South-Western Legal Studies in Business

Traditional Rule of Vicarious Liability Applies to Fair Housing Act
Description The Supreme Court held that traditional rules of vicarious liability in tort apply when a principal is sued for racial discrimination in violation of the Fair Housing Act. Congress did not imply in the Act that the standard of liability would be any different than the one that is imposed at common law.
Topic Agency
Key Words Vicarious Liability; Officers; Fair Housing Act
C A S E   S U M M A R Y
Facts Mary and David Holley, an interracial couple, tried to buy a home in California that was listed by Triad, Inc. Crank, a Triad salesman, was alleged to have prevented the Holleys from buying the house for racially discriminatory reasons in violation of the Fair Housing Act. The Holleys sued Crank, Triad, and David Meyer, the president and sole shareholder of Triad. They contended that Meyer was vicariously liable for Crank's unlawful actions. The district court dismissed the suit against Meyer. The Ninth Circuit Court of Appeals reversed, holding that while under usual principles of vicarious liability in tort law, Meyer would not be liable, but that he could be liable under the Fair Housing Act. Meyer appealed to the Supreme Court.

Reversed. Although the Act says nothing about vicarious liability, the Court has assumed that when Congress creates a tort action, it legislates against a legal background of ordinary tort-related vicarious liability rules and intends its legislation to incorporate those rules. Traditional vicarious liability rules ordinarily make principals or employers vicariously liable for the acts of their agents or employees in the scope of their authority or employment. Absent special circumstances, it is the corporation, not its owner or officer, who is the principal subject to vicarious liability for the torts of its agents. No convincing argument supports the appeals court's decision to apply nontraditional vicarious liability principles.

Citation Meyer v. Holley, --- S.Ct. --- (2003 WL 141310, Sup. Ct., 2003)

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