K. H. v. Riti, Inc.

[DO NOT PUBLISH]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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____________________
Before WILSON, BRANCH , and L UCK , 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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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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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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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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(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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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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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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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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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.
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