|MEYER V. HOLLEY (01-1120) 537 U.S. 280 (2003)
258 F.3d 1127, vacated and remanded.
[ Breyer ]
DAVID MEYER, individually and in his capacity as
PRESIDENT AND DESIGNATED OFFICER/BROKER
OF TRIAD, INC., etc., PETITIONER v. EMMA
MARY ELLEN HOLLEY, et vir, et al.
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE NINTH CIRCUIT
[January 22, 2003]
Justice Breyer delivered the opinion of the Court.
The Fair Housing Act forbids racial discrimination in respect to the sale or rental of a dwelling. 82 Stat. 81, 42 U.S.C. § 3604(b), 3605(a). The question before us is whether the Act imposes personal liability without fault upon an officer or owner of a residential real estate corporation for the unlawful activity of the corporations employee or agent. We conclude that the Act imposes liability without fault upon the employer in accordance with traditional agency principles, i.e., it normally imposes vicarious liability upon the corporation but not upon its officers or owners.
For purposes of this decision we simplify the background facts as follows: Respondents Emma Mary Ellen Holley and David Holley, an interracial couple, tried to buy a house in Twenty-Nine Palms, California. A real estate corporation, Triad, Inc., had listed the house for sale. Grove Crank, a Triad salesman, is alleged to have prevented the Holleys from obtaining the houseand for racially discriminatory reasons.
The Holleys brought a lawsuit in federal court against Crank and Triad. They claimed, among other things, that both were responsible for a fair housing law violation. The Holleys later filed a separate suit against David Meyer, the petitioner here. Meyer, they said, was Triads
president, Triads sole shareholder, and Triads licensed officer/broker, see Cal. Code Regs., Tit. 10, §2740 (1996) (formerly Cal. Admin. Code, Tit. 10, §2740) (requiring that a corporation, in order to engage in acts for which a real estate license is required, designate one of its officers to act as the licensed broker); Cal. Bus. & Prof. Code Ann. §§10158, 10159, 10211 (West 1987). They claimed that Meyer was vicariously liable in one or more of these capacities for Cranks unlawful actions.
The District Court consolidated the two lawsuits. It dismissed all claims other than the Fair Housing Act claim on statute of limitations grounds. It dismissed the claims against Meyer in his capacity as officer of Triad because (1) it considered those claims as assertions of vicarious liability, and (2) it believed that the Fair Housing Act did not impose personal vicarious liability upon a corporate officer. The District Court stated that any liability against Meyer as an officer of Triad would only attach to Triad, the corporation. App. 31. The court added that the Holleys had not urged theories that could justify reaching Meyer individually. Ibid. It later went on to dismiss for similar reasons claims of vicarious liability against Meyer in his capacity as the designated
officer/broker in respect to Triads real estate license. Id., at 5255.
The District Court certified its judgment as final to permit the Holleys to appeal its vicarious liability determinations. See Fed. Rule Civ. Proc. 54(b). The Ninth Circuit reversed those determinations. 258 F.3d 1127 (2001). The Court of Appeals recognized that under general principles of tort law corporate shareholders and officers usually are not held vicariously liable for an employees action, but, in its view, the criteria for the Fair Housing Act are different. Id., at 1129. That Act, it said, specified liability for those who direct or control or have the right to direct or control the conduct of anothereven if they were not at all involved in the discrimination itself and even in the absence of any traditional agent/principal or employee/employer relationship, id., at 1129, 1131. Meyer, in his capacity as Triads sole owner, had the authority to control the acts of a Triad salesperson. Id., at 1133. Meyer, in his capacity as Triads officer, did direct or control, or had the right to direct or control, the conduct of a Triad salesperson. Ibid. And even if Meyer neither participated in nor authorized the discrimination in question, that control or authority to control is enough
to hold Meyer personally liable. Ibid. The Ninth Circuit added that, for similar reasons, Meyer, in his capacity as Triads license-related
officer/broker, was vicariously liable for Cranks discriminatory activity. Id., at 11341135.
Meyer sought certiorari. We granted his petition, 535 U.S. 1077 (2002), to review the Ninth Circuits hold-
ing that the Fair Housing Act imposes principles of
strict liability beyond those traditionally associated with agent/principal or employee/employer relationships. We agreed to decide whether the criteria under the Fair Housing Act are different, so that owners and officers of corporations are automatically and absolutely liable for an employees or agents violation of the Acteven if they did not direct or authorize, and were otherwise not involved in, the unlawful discriminatory acts. Pet. for Cert. i.
The Fair Housing Act itself focuses on prohibited acts. In relevant part the Act forbids any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate, for example, because of race. 42 U.S.C. § 3605(a). It adds that [p]erson includes, for example, individuals, corpora-
tions, partnerships, associations, labor unions, and other organizations. §3602(d). It says nothing about vicarious liability.
Nonetheless, it is well established that the Act provides for vicarious liability. This Court has noted that an action brought for compensation by a victim of housing discrimination is, in effect, a tort action. See Curtis v. Loether, 415 U.S. 189, 195196 (1974). And 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 consequently intends its legislation to incorporate those rules. Monterey v. Del Monte Dunes at Monterey, Ltd., 526 U.S. 687, 709 (1999) (listing this Courts precedents that interpret Rev. Stat. §1979, 42 U.S.C. § 1983 in which Congress created a species of tort liabil-
ity, in light of the background of tort liability (internal quotation marks omitted)). Cf. Astoria Fed. Sav. & Loan Assn. v. Solimino, 501 U.S. 104, 108 (1991) (Congress is understood to legislate against a background of common-law principles); United States v. Texas, 507 U.S. 529, 534 (1993) (In order to abrogate a common-law principle, the statute must speak directly to the question addressed by the common law).
It is well established that traditional vicarious liability rules ordinarily make principals or employers vicariously liable for acts of their agents or employees in the scope of their authority or employment. Burlington Industries, Inc. v. Ellerth, 524 U.S. 742, 756 (1998) (An employer may be liable for both negligent and intentional torts committed by an employee within the scope of his or her employment); New Orleans, M., & C. R. Co. v. Hanning, 15 Wall. 649, 657 (1873) (The principal is liable for the acts and negligence of the agent in the course of his employment, although he did not authorize or did not know of the acts complained of); see Rosenthal & Co. v. Commodity Futures Trading Commn, 802 F.2d 963, 967 (CA7 1986) (
The Ninth Circuit held that the Fair Housing Act imposed more extensive vicarious liabilitythat the Act went well beyond traditional principles. The Court of Appeals held that the Act made corporate owners and officers liable for the unlawful acts of a corporate employee simply on the basis that the owner or officer controlled (or had the right to control) the actions of that employee. We do not agree with the Ninth Circuit that the Act extended traditional vicarious liability rules in this way.
For one thing, Congress said nothing in the statute or in the legislative history about extending vicarious liability in this manner. 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.
Where Congress, in other civil rights statutes, has not expressed a contrary intent, the Court has drawn the inference that it intended ordinary rules to apply. See, e.g., Burlington Industries, Inc., supra, at 754755 (deciding an employers vicarious liability under Title VII based on traditional agency principles); Meritor Savings Bank, FSB v. Vinson, 477 U.S. 57, 72 (1986) (Congress wanted courts to look to agency principles for guidance).
This Court has applied unusually strict rules only where Congress has specified that such was its intent. See, e.g., United States v. Dotterweich, 320 U.S. 277, 280281 (1943) (Congress intended that a corporate officer or employee standing in responsible relation could be held liable in that capacity for a corporations violations of the Federal Food, Drug, and Cosmetic Act of 1938, 52 Stat. 1040, 21 U.S.C. § 301392); United States v. Park, 421 U.S. 658, 673 (1975) (discussing, with respect to the
Federal Food, Drug, and Cosmetic Act, congressional intent to impose a duty on responsible corporate agents); United States v. Wise, 370 U.S. 405, 411414 (1962) (discussing 38 Stat. 736, currently 15 U.S.C. § 24 which provides: Whenever a corporation shall violate any of the antitrust laws, such violation shall be deemed to be also that of the individual directors, officers, or agents of such corporation who shall have authorized, ordered, or done any of the acts constituting in whole or in part such violation); see also 46 U.S.C. § 12507(d) (If a person, not an individual, is involved in a violation [relating to a vessel identification system], the president or chief executive of the person also is subject to any penalty provided under this section).
For another thing, the Department of Housing and Urban Development (HUD), the federal agency primarily charged with the implementation and administration of the statute, 42 U.S.C. § 3608 has specified that ordinary vicarious liability rules apply in this area. And we ordinarily defer to an administering agencys reasonable interpretation of a statute. Chevron U.S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842845 (1984); Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).
A HUD regulation applicable during the relevant time periods for this suit provided that analogous administrative complaints alleging Fair Housing Act violations may be filed
against any person who directs or controls, or has the right to direct or control, the conduct of another person with respect to any aspect of the sale of dwellings if that other person, acting within the scope of his or her authority as employee or agent of the directing or controlling person has engaged in a discriminatory housing practice. 24 CFR § 103.20(b) (1999) (repealed) (emphasis added).
See Gladstone, Realtors v. Village of Bellwood, 441 U.S.
91, 107 (1979) (treating administrative actions under 42 U.S.C. § 3610 and civil actions under §3613 as alternative, but parallel, proceedings).
When it adopted the similar predecessor to this regulation (then codified at 24 CFR § 105.13 see 53 Fed. Reg. 24185 (1988)), HUD explained that it intended to permit a respondent (defined at 42 U.S.C. § 3602) to raise in an administrative proceeding any defense that could be raised in court. 53 Fed. Reg., at 24185. It added that the underscored phrase was designed to make clear that a complaint may be filed against a directing or controlling person with respect to the discriminatory acts of another only if the other person was acting within the scope of his or her authority as employee or agent of the directing or controlling person. Ibid. (emphasis added). HUD also specified that, by adding the words acting within the scope of his or her authority as employee or agent of the directing or controlling person, it disclaimed any intent to impose absolute liability on the basis of the mere right to direct or control. Ibid.; see 54 Fed. Reg. 3232, 3261 (1989).
Finally, we have found no convincing argument in support of the Ninth Circuits decision to apply nontraditional vicarious liability principlesa decision that respondents do not defend and in fact concede is incorrect. See Brief for Respondents 6, 1011, 43 (conceding that traditional vicarious liability rules apply); Brief for United States as Amicus Curiae 8, 22. The Ninth Circuit rested that decision primarily upon the HUD regulation to which we have referred. The Ninth Circuit underscored the phrase or has the right to direct or contro[l] the conduct of another person. 258 F.3d, at 1130. Its opinion did not explain, however, why the Ninth Circuit did not read these words as modified by the subsequent words that limited vicarious liability to actions taken as employee or agent of the directing or controlling person. Ibid. Taken as a whole, the regulation, in our view, says that ordinary, not unusual, rules of vicarious liability should apply.
The Ninth Circuit also referred to several cases decided in other Circuits. The actual holdings in those cases, however, do not support the kind of nontraditional vicarious liability that the Ninth Circuit applied. See Chicago v. Matchmaker Real Estate Sales Center, Inc., 982 F.2d 1086 (CA7 1992) (defendant corporation liable for the acts of its agents; shareholder directly, not vicariously, liable); Walker v. Crigler, 976 F.2d 900 (CA4 1992) (owner of rental property liable for the discriminatory acts of agent, the propertys manager); Marr v. Rife, 503 F.2d 735 (CA6 1974) (real estate agencys owner liable for the discriminatory acts of his agencys salespersons, but without statement of whether agency was a corporation). Nor does the language of these cases provide a convincing rationale for the Ninth Circuits conclusions.
The Ninth Circuit further referred to an owners or officers non delegable duty not to discriminate in light of the Acts overriding societal priority. 258 F.3d, at 1131, 1132 (citing Chicago v. Matchmaker Real Estate Sales Center, Inc., supra, at 10961097, and Walker v. Crigler, supra, at 904905). And it added that [w]hen one of two innocent people must suffer, the one whose acts permitted the wrong to occur is the one to bear the burden. 258 F.3d, at 1132.
[A] nondelegable duty is an affirmative obligation to ensure the protection of the person to whom the duty runs. General Building Contractors Assn., Inc. v. Pennsylvania, 458 U.S. 375, 396 (1982) (finding no nondelegable duty under 42 U.S.C. § 1981). Such a duty imposed upon a principal would go further than the vicarious liability principles we have discussed thus far to create liability although [the principal] has himself done everything that could reasonably be required of him, W. Prosser, Law of Torts §71, p. 470 (4th ed. 1971), and irrespective of whether the agent was acting with or without authority. The Ninth Circuit identifies nothing in the language or legislative history of the Act to support the existence of this special kind of liabilitythe kind of liability that, for example, the law might impose in certain special circumstances upon a principal or employer that hires an independent contractor. Restatement §214; see 5 F. Harper, F. James, & O. Gray, Law of Torts §26.11 (2d ed. 1986); Prosser, supra, §71, at 470471. In the absence of legal support, we cannot conclude that Congress intended, through silence, to impose this kind of special duty of protection upon individual officers or owners of corporationswho are not principals (or contracting parties) in respect to the corporations unlawfully acting employee.
Neither does it help to characterize the statutes objective as an overriding societal priority. 258 F.3d, at 1132. We agree with the characterization. But we do not agree that the characterization carries with it a legal rule that would hold every corporate supervisor personally liable without fault for the unlawful act of every corporate employee whom he or she has the right to supervise. Rather, which of two innocent people must suffer, ibid., and just when, is a complex matter. We believe that courts ordinarily should determine that matter in accordance with traditional principles of vicarious liabilityunless, of course, Congress, better able than courts to weigh the relevant policy considerations, has instructed the courts differently. Cf., e.g., Sykes, The Economics of Vicarious Liability, 93 Yale L. J. 1231, 1236 (1984) (arguing that the expansion of vicarious liability or shifting of liability, due to insurance, may diminish an agents incentives to police behavior). We have found no different instruction here.
Respondents, conceding that traditional vicarious liability rules apply, see supra, at 8, argue that those principles themselves warrant liability here. For one thing, they say, California law itself creates what amounts, under ordinary common-law principles, to an employer/employee or principal/agent relationship between (a) a corporate officer designated as the broker under a real estate license issued to the corporation, and (b) a corporate employee/salesperson. Brief for Respondents 68, 1336. Insofar as this argument rests solely upon the corporate broker/officers right to control the employee/salesperson, the Ninth Circuit considered and accepted it. 258 F.3d, at 11341135. But we must reject it given our determination in Part II that the right to control is insufficient by itself, under traditional agency principles, to establish a principal/agent or employer/ employee relationship. The Ninth Circuit did not decide
whether other aspects of the California broker relationship, when added to the right to control, would, under traditional legal principles and consistent with the general common law of agency, Burlington Industries, Inc. v. Ellerth, 524 U.S., at 754 (internal quotation marks omitted), establish the necessary relationship. But in the absence of consideration of that matter by the Court of Appeals, we shall not consider it. See Pennsylvania Dept. of Corrections v. Yeskey, 524 U.S. 206, 212213 (1998) (
Respondents also point out that, when traditional vicarious liability principles impose liability upon a corporation, the corporations liability may be imputed to the corporations owner in an appropriate case through a
The judgment of the Court of Appeals is vacated, and the case is remanded for further proceedings consistent with this opinion.
It is so ordered.