Hotels Face Potential Liability for Sex Traffickers

May 4, 2021

Sex traffickers routinely utilize hotels in their criminal activity and hotel franchises are increasingly being targeted in civil actions by victims for tolerating criminal activity under their roofs.

Hotel owners therefore need to be aware of their potential liability under the Trafficking Victims Protection Reauthorization Act (TVPRA) and should ensure they have policies in place to educate their managers about civil exposure for sex trafficking and the risk of hefty judgments.

Sometimes traffickers stay for days and go unnoticed by hotel staff. Others stay for months, making it painfully obvious to hotel employees that victims of sex trafficking are being held on the premises. But whether the criminal activity is blatant or concealed, hotel franchisors could be civilly liable to the victims. This is so even when the franchisor lacks any knowledge of the criminal behavior.

Trafficking Victims Protection Reauthorization Act

The TVPRA provides that an individual victim of sex trafficking “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)."

The law creates civil liability for two categories of defendants: (1) those who personally committed a criminal offense; and (2) those who knowingly benefitted from participation in a venture that they knew or should have known to be sex trafficking. Hotel franchisors fall into the second category of defendants.

To maintain a viable claim against a hotel franchisor, a plaintiff must demonstrate that: (1) the hotel knowingly benefited, financially or by receiving anything of value; (2) the benefit was from participating in the sex trafficking venture; and (3) the franchisor knew or should have known that it was engaged in an act of sex trafficking. Importantly, there is no requirement that the sex trafficker have been convicted criminally to support a civil claim against a hotel franchisor for financially benefitting from the sex trafficking.

Knowingly Received a Financial Benefit
A plaintiff must first allege that the defendant knowingly received a financial benefit. The benefit does not have to be provided to the defendant specifically because of its involvement in sex trafficking. Rather, the rental of a room constitutes a financial benefit knowingly received sufficient to meet this element.

The Benefit was From Participating in Sex Trafficking
A plaintiff must next demonstrate that the benefit was from the hotel “participating” in the sex trafficking venture. Participation is satisfied if a hotel assisted, supported or facilitated the venture. The “participation” does not have to be a direct participation in the sex trafficking. Further, participation does not even require actual knowledge of participation in the sex trafficking itself. Courts have held that a plaintiff establishes participation in a venture for purposes of the TVPRA when the plaintiff alleges a continuous business relationship between the trafficker and the hotels such that it would appear that the trafficker and the hotels have established a pattern of conduct or could be said to have a tacit agreement.

Whether a Franchisor Should Have Known It Was Engaged in Sex Trafficking
A plaintiff may be able to maintain a claim against a franchisor if the plaintiff can either allege: (A) that hotel franchisee’s knowledge should be imputed to franchisor because franchisee was an agent of franchisor; or (B) that because sex trafficking generally was so pervasive at the franchisee hotel, franchisor should have known it was engaged in sex trafficking,

Franchisee as Agent of Franchisor

If franchisee’s knowledge of sex trafficking by the venture that trafficked a plaintiff is imputed to franchisor, then the franchisor may be held vicariously liable for the franchisee’s violations of the TVPRA. There is a split of authority with respect to whether state common law or federal common law applies to the question of whether a party can be held indirectly liable under the TVPRA based on an agency relationship.

To determine whether an agency relationship exists such that vicarious liability is appropriate, courts consider the following non-exhaustive list of factors:

  • the control exerted by the employer
  • whether the one employed is engaged in a distinct occupation
  • whether the work is normally done under the supervision of an employer
  • the skill required
  • whether the employer supplies tools and instrumentalities
  • the length of time employed
  • whether payment is by time or by the job
  • whether the work is in the regular business of the employer
  • the subjective intent of the parties
  • whether the employer is or is not in business

Generally, courts will examine whether the franchisor had control over the day-to-day operations of the franchisee’s business.

General Knowledge of Sex Trafficking

Courts are divided in deciding whether, for a viable TVPRA claim, a plaintiff must allege, among other things, that the defendant knew or should have known of sex trafficking by the particular sex-trafficking venture in which the defendant is alleged to have participated, or rather just a general knowledge that sex trafficking was occurring at the hotel.

Accordingly, depending on the jurisdiction, a plaintiff could bring a claim against a franchisor if the franchisee hotel is a known sex trafficking hot spot, which can be shown through police activity at the hotel, comments on social media, public reviews of the hotel or simply by the sheer number of sex traffickers that stay at the hotel.

If you have concerns that your hotel may be renting rooms to sex traffickers, contact counsel immediately. Owners should not wait to be contacted by a government agency or for a civil action to be filed. A knowledgeable attorney will be able to advise on potential proactive measures that may absolve your company of civil liability.