Court Opinion

ID: 5139927
Source: CourtListenerOpinion
Date Created: 2021-12-22 22:00:49.038781+00
Date Added: 2024-06-11T08:24:20.320583
License: Public Domain

USCA11 Case: 20-11764    Date Filed: 12/22/2021   Page: 1 of 31

                                                   [PUBLISH]
                          In the
         United States Court of Appeals
                For the Eleventh Circuit

                  ____________________

                        No. 20-11764
                  ____________________

JANE DOE #1,
                                            Plaintiff-Appellant,
versus
RED ROOF INNS, INC., et al.,

                                                   Defendants,

CHOICE HOTELS INTERNATIONAL, INC.,
WYNDHAM HOTELS & RESORTS INC,
MICROTEL INNS AND SUITES FRANCHISING, INC.,

                                        Defendants-Appellees.
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2                   Opinion of the Court                20-11764

                  ____________________

         Appeal from the United States District Court
            for the Northern District of Georgia
           D.C. Docket No. 1:19-cv-03840-WMR
                  ____________________

                  ____________________

                        No. 20-11769
                  ____________________

JANE DOE #2,
                                              Plaintiff-Appellant,
versus
RED ROOF INNS, INC., et al.,

                                                     Defendants,

CHOICE HOTELS INTERNATIONAL, INC.,
WYNDHAM HOTELS & RESORTS INC,
MICROTEL INNS AND SUITES FRANCHISING, INC.,
VARAHI HOTEL, LLC,

                                           Defendants-Appellees.
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20-11764              Opinion of the Court                       3

                    ____________________

           Appeal from the United States District Court
              for the Northern District of Georgia
             D.C. Docket No. 1:19-cv-03841-WMR
                    ____________________

                    ____________________

                          No. 20-11771
                    ____________________

JANE DOE #3,
                                               Plaintiff-Appellant,
versus
RED ROOF INNS, INC., et al.,

                                                      Defendants,

WYNDHAM HOTELS & RESORTS INC,
MICROTEL INNS AND SUITES FRANCHISING, INC.,
ESA MANAGEMENT, LLC,
ESA P PORTFOLIO, LLC,
EXTENDED STAY AMERICA, INC.,
ESA P PORTFOLIO OPERATING LESSEE, LLC,
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4                   Opinion of the Court                20-11764

                                           Defendants-Appellees.

                  ____________________

         Appeal from the United States District Court
            for the Northern District of Georgia
           D.C. Docket No. 1:19-cv-03843-WMR
                  ____________________

                  ____________________

                        No. 20-11770
                  ____________________

JANE DOE #4,
                                              Plaintiff-Appellant,
versus
RED ROOF INNS, INC., et al.,

                                                     Defendants,

CHOICE HOTELS INTERNATIONAL, INC.,
WYNDHAM HOTELS & RESORTS INC,
MICROTEL INNS AND SUITES FRANCHISING, INC.,
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20-11764                Opinion of the Court                         5

                                               Defendants-Appellees.

                     ____________________

           Appeals from the United States District Court
               for the Northern District of Georgia
              D.C. Docket No. 1:19-cv-03845-WMR
                     ____________________

Before JORDAN, BRASHER, and ANDERSON, Circuit Judges.
BRASHER, Circuit Judge:
       Four sex trafficking victims, proceeding as Jane Does, filed
complaints against numerous defendants within the hotel industry
for violations of the Trafficking Victims Protection Reauthoriza-
tion Act, specifically 18 U.S.C. § 1595(a), and Georgia state law. Un-
der the TVPRA, a trafficking victim may sue a sex-trafficking per-
petrator and “whoever knowingly benefits, financially or by receiv-
ing anything of value from participation in a venture which that
person knew or should have known has engaged in an act in viola-
tion of [the Trafficking Victims Protection Act].” 18 U.S.C. §
1595(a). The Does alleged that they were trafficked in Atlanta-area
hotels and sued the hotel operators, employees, owners, fran-
chisees, and franchisors of those hotels.
       The district court held that the Does failed to plausibly allege
claims against three hotel franchisors: Choice Hotels International,
Inc., Wyndham Hotels & Resorts, Inc., and Microtel Inn & Suites
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6                        Opinion of the Court              20-11764

Franchising, Inc. It dismissed their amended complaints as to those
franchisors. And the Does appealed.
        To resolve this appeal, we must answer two questions. First,
we must decide a question of first impression about the elements
of a TVPRA beneficiary claim. We hold that Section 1595(a) should
be applied according to its plain meaning: that is, to state a claim
for beneficiary liability under the TVPRA, a plaintiff must plausibly
allege that the defendant (1) knowingly benefited (2) from taking
part in a common undertaking or enterprise involving risk and po-
tential profit, (3) that the undertaking or enterprise violated the
TVPRA as to the plaintiff, and (4) that the defendant had construc-
tive or actual knowledge that the undertaking or enterprise vio-
lated the TVPRA as to the plaintiff. Second, we must determine
whether the Does have plausibly alleged facts that satisfy those el-
ements against each of the franchisors. Here, we conclude that the
Does have failed to meet that burden as to the three franchisors at
issue on appeal. We likewise conclude that, as to these three de-
fendants, the Does did not state a plausible claim under Georgia
state law. Accordingly, we affirm.
                      I.      BACKGROUND

                    A.      Factual Background

       Four Jane Does filed nearly identical amended complaints
against individuals and businesses involved in the hotel industry,
including individual hotels, owners, management, and franchisors.
The Does alleged that they were “victims of the conspicuous and
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20-11764                Opinion of the Court                         7

open sex trafficking that occurred at Defendants’ hotels.” They
pleaded facts about hotel sex trafficking generally and sex traffick-
ing in the Atlanta area, specifically.
       Among the defendants are the three franchisors relevant to
this appeal: Choice Hotels International, Inc., Wyndham Hotels &
Resorts, Inc., and Microtel Inn & Suites Franchising, Inc. Choice is
a franchisor that licenses its brand to the Suburban Extended Stay
in Chamblee, Georgia. Wyndham is the parent company of MISF
and the franchisor that licenses its brand to the Microtel Inn &
Suites in Atlanta, Georgia. MISF enters into franchise agreements
with Microtel Inn & Suites franchisees on Wyndham’s behalf. The
Does alleged that these franchisors violated the TVPRA, 18 U.S.C.
§ 1595(a); the Georgia Racketeer Influenced and Corrupt Organi-
zations Act, O.C.G.A. §§ 16-14-4(a), (c); and acted negligently.
        The Does alleged that these two hotels—the Suburban Ex-
tended Stay in Chamblee and the Microtel Inn & Suites in At-
lanta—“accommodate[d], facilitate[d], and participate[d] in the sex
trafficking of women, men, and children in Atlanta”—including
their own sex trafficking. The Does alleged that they were “forced
to engage in commercial sex acts at [these] hotels by various sex
traffickers.” And the money that their traffickers made from those
ventures was “used to pay . . . for their hotel rooms and other ser-
vices in furtherance of the sex trafficking ventures occurring at
[these] hotels.” Some of the hotels’ employees worked with the
traffickers by, for example, acting “as lookouts, notifying traffickers
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8                      Opinion of the Court                20-11764

if police were present.” Traffickers paid these employees in cash or
drugs.
       Does 1, 2, and 4 alleged that there was a “well-established
sex trafficking venture” at the Suburban Extended Stay licensed by
Choice Hotels in Chamblee, Georgia. That alleged venture was
comprised of “traffickers, the hotel’s employees, management,
owners, and franchisor, as well as others involved in the sex traf-
ficking of victims at that hotel.” Many of the local hotel’s employ-
ees assisted and facilitated the Does’ trafficking and were paid by
the traffickers to work as lookouts. While being trafficked at the
Suburban Extended Stay, the Does “exhibited numerous well-
known and visible signs of a sex trafficking victim.” And the state
of the hotel rooms used for the trafficking and the constant flow of
men in and out of rooms suggested that sex trafficking was occur-
ring at the hotel.
       Three Does alleged that Choice “controlled the policies and
standards applicable to and enforced (or not enforced) at the Sub-
urban Extended Stay (Chamblee), as well as the training of its man-
agers and employees.” Choice also “sent inspectors to examine this
hotel, at times anonymously, and the ongoing sex trafficking activ-
ity would have been apparent to those inspectors.” Further, the
Does alleged upon information and belief that Choice monitored
online reviews of the hotel, which “reported widespread prostitu-
tion and crime occurring at the hotel.” The Does also alleged that
customers complained to Choice about prostitution, commercial
sex trafficking, and other criminal activity at the hotel. The police
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20-11764               Opinion of the Court                         9

responded to prostitution calls at the hotel on numerous occasions,
and nonprofit and religious groups regularly visited “to provide
food and rescue information to the sex trafficking victims they en-
counter[ed] at the hotel.”
        As for Wyndham and MISF, all four Does alleged that there
was also a “well-established sex trafficking venture at the Microtel”
in Atlanta that was licensed by Wyndham and MISF. The Does al-
lege that the local hotel’s employees participated in, assisted, and
facilitated the Does’ trafficking at the Microtel by working as look-
outs for traffickers and allowing them to use the lobby computer
to advertise for sex with Does 1 and 2. And during the years that
Doe 4 was trafficked at the Microtel, “a single sex trafficker com-
pletely controlled the third floor of the hotel.” That trafficker also
used the banquet room to take photographs of victims to use for
online advertisements. Wyndham and MISF “controlled the poli-
cies and standards applicable to and enforced (or not enforced) at
the Microtel (Atlanta), as well as the training of its managers and
employees.” “Wyndham and [MISF]––the hotel’s franchisor[s]––
sent inspectors to examine this hotel, at times anonymously, and
the ongoing sex trafficking activity would have been apparent to
those inspectors.”
       The Does alleged that the three franchisors profited from
this activity. In exchange for allowing the Microtel to use its brand,
Wyndham received “royalty and other fees based on a percentage
of their gross room revenue.” The other franchisors also earned a
percentage of the revenue generated from the daily rental of hotel
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10                     Opinion of the Court                20-11764

rooms, including the rental of rooms used to “harbor, exploit, and
sell” each of the Does. And the franchisors “intentionally turn[ed]
a blind eye to safety and security issues at their hotels . . . even
when [they] knew or should have known part of [their] profits were
derived from sex trafficking ventures.” They “should have known”
about those sex trafficking ventures, according to the Does, be-
cause sex trafficking occurred openly at the hotels, and the franchi-
sors routinely “investigate individual hotel locations and take re-
medial action” when revenue is down.
                  B.     Procedural Background

       The Does asserted a “standalone” civil beneficiary TVPRA
claim against the franchisors and alleged that they knowingly ben-
efitted from participation in a sex trafficking venture that they
“knew or should have known” violated the TVPRA. They also as-
serted Georgia RICO claims predicated on violations of Section
1591 and Georgia state law. Finally, they alleged negligence based
on the franchisors’ “supervisory control and authority over em-
ployees, contractors and others” at the hotels, their failure to keep
the hotels safe, and their failure to “adequately and properly pro-
tect their invitees, including [the Does], in breach of their duty of
care.” Soon after filing the amended complaint, Doe 3 voluntarily
dismissed all claims against Choice without prejudice.
      Choice, Wyndham, and MISF moved to dismiss each of the
Does’ amended complaints against them for failure to state a claim.
Choice alternatively moved to strike certain allegations from Does
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20-11764                Opinion of the Court                        11

1, 2, and 4’s amended complaints as “impertinent and salacious.”
The district court granted the motions to dismiss as to all claims
against Choice, Wyndham, and MISF without prejudice in nearly
identical orders in each case. In those orders, the district court also
granted Choice’s motion to strike the disputed language from Does
1, 2, and 4’s amended complaints and sua sponte struck the same
material from Doe 3’s amended complaint.
        The Does then moved for entry of judgment in favor of
Choice (in all cases except for the third Doe’s case), Wyndham, and
MISF under Federal Rule of Civil Procedure 54(b) and for interloc-
utory review under 28 U.S.C. § 1292(b). They argued that the dis-
trict court’s order dismissing Wyndham, MISF, and Choice was a
final judgment under Rule 54(b) and there was no just reason for
delay because (1) the immediate resolution of an appeal would re-
solve issues in all four interrelated Doe actions, streamlining the
litigation; (2) there would be a risk of duplicative discovery and tri-
als without an immediate appeal, and an immediate appeal could
serve to limit the scope of discovery; (3) the cases were still in the
early stages of discovery, so duplicative discovery could best be
avoided now; and (4) COVID-19’s impact on the defendants’ oper-
ations could diminish the Does’ ability to recover later on. The
Does also argued that the question presented by the dismissal or-
der, how to interpret 18 U.S.C. § 1595(a)’s knowledge requirement,
satisfied the Section 1292(b) factors for interlocutory review. No
defendant opposed the motion.
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12                     Opinion of the Court                 20-11764

       The district court granted the franchisors’ motions for Rule
54(b) certification and interlocutory review under Section 1292(b)
and stayed discovery pending the anticipated appeals. The court
later amended the entry of final judgment to dismiss Choice,
Wyndham, and MISF with prejudice at the Does’ request and after
they waived the right to later add the defendants if unsuccessful on
appeal.
       Each Doe timely appealed the district court’s amended Rule
54(b) judgment and, in the alternative, filed a petition for permis-
sion to appeal under Section 1292(b).
                      II.    JURISDICTION

       We must first satisfy ourselves that we have jurisdiction
over this appeal. See Boyd v. Homes of Legend, Inc., 188 F.3d 1294,
1297 (11th Cir. 1999). The Does argue that we have jurisdiction un-
der both 28 U.S.C. § 1291 and 28 U.S.C. § 1292. We conclude that
jurisdiction is proper under 28 U.S.C. § 1291 because the district
court properly directed entry of final judgment as to the franchisor
defendants under Rule 54(b). We therefore do not reach the ques-
tion of whether jurisdiction is proper under Section 1292(b).
       “A district court must follow a two-step analysis in determin-
ing whether a partial final judgment may properly be certified un-
der Rule 54(b).” Lloyd Noland Found., Inc. v. Tenet Health Care
Corp., 483 F.3d 773, 777 (11th Cir. 2007). The court must determine
(1) whether “its final judgment is, in fact, both ‘final’ and a ‘judg-
ment’”; and (2) whether there is “just reason for delay” in certifying
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20-11764                Opinion of the Court                         13

the order as immediately appealable. Id. An order is “final” if it “dis-
poses entirely of a separable claim or dismisses a party entirely.” In
re Se. Banking Corp., 69 F.3d 1539, 1547 (11th Cir. 1995). It is a
“judgment” if “it is a decision upon a cognizable claim for relief.”
Curtiss-Wright Corp. v. Gen. Elec. Co., 446 U.S. 1, 7 (1980). When
determining whether there is no just reason for delay, the district
court should consider “judicial administrative interests––including
the historic federal policy against piecemeal appeals––and the equi-
ties involved.” Lloyd Noland Found., 483 F.3d at 778 (cleaned up).
This Court reviews the first step of the district court’s analysis––
whether the order constitutes a final judgment––de novo. Id. at 778
& n.5. We review whether there was no “just reason for delay”
only for abuse of discretion. Id. at 778 n.5.
        First, the district court’s orders granting the motions to dis-
miss filed by Choice, Wyndham, and MISF were “final judgments”
for purposes of Rule 54(b). Those orders dismissed Choice, Wynd-
ham, and MISF from the cases entirely. See In re Se. Banking Corp.,
69 F.3d at 1547. The court initially dismissed the franchisors with-
out prejudice and reserved the Does’ rights to add them back later
if newly discovered evidence warranted their inclusion. Even with
this reservation of right, that order was still an “ultimate disposi-
tion” of the claims against those parties. See Lloyd Noland Found.,
483 F.3d at 777. The district court later amended its dismissal of the
franchisors to be with prejudice after the Does stipulated that they
would rest on their original allegations against the franchisors and
waived their right to add them to the case later should their appeals
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14                      Opinion of the Court                  20-11764

fail. Accordingly, the district court did not err in concluding that its
dismissals of the franchisors were “final judgments” for purposes of
Rule 54(b).
       Second, the district court did not abuse its discretion in de-
termining that there was no just reason to delay this appeal. This
Court has stated that “limitation of piecemeal appeals [is] an essen-
tial purpose served by postponing final disposition” of claims that
a party wishes to appeal. Ebrahimi v. City of Huntsville Bd. of
Educ., 114 F.3d 162, 168 (11th Cir. 1997). We have also cautioned
that “[a]bsent special circumstances . . . the district court’s prefer-
ence for pretrial appellate review of its dismissal decisions consti-
tutes an improper basis for issuance of a partial final judgment” un-
der Rule 54(b). Id. at 168.
       The district court did not abuse its discretion in concluding
that there was no just reason for delay due to the unique circum-
stances of these cases. The Does’ cases closely parallel one another,
and the district court’s dismissal order is the same in each. Address-
ing this consolidated appeal now significantly enhances the effi-
ciency of the litigation. The relatedness of these four cases, their
early stage in litigation, the number of defendants involved, and
the substantial discovery to be had are the kind of “special circum-
stances” that warrant appellate review. See Ebrahimi, 114 F.3d at
168. Accordingly, the district court did not abuse its discretion in
finding no just reason to delay the appeal. Consequently, this Court
has jurisdiction over the appeal under 28 U.S.C. § 1291 and we need
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20-11764                  Opinion of the Court                            15

not reach the question of whether the district court properly certi-
fied its rulings as immediately appealable under Section 1292(b).
                  III.    STANDARD OF REVIEW

        This Court “review[s] an order granting a motion to dismiss
with prejudice de novo, applying the same standards the district
court used.” Young Apartments, Inc. v. Town of Jupiter, 529 F.3d
1027, 1037 (11th Cir. 2008). As such, we must accept all factual al-
legations in the complaint as true and construe them “in the light
most favorable to the plaintiff.” Id. “Threadbare recitals of the ele-
ments of a cause of action, supported by mere conclusory state-
ments, do not suffice.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
Instead, a plaintiff must allege sufficient facts that, “accepted as
true, [] ‘state a claim to relief that is plausible on its face.’” Id. (quot-
ing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
                          IV.     DISCUSSION

                 A.      Defining a Beneficiary Claim

       At its core, this is a case about statutory interpretation. We
begin that task, as always, with the common and ordinary meaning
of the words used in a statute. See Consol. Bank, N.A. v. U.S. Dep’t
of Treasury, 118 F.3d 1461, 1464 (11th Cir. 1997) (“In the absence
of a statutory definition of a term, we look to the common usage
of words for their meaning.”); see also CBS Inc. v. PrimeTime 24
Joint Venture, 245 F.3d 1217, 1222 (11th Cir. 2001) (stating that,
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16                      Opinion of the Court                 20-11764

when the statutory text is unambiguous, this Court should begin
and end its analysis with the text’s plain meaning).
        The Trafficking Victims Protection Reauthorization Act, 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 Act provides sex-trafficking victims with a civil cause of action
against “the perpetrator (or whoever knowingly benefits, finan-
cially or by receiving anything of value from participation in a ven-
ture which that person knew or should have known has engaged
in an act in violation of this chapter).” 18 U.S.C. § 1595(a). For pur-
poses of this appeal, we assume that the Does are sex-trafficking
victims under the TVPRA. The only question for this Court, there-
fore, is whether the Does have plausibly alleged that the franchisors
are liable. The Does allege that the franchisors are liable because
they knowingly benefited from participation in a venture that they
should have known violated Section 1591(a). That allegation can
be broken down into four component parts: that the franchisors (1)
knowingly benefited (2) from participating in a venture; (3) that
venture violated the TVPRA as to the Does; and (4) the franchisors
knew or should have known that the venture violated the TVPRA
as to the Does. We address each part in turn.
       The parties do not meaningfully dispute the first element,
and we likewise have little difficulty in deciding what “knowingly
benefits” means. “Knowledge” is “[a]n awareness or understanding
of a fact or circumstance; a state of mind in which a person has no
substantial doubt about the existence of a fact.” Knowledge, Black’s
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20-11764                Opinion of the Court                        17

Law Dictionary (11th ed. 2019). And Section 1595(a) explains that
a defendant may benefit “financially or by receiving anything of
value.” Accordingly, a plaintiff like the Does must allege that the
defendant knew it was receiving some value from participating in
the alleged venture.
       Most of the parties’ dispute concerns the second element—
to knowingly benefit from participating in a venture. The franchi-
sors argue, and the district court held, that we should incorporate
the definition of “participation in a venture” from the criminal pro-
visions in Section 1591. Section 1591(e)(4) defines “participation in
a venture” as “knowingly assisting, supporting, or facilitating a vi-
olation of subsection (a)(1),” which criminalizes “commercial sex
act[s]” of minors or obtained through threat or force. For the fol-
lowing reasons, we disagree with transposing the statutory defini-
tion from this criminal section to the civil cause of action.
       First, although we usually presume that Congress intends
phrases in the same statute to mean the same thing, see, e.g., Law
v. Siegel, 571 U.S. 415, 422 (2014), the text of this statute overcomes
that presumption. Section 1591 clearly states that its definition of
“participation in a venture” applies only “[i]n this section.” 18
U.S.C. § 1591(e). That is, by its plain terms, the definition applies
only to the phrase as used in Section 1591 of the statute. That lim-
ited application makes sense; Section 1591 carries criminal penal-
ties, whereas Section 1595 does not. Presumably because it imposes
criminal liability, Section 1591(a) includes a scienter requirement
that does not appear in Section 1595(a)––a defendant must know
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18                      Opinion of the Court                 20-11764

“that means of force, threats of force, fraud, coercion . . . , or any
combination of such means will be used to cause the person to en-
gage in a commercial sex act.” 18 U.S.C. § 1591(a).
        Second, the civil provisions of Section 1595(a) make no sense
with Section 1591’s definition of “participation in a venture” read
in. A plaintiff can sue a perpetrator of sex trafficking—i.e., someone
who has violated the criminal statute—without resort to the bene-
ficiary cause of action. To state a beneficiary claim, however, a
plaintiff must allege that the defendant “knowingly benefit[ted], fi-
nancially or by receiving anything of value from participation in a
venture which that person knew or should have known has en-
gaged in an act in violation of this chapter.” See 18 U.S.C. § 1595(a).
If we replace “participation in a venture” with Section 1591(e)(4)’s
“knowingly assisting, supporting, or facilitating a violation of sub-
section (a)(1),” we get a nonsense sentence: benefited “from [know-
ingly assisting, supporting, or facilitating a violation of subsection
(a)(1)] which that person knew or should have known has engaged
in an act in violation of this chapter.” In other words, the franchi-
sors’ formulation requires a plaintiff to prove that the defendant
knowingly facilitated a violation, making the “should have known”
language superfluous.
       Instead of incorporating Section 1591(e)(4)’s idiosyncratic
definition of “participation in a venture,” we interpret that phrase
in Section 1595(a) according to its plain meaning. The ordinary
meaning of “venture” is an undertaking or enterprise involving risk
and potential profit. See Venture, Black’s Law Dictionary (11th ed.
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20-11764               Opinion of the Court                        19

2019) (“[a]n undertaking that involves risk; esp., a speculative com-
mercial enterprise”); Venture, Oxford English Dictionary 520 (2d
ed. 1989) (“[a]n enterprise of a business nature in which there is
considerable risk of loss as well as chance of gain; a commercial
speculation”). The ordinary meaning of participate or participation
is to take part in or share with others in common or in an associa-
tion. See Participation, Black’s Law Dictionary (11th ed. 2019)
(“[t]he act of taking part in something”); Participate, Oxford Eng-
lish Dictionary 268 (2d ed. 1989) (“[a] taking part, association, or
sharing (with others) in some action or matter”). Accordingly, we
conclude that the phrase “participation in a venture” requires that
the Does allege that the franchisors took part in a common under-
taking or enterprise involving risk and potential profit.
        The third element of the Does’ claim is that the venture in
which the defendant participated and from which it knowingly
benefited must have violated the TVPRA as to the plaintiff. The
TVPRA criminalizes various acts, but the Does specifically premise
their Section 1595(a) beneficiary claims on violations of Section
1591(a). Section 1591(a) makes it a crime to “knowingly” harbor or
solicit a person for commercial sex while “knowing . . . that means
of force, threats of force, fraud, coercion . . . , or any combination
of such means will be used to cause the person to engage in a com-
mercial sex act.” 18 U.S.C. § 1591(a). Section 1591(a) also prohibits
anyone from knowingly “benefit[ting], financially or by receiving
anything of value” from “knowingly assisting, supporting, or facil-
itating a violation of subsection (a)(1).” Id. at 1591(a)(2) & (e)(4).
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20                      Opinion of the Court                 20-11764

Consequently, the Does must plead sufficient facts to plausibly al-
lege that the venture in which the franchisors participated commit-
ted one of these crimes against them.
       Fourth, the defendant must have either actual or construc-
tive knowledge that the venture—in which it voluntarily partici-
pated and from which it knowingly benefited—violated the
TVPRA as to the plaintiff. Section 1595(a) requires that the defend-
ant “knew or should have known [that the venture] has engaged in
an act in violation of this chapter.” Knowledge requires “[a]n
awareness or understanding of a fact or circumstance.”
Knowledge, Black’s Law Dictionary (11th ed. 2019). Constructive
knowledge, on the other hand, is that knowledge which “one using
reasonable care or diligence should have.” Constructive
Knowledge, Black’s Law Dictionary (11th ed. 2019). Thus, the fran-
chisors may be liable under the TVPRA if they have either actual
or constructive knowledge that the venture in which they partici-
pated and from which they benefited violated the TVPRA as to the
Does.
       In defining these elements according to their plain meaning,
we depart from some courts and agree with others. The district
courts are all over the map on the meaning of these terms. See, e.g.,
A.B. v. Hilton Worldwide Holdings Inc., 484 F.Supp.3d 921, 937
(D. Or. 2020) (collecting cases). But most district courts, like us,
have rejected the idea that a court can transpose the definition of
“participation in a venture” from the criminal section to the civil
cause of action. See, e.g., A.B. v. Marriott Int’l, Inc., 455 F.Supp.3d
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20-11764               Opinion of the Court                        21

171, 183 (E.D. Pa. 2020). As for our sister circuits, only the First
Circuit has addressed a Section 1595(a) beneficiary claim. See Ric-
chio v. McLean, 853 F.3d 553, 556–58 (1st Cir. 2017). And we think
our reasoning is consistent with the disposition there. In Ricchio,
the plaintiff sued the owner and live-in operators of a hotel where
she was held hostage and sexually abused. Id. at 556. The First Cir-
cuit held that the plaintiff had plausibly alleged that the operators’
association with the plaintiff’s sex trafficker was a “venture” be-
cause her abuser “had prior commercial dealings with the [opera-
tors], which the parties wished to reinstate for profit.” Id. at 555.
Considering these dealings, the plaintiff also plausibly alleged that,
by renting a room to the abuser, the operators were “associating
with him in an effort to force [the plaintiff] to serve their business
objective.” Id. We agree that these kinds of allegations would es-
tablish a hotel operator’s participation in a venture with a sex traf-
ficker.
       In short, we hold that, to state a beneficiary claim under Sec-
tion 1595(a), a plaintiff must plausibly allege that the defendant (1)
knowingly benefited, (2) from taking part in a common undertak-
ing or enterprise involving risk and potential profit, (3) that under-
taking or enterprise violated the TVPRA as to the plaintiff, and (4)
the defendant had constructive or actual knowledge that the un-
dertaking or enterprise violated the TVPRA as to the plaintiff.
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22                         Opinion of the Court                      20-11764

     B.    The Does’ Beneficiary Claims Against the Franchisors

      Having defined the elements of a beneficiary claim, we now
consider whether the Does have stated such a claim against these
three hotel franchisors for the operation of these two hotels. We
conclude that they have not. 1 Specifically, the Does have not plau-
sibly alleged that these three hotel franchisors participated in a ven-
ture that violated the TVPRA.
        We begin with the venture the Does say that the franchisors
participated in. Throughout their complaints, the Does alleged that
the franchisors participated in “sex trafficking ventures.” On the
first page of the complaints, they referred to “sex trafficking ven-
tures” that the “Defendants were essential to the success of.” On
the next page they alleged that “[e]ach of Defendants’ hotels hosted
one or more hotel sex trafficking ventures.” They stated that “sev-
eral Defendants’ agents and employees actively participated in sex
trafficking ventures and were rewarded for doing so.” They subti-
tled the allegations against each franchisor as “The Suburban Ex-
tended Stay (Chamblee) Sex Trafficking Venture” and “The Micro-
tel (Atlanta) Sex Trafficking Venture.” Over and over, they

1 The Does appeal the district court’s decision to strike general allegations
about sex trafficking from their amended complaints. For purposes of consid-
ering the dismissals on appeal, we consider all allegations in the amended com-
plaints, including those that the district court struck. Even considering those
allegations, we conclude that the district court did not err in granting the mo-
tions to dismiss.
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20-11764               Opinion of the Court                       23

repeated this phrase: sex trafficking venture. In fact, every single
reference to a “venture” in the complaints refers to a “sex traffick-
ing venture.” Then, the Does alleged that the franchisors profited
from this “sex trafficking venture” through room fees and should
have known that this venture victimized them in violation of the
TVPRA.
        So we must determine whether the Does plausibly alleged
that the franchisors took part in the common undertaking of sex
trafficking with hotel employees, management, owners, and sex
traffickers. On this complaint, they did not. The Does alleged that
Wyndham “licenses its hotel brands, including Microtel . . . to fran-
chisees who pay Wyndham royalty and other fees based on a per-
centage of their gross room revenue.” They alleged that Choice
“received a percentage of the revenue generated by the operation
of the Suburban Extended Stay (Chamblee), including a percentage
of the revenue generated for the rate charged on the rooms in
which” each Doe was trafficked. They also alleged that each of the
franchisors “owned, managed, supervised, operated, oversaw, con-
trolled the operation of, and/or were inextricably connected to the
renting of rooms” at the hotels. These allegations may suggest that
the franchisors financially benefitted from renting hotel rooms to
the Does’ sex traffickers. But they do nothing to show that the fran-
chisors participated in a common undertaking involving risk or
profit that violated the TVPRA—i.e., the alleged sex trafficking
ventures.
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24                      Opinion of the Court                 20-11764

       The Does also alleged that the franchisors investigated the
individual hotels, took remedial action when revenue was down,
read online reviews mentioning prostitution and crime occurring
generally at the hotels, and controlled the training of managers and
employees who were allegedly involved in facilitating sex traffick-
ing at the hotels. Again, these allegations are insufficient to state a
claim. None of these allegations suggest that the franchisors partic-
ipated in an alleged common undertaking or enterprise with the
Does’ sex traffickers or others at the hotel who violated the statute.
        Perhaps recognizing their tenuous legal position, the Does
allege something different on appeal: that the franchisors partici-
pated in commercial ventures to operate hotels and that those ho-
tel ventures violated the statute. There are two problems with that
new theory. First, it is incompatible with the allegations in the
Does’ complaints. Again, every time the complaints refer to ven-
tures, they refer to “sex trafficking ventures.” And those ventures
were alleged to include the sex traffickers themselves as partici-
pants. On the other hand, there are no nonconclusory allegations
in the complaint about the franchisors’ business relationship with
anyone else involved in operating these hotels. Second, the Does
failed to present this theory to the district court when given the
opportunity. This was no oversight. The district court granted the
Does leave to amend their complaints, yet they still alleged “sex
trafficking ventures.” The district court then dismissed the franchi-
sors without prejudice, specifically so that the Does could later
amend their complaints to add them back. The Does chose instead
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20-11764               Opinion of the Court                       25

to request that dismissal be entered with prejudice. We will not
consider this theory for the first time on appeal after the Does were
given ample opportunity to present it in the district court. Access
Now, Inc. v. Sw. Airlines Co., 385 F.3d 1324, 1331 (11th Cir. 2004).
       In short, to participate in a venture under Section 1595(a), a
defendant must take part in a common undertaking involving risk
or profit. The Does chose to frame the ventures at issue as sex traf-
ficking ventures in their amended complaints. Yet they have pro-
vided no plausible allegations that the franchisors took part in the
common undertaking of sex trafficking. Their only allegations as
to the franchisors’ knowledge or participation in those sex traffick-
ing ventures are that the franchisors sent inspectors to the hotels
who would have seen signs of sex trafficking and that they received
reviews mentioning sex work occurring at the hotels. But observ-
ing something is not the same as participating in it. Accordingly,
the Does’ Section 1595(a) beneficiary claims against the franchisors
fail.
                     C.     State Law Claims

     We also affirm the district court’s dismissal of the Does’
Georgia RICO Act and negligence claims against the franchisors.
       The Does argue that the district court erred by failing to ac-
cept their allegations when dismissing their RICO claims. And they
argue that they plausibly alleged the predicate acts of prostitution
and sexual servitude. Finally, they argue that the district court ap-
plied an incorrect standard in determining that they had failed to
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26                     Opinion of the Court                 20-11764

plausibly allege a criminal agreement. As part of that argument, the
Does explain that to establish an agreement for purposes of a RICO
conspiracy, they need only allege “a mere tacit understanding be-
tween two or more people that they will pursue a particular crim-
inal objective.” And they continue that they plausibly alleged such
“a tacit understanding between the Franchisors and their fran-
chisees to turn a blind eye to allow and profit from the sex traffick-
ing at the Microtel and SES.” We disagree.
        Accepting all allegations in the amended complaints, the
Does have failed to plausibly allege a Georgia RICO claim. First,
the Does alleged that the franchisors violated O.C.G.A. §§ 16-14-
4(a) and (c). Section 16-14-4(a) makes it illegal “for any person,
through a pattern of racketeering activity or proceeds derived
therefrom, to acquire or maintain, directly or indirectly, any inter-
est in or control of any enterprise, real property, or personal prop-
erty of any nature, including money.” A “pattern of racketeering
activity” means “[e]ngaging in at least two acts of racketeering ac-
tivity in furtherance of one or more incidents, schemes, or transac-
tions that have the same or similar intents, results, accomplices,
victims, or methods of commission or otherwise are interrelated
by distinguishing characteristics.” O.C.G.A. § 16-14-3(4)(A). A
“racketeering activity” is the commission, attempted commission,
solicitation, coercion, or intimidation of another “to commit any
crime which is chargeable by indictment under” Georgia law. Id.
at § 16-14-3(5)(A). And “[a]ny person who is injured by reason of
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20-11764                Opinion of the Court                        27

any violation of Code Section 16-4-4 shall have a cause of action”
against the violator. Id. at § 16-14-6(c).
       The Does alleged that the franchisors “as parties to the
crime, and as co-conspirators” subjected them to sexual servitude
in violation of O.C.G.A. § 16-5-46(c)(1) “when they were coerced
into performing or conducting sexually explicit conduct for which
something of value, directly or indirectly, was given, promised to,
or received by someone.” That “threadbare recital[]” of the ele-
ments of “sexual servitude” is insufficient to plausibly allege a vio-
lation of Section 16-5-46(c)(1). See Iqbal, 556 U.S. at 663.
       The Does also alleged that the franchisors committed false
imprisonment, keeping a place of prostitution, pimping, and pan-
dering, in violation of Georgia law. Each allegation contained no
more than a threadbare recital of the elements of the crimes sup-
ported by conclusory allegations. Accordingly, the Does failed to
plausibly allege the predicate acts necessary to support their RICO
claims. The district court did not err in dismissing the Does’ sub-
stantive RICO claims against the franchisors.
        Section 16-14-4(c) makes it illegal “for any person to conspire
or endeavor to violate” Section 16-14-4(a). To violate Section 16-
14-4(c), one must either commit an overt act to “effect the object
of” the endeavor or conspiracy or a co-conspirator must commit
such an overt act. See O.C.G.A. § 16-14-4(c)(1)–(2). The Does al-
leged that the franchisors conspired “to acquire money through a
pattern of racketeering activity.” But the pattern of racketeering ac-
tivity on which they predicate their conspiracy counts relies on the
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28                      Opinion of the Court                 20-11764

same threadbare allegations as the substantive RICO claims. Be-
cause those allegations are insufficient to plausibly allege any RICO
violation, the district court also correctly dismissed the Does’ con-
spiracy counts.
        Finally, the district court dismissed the Does’ negligence
claims after concluding that the amended complaints merely al-
leged ordinary franchise relationships “which do not give rise to
vicarious liability against franchisors.” A franchisor that “main-
tain[s] no control over the operation of the [franchise]” and “simply
provide[s] supplies and consultation services” to franchisee em-
ployees does not owe a duty to patrons of the franchise. Cobb v.
Popeye’s, Inc., 373 S.E.2d 233, 235 (Ga. Ct. App. 1988). Such a duty
only arises if the franchisor retains a right to control the day-to-day
operations of the franchise. See Schlotzky’s, Inc. v. Hyde, 538
S.E.2d 561, 562 (Ga. Ct. App. 2000).
       The Does allege that the franchisors “owned and/or man-
aged and/or operated and/or oversaw and/or controlled the oper-
ation” of their hotels and that they “had supervisory control over”
the hotels. Those allegations are mere recitations of the require-
ments for franchisor liability, and the Does do not allege any facts
to support them. Accordingly, they have failed to plausibly allege
that the franchisors owed the Does a duty. See Iqbal, 556 U.S. at
663.
       The Does’ argument that the franchisors ratified the acts of
the franchisees also fails. Under O.C.G.A. § 10-6-1, a principal-agent
relationship arises when one party “subsequently ratifies the acts of
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20-11764                Opinion of the Court                        29

another in his behalf.” A party ratifies the acts of another by accept-
ing and retaining the benefits of the other party’s alleged unauthor-
ized act. DaimlerChrysler Motors Co. v. Clemente, 668 S.E.2d 737,
746 (Ga. Ct. App. 2008). But the principal must also have “full
knowledge of all the material facts” for that acceptance and reten-
tion to constitute ratification. Hyer v. Citizens & S. Nat’l Bank in
Macon, 373 S.E.2d 391, 393 (Ga. Ct. App. 1988).
        The Does did not plausibly allege that the franchisors had
“full knowledge of all the material facts” regarding the franchise
employees’ actions in assisting and facilitating sex trafficking. The
Does argue otherwise based on their allegations that the franchi-
sors sent inspectors to the hotels “while hotel employees either as-
sisted or at the very least, turned a blind eye” to the trafficking oc-
curring there. But that allegation alone does not rise to the level of
plausibly alleging the franchisors’ full knowledge of all material
facts. Accordingly, the Does did not plausibly allege that the fran-
chisors ratified the franchise employees’ actions, and the district
court did not err in dismissing the negligence claims.
                       V.     CONCLUSION

       Applying the plain meaning of Section 1595(a) to all allega-
tions in the amended complaints, the Does failed to plausibly allege
a violation of that section. Nor have the Does plausibly alleged a
violation of state law. Accordingly, the district court’s grant of the
franchisors’ motions to dismiss is AFFIRMED.
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30                   Opinion of the Court              20-11764

      Because we conclude that jurisdiction is proper under 28
U.S.C. § 1291, we DENY the Does’ petitions for permission to ap-
peal under Section 1292(b) as moot.
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20-11764             [JORDAN, J., CONCURRING]                          1

JORDAN, CIRCUIT JUDGE, CONCURRING.
      I join the court’s opinion and write separately to emphasize
some aspects of our decision.
       First, our opinion addresses the plaintiffs’ TVPRA “benefi-
ciary” claims against franchisors which do not operate or manage
the hotels at which sex trafficking allegedly occurred. See 18 U.S.C.
§ 1595(a). I agree that the allegations here are insufficient given the
plaintiffs’ assertion of (and reliance on) a “sex trafficking venture.”
See, e.g., E.S. v. Best Western Int’l, Inc., 510 F.Supp. 3d 420, 427–
28 (N.D. Tex. 2021); S.J. v. Choice Hotels Int’l, Inc., 473 F.Supp. 3d
147, 153–54 (E.D.N.Y. 2020). But, as the court explains, similar
claims against those who own, operate, or manage the hotels in
question (e.g., franchisees) would withstand a Rule 12(b)(6) motion
to dismiss. See, e.g., Ricchio v. McLean, 853 F.3d 553, 555–57 (1st
Cir. 2017); S.Y. v. Naples Hotel Co., 476 F.Supp. 3d 1251, 1256–57
(M.D. Fla. 2020).
      Second, the participation element of a “beneficiary” claim
under § 1595(a) does not require that the defendant in question
have participated in the sex trafficking act itself. See, e.g., S.Y., 476
F.Supp. 3d at 1256. Instead, as the court explains, “participation in
a venture” requires only that a defendant take part in a common
undertaking or enterprise involving risk and potential profit.