Between 2017 and 2019, four women filed separate state court suits against the Roosevelt Inn in Philadelphia and the Days Inn where they were sex trafficked. The women alleged that the hotel ignored the clear signs of sex trafficking and the hotel failed to stop it from taking place. The women are now asking the Third Circuit to “reverse a lower court’s ruling that relieved the hotel’s insurers from covering the underlying lawsuits”.
On March 20, 2023, U.S. District Judge Chad F. Kenney granted the motions for judgment on the pleadings asserted by Samsung Fire & Marine Insurance Co. and Nationwide Mutual Insurance Co. and granted Ace Property & Casualty Insurance Co.’s motion to dismiss on the grounds that public policy bars insurance coverage for those allegedly involved in enabling human trafficking because it is “against public policy to provide insurance for loss attributable to particularly harmful criminal conduct”. Judge Kenney ruled that shielding policyholders from the consequences of their criminal conduct would be “against the safety, morals, and welfare of the Commonwealth”.
The women, identified by their initials M.B., C.A., B.H. and K.R., filed an amicus brief on October 12, 2023, arguing that Judge Kenney incorrectly relieved insurers from having to defend or indemnify the Roosevelt Inn and the Days Inn. The women’s main argument is that they allege the hotel engaged in negligent conduct, not a criminal act. Their complaint alleged the hotels knew or should have known the women were being forced to engage in commercial sex acts while on their premises given their extended stays at the hotel, the way they were dressed, the fear and anxiety they exhibited, refusal of housekeeping services, the traffickers paying in cash, rooms contained used condoms and their wrappers and men frequently going in and out of their rooms.
Judge Kenney relied on the Minnesota Fire & Cas. Co. v. Greenfield to reach the conclusion that an insured cannot invoke their insurance policy to defend against a civil action stemming from an insured’s criminal activity. “Setting aside the fact that the Hotel Defendants have not been sued for criminal activity, the district court has dramatically overstated Greenfield’s non-precedential holding while dramatically expanding the public policy exception to an insurer’s duty”, the women stated in their amicus brief. Greenfield involved an insurer who filed a declaratory judgment arguing it had no duty to defend a homeowner in a wrongful death suit arising from the overdose death of a guest the homeowner provided with heroin. The woman argued that Greenfield is misplaced because in that case the insured and the homeowner were charged with and pled guilty to crimes in connection with the overdose death. In the present case, the hotels have not been charged or convicted under the Pennsylvania’s sex trafficking law nor have the women been charged or convicted with any crime.
If Judge Kenney’s ruling is not reversed, the women want the Third Circuit to certify the issue to the Pennsylvania Supreme Court.
“As a matter of “public policy,” this erroneous decision also has devastating implications regarding the availability of paid-for insurance coverage for any business that operates where crime can occur and where a victim may suffer personal injury resulting from negligence concurrent with a criminal act,” the women said.
The women are represented by Charles L. Becker and Ruxandra M. Laidacker of Kline & Specter PC.
The CSE Institute commends the attorneys at Kline & Specter for the amazing impact litigation they are bringing on behalf of survivors of human trafficking. Over the last several years there have been multiple civil lawsuits filed against the hotel industry, exposing the prevalence of sex trafficking and prostitution occurring within those properties. The CSE Institute supports the survivors and is grateful that hotels and motels are being held accountable for their participation in human trafficking.
The CSE Institute will continue to provide updates on this matter.
All views expressed herein are personal to the author and do not necessarily reflect the views of the Villanova University Charles Widger School of Law or of Villanova University.