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Quote of the Day - It is never too late to give up our prejudices. - Henry David Thoreau
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Ninth Circuit Clears The Path For A Decision Perhaps Already Made

While some are complaining about the work ethic of Gen Y and they're expressing their opinions, the Ninth Circuit is busy discussing the law.

That discussion yesterday returned to the continuing saga of whether a business owner can be personally liable for the civil rights violations of his employees. Here, a real estate agent allegedly used racial epithets in denying an interracial couple the opportunity to buy a home. The case has been up and down the appeals route, all the way to the Supreme Court and back, now once again before the Ninth Circuit.

The Supreme Court overturned the Ninth Circuit's holding that the business owner could be held liable, but left open two questions:

  1. Does the "right to control," together with other aspects of the broker-agent relationship, establish a sufficient agency relationship to hold the owner liable?
  2. Is there sufficient evidence to pierce the corporate veil (evidence not developed or analyzed below)?
These questions, with some guidance and a free pass, now go back to the trial court. The Ninth Circuit disregarded the owner's arguments that the home-buying couple had waived certain claims and also permitted the couple to amend their complaint to "get to the merits."

In talking about an tangential issue on discipline of brokers, the Court said: "[t]his personal obligation is independent from that of the normal responsibilities of a corporate officer or of the corporation itself. This is a direct personal responsibility on the part of the officer/broker ... "

Read between the lines here: the Ninth Circuit wants to make law, and it would appear that they're ready to hold (again) that a business owner can be individually and personally liable for the civil rights violations of her employees. We'll see, but that's my prediction. We should be able to know in a few months.

In the meantime, if you own a business, you may want to check your company's insurance policy to make sure you're covered. Better yet, if the Ninth Circuit holds that owners are personally liable, check your homeowner's policy. The lesson in any event: make sure you're covered.

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Printer friendly page Permalink Email to a friend Posted by J. Craig Williams on Tuesday, March 08, 2005 at 11:19 Comments Closed (0) |
 
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