Mayer Brown's



2001 Term, Number 16 / May 20, 2002

Today the Supreme Court granted certiorari in one case of potential interest to the business community. Amicus briefs in support of the petitioner are due on Friday, July 5, 2002, and amicus briefs in support of the respondents are due on Monday, August 5, 2002. Any questions about this case should be directed to Miriam Nemetz (202-263-3253) or Robert Bronston (202-263-3244) in our Washington office.

Housing — Fair Housing Act — Vicarious liability of corporate owners and officers. The Supreme Court granted certiorari in Meyer v. Holley, No. 01-1120, to determine whether owners and officers of a corporation may be held vicariously liable for a corporate employee's violation of the Fair Housing Act, 42 U.S.C. § 3601 ("FHA"). 

David Meyer was the sole owner, president and designated officer/broker of Triad Realty. Emma and David Holley offered to purchase a house marketed by Triad. Triad agent Grove Crank rejected the offer and allegedly used racial invectives when discussing the offer with the home builder. After the home sold for $20,000 less than the Holleys' rejected offer, they filed suit in federal district court in California, raising claims under the FHA against Triad, Crank, and Meyer. The district court granted summary judgment in favor of Meyer, concluding that Crank's discriminatory acts could be imputed to Triad, but not to Meyer as an individual. 

The Ninth Circuit reversed. Holley v. Crank, 258 F.3d 1127 (9th Cir. 2001). The Ninth Circuit held that Crank's discriminatory actions could be imputed to Meyer on three separate bases: as the sole owner of Triad, as its president, and as its designated officer/broker. Id. at 1135-1136. The court relied heavily on a Department of Housing and Urban Development ("HUD") regulation interpreting the FHA to impose liability on "any person who directs or controls, or has the right to direct or control, the conduct of another person" who engages in discriminatory practices with respect to the sale of dwellings. Id. at 1130 (citing 24 C.F.R. § 103.20 (1999) (emphasis added)). The court also reasoned that "a principal cannot free itself of liability by delegating to an agent the duty not to discriminate." Id. at 1133. 

The Ninth Circuit joined two other Circuits that have held owners and officers vicariously liable under the FHA for the actions of corporate agents. See Walker v. Crigler, 976 F.2d 900, 904-905 (4th Cir. 1992); Chicago v. Matchmaker Real Estate Sales Center, Inc., 982 F.2d 1086, 1096-1097 (7th Cir. 1992). 

This case is of substantial interest to owners and officers of corporations whose activities are subject to the Fair Housing Act.

This Mayer, Brown, Rowe & Maw Supreme Court Docket Report provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

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