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.
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