In 2000, Congress enacted the Trafficking Victims Protection Act (TVPA) in response to the growing problem of human trafficking. The Act defines human trafficking broadly as the exploitation of an individual for forced labor or a commercial sex act done under force, fraud, or coercion. (Sections 1581, 1583, 1584(a), 1589(a) and (b), 1590(a), and 1591(a) of the TVPA lay out provisions criminalizing specific human trafficking offenses: Peonage, Enticement into slavery, Sale into involuntary servitude, Forced labor, Trafficking with respect to peonage, slavery, involuntary servitude, or forced labor, and Sex trafficking.)
The TVPA has been amended several times. Two relatively recent amendments provide a private right of action for victims under 18 U.S.C. §1595, as well as extraterritorial application to offenses taking place outside the United States under 18 U.S.C. §1596. The most recent circuit court to offer its reading of these provisions is the Ninth Circuit in Keo Ratha v. Phatthana Seafood Co., Ltd., No. 18-55041 (9th Cir. 2022). In that case the panel held, without taking a position on whether the TVPA applied to events occurring abroad, that foreign defendants in TVPRA civil actions cannot be found “present” under §1596 without a showing of either physical presence or purposeful direction of conduct towards the U.S. market. The plaintiffs in Keo Ratha were a group of Cambodian villagers, who brought the suit against two Thai seafood manufacturing companies, Phatthana Seafood and S.S. Frozen, on allegations that the companies subjected them to trafficking and forced labor in inhumane and unsafe conditions at their factories. The plaintiffs also named two U.S.-affiliated companies, Rubicon and Wales, as beneficiary defendants on grounds that they “knowingly benefitted” from the exploitation of the victims owing to their business relationship with the Thai seafood manufacturers, and thus could be found liable under §1595(a).
As amended in 2008, §1595(a) provides a civil remedy against perpetrators, as well as anyone who “knowingly benefits, 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 the TVPRA].” William Wilberforce Trafficking Victims Protection Reauthorization Act of 2008, Pub. L. No. 110-457, 18 U.S.C. §1595(a). The use of a “knowingly benefits” standard of liability is fairly novel and raises some important questions. For example, when does the knowledge have to be acquired? And does the knowledge or benefit have to pertain to each plaintiff? Several courts have already provided their own answers to these questions, leading to somewhat varying interpretations. Some have applied a pure negligence analysis to interpret the language of §1595(a), casting a wider net for liability under the provision. Others have approached the provision with slightly more resistance, reading in tighter limitations.
Civil Beneficiary Claims Under §1595(a)
Both the Eleventh Circuit as well as the Ninth Circuit seem to have taken the latter approach. In Doe v. Red Roof Inns, the plaintiffs sued Red Roof Inn hotels, a Microtel hotel, a Suburban Extended Stay, as well as a Hampton Inn, naming them as beneficiaries to well-established sex-trafficking ventures to which the plaintiffs were victim. Doe v. Red Roof Inns, 21 F.4th 714 (11th Cir. 2021). The plaintiffs further alleged that the franchisor companies of these hotels were also liable as beneficiaries, on grounds that they financially benefitted from renting rooms out to the perpetrators when they “knew or should have known” about the trafficking ventures taking place at the venues. Upholding the defendants’ motion to dismiss, the Eleventh Circuit ruled that plaintiffs bringing such claims must plausibly allege that they were specifically trafficked at the particular named venue, and further that each named defendant knew or should have known that the plaintiff was specifically trafficked at that venue. (“In short, we hold that, to state a beneficiary claim under Section 1595(a), a plaintiff must plausibly allege that the defendant (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.”). Ultimately, the Red Roof court held defendants’ general knowledge of trafficking at the venue to be insufficient under §1595(a).
While the Ninth Circuit in Keo Ratha did not lay out a standard like the Eleventh Circuit did, it adopted a similarly narrow reading of §1595(a) for the plaintiffs’ claims against U.S.-affiliated defendants Rubicon and Wales, both of which were named beneficiaries to the venture. For Rubicon, which was alleged to have benefited from its attempts to sell Phatthana’s seafood products in the United States, the panel ruled that §1595(a) does not extend to parties who attempt to knowingly benefit. As for Wales, the plaintiffs alleged that the company’s quality control inspections of Phatthana’s seafood were proof that they “knowingly benefitted” from the violations, as they “knew or should have known” about the trafficking abuses taking place at the factories at the time. The Ninth Circuit held that the monies earned from Wales’s inspections of the seafood produced in the perpetrators’ factories did not prove Wales “knowingly benefitted” without evidence that the beneficiary parties knew of the offenses taking place at the specified factory on the date that they made these earnings. Therefore, the court found such evidence, without more, offered merely a possibility that the defendant knowingly benefitted, ruling that such possibility is not covered under §1595. (“Although that statement may be consistent with the possibility that Wales knowingly benefitted from the alleged venture after it learned of Ratha’s allegations, we find the statement, without more, to be “insufficient to allow a reasonable juror to conclude that [Plaintiffs’] position more likely than not is true.”).
Some district courts have taken a more lenient approach, maintaining a pure negligence analysis. Two such courts are the Southern District of Ohio in M.A. v. Wyndham Hotels & Resorts (M.A.), 425 F. Supp. 3d 959 (S.D. Ohio 2019), as well as the Eastern District of Pennsylvania in A.B. v. Marriott International (A.B.), 455 F. Supp. 3d 171 (2020). Relying on the negligence standard, both courts found the “knew or should have known” requirement in §1595(a) was met by broader evidence. In M.A., the court looked to facts alleging that the defendants should have been on notice of the criminal activity given the prevalence of general sex trafficking at the venue, while the court in A.B. found the parent company, Marriott, vicariously liable based on its principal-agent relationship with the individual hotels where the trafficking took place.
Defining ‘Presence’ Under §1596
Beyond its interpretation of beneficiary claims under §1595(a), the Ninth Circuit’s opinion in Keo Ratha also addresses ambiguity under §1596 in regards to the claims made against the two Thai seafood manufacturing companies, Phatthana and S.S. Frozen (named as the two perpetrating parties for the trafficking offenses). The plaintiffs alleged that Phatthana and S.S. Frozen recruited them from their villages in Cambodia to work in their factories to produce seafood for U.S. export, but that once they began working they became victims of peonage, forced labor, and involuntary servitude. In evaluating these claims under §1596, the two questions the court sought to answer were (1) whether the extraterritoriality provision extends to civil claims, and (2) how “presence” under §1596(a) should be defined for foreign defendants. Assuming without deciding that civil claims may be brought for extraterritorial offenses under the statute, the court held that the Thai defendants were not “present” under §1596. (The court assumes without deciding that for the purposes of their personal jurisdiction analysis, §1595 would permit private causes of action for extraterritorial violations of §1596’s substantive provisions.) The panel explained that not only was there no showing of physical presence of the foreign defendants within the United States, but further that even if plaintiffs were correct in arguing that no more than minimum contacts were required to show presence under §1596(a), they still were unable to establish that the defendants had sufficient contacts with the U.S. such that personal jurisdiction could be satisfied. (“Even assuming §1596(a)(2) requires foreign companies to possess nothing more than minimum contacts with the United States, Plaintiffs have not established that Phatthana or S.S. Frozen have sufficient contacts with the United States to satisfy that standard.”) In assessing the sufficiency of the contacts, the court considers both categories of personal jurisdiction—specific jurisdiction as well as general jurisdiction.
Under a general jurisdiction analysis, the defendants’ activities did not indicate a “continuous and systematic” presence in the United States that would render it “at home,” nor did they have a principal place of operation within the United States. And under a specific jurisdiction analysis, the panel ruled that a finding of sufficient contacts could not be made given a lack of evidence that the foreign defendants “purposefully directed” their activities towards the United States. (“The panel held that even assuming § 1596 requires foreign companies to possess nothing more than minimum contacts with the United States, plaintiffs did not establish that Phatthana or S.S. Frozen had sufficient contacts with the United States to meet that standard.”)
Objecting to the court’s specific jurisdiction analysis, the Cambodian plaintiffs in Keo Ratha in October 2022 petitioned the Supreme Court for certiorari, specifically asking the Court to rectify the Ninth Circuit’s distinction between purposeful availment and purposeful direction. The petitioners argue that other courts have understood the two standards to be two means of asking the same question—which is whether or not the defendant engaged with the forum on his or her own volition in a manner connected to the dispute—and thus that both tests should be applicable. Petition for a Writ of Certiorari to the U.S. Court of Appeals for the Ninth Circuit, Keo Ratha v. Phatthana Seafood Co. (filed Oct. 28, 2022) (No. 22-411). The Court denied the petition on December 5, 2022.
Reprinted with permission from the January 23, 2023 issue date of the “New York Law Journal” © 2022 ALM Media Properties, LLC. All rights reserved. Further duplication without permission is prohibited, contact 877-257-3382 or reprints@alm.com
