On May 19, 2023, a judge in California agreed to dismiss a complaint against several hotels and their franchisees. (the “G6 Hospitality” case). This ruling in the Northern District of California is one of several over the last few years addressing the sufficiency of allegations against hospitality businesses for claims under The Trafficking Victims Protection Reauthorization Act (TVPRA). Notably, it underscores the importance of clearly defined protocols and boundaries for hospitality businesses.

Human trafficking offenses are distinguished by exploitation rather than movement across borders. The hallmark of the offense is the manipulation of others for profit as if people were mere commodities. The most common legal definition of human trafficking is the harboring, transporting or recruiting of humans through force, fraud or coercion for the purpose of commercial sex, forced labor, or other forms of servitude. The TVPRA under 18 U.S.C. § 1591 prohibits the sex trafficking of children or adults by force, fraud or coercion.

In addition to that criminal prohibition, the statute provides sex-trafficking victims with a civil cause of action against the trafficker, 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.

This is where hotel operators, franchisees and others in hospitality leadership must be informed and aware.

While plaintiffs often bring claims under both federal and state statutes, many also allege common law negligence against hotel operators. According to the data contained in a 2022 report from the Human Trafficking Law Center, there is an overall trend supporting an increase in the filings of these types of claims by plaintiffs, with over $84 million in damages awarded in 2020 alone.

While the number of suits filed continues to rise, courts have recently taken a significant step to gatekeep vague allegations and enforce the intention and purpose of the law.

To sufficiently plead a claim, the plaintiff must connect the dots between the alleged sex trafficking of the particular plaintiff and the hotel defendant[s]. Looking at this particular element, we find that the G6 Hospitality Court heavily relied on the boundaries established by hotel personnel in distinguishing conduct that was alleged to be conspiratorial by the plaintiff.

Boundaries and protocols are necessary to preserve the hotel-guest relationship, but also to mitigate liability on the part of the hotel. In the past, courts have recognized that the “dots” could be so connected where a continuous business relationship between the trafficker and hotel existed such that it would appear that the trafficker and the hotel have established a pattern of conduct, or have a tacit agreement.

In G6 Hospitality, no allegations were alleged to support such a finding; the hotels’ employees’ did not act outside the scope of their roles when they: brought more linens to the guest’s room at their request; provided an extra room key; or advised the guest where the alleged victim was located. In fact, the plaintiff alleged that the hotel staff informed the trafficker of the alleged victim’s location, but the plaintiff did not have any supportive facts that the staff knew the alleged victim was trying to hide.

Because the claims were also against franchisors and their franchisees, the G6 Hospitality Court looked at the agency relationship of the hotels. While the court found that the vicarious liability/agency claims were permitted under Section 1595, the court also found that the plaintiff had failed to allege sufficient facts to support the franchisors exercised a certain level of control over the franchisees’ day to day operations. As a result, the court dismissed the claims.

Franchisors should heed the warning and consider the level of control over their franchisees in evaluating the risks of vicarious liability claims. Franchisors should evaluate:

  1. Do they host online bookings for the franchisee on their domain?
  2. Do they set franchisee employee wages?
  3. Do they make employment decisions for the franchisee?
  4. Do they provide standardized training to the franchisee for the day-to-day operation of the business, or otherwise require compliance with a strict set of rules?
  5. Does the franchisor set the room-rent pricing for the franchisee?
  6. Is there a mandatory use of the franchisor’s customer rewards program?
  7. Does franchisor advertise employment opportunities for openings at franchisee location?
  8. Are the franchisee hotels built and/or maintained in a manner specified by the franchisor?
  9. Are the uniforms consistent with franchisor’s selection or standards?

This is not an exhaustive list, and these are some of the factors considered by courts when imposing liability on a franchisor, but it is important to recognize that courts have found the franchisor’s involvement for the purpose of uniformity and standardization of the brand is not sufficient to establish agency.

The impact of the G6 Hospitality ruling should continue to reinforce the need for defined roles and boundaries between staff and guests. Staff should continue to be trained to respond to guest requests, however, they should do so with additional protocols in place when the requests appear to support criminal activity.

For example, staff should be aware that traffickers often request (or direct their victims to request) frequent linen changes, trash service (or withhold all trash and dispose of it themselves) and personal hygiene supplies (shampoo, body wash, etc.). Staff should continue to accommodate guests needing an extra key to the room, or a first-floor accessible room, but should be trained to recognize increased foot traffic and identify the actual guests staying in the room.

Staff should be aware that sex trafficking affects people of all ages, genders, and nationalities. Relationship dynamics are unique and staff should not interject themselves into guest relationships, however, staff should be aware of the signs and red flags of human trafficking activity, so that it may be duly reported in accord with internal policy. Red flags may include verbal altercations, physical altercations on property and/or erratic behavior. Hotel management should have a medium through which hotel staff can report their observations of any conduct or events that seem inconsistent with an on-site guest experience at that hotel.

Ultimately, a culture of awareness is the key to success. This includes knowing your role as a particular staff or team member, ensuring the guest experience, and making note of suspicious or concerning behavior. Ongoing training and support for staff members is necessary to ensure that staff are able to effectively balance guest privacy and monitoring for suspicious activity.

Sex trafficking is a global problem that affects people of all ages, genders and nationalities. The federal government estimates that over 27 million people are trafficked worldwide at any given time. Hotels, motels and extended stay lodging are often used as venues for sex trafficking, making it critical for hotel staff to be able to identify and confront this issue. By providing comprehensive training on how to recognize and report human trafficking, hotels can play a critical role in preventing this heinous crime.