August 20, 2025|Franchise Frontlines
(This article addresses only the court’s rulings on equitable tolling and res judicata, as those issues are most pertinent for franchisors and employers. It does not analyze the broader statute of limitations framework under the TVPRA, including discovery-based accrual theories, which were raised by the parties but not essential to this discussion.)
August 20, 2025 | United States District Court for the Eastern District of California | Unpublished Opinion
Executive Summary
In an unpublished order, Judge Kimberly J. Mueller of the Eastern District of California granted in part and denied in part Red Roof Franchising LLC’s (“RRF”) motion for judgment on the pleadings. Plaintiff J.M., who alleges she was trafficked in a Stockton, California Red Roof Inn between 2006 and 2012, previously lost a summary judgment ruling against Red Roof Inns, Inc. (“RRI”). In this second suit against RRF and a local franchisee, RRF argued the claims were barred by the statute of limitations and by res judicata from the prior litigation. The court declined to dismiss the TVPRA claims on statute of limitations grounds, holding that equitable tolling could apply, and further rejected RRF’s res judicata argument because the prior judgment did not decide RRF’s liability.
Relevant Background
J.M. alleges she was trafficked in a Stockton Red Roof Inn until 2012. She filed her first suit in April 2022 against RRI, asserting civil claims under the Trafficking Victims Protection Reauthorization Act (“TVPRA”), 18 U.S.C. § 1595(a). The district court entered summary judgment for RRI in October 2024, finding insufficient evidence that RRI or its employees knew of or benefitted from the trafficking. J.M. appealed that ruling. While the appeal was pending, she filed a second lawsuit in 2024, this time naming RRF and PDK Hospitality Franchising LLC (“PDK”), the local operator of the Stockton property, as defendants. In that action, she alleged beneficiary and conspiracy liability under § 1595. RRF moved for judgment on the pleadings, arguing that the TVPRA’s ten-year statute of limitations had run and that res judicata barred relitigation after the RRI judgment.
Decision
RRF first argued the claims accrued in 2012 when J.M. escaped her traffickers, more than ten years before she filed this action in 2024, rendering them untimely under 18 U.S.C. § 1595(c). The court agreed that the TVPRA does not include a discovery rule, citing Rotkiske v. Klemm, 589 U.S. 8, 14 (2019), and held that TVPRA claims normally accrue when the wrongful conduct ends. However, Judge Mueller found it was not “obvious on the face of the complaint” that the claims were time-barred because equitable tolling may apply. The court emphasized J.M.’s allegations of lasting psychological trauma, forced drug dependency, and the murky corporate structure between RRI and RRF that complicated her earlier lawsuit. Because equitable tolling requires a fact-intensive inquiry into diligence and extraordinary circumstances, the issue was reserved for summary judgment.
RRF also argued that equitable tolling was unavailable because J.M. had already filed a lawsuit against RRI in 2022 and could have joined RRF as a defendant at that time. The court acknowledged that contention but, in light of the allegations of trauma and the persistent uncertainty over the respective roles of RRI, RRF, and the local operator reflected in the prior case record, concluded it could not determine “on the face of the complaint”—and certainly not “beyond doubt”—that tolling was foreclosed. The court emphasized that whether J.M. acted diligently and whether she reasonably could have added RRF earlier are fact-intensive issues for discovery and, if appropriate, summary judgment.
On res judicata, RRF asserted that J.M.’s claims were precluded by the judgment in her earlier action against RRI. Specifically, RRF argued that J.M. had already litigated and lost the central issue of whether Red Roof corporate entities had knowledge of and benefitted from trafficking at the Stockton hotel. In RRF’s view, because the 2022 action ended in summary judgment for RRI, J.M. should not be permitted to pursue essentially the same theory against RRF in this new lawsuit.
The court analyzed this under the doctrine of issue preclusion. Under federal common law, issue preclusion applies only if the issue is identical to one decided in the prior proceeding, was actually litigated and resolved, and was necessary to the judgment. See Taylor v. Sturgell, 553 U.S. 880, 892 (2008). Judge Mueller explained that while the 2022 case determined whether RRI could be held liable as a beneficiary under the TVPRA, this case was directed at RRF, a different entity. The issues were not identical. The earlier summary judgment ruling concerned whether RRI’s employees or information relayed directly to RRI supported knowledge and benefit. That case did not resolve whether RRF, as franchisor of the Stockton property, independently knew or should have known about trafficking or benefitted from it.
The court also noted that the record in the earlier case contained ambiguous corporate testimony and unclear documents, leaving the relationship between RRI and RRF unsettled. This lack of clarity confirmed that the issue of RRF’s liability was not actually litigated or decided. For these reasons, the court denied RRF’s motion for judgment on the pleadings based on res judicata and allowed J.M.’s claims to proceed.
Looking Forward
The order reflects a procedural opening that may allow plaintiffs to relitigate claims that otherwise appear to be time-barred or foreclosed by prior judgments. By declining to dismiss on statute of limitations grounds, the court signaled that equitable tolling arguments tied to trauma or corporate confusion may be sufficient to survive the pleading stage, even when more than a decade has passed since the alleged conduct. Similarly, by limiting the reach of res judicata, the court permitted litigation to proceed against a related entity despite an earlier ruling in favor of the corporate parent.
For franchisors and employers, this decision highlights how facially strong procedural defenses may not end a case early if the court perceives uncertainty about diligence, corporate structure, or entity-specific liability. The effect is that defendants may find themselves defending claims longer than expected, even where the allegations seem barred on their face.
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.
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