United States: Mohler Comments On Hotels' Trafficking Liability

"What is happening is the civil cases against managers and owners are getting past the motion to dismiss phase and into discovery, and where they go from there is still a story to be told," said Bryan Mohler, a member of Pryor Cashman LLP's real estate, hotel and hospitality, and litigation groups, noting many cases have settled privately.

"The general rule ... is that you have to show that they knew or should have known, [such as] via continued business relationships between a hotel and trafficker, but that's been a very easy bar for litigants to get past."

According to Mohler of Pryor Cashman, courts across the country have increasingly been adhering to the distinction between a hotel franchisor and its actual managers and owners since the U.S. District Court for the Eastern District of New York became among the first to draw it in July 2020 when largely granting a motion to dismiss by Choice Hotel International, Wyndham Hotels and Resorts, and Howard Johnson International in S.J. v. Choice Hotels Inc. et al.

"However, to conclude that franchisors ... are liable under the TVPRA simply because they were generally aware that sex-trafficking sometimes occurred on their franchisees' properties unjustifiably bridges the scienter gap between 'should have known' and 'might have been able to guess,'" U.S. District Judge Brian M. Cogan wrote at the time in a 16-page order.

Since then, many franchisor defendants have cited that decision in seeking dismissals of similar allegations against them, said Mohler.

"There was lots of litigation brought against franchisors, because they are the ones with the big pockets," he told Law360.