473 F.Supp.3d 147
E.D.N.Y2020Background
- Plaintiff (S.J.) alleges she was sex-trafficked from about age 10 for three years (2006–2009) at two branded hotels in NYC: a Bronx Econo Lodge and a Queens Howard Johnson.
- Corporate defendants Choice Hotels, Wyndham, and Howard Johnson, Inc. are franchisors/brand owners who do not own or operate the hotels but set brand standards, training/policies, and receive a percentage of gross revenue from the franchisees.
- Plaintiff alleges hotel staff observed numerous obvious indicators of trafficking (frequent male visitors, cash payments, used condoms, refusal of maid service, physical abuse, forced sexual acts with staff) and that corporate defendants knew or should have known of trafficking risks but failed to adequately train or supervise staff.
- Claims asserted: (1) civil liability under the TVPRA (18 U.S.C. § 1595), (2) New York Social Services Law § 483-bb, and (3) state-law negligence (including vicarious liability via agency theory).
- Procedural posture: franchisor defendants moved to dismiss. Court dismissed the TVPRA and § 483-bb claims as to franchisors but denied dismissal of the direct negligence claim; vicarious liability theories were rejected.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does § 1595 permit direct liability of franchisors for benefiting from a trafficking "venture"? | S.J.: franchisors "should have known" trafficking occurred on their branded properties and thus are liable under § 1595. | Choice/Wyndham/Howard Johnson: franchisors lacked actual or venture-specific constructive knowledge and did not commit overt acts of participation. | Dismissed as to franchisors: plaintiff failed to plead knowledge of a specific trafficking venture required for § 1595 liability. |
| Can franchisors be vicariously liable under § 1595 via agency (franchisee = agent)? | S.J.: franchisors exercised ongoing, systemic control over franchisees, establishing agency. | Defendants: general brand-standardization does not establish day-to-day control or agency. | Dismissed: under New York law franchisees are not agents absent complete control; allegations showed only standardization, not domination. |
| Does NY Social Services Law § 483-bb(c) apply to trafficking that occurred in 2006–2009? | S.J.: statute creates a civil remedy against those who advanced/profited from trafficking. | Defendants: § 483-bb(c) took effect in 2016 and cannot be applied retroactively to pre-2016 conduct. | Dismissed: court refuses retroactive application; § 483-bb(c) creates a new remedy and is prospective only. |
| Do franchisors owe a common-law duty/are they directly negligent for failing to prevent trafficking? | S.J.: franchisors had notice of trafficking risks and a duty to train/supervise; their failures caused harm. | Defendants: no duty because harm from franchisee criminal acts was not foreseeable or franchisor control insufficient. | Survives as to direct negligence: court finds foreseeability and corporate acknowledgments of trafficking risks create a duty; vicarious negligence via agency fails. |
Key Cases Cited
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (pleading must be plausible, not speculative)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (court accepts well-pleaded facts but not legal conclusions)
- Noble v. Weinstein, 335 F. Supp. 3d 504 (S.D.N.Y. 2018) (discusses extra participation element drawn from criminal statute)
- United States v. Afyare, [citation="632 F. App'x 272"] (6th Cir. 2016) (criminal-law discussion of "participation in a venture")
- M.A. v. Wyndham Hotels & Resorts, Inc., 425 F. Supp. 3d 959 (S.D. Ohio 2019) (interpreting § 1595 to encompass "should have known" without requiring direct participation in trafficking)
- Cullen v. BMW of N. Am., 691 F.2d 1097 (2d Cir. 1982) (franchisor-duty analysis; foreseeability required for duty to third parties)
- Palsgraf v. Long Island R.R., 248 N.Y. 339 (1928) (foreseeability defines duty in negligence law)
- Macpherson v. Buick Motor Co., 217 N.Y. 382 (1916) (foreseeability and duty principles)
- Jacobus v. Colgate, 217 N.Y. 235 (1916) (statutes creating new remedies are not retroactive)
- Nallan v. Helmsley-Spear, Inc., 50 N.Y.2d 507 (1980) (intervening criminal act does not bar liability if such acts were foreseeable)
- Schoenwandt v. Jamfro Corp., 261 A.D.2d 117 (1st Dep't 1999) (franchisor control over standards insufficient to establish agency)
- Jean-Charles v. Perlitz, 937 F. Supp. 2d 276 (D. Conn. 2013) (knowledge/should-have-known can support civil liability for facilitating sexual abuse)