Opinion
Case Number: 3:20-cv-00050-M
2021-01-04
E.S., an individual, Plaintiff, v. BEST WESTERN INTERNATIONAL, INC. ; Marriott International, Inc.; ESA Management, LLC; G6 Hospitality, LLC ; Wyndham Hotels and Resorts, Inc. ; and Choice Hotels International, Inc., Defendants.
W Mark Lanier, Monica Cooper, Pro Hac Vice, The Lanier Law Firm, P.C., Houston, TX, Charla G. Aldous, Aldous Walker LLP, Dallas, TX, Paul Pennock, Pro Hac Vice, Weitz Luxenburg PC, New York, NY, for Plaintiff. Nicole Ordonez, Amber Rochelle Pickett, Nichol L. Bunn, Lewis Brisbois Bisgaard & Smith LLP, Dallas, TX, Karen L. Campbell, Pro Hac Vice, Lewis Brisbois Bisgaard & Smith LLP, New York, NY, for Defendant Best Western International Inc. Jason S. Lewis, James C. Bookhout, DLA Piper LLP, Dallas, TX, Ellen E. Dew, Pro Hac Vice, DLA Piper (US) LLP, Baltimore, MD, for Defendant Marriott International Inc. Isabel Andrade Crosby, DLA Piper LLP, Dallas, TX, Angela C. Agrusa, Pro Hac Vice, Shannon E. Dudic, Pro Hac Vice, DLA Piper LLP, Los Angeles, CA, for Defendant G6 Hospitality LLC. Allissa Pollard, Christopher Donovan, DLA Piper LLP, Houston, TX, David S. Sager, Pro Hac Vice, DLA Piper LLP, Short Hills, NJ, for Defendant Wyndham Hotels and Resorts Inc. Katriel Chaim Statman, Baker Donelson Bearman Caldwell & Berkowitz PC, Houston, TX, Sara M. Turner, Pro Hac Vice, Baker Donelson Bearman Caldwell & Berkowitz PC, Birmingham, AL, for Defendant Choice Hotels International Inc. Claudine G. Jackson, Phelps Dunbar LLP, Fort Worth, TX, Christopher T. Byrd, Pro Hac Vice, Patrick Bryant Moore, Pro Hac Vice, Sarah Unatin, Pro Hac Vice, Shubhra R. Mashelkar, Pro Hac Vice, Weinberg Wheeler Hudgins Gunn & Dial LLC, Atlanta, GA, for Defendant ESA Management LLC.
W Mark Lanier, Monica Cooper, Pro Hac Vice, The Lanier Law Firm, P.C., Houston, TX, Charla G. Aldous, Aldous Walker LLP, Dallas, TX, Paul Pennock, Pro Hac Vice, Weitz Luxenburg PC, New York, NY, for Plaintiff.
Nicole Ordonez, Amber Rochelle Pickett, Nichol L. Bunn, Lewis Brisbois Bisgaard & Smith LLP, Dallas, TX, Karen L. Campbell, Pro Hac Vice, Lewis Brisbois Bisgaard & Smith LLP, New York, NY, for Defendant Best Western International Inc.
Jason S. Lewis, James C. Bookhout, DLA Piper LLP, Dallas, TX, Ellen E. Dew, Pro Hac Vice, DLA Piper (US) LLP, Baltimore, MD, for Defendant Marriott International Inc.
Isabel Andrade Crosby, DLA Piper LLP, Dallas, TX, Angela C. Agrusa, Pro Hac Vice, Shannon E. Dudic, Pro Hac Vice, DLA Piper LLP, Los Angeles, CA, for Defendant G6 Hospitality LLC.
Allissa Pollard, Christopher Donovan, DLA Piper LLP, Houston, TX, David S. Sager, Pro Hac Vice, DLA Piper LLP, Short Hills, NJ, for Defendant Wyndham Hotels and Resorts Inc.
Katriel Chaim Statman, Baker Donelson Bearman Caldwell & Berkowitz PC, Houston, TX, Sara M. Turner, Pro Hac Vice, Baker Donelson Bearman Caldwell & Berkowitz PC, Birmingham, AL, for Defendant Choice Hotels International Inc.
Claudine G. Jackson, Phelps Dunbar LLP, Fort Worth, TX, Christopher T. Byrd, Pro Hac Vice, Patrick Bryant Moore, Pro Hac Vice, Sarah Unatin, Pro Hac Vice, Shubhra R. Mashelkar, Pro Hac Vice, Weinberg Wheeler Hudgins Gunn & Dial LLC, Atlanta, GA, for Defendant ESA Management LLC.
ORDER
BARBARA M. G. LYNN, CHIEF JUDGE Before the Court are the Motion to Dismiss (ECF No. 55), filed by Defendant Best Western International, Inc.; the Motion to Dismiss (ECF No. 56), filed by Defendant Choice Hotels International, Inc.; the Motion to Dismiss (ECF No. 58), filed by Marriott International, Inc.; the Motion to Dismiss (ECF No. 61), filed by Wyndham Hotels and Resorts, Inc.; and the Motion to Dismiss (ECF No. 102), filed by ESA Management, LLC. For the reasons stated below, the Motions are GRANTED IN PART and DENIED IN PART. Plaintiff shall have twenty days from the date of this Order to file an amended complaint.
Movant Defendants requested oral argument on the Motions to Dismiss. The Court finds that oral argument is unnecessary and denies their request.
I. Background
In this case, Plaintiff E.S., a sex trafficking victim, alleges that Defendants have violated the William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008 ("TVPRA"), 18 U.S.C. § 1591, et seq. Plaintiff alleges that she was first trafficked for commercial sex when she was 21 years old in Fort Worth and Dallas, Texas. Plaintiff states that she was coerced into trafficking by a friend of her sister, who promised he would take care of her and her daughter. Plaintiff contends that, between approximately 2006 and 2011, she "was advertised on www.backpage.com against her will, physically tortured, and then sexually exploited under such duress at hotels in Arlington, Garland, Fort Worth, Grand Prairie, Dallas, Addison and Mesquite, Texas[,] including the Baymont Inn®, Days Inn®, Super 8®, Microtel®, La Quinta®, Best Western®, Wingate Hotel®, Howard Johnson®, Fairfield Inn and Suites®, Extended Stay America®, Studio 6®, La Quinta® and Quality Inn®." (ECF No. 46 ¶ 7); see also id. ¶ 8 ("[Plaintiff] was trafficked, sexually exploited, and repeatedly and brutally victimized at Defendants’ brand hotels in violation of 18 U.S.C. § 1591(a).").
Plaintiff asserts that her trafficker controlled a ring of women who were prostituted in Defendants’ brand hotels. Plaintiff alleges that when checking into the hotels, she would use fake IDs. She states that the reservations were either made in her name, her trafficker's name, or the name of another woman being trafficked. Plaintiff contends that she and the other women would pay for the rooms in cash or with a pre-paid card. Plaintiff states that while staying in the rooms, they would call for extra towels, refuse room service, and leave trash cans full of items associated with sexual activity. Plaintiff alleges that "there was significant foot traffic within the hotels that her trafficker frequented." (ECF No. 46 ¶ 169). Plaintiff states that "she remembers hearing screaming from down the hall, while other girls were being beaten by men in the trafficking ring." (Id. ). Plaintiff maintains that while she was staying at a Best Western hotel located at 201 West Loop 820 North, Fort Worth, Texas, she was removed from the hotel because the staff saw her advertisement on www.backpage.com. She states that she was not allowed to return to that location, but was permitted to stay at other Best Western hotels. (Id. ¶ 172).
On January 8, 2020, Plaintiff filed this lawsuit against Best Western, Marriott, ESA, Wyndham, Choice, and G6 Hospitality, alleging violations of § 1595 by each Defendant. Defendants Best Western, Marriott, ESA, Wyndham, and Choice ("Movant Defendants") move to dismiss Plaintiff's claims against them, arguing that Plaintiff has failed to state a claim under Federal Rule of Civil Procedure 12(b)(6). Best Western also moves to dismiss under Rule 12(b)(2) for lack of personal jurisdiction and argues that it is an improper party to the lawsuit. Choice moves to strike portions of Plaintiff's First Amended Complaint ("FAC") under Rule 12(f).
G6 Hospitality filed its answer on May 15, 2020 (ECF No. 53) and has not filed a motion to dismiss.
II. Legal Standards
A. Rule 12(b)(6)
Rule 12(b)(6) authorizes dismissal for failure to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). The Court must "constru[e] all factual allegations in the light most favorable to the plaintiffs." Kopp v. Klein , 722 F.3d 327, 333 (5th Cir. 2013). The Court is not, however, "bound to accept as true a legal conclusion couched as a factual allegation." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) (quoting Papasan v. Allain , 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ).
For a complaint to survive a Rule 12(b)(6) motion, it must contain "enough facts to state a claim to relief that is plausible on its face." Twombly , 550 U.S. at 570, 127 S.Ct. 1955. A facially plausible complaint "must allege more than labels and conclusions, ... factual allegations must be enough to raise a right to relief above the speculative level." Jebaco, Inc. v. Harrah's Operating Co., Inc. , 587 F.3d 314, 318 (5th Cir. 2009) (quoting Twombly , 550 U.S. at 555, 127 S.Ct. 1955 ).
B. Rule 12(b)(2)
When a defendant challenges personal jurisdiction under Rule 12(b)(2), the plaintiff bears the burden of "mak[ing] a prima facie showing that personal jurisdiction is proper." Monkton Ins. Servs., Ltd. v. Ritter , 768 F.3d 429, 431 (5th Cir. 2014) (internal citation omitted). The Court "must accept the plaintiff's uncontroverted allegations, and resolve in [her] favor all conflicts between the facts contained in the parties’ affidavits and other documentation." Id. at 431.
C. Rule 12(f)
Rule 12(f) provides that "[t]he court may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter." Both because striking a portion of a pleading is a drastic remedy, and because it often is sought by the movant simply as a dilatory tactic, motions under Rule 12(f) are viewed with disfavor and are infrequently granted. F.D.I.C. v. Niblo , 821 F. Supp. 441, 449 (N.D. Tex. 1993) (internal citation omitted). However, allegations can be appropriately stricken when they have no possible relation to the controversy and may thereby cause prejudice to one of the parties. Jefferson Parish Consol. Garbage Dist. No. 1 v. Waste Mgmt. of La. , Case No. 09-6270, 2010 WL 1731204, at *5 (E.D. La. Apr. 28, 2010) (internal citations omitted); Berry v. Lee , 428 F. Supp. 2d 546, 563 (N.D. Tex. 2006). The Court possesses considerable discretion in ruling on a motion to strike. Niblo , 821 F. Supp. at 449.
III. Analysis
A. Movant Defendants’ Rule 12(b)(6) Motions to Dismiss
Section 1591 of the TVPRA imposes criminal liability for sex trafficking, while § 1595 provides the following civil remedy:
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 damages and reasonable attorneys fees.
18 U.S.C. § 1595(a). To state a claim under a § 1595 financial beneficiary theory, Plaintiff must allege facts from which it can be reasonably inferred that Movant Defendants (1) "knowingly benefit[ted] financially or by receiving anything of value," (2) from participation in a venture, (3) they "knew or should have known has engaged in" sex trafficking under § 1591. See J.C. v. Choice Hotels Int'l, Inc., et al. , Case No. 20-cv-0155, 2020 WL 6318707, at *4 (N.D. Cal. Oct. 28, 2020).
Plaintiff claims that Movant Defendants are both directly and indirectly liable under § 1595. Movant Defendants move to dismiss Plaintiff's § 1595 claims under both theories. Best Western and Wyndham argue that Plaintiff's claims under § 1595 are partially barred by the statute of limitations and because the financial beneficiary prong of § 1595 does not apply retroactively. Movant Defendants also argue that the FAC is comprised of improper shotgun or group pleading.
Best Western also argues that Plaintiff fails to allege a plausible claim against it for violation of § 1591(a). (ECF No. 55 at 17). The Court does not interpret the FAC as bringing such a claim against any of the Movant Defendants, but to the extent it does, that claim is dismissed.
1. Direct Liability
a. Knowingly Benefitted
Movant Defendants argue that the FAC fails to allege sufficiently that the Movant Defendants "knowingly benefitted" from the sex trafficking of Plaintiff.
In the FAC, Plaintiff alleges that Movant Defendants have "financially benefit[t]ed ... by keeping operating costs low, and maintaining the loyalty of the segment of their customer base that seeks to participate in the sex trade. Moreover, [Movant Defendants] directly benefitted from the trafficking of [Plaintiff] on each occasion they received payment for rooms that she was being kept in at [Movant Defendants’] brand hotels." (See, e.g. , ECF No. 46 ¶ 191); see also, e.g., id. ¶ 14(d) (Movant Defendants "receive[ ] a percentage of the gross room revenue from the money generated by the operations of all [of Movant Defendants’ brand] hotels, including a percentage of the revenue generated from the rate charged for the rooms in which the Plaintiff was sex trafficked.").
Several other district courts have found that similar allegations are sufficient to plead the knowingly benefitted element. See, e.g., M.A. v. Wyndham Hotels & Resorts, Inc. , 425 F. Supp. 3d 959, 965 (S.D. Ohio 2019) ("[T]he rental of a room constitutes a financial benefit from a relationship with the trafficker sufficient to meet this element of the [§] 1595(a) standard."); A.B. v. Marriott Int'l, Inc. , 455 F. Supp. 3d 171, 191 (E.D. Pa. 2020) (same); H.H. v. G6 Hosp., LLC , Case No. 2:29-cv-755, 2019 WL 6682152, at *2 (S.D. Ohio Dec. 6, 2019) (same); S.Y. v. Naples Hotel Co. , 476 F.Supp.3d 1251, 1256-57 (M.D. Fla. 2020) (same); A.B. v. Hilton Worldwide Holdings Inc. , 484 F.Supp.3d 921, 936-37 (D. Or. 2020) (same). The Court agrees with these cases and finds that Plaintiff has alleged sufficiently the knowingly benefitted element under her direct liability theory.
b. Participation in Venture
Movant Defendants argue that to meet the participation element, Plaintiff must show that Movant Defendants committed an "overt act" that furthered the sex trafficking. (See, e.g. , ECF No. 58 at 10). For support, Movant Defendants cite United States v. Afyare , in which the Sixth Circuit held that § 1591(a)(2), the criminal provision of the TVPRA, "targets those who participate in sex trafficking; it does not target [those] who turn a blind eye to the source of their financial sponsorship." 632 F. App'x 272, 286 (6th Cir. 2016). There are at least two district courts that, applying Afyare ’s reasoning, have required a plaintiff asserting a civil claim under § 1595 to allege that the defendant actually participated in the sex trafficking. See Doe 1 v. Red Roof Inns, Inc. , Case No. 1:19-cv-3840, 2020 WL 1872335, at *3 (N.D. Ga. Apr. 13, 2020) ("Association alone cannot establish liability; instead, knowledge and ‘some participation in the sex trafficking act itself must be shown.’ ") (internal citation omitted); Noble v. Weinstein , 335 F. Supp. 3d 504, 524 (S.D.N.Y. 2018) ("Plaintiff must allege specific conduct that furthered the sex trafficking venture. Such conduct must have been undertaken with the knowledge, or in reckless disregard of the fact, that it was furthering the alleged sex trafficking venture. In other words, some participation in the sex trafficking act itself must be shown.").
However, most district courts have rejected Movant Defendants’ argument. See, e.g., M.A. , 425 F. Supp. 3d at 968–69 ; J.C. v. Choice Hotels Int'l , Case No. 20-cv-0155, 2020 WL 3035794, at *1 n. 1 (N.D. Cal. June 5, 2020) ; S.J. v. Choice Hotels Int'l, Inc. , 473 F.Supp.3d 147, 152-54 (E.D.N.Y. 2020) ; Doe S.W. v. Lorain-Elyria Motel, Inc. , Case No. 2:19-cv-1194, 2020 WL 1244192, *6 (S.D. Ohio Mar. 16, 2020). Those courts reasoned that "applying the definition of ‘participation in a venture’ provided for in § 1591 [ ] to the requirements under § 1595 would void the ‘known or should have known’ language of § 1595," and that this violates the "cardinal principle of statutory construction that a statute ought, upon the whole, to be construed so that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant." M.A. , 425 F. Supp 3d at 969 (internal quotation and citation omitted). The Court agrees with this statutory analysis, and concludes that Plaintiff is not required to establish an overt act in furtherance of or actual participation in sex trafficking under § 1595.
Still, the Court finds that Plaintiff's direct liability theory against Movant Defendants is insufficiently pled as to the participation element. Plaintiff asserts that Movant Defendants "participat[ed] in, and facilitate[ed], the harboring and providing of [Plaintiff] for the purposes of commercial sex induced by force, fraud, or coercion, by their acts, omissions, and/or commissions." (See, e.g. , ECF No. 46 at ¶ 195). Plaintiff further states that Movant Defendants "failed to take any steps to alert the authorities, properly intervene in the situation, or take reasonable security steps to improve awareness of sex trafficking and/or prevent sexual exploitation on their properties." (Id. at ¶ 185).
The Court finds that these allegations are not sufficient to plead that Movant Defendants directly participated in a specific venture that trafficked Plaintiff on specific occasions at the specific hotels mentioned in the FAC. See B.M. v. Wyndham Hotels & Resorts, Inc. , 20-CV-00656, 2020 WL 4368214, at *5 (N.D. Cal. July 30, 2020) ("The Complaint is devoid of any facts linking these Defendants (Wyndham and Choice) to the sex trafficking of this Plaintiff (B.M.) ") (emphasis in original); A.B. v. Hilton Worldwide Holdings Inc. , 484 F.Supp.3d at 938 ("General knowledge of commercial sex activity occurring at hotels across the United States is insufficient on its own to demonstrate Defendants participated in the trafficking of Plaintiff.").
c. Knew or Should Have Known of Plaintiff's Sex Trafficking
Movant Defendants argue that the FAC fails to allege sufficiently that they knew or should have known of the sex trafficking of Plaintiff. The FAC states that Plaintiff would use fake IDs to check into rooms in Movant Defendants’ brand hotels; that the reservations would be under various names, including her trafficker's name; that while staying in the rooms, Plaintiff would often call for extra towels, refuse service, and leave trash cans full of items associated with sexual activity; and that "there was significant foot traffic within the hotels that her trafficker frequented." (ECF No. 46 ¶ 169). With respect to Best Western, Plaintiff alleges that, while she was staying at the Fort Worth Best Western, she was removed from the premises after the hotel staff saw her www.backpage.com advertisement.
Despite these allegations, the FAC does not state how Movant Defendants knew or should have known that Plaintiff was being trafficked. See B.M. , 2020 WL 4368214, at *5 (finding that similar allegations did not support a theory that defendant franchisors knew or should have known about plaintiff's trafficking); see also A.B. v. Hilton Worldwide Holdings Inc. , 484 F.Supp.3d at 939 ("To support her direct liability theory, Plaintiff must allege facts showing how Hilton, Wyndham, Marriott, and Red Lion received notice that Plaintiff A.B. was trafficked at their respective properties and she has not done so.").
Plaintiff filed a Notice of Supplemental Authority in support of her position, which identifies J.C. v. Choice Hotels Int'l, Inc., et al. , Case No. 20-cv-0155, 2020 WL 6318707 (N.D. Cal. Oct. 28, 2020). In that case, the court found that J.C. pleaded "plausible allegations to show that the hotel defendants had actual and/or constructive knowledge about her sex trafficking as opposed to just sex trafficking problems in the hospitality industry in general." Id. at *6 (emphasis in original). J.C. alleged:
upon information and belief, that defendants "monitored criminal activity occurring at hotels under its brand," "regularly review[ed] and monitor[ed] customer reviews of its properties," and "discussed, developed, and implemented uniform policies and procedures to identify, prevent and mitigate the risk of human trafficking occurring at [their] properties, including [the hotels where J.C. was trafficked]" .... She further alleges that employees at these hotels "were aware of [her] trafficking and pursuant to corporate-wide policies, reported such activity directly to [defendants], including illegal website use, booking and reservation history; payment by cash for several rooms at a time and visits from multiple men throughout the day."
Id.
Here, Plaintiff does not make similar allegations that Movant Defendants monitored criminal activity at their hotels or that staff at the hotels were regularly reporting suspect activity to Movant Defendants. For example, even though Plaintiff alleges that she was removed from the Fort Worth Best Western after the hotel staff saw her www.backpage.com advertisement, there are no allegations in the FAC that the hotel staff notified or should have notified Best Western of the advertisement. The Court finds that Plaintiff has failed to allege a reasonable inference connecting Movant Defendants specifically to Plaintiff's trafficking.
In sum, Plaintiff has failed to allege sufficiently her direct liability claims under § 1595 against Movant Defendants.
2. Indirect Liability
Plaintiff seeks to hold Movant Defendants vicariously liable based on actual and apparent agency theories and under the alter ego doctrine. Plaintiff argues that Choice is also vicariously liable as a joint employer. To state a claim for vicarious liability under one of these theories, Plaintiff must plausibly allege that (1) Movant Defendants and their brand hotels are in an agency relationship, alter egos, or joint employers, and (2) the brand hotels or their staffs are plausibly liable under § 1595.
a. Relationship Between Movant Defendants and Their Brand Hotels
i. Actual Agency
As an initial matter, Choice argues that an agency relationship is not sufficient to create liability under the TVPRA. (ECF No. 56 at 19). Numerous district courts have rejected this argument. See, e.g., J.C. , 2020 WL 6318707, at *8 (listing cases). Here, Choice has not provided any authority to support its argument, and the Court finds that agency liability applies to claims under the TVPRA.
In order to prove the existence of an agency relationship, Texas law requires the party asserting agency (1) to prove the principal has both the right to assign the agent's task and (2) the right to control the means and details by which the agent will accomplish the task. Webster v. Lipsey , 787 S.W.2d 631, 635 (Tex. App.—Houston [14th Dist.] 1990, writ denied) ; Johnson v. Owens , 629 S.W.2d 873, 875 (Tex. App.—Fort Worth 1982, writ ref'd n.r.e.). Further, the right of control must pertain to a task or matter material to the lawsuit. Exxon Corp v. Tidwell , 867 S.W.2d 19, 23 (Tex. 1993) (stating that "the nature of the matters to which the right of control extends [is] determinative"); Barnes v. Wendy's Int'l Inc. , 857 S.W.2d 728, 730 (Tex. App.—Houston [14th Dist.] 1993, no writ).
The FAC alleges that an agency relationship between Movant Defendants and their brand hotels "was created and is maintained through [Movant Defendants’] exercise of an ongoing and systemic right of control over [their brand hotels] by [Movant Defendants’] operations, including the means and methods of how [their brand] hotels conduct daily business," including "hosting online bookings," "setting parameters on employee wages," "building and maintaining the facility in a manner specified by [Movant Defendants]," conducting "regular inspection of the facility and operation," and "standardiz[ing] training methods for employees." (See e.g. , ECF No. 46 ¶¶ 15(b) & (g), 90, 98, 135). The FAC states that "[u]pon information and belief, per the contract or franchise agreement, [Movant Defendants] may enforce these standards through periodic inspections and even termination of the agreement if the operating hotel ... is found to be inadequate." (See, e.g., id. ¶ 136). The Court finds that these allegations are sufficient at the pleading stage to show an actual agency relationship between Movant Defendants and their brand hotels.
ii. Apparent Agency
Under Texas law, apparent authority is based on estoppel arising "either from a principal knowingly permitting an agent to hold [itself] out as having authority or by a principal's actions which lack such ordinary care as to clothe an agent with the indicia of authority, thus leading a reasonably prudent person to believe that the agent has the authority [it] purports to exercise." Baptist Mem'l Hosp. Sys. v. Sampson , 969 S.W.2d 945, 949 (Tex. 1998). The party asserting the apparent agency must prove that the principal, by its conduct, caused the party to reasonably believe that the putative agent was an agent of the principal, and that the party justifiably relied on the appearance of agency. Id. at 948–49 (internal citation omitted).
In the FAC, Plaintiff states the legal conclusion that an apparent agency relationship exists between each Movant Defendant and its respective brand hotels. (See, e.g. , ECF No. 46 ¶ 162(g)). Plaintiff does not allege that each Movant Defendant held out its respective brand hotel to Plaintiff or the public as possessing authority to act on Movant Defendants’ behalf, that any representation was made to Plaintiff by Movant Defendants, or that Plaintiff reasonably relied on any representation made by Movant Defendants. See A.B. , 455 F. Supp. 3d at 197 (finding plaintiff did not plead an apparent agency theory because "given the facts as alleged, we do not see how she relied on any representation (which is not alleged) by Marriott regarding its franchisee hotels"); see also A.B. v. Hilton Worldwide Holdings Inc. , 484 F.Supp.3d at 942 ("[A]n apparent agency theory of liability does not comport with the underlying facts of this case," where plaintiff's "claim is premised on the notion that she was taken to the hotels against her will to be sex trafficked."). The Court finds that Plaintiff has failed to plead that Movant Defendants are vicariously liable under an apparent agency theory.
iii. Alter Ego
Plaintiff alleges that Movant Defendants "hold[ ] out [their brand hotels] to the public as their direct alter-ego each possessing authority to act on the other's behalf." (See, e.g. , ECF No. 46 ¶ 162(h)).
Texas law recognizes that the corporate form can be disregarded in certain circumstances. Under the alter ego doctrine, courts disregard the corporate entity when, "there exists such unity between the corporation and individual that the corporation ceases to be separate and when holding only one corporation liable would promote injustice." Mancorp, Inc. v. Culpepper , 802 S.W.2d 226, 228 (Tex. 1990) (internal citation omitted). The alter ego doctrine generally applies when a party seeks to hold an individual or entity liable for the obligations of a corporation in which the individual or entity owns stock. See Zahra Spiritual Trust v. United States , 910 F.2d 240, 245–46 (5th Cir. 1990).
Here, the FAC does not allege sufficiently that the brand hotels are the alter egos of Movant Defendants. For example, the FAC does not allege that Movant Defendants or their respective brand hotels own stock in each other or failed to follow separate corporate formalities. Plaintiff's attempt to hold Movant Defendants vicariously liable under an alter ego theory fails.
iv. Joint Employer
In the FAC, Plaintiff alleges that Choice is a "joint-venture" and receives from all of its hotels "an application fee, a lump sum payment, royalties, and other ongoing financial benefits." (ECF No. 46 ¶ 164(c); see also ECF No. 74 at 20 (Plaintiff argues in her response that "Choice is a joint employer because of the brand specific controls it required branded hotel properties to follow.")).
Choice responds that Plaintiff has not plausibly alleged that its brand hotels’ employees are employed by Choice. Choice contends that the franchisees in charge of the brand hotels for each location are "independent contractors that are solely responsible for business control of the locations at issue, including hiring, supervising, and training of hotel employees." (ECF No. 56 at 6). Choice also points to a statement by the National Labor Relations Board about its recently adopted rules, which provides,
To be a joint employer under the final rule, a business must possess and exercise substantial and direct immediate control over one or more essential terms and conditions of employment of another employer's employees. The final rule defines key terms, including what are considered "essential terms and conditions of employment," and what does, and what does not constitute "direct and immediate control" as to each of these essential employment terms. The final rule also defines what constitutes "substantial" direct and immediate control and makes clear that control exercised on a sporadic, isolated, or de minimis basis is not "substantial."
(Id. at 6–7).
Whether distinct entities can be considered joint employers for purposes of liability generally turns on how much control one exercises over the other. See, e.g, Cabrera v. Jacobs Tech., Inc. , Case No. H-10-1069, 2011 WL 1882517, at *4 (S.D. Tex. May 17, 2011) ("The right to control an employee's conduct is the most important component" of the hybrid economic realities/common law control test applied to ascertain whether two entities are joint employers under Title VII."). The Court finds that the allegations in support of Plaintiff's actual agency theory described above could plausibly show control by Choice over its brand hotels to establish joint employer status.
b. Brand Hotels’ Liability under § 1595
In order to show that Movant Defendants are vicariously liable, Plaintiff must allege that Movant Defendants’ brand hotels are plausibly liable under § 1595. The Court finds that Plaintiff has not alleged with sufficient specificity that the brand hotels participated in Plaintiff's sex trafficking or that they knew or should have known of Plaintiff's sex trafficking. The FAC does not state how long Plaintiff stayed at each specific hotel, how many times she stayed at each specific hotel, or whether she interacted with the same hotel staff during each stay. Even the allegation that Plaintiff was removed from the Fort Worth Best Western after the hotel staff saw her www.backpage.com advertisement is insufficient, because it is not clear what the advertisement said and whether it would have put the hotel staff on notice that Plaintiff was being sex trafficked at that hotel. Thus, Plaintiff's indirect liability claims against Movant Defendants are dismissed.
3. Retroactivity of the Financial Beneficiary Prong and Statute of Limitations
Best Western and Wyndham argue that Plaintiff's claims fail to the extent that they seek to recover based upon alleged acts and omissions occurring before December 23, 2008, the effective date on which Congress amended the TVPRA to include the financial benefit prong, because that amendment does not apply retroactively. Many district courts have found that the 2008 amendment is not retroactive. See, e.g., Gonzalez v. CoreCivic, Inc. , Case No. 1:18-CV-169-LY, 2019 WL 2572540, at *3 (W.D. Tex. Mar. 1, 2019) ; H.G. v. Inter-Cont'l Hotels Corp. , Case No. 19-CV-13622, 489 F.Supp.3d 697, 710–11 (E.D. Mich. Sept. 23, 2020) ; Griffin v. Alamo , Case No. 4:14-CV-4065, 2016 WL 7391046, at *4 (W.D. Ark. Dec. 21, 2016). Those courts reasoned that the 2008 amendment did not apply retroactively because there is a "presumption against retroactive legislation [that] is deeply rooted in our jurisprudence," see Landgraf v. USI Film Prods. , 511 U.S. 244, 265, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994), and because there is no evidence that Congress intended the financial beneficiary prong of § 1595 to apply retroactively. This Court agrees with such analysis. Thus, even if Plaintiff pled sufficiently direct or indirect TVPRA claims against Movant Defendants, she would be barred from recovering damages for any alleged violations of the financial beneficiary prong of § 1595, at the hotels specified in the FAC, prior to December 23, 2008.
Best Western also argues that Plaintiff's TVPRA claim is partially barred because the TVPRA has a 10-year statute of limitations. Plaintiff alleges that she was trafficked between 2006 and 2011. The TVPRA provides, in relevant part, that "no action may be maintained under [ § 1595(a) ] unless it is commenced not later than ... 10 years after the cause of action arose." 18 U.S.C. § 1595(c). Best Western asserts that Plaintiff should be barred from pursuing claims for violations of the TVPRA that occurred before January 8, 2010, ten years prior to the filing of her initial Complaint in this case. Plaintiff responds that the statute of limitations for her claim is tolled "due to the force and coercion Plaintiff underwent by her trafficker." (ECF No. 77 at 19). The Court finds that whether the statute of limitations should be tolled involves fact questions that are better resolved at summary judgment.
4. Shotgun/Group Pleading
Movant Defendants argue that the FAC should be dismissed under Rules 8 and 12(b)(6) because it fails to attribute specific factual allegations to specific Movant Defendants and constitutes a shotgun pleading. (See, e.g. , ECF No. 58 at 18–20). For example, Marriott argues that "[t]here is not a single allegation in the Amended Complaint stating specifically that that [sic] Plaintiff was trafficked at the two Fairfield Inn hotels identified in the complaint, or identifying when, [between 2006 and 2011], Plaintiff was trafficked at any of the hotels." (Id. at 19).
It is true that the FAC contains numerous allegations that relate to the hotel industry in general, but it also contains specific allegations as to each Movant Defendant. For instance, the FAC states that Marriott (1) "owns, supervises, and/or operates the Fairfield Inn® hotels located at 2500 E. Lamar Boulevard in Arlington and at 2110 Market Center Boulevard and North Stemmons Freeway in Dallas, Texas;" (2) "controls the training and policies for its brand hotels including the Fairfield Inn hotel where [Plaintiff] was trafficked;" and (3) "Marriott receives a percentage of the gross room revenue from the money generated by the operations of Fairfield Inn® hotels, including a percentage of the revenue generated from the rate charged for the rooms in which the Plaintiff was sex trafficked." (ECF No. 46 ¶ 15). Further, although the section in the FAC titled "The Sex Trafficking of [Plaintiff]" alleges facts with respect to all Movant Defendants (see, e.g., id. ¶ 169 ("When checking into the hotels, E.S. would use [fake IDs].")), the Court finds that the FAC provides adequate notice of Plaintiff's claims to Movant Defendants under Rule 8. Still, to facilitate the discovery process and because the Court is granting Plaintiff leave to amend the FAC to correct the deficiencies stated in this Order, she is instructed to add to her Second Amended Complaint as many details as possible about her specific experiences at each brand hotel.
B. Best Western's 12(b)(2) Motion to Dismiss for Lack of Personal Jurisdiction
Best Western moves to dismiss under Rule 12(b)(2) for lack of personal jurisdiction. The Court finds that specific personal jurisdiction exists over Best Western.
The Court has the power to exercise personal jurisdiction over a nonresident defendant if the following conditions are satisfied: "(1) the long-arm statute of the forum state confers personal jurisdiction over that defendant; and (2) exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution." Ainsworth v. Moffett Eng'g, Ltd. , 716 F.3d 174, 177 (5th Cir. 2013). Because "[t]he Texas long-arm statute extends to the limits of the Constitution," only the second prong of the test is at issue. Stroman Realty, Inc. v. Antt , 528 F.3d 382, 385 (5th Cir. 2008).
There are two categories of personal jurisdiction: general and specific. Daimler AG v. Bauman , 571 U.S. 117, 127, 134 S.Ct. 746, 187 L.Ed.2d 624 (2014). Best Western argues that the Court has neither general nor specific jurisdiction over it. Because the Court finds that specific personal jurisdiction exists over Best Western, it need not address whether general personal jurisdiction exists.
For the Court to exercise specific jurisdiction over a nonresident who has not consented to suit in the forum state, the nonresident must have contacts with the forum state that "arise from or are directly related to the cause of action." Marathon Oil Co. v. A.G. Ruhrgas , 182 F.3d 291, 295 (5th Cir. 1999) (internal citation omitted). The Fifth Circuit mandates a three-step inquiry for an analysis of specific jurisdiction: (1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable. Monkton Ins. Servs., Ltd. , 768 F.3d at 433. If the plaintiff establishes the first two prongs, then the burden shifts to the defendant to show that the exercise of personal jurisdiction over it would not be fair or reasonable. Id.
The minimum contacts test is a fact-intensive inquiry, the touchstone of which is "whether the defendant's conduct shows that it ‘reasonably anticipates being haled into court’ [in the forum state]." McFadin v. Gerber , 587 F.3d 753, 759 (5th Cir. 2009) (internal citation omitted). Specific jurisdiction cannot be established through random, fortuitous, or attenuated contacts, nor from the "unilateral activity of a third party or another person." Id. (quoting Burger King Corp. v. Rudzewicz , 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ).
The Court determines that, construing the FAC in the light most favorable to Plaintiff, there are sufficient allegations to indicate Best Western has minimum contacts with Texas. The FAC states that "Best Western owns, supervises, and/or operates the Best Western® hotels located at 201 West Loop 820 North in Fort Worth and at 2075 North State Highway 360, Grand Prairie, Texas," where Plaintiff alleges she was trafficked. (ECF No. 46 ¶ 14(e)). The FAC alleges that Best Western received "a percentage of the gross room revenue from the money generated by the operations of all Best Western® hotels, including a percentage of the revenue generated from the rate charged for the rooms in which the Plaintiff was sex trafficked." (Id. ¶ 14(d)). Plaintiff contends that Best Western "operates dozens of hotels in Texas, including the Best Western® locations listed [in the FAC], contracts to supply services in Texas, caused indivisible injuries to the Plaintiff in Texas, and profited from an illegal sex trafficking venture at multiple Best Western® locations in the state of Texas." (Id. ¶ 14(f)).
These contacts are not "random, fortuitous, or attenuated," and constitute purposeful availment. See McFadin , 587 F.3d at 759. Plaintiff has alleged a causal connection between Best Western's contacts and her injuries as a result of her sex trafficking in the specified hotel locations. The Court finds that its exercise of personal jurisdiction over Best Western is not unfair or unreasonable. See J.C. , 2020 WL 6318707, at *4 (finding specific personal jurisdiction existed over defendant hotel where defendant owned and operated franchised hotels in the forum state, including in certain locations where plaintiff was trafficked); Doe S.W. , 2020 WL 1244192, at *3 (same).
C. Whether Best Western is an Improper Party
Although Rule 21, which governs improper joinder, is not cited in its Motion to Dismiss, Best Western argues that it is an improper party to this action. The FAC alleges that two specific hotels are "own[ed], supervise[d], and/or operate[d]" by Best Western: one at 201 West Loop 820 North in Fort Worth, Texas and one at 2075 North State Highway 360, Grand Prairie, Texas. Best Western argues that the Grand Prairie hotel was not affiliated with Best Western during the 2006–2011 period that Plaintiff alleges she was trafficked, and that it did not become a Best Western brand hotel until 2012. Best Western states that it provided Plaintiff's counsel with an affidavit attesting that the Grand Prairie hotel was not a Best Western brand hotel during the time of Plaintiff's alleged trafficking.
Best Western also asserts it is not a proper party to this case because it has no ownership, control, or operation of the Fort Worth hotel or the Grand Prairie hotel. Best Western points to the Tarrant County Appraisal District's public website, and argues that Best Western is not the owner of the Fort Worth hotel or the Grand Prairie hotel. Best Western also attaches its membership agreements with the owners of those hotels, which state the following:
BEST WESTERN HAS NO RESPONSIBILITY FOR THE USE, CONDITION OR OPERATION OF THE HOTEL OR THE SAFETY OF THE DESIGN OF ANY STRUCTURE OR PRODUCT. BEST WESTERN HAS NO CONTROL OVER OR RESPONSIBILITY FOR ANY DECISION AFFECTING THE EMPLOYMENT OR SUPERVISION OF ANY PERSON EMPLOYED IN CONNECTION WITH THE HOTEL.
(See ECF No. 55, Exs. G & H). Best Western argues that, "[w]hen a franchisor or brand does not have the right to control the premises, as shown here, no agency relationship exists between the franchisor and franchisee, and thus the franchisor may not be held vicariously liable for civil claims." (Id. at 18).
The Court finds that whether the Fort Worth and the Grand Prairie hotels are affiliated with, owned by, operated by, or controlled by Best Western during the relevant time period is a question of fact. At this stage, the Court takes as true the allegations in the FAC that both hotels were affiliated with, owned by, operated by, or controlled by Best Western during the time Plaintiff was sex trafficked. While Best Western is correct that the Court can consider documents outside the pleadings that are referred to in the FAC and are central to Plaintiff's claims, see Causey v. Sewell Cadillac–Chevrolet, Inc. , 394 F.3d 285, 288 (5th Cir. 2004), and can take judicial notice of matters of public record, see Funk v. Stryker Corp. , 631 F.3d 777, 783 (5th Cir. 2011), the documents submitted by Best Western do not convince the Court to decide these issues as a matter of law at this stage in the case. That said, the Court reminds Plaintiff of her duty under Rule 11 to conduct a reasonable inquiry into the facts supporting her allegations.
D. Choice's Motion to Strike
Choice requests that the Court strike from the FAC "paragraphs that have no bearing on the facts of issues of this case," including "salacious and unopposed allegations about the hospitality industry's participation in the sex trafficking industry." (ECF No. 56 at 9–10). Specifically, Choice asks that the Court strike paragraphs 27–35, 95–114, and 130–132 "as impertinent, salacious, and meant merely to flame emotions." (Id. at 10).
The Court finds that, at this stage, the allegations in those paragraphs provide appropriate context to Plaintiff's suit and do not meet the standard for being stricken under Rule 12(f). Choice's Motion to Strike is denied.
IV. Conclusion
IT IS ORDERED that Movant Defendants’ Motions to Dismiss (ECF Nos. 55, 56, 58, 61, 102) are GRANTED IN PART and DENIED IN PART. Plaintiff's TVPRA claims against Movant Defendants under a direct liability theory, an actual agency theory, and the joint employer doctrine are DISMISSED WITHOUT PREJUDICE. Plaintiff's TVPRA claims against Movant Defendants under an apparent agency theory and the alter ego doctrine are DISMISSED WITH PREJUDICE. Further, all of Plaintiff's TVPRA claims against Movant Defendants that are based on alleged violations of § 1595 prior to December 23, 2008, are DISMISSED WITH PREJUDICE. By January 25, 2021, Plaintiff shall file a Second Amended Complaint with the amendments limited to the matters covered herein. Plaintiff is instructed to file a clean copy and a redline of the Second Amended Complaint.