Thursday, January 23, 2003
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Corporation’s Owners Not Personally Liable for Violation Of Fair Housing Act, U.S. Supreme Court Rules
From Staff and Wire Service Reports
The U.S. Supreme Court yesterday overturned an appeals court ruling that the Fair Housing Act can be used to sue the owners of a real estate company that employed a salesperson who allegedly practiced racial discrimination.
The ruling is a defeat for a mixed-race couple who could not get the employee of Triad, Inc. to sell them a house listed for sale in the desert city of Twenty-Nine Palms.
Emma Mary Ellen Holley and David Holley sued the salesman, Grove Crank, and Triad. They filed a separate suit against David Meyer, Triad’s president, sole shareholder and licensed broker.
The Ninth U.S. Circuit Court of Appeals ruled that the Fair Housing Act expands the usual rules for vicarious liability for an employee action and permits suit against the corporate officer/owner.
But the Supreme Court ruled unanimously that the law outlawing racial discrimination in housing can be used to collect damages only from those who discriminate, and their companies. Company officers and owners cannot be held liable, the court said.
Justice Stephen Breyer said there was nothing in Sec. 42 U.S.C. Sec. 608, the 1968 law meant to help minorities rent and buy homes, that referred to expanding the normal bounds of vicarious liability.
“For one thing, Congress said nothing in the statute or in the legislative history about extending vicarious liability in this manner,” Breyer said. “And Congress’ silence, while permitting an inference that Congress intended to apply ordinary background tort principles, cannot show that it intended to apply an unusual modification of those rules.”
Breyer also noted that the Department of Housing and Urban Development, the federal agency primarily charged with the implementation and administration of the statute, has specified that ordinary vicarious liability rules apply in its arena, and that the court generally defers an administering agency’s reasonable interpretation of a statute.
“Finally, we have found no convincing argument in support of the Ninth Circuit’s decision to apply nontraditional vicarious liability principlesó-a decision that respondents do not defend and in fact concede is incorrect,” the justice said.
Crank allegedly called the Holleys a “salt-and-pepper team.” Emma Holley is black and her husband is white.
They were joined in their suit by the builder, who sold the house for $20,000 less than the couple was ready to pay.
The Bush administration had sided with the Holleys, arguing before the Supreme Court last month that the real estate company owner “exercised pervasive control” over the company’s affairs.
The case goes back to the Ninth Circuit to resolve other issues.
Copyright 2003, Metropolitan News Company