address. Information Sharing: We do not share user information with any third parties other than via press release distribution as described below.

Hotel Newswire is a newswire service that distributes press releases on behalf of our users. If you decide to submit a press release for distribution through our system we will transmit your entire press release including any personal information therein contained to our media contacts and online distribution points including search engines. This is the only redistribution of your information that we engage in. Your submission of press releases through our system indicates consent with this policy. The information we collect during your registration process is used to notify users about updates to our service and inform users of any special events hosted by Hotel Newswire. This information is not shared with other organizations for commercial or non-commercial purposes.

Cookies: Our system requires the use of cookies to enable the user to log back into our website to access information from the newswire, without having to log in each time using the required username and password.

If you do not want to receive email from us in the future, please let us know by following instructions included in our communication with you. Users who supply us with telephone numbers online may receive telephone contact from us regarding their account, or informing them of new products and services available on the HotelExecutive website. If you do not wish to receive such telephone calls, please edit your account and remove your phone number from your account profile. This can be done from your user account menu.

Ad Servers: We do not partner with or have any relationship with any ad server companies. From time to time, we may use customer information for new uses not previously disclosed in our privacy notice. If our information practices change at any time, we will post the policy changes to our website to notify you of these changes and provide you with the ability to opt out of these new uses. If you are concerned about how your information is used, you should check back at our website periodically.

Upon request we provide site visitors with access to all information (including proprietary information) that we maintain about them. Users can access this information by logging in to their account.

Security: We always use industry-standard encryption technologies while transferring and receiving user data exchanged with our site. We have appropriate security measures in place in our physical facilities to protect against the loss, misuse, or alteration of information that we have collected from you on our site. We do not store credit card information in our systems.

If you feel that this site is not following its stated information policy, you may contact us.

COVID-19: VOICES IN A TIME OF CRISIS

Zoe Connolly

Everyone reacts to a crisis in their own way. Some retreat into their own silo whereas others seek to collaborate. As an industry, the speed of recovery depends on the latter as travelers expect to travel safely and can stay healthy throughout their journey. We call this transparency, and it... Read on...

Robert Gilbert
Lorraine Abelow
Grace Kang
Mike Sawchuk
David Lund
Paul van Meerendonk
Bonnie Knutson
Jonathan Sockell
Kalen Willis
Michael Barbera
Coming up in October 2020...

Revenue Management: Maximizing Profit

Hotel Revenue Management continues to evolve at a blistering pace. Driven by technological innovation and new distribution channels, there are some dynamic opportunities for expansion in this fast-growing field. The technology is primarily designed to help revenue managers further refine their operations and pricing models to maximize hotel profit. For example, hotels can't be all things to all people, so a key strategy is to precisely identify their target audience. By employing geo-targeting techniques and analyzing behavior such as previous bookings, on-property purchases and online shopping practices, there is an increased capability to define guest demographics. By segmenting customers in more specific ways, hotels are able to create more personalized experiences which, in turn, allow managers to optimize their room rates. It is also an effective way to fulfill the unique needs and preferences of the individual. Another methodology is to consistently monitor the competition's pricing strategies. There are software tools that analyze a competitor's current rates, and then allow a hotel to make its own pricing adjustments. It is also a useful means to conduct forecasting models. Other technologies that are being integrated into a revenue manager's toolkit include Artificial Intelligence in the form of automated algorithms, and Voice Recognition (VR) for data inquiries, rate changes, and booking behavior. Predictive and analytic software programs are also being leveraged to provide more forward-looking data, instead of the usual reliance on historical performance. These metrics allow managers to be more proactive - rather than reactive - with their revenue strategy. The October issue of the Hotel Business Review will examine these developments and report on how some leading hotels are executing their revenue management strategies.