December 10, 2025|Franchise Frontlines
December 10, 2025 | United States District Court for the Western District of Washington | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Lauren King of the United States District Court for the Western District of Washington granted in part and denied in part motions to dismiss in a Trafficking Victims Protection Reauthorization Act (“TVPRA”) action arising from alleged trafficking at a franchised Hawthorn Suites hotel. The plaintiff asserted both perpetrator and beneficiary liability claims under 18 U.S.C. § 1595(a) against Wyndham Hotels & Resorts, Inc. and a now-dissolved franchisee entity. Wyndham argued that the complaint failed to plausibly allege its direct knowledge or participation in the alleged trafficking. The court agreed that the complaint did not plausibly allege direct perpetrator or beneficiary liability as to Wyndham. However, the court held that the complaint sufficiently alleged vicarious liability based on agency and joint employer theories tied to Wyndham’s alleged operational control over the franchisee. The court also dismissed the dissolved Nevada LLC defendant for lack of legal existence.
Relevant Background
The plaintiff alleged that from 2017 to 2019 she was trafficked at multiple Seattle-area hotels, including a Hawthorn Suites property in Kent, Washington. The Hawthorn Suites location operated under a Wyndham franchise. The complaint alleged that traffickers rented rooms for extended periods, that buyers moved in and out of rooms in plain view, that the plaintiff suffered visible physical abuse including bruises and burns, and that hotel staff observed suspicious activity yet failed to intervene.
The plaintiff brought TVPRA claims against Wyndham and the Hawthorn Suites owner entities on both perpetrator and beneficiary liability theories. She asserted both direct liability—based on Wyndham’s alleged inspections, data systems, and awareness of trafficking risks—and indirect liability under vicarious and joint employer theories based on the franchisor-franchisee relationship.
One of the franchisee entities, HSK212, LLC, was a Nevada limited liability company that had dissolved in April 2022. The complaint was filed in February 2025.
Decision
The court first addressed HSK212’s motion to dismiss. Under Nevada Revised Statutes § 86.505(1), a dissolved LLC may be sued for two years following dissolution with respect to claims known or reasonably knowable prior to dissolution. Because the alleged trafficking occurred between 2017 and 2019 and HSK212 dissolved in April 2022, the plaintiff had two years from dissolution to file suit. Filing in 2025 fell outside that period. The court concluded that HSK212 lacked legal existence for purposes of suit and dismissed it from the action.
The court then turned to Wyndham’s motion to dismiss the TVPRA claims.
With respect to perpetrator liability, the court recognized that § 1595(a) allows civil claims against a “perpetrator,” meaning one who directly violates § 1591(a). Such liability requires actual knowledge. The court found that the complaint plausibly alleged that hotel staff had actual knowledge of trafficking based on allegations of extended stays, visible injuries, repeated buyer traffic, and direct interactions with front desk personnel. However, the court concluded that the complaint did not plausibly allege that Wyndham itself had actual knowledge. Allegations that Wyndham conducted inspections, had access to data systems, or was generally aware that trafficking occurs in the hotel industry amounted to “red flag” allegations and were insufficient to establish direct perpetrator liability.
The court next addressed beneficiary liability. To state such a claim, a plaintiff must allege that the defendant knowingly benefited from participation in a venture that it knew or should have known engaged in trafficking. While the court noted that the “knowingly benefitted” element is often satisfied where a hotel receives room revenue, it found that the complaint did not plausibly allege that Wyndham directly participated in the trafficking venture. Awareness of industry risks or failure to prevent trafficking does not equate to participation. The court therefore dismissed the direct beneficiary liability theory against Wyndham.
The analysis did not end there.
The court examined whether the claims could proceed under vicarious liability principles. Although the TVPRA does not expressly reference agency liability, courts presume Congress legislates against the backdrop of common law agency principles. The complaint alleged that Wyndham exercised extensive operational control over the franchisee, including control over training content, employee hiring requirements, inspections, brand standards, data systems, and disciplinary processes. At the pleading stage, these allegations were sufficient to plausibly allege an agency or joint employer relationship.
Because the complaint plausibly alleged that hotel staff had actual knowledge of trafficking and that Wyndham exercised sufficient operational control to support a principal-agent or joint employer relationship, the court held that the TVPRA claims could proceed against Wyndham on a derivative liability theory.
The court rejected the plaintiff’s alter ego theory, finding the allegations insufficient to pierce the corporate veil.
Finally, the court granted leave to amend the dismissed direct liability claims.
Looking Forward
This opinion reflects the increasingly structured approach courts are taking in franchise-based TVPRA litigation.
First, courts are drawing a clear line between direct and derivative liability. Allegations of inspections, brand awareness, and general knowledge of trafficking risks may not suffice to establish direct perpetrator or beneficiary liability absent plausible allegations of actual knowledge tied to specific conduct.
Second, beneficiary liability continues to require more than passive receipt of royalties. Participation in a trafficking venture requires factual allegations that move beyond failure to prevent wrongdoing.
Third, and most relevant for franchisors, operational control remains central to vicarious liability analysis. At the pleading stage, detailed allegations concerning training requirements, inspection authority, reservation systems, hiring standards, and operational mandates may be sufficient to survive dismissal. Whether those allegations ultimately support liability will depend on the evidentiary record developed in discovery.
This decision does not determine that Wyndham is liable. It holds only that the complaint sufficiently alleged a derivative theory based on operational control. For franchisors, the case underscores the importance of clearly delineating brand standards from day-to-day operational control and documenting the limits of authority over franchisee personnel decisions and on-site management practices.
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 LLP 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.
