October 14, 2025|Franchise Frontlines
October 14, 2025 | U.S. District Court for the Eastern District of Pennsylvania | Unpublished Opinion
Executive Summary
In an unpublished decision, Judge Gerald J. Pappert of the Eastern District of Pennsylvania denied Choice Hotels International’s motion to dismiss a civil action arising under the Trafficking Victims Protection Reauthorization Act (TVPRA). The plaintiff, identified as R.K., alleged that she was sex trafficked at the Radisson Hotel Valley Forge in King of Prussia over a two-year period and asserted that Choice “knowingly benefited” from and “participated in a venture” that allegedly engaged in trafficking. Choice argued that the complaint failed to meet the pleading standards for beneficiary liability under 18 U.S.C. § 1595(a) and contended that the plaintiff had not plausibly alleged knowledge, participation, or benefit. Choice also moved to dismiss vicarious liability claims, asserting that franchisors cannot be liable for the actions of franchisees and their employees. The court rejected these arguments and held that the complaint plausibly alleged (1) beneficiary liability under § 1595, (2) a commercial venture between Choice and the Radisson, (3) constructive knowledge of a TVPRA violation, and (4) a potential agency relationship sufficient for vicarious liability at the pleading stage. While the court emphasized that it was accepting the allegations as true solely for purposes of Rule 12(b)(6), the decision provides insight into how courts may evaluate TVPRA claims involving franchise systems.
Relevant Background
For purposes of the motion to dismiss, the court accepted the allegations describing R.K.’s circumstances while she was trafficked at the Radisson Hotel Valley Forge. According to the complaint, R.K. met her trafficker in 2015, when she was twenty years old, and he allegedly gained complete control of her life by threatening and abusing her, depriving her of necessities, and coercing her into commercial sex acts. The complaint alleges that the trafficker selected the Radisson because it provided an anonymous, central location where individuals involved in trafficking could avoid detection. R.K. asserts that she was forced to stand outside the hotel to solicit customers, that her trafficker used the hotel’s Wi-Fi to post online advertisements, and that she was compelled to engage in commercial sex “hundreds of times” in hotel rooms rented by her trafficker.
The complaint describes a series of red flags that R.K. maintains were visible to the hotel’s staff, including requests for rooms in isolated areas of the property, evidence of drug use, frequent linen changes, a high volume of male visitors to the same room, and the appearance of women dressed in ways inconsistent with the weather. R.K. alleges that she was repeatedly seen in a bruised, malnourished, or distraught condition. Despite this, the complaint asserts that hotel staff did not alert law enforcement or attempt to intervene. According to the allegation, on one occasion when R.K. asked a hotel security guard for help, she was told to return to her room.
Choice later acquired the Radisson, and the complaint alleges that Choice’s franchise relationship with the hotel constituted the “venture” from which Choice allegedly benefited. The complaint describes Choice’s contractual and brand-standards relationship with the Radisson, asserting that Choice exerted influence through detailed brand guidelines, reservation systems, security policies, operational support, and regular inspections. These allegations, which are assumed true at the pleading stage, formed the basis for the court’s analysis of whether R.K. plausibly alleged participation in a “venture” under the TVPRA.
Decision
The court first addressed Choice’s attempt to introduce a franchise agreement and a declaration from a corporate representative to show that the hotel owner maintained day-to-day control over operations. The court declined to consider these documents because they were outside the scope of the pleadings and because R.K. had not relied on the specific agreement in drafting her complaint. Citing Third Circuit precedent, the court explained that extrinsic materials, including declarations and documents outside the complaint, are generally not considered at the Rule 12(b)(6) stage. Because the franchise agreement Choice offered was redacted, dated 1999, and not attached to the pleading, the court concluded that the document was not integral to the complaint and would need to be addressed at summary judgment rather than on a motion to dismiss.
Turning to the legal standards, the court applied the traditional plausibility framework under Twombly and Iqbal, requiring the plaintiff to allege facts sufficient to support a reasonable inference that Choice knowingly benefited from and participated in a venture that it knew or should have known engaged in trafficking. The court began by examining whether R.K. had sufficiently alleged that she was a “victim of a violation of this chapter,” as required by § 1595(a). Accepting the allegations of coercion, violence, and forced commercial sex as true at this stage, the court determined that R.K.’s trafficker, and allegedly the hotel’s owner, could plausibly be deemed to have engaged in criminal sex trafficking under § 1591. Choice’s argument that the complaint was implausible because it did not identify the trafficker, the hotel owner, or individual staff members was rejected; the court noted that Rule 8 does not require such specificity.
The court next examined whether the complaint sufficiently alleged that Choice “knowingly benefited” from participation in a venture. The complaint alleges that Choice received a “steady stream of income” from room rentals used by the trafficker and that Choice collected guest data from individuals staying at the hotel. The court observed that numerous decisions within the Third Circuit have held that similar allegations are sufficient to meet the benefit element at the pleading stage, particularly when the franchisor is alleged to have received revenue derived from room rentals purchased by traffickers. While Choice argued that aggregate financial benefits lack a nexus to the trafficking allegations, the court explained that under § 1595, “anything of value” can satisfy the benefit requirement and that the statute does not require a specific causal connection between the benefit and the misconduct.
The court then addressed whether Choice’s franchise relationship with the Radisson could constitute a “venture.” Because § 1595 does not define the term, the court relied on ordinary meaning and case law from other circuits, concluding that a venture is an “undertaking or enterprise involving risk and potential profit.” Based on the allegations that Choice and the Radisson operated a commercial hospitality enterprise together, the court held that R.K. plausibly alleged a venture. Choice argued that R.K. improperly relied on § 1591’s narrower definition, but the court clarified that § 1591’s definitions do not govern § 1595 civil claims.
The third element—participation in a venture—received extensive analysis. The court recognized that franchisors typically do not operate hotels and are usually one step removed from hotel-level employees. However, the court accepted the allegations that Choice oversaw staff training, set policies, regulated building standards, conducted inspections, influenced staffing decisions, and maintained systems affecting guest interactions. The court emphasized that allegations of recurring room rentals to traffickers and observations of red flags by staff, combined with alleged franchisor oversight, were sufficient at this stage to infer participation in a venture. The decision notes that courts in similar cases have found that allegations of brand standards and operational involvement may satisfy the participation element when coupled with alleged failure to act in the face of trafficking indicators. The court emphasized that these were allegations only and would need to be tested in discovery.
On the knowledge element, the court held that constructive knowledge under § 1595(a) is assessed according to a negligence standard. R.K. alleged that Choice was aware of the prevalence of trafficking in the hotel industry, had represented publicly that it would adopt anti-trafficking measures, and had access to guest data and red flags that could have revealed trafficking. The court reasoned that allegations that franchisor employees monitored guest information, received reports, or had access to systems identifying suspicious activity could support an inference of constructive knowledge. While Choice argued that red flags cannot establish constructive knowledge, the court cited multiple decisions finding such allegations adequate at the pleading stage.
Finally, the court addressed R.K.’s vicarious liability theory. Citing numerous decisions permitting vicarious liability under the TVPRA, the court held that Pennsylvania law governs the agency analysis. The court concluded that R.K. adequately alleged an agency relationship between Choice and the Radisson by asserting that Choice controlled the hotel’s training, pricing, signage, inspections, billing systems, and guest safety policies. For purposes of a motion to dismiss, these allegations were sufficient to allow the vicarious liability claim to proceed.
The court briefly addressed the statute of limitations argument, noting that the alleged trafficking occurred between 2015 and 2017 and that the complaint was filed in 2025, within the ten-year limitations period for adult victims. The court declined to resolve whether the continuing-violation doctrine applied because the claims appeared timely on their face.
Looking Forward
This decision illustrates how courts may analyze TVPRA claims brought against franchisors, particularly at the motion-to-dismiss stage, where allegations are taken as true. The ruling reflects the court’s acceptance of a broad interpretation of concepts such as benefit, participation, and venture in the context of franchise relationships. For franchisors and brand owners, the opinion highlights that plaintiffs often rely on brand standards, reservation systems, data monitoring, and audit practices to argue that franchisors exercised influence over hotel operations. It is important to recognize that the court’s reasoning is tied to the specific allegations in this complaint and does not reflect a broader legal conclusion about how franchisors operate or about any actual misconduct.
The opinion also reinforces that TVPRA claims can be difficult to resolve early, particularly when plaintiffs allege extensive red flags and access to guest information. Franchisors may benefit from reviewing their compliance frameworks, including training materials, audit procedures, and escalation pathways for concerns raised at franchised locations. By clarifying the distinction between brand standards and operational control and documenting the limits of franchisor involvement in daily site-level decision-making, franchisors can reduce the risk of allegations that mischaracterize the nature of franchise relationships.
The decision further underscores that vicarious liability allegations can move forward when plaintiffs assert that franchisors exerted substantial control over franchisee operations, even though franchisors generally do not manage hotel properties. This does not suggest that franchisors are liable for franchisee conduct; rather, it demonstrates that plaintiffs may survive a motion to dismiss by pleading detailed, fact-specific allegations that courts deem sufficient to warrant discovery. Franchisors may consider ensuring that their agreements, training materials, and policies clearly articulate the delineation between brand protection and day-to-day operational control.
Overall, the ruling is a reminder that courts examining TVPRA claims rely heavily on the particular allegations in a complaint and that the nuances of a franchise relationship matter significantly. While the opinion does not reflect a shift in substantive franchisor liability, it underscores the importance of proactive compliance assessments, review of brand standards, and careful documentation of the separation between franchisor oversight and franchisee operations.
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.
