Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—W.D. Pa.: Human trafficking and labor trafficking claims against hotel franchisor survive dismissal, (Aug 7, 2025)

By Kenneth H. Ryesky, M.B.A., J.D.

Homeless woman who had agreed to work at Days Inn® franchise in exchange for lodgings was abused by employer until her midnight escape with her son from confinement.

A federal district court judge in Pittsburgh, Pennsylvania has partially dismissed claims brought against some hoteliers by three individuals who had worked at one or both of the two implicated hotel properties. In addition to various franchisee defendants, one of the hotel properties was operated under franchise from international franchisor Wyndham, who was also named as a defendant. The defendants alleged (1) forced-labor and labor-trafficking claims; (2) wage-and-hour claims; (3) race-discrimination claims; (4) and common law unjust enrichment claims. The wage-and-hour claims of two individuals were dismissed, and the third individual's were limited to the time of his employment at one of the hotel properties. The RICO claims mostly survived dismissal. Most of the human trafficking and labor trafficking claims survived dismissal, notably including those asserted against Wyndham as the franchisor. The plaintiffs were given leave to replead (Timko v. NSPA Lounge LLC , No. 2:23-cv-01307-NR (W.D. Pa. July 30, 2025)).

Background. Wyndham Hotels & Resorts, Inc. (Wyndham) is the world's largest hotel franchisor. A hotel property in New Stanton, Pennsylvania, owned and operated by Himanshu Bhatia (H. Bhatia), Yadwinder Singh, and Baljinder Kaur through their NSPA Lounge LLC entity (NSPA), was franchised under Wyndham's Days Inn® brand. The "Motel M" motel property in Lewisburg, West Virginia was owned and operated by Milan, LLC (Milan), an entity owned by H. Bhatia and his wife (D. Bhatia).

Two individuals, Timko and Robinson, who were in need of shelter, entered into what they understood to be lodgings in exchange for their labor at the Days Inn® and/or Motel M. The actual employment conditions were alleged to have entailed, among other things, deficient wages, overly extended employment hours, restrictions of free movement during non-working hours, restrictions against speaking with co-workers who were not subject to such restrictions, and threats of coercion to collect debts accumulated to the employers in connection with the individuals' respective employments. A third individual, Darnell, who had been employed at the Days Inn® prior to its acquisition by NSPA, alleged (1) underpayment of wages while her employment continued following NSPA's succession as owner-operator; and (2) Singh refused to provide the required responses and cooperation when Darnell applied for unemployment compensation following termination of her employment at the Days Inn®.

Singh, Kaur, and NSPA did not respond to the complaint, and default judgment was entered against them. The remaining defendants moved to dismiss.

Human trafficking-beneficiary liability. The judge ruled that Timko and Robinson plausibly alleged their beneficiary liability claim against Wyndham under the Trafficking Victims Protection Reauthorization Act (TVPRA) [18 U.S.C.§§1581, et seq.]. The TVPRA civil remedy [18 U.S.C.§1595] requires a predicate offense. Here, Singh had threatened Robinson and Timko with arrest, Timko for failure to pay the alleged debt in connection with her employment, and Robinson if he left the property without permission during his non-working hours. These constitute "means of the abuse or threatened abuse of law or legal process [18 U.S.C.§1589(a)(3)] as a valid predicate for the civil remedy.

The civil remedy can be applied not only to a perpetuator, but also to "whoever knowingly benefits, or attempts or conspires to benefit, financially or by receiving anything of value from participation in a venture" that violates TVPRA [18 U.S.C.§1595(a)]. Being aware of the benefit received is sufficient for pleading purposes, and such benefit need not necessarily be from criminal activity. Here, Wyndham was aware that it was receiving royalties from room rentals at the Days Inn®.

The pleadings were also plausible that Wyndham knowingly engaged in the requisite "venture" for beneficiary liability. That Wyndham had implemented training programs for its personnel on sex-trafficking showed that Wyndham had at least general knowledge of sex-trafficking as it pertained to the hotel industry. Wyndham was also alleged to have monitored its franchisees. An agency relationship was also alleged. These allegations, taken together, plausibly plead knowledge or constructive knowledge on the part of Wyndham. The beneficiary liability claim was sufficiently pleaded to survive the dismissal motion.

Vicarious liability. The court found that Timko and Robinson plausibly alleged Wyndham's vicarious liability for the actions of the franchisee defendants. Under the franchise agreement, Wyndham exclusively controlled the online reservation booking system for the hotels operating under its franchise, and had access to the data in the system. Wyndham's approval was required for building renovations. Wyndham also had the contractual right to unilaterally terminate the franchise agreement. Moreover, there were discussions "with the franchisee defendants about overcharging guests, false advertising, and bad reviews." These allegations sufficed to plead an agency relationship, from which Wyndham could incur vicarious liability for the franchisee defendants’ actions.

For similar reasons, Timko and Robinson plausibly pleaded their vicarious liability causes of action against Wyndham under the Pennsylvania Human Trafficking Law (PHTL) [18 Pa. C.S.§3001 et seq.].

The Case is No. 2:23-cv-01307-NR.

Judge: Ranjan, J.

Attorneys: Joshua P. Ward (J.P. Ward & Associates, LLC) for Terri Timko. Michael A. Comber (Comber Miller LLC) for Milan, LLC d/b/a Motel M.

Companies: NSPA Lounge LLC d/b/a Days Inn; NSPA Suites LLC

Cases: FranchisingDistribution PennsylvaniaNews