There is a new and rapidly growing trend in litigation across the country that is impacting business lines in corporate America: Sex trafficking victims are filing civil suits against corporate entities. The victims seek significant monetary damages and allege corporate-entity participation in the sex trafficking epidemic.
Recently, there has been a push of such cases against the hospitality industry. The claimed participation of hospitality businesses is not based upon allegations of direct criminal activity, or even direct contact with the victim, but rather that hotel entities—or merely the entities that entered into a franchise license agreement for the use of their brand—turned a blind eye to signs of trafficking occurring at subject hotels. These cases also assert that the hotel industry at large has profited through payment for room rentals and other incidentals by traffickers who used the hotels to engage in criminal acts. As of May 2020, there are over 70 lawsuits filed across the country, with more being filed all the time.
The law surrounding these claims is developing, as the courts are tasked with interpreting the statutory framework governing them. The potential reach of claims extends to various platforms that provide unintended opportunities for traffickers to transport their victims, including hotels, bars, adult entertainment clubs, websites, software developers, and any platform or business that receives an unknowing benefit from the trafficking venture.
Background of Federal Law
In 2000, the U.S. Congress passed the Trafficking Victims Protection Act (TVPA) in order to combat sex and human trafficking. This early iteration of the anti-trafficking legislation created criminal liability for forced labor and sex trafficking. A few years later, Congress passed 18 U.S.C. § 1595, known as the Trafficking Victims Protection Reauthorization Act of 2003 (TVPRA), which established a federal civil right of action by victims of trafficking against their traffickers.
Most recently, in 2008, the TVPRA was amended to include a provision allowing a victim to bring a civil suit against the perpetrator 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” sex trafficking. The 2008 amendment to the TVPRA “opened the door for liability against facilitators who did not directly traffic the victim, but benefitted from what the facilitator [knew or] should have known was a trafficking venture,” as noted in A.B. v. Marriott Int’l Inc., No. CV 19-5770, 2020 WL 1939678, at 7 (E.D. Pa. Apr. 22, 2020), citing Gallant Fish, No Rest for the Wicked: Civil Liability Against Hotels in Cases of Sex Trafficking.
Pending Litigation Trends
The inclusion of the “should have known” language in the 2008 amendment has created a flood of standalone claims filed under Section 1595 of the TVPRA against members of the hospitality industry, without reference to, or the inclusion of, claims against the trafficker. Over the past year, several plaintiffs’ attorneys have filed private civil actions under the TVPRA using this statute as an avenue to seek large damage awards against major corporate hospitality entities.
The complaints all contain similar allegations that hotel defendants turned a blind eye to sex trafficking at the subject hotels by ignoring red flags, such as:
• Room rentals by the trafficker with cash or prepaid credit cards.
• Requests by the trafficker for two keys.
• Trash cans containing indicators of commercial sex.
• Refusal of housekeeping services.
• Excessive requests for towels and linens.
• Avoidance of eye contact by the victim.
• Visible physical injuries.
Plaintiffs go one step further and allege that these defendants violated the TVPRA by failing to take reasonable steps to prevent human trafficking, such as failing to implement training that would help prevent human trafficking, and failing to conduct audits to confirm such training has been implemented.
Regardless of the specific allegations in any one of these suits, the basis for imposing liability is that the corporate hotel chains knew or should have known that criminal sex trafficking occurred on their properties; could have prevented it with training resources; and failed to do so, all the while accepting the financial benefit from the room rentals.
The hospitality sex trafficking cases are still in the early stages of litigation, and there is no settled law regarding corporate liability for the hospitality industry under the TVPRA. In fact, the trial court decisions on several motions to dismiss demonstrate a split of authority on the conduct covered under the TVPRA and the legal standards required to obtain dismissal.
A majority of decisions have held that allegations of a benefit received from the rental of a hotel room constitute a financial benefit from a relationship with the trafficker sufficient to overcome a motion to dismiss and meet this element of the Section 1595(a). The courts are also in agreement that Section 1595 does not require actual knowledge of the sex trafficking venture occurring on the property, only allegations that a hotel should have known of the sex trafficking. However, the district courts are split on the meaning of “participation in a venture” under Section 1595(a) of the TVPRA.
Some courts, such as in Jane Doe 1 v. Red Roof Inns Inc. et al., 1:19-cv-03840-WMR, 2020 WL 1872335 (N.D. Ga. Apr.13, 2020), have taken the position that liability under the TVPRA requires allegations that a defendant “knowingly assist[ed], support[ed], or facilitate[ed]” the sex trafficking. In other words, in order to participate in an act, the defendant must have knowledge of the act or the venture it was participating in. This is in contrast to merely being associated with the trafficking by virtue of it occurring on the property.
On the other end of this debate are cases that have held the TVPRA does not require actual knowledge of participation, such as in M.A. v. Wyndham Hotels & Resorts Inc. No. 19-849, 2019 WL 492927 (S.D. Ohio October 7, 2019). All that is required are allegations that the hotel defendant rented rooms that it knew or should have known would be used for sex trafficking.
New cases are being filed all the time, and hospitality defendants are filing various motions seeking dismissals of these cases in jurisdictions all over the country. Given the current legal uncertainty surrounding the scope of these claims, along with the potential reach into various business platforms, it is imperative that corporate America and counsel representing their business interests understand the constantly evolving landscape of law and employ concerted defense efforts to fight these claims and limit the floodgates from opening further in the area of civil sex and human trafficking lawsuits.