White Collar Posts

Liability for What Goes on Behind Closed Doors: Sex Trafficking and the Hospitality Industry's Privacy Tightrope

March 27, 2017
By: Abraham J. Rein, Charles W. Spitz, and Marc H. Perry

Earlier this month, the Philadelphia hotel Roosevelt Inn, its corporate parents, its New York management company, and an individual owner/manager of the hotel, were sued for allegedly allowing trafficking of sex involving a minor to take place on the hotel’s premises. The case – the first of its kind invoking Pennsylvania’s recently-amended human trafficking law – raises an abundance of difficult legal and ethical questions regarding hotels’ legal responsibilities for and obligations concerning their guests’ conduct, and how to meet those responsibilities while also respecting guests’ privacy.

The Roosevelt Inn Case

The lawsuit alleges that the defendants, “individually and/or by and through their actual or apparent agents, servants and employees,” “knew or had constructive knowledge” that their premises were being used for the sexual exploitation of the plaintiff, identified as “M.B.” The complaint alleges a number of potential indicators for sex trafficking at the hotel, implying that those red flags should have tipped the defendants off to the tragedy of M.B.’s alleged circumstances – indicators such as men lingering in the hall outside the plaintiff’s room, older men accompanying her in the hotel, M.B. being treated aggressively, M.B. exhibiting fear and anxiety, cash payments for her room, regular refusal of housekeeping services, and M.B. having few or no personal belongings in her room and dressing in a “sexually explicit manner.”

The complaint asserts causes of action for negligence, negligent infliction of emotional distress, intentional infliction of emotional distress, and a count styled “Negligence: Violation of Pennsylvania Human Trafficking Law, 18 Pa. C.S.A. § 3001, et. seq.”

The Law

Civil liability. The Roosevelt Inn complaint’s reference to the Pennsylvania Human Trafficking Law reportedly represents the first time that that law has been invoked in a civil lawsuit. Although plaintiff M.B. does not directly frame it as a separate cause of action, opting instead to invoke the sex trafficking law generally as a component of a negligence theory, the Pennsylvania law includes a provision that has the potential to create civil exposure for hotels whose premises have been used for prostitution. 18 Pa.C.S. § 3051(a)(2)(i) provides for civil liability for anyone who “profit[s] from” any sex trade act. In the case of a defendant, like a hotel, who “provides goods or services to the general public,” the law would require the plaintiff to prove that the defendant “knowingly markets or provides its goods or services to” a trafficker. 18 Pa.C.S. § 3051(b)(1). A federal law similarly provides for civil liability for “whoever knowingly benefits, financially or by receiving anything of value from participation in a venture which that person knew or should have known was engaged in [human trafficking].” 18 U.S.C. § 1595(a). 

Under the federal regime, receiving a financial benefit when one should have known that one’s co-venturer was engaged in trafficking is enough to create exposure. (Under Pennsylvania law, the conduct must be done “knowingly”; which means “aware” that one’s conduct is of a particular nature, that particular circumstances exist, or that “it is practically certain” that one’s conduct will cause a particular result, 18 Pa.C.S. § 302(b)(2)). It seems likely, then, that cognizance of the sorts of red flags listed in the Roosevelt Inn complaint – men lingering in halls, regular refusal of housekeeping services, checking in with few or no personal belongings, etc. – could be sufficient to create civil liability under either Pennsylvania or federal law. Other potential indicators of trafficking identified by the Polaris Project, an anti-human trafficking organization, include:

• paying for the room with a prepaid card;
• requesting a room overlooking the parking lot;
• presence of excessive drugs, alcohol, or sex paraphernalia; and
• frequent requests for new linens, towels, and restocking of the refrigerator.
   

Criminal liability. Both Pennsylvania and federal law also create the potential for criminal exposure for hotels and their affiliates and employees who do not adequately respond to prostitution on their property. The federal statute makes it a criminal offense to “benefit[ ], financially or by receiving anything of value, from participation in a venture” that harbors a person, knowing or in reckless disregard of the fact that he or she is a victim of sex trafficking. 18 U.S.C. § 1591(a)(2). 

The Pennsylvania law is similar, establishing criminal liability for anyone who “knowingly benefits financially or receives anything of value from any act that facilitates” an act of sex trafficking. 18 Pa.C.S. § 3011(b). Pennsylvania law also includes a separate provision that specifically creates criminal liability for any “business entity” that “knowingly aids or participates in any violation of [the sex trafficking law].” 18 Pa.C.S. § 3017(a). Violation of this provision can also lead to penalties of up to $1 million, revocation of the entity’s charter or authority to do business in the state, or forfeiture of assets or restitution. Id.

The Privacy Tightrope

While hotels may have a duty to prevent any form of human trafficking on their premises, that battle comes with a set of potential risks. Hotels are also under strict legal and ethical privacy obligations, and a misstep in service of even the most well-intentioned anti-trafficking agenda could lead to privacy blunders.

Hotels are at risk for legal action if identifiable information about their guests is distributed inappropriately. In one case that made headlines last year, sportscaster Erin Andrews was awarded a $55 million verdict after she sued a hotel that had revealed to another guest which room was hers, and that guest then surreptitiously filmed her through her door’s peephole. In an effort to avoid those risks, and protect guests’ privacy, hotels may have policies regarding when and how guests’ names and other identifiable information can be used, may seek to limit staff with access to identifiable information about guests to those with a need to know, and may take other reasonable precautions. 

Combine these privacy concerns with the fallout from a poorly-executed attempt to react to suspected trafficking on the hotel’s premises, and the risks become clear. A call to law enforcement, even if not overheard, could generate a difficult-to-control flurry of activity involving many people, including staff and non-staff, and potentially even affect other guests. This activity could result in exposure of personal information about the suspect guest, potentially including some of his or her most sensitive information, such as information about visitors to the guest’s room, sexual activity, and the like. Such revelations, if ultimately determined to be unjustified, could lead to serious exposures for the organization. This is particularly so in an age of social media when there is little opportunity to control the rapidity and breadth of the spread of sensitive information. And if information memorializing staff’s suspicions about guests’ conduct is stored electronically, a data breach – a huge and growing issue in the hospitality industry – could be even more devastating for those guests than it otherwise might be.

Recommendation: Carefully Thought-Out Policies, Tailored to Your Organization

The best framework for safeguarding against and reacting to sex trafficking while avoiding privacy and other harms is a set of intelligent, well thought-out policies that address both concerns. These policies should be tailored to the particular organization’s size, capacity, and culture. Crucially, the policies must be consistently applied: the appearance that such policies are employed to the benefit or detriment of some guests, but not others, defeats their purpose and creates the potential for liability. Because of the importance of consistent application, good, effective training is a must.

Ultimately, hotels cannot eliminate the risk that their premises will be used for improper purposes, and difficult decisions will need to be made along the way. But careful planning and intelligent before-the-fact decision making can go far to help mitigate the risk.

Disclaimer: This post does not offer specific legal advice, nor does it create an attorney-client relationship. You should not reach any legal conclusions based on the information contained in this post without first seeking the advice of counsel.