September 13, 2023
By: Thomas O’Connell
Citation:
A.B. v. Extended Stay America Inc., 2023 WL 5951390 (W.D. Wash. Sept. 13, 2023).
Executive Summary:
In this unpublished decision, Judge David G. Estudillo of the United States District Court for the Western District of Washington dismissed Plaintiff A.B.’s claims against Defendants Extended Stay America, Inc. (“ESA, Inc.”) and ESA Portfolio Operating Lessee LLC (“ESA Portfolio”). The case, arising under the Trafficking Victims Protection Reauthorization Act (TVPRA), 18 U.S.C. § 1595, alleged that Defendants knowingly benefitted from Plaintiff’s sex trafficking. The court granted Defendants’ motions to dismiss due to lack of personal jurisdiction over ESA, Inc. and failure to state a claim against ESA Portfolio.
Relevant Background:
Between 2012 and 2013, Plaintiff alleged she was trafficked at an Extended Stay America hotel in Portland, Oregon. She contended her trafficker booked hotel rooms where she was exploited and utilized hotel resources, such as wireless internet, to further the trafficking. Plaintiff alleged that hotel staff failed to act despite purportedly observing signs of trafficking, such as frequent visitors, her attire, and avoidance of eye contact.
Procedurally, Plaintiff initially brought similar claims in the District of Oregon, where her TVPRA claims were dismissed due to lack of jurisdiction and insufficient allegations under the statute’s knowledge requirement (see, A.B. v. Hilton Worldwide Holdings Inc., 484 F. Supp. 3d 921 (D. Or. 2020) and A.B. v. Wyndham Hotels & Resorts, Inc., 532 F. Supp. 3d 1018 (D. Or. 2021)). In this case, ESA, Inc. and ESA Portfolio filed motions to dismiss Plaintiff’s amended complaint, challenging the court’s jurisdiction and the sufficiency of Plaintiff’s claims.
Decision:
The court dismissed Plaintiff’s claims on the following grounds:
- The court found that it lacked personal jurisdiction over ESA, Inc. because the company had no substantial ties to Washington during the relevant period, and Plaintiff failed to demonstrate otherwise. General jurisdiction was not established as ESA, Inc. was incorporated in Delaware, had its principal place of business in North Carolina, and did not have continuous or systematic activities in Washington to render it “at home” as required by Daimler AG v. Bauman, 571 U.S. 117, 139 (2014).
Specific jurisdiction was also lacking because ESA, Inc. did not purposefully direct any activities toward Washington or engage in forum-related conduct giving rise to Plaintiff’s claims. Applying the three-part test from Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004), the court noted that ESA, Inc. was not formed until after the alleged trafficking occurred and had no involvement with the hotel at issue. Plaintiff’s argument for successor liability under Harbison v. Garden Valley Outfitters, Inc., 849 P.2d 669 (Wash. Ct. App. 1993), failed because ESA, Inc. demonstrated it did not assume any liabilities from its predecessors, maintaining corporate formalities and operational independence.
Thus, the court held that Plaintiff’s claims against ESA, Inc. must be dismissed for lack of personal jurisdiction.
- The court dismissed the TVPRA claim against ESA Portfolio under Rule 12(b)(6). To state a claim under 18 U.S.C. § 1595, Plaintiff needed to allege that the defendant: (1) knowingly benefitted, (2) from participation in a venture, (3) which it knew or should have known was engaged in trafficking. Citing Ratha v. Phatthana Seafood Co., 35 F.4th 1159 (9th Cir. 2022), the court held Plaintiff failed to allege that ESA Portfolio had actual or constructive knowledge of trafficking at the hotel. General claims of suspicious activity, such as excessive towel requests or unregistered guests, were deemed insufficient under Doe #1 v. Red Roof Inns, Inc., 21 F.4th 714 (11th Cir. 2021) and M.A. v. Wyndham Hotels & Resorts, Inc., 425 F. Supp. 3d 959 (S.D. Ohio 2019).
- The court denied Plaintiff’s request to amend the complaint, citing futility. Plaintiff had multiple opportunities to amend her claims, including prior litigation in the District of Oregon, yet failed to present sufficient factual allegations.
Looking Forward:
This decision shows the importance of maintaining clear operational boundaries and adherence to corporate formalities for franchisors. The court’s reasoning in dismissing the claims against ESA, Inc. centered on the company’s ability to demonstrate its independence from the alleged activities and its subsidiaries.
Therefore, franchisors, especially in high-risk sectors such as fast food and hospitality, can learn from this by maintaining clear operational boundaries and adhering to corporate formalities. These practices are essential for limiting liability stemming from franchisee misconduct and protecting the franchisor from unintended legal exposure.