August 15, 2025|Franchise Frontlines
August 15, 2025 | United States District Court for the District of New Jersey | Unpublished Opinion
Executive Summary
In an unpublished opinion, Judge Michael E. Farbiarz of the District of New Jersey denied without prejudice a motion to dismiss for lack of personal jurisdiction filed by Om Krupa Maa LLC, a Texas Days Inn franchisee. The plaintiff alleged she was sex trafficked at the franchisee’s Texas hotel and asserted claims under the Trafficking Victims Protection Reauthorization Act (“TVPRA”), 18 U.S.C. §§ 1581 et seq., for both perpetrator and beneficiary liability. The defendant argued New Jersey lacked personal jurisdiction. The court concluded that the jurisdictional claims were not “clearly frivolous”—a notably low threshold—and permitted jurisdictional discovery based on the franchisee’s alleged contractual and operational ties to Wyndham’s New Jersey headquarters.
Relevant Background
The plaintiff, proceeding under a pseudonym, alleged that she was trafficked for sex at a Days Inn hotel operated in Texas by Om Krupa Maa LLC. According to the complaint, Om Krupa Maa was a franchisee of Wyndham Hotels & Resorts, Inc. and its affiliate Days Inn Worldwide, Inc., both headquartered in New Jersey. The franchise agreement allegedly required the franchisee to follow systemwide rules and policies emanating from New Jersey, including those relating to safety, security, anti-trafficking measures, employee training, and incident response. The plaintiff alleged that the franchisee had to report information about trafficking incidents to Wyndham’s New Jersey headquarters, that employees received training materials on anti-trafficking protocols from New Jersey, and that representatives were required to attend training sessions in the state.
The plaintiff further claimed that Wyndham and its franchisees operated as a “venture” that facilitated trafficking. Wyndham was alleged to have implicitly approved franchisee decisions not to report or adequately respond to criminal activity, including trafficking, while retaining control over hotel operations related to room rentals and guest safety. The plaintiff asserted that these contractual obligations and operational oversight tied the Texas franchisee to New Jersey and made the forum a proper place to litigate her TVPRA claims. Om Krupa Maa moved to dismiss on personal jurisdiction grounds, arguing it had no meaningful contacts with New Jersey. The other defendants, including Wyndham, did not join the motion.
Decision
The court explained that jurisdictional discovery should ordinarily be permitted unless the claim is “clearly frivolous.” Mass. Sch. of L. at Andover, Inc. v. Am. Bar Ass’n, 107 F.3d 1026, 1042 (3d Cir. 1997). Although Andover addressed corporations, Judge Farbiarz extended its reasoning to limited liability companies, citing Caduceus, Inc. v. Univ. Physician Grp., 713 F. Supp. 3d 30, 39 (D.N.J. 2024), which observed that “courts are expected to avoid potentially difficult legal questions when they can. And all the more so when the legal questions are constitutional.” He emphasized that plaintiffs often lack pre-discovery access to LLC information, and constitutional avoidance principles favored allowing discovery in close cases.
At this preliminary stage, the court found three points sufficient to allow jurisdictional discovery. First, it found that the franchisee had purposefully availed itself of New Jersey by contracting with a New Jersey-based franchisor, following the reasoning of Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479–82 (1985), where a Michigan franchisee was held to have availed itself of Florida jurisdiction by affiliating with a Florida franchisor. Second, the court determined that the plaintiff’s TVPRA claims bore a “strong relationship” to New Jersey because the franchisee was allegedly required to report trafficking-related information, follow anti-trafficking policies, and receive training from Wyndham’s headquarters. See Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 592 U.S. 351, 365 (2021) (explaining that specific jurisdiction exists where the claims “arise out of or relate to” the defendant’s contacts with the forum). Third, the court held that the defendant failed to show that jurisdiction in New Jersey would be unreasonable under the fairness factors set out in Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), and O’Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 324 (3d Cir. 2007). Reiterating that the allegations were not “clearly frivolous,” the court declined to dismiss the case at this stage and instead permitted jurisdictional discovery.
Looking Forward
For the franchise industry, this decision underscores how weak precedent for personal jurisdiction can become a vehicle for forum shopping. By crediting allegations that a franchisee’s reporting, training, and compliance obligations created ties to the franchisor’s home state, the court allowed litigation in a forum more than 1,300 miles away—over a four-hour flight—from where the alleged conduct occurred. For franchisors and franchisees alike, this creates fertile ground for plaintiffs to strategically select courts that may be perceived as more favorable, and a mechanism to increase costs to defendants.
Perhaps more significant was the deferential language of the decision. By permitting these claims to proceed so long as they are “not clearly frivolous,” and by expressing a reluctance to resolve “close calls,” the court demonstrated just how difficult it has become to obtain dismissal at the initial pleading stage—even in circumstances that may seem facially obvious. Predatory plaintiffs’ attorneys are increasingly exploiting this reluctance, and forcing defendants to either incur substantial fees and costs to defeat the case, or to settle it. These tactics amount to nothing short of legally cognizable extortion.
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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