B.J. v. G6 Hospitality, LLC

Background

B.J. alleged that she was trafficked for commercial sex and suffered physical and emotional abuse under duress at five California hotels between 2012 and 2016. The hotels included Studio 6 Concord, the San Ramon Marriott, the Residence Inn Concord, the Clarion Hotel Concord/Walnut Creek, and the Hilton Concord. The defendants included hotel owners, operators, franchisees, managers, and franchisors.

B.J. alleged that the defendants ignored open and obvious signs of commercial-sex trafficking, failed to protect her, rented rooms to her traffickers, and financially benefited from the trafficking. She brought claims under the federal Trafficking Victims Protection Reauthorization Act, 18 U.S.C. § 1595, and the California Trafficking Victims Protection Act.

Motions and legal standard

Four groups of defendants moved to dismiss under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint states a legally recognized claim supported by enough factual allegations. Choice Hotels also moved, alternatively, to strike allegations. B.J. opposed the motions.

The court was required at this stage to accept material factual allegations as true and view them in B.J.’s favor, but the complaint still had to contain enough facts to make relief plausible rather than merely possible or speculative.

California trafficking claim

B.J. conceded that the California trafficking claim should be dismissed against all moving and joining defendants. The court therefore turned to the federal trafficking claim.

Federal trafficking claim: direct liability

The federal statute allows a trafficking victim to sue the trafficker or a person who knowingly benefited financially, or received something of value, from participating in a venture that the person knew or should have known engaged in trafficking. The court explained that a beneficiary claim requires plausible allegations that the defendant knowingly benefited, participated in a venture, and knew or should have known that the venture trafficked the plaintiff.

B.J. pursued direct-liability theories against Marriott and the franchisee defendants. The court found that allegations that Marriott and the franchisees received room revenue or royalties were sufficient, at the pleading stage, to allege the knowing-benefit element.

The court nevertheless found the participation element missing. B.J. alleged that hotel employees provided supplies, gave an extra room key, informed the trafficker of her location, or otherwise assisted conduct occurring at the hotels. But the court found that these allegations did not show conduct outside the employees’ ordinary responsibilities or a tacit agreement with the trafficker to participate in a sex-trafficking venture.

The court also found that B.J. had not plausibly alleged that Marriott or the franchisees knew or should have known that the venture involved trafficking. Some alleged incidents occurred in public areas, but B.J. did not allege that hotel employees witnessed them. Other allegations involved employees observing attacks, buyers leaving rooms undressed, commercial-sex activity, or multiple buyers entering and leaving. The court found those facts could be consistent with criminal conduct other than sex trafficking, such as prostitution, and that the complaint lacked additional facts pointing specifically to trafficking or coercion.

The court therefore held that B.J.’s direct federal trafficking claims against Marriott and the franchisee defendants were subject to dismissal.

Federal trafficking claim: vicarious liability

B.J. sought to hold the franchisor defendants vicariously liable—meaning liable for conduct attributed to their franchisees—under actual-agency and apparent-agency theories.

For actual agency, the court explained that B.J. needed to allege facts showing that the franchisors manifested that the franchisees would act for them, that the franchisees accepted that undertaking, and that the franchisors had an understanding giving them control over the undertaking. Although B.J. listed many possible forms of franchisor control, including online bookings, employee wages, employment decisions, training, inspections, prices, operating rules, and trafficking-prevention policies, the court found that her use of phrases such as “one or more,” “may exercise,” and “could have exercised” made the allegations too uncertain and vague. The court also found that allegations concerning brand standards, required services, and the right to terminate a franchise agreement generally showed standardization rather than the required control over day-to-day operations.

For apparent agency, B.J. needed to allege that the franchisors’ representations led her to believe the hotels were their agents and that she relied on that belief. Although she alleged that the franchisors held out the franchisees as authorized to act for them, she did not allege reliance. The court also found that her allegation that she was taken to the hotels against her will to be trafficked was inconsistent with reliance on the franchisors’ representations.

The court held that the vicarious-liability theories based on both actual and apparent agency were subject to dismissal. Because the court granted leave to amend, it addressed the franchisors’ agency arguments even though some vicarious claims also depended on the dismissed direct claims against franchisees.

Disposition

Judge Maxine M. Chesney granted defendants’ motions to dismiss and afforded B.J. leave to amend. A third amended complaint, if any, had to be filed by June 12, 2023. B.J. could not add new defendants or claims without first obtaining the court’s permission. The court denied as moot Choice Hotels’ motion to strike and continued the case-management conference from June 23, 2023, to September 1, 2023.