Meyer v. Holley
154 L. Ed. 2d 753, 537 U.S. 280, 2003 U.S. LEXIS 902 (2003)
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Rule of Law:
The Fair Housing Act does not impose personal vicarious liability on corporate officers or owners for the discriminatory acts of the corporation's employees based solely on the officer's right to control. Instead, liability is determined by traditional common law agency principles, which ordinarily hold the corporation, as the principal or employer, liable.
Facts:
- Emma Mary Ellen Holley and David Holley, an interracial couple, attempted to purchase a house in Twenty-Nine Palms, California.
- The house was listed for sale by Triad, Inc., a real estate corporation.
- Grove Crank, a salesman for Triad, allegedly prevented the Holleys from buying the house for racially discriminatory reasons.
- David Meyer was the president, sole shareholder, and licensed 'officer/broker' for Triad, Inc.
- The Holleys alleged that Meyer was personally responsible for Crank's discriminatory conduct due to his roles and authority within the corporation, even if he was not directly involved.
Procedural Posture:
- The Holleys filed a lawsuit in federal district court against salesman Grove Crank, Triad, Inc., and later filed a separate suit against Triad's owner, David Meyer.
- The U.S. District Court consolidated the lawsuits and dismissed the vicarious liability claims against Meyer in his capacity as a corporate officer and broker.
- The Holleys, as appellants, appealed the dismissal to the U.S. Court of Appeals for the Ninth Circuit.
- The Ninth Circuit reversed the District Court's decision, holding that the Fair Housing Act imposes personal liability on those who have the right to direct or control the conduct of an employee, making Meyer (the appellee) potentially liable.
- Meyer, as petitioner, was granted a writ of certiorari by the U.S. Supreme Court to review the Ninth Circuit's holding.
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Issue:
Does the Fair Housing Act impose personal vicarious liability on a corporate officer or owner for an employee’s discriminatory actions based solely on the officer's right to direct or control the employee, thereby extending liability beyond traditional agency principles?
Opinions:
Majority - Justice Breyer
No. The Fair Housing Act incorporates traditional principles of vicarious liability, which do not automatically impose personal liability on a corporate officer or owner for an employee's misconduct. The Court reasoned that when Congress creates a tort action like the FHA, it is presumed to legislate against the background of ordinary common law rules. Under traditional agency law, it is the corporation—the principal or employer—that is vicariously liable for the torts of its employees acting within the scope of their employment, not the corporation's officers or owners in their personal capacity. The mere 'right to control' an employee is insufficient by itself to establish a principal-agent relationship with a corporate officer personally; the employee acts on behalf of the corporation, not the officer. The Court also deferred to HUD regulations, which clarify that liability for a 'directing or controlling person' requires that the discriminating individual was acting as an 'employee or agent' of that person, consistent with traditional agency law.
Analysis:
This decision solidifies the principle that federal anti-discrimination statutes should be interpreted in light of traditional common law tort principles unless Congress explicitly states otherwise. It reinforces the integrity of the corporate form, shielding officers and owners from automatic personal liability for the acts of corporate employees. The ruling prevents a significant expansion of vicarious liability, ensuring that plaintiffs seeking to hold a corporate officer personally liable must do more than allege a 'right to control'; they must establish a basis for liability under traditional agency rules or through doctrines like 'piercing the corporate veil.' This maintains a clear distinction between corporate liability and personal liability in the context of civil rights law.
