September 04, 2025|Franchise Frontlines
September 4, 2025 | U.S. District Court for the Northern District of California | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge P. Casey Pitts of the Northern District of California denied a motion to dismiss filed by a hotel franchisor and a franchisee in a human-trafficking lawsuit brought under the Trafficking Victims Protection Reauthorization Act (TVPRA). The plaintiff alleged she was sex-trafficked for more than a year at a franchised DoubleTree property and brought claims under both beneficiary and perpetrator theories. The franchisor argued the allegations were insufficient as a matter of law. The court found the allegations plausible at the pleading stage, including allegations of an agency relationship between the franchisor and franchisee and possible imputation of knowledge, and allowed all claims to proceed.
Relevant Background
The complaint alleged that the plaintiff was trafficked for an extended period at a franchised DoubleTree hotel operated by the franchisee. According to the allegations, hotel staff observed “open and obvious” indicators of trafficking, including repeated check-ins tied to unrelated men, the plaintiff’s lack of possessions, clothing allegedly selected by her trafficker, and a continuous stream of short-stay male visitors. The plaintiff further alleged that sex trafficking was widespread at the hotel and that similar signs were observed regarding other individuals.
The plaintiff also alleged that the franchisor exercised significant operational control, including over room rates, booking systems, hiring and training, staffing levels, maintenance requirements, and security policies. She asserted that the franchisor required franchisees and staff to report suspected criminal activity, including trafficking. Hilton attempted to introduce reservation system records to challenge these allegations, but the court found the records outside the scope of materials it could consider on a motion to dismiss.
Procedurally, the plaintiff moved to proceed under a pseudonym because of the nature of the allegations. The court granted the motion, concluding that the plaintiff’s privacy interests outweighed any prejudice to the defendants.
Decision
The court denied the motion to dismiss, emphasizing the limited nature of its role at the pleading stage and its obligation to assume the complaint’s factual allegations are true.
The court found that the plaintiff adequately alleged an agency relationship between the franchisor and franchisee. Applying federal common-law agency principles, the court concluded that allegations of franchisor control over training, staffing, room rates, booking systems, maintenance, and security policies were sufficient to plausibly plead an agency relationship at this early phase.
On the TVPRA beneficiary claim, the court determined that the plaintiff adequately alleged all required elements. Renting rooms to a trafficker for more than a year plausibly constituted a financial benefit, and allegations of a continuous business relationship were sufficient to plead “participation in a venture” under the civil standard. The court interpreted this element to include participation in an association in fact that allegedly assisted, supported, or facilitated trafficking, rather than requiring a shared criminal purpose.
The court also found that the allegations regarding visible red flags were sufficient to plausibly plead constructive knowledge under the civil standard, noting that the TVPRA allows liability where a defendant “should have known” of trafficking.
On the perpetrator theory asserted against the franchisee, the court held that continuing to rent rooms to a trafficker while allegedly witnessing obvious signs of trafficking could plausibly constitute “harboring” under the TVPRA, which encompasses affording lodging. The court emphasized that this standard requires allegations of actual knowledge or reckless disregard, and found the complaint’s allegations sufficient to proceed at this stage.
Finally, because the plaintiff alleged that the franchisee acted as the franchisor’s agent and that the franchisor required reporting of suspected trafficking, the court found that the complaint plausibly alleged imputation of knowledge to the franchisor. The court noted that these issues would ultimately depend on the factual record developed through discovery.
Looking Forward
This decision may offer franchisors insight into how courts evaluate TVPRA claims at the motion-to-dismiss stage, especially within the Ninth Circuit. Although the court emphasized the narrow procedural posture and assumed the allegations true for purposes of this motion only, the ruling illustrates how plaintiffs may survive dismissal when they allege franchisor control in areas such as security, training, staffing, or reporting.
Because courts may treat allegations of franchisor-required reporting and operational oversight as supporting inferences of agency or imputed knowledge, franchisors may wish to periodically assess the structure of their operational standards, franchise system training, and reporting protocols. Courts in other jurisdictions may reach different conclusions depending on local precedent, the allegations presented, and the specific contractual framework involved.
TVPRA litigation continues to reflect a complex interplay between brand standards, operational oversight, and federal agency principles. Even so, later stages of litigation will depend on actual evidence, and this ruling does not determine liability. Rather, it reflects a court’s willingness to allow claims to proceed where the allegations, viewed in isolation at the pleading stage, plausibly state a claim under the TVPRA.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
