J. B. v. G6 Hospitality, LLC

• Court: District Court, N.D. California
• Decided: December 16, 2021
• Docket: 4:19-cv-07848
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 J.B., Case No. 19-cv-07848-HSG 8 Plaintiff, ORDER BIFURCATING CLAIMS AND CERTIFYING QUESTION FOR 9 v. INTERLOCUTORY APPEAL 10 G6 HOSPITALITY, LLC, et al., Re: Dkt. No. 179 11 Defendants. 12 13 On September 17, 2020, Plaintiff J.B. filed an amended complaint against Defendants G6 14 Hospitality LLC (“G6 Hospitality”), Rajesh Khatri & Hansaben Khatri d/b/a Economy Inn 15 Oakland (“Economy Inn”), SRK Motel, Inc. d/b/a Bay Breeze Inn (“Bay Breeze Inn”), Kalpesh K. 16 Balsara d/b/a Sage Motel (“Sage Motel”), Gangaben A. Patel Trust 2000 d/b/a Holiday Motel 17 (“Holiday Motel”) (collectively, the “Defendant Hotels”), Kairos Unlimited Counseling Services 18 (“Kairos”), and Craigslist, Inc. (“Craigslist”) (collectively, the “Defendants”). Dkt. No. 134 19 (“FAC”). On September 8, 2021, the Court granted Craigslist’s motion to dismiss, dismissing 20 Plaintiff’s claim against Craigslist with leave to amend.1 See Dkt. No. 178 (“Order”). Plaintiff 21 filed a motion under 28 U.S.C. § 1292(b) to certify for interlocutory appeal the Court’s dismissal 22 of Plaintiff’s claim against Craigslist. See Dkt. No. 179. The Court asked the parties to meet and 23 confer about the possibility of severing Plaintiff’s claim against Craigslist in order to facilitate a 24 potential appeal of the dismissal of that claim. See Dkt. No. 187. The parties responded with a 25 joint status report outlining each party’s position. Dkt. No. 188. For the reasons explained below, 26 the Court BIFURCATES the trial of the dismissed claim against Craigslist from the claims 27 1 against Defendant Hotels and Kairos. The Court also GRANTS Plaintiff’s motion for a certificate 2 of appealability as to the dismissal of the Craigslist claim. 3 I. BACKGROUND 4 Plaintiff alleges that Craigslist violated section 1595 of the Trafficking Victims Protection 5 Reauthorization Act of 2008, 18 U.S.C. § 1591, et seq. (“TVPRA”).2 FAC at ¶ 102. Plaintiff 6 alleges that she was “advertised for sale on the Craigslist’s ‘Erotic Services’ and ‘Adult Services’ 7 classified categories” and “repeatedly trafficked for commercial sex.” FAC at ¶¶ 1–2. Plaintiff 8 further alleges that Craigslist “knew that these sections were used to sell adults and children for 9 sex.” Id. at ¶ 2. 10 As to the Defendant Hotels, Plaintiff brought causes of action for violations of the 11 TVPRA; the California Trafficking Victims Protection Act, Cal. Civ. Code § 52.5 (“CTVPA”); 12 and California common law.3 Plaintiff alleges that “she was imprisoned and abused at motels 13 throughout Oakland, including on multiple occasions at each of the Defendant Hotels.” Id. at ¶ 6. 14 Plaintiff further alleges that Defendant Hotels had actual or constructive knowledge that sex 15 trafficking occurred frequently on their properties. See, e.g., id. at ¶¶ 7, 71, 81. Plaintiff alleges 16 that “[e]ach Defendant Hotel also observed at least one (sometimes multiple) violent encounters 17 between Plaintiff and a trafficker and/or buyer.” Id. at ¶ 6. 18 On October 9, 2020, Craigslist moved to dismiss Plaintiff’s TVPRA claim against it on the 19 ground that the Communications Decency Act, 47 U.S.C. § 230 (“CDA”), bars the claim. Dkt. 20 No. 148; see FAC ¶¶ 98-113. Generally, under the CDA, an interactive computer service provider 21 may not be held liable as a “publisher or speaker of any information provided by another 22 information content provider” on its service. See 47 U.S.C. § 230(c)(1). Craigslist argued that, as 23 an interactive computer service provider, it was entitled to immunity from Plaintiff’s TVPRA 24 claim under the CDA. Dkt. No. 148 at 1. Plaintiff responded by arguing that CDA immunity was 25 2 Plaintiff also originally brought state-law claims against Craigslist, but the Court dismissed those 26 claims without leave to amend. Dkt. No. 132 at 5-11. 3 Plaintiff’s CTVPA claim against Economy Inn was dismissed without leave to amend. See Dkt. 27 No. 178 at 21-23. Plaintiff’s CTVPA claim against Holiday Motel was dismissed with leave to 1 abrogated by Congress in 2018 with the passage of the Allow States and Victims to Fight Online 2 Sex Trafficking Act of 2017 and the Stop Enabling Sex Traffickers Act, 132 Stat. 1253 (2018) 3 (“FOSTA-SESTA”). See Dkt. No. 155 at 11-18. The Court had previously rejected Craigslist’s 4 argument, Dkt. No. 132 at 12, but Craigslist sought reconsideration based on the reasoning of 5 intervening rulings by other district courts, Dkt. No. 148 at 2. After close reexamination of the 6 issue, the Court held that section 230(e)(5)(A) of the CDA, as amended by FOSTA-SESTA, 7 eliminates a defendant’s immunity from a civil TVPRA section 1595 claim if, but only if, the 8 defendant’s conduct amounts to a violation of TVPRA section 1591, the statute’s criminal 9 provision. Order at 20. The Court found that Plaintiff had not adequately pled that Craigslist’s 10 conduct constituted a violation of section 1591, and dismissed her TVPRA claim against Craigslist 11 with leave to amend. See id. at 21. 12 Plaintiff moves to certify the Court’s ruling on this point for interlocutory appeal under 28 13 U.S.C. § 1292(b). Dkt. No. 179. Plaintiff contends that the Court’s decision with regard to 14 Craigslist involved a purely legal question and defined the elements Plaintiff must plead and prove 15 to prevail on her civil TVPRA claim. See id. at 1, 3-4. Plaintiff also highlights that district courts 16 addressing this issue have reached different conclusions. See id. at 4. Finally, Plaintiff asserts that 17 “prompt appellate review of the Court’s immunity ruling will dramatically shape the scope of this 18 action,” possibly eliminating months or even years the parties might spend “litigating Plaintiff’s 19 claim according to the wrong legal standard.” Id. at 5-6. 20 The Court asked the parties to meet and confer and discuss whether they could agree to 21 severance of Plaintiff’s claim against Craigslist, given that Plaintiff seeks certification only as to 22 the Court’s ruling regarding Craigslist and that the question to be certified would not affect the 23 merits of any other Defendant’s claim. See Dkt. No. 187. The parties were unable to agree and 24 submitted a joint status report setting out each party’s position.4 See Dkt. No. 188. Plaintiff 25 requests that the claim against Craigslist be severed and certified for interlocutory review. See id. 26 at 2-4. Craigslist outlines multiple possibilities but prefers for the Court to revise its Order to 27 1 dismiss Plaintiff’s claim against Craigslist with prejudice and without leave to amend, allowing 2 Plaintiff to appeal the final judgment as of right. See id. at 4-7. Bay Breeze Inn, Economy Inn, 3 and G6 Hospitality favor severing Plaintiff’s claim against Craigslist only if Plaintiff’s claims 4 against the remaining Defendants are stayed pending the resolution of the Craigslist appeal. See 5 id. at 7-9. Finally, Holiday Motel is amenable to severance of Craigslist, while Sage Motel is not. 6 See id. at 9. 7 II. SEPARATE TRIALS 8 “For convenience, to avoid prejudice, or to expedite and economize, the court may order a 9 separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party 10 claims.” Fed. R. Civ. P. 42(b). Courts are limited by constitutional constraints, such as preserving 11 any right of trial by jury, but otherwise have “broad authority” to order a separate trial of any 12 claim. See Danjaq LLC v. Sony Corp., 263 F.3d 942, 961-962 (9th Cir. 2001). Courts may issue 13 such an order sua sponte. See Institutional Drug Distrib., Inc. v. Yankwich, 249 F.2d 556, 568-69 14 (9th Cir. 1957). Of the three reasons for ordering a separate trial – (1) convenience, (2) avoidance 15 of prejudice, and (3) fostering expedition and economy – any one is sufficient to sustain an order 16 for a separate trial. In re Paris Air Crash of March 3, 1974, 69 F.R.D. 310, 319 (C.D. Cal. 1975). 17 Under the circumstances, the Court finds that it is appropriate to separate Plaintiff’s claim 18 against Craigslist from Plaintiff’s claims against the other Defendants. Defining the elements of 19 Plaintiff’s claim against Craigslist, and determining its likely viability, implicates a novel issue of 20 law. An appeal could take months or even years to resolve. By contrast, Plaintiff’s claims against 21 the other Defendants raise no such issues, and are ripe for resolution now. The Court thus sees no 22 just reason to delay the resolution of Plaintiff’s claims against Defendant Hotels and Kairos 23 pending resolution of any appeal as to Craigslist. Separating the Craigslist claim will avert 24 significant delay by enabling the majority of Plaintiff’s claims to move forward. Any theoretical 25 costs that might result from proceeding with the two sets of claims on different tracks (and no 26 party has concretely identified any such costs) are outweighed by the benefit of moving Plaintiff’s 27 claims against the bulk of the Defendants towards a timely resolution. Separating Plaintiff’s claim 1 unnecessary delay of the remaining claims, and expedite the judicial proceedings and make them 2 more efficient. 3 The Court does not find persuasive Defendants’ objections to proceeding separately with 4 Plaintiff’s claims against Craigslist. 5 Bay Breeze Inn, Economy Inn, and G6 Hospitality argue 5 that Defendant Hotels’ “liability to Plaintiff, if any, must be reduced by craigslist’s proportionate 6 share of fault for the same injuries (even if craigslist has an immunity defense that exempts it from 7 liability to Plaintiff directly).” Dkt. No. 188 at 8. Bay Breeze Inn, Economy Inn, and G6 8 Hospitality further suggest that separate proceedings against Craigslist would “unnecessarily 9 multiply the proceedings for the Court and all parties and risk inconsistent judgments.” Id. The 10 Court does not find any of these purported drawbacks to constitute substantial (or any) prejudice 11 warranting delay of the non-Craigslist claims. It is unclear to the Court what if any impact federal 12 immunity under the CDA would have on joint liability under the remaining state law claims, and 13 the authority cited in Defendants’ cursory discussion does not speak to this question. There are no 14 remaining state law claims against Craigslist. And the Court sees little if any risk of inconsistent 15 judgments because the elements of the sole remaining claim against Craigslist are entirely 16 different than those of the claims against Defendant Hotels and Kairos. Defendant Hotels and 17 Kairos are not interactive computer service providers, meaning that Section 230 of the CDA does 18 not impact the merits of Plaintiff’s claims against them. The Court accordingly finds that no 19 substantial right will be prejudiced by bifurcating the claim against Craigslist, and concludes that 20 the ends of justice are best served by separating Plaintiff’s claim against Craigslist from her claims 21 against the other Defendants. 22 Exercising its discretion under Rule 42(b), the Court BIFURCATES the Craigslist claim 23 from the claims against Defendant Hotels and Kairos. 24 III. CERTIFICATION FOR INTERLOCUTORY APPEAL 25 Plaintiff seeks, without objection from Craigslist, to certify the Court’s Order for 26

27 5 Though the parties were asked to state their positions regarding severance, the Court finds the 1 interlocutory appeal under 28 U.S.C. § 1292(b). More specifically, Plaintiff seeks to certify the 2 portion of the Order in which the Court determined that section 230(e)(5)(A) of the CDA, as 3 amended by FOSTA-SESTA, “provides an exemption from immunity for a section 1595 claim if, 4 but only if, the defendant’s conduct amounts to a violation of section 1591.” Order at 20. The 5 Court concluded that, after FOSTA-SESTA, a plaintiff bringing a civil claim for a violation of 6 section 1595 of the TVPA still must show that the interactive computer service provider acted 7 with the mens rea defined in section 1591 of the TVPA. Id. Plaintiff, on the other hand, argues 8 that FOSTA-SESTA effected a broad abrogation of CDA immunity such that civil plaintiffs need 9 only show that an interactive computer service provider acted with the mens rea described in 10 section 1595 of the TVPA. Dkt. No. 155 at 14-15. 11 In general, parties may only appeal orders which “end[] the litigation on the merits and 12 leave nothing for the court to do but execute the judgment.” Romoland School Dist. v. Inland 13 Empire Energy Center, LLC, 548 F.3d 738, 747 (9th Cir. 2008). As the Court dismissed 14 Plaintiff’s claim against Craigslist with leave to amend, the Order is not a final order that ends the 15 litigation and is not appealable as of right. Plaintiff seeks to invoke a “narrow exception” to the 16 final judgment rule. See Couch v. Telescope Inc., 611 F.3d 629, 633 (9th Cir. 2010). Under 28 17 U.S.C. § 1292(b), a district court may certify an order for interlocutory appeal if certain 18 requirements are met. Id. “These certification requirements are (1) that there be a controlling 19 question of law, (2) that there be substantial grounds for difference of opinion, and (3) that an 20 immediate appeal may materially advance the ultimate termination of the litigation.” In re Cement 21 Antitrust Litig. (MDL No. 296), 673 F.2d 1020, 1026 (9th Cir. 1981). 22 First, the Court finds that Plaintiff seeks appellate review of a controlling question of law. 23 The Ninth Circuit has previously noted that a “controlling” question of law exists where 24 “resolution of the issue on appeal could materially affect the outcome of litigation in the district 25 court.” In re Cement Antitrust Litig. (MDL No. 296), 673 F.2d at 1026. And district courts have 26 characterized a question of law in this context as “a purely legal one that can be resolved quickly 27 without delving into a particular case’s facts.” Henley v. Jacobs, No. C 18-2244 SBA, 2019 WL 1 regarding the extent to which FOSTA-SESTA abrogates CDA immunity for interactive computer 2 service providers will not require any factual inquiry. And the nature and extent of the CDA 3 immunity to which Craigslist is entitled will materially affect the outcome (or at a minimum the 4 required framing) of Plaintiff’s claims against it. While the Court granted Plaintiff leave to amend 5 the complaint, the Court found that Plaintiff must plead and prove that Craigslist’s conduct fell 6 within the ambit of section 1591 of the TVPRA, and thus amounted to more than “constructive 7 knowledge” as described in section 1595. See Order at 8 n.2, 20. The Court anticipates that this 8 higher pleading and proof burden could materially affect the viability of Plaintiff’s claim. 9 Second, the Court finds that there are substantial grounds for difference of opinion on this 10 issue. “To determine if a ‘substantial ground for difference of opinion’ exists under § 1292(b), 11 courts must examine to what extent the controlling law is unclear.” See Couch, 611 F.3d at 633. 12 Courts look to whether the issue is one “over which reasonable judges might differ” and whether 13 the “uncertainty provides a credible basis for a difference of opinion.” Reese v. BP Expl. (Alaska) 14 Inc., 643 F.3d 681, 688 (9th Cir. 2011). No court of appeal has ruled on this question to the 15 Court’s knowledge, and district courts have reached thoroughly-reasoned but conflicting 16 conclusions. Compare, e.g., Doe v. Kik Interactive, Inc., 482 F. Supp. 3d 1249, 1251 (S.D. Fla. 2020) 17 (“FOSTA permits civil liability for websites only ‘if the conduct underlying the claim constitutes a 18 violation of section 1591.’ And section 1591 requires knowing and active participation in sex 19 trafficking by the defendants.”) with Doe v. Twitter, Inc., No. 21-CV-00485-JCS, 2021 WL 3675207, 20 at *24 (N.D. Cal. Aug. 19, 2021) (“[T]he Court concludes that Plaintiffs’ Section 1595 claim against 21 Twitter based on alleged violation of Section 1591(a)(2) is not subject to the more stringent 22 requirements that apply to criminal violations of that provision.”). 23 Finally, the Court finds that an immediate appeal may materially advance the ultimate 24 termination of the litigation. There is no requirement that an interlocutory appeal have a “final, 25 dispositive effect on the litigation.” Reese, 643 F.3d at 688. Instead, this factor is related to 26 whether the issue is a “controlling” one, and courts “consider the effect of a reversal by the Ninth 27 Circuit on the management of the case.” Mateo v. M/S KISO, 805 F. Supp. 792, 800 (N.D. Cal. 1 Following the Court’s Order, Plaintiff must plead and prove that Craigslist acted with the mens rea 2 described in section 1591 of the TVPRA. See Order at 11-12. Although the Court dismissed 3 Plaintiff’s TVPRA claim with leave to amend, it remains to be seen whether Plaintiff can meet this 4 higher burden either at the pleading stage or as a matter of proof. Rather than litigating the case to 5 the finish under a standard that will be challenged on appeal, the Court and the parties will benefit 6 from definitive guidance from the Ninth Circuit at the outset, before time and resources are 7 invested. Plaintiff has acted diligently, filing the motion for a certificate of appealability 8 approximately two weeks after the Court issued its Order. See Fenters v. Yosemite Chevron, 761 9 F. Supp. 2d 957, 1005 (E.D. Cal. 2010). Interlocutory review would not unduly delay the case, 10 but instead likely would enhance efficiency by enabling the Court and the parties to conduct 11 discovery, motions practice, and trial in a manner consistent with a settled legal standard. 12 The Court finds that its Order regarding Craigslist “involves a controlling question of law 13 as to which there is substantial ground for difference of opinion and that an immediate appeal from 14 the order may materially advance the ultimate termination of the litigation.” See 28 U.S.C. § 15 1292(b). Therefore, the Court GRANTS Plaintiff’s motion to certify the Order regarding 16 Craigslist for interlocutory appeal. 17 IV. CONCLUSION 18 The Court BIFURCATES Plaintiff’s claim against Craigslist from Plaintiff’s claims 19 against Defendant Hotels and Kairos. The Court further GRANTS Plaintiff’s motion to certify 20 the Order regarding Craigslist for interlocutory appeal under 28 U.S.C. § 1292(b). Plaintiff and 21 Craigslist agree that a stay of the claim against Craigslist is appropriate, see Dkt. No. 188 at 3:8- 22 10, 6:21-7:2, and 7 n.3, and the Court concurs. See Nken v. Holder, 556 U.S. 418, 433-434 23 (2009). The Court thus STAYS only that claim pending Plaintiff’s application for an interlocutory 24 appeal (and for the duration of the appeal if the Ninth Circuit grants review). 25 Finally, the Court SETS a case management conference regarding Plaintiff’s claims 26 against Defendant Hotels and Kairos for January 18, 2022 at 2:00 p.m. in Courtroom 2 on the 27 Fourth Floor, at 1301 Clay Street, Oakland, California. Plaintiff’s counsel and counsel for 1 || joint proposed case schedule through trial or the parties’ separate scheduling proposals if they are 2 || unable to agree. The Court has already determined that these remaining claims will not be stayed, 3 so no party need raise that issue again. 4 IT IS SO ORDERED. 5 || Dated: 12/16/2021 ° avwooD S. GILLIAM, JR. □ 7 United States District Judge 8 9 10 11 12

© 15 16

= 17

Z 18 19 20 21 22 23 24 25 26 27 28