Supreme Court Limits Vicarious Liability Under the Fair
2003, the United States Supreme Court was asked to determine whether individual
officers or owners of a corporation, who did not personally engage in unlawful
conduct relating to the Fair Housing Act, were nonetheless personally
responsible for the unlawful conduct of a corporate employee. In the case of
Meyer v. Holley, Mr. and Mrs. Holley were an interracial couple who tried to
purchase a house in California. A real estate corporation listed the home for
sale. The Holleys asserted that the realtor unlawfully discriminated against
Holley’s filed a lawsuit against the real estate corporation, the employee who
allegedly committed the discrimination and also against the president of the
real estate corporation, who was its sole shareholder and its licensed
"office/broker." The owner of the corporation neither participated in the
alleged discriminatory conduct nor did he authorize the alleged conduct.
Under the Fair Housing Act, strict liability is imposed beyond that which is
traditionally associated with the principal/agent or employer/employee
relationships. The Supreme Court was asked to decide whether the owners or
officers of entities were automatically liable for the wrongful acts of their
employees or agents, even if the owners or officers were not involved in and did
not direct or authorize the unlawful discriminatory conduct. This type of
scenario often occurs when a property management employee engages in
discriminatory acts that were not authorized by or known to the property owner.
Typically, an employer is vicariously liable for the acts of their agents and
employees if they are acting within the scope of their authority or employment.
But, unless there are special circumstances, a business that is operated as a
corporation shields its officers, principals and owners from vicarious liability
for the wrongful acts committed by the corporation's employees or agents.
Supreme Court ruled that the owners or officers of a corporation may only be
held liable for Fair Housing violations if they directed or controlled the
person with respect to the unlawful act. The Supreme Court concluded that
owner/broker of the real estate company was not liable for the unlawful
acts of its real estate agent.
This article was originally published in 2008.