S.J., аn individual, Plaintiff, - against - CHOICE HOTELS INTERNATIONAL, INC., et al., Defendants.
Case 1:19-cv-06071-BMC
UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK
July 20, 2020
COGAN, District Judge.
19-cv-6071 (BMC)
COGAN, District Judge.
Plaintiff brings this action under the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 (“TVPRA“),
BACKGROUND
According to the second amended complaint, Plaintiff was trafficked for commercial sex for three years, beginning at the age of ten. The identities of the traffickers are neither provided nor relevant in this proceeding. At issue in this case are only the owners/operators of the individual hotels where the sex trafficking took place, and the franchisors/corporate brand owners of those samе hotels. Each defendant in this case is associated with one of two hotels operating in New York City, where plaintiff alleges she was primarily trafficked: an Econo Lodge in the Bronx (“Bronx Econo Lodge“) and a Howard Johnson Inn in Queens (“Queens Howard Johnson“)1:
Defendant Choice Hotels International (“Choice Hotels“) is a hotel brand owner that franchised the Econo Lodge brand to the Bronx Econo Lodge. Choice Hotels neither owns nor operates the Bronx Econo Lodge, but is alleged to control its training and policies as a condition for use of the brand name. Moreover, Choice Hotels receives a percentage of the gross revenue generated by the Bronx Econo
Defendant Wyndham Hotels & Resorts, Inc. (“Wyndham“) is likewise a hotel brand owner which, under its corporate umbrella, owns the separate Howard Johnson International, Inc. (“Howard Johnson, Inc.“) hotel brand. In turn, Wyndham and Howard Johnson, Inc. franchised the Howard Johnson brand to the Queens Howard Johnson. Wyndham controls the training and policies for the Queens Howard Johnson and both Wyndham and Howard Johnson, Inc. are alleged to receive a percentage of the gross revenue generated by the Queens Howard Johnson‘s operations, including from the rates charged on the rooms where plaintiff was trafficked.
Plaintiff avers that, over the years during which she was trafficked, the two hotels’ staff had regular contact with her and her principal trafficker, and had witnessed numerous signs of physical abuse and other obvious indicators of sex trafficking. Some of the more dramatic examples of visible sex trafficking conduct include frequent unannounced male visitors to plaintiff‘s room; plaintiff‘s refusal of maid service yet repeated requests for linens and towels; cash payment for hotel rooms; the presence of numerous used condoms in the rooms after checkout; plaintiff‘s inappropriate attire for her age; and the fact that plaintiff was commonly ferried to and from the hotels with a paper bag over her head. Plaintiff further alleges that her sex traffickеr forced her to perform sexual acts on certain hotel staff on numerous occasions as payment for the hotel rooms used for her trafficking.
In addition to the obvious signs of plaintiff‘s trafficking at the Bronx Econo Lodge and Queens Howard Johnson, plaintiff alleges that defendants Choice Hotels, Wyndham, and Howard Johnson, Inc. knew or should have known that sex trafficking often occurred on their branded properties, and thus had a legal duty to safeguard against it. For instance, these corporate defendants partnered with End Child Prostitutiоn and Trafficking (“ECPAT-USA“) to develop employee training to identify sex trafficking in hotels, and there have been numerous news articles containing incidents of reported or confirmed sex trafficking on Econo Lodge and Howard Johnson Inn-branded properties across the country. Nevertheless, plaintiff alleges, these corporate defendants failed to sufficiently train the hotels’ staff in recognizing the signs of sex trafficking and what to do to prevent it from happening.
In consideration of the foregoing, plaintiff asserts that all defendants knew or should have known about her trafficking and that they all financially benefitted from her trafficking, in violation of the TVPRA and
Corporate defendants Choice Hotels, Wyndham, and Howard Johnson, Inc. move to dismiss the claims against them, contending that they cannot be held liable under the TVPRA because they neither had actual knowledge of plaintiff‘s sex trafficking nor committed any overt acts of participation in the sex trafficking. They further argue that
DISCUSSION
To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). “A claim has facial plausibility when the plaintiff pleads factual contеnt that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
“The plausibility standard is not akin to a probability requirement, but it asks for more than a sheer possibility that a defendant has acted unlawfully. Where a complaint pleads facts that are merely consistent with a defendant‘s liability, it stops short of the line between possibility and plausibility of entitlement to relief.” Id. (internal quotation marks and citations omitted). Said otherwise, a plaintiff‘s “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555.
In conducting the above analysis, a court must accept as true all of the well-pleaded allegations contained in the complaint. Iqbal, 556 U.S. at 678. But this tenet “is inapplicable to legal conclusions.” Id. “[D]etailed factual allegations” are not required, but “[a] pleading that offers ‘labels and conclusions’ or ‘a formulaic recitation of the elements of a cause of action will not do.‘” Id. (quoting Twombly, 550 U.S. at 555).
I. TVPRA Claim
Defendants Choice Hotels, Wyndham, and Howard Johnson, Inc. argue that plaintiff has not stated a claim for relief against them under the TVPRA‘s civil liability provision,
An individual who is a victim of a violation of this chapter may bring a civil action against the perpetrator (or whoever knowingly benefits, financially or by receiving anything of value from participation in a venture which that person knew or should have known has engaged in an act in violation of this chapter) in an appropriate district court of the United States and may recover damаges and reasonable attorneys fees.
Thus, liability under TVPRA requires that “(1) the person or entity must ‘knowingly benefit, financially or by receiving anything
At least one other court has required a civil plaintiff to also show that the person had knowledge of “some participation in the sex trafficking act itself.” See Noble v. Weinstein, 335 F. Supp. 3d 504, 524 (S.D.N.Y. 2018) (quoting United States v. Afyare, 632 F. App‘x 272, 285 (6th Cir. 2016)); see also Doe 1 v. Red Roof Inns, Inc., No. 19-cv-3840, 2020 WL 1872335, at *3 (N.D. Ga. Apr. 13, 2020) (quoting Noble, 335 F. Supp. 3d at 524)). But the court so holding relied upon a criminal case (Afyare) that was analyzing
The practical difference between criminal and civil liability is that the civil reading gives full expression to the “knew or should have known” language (emphasis added) of
The court in Noble . . . applied the “participation in a venture” element from the criminal offense defined by Congress in section 1591(a)(2). The court in Noble did not address the “knew or should have known” language in the civil remedies defined in section 1595. . . [T]he court in Noble essentially required the victim of sex trafficking seeking a civil remedy to first prove a criminal violation of section 1591(a)(2). And this is where we diverge from the judges in the Northern District of Georgia in the Red Roof cases and the Southern District of New York in Noble.
A.B., 2020 WL 1939678, at *13. In effect, the broader understanding of
Such a reading could, for example, reach the president of a primary school who had witnessed inappropriate contact between the head of the school and a student, and had also “shunned a[n]... administrator . . . after she tried to stop [further] sexual abuse” of other students. See Jean-Charles v. Perlitz, 937 F. Supp. 2d 276, 280, 288 (D. Conn. 2013). The court in Perlitz held that, “[v]iewed in the context of the allegations of the complaint as a whole, these allegations concerning [the president‘s] knowledge of [thе school head‘s] wrongful activities raise a plausible inference that he knew or should have known [the school] was violating
But plaintiff‘s proposed application of
The real issue is not, then, actual-versus-constructive knowledge but whether a defendant satisfies the knowledge element as to a particular sex trafficking venture. The statutory text speaks in singular terms – “participation in a venture which that person . . . should have known has engaged in an act in violation of this chapter.”
Of course, this doesn‘t necessarily absolve the franchisors of the responsibilities they may have – under other statutes, thеir franchising contracts, or the common law – to train hotel staff about the warning signs of sex trafficking and what to do if they appear. But there is no basis to read such a responsibility into the text of the TVPRA.
Turning to vicarious liability, to the extent that plaintiff relies upon an agency theory to indirectly impose liability on the franchisor defendants under the TVPRA, that argument is foreclosed by New York agency law.3 Specifically, “[t]he general rule holds that a franchisee is not the agent of a franchisor.” Nebraskaland, Inc. v. Sunoco, Inc. (R & M), No. 10-cv-1091, 2013 WL 5656143, at *5 (E.D.N.Y. Oct. 11, 2013) (citing Terrano v. Fine, 17 A.D.3d 449, 793 N.Y.S.2d 451 (2nd Dep‘t 2005)). Of course, it is true that a franchisor may be held “accountable for the acts of its franchisee if the franchisor exercised such complete control over the day-to-day operations of the franchisee‘s business that its purported independence may be fairly dismissed as a fiction” or if it “exercised ultimate control over the instrumentality that caused harm to an injured third-party.” Id. But such complete control is a high standard, and one that is not met merely by, for example, alleging a franchisor‘s “right to terminate the agreement if it disapproved of the franchisee‘s conduct оr its right to re-enter the premises.” See Schoenwandt v. Jamfro Corp., 261 A.D.2d 117, 689 N.Y.S.2d 461 (1st Dep‘t 1999). Moreover, alleging a franchisor‘s control over “uniformity and standardization across franchises” is likewise insufficient to establish the level of domination that would render a franchisee‘s independence a fiction. See Louis v. Jerome, No. 15-cv-3094, 2016 WL 4532115, at *4 (E.D.N.Y. Aug. 29, 2016) (citing Manos v. Geissler, 377 F. Supp. 2d 422, 429 (S.D.N.Y. 2005) (“Plaintiff has not alleged any facts that demonstrate that Midas ‘exercised such complete dominion and control’ that BRG lacked independent will.“)).
As the court in Louis explained:
Plaintiff‘s allegations regarding [the franchisor]‘s “strict control” are generalized and refer to such issues as apprоval of the franchise location, setting of standards and operating procedures, reporting requirements, training, and software and technical support. These allegations pertain to uniformity and standardization across franchises, not day-to-day oversight. There is not a single specific allegation as to [the franchisor]‘s daily activities or involvement at either Jerome‘s or Mathieu‘s franchise. Considering plaintiff‘s allegations in the light most favorable to her, she has not alleged that [the franchisor] exercised control over the daily operations of these franchises sufficient to impose liability upon the franchisor.
Plaintiff‘s allegations as to the franchisor defendants’ control over the Bronx Econo Lodge and Queens Howard Johnson are similarly inadequate. She avers generally that
- As a hotel operator, Defendant Choice Hotels controls the training and policies for its branded properties including the Econo Lodge hotel where S.J. was trafficked.
- Defendant Choice Hotels represents that it considers guest safety and security important and requires the hotels in its portfolio to comply with Choice Hotels brand standards and all local, state, and federal laws.
- As a hotel operator, Defendant Wyndham Hotels controls the training and policies for its branded properties including the Howard Johnson Inn hotel where S.J. was trafficked.
- Defendant Wyndham Hotels maintains that it considers guest safety and security to be important and requires the hotels in its portfolio to comply with Wyndham brand standards and all local, state, and federal laws.
- At all relevant times Defendant Howard [Johnsоn] owned, supervised, and/or operated the Howard Johnson located at 153-95 Rockaway Boulevard, Jamaica, New York 11434 through a franchising agreement.
- As a hotel owner, operator and/or franchisor, Defendant Howard Johnson controlled the training and policies
for their branded properties including the Howard Johnson hotel where S.J. was trafficked. - [T]he Wyndham Defendants: (1) hosted the Howard Johnson Inn‘s online bookings on their domain; (2) required Howard Johnson Inn to use their customer rewards program; (3) set employee wages; (4) made employment decisions; (5) advertised for employment; (6) shared in the profits; (7) provided standardized training methods for Howard Johnson Inn‘s employees (8) specified how to build and maintain the facilities; (9) provided standardized rules of operation; (10) regularly inspected their Howard Johnson Inn facility; (11) fixed prices; and (12) deprived the Howard Johnson Inn of independence in business operation.
As in Louis, plaintiff only sets forth facts tending to show that the franchisors’ involvement was limited to uniformity and standardization of the brand. Thus, to the extent that they aren‘t mere legal conclusions, these allegations, even if proven true, would fail to sufficiently demonstrate that the franchisor defendants exercised “such complete control over the day-to-day operations of the franchisee‘s business that its purported independence may be fairly dismissed as a fiction.” See Nebraskaland, Inc., 2013 WL 5656143, at *5.
II. New York Social Services Law § 483-bb Claim
Plaintiff also asserts a claim against defendants Choice Hotels, Wyndham, and Howard Johnson, Inc. pursuant to
An individual who is a victim of the conduct prohibited by section 230.33, 230.34, 230.34-a, 135.35 or 135.37 of the penal law may bring a civil action against the рerpetrator or whoever knowingly advances or profits from, or whoever should have known he or she was advancing or profiting from, an act in violation of section 230.33, 230.34, 230.34-a, 135.35 or 135.37 of the penal law to recover damages and reasonable attorney‘s fees.
Wyndham and Choice Hotels point out, however, that the provision in
“It is a fundamental canon of statutory construction that retroactive operation is not favored by courts and statutes will not be given such construction unless the language expressly or by necessary implication requires it.” Majewski v. Broadalbin-Perth Cent. School Dist., 91 N.Y.2d 577, 584, 429 N.Y.S.2d 966, 968 (1998) (citing cases). Furthermore, although “[a]n equally settled maxim is that ‘remedial’ legislation . . . should be applied retroactively, . . . [c]lassifying a statute as ‘remedial’ does not automatically overcome the strong presumption of prospectivity since the term may broadly encompass any attempt to supply some defect or abridge some superfluity in the former law.” Id. (colatus4). In any event, this “remedial” exception “does not apply to statutes creating new rights and remedies where none previously existed,” as is the case here. Matter of Cady v. County of Broome, 87 A.D.2d 964, 965, 451 N.Y.S.2d 206, 207 (1982) (citing Jacobus v. Colgate, 217 N.Y. 235, 252 (1916) (Cardozo, J.)).
That the right of action created in 2016 is a new right vis-à-vis the indirect franchisors is made evident by reference to then-Judge Cardozo‘s discussion in Jacobus, cited above. There, he explained that
[t]here is a manifest and important difference between a statute which creates a new statutory right and a statute whiсh prescribes a ‘cause of action,’ or remedy for an existing right. For example, a statute such as Lord Campbell‘s Act which gave to the widow and next of kin of a person killed by the wrongful act of another the right to recover damages from the wrongdoer, conferred a right which did not exist at common law and it also prescribed a remedy by which that right might be enforced. The present statute is different. Before this statute was passed our law, in common with the law of every civilized state, recognized that a trespass upon the real property of the owner and burning down the buildings thereon in whatever jurisdiction the property was situated constituted a wrong and that such a wrongful act violated the right of the owner and that the owner had a right to redress.
Jacobus, 217 N.Y. at 252 (first emphasis added). Although a traditional right to sue one‘s own sex trafficker can‘t readily be disputed, the more attenuated ability to “bring a civil action against . . . whoever should have known he or she was advancing or profiting from” the sex trafficking is quite novel. Indeed, the latter bears a striking resemblance to Judge Cardozo‘s example of a statute “which gave to the widow and next of kin of a person killed by the wrongful act of another the right to recover damages from the wrongdoer.” Id.
This claim is therefore dismissed.
III. Negligence Claim
Plaintiff‘s negligence claim against the franchisor defendants largely relies upon her conclusion that “at all relevant times, [they] exercised сomplete control over the propert[ies] where Plaintiff was trafficked.” As was determined above, however, plaintiff falls short of sufficiently alleging an agency relationship between the franchisor and franchisee defendants. There is therefore no vicarious liability for negligence against these parties.
But plaintiff also contends that the franchisor defendants were directly negligent. Thus, to avoid dismissal, she must allege: (1) a duty owed to plaintiff, (2) a breach of that duty, (3) causation, and (4) damages. See Skidd v. JW Marriot Hotels & Resorts, 06-cv1554, 2010 WL 2834890, at *4 (S.D.N.Y. July 8, 2010). The main obstacle in this regаrd – and the only one that defendants raise in their motions – is the duty prong. As an initial matter, there is state authority suggesting that, in some contexts, a franchisor may owe a duty of care to its franchisee‘s customer. In Pipitone v. 7-Eleven, Inc., 67 A.D.3d 879, 879, 889 N.S.S.2d 234, 235 (2nd Dep‘t 2009), for example, the Appellate Division held that the franchisor and out-of-possession tenant “had a duty to maintain the premises in a reasonably safe manner.”
Perhaps more instructive for our purposes, in Cullen v. BMW of N. Am., 691 F.2d 1097, 1100-01 (2d Cir. 1982), the Second
The dissent in Cullen attacked the decision primarily because it believed that that the injury was foreseeable, and so the franchisor had a common law duty in relation to the customer. Id. at 1101-03 (Oakes, J., dissenting). Reaffirming, first, that New York has long defined duty with relation to foreseeability, see Palsgraf v. Long Island R.R., 248 N.Y. 339, 344, 162 N.E. 99, 100 (1928) (Cardozo, J.) (“The risk reasonably to be perceived defines the duty to be obeyed, and risk imports relation; it is risk to another or to others within the range of apprehension.“); Macpherson v. Buick Motor Co., 217 N.Y. 382, 394, 111 N.E. 1050, 1054 (1916) (Cardozo, J.) (“[F]oresight of the consequences involves the creation of a duty.“), the dissent went on to criticize the majority opinion‘s conclusion that the harm was not foreseeable simply because it was a result of “an intervening act, tortious or criminal.” Cullen, 691 F.2d at 1102 (Oakes, J., dissenting):
But New York law provides, as the common law of England before it provided, that “the criminal conduct of a third person [does] not preclude a finding of ‘proximate cause’ if the intervening agency was itself a foreseeable hazard.” Nallan v. Helmsley-Spear, Inc., 50 N.Y.2d 507, 520–21, 407 N.E.2d 451, 459, 429 N.Y.S.2d 606, 614 (1980); Scott v. Shepherd, 96 Eng.Rep. 525, 526 (C.P. 1773) (“The intermediate acts of Willis and Ryal will not purge the original tort in the defendant. But he who does the first wrong is answerable for all the consequential damages.“).
To be sure, the majority did not actually disagree with this point of doctrine, as it qualified its statement of the duty rule by saying that “an intervening act . . . will ordinarily insulate a negligent defendant from liability when the subsequent act could not have been reasonably anticipated.” Cullen, 691 F.2d at 1101 (emphasis added). Accordingly, the majority was careful to frame its conclusion of non-duty on a factual basis, holding that the franchisor‘s awareness of certain risk factors offered “no cause reasonably to anticipate that Eichler would either engage in any criminal activity or that he would abscond with customer funds.” Id. The difference between the two opinions was therefore a matter of evidentiary degree, not of the legal possibility of a franchisor‘s duty to a third party.
Our case does not suffer from the subtlety of facts at issue in Cullen. The existence of a duty here is undoubtedly more defined, both because the franchisor defendаnts
CONCLUSION
Choice Hotels, Wyndham, and Howard Johnson, Inc.‘s [24, 40, 57] motions to dismiss are granted in part and denied in part as set forth above.
SO ORDERED.
Digitally signed by Brian M. Cogan
U.S.D.J.
Dated: Brooklyn, New York
July 20, 2020