Meyer v. Holley

Emma Mary Ellen Holley and David Holley (defendants) were an interracial couple who tried to buy a house in California. Triad, Inc., listed the house for sale, and Grove Crank, a salesman employed by Triad, allegedly prevented the Holleys from buying the house based on race. The Holleys sued Crank and Triad in federal court, alleging violations of the Fair Housing Act (FHA), which prohibited discrimination on the basis of race in the sale or rental of a dwelling. The Holleys then brought a separate claim against David Meyer (plaintiff), who served as Triad’s president, sole shareholder, and licensed broker. The Holleys argued that Meyer’s work in at least one of his capacities made him vicariously liable for Crank’s unlawful conduct. The district court consolidated the suits and dismissed the claims against Meyer. Further, the court held that ordinary principles of tort liability applied to the FHA, which called for the corporation, not the principal, to be subject to vicarious liability. The Ninth Circuit reversed and found that although ordinary tort-law principals did not call for shareholders and officers to be held vicariously liable for all employee actions, liability under the FHA was stricter than ordinary tort principals, and owners or officers who direct or control or have the right to direct or control a salesperson had an affirmative obligation to ensure protection from the discriminatory actions of its employee. Meyer appealed to the United States Supreme Court, where the Holleys argued that even if the ordinary vicarious-liability principles applied, California law created an employer-employee relationship between the corporation’s designated broker and the employee-salesperson, based on the right to control.