Case Report – S.C. v. Hilton Franchise Holding LLC

Prepared by Michelle Emeterio

A November 12, 2024 court order in S.C. v. Hilton Franchise Holding LLC, No. 2:23-CV- 02037-APG-DJA, 2024 WL 4773981, at *1 (D. Nev. Nov. 12, 2024) denied defendant Hilton Franchise Holding’s motion to dismiss sex trafficking claims.

Claims

Plaintiff “S.C.” brought sex trafficking claims against Hilton Franchise Holding, LLC, hotel operators, and several individuals, alleging the defendants participated in or benefitted from sex trafficking S.C. at a Las Vegas hotel.

The claims were brought under:

• The Trafficking Victims Protection Reauthorization Act (TVPRA) – under the TVPRA, a victim of sex trafficking may sue:
  • the perpetrator of their trafficking, and
  • whoever knowingly benefits, or attempts or conspires to benefit, financially or by receiving anything of value from participation in a venture which that person knew or should have known has engaged in sex trafficking.
• The Child Abuse Victims’ Rights Act (CAVRA).
• Nevada laws for victims of human trafficking, negligence, and intentional infliction of emotional distress.

This Case Report focuses on the claims brought under the TVPRA.¹

Background

S.C.’s first amended complaint indicated as follows:

• S.C. was threatened and forced into commercial sex starting when she was 16, including more than 150 times at the same hotel over a period of less than 2 years. Repeat encounters involved an older man booking a room in advance while S.C.’s traffickers “would deliver her at the front door and wait in a car in the parking lot within view of the hotel’s security cameras.” The man “would stay for only a couple of hours, just long enough to meet with

S.C. and leave behind a room with used condoms in the trash and soiled sheets.”

• It would have been clear to any reasonable person that S.C. was under 18 years old, was in sexual attire inappropriate for her age and the weather, and would leave within a few hours in the same car, driven by older people.
• After time, emotional abuse, beatings, and supplies of illegal drugs, she visibly deteriorated to only 90 pounds and struggled to walk.
• Hotel staff never attempted to evict the men S.C. was visiting or call the police, while the hotel profited from room rentals.

S.C.’s complaint further alleged that Hilton, as the franchisor, controlled many of the hotel’s operations including with strict brand quality standards, inspections, employee training, approval authority for management hiring, and monitoring of guest complaints.

Hilton’s Motion to Dismiss

Hilton argued that S.C. failed to plausibly allege a cause of action against Hilton or its franchisees and that her state common-law claims were time-barred.

Hilton objected to the fact that many of the allegations were pleaded “on information and belief.” It also argued that S.C.’s complaint failed to identify a venture between the traffickers and Hilton and that it does not control the hotel employees “other than maintaining brand standards consistent with a typical franchise agreement, which does not create an agency relationship or joint employer status.”

Denial of the Motion to Dismiss

The court accepted S.C.’s allegations pleaded on information and belief, noting that the Twombly plausibility standard does not prevent this where the facts are peculiarly within the possession and control of the defendant, etc. The court determined that S.C. has standing as a victim and that she plausibly alleged that Hilton knew or should have known that it was participating in a venture engaged in trafficking.

As to beneficiary liability, the court determined that, taken together with the financial benefit of the franchise agreement, the following facts sufficed:

[T]hat Hampton Inn employees concluded that S.C. was underage and being trafficked, that the employees were under a duty to inform Hilton of suspected trafficking, and that the Hampton Inn employees did inform Hilton of suspected trafficking during the relevant time period, including S.C.’s trafficking.

But, the following facts alone would not have sufficed because they did not reveal to Hilton the person’s age, or whether her encounters at the hotel were under force, threats of force, fraud, or coercion, and because the TVPRA does not require hotels or their franchisors to affirmatively stop sex trafficking:

[T]hat Hilton had constructive knowledge based on [a] suspicious pattern of room rentals.

[That] Hilton was on notice about the prevalence of [sex] trafficking at its hotels, yet it failed to take adequate steps to train staff in order to prevent its occurrence.

As to indirect liability as both perpetrator and beneficiary through the actions of the hotel employees, the court found that S.C. had plausibly alleged both an agency relationship and an employment relationship for TVPRA purposes by controlling employees and day-to-day operations of the aspects of the hotel that knowingly benefitted from the sex trafficking of S.C.

Conclusion and Next Steps

Though the motion was denied, the parties were granted leave. That is, Hilton was granted leave to file supplemental authority (two cases decided after it filed its reply) to support its contentions that S.C. “failed to differentiate between the defendants, failed to allege sufficient knowledge about sex trafficking, and failed to establish an agency relationship.” And, S.C. was granted leave to file a second amended complaint to bring a perpetrator claim under the TVPRA.

Michelle Emeterio is an intellectual property associate in Snell & Wilmer’s Orange County office. Her practice focuses on trademark, copyright, and franchise counseling and application prosecution.

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¹ The court granted S.C. leave to amend her complaint if she also wishes to add a perpetrator-beneficiary liability claim based on “harboring.” Perpetrator-beneficiary liability requires actual knowledge and assistance or facilitating of the venture (S.C.’s existing TVPRA claims carry a lower, negligence standard).