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Sunday, December 01, 2002
No. 01-1120 Meyer v. Holley

Here we have a case with unmistakable good guys and bad guys. Unfortunately, the really bad guy isn't before the Court. The respondents in this case include a mixed-race couple who wanted to buy a house and a builder who wanted to sell it to them. Unfortunately, between these parties was an evil real estate agent who just didn't want the Holleys to find a home. First he showed them a bunch of homes that were out of their price range, neglecting the home in question that was in their price range, then he failed to present their offer to the builder of the home in question, who ultimately ended up selling it for less than the Holleys' offer.

The question is whether this agent's actions (which violated the Fair Housing Act ("FHA")) may be imputed to Meyer, who owned the real estate company that listed the home. The Ninth Circuit found that they could. The panel relied on a former HUD regulation implementing FHA, which provided that "A complaint may be filed against any person who . . . has the right to direct or control the conduct of another person with respect to any aspect of a sale" if the other person engages in a discriminatory hiring practice. The panel found that this language indicated that there existed a non-delegable duty to ensure non-discriminatory practices, and that the Holleys were entitled to a trial as to whether Meyer actually owned the real estate company at the relevant time.

Interestingly, the government has weighed in as amicus on behalf of the respondents. According to the Solicitor, HUD's regulations do not evidence any intent to create an execption to the ordinary limitation of corporate liability, but the Ninth Circuit's decision should nevertheless be affirmed in order to allow a trial on whether the corporate veil should be pierced.

This case presents a couple of tough questions for the Court to resolve. On the one hand, the language of HUD's regulation seems to pretty clearly include Meyer. On the other hand, exceptions to ordinary principles of corporate limited liaiblity should not lightly be found by courts, and HUD's regulation, which has since been changed, may not indicate a clear intent to create an exception by Congress. Luckily, the Solicitor pointed out a way to resolve this case, at least as to whether the Court will affirm or reverse, without reaching those questions. Even if the Court decides that there is no FHA exception to corporate limited liability, I predict it will AFFIRM the Circuit's ruling remanding the case for trial, either on the issue of ownership or of veil-piercing.