United States of America v. Gumbaytay et al

Filing 197

MEMORANDUM OPINION AND ORDER that Williams' 131 MOTION for Summary Judgment is GRANTED in part and DENIED in part. It is granted in that Williams is not vicariously liable for punitive damages for any actions taken by Gumbaytay found to violate the Fair Housing Act. It is denied in all other respects. Signed by Hon. Chief Judge Mark E. Fuller on 9/9/2010. (Attachments: # 1 Civil Appeals Checklist)(cc, )

United States of America v. Gumbaytay et al

Doc. 197

IN THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF ALABAMA N O R T H E R N DIVISION U N IT E D STATES OF AMERICA, P la in tif f , v. J A M A R L O K. GUMBAYTAY, et al., D e f e n d a n ts. ) ) ) ) ) ) ) ) )

C A S E NO. 2:08-cv-573-MEF (W O - PUBLISH)

M E M O R A N D U M OPINION AND ORDER I . INTRODUCTION O n July 17, 2008, the United States of America ("Plaintiff") brought suit against eleven defendants pursuant to Title VIII of the Civil Rights Act of 1968, as amended, 42 U .S .C . §§ 3601-3619 ("Fair Housing Act"). (Doc. #1). Over the course of amending its c o m p la in t three times, Plaintiff added nine defendants to the nine remaining original d e f e n d a n ts . (Docs. #45, 107, & 168). Plaintiff alleges that defendant Jamarlo Gumbaytay (" G u m b a yta y" ) engaged in a pattern of unlawful discrimination on the basis of sex in c o n n e c tio n with the rental of the other defendants' properties. On January 15, 2010, d e f e n d a n t Lori Williams ("Williams") moved for summary judgment pursuant to Rule 56 of th e Federal Rules of Civil Procedure. (Doc. #131). For the reasons set forth in this M e m o ra n d u m Opinion and Order, that motion will be GRANTED in part and DENIED in p a rt.

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Dockets.Justia.com

II. JURISDICTION AND VENUE J u ris d ic tio n over Plaintiff's claims is proper under 28 U.S.C. §§ 1331 and 1345 and 4 2 U.S.C. § 3614(a). The parties do not contest personal jurisdiction or venue, and the Court f in d s adequate allegations in support of both personal jurisdiction and venue. II I . LEGAL STANDARD U n d e r Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment is a p p ro p ria te "if the pleadings, depositions, answers to interrogatories, and admissions on file, to g e th e r with the affidavits, if any, show that there is no genuine issue as to any material fact a n d that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. C a tr e tt, 477 U.S. 317, 322 (1986). The party asking for summary judgment "always bears th e initial responsibility of informing the district court of the basis for its motion, and id e n tif yin g those portions of `the pleadings, depositions, answers to interrogatories, and a d m is sio n s on file, together with the affidavits, if any,' which it believes demonstrate the a b s e n c e of a genuine issue of material fact." Id. at 323. The movant can meet this burden b y presenting evidence showing there is no dispute of material fact, or by showing the nonm o v in g party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Id. at 322-23. O n c e the moving party has met its burden, Rule 56(e) "requires the nonmoving party to go beyond the pleadings and by [its] own affidavits, or by the `depositions, answers to in te rro g a to rie s , and admissions on file,' designate `specific facts showing that there is a

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genuine issue for trial.'" Id. at 324. To avoid summary judgment, the nonmoving party " m u s t do more than simply show that there is some metaphysical doubt as to the material f a c ts ." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986). On the o th e r hand, a court ruling on a motion for summary judgment must believe the evidence of th e non-movant and must draw all justifiable inferences from the evidence in the non-moving p a rty's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). After the n o n m o v in g party has responded to the motion for summary judgment, the court must grant s u m m a ry judgment if there is no genuine issue of material fact and the moving party is e n title d to judgment as a matter of law. See Fed. R. Civ. P. 56(c). I V . FACTUAL AND PROCEDURAL BACKGROUND P la in tif f filed its initial complaint on July 17, 2008. It then filed amended complaints, a d d in g defendants but not changing its allegations or claims, on January 7, 2009; November 2 3 , 2009; and April 29, 2010. In its most-recent amended complaint, Plaintiff alleges the f o llo w in g : "At all times relevant to this action" Williams employed Gumbaytay as her agent to manage the property she owned at 720 Capri Street, Montgomery, Alabama 36105 ("720 C a p ri" ). Rental unit(s) at that property are "dwellings" within the meaning of 42 U.S.C. § 3 6 0 2 (b ). From at least 2005 to the present, Gumbaytay has been subjecting actual and p ro s p e c tiv e female tenants at that property to discrimination on the basis of sex, including s e v e re , pervasive, and unwelcome sexual harassment. This includes "unwanted verbal sexual a d v a n c e s ; unwanted sexual touching; unwanted sexual language; granting and denying

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tangible housing benefits based on sex; and taking adverse action against female tenants w h e n they refused or objected to his sexual advances." Williams is liable for the

d is c rim in a to ry conduct of Gumbaytay, her agent and manager. Additionally, Williams knew o r should have known of Gumbaytay's discriminatory conduct but failed to take reasonable p re v e n ta tiv e or corrective measures. Williams may own or have owned other dwellings, w h e re she engaged in similar conduct. P la i n t i f f claims that this conduct--intentional, willful, and/or taken in reckless d is re g a rd for the rights of others--constitutes violations of the following provisions of the F a ir Housing Act: 42 U.S.C. §§ 3604(a)­(c) and 3617. Plaintiff seeks a declaration that W illia m s violated the Fair Housing Act; an injunction preventing Williams from violating th e Fair Housing Act in the future and from failing to take affirmative steps necessary to re s to re the victims of her past violations to the position they would have been absent her c o n d u c t; monetary damages to identifiable victims pursuant to 42 U.S.C. § 3614(d)(1)(B); a n d civil penalties against Williams to vindicate the public interest pursuant to 42 U.S.C. § 3 6 1 4 (d )(1 )(C ). E v id e n c e submitted by the parties shows the following: P la in tif f has previously submitted several declarations from several women who have liv e d in properties managed by Gumbaytay, all describing various forms of discrimination b a s e d on sex. Valerie Manning ("Manning") rented the property at 720 Capri, beginning a ro u n d January 2006, just before Williams bought the property. At the time, Eric Crews was

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the property manager. Williams purchased 720 Capri in January 2006. Williams has never h a d an interest in any of the other properties mentioned in Plaintiffs' complaint. No other d e f e n d a n t in this lawsuit has an interest in 720 Capri. A p p ro x im a te ly three months after her tenancy began, Manning's water bills increased d ra m a tic a lly due to a leak. She called Eric Crews about the leak; however, Gumbaytay a n s w e r e d the phone. Gumbaytay said he could help with the leak, that he was Manning's " s u g a r daddy," and that Manning was too pretty to be having trouble. In November 2006, Manning received a letter from Williams stating that Gumbaytay w a s taking over as property manager at 720 Capri. Gumbaytay then contacted Manning, te llin g her that Williams was increasing Manning's rent from $550 per month to $650 per m o n th . Gumbaytay again told Manning she was pretty and that if she would "see him s o m e tim e " she would not have to worry about paying rent. Gumbaytay stated that he could p a y her rent and buy things for her children. A ro u n d this time, Gumbaytay began showing up at 720 Capri every Sunday, trying to get Manning to spend time with him and come over to his house. Gumbaytay would also s it in his car by 720 Capri and watch the house and often come by unannounced, including la te at night. He would often make calls to 720 Capri, telling Manning that he was thinking a b o u t her and asking her what she was doing. At one point, Manning disconnected her phone b e c a u s e of Gumbaytay's calls. O n December 8, 2006, Gumbaytay went to 720 Capri to collect a partial rent payment.

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He told Manning he could be her "sugar daddy" if she needed help with the rent because, " T h e lady that owns this house, she wants her money. The lady is a bloodhound for her m o n e y. " In June 2007, Gumbaytay sent Manning a "Notice of Default in Payment of Rent W a rn in g Prior to Demand to Pay or Terminate Residential Lease" saying that Manning owed $ 9 0 0 . Manning called Gumbaytay about that note, which bore his signature. Gumbaytay c la im e d that he had not written the note but told Manning he would pay the amount listed as d u e on the note if Manning "got with" him. O n July 24, 2007, Williams sent Manning a letter stating that she was taking over m a n a g e m e n t of 720 Capri as of August 30. Williams says she fired Gumbaytay on July 24, 2 0 0 7 because Williams had obtained information that Gumbaytay may have sexually h a ra s s e d people who were not her tenants. Around August 10, 2007, Manning called W illia m s about problems at 720 Capri. Williams said it was the first she had heard of these is su e s, even though Manning had previously notified Gumbaytay, and said she would send o v e r a repairman. However, the repairman never came. Manning then called Gumbaytay, th in k in g he was still the property manager until August 30. Gumbaytay told her he no longer m a n a g e d 720 Capri but added that Manning did not owe Williams any rent above $550 per m o n th because his statement that rent was $650 per month was "just what [Williams] had me d o to you." Williams met with Manning in September 2007 and told her that rent was $650 p e r month. She also told Manning that she had met with her attorney, and her attorney told

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her that she (Williams) was liable for Gumbaytay's actions. W illia m s states in her affidavit that her meeting with Manning in September 2007 was th e first time she heard allegations that Gumbaytay harassed Manning. She adds that M a n n in g had Williams's contact information and never contacted her with allegations about G u m b a yta y. Plaintiff disputes this point, submitting several documents sent to Manning that in c lu d e contact information only for Gumbaytay's management company. V . DISCUSSION A . 42 U.S.C. § 3614(a) T h is case is brought by the United States Attorney General ("Attorney General"). The A tto rn e y General may bring this lawsuit against Williams in the following circumstances: W h e n e v e r the Attorney General has reasonable cause to believe that any p e rs o n or group of persons is engaged in a pattern or practice of resistance to th e full enjoyment of any of the rights granted by [the Fair Housing Act], or th a t any group of persons has been denied any of the rights granted by [the Fair H o u s in g Act] and such denial raises an issue of general public importance, the A tto rn e y General may commence a civil action in any appropriate United S ta te s district court. 4 2 U.S.C. § 3614(a). Therefore, the Attorney General "has standing to sue" whenever he or s h e has reasonable cause to believe that "(1) there is an `individual' or a `group' pattern or p ra c tic e violative of the Fair Housing Act or (2) whenever a group of persons has been d e n ie d rights granted by the Act and that denial raises an issue of general public importance."

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United States v. Bob Lawrence Realty, Inc., 474 F.2d 115, 122­23 (5th Cir. 1973).1 Plaintiff a lle g e s both of these requirements, though only one is necessary. United States v. Pelzer R e a lty Co., Inc., 484 F.2d 438, 444 (5th Cir. 1973). Though the Court must determine if at le a s t one of these requirements is met, "a court's standard of review of the Attorney G e n e ra l's decision to bring an action under [42 U.S.C. § 3614(a)] should be a limited one," f o c u s in g on the "only requirement . . . that the Attorney General have reasonable cause to b e lie v e that such conditions exist." Id. at 445 (emphasis in original). W illia m s argues that Plaintiff cannot survive summary judgment because Williams d id not engage in a group pattern or practice violative of the Fair Housing Act. With regards to a group pattern or practice, the Fifth Circuit,2 in a decision binding on this Court, found th a t proof of a conspiracy was not required for the Attorney General to bring a claim of a g ro u p pattern or practice of blockbusting,3 one of the activities proscribed by the Fair H o u s in g Act. Bob Lawrence Realty, 474 F.2d at 124. The Court noted that, at least in the

In Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1209 (11th Cir. Nov. 3, 1981) (e n banc), the Eleventh Circuit adopted as binding precedent all Fifth Circuit decisions h a n d e d down prior to the close of business on September 30, 1981. The Court could not find a case where the Eleventh Circuit, since forming, has p ro v id e d any relevant guidance in the interpretation of 42 U.S.C. § 3614(a) or its predecessor p r o v is io n s . Nor could the Court find any binding case from the Fifth Circuit, with the e x c e p tio n of Bob Lawrence Realty, that provides any relevant guidance in the interpretation o f 42 U.S.C. § 3614(a) or its predecessor provisions. Blockbusting is defined as "[f]or profit, to induce or attempt to induce any person to sell or rent any dwelling by representations regarding the entry or prospective entry into th e neighborhood of a person or persons of a particular race, color, religion, sex, handicap, f a m ilia l status, or national origin." 42 U.S.C. § 3604(e). -8 3 2

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context of a residential area in the process of transitioning from being primarily one race to p rim a rily another race, "[b]lockbusting by its very nature does not require concerted action o r a conspiracy to wreck its pernicious damage." Id. at 124. The Court found this to be true b e c a u s e the "sociological phenomenon4 of a transitional area" attracted individual realtors, a c tin g as blockbusters, to come to the area and compete for market share. Id. The Court thus s e e m e d to base its holding--"a `group pattern or practice' of blockbusting is established w h e n a number of individuals" engage in blockbusting--at least in part on aspects that may b e peculiar to blockbusting. However, the Court also noted that "requiring proof of a c o n s p ira c y before the Attorney General has standing" to bring claims against an alleged

The Fifth Circuit notes that the district court made the following findings at trial in th a t case: T h e evidence at the trial disclosed many illuminating things about what h a p p e n s in a residential neighborhood when it becomes racially transitional. For example, if these cases are typical--and the court believes they are--the f o llo w in g consequences can be predicted as inevitable, and beyond dispute: F irs t, a sense of panic and urgency immediately grips the neighborhood and ru m o rs circulate and recirculate about the extent of the intrusion (real or f a n c ie d ), the effect on property values and the quality of education. Second, th e re are sales and rumors of sales, some true, some false. Third, the frenzied lis tin g and sale of houses attracts real estate agents like flies to a leaking jug o f honey. Fourth, even those owners who do not sell are sorely tempted as th e ir neighbors move away, and hence those who remain are peculiarly v u ln e ra b le . Fifth, the names of successful agents are exchanged and re c o m m e n d e d between homeowners and frequently the agents are called by the o w n e r s themselves, if not to make a listing then at least to get an up-to-date a p p ra is a l. Constant solicitation of listings goes on by all agents either by h o u s e -to -h o u s e calls and/or by mail and/or by telephone, to the point where o w n e rs and residents are driven almost to distraction. B o b Lawrence Realty, 474 F.2d at 124 n.13 (quoting United States v. Mitchell, 335 F. Supp. 1 0 0 4 , 1005­06 (N.D. Ga. 1971)). -9 -

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group pattern or practice of blockbusting would "unjustifiably restrict the power which C o n g re s s gave to the Attorney General to proceed against group patterns or practices." Id. T h is Court sees no reason to depart from the Fifth Circuit's rationale in Bob Lawrence R e a lty . Individual property owners may be attracted to hiring Gumbaytay as an agent for the p u rp o s e of increasing revenues through proscribed methods, resulting in group action. The C o u rt will not unjustifiably restrict the Attorney General's ability to proceed against group a c tio n under 42 U.S.C. § 3614(a) by requiring proof of a conspiracy, especially where the C o u rt is limited to reviewing only whether the Attorney General has "reasonable cause" to b e lie v e that group action exists. Plaintiff has produced evidence that Williams was one of s e v e ra l property owners who hired Gumbaytay as their property manager. This is sufficient f o r a finding on summary judgment that the Attorney General had reasonable cause to believe g ro u p action exists, regardless of whether Williams acted in concert with any of the other p ro p e rty owners. H o w e v e r, the Court still must determine if Plaintiff has presented evidence raising an is su e of fact about whether the group engaged in a "pattern or practice" of actions violative o f the Fair Housing Act. While the actual number of discriminatory events is not

d e te rm in a tiv e , the words "pattern or practice" were "intended to encompass more than an is o la te d or accidental or peculiar event." Id. at 124 (quoting United States v. W. Peachtree T e n th Corp., 437 F.2d 221, 227 (5th Cir. 1971) (internal quotations omitted)). Williams has in tro d u c e d uncontroverted evidence that she only has one property and one tenant (Manning)

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relevant to this lawsuit. However, Plaintiff has introduced evidence that Manning was s u b je c te d to continuing harassment from Gumbaytay; it was no isolated incident. See Pelzer R e a lty Co., 484 F.2d at 445. Furthermore, Plaintiff has introduced evidence that Gumbaytay e n g a g e d in similar conduct with several tenants at several properties. P la in tif f has only submitted evidence that Gumbaytay acted in a manner that violates th e Fair Housing Act. The other defendants, including Williams, are all property owners who h ire d Gumbaytay as a property manager. But "it is well established that the [Fair Housing] A c t provides for vicarious liability." Meyer v. Holley, 537 U.S. 280, 285 (2003). Under tra d itio n a l vicarious liability rules, the property owners are liable for the acts of Gumbaytay a s their agent or employee within the scope of his authority or employment. Id. Here, P la in tif f presents evidence that Gumbaytay's prohibited acts occurred within the scope of his a u th o rity or employment as a property manager of the relevant properties. P la in tif f has easily satisfied its burden of producing evidence showing a material fact is su e about whether the group of defendants "engaged in a pattern or practice of resistance to the full enjoyment of any of the rights granted by" the Fair Housing Act. 42 U.S.C. § 3 6 1 4 (a ). Therefore, summary judgment is inappropriate on this issue. Because Plaintiff need o n ly satisfy one of the requirements under 42 U.S.C. § 3614(a), the rest of Williams's a rg u m e n ts about section 3614(a) are moot.

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B. Punitive Damages C o n g re s s provided for the awarding of "monetary damages to persons aggrieved" in a Fair Housing Act case brought pursuant to 42 U.S.C. § 3614(a). In this context, "monetary d a m a g e s " includes actual damages, damages for emotional distress, and punitive damages. United States v. Rent America, Corp., 734 F. Supp. 474, 482 (S.D. Fla. 1990). Plaintiff and W illia m s disagree over the standard to be used in determining when to award punitive d a m a g e s . The Eleventh Circuit has not discussed when punitive damages become available in Fair Housing Act cases. In Kolstad v. Am. Dental Health Ass'n, the United States Supreme Court discussed w h e n punitive damages are available in a Title VII case pursuant to 42 U.S.C. § 1981a(b)(1). 527 U.S. 526, 533­39 (1999). Section 1981a(b)(1) provides for punitive damages upon p ro o f that the defendant discriminated "with malice or with reckless indifference to the f e d e ra lly protected rights of an aggrieved individual." 42 U.S.C. § 1981a(b)(1). The Kolstad C o u rt interpreted the whole of § 1981a to show "a congressional intent to authorize punitive a w a rd s in only a subset of cases involving intentional discrimination." Kolstad, 527 U.S. at 5 3 4 . Looking to the terms "malice" and "reckless," the Supreme Court found that the focus s h o u ld be on the actor's state of mind, not on the actor's conduct.5 Id. at 534­35, 537­39. It then looked to Smith v. Wade, its earlier case on the availability of punitive damages in a

The court did note, however, that "egregious or outrageous acts may serve as e v id e n c e supporting an inference of the requisite `evil motive.'" Kolstad, 527 U.S. at 538. -1 2 -

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lawsuit brought pursuant to 42 U.S.C. § 1983. Id. at 535­36 (citing Smith v. Wade, 461 U.S. 3 0 (1983)); see id. at 535 ("Congress looked to the Court's decision in Smith [v. Wade] in a d o p tin g this [`malice' and `reckless'] language in § 1981a."). The Court in Smith v. Wade d e c id e d that actual malice was unnecessary for punitive damages, but, at a minimum, the p la in tif f must show "recklessness in its subjective form." Id. at 536 (citing Smith v. Wade, 4 6 1 U.S. at 45­48). Applying the Smith v. Wade standard in the context of § 1981a, the S u p re m e Court in Kolstad held that, for punitive damages to be available, a defendant "must a t least discriminate in the face of a perceived risk that its actions will violate federal law." Id. at 536. The Supreme Court, in keeping with congressional intent, recognized that there m a y be times where, under this standard, intentional discrimination does not give rise to p u n itiv e damages. See id. at 536­37. T h e Eleventh Circuit has applied Kolstad in civil rights cases. See, e.g., Miller v. K e n w o r th of Dothan, Inc., 277 F.3d 1269, 1280 (11th Cir. 2002) (Title VII); Lambert v. F u lto n Cnty., Ga., 253 F.3d 588, 597 (11th Cir. 2001) (42 U.S.C. § 1983). But, as noted a b o v e , the Eleventh Circuit has not set a standard for punitive damages in Fair Housing Act c a s e s . The Court is convinced by the decisions of many other circuits that the Kolstad s ta n d a rd should be used for Fair Housing Act cases. See Lincoln v. Case, 340 F.3d 283, 291 (5 th Cir. 2003); Preferred Props., Inc. v. Indian River Estates, Inc., 276 F.3d 790, 799­00 (6 th Cir. 2002); Badami v. Flood, 214 F.3d 994, 997 (8th Cir. 2000); Alexander v. Riga, 208 F .3 d 419, 430­31 (3d Cir. 2000); cf. Tyus v. Urban Search Mgmt., 102 F.3d 256, 266 (7th

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Cir. 1997) (applying the Smith v. Wade standard for punitive damages in a Fair Housing Act d e c is io n issued prior to Kolstad). H o w e v e r, the Kolstad Court recognized that an additional step was necessary in order t o "impute liability for punitive damages" to a non-actor defendant. Kolstad, 527 U.S. at 5 3 9 . This is because the Supreme Court felt that, in keeping with the common law, agency p rin c ip le s should limit vicarious liability for punitive damages. Id. at 541. T h e Restatement (Second) of Agency summarized the common law rule that " [ p ]u n itiv e damages can properly be awarded against a master or other principal because of a n act by an agent if, but only if," among other things, "the agent was employed in a m a n a g e ria l capacity and was acting in the scope of employment." Id. at 542 (quoting R e sta te m e n t (Second) of Agency § 217 C (1957)). The Supreme Court took issue with this ru le in a Title VII context for a couple of reasons. First, the rule would expose employers m a k in g every effort to comply with Title VII to punitive damages for the discriminatory acts o f all agents acting in a managerial capacity. Id. at 544. This result would be contrary to the g e n e ra l rule from Kolstad, since the Kolstad Court stated that punitive damages may only be a w a rd e d against a defendant exhibiting a reckless or malicious state of mind. Id. Second, th e rule would reduce the incentive for employers to implement antidiscrimination policies. Id. at 545. Employees who are informed about Title VII are more likely than ignorant e m p lo ye e s to satisfy the general Kolstad standard when they discriminate, because they are m o re likely than ignorant employees to "discriminate in the face of a perceived risk that

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[their] actions will violate federal law." Id. at 536. Therefore, under the Restatement rule, w h ic h provides for broad vicarious liability for punitive damages, employers are more likely to be exposed to punitive damages when they inform their employees about federal law. T h e Supreme Court chose to modify the Restatement rule in the Title VII context, to re m o v e the perverse incentives it creates for employers. Id. at 545. The Kolstad Court stated th a t , "in the punitive damages context, an employer may not be vicariously liable for the d is c rim in a to ry employment decisions of managerial agents where these decisions are c o n tra ry to the employer's good-faith efforts to comply with Title VII." Id. (inner quotations o m itte d ). At least one circuit court has adopted this modified rule for vicarious liability for p u n itiv e damages in a lawsuit brought pursuant to the Fair Housing Act. See Alexander, 208 F .3 d at 433­34 (finding that the duty of a landlord under the Fair Housing Act to not d is c rim in a te cannot be delegated to his or her employee, then remanding to the jury to c o n s id e r whether, pursuant to Kolstad, the landlord "engaged in active anti-discrimination e f f o rts sufficient to protect him" from punitive damages for the discriminatory acts of his e m p lo ye e ). The Eleventh Circuit has applied this modified rule from Kolstad in civil rights c a s e s . See Wilbur v. Corr. Servs. Corp., 393 F.3d 1192, 1205 (11th Cir. 2004); Miller, 277 F .3 d at 1280. In short, Gumbaytay is subject to punitive damages if he, at the least, discriminated in the face of a perceived risk that his actions will violate federal law. See Kolstad, 527 U.S. a t 536. Williams is vicariously liable for those punitive damages under common-law agency

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rules, unless Gumbaytay's discriminatory acts are contrary to Williams's good-faith efforts to comply with the Fair Housing Act. See id. at 545. A s the Court has already noted, Plaintiff has presented evidence showing that G u m b a yta y's prohibited acts occurred within the scope of his agency relationship with W illia m s . However, the Court need not consider evidence, or lack thereof, of Gumbaytay's s u b je c tiv e mindset and Williams's good-faith efforts to comply with the Fair Housing Act, b e c a u s e the Eleventh Circuit has provided another layer of protection against vicarious lia b ility for punitive damages. "`[P]unitive damages will ordinarily not be assessed against e m p lo ye rs with only constructive knowledge' of harassment; rather, punitive damages may o n ly be considered in cases where the `discriminating employee was high[] up the corporate h ie ra rc h y' or where `higher management countenanced or approved [his] behavior.'" Miller, 2 7 7 F.3d at 1280 (quoting Dudley v. Wal-Mart Stores, Inc., 166 F.3d 1317, 1323 (11th Cir. 1 9 9 9 )) .6 H e re , there is no corporate hierarchy to consider. As to the second consideration, P laintiff has introduced no evidence that Williams "countenanced or approved" Gumbaytay's

The Eleventh Circuit previously said that this rule exists "[i]n part because of the e g re g io u s -c o n d u c t requirement" for punitive damages. Dudley, 166 F.3d at 1323. In K o ls ta d , decided just a few months after Dudley, the Supreme Court stated that the a v a ila b ility of punitive damages stems from state of mind rather than egregiousness of c o n d u c t. Kolstad, 527 U.S. at 534­35, 537­39. However, the Eleventh Circuit later re ite ra te d its "constructive knowledge" rule for vicarious liability for punitive damages while d is c u s sin g Kolstad, indicating that the Circuit believes the rule is justified even in the a b s e n c e of any egregious-conduct requirement. Miller, 277 F.3d at 1280. -1 6 -

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alleged behavior. No evidence submitted to this Court indicates that Williams even knew of G u m b a yta y's alleged treatment of Manning or anybody else before she hired him, when she h ire d him, during the bulk of his time as Williams's property manager, or at any time until ju s t before she fired him. And that firing itself indicates that Williams disapproved of G u m b a yta y's behavior. Plaintiff has failed to show that there is a genuine issue of material f a c t regarding Williams's liability for punitive damages under Eleventh Circuit precedent. Cf. Boswell v. Gumbaytay, No. 2:07-cv-135, 2009 WL 1515872, at *6­*7 (M.D. Ala. June 1 , 2009). P la in tif f argues that the Court should not apply the Eleventh Circuit rule from Miller b e c a u s e that case discusses hostile environment harassment while this case deals with, in a d d itio n to hostile environment harassment, a situation where Manning suffered tangible e c o n o m ic harm as a result of not succumbing to Gumbaytay's alleged harassment. Plaintiff re lie s on Burlington Industries, Inc. v. Ellerth for this argument. 524 U.S. 742 (1998). In th a t case the Supreme Court did create an affirmative defense for vicarious liability "to lia b ility or damages" for a hostile environment claim. Id. at 765. This defense was not a v a ila b le when the "harassment culminates in a tangible . . . action" against the person c o m p la in in g of harassment. Id. Therefore, Plaintiff correctly states that the Supreme Court h a s made a distinction between these two harassment scenarios. H o w e v e r, the Supreme Court also dealt with a situation where the plaintiff sued over ta n g ib le adverse action one year later in Kolstad. 527 U.S. at 531. Yet the Kolstad Court did

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not mention the distinction made in Burlington Industries when discussing vicarious liability f o r punitive damages. Id. at 539­45. This is despite regular citations to Burlington In d u s trie s throughout Kolstad. The Court is left to presume that Burlington Industries does n o t apply to vicarious liability for punitive damages. Additionally, the Eleventh Circuit in M ille r cited to Dudley for the proposition that vicarious liability for punitive damages is only a v a i la b l e where, among other things, the employer approved of the employee's harassing b e h a v io r. See Miller, 277 F.3d at 1280 (quoting Dudley, 166 F.3d at 1323). Unlike Miller, a case of hostile environment, in Dudley at least one of the plaintiffs suffered tangible a d v e rs e employment actions. See Dudley, 166 F.3d at 1319. So the Eleventh Circuit has not a c c e p te d the distinction made by Plaintiff. V I . CONCLUSION F o r the foregoing reasons, it is hereby ORDERED that Williams's motion for s u m m a ry judgment (Doc. #131) is GRANTED in part and DENIED in part. It is granted in th a t Williams is not vicariously liable for punitive damages for any actions taken by G u m b a yta y found to violate the Fair Housing Act. It is denied in all other respects. D O N E this the 9th day of September, 2010.

/s/ Mark E. Fuller CHIEF UNITED STATES DISTRICT JUDGE

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