WASHINGTON (January 23, 2003) In a unanimous decision yesterday, the U.S. Supreme Court ruled that individual broker-owners are not personally liable for the acts of agents who commit fair housing law violations.

The high court, in the case Meyer v. Holley, reversed a decision by the U.S. Ninth Circuit Court of Appeals in California, which had extended liability to owners and officers. In the case, a racially mixed couple sought to make the owner of Triad, Realtors®, personally responsible for the actions of one of its agents who allegedly had made disparaging remarks about the couple.

"NAR is pleased that the Supreme Court adopted the position advanced by NAR in its amicus curiae (friend of the court) brief that traditional principles of vicarious liability apply in fair housing cases. As a result, the court found that innocent officers and owners of residential real estate corporations will not be held personally liable for the unlawful conduct of the corporation's employees or agents," said Laurie Janik, NAR general counsel.

In Meyer v. Holley, an interracial couple alleged that they were discriminated against by a real estate agent, and brought a claim under the Fair Housing Act against the agent and the real estate firm for whom the agent worked. The couple also personally sued the individual owner and officer of the firm, claiming that he also was responsible for the agent's alleged conduct.

The trial court applied well-recognized principles to dismiss the Fair Housing Act claims against the individual owner, holding that vicarious liability principles permitted only the corporation, and not the individual owner and officer of the corporation, to be liable for misconduct by the corporation's agents.

The Ninth Circuit Court reversed the decision, concluding that traditional vicarious liability rules did not control with respect to the personal liability of corporate shareholders and officers in Fair Housing Act cases, and that owners and officers may be liable "simply on the basis that the owner or officer controlled (or had the right to control) the actions of the employee."

In a 9-0 decision, the Supreme Court reversed that conclusion of the Ninth Circuit. The Supreme Court opinion, delivered by Justice Stephen Breyer, said that the Fair Housing Act has not "extended traditional vicarious liability rules in that way."

Published: January 24, 2003

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