March 25, 2024
By: Thomas O’Connell
Citation:
G.M. v. Choice Hotels International, Inc., 725 F. Supp. 3d 766 (S.D. Ohio 2024)
Executive Summary:
In this decision, Chief Judge Algenon L. Marbley of the United States District Court for the Southern District of Ohio denied the defendant’s motion to dismiss, transfer, or sever the plaintiff’s claims under the Trafficking Victims Protection Reauthorization Act (TVPRA) and the Child Abuse Victim’s Rights Act (CAVRA). The Court concluded that the plaintiff’s allegations that the defendant knowingly benefited from and participated in a commercial venture involving sex trafficking were sufficient to state claims under the TVPRA and CAVRA, and that the defendant was properly joined with other parties.
Relevant Background:
The Plaintiff, G.M., alleged that she was trafficked for sex at age fifteen and held at Choice-branded hotels, including the Rodeway Inn and Quality Inn in Indianapolis, from August to October 2016. The Defendant, Choice Hotels International, Inc., is the franchisor of these properties.
The Plaintiff claimed that Choice Hotels profited from rooms rented by traffickers and failed to implement adequate policies to prevent trafficking. She cited several alleged trafficking indicators, including frequent male visitors, cash payments, extended day-to-day stays, excessive condom use, and visible signs of physical abuse. G.M. also alleged that Choice Hotels exerted control over its franchisees through property management systems, mandatory corporate policies, and inspections, creating an agency relationship.
Choice Hotels moved to dismiss, asserting that G.M. failed to state claims under the TVPRA and CAVRA and challenging the Court’s jurisdiction. The Defendant argued that it could not be held liable for the actions of franchisees and denied having knowledge of trafficking at its branded properties.
Decision:
The Court denied the Defendant’s motion, finding the following:
- Court determined that the Plaintiff adequately alleged violations of the TVPRA under 18 U.S.C. § 1595(a). It found that constructive knowledge of trafficking and financial benefit were sufficient to establish liability. The Court interpreted Ricchio v. McLean, 853 F.3d 553 (1st Cir. 2017), as supporting this interpretation.
- The Court held that the Plaintiff’s allegations under 18 U.S.C. § 2255(a) met the statute’s requirements by demonstrating willful blindness to trafficking activity.
- The Court found that the Plaintiff’s allegations plausibly suggested an agency relationship, citing the Defendant’s operational control over franchisees, such as mandatory adherence to corporate standards and shared profits. The Court relied on the Restatement (Third) of Agency, § 1.01, to evaluate agency principles under federal common law.
- The Court rejected the Defendant’s challenge to jurisdiction, noting that the Plaintiff’s allegations under CAVRA were sufficient and that the Defendant consented to jurisdiction by designating an agent for service of process in Ohio.
Looking Forward:
This case highlights critical considerations for franchisors, particularly in industries at risk of trafficking allegations:
- Franchisors must proactively implement robust anti-trafficking policies, including staff training, to mitigate liability risks. Courts may view omissions in this area as indicative of constructive knowledge of illegal activities.
- Extensive control over franchisees’ operations may expose franchisors to claims of agency and vicarious liability. Ensuring clear distinctions in responsibilities and roles in franchise agreements is essential.
- The Court’s findings in this case rely on the specific facts presented. While the decision may shape how liability is assessed under the TVPRA, franchisors should carefully assess their operations and policies to distinguish their circumstances from those in this case.
- Franchisors operating in multiple jurisdictions must remain mindful of how designated agents and statutory provisions may confer jurisdiction in various courts.