Court Opinion

ID: 9931612
Source: CourtListenerOpinion
Date Created: 2024-02-09 16:01:50.459818+00
Date Added: 2024-06-11T12:25:07.033735
License: Public Domain

USCA11 Case: 23-11682     Document: 32-1         Date Filed: 02/09/2024   Page: 1 of 11

                                                        [DO NOT PUBLISH]
                                        In the
                 United States Court of Appeals
                          For the Eleventh Circuit

                            ____________________

                                  No. 23-11682
                            Non-Argument Calendar
                            ____________________

        K. H.,
                                                           Plaintiﬀ-Appellant,
        versus
        RITI, INC.,
        d.b.a. American Inn & Suites,

                                                         Defendant-Appellee.

                            ____________________

                  Appeal from the United States District Court
                     for the Northern District of Georgia
                     D.C. Docket No. 1:22-cv-03404-MHC
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        2                          Opinion of the Court                       23-11682

                                ____________________

        Before WILSON, BRANCH, and LUCK, Circuit Judges.
        PER CURIAM:
                This is a lawsuit brought by a sex trafficking victim, K.H.,
        against Riti, Inc., the owner and manager of the hotel where she
        was trafficked. K.H. alleges that Riti knew or should have known
        that K.H. and others were being trafficked at its hotel, but Riti
        continued to rent rooms to sex traffickers so that it could earn
        rental revenue. Thus, K.H. alleges that Riti, as a beneficiary of sex
        trafficking, violated the Trafficking Victims Protection
        Reauthorization Act’s (“TVPRA”) civil beneficiary provision. The
        district court granted Riti’s motion to dismiss for failure to state a
        claim. It held that K.H. failed to allege a necessary element of its
        TVPRA claim—that Riti took part in a common undertaking or
        enterprise involving risk and potential profit. After review, we
        affirm.
                                    I.       Background
              In 2011, K.H. found herself in dire straits. 1 Having recently
        run away from a group home, K.H. was sixteen years old and
        homeless. Her situation worsened when she met Darrell Laye, a

        1 Because we are at the motion to dismiss stage, we accept as true the factual

        allegations in K.H.’s complaint. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
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        23-11682                 Opinion of the Court                              3

        man who promised to “help” K.H.2 Far from helping K.H., Laye
        instead took K.H. to American Inn & Suites, a budget motel in
        Jonesboro, Georgia owned and managed by Riti, and explained to
        K.H. that he was a pimp and K.H. was now one of his prostitutes.
                From 2011 to 2015, Laye coerced K.H. to work as a
        prostitute, using threats, physical violence, and starvation. She was
        sexually assaulted hundreds of times at Riti’s hotel. Laye also
        trafficked multiple other victims at the hotel for several months at
        a time. Laye took the proceeds of the commercial sex acts and used
        a portion of the proceeds to book future lodging at the hotel. Laye
        “would pay in cash for one night at a time, booking the next night’s
        stay before check-out time.” As owner and manager of the hotel,
        Riti collected rental fees from the rooms in which K.H. was
        trafficked.
                K.H. alleged that Riti knew or should have known that its
        hotel was being used for trafficking generally, and for K.H.’s
        trafficking specifically. K.H. alleged that Riti should have been
        aware of K.H.’s trafficking because Riti “directed, operated,
        supervised, monitored, managed, and/or employed all employees,
        managers, housekeepers, and other staff.”
                Further, K.H. alleged the hotel is a “notorious hotspot for
        illicit activity that has been attracting sex trafficking and

        2 K.H. alleged that “[u]pon information and belief,” Laye is incarcerated and

        still faces multiple felony charges including aggravated assault, aggravated
        battery, and cruelty to children.
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        4                          Opinion of the Court                         23-11682

        prostitution ventures for years.” K.H. cited three online reviews
        reporting prostitution, sex trafficking, and other illegal activities at
        the hotel. K.H. also cited four incidents of police responses to
        reports of sex trafficking at the motel between June and December
        2015. Finally, K.H. alleged that Riti observed most of the signs that
        both the Department of Homeland Security (“DHS”)3 and the End
        Child Prostitution and Trafficking (“ECPAT”) 4 organization list as
        specific indicators of sex trafficking.

        3 As to the DHS guidelines, K.H. alleged that Riti observed the following:
        (a) persons who show signs of malnourishment, poor hygiene, fatigue, sleep
        deprivation, untreated illness, injuries, and/or unusual behavior; (b) persons
        who lack freedom of movement or are constantly monitored; (c) persons who
        have no control over or possession of money or ID; (d) persons who dress
        inappropriately for their age or have lower quality clothing compared to
        others in their party; (e) requests for room or housekeeping services but denial
        of hotel staff entry into the room; (f) the presence of multiple computers, cell
        phones, pagers, credit card swipers, or other technology in the room;
        (g) extended stay with few or no personal possessions in the room;
        (h) excessive amounts of sex paraphernalia in rooms; (i) the same person
        reserves multiple rooms; (j) a room is rented hourly, less than a day, or for an
        atypical extended stay; (k) attempts to sell items to or beg from patrons or
        staff; (l) cars in the parking lot regularly parked backward, so the license plates
        are not visible; (m) loitering and solicitation of male patrons; and (n) persons
        asking staff or patrons for food or money.
        4 As to the ECPAT guidelines, K.H. alleged that Riti observed the following:
        (a) paying for rooms using cash; (b) paying for multi-day stays one day at a
        time, (c) persons escorting various men into the room and lingering until they
        leave, (d) persons watching the door; (e) room is frequented by different men;
        (f) insisting on little or no housekeeping; (g) excessively requesting towels and
        sheets; (h) wearing the same attire or attire that is revealing or inappropriate
        for the weather; (i) excess lingerie; (j) discarded condoms and lubricants, and
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        23-11682                   Opinion of the Court                        5

                Based on the above, K.H. filed her one-count Complaint
        against Riti, alleging that Riti violated the civil beneficiary
        provision of the TVPRA, 18 U.S.C. § 1595(a). See 18 U.S.C.
        § 1595(a) (stating that a sex trafficking victim “may bring a civil
        action against . . . whoever knowingly benefits . . . from
        participation in a venture which that person knew or should have
        known has engaged in an act in violation of the” TVPRA.) The
        district court dismissed her complaint, holding that she failed to
        plausibly allege a necessary element of her claim—that Riti took
        part in a common undertaking or enterprise with Laye. K.H.
        appealed.
                             II.      Standard of Review
                “We review de novo a dismissal of a complaint for failure to
        state a claim[.]” Henderson v. McMurray, 987 F.3d 997, 1001 (11th
        Cir. 2021). To survive a motion to dismiss, a complaint must
        contain sufficient factual matter, accepted as true, to state a claim
        to relief that is plausible on its face. Iqbal, 556 U.S. at 678. “A claim
        has facial plausibility when the pleaded factual content allows the
        court to draw the reasonable inference that the defendant is liable
        for the misconduct alleged.” Id. at 663.
                                    III.   Discussion
               On appeal, K.H. argues that the district court erred in
        granting Riti’s motion to dismiss because K.H. plausibly alleged

        (k) use of websites with adult classified ads and possessing few personal
        belongings.
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        6                     Opinion of the Court                23-11682

        that (1) Riti participated in a common undertaking or enterprise
        with Laye, and (2) Riti knew or should have known that the
        venture with Laye violated the TVPRA as to K.H. After review,
        we affirm the district court and hold that K.H. did not plausibly
        allege that Riti participated in a common undertaking or
        enterprise. Because our holding that K.H. failed to plausibly allege
        that Riti participated in a common undertaking or enterprise is
        dispositive of the case, we need not decide whether Riti knew or
        should have known that the venture with Laye violated the
        TVPRA as to K.H.
               Our analysis begins with the text of the civil remedy
        provision of the TVPRA, which provides that a sex trafficking
        victim may bring a civil action for damages against the perpetrator
        “or 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 an act in violation of this chapter . . . .” 18
        U.S.C. § 1595(a). K.H.’s claim against Riti is not a claim against a
        perpetrator. Rather, it is a claim against a party that allegedly
        “knowingly benefit[ed]” or “attempt[ed] or conspire[d]” to benefit
        from sex trafficking. Id. These types of claims under the TVPRA
        are known as beneficiary claims. Doe #1 v. Red Roof Inns, Inc., 21
        F.4th 714, 723 (11th Cir. 2021).
            We have said that, to state a civil beneficiary claim under the
        TVPRA, a plaintiff must plausibly allege that the defendant:
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        23-11682                 Opinion of the Court                            7

                (1) knowingly beneﬁted, (2) from taking part in a
               common undertaking or enterprise involving risk and
               potential proﬁt, (3) that undertaking or enterprise
               violated the TVPRA as to the plaintiﬀ, and (4) the
               defendant had constructive or actual knowledge that
               the undertaking or enterprise violated the TVPRA as
               to the plaintiﬀ.

        Id. at 726. The dispute here largely revolves around the second
        element. 5
                Our only published case discussing the second element is
        Red Roof, 21 F.4th 714. In Red Roof, the plaintiffs alleged that they
        were trafficked at the hotels that the franchisors licensed to
        franchisees, and that the franchisors knowingly benefitted from the
        percentage of rental revenue that they received from the rooms
        rented by the traffickers. Id. The plaintiffs also alleged (1) that
        hotel employees assisted in the trafficking by acting as police
        lookouts; (2) that one of the franchisors sent inspectors to examine
        the hotel; (3) that plaintiffs exhibited several visible signs of a sex
        trafficking victim; and (4) that online reviews of the hotel “reported
        widespread prostitution and crime occurring at the hotel.” Id. at
        719–20. Thus, the plaintiffs alleged “that the franchisors
        participated in sex trafficking ventures” with “hotel employees,

        5 Riti argues that we should use the framework the district court used to

        determine whether K.H. satisfies the second element. That test is whether
        K.H. alleged that Riti and Laye had (1) a “direct association” or (2) a
        “continuous business relationship.” Because this test is not set out in the
        statute or described in our caselaw, we decline to follow it.
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        8                      Opinion of the Court                23-11682

        management, owners, and sex traffickers.” Id. at 726 (quotations
        omitted).
               We held that the plaintiffs had not plausibly alleged that the
        franchisors took part in a common sex trafficking undertaking or
        enterprise. Id. at 726–27. While the franchisors managed and
        “were inextricably connected to the renting of rooms,” financially
        benefitted from renting those rooms to traffickers, and trained the
        managers who served as police lookouts, we held that these
        allegations were insufficient to allege a common sex trafficking
        undertaking or enterprise. Id. We similarly found insufficient the
        allegations that the franchisors investigated the hotels and read
        online reviews describing prostitution and crime at the hotels. Id.
        at 727. We held that “observing something is not the same as
        participating in it.” Id.
               K.H.’s allegations are much like the allegations we found
        inadequate in Red Roof. K.H. alleges that Riti participated in a
        common sex trafficking undertaking with Laye because (1) Riti
        knew or should have known that sex trafficking was occurring at
        its hotel—based on online reviews, police reports, and visible
        indicators—yet (2) Riti continued to engage in a hotel business
        relationship with and collect room rental revenue from Laye for
        approximately four years. Thus, just like in Red Roof, K.H. has not
        plausibly alleged that Riti took part in a common sex trafficking
        undertaking or enterprise with Laye.
             K.H. argues that Red Roof is distinguishable because that case
        was brought against franchisors, while this case was brought
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        23-11682               Opinion of the Court                         9

        against a franchisee. According to K.H., unlike Riti, the franchisors
        in Red Roof did not physically rent the rooms to the sex traffickers,
        they just received a percentage of the revenue from those rentals.
        But this distinction does little work for K.H. because the franchisors
        in Red Roof “owned, managed, supervised, operated, oversaw,
        controlled the operation of, and/or were inextricably connected to
        the renting of rooms.” 21 F.4th at 726–27. The difference between
        physically renting the rooms (based on the facts of this case) and
        “controll[ing] the operation of” renting the rooms (based on the
        facts of Red Roof) is immaterial.
               Nonetheless, K.H. argues that Red Roof suggested that the
        difference between a franchisor and franchisee is significant.
        Indeed, K.H. argues that Red Roof establishes that if the claim had
        been against the hotel operators, rather than the franchisors, the
        plaintiffs would have a plausible claim. In support of this
        argument, K.H. first points out that, in Red Roof, we cited with
        approval Ricchio v. McLean, 853 F.3d 553 (1st Cir. 2017). In that
        case, the First Circuit found a plausible TVPRA claim against motel
        operators based on allegations that the trafficker “had prior
        commercial dealings with the [operators], which the parties wished
        to reinstate for profit” and 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. at 555.
               K.H. is correct that we noted in passing that “the[] kinds of
        allegations” in Ricchio would support a finding that a hotel operator
        participated in a sex trafficking venture. 21 F.4th at 726. But the
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        10                      Opinion of the Court                    23-11682

        allegations in Ricchio were far stronger than just an operator
        renting rooms to a trafficker. For example, in Ricchio, the trafficker
        and the motel operator—who were a husband and wife that lived
        in the motel themselves—“had prior commercial dealings . . . ,
        which the parties wished to reinstate for profit.” 853 F.3d at 555.
        In fact, the motel operator and the trafficker “exchang[ed] high-
        fives in the motel’s parking lot while speaking about ‘getting this
        thing going again,’ in circumstances in which [the trafficker’s]
        coercive and abusive treatment of [plaintiff] as a sex slave had
        become apparent to [the operator].” Id. And the operator had
        “nonchalantly ignored [plaintiff’s] plea for help in escaping from
        [the trafficker’s] custody at the motel” and likely seen the trafficker
        “grab [plaintiff], kick [plaintiff], and force [plaintiff] back toward the
        rented quarters . . . .” Id. So it was under these circumstances that
        the First Circuit held that it was reasonably inferable that the motel
        operator and trafficker were working together “to force [plaintiff]
        to serve their business objective.” Id.
                Thus, these are “the[] kinds of allegations” we said would
        support a finding that a hotel operator participated in a sex
        trafficking venture in Red Roof. 21 F.4th at 726. Against this
        measuring stick, K.H.’s allegations come up short. K.H.’s
        allegations amount to contentions that Riti financially benefitted
        from renting hotel rooms to K.H.’s trafficker and that Riti observed
        signs of sex trafficking at the hotel. But as we made clear in Red
        Roof, allegations of financial benefit alone are not sufficient to
        establish that the defendant participated in a sex trafficking venture
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        23-11682                  Opinion of the Court                               11

        and observing signs of sex trafficking “is not the same as
        participating in it.” Id. 6
               Accordingly, because K.H. failed to plausibly allege that Riti
        participated in a common sex trafficking undertaking or enterprise
        with Laye, 7 the district court did not err in granting Riti’s motion
        to dismiss.
               AFFIRMED.

        6 K.H. also points to a sentence in the separate concurring opinion in Red Roof,

        that “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.” 21 F.4th at 729 (Jordan, J., concurring). Aside from being dicta in a
        concurring opinion, this statement was made in the context of the particular
        facts of Red Roof. In Red Roof, the plaintiffs alleged more than that hotel
        employees had rented rooms to traffickers, they alleged that hotel employees
        worked directly with traffickers by providing lookouts in exchange for cash or
        drugs. 21 F.4th at 720. K.H. has not alleged such involvement between hotel
        employees and traffickers here. So, the Red Roof concurrence does not support
        K.H.’s claim either.
        7 Because our holding on this issue disposes of K.H.’s claim, we need not reach

        the second issue raised on appeal—whether Riti knew or should have known
        that the venture with Laye violated the TVPRA as to K.H.