Court Opinion

ID: 9483490
Source: CourtListenerOpinion
Date Created: 2023-08-05 09:21:50.693974+00
Date Added: 2024-06-11T17:49:39.103995
License: Public Domain

WIDENER, Circuit Judge,
dissenting:
In holding a property owner’s duty to comply with the Fair Housing Act to be “non-delegable,” the majority effectively imposes strict liability upon a property owner- for the discriminatory acts of his agent. Under this- rule, even the most conscientious and careful property owner, as there was here, will be unable to protect himself from liability resulting from the forbidden acts of unscrupulous agents.1 I am of opinion that the Department of Housing and Urban Development, the federal agency charged with administering the Fair Housing Act, has made clear that ordinary principles of agency -law are not to be *906displaced in favor of strict liability. Further, I find no cause to overturn the verdict of a properly-instructed jury in favor of Whitesell, that verdict being amply supported by evidence and to the effect that agent Crigler acted outside the scope of her employment. Accordingly, I respectfully dissent.
The Fair Housing Act, 42 U.S.C. §§ 3601-3619 (the Act), charges the Secretary of Housing and Urban Development (HUD) with the duty of administering the provisions ■ of the Act. Pursuant to that duty HUD has promulgated regulations governing the filing of complaints under the Act with HUD. See 24 C.F.R. Part 105. Though the instant case involves a private civil action rather than a complaint filed with HUD, that agency’s regulations nonetheless serve as the best guide as to the proper interpretation of the Act’s rather generalized prohibitions. The failure of the majority to follow the regulation is strained, I suggest, and may indicate a refusal to recognize the dichotomy between the regulation and its opinion.
The HUD regulation most relevant here provides as follows:
§ 103.20 Persons against whom complaints may be filed.
(a) A complaint may be filed against any person alleged to be engaged, to have engaged, or to be about to engage, in a discriminatory housing practice.
(b) A complaint may also 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, rental, advertising or financing of dwellings or the provision of brokerage services relating to the sale or rental 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, is engaged, has engaged, or is about to engage, in a discriminatory housing practice.
24 C.F.R. § 103.20 (1991) (emphasis supplied). HUD’s use of the italicized language, I submit, is sufficient indication of that agency’s intention that the traditional doctrine of respondeat superior should define the liability of the principal of a wrongdoing agent under the Act. That a principal’s liability under the Act, in the eyes of the agency charged with its administration, is dependent upon a showing that the agent was acting “within the scope of his or her authority” is wholly inconsistent with the majority’s assertion that such liability is non-delegable, or strict.
The history of the promulgation of the present section 103.20 confirms that HUD in no way intended to impose strict vicarious liability upon innocent property owners. HUD first addressed this issue in 1984, when it published a proposed section 105.13, also entitled “Persons against whom complaints may be filed.” That proposed regulation provided as follows:
(a) A complaint may be filed against any person alleged to be or have been engaged, or to be about to engage, in a discriminatory housing practice.
(b) 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, rental, advertising or financing of dwelling [sic] or the provision of brokerage services relating to the sale or rental of dwellings is responsible for discriminatory housing practices by such other person.
49 Fed.Reg. 40533 (proposed Oct. 16, 1984). Importantly, this regulation is substantially identical to the present 24 C.F.R. § 103.20 except for the crucial omission of the scope-of-employment requirement. In the absence of any reference to the agent’s scope of employment, the language of the proposed regulation arguably could have been interpreted as imposing strict liability on all real property owners for the unlawful acts of their agents. Indeed, commentary accompanying the proposed regulation suggests that at that time HUD intended to make “nondelegable”2 the liability of *907principals involved in the sale, lease, or financing of real property. See 49 Fed. Reg. 40528-29 (1984).
However, HUD’s comments accompanying the publication of the final version of the rule in question, which remains the version in force today, both make clear that no strict liability was intended and shed light on HUD’s understanding of the concept of nondelegability. Those comments tell us that the National Association of Realtors (NAR) “strenuously objected” to the proposed section 105.13(b). According to HUD,
NAR contended that the judicial decisions do not establish a rule of absolute liability (without fault) as paragraph (b) would impose. NAR argued that the decided cases focus only on the liability of a broker for conduct of his or her salespersons, but do not mandate absolute liability on the basis of mere right “to direct or control” without reference to instructions, policies, compliance programs and other actions of the principal.... In response, it is not HUD’s intent to impose absolute liability on any principal; the intent, in proposing paragraph (b), was to follow the law enunciated by the courts in recent Fair Housing Act cases with respect to the liability of a principal for acts of an agent.... HUD has revised the language of paragraph (b) of [now § 120.30] to provide 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.
53 Fed.Reg. 24185 (1988); see also 54 Fed. Reg. 3260-61 (1989). Thus, this comment only confirms the most straightforward reading of the text of the present section 103.20, i.e., that familiar principles of agency law, and not strict liability, control a principal’s liability for the acts of an agent.
While I am of opinion that the aforementioned HUD regulation standing alone sufficiently establishes that the doctrine of respondeat superior governs the liability of a principal for the discriminatory acts of his agent; I pause for a moment to consider the case law cited by the majority for the proposition that a property owner’s vicarious liability under the Act is strict. Certainly, a good deal of case law exists holding principals vicariously liable for the Fair Housing Act violations of their agents. Many of these cases indeed use the term nondelegable in describing a property owner’s responsibility for compliance with the Fair Housing Act. The cases fall far short, however, of establishing a general rule that traditional principles of agency law have no application in- Fair Housing Act cases.
For example, in Marr v. Rife, 503 F.2d 735 (6th Cir.1974), perhaps the most oft-cited case for the strict liability position, the Sixth Circuit held liable the owner of a real estate agency for the discriminatory acts of his agents. The court’s discussion of the scope of the principal’s vicarious liability, however, leaves much to be desired in terms of clarity. The Marr court relied primarily on three cases, none of which squarely supports a rule that inquiry into whether a wrongdoing agent was acting within the scope of his employment is irrelevant. First, the court cited United States v. Northside Realty Assoc’s, Inc., 474 F.2d 1164 (5th Cir.1973), a case that in fact supports the application of traditional agency law in assessing liability of a principal under the Act. See Marr, 503 F.2d at 741, quoting Northside Realty, 474 F.2d at 1168 (holding that agent of defendant corporation “acted within the scope of his duties” during discriminatory conduct). Second, the court relied upon United States v. Youritan Construction Co., 370 F.Supp. 643 (N.D.Cal.1973), aff’d in part and rev’d in part, 509 F.2d 623 (9th Cir.1975). Youritan at best presents a discussion of both aspects of the law of vicarious liability before us here, and it too can be read as contemplating application of re-spondeat superior principles under the Act. See Marr, 503 F.2d at 741, quoting Youritan, 370 F.Supp. at 649. Finally, the Marr court cited United States v. Real Estate Development Corp., 347 F.Supp. 776 (N.D.Miss.1972). Again, though the *908Real Estate Development opinion uses the term non-delegable, that reference comes in a passage that also supports the application of traditional agency principles. See Real Estate Development, 347 F.Supp. at 785 (“[The agents’] acts and statements, made within the scope of their agency, are attributable to [their principal], whose duty to comply with the law is non-delega-ble.”) (emphasis supplied). The Marr case itself, in finding liable a real estate agency owner for the acts of an agent, held only as follows:
While [the] evidence does not indicate that [the agent] acted with the approval or at the direction of [the principal], we do not believe that such a finding is necessary in order to hold [the principal] liable. As owner of the agency, [the principal] had at least the power to control the acts of his salesmen.
Marr, 503 F.2d at 742. This holding hardly constitutes a ringing endorsement of the nondelegability approach; in fact, the language is fully consistent with application of the law of respondeat superior. On the whole, I simply find uncompelling the reasoning of the Marr opinion.
Neither do I believe that Coates v. Bechtel, 811 F.2d 1045 (7th Cir.1987), supports the strict liability approach of the majority in the instant case. Indeed, I suggest its holding is quite to the contrary. In Coates, the Seventh Circuit reversed as an abuse of discretion the district court’s award of attorney’s fees to the prevailing defendant in a case brought under the Fair Housing Act. The defendant in question was the absentee owner of a mobile home. The owner had agreed to sell the mobile home to a black couple, the sales arrangements being handled by two of the defendant’s agents. The sales transaction fell through, however, when the agents subjected the buyers to harassment on account of their race. The buyers thereafter brought suit against both the owner and the agents under the Fair Housing Act.
The district court granted summary judgment in favor of the owner on grounds that the agents had not acted within the scope of their actual or apparent authority in discriminating against the buyers on the basis of their race. See Coates, 811 F.2d at 1048 and n. 1. The district court further granted the owner’s motion for attorney’s fees pursuant to 42 U.S.C. § 1988, holding that the buyers’ claim against the owner was “unreasonable and without foundation.” 811 F.2d at 1049.
On appeal, the Seventh Circuit considered only the propriety of the fee award under section 1988. The court reversed that award and held that the buyers’ claim, though without merit, was not frivolous, groundless, or unreasonable. In evaluating whether the claim was sufficiently col-orable to preclude an award of fees to the owner, the court acknowledged that familiar principles of agency law governed the owner’s liability and that the buyers conceivably could have made out a claim of vicarious liability against the owner had the facts been more favorable to the plaintiff buyers.3 Nowhere does the opinion suggest that principles of strict liability apply to the buyers’ claims against the owner. Apparently the majority arrives at its conclusion from Coates’ parenthetical reference to Phiffer, infra, n. 4.
I shall not belabor the point by discussing further the case law addressing vicarious liability under the Act.4 Though I am aware of no case ■ squarely adopting the *909position of the majority in the instant case, my point is not that the broad range of reported cases do not hold property owners to a rigorous standard for the acts of their agents. Indeed, courts rightly have been quick to hold principals liable for the unlawful discrimination of their agents when the facts reveal that a principal has done nothing to guard against the occurrence of such discrimination. I wish only to show that, contrary to the suggestion of the majority, the cases reveal no consensus that principals are to be held liable under the Act without regard to traditional agency law in general, and scope-of-employment law in particular. Accordingly, I would look to the plain language of 24 C.F.R. § 103.20 and hold that familiar principles of agency law govern a property owner’s liability under the Act.
Having stated my opinion that White-sell’s liability to Mrs. Walker, if any, must be under the traditional principles of re-spondeat superior, I now turn to the question of whether the jury’s verdict in favor of Whitesell was supported in law and fact.
I note this part of the majority opinion with which I agree: “We accept the jury’s finding that Whitesell did not confer on Crigler the right to discriminate, or even indicate his intention that she discriminate. The evidence is sufficient to support the conclusion that Whitesell specifically intended that Crigler not discriminate.” That being the case, and no error of law being relied upon by the majority other than its holding that the responsibility of Whitesell was nondelegable, I would simply affirm the judgment of the district court.

. Even if, in footnote 7, supra, the majority may seem to back off slightly from an unequivocal commitment to the position that property owners may never escape vicarious liability for the discriminatory acts of their agents, its application of the "non-delegable” principle to the facts of this case amounts to an embrace of strict liability for property owners of ordinary prudence in the vast majority of cases involving an innocent principal and a wrongdoing agent. Footnote 7, then, should be considered, I think, for what it is, a dictum.

. Use of the word in 1984 was by HUD. This aspect of the 1984 proposal was changed by the regulation under consideration here.

. According to Coates:
The central factual issue underlying the plaintiffs’ vicarious liability claim against Tom was the scope and nature of the agency relationship between Tom and Fritz. As a matter of well-settled agency law, a principal may be held liable for the discriminatory acts of his agent if such acts are within the scope of the agent’s apparent authority, even if the principal neither authorized or ratified the acts. In cases of racial discrimination in housing under both 42 U.S.C. § 1982 and the Fair Housing Act, 42 U.S.C. § 3604, the courts have imputed the wrongful acts of a real estate sales or rental agent to the property owner he is representing regardless of whether the owner specifically authorized the agent to engage in racial discrimination.
Coates, 811 F.2d at 1051. (footnote omitted)

. I should note, however, that I find similarly unconvincing the conclusory treatment of the point in Phiffer v. Proud Parrot Motor Hotel, Inc., 648 F.2d 548, 552 (9th Cir.1980).