Punitive damages in fair housing litigation: Ending unwise restrictions on a necessary remedy

Harvard Civil Rights-Civil Liberties Law Review

Volumn 36, Issue 2, 2001, Pages

  Moran, Timothy J ^a,b  

^a United States Department of Justice   (United States)

^b HARVARD LAW SCHOOL   (United States)

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EID: 7444228215     PISSN: 00178039     EISSN: None     Source Type: Journal    
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References (378)

1. La. ACORN Fair Hous. v. LeBlanc, 211 F.3d 298, 299 (5th Cir. 2000), cert. denied, 121 S. Ct. 1225 (2001).
2. Id. at 299-300.
3. Id. at 303. For analysis of whether compensatory damages should be a prerequisite to awarding punitive damages in fair housing cases, see infra Part II.
4. See id. at 306 (King, J., dissenting).
5. Title VIII of the Civil Rights Act of 1968, Pub. L. No. 90-284, 82 Stat. 73 (codified as amended at 42 U.S.C. §§ 3601-3619 (1994)).
6. See, e.g., CLEAR AND CONVINCING EVIDENCE: MEASUREMENT OF DISCRIMINATION IN AMERICA (Michael Fix & Raymond J. Struyk eds., 1993); HOUSING MARKETS AND RESIDENTIAL MOBILITY (G. Thomas Kingsley & Margery Austin Turner eds., 1993); DOUGLAS S. MASSEY & NANCY A. DENTON, AMERICAN APARTHEID: SEGREGATION AND THE MAKING OF THE UNDERCLASS (1993); JOHN YINGER, CLOSED DOORS, OPPORTUNITIES LOST: THE CONTINUING COSTS OF HOUSING DISCRIMINATION (1995).
7. See, e.g., CLEAR AND CONVINCING EVIDENCE: MEASUREMENT OF DISCRIMINATION IN AMERICA (Michael Fix & Raymond J. Struyk eds., 1993); HOUSING MARKETS AND RESIDENTIAL MOBILITY (G. Thomas Kingsley & Margery Austin Turner eds., 1993); DOUGLAS S. MASSEY & NANCY A. DENTON, AMERICAN APARTHEID: SEGREGATION AND THE MAKING OF THE UNDERCLASS (1993); JOHN YINGER, CLOSED DOORS, OPPORTUNITIES LOST: THE CONTINUING COSTS OF HOUSING DISCRIMINATION (1995).
8. See, e.g., CLEAR AND CONVINCING EVIDENCE: MEASUREMENT OF DISCRIMINATION IN AMERICA (Michael Fix & Raymond J. Struyk eds., 1993); HOUSING MARKETS AND RESIDENTIAL MOBILITY (G. Thomas Kingsley & Margery Austin Turner eds., 1993); DOUGLAS S. MASSEY & NANCY A. DENTON, AMERICAN APARTHEID: SEGREGATION AND THE MAKING OF THE UNDERCLASS (1993); JOHN YINGER, CLOSED DOORS, OPPORTUNITIES LOST: THE CONTINUING COSTS OF HOUSING DISCRIMINATION (1995).
9. See, e.g., CLEAR AND CONVINCING EVIDENCE: MEASUREMENT OF DISCRIMINATION IN AMERICA (Michael Fix & Raymond J. Struyk eds., 1993); HOUSING MARKETS AND RESIDENTIAL MOBILITY (G. Thomas Kingsley & Margery Austin Turner eds., 1993); DOUGLAS S. MASSEY & NANCY A. DENTON, AMERICAN APARTHEID: SEGREGATION AND THE MAKING OF THE UNDERCLASS (1993); JOHN YINGER, CLOSED DOORS, OPPORTUNITIES LOST: THE CONTINUING COSTS OF HOUSING DISCRIMINATION (1995).
10. The most recent national study of discrimination in housing, conducted in 1989, concluded that African Americans and Hispanics experience discrimination roughly fifty percent of the time when they inquire about buying or renting a dwelling. MARGERY A. TURNER ET AL., U.S. DEP'T OF HOUS. & URBAN DEV., HOUSING DISCRIMINATION STUDY: SYNTHESIS, at vi-vii (1991). The results and methodology of this study are summarized in Margery Austin Turner, Discrimination in Urban Housing Markets: Lessons from Fair Housing Audits, 3 HOUSING POL'Y DEBATE 185, 191-92 (1992) [hereinafter Turner, Discrimination in Urban Housing Markets]. See also YINGER, supra note 6, at 19-41. More recent studies in selected metropolitan areas have also reported high levels of discrimination. E.g., Jennifer Boyd, Housing Test Alleges Discrimination, BUS. J. CHARLOTTE, Dec. 10, 1999, at 1 (describing study in Charlotte, North Carolina, area that found that 60% of apartment complexes discriminated on basis of race and national origin, and that 100% of complexes surveyed did not meet the Fair Housing Act's accessibility requirements for the physically disabled); Joan Treadway, New Orleans Housing Study Finds Extensive Bias, NEW ORLEANS TIMES-PICAYUNE, Apr. 27, 2000, at B1 (describing study in New Orleans area that found that African Americans, families with children, and Latinos experience discrimination at least forty percent of the time when inquiring about multifamily housing, and that large numbers of apartment complexes did not meet the Fair Housing Act's requirement that multifamily housing be accessible to disabled persons); Ted Rohrlich, Two Studies Find Bias in Rental Housing, L.A. TIMES, Sept. 27, 1999, at B1 (describing five-year study of Los Angeles area that concluded that African Americans and Latinos seeking apartments experience discrimination about forty percent of the time). The United States Department of Housing and Urban Development ("HUD") is currently funding a two-year national study of housing discrimination. See Fair Housing 2000: An Interview with Eva M. Plaza, 57 J. HOUSING & COMMUNITY DEV. 14, 15 (2000).
11. The most recent national study of discrimination in housing, conducted in 1989, concluded that African Americans and Hispanics experience discrimination roughly fifty percent of the time when they inquire about buying or renting a dwelling. MARGERY A. TURNER ET AL., U.S. DEP'T OF HOUS. & URBAN DEV., HOUSING DISCRIMINATION STUDY: SYNTHESIS, at vi-vii (1991). The results and methodology of this study are summarized in Margery Austin Turner, Discrimination in Urban Housing Markets: Lessons from Fair Housing Audits, 3 HOUSING POL'Y DEBATE 185, 191-92 (1992) [hereinafter Turner, Discrimination in Urban Housing Markets]. See also YINGER, supra note 6, at 19-41. More recent studies in selected metropolitan areas have also reported high levels of discrimination. E.g., Jennifer Boyd, Housing Test Alleges Discrimination, BUS. J. CHARLOTTE, Dec. 10, 1999, at 1 (describing study in Charlotte, North Carolina, area that found that 60% of apartment complexes discriminated on basis of race and national origin, and that 100% of complexes surveyed did not meet the Fair Housing Act's accessibility requirements for the physically disabled); Joan Treadway, New Orleans Housing Study Finds Extensive Bias, NEW ORLEANS TIMES-PICAYUNE, Apr. 27, 2000, at B1 (describing study in New Orleans area that found that African Americans, families with children, and Latinos experience discrimination at least forty percent of the time when inquiring about multifamily housing, and that large numbers of apartment complexes did not meet the Fair Housing Act's requirement that multifamily housing be accessible to disabled persons); Ted Rohrlich, Two Studies Find Bias in Rental Housing, L.A. TIMES, Sept. 27, 1999, at B1 (describing five-year study of Los Angeles area that concluded that African Americans and Latinos seeking apartments experience discrimination about forty percent of the time). The United States Department of Housing and Urban Development ("HUD") is currently funding a two-year national study of housing discrimination. See Fair Housing 2000: An Interview with Eva M. Plaza, 57 J. HOUSING & COMMUNITY DEV. 14, 15 (2000).
12. The most recent national study of discrimination in housing, conducted in 1989, concluded that African Americans and Hispanics experience discrimination roughly fifty percent of the time when they inquire about buying or renting a dwelling. MARGERY A. TURNER ET AL., U.S. DEP'T OF HOUS. & URBAN DEV., HOUSING DISCRIMINATION STUDY: SYNTHESIS, at vi-vii (1991). The results and methodology of this study are summarized in Margery Austin Turner, Discrimination in Urban Housing Markets: Lessons from Fair Housing Audits, 3 HOUSING POL'Y DEBATE 185, 191-92 (1992) [hereinafter Turner, Discrimination in Urban Housing Markets]. See also YINGER, supra note 6, at 19-41. More recent studies in selected metropolitan areas have also reported high levels of discrimination. E.g., Jennifer Boyd, Housing Test Alleges Discrimination, BUS. J. CHARLOTTE, Dec. 10, 1999, at 1 (describing study in Charlotte, North Carolina, area that found that 60% of apartment complexes discriminated on basis of race and national origin, and that 100% of complexes surveyed did not meet the Fair Housing Act's accessibility requirements for the physically disabled); Joan Treadway, New Orleans Housing Study Finds Extensive Bias, NEW ORLEANS TIMES-PICAYUNE, Apr. 27, 2000, at B1 (describing study in New Orleans area that found that African Americans, families with children, and Latinos experience discrimination at least forty percent of the time when inquiring about multifamily housing, and that large numbers of apartment complexes did not meet the Fair Housing Act's requirement that multifamily housing be accessible to disabled persons); Ted Rohrlich, Two Studies Find Bias in Rental Housing, L.A. TIMES, Sept. 27, 1999, at B1 (describing five-year study of Los Angeles area that concluded that African Americans and Latinos seeking apartments experience discrimination about forty percent of the time). The United States Department of Housing and Urban Development ("HUD") is currently funding a two-year national study of housing discrimination. See Fair Housing 2000: An Interview with Eva M. Plaza, 57 J. HOUSING & COMMUNITY DEV. 14, 15 (2000).
13. The most recent national study of discrimination in housing, conducted in 1989, concluded that African Americans and Hispanics experience discrimination roughly fifty percent of the time when they inquire about buying or renting a dwelling. MARGERY A. TURNER ET AL., U.S. DEP'T OF HOUS. & URBAN DEV., HOUSING DISCRIMINATION STUDY: SYNTHESIS, at vi-vii (1991). The results and methodology of this study are summarized in Margery Austin Turner, Discrimination in Urban Housing Markets: Lessons from Fair Housing Audits, 3 HOUSING POL'Y DEBATE 185, 191-92 (1992) [hereinafter Turner, Discrimination in Urban Housing Markets]. See also YINGER, supra note 6, at 19-41. More recent studies in selected metropolitan areas have also reported high levels of discrimination. E.g., Jennifer Boyd, Housing Test Alleges Discrimination, BUS. J. CHARLOTTE, Dec. 10, 1999, at 1 (describing study in Charlotte, North Carolina, area that found that 60% of apartment complexes discriminated on basis of race and national origin, and that 100% of complexes surveyed did not meet the Fair Housing Act's accessibility requirements for the physically disabled); Joan Treadway, New Orleans Housing Study Finds Extensive Bias, NEW ORLEANS TIMES-PICAYUNE, Apr. 27, 2000, at B1 (describing study in New Orleans area that found that African Americans, families with children, and Latinos experience discrimination at least forty percent of the time when inquiring about multifamily housing, and that large numbers of apartment complexes did not meet the Fair Housing Act's requirement that multifamily housing be accessible to disabled persons); Ted Rohrlich, Two Studies Find Bias in Rental Housing, L.A. TIMES, Sept. 27, 1999, at B1 (describing five-year study of Los Angeles area that concluded that African Americans and Latinos seeking apartments experience discrimination about forty percent of the time). The United States Department of Housing and Urban Development ("HUD") is currently funding a two-year national study of housing discrimination. See Fair Housing 2000: An Interview with Eva M. Plaza, 57 J. HOUSING & COMMUNITY DEV. 14, 15 (2000).
14. The most recent national study of discrimination in housing, conducted in 1989, concluded that African Americans and Hispanics experience discrimination roughly fifty percent of the time when they inquire about buying or renting a dwelling. MARGERY A. TURNER ET AL., U.S. DEP'T OF HOUS. & URBAN DEV., HOUSING DISCRIMINATION STUDY: SYNTHESIS, at vi-vii (1991). The results and methodology of this study are summarized in Margery Austin Turner, Discrimination in Urban Housing Markets: Lessons from Fair Housing Audits, 3 HOUSING POL'Y DEBATE 185, 191-92 (1992) [hereinafter Turner, Discrimination in Urban Housing Markets]. See also YINGER, supra note 6, at 19-41. More recent studies in selected metropolitan areas have also reported high levels of discrimination. E.g., Jennifer Boyd, Housing Test Alleges Discrimination, BUS. J. CHARLOTTE, Dec. 10, 1999, at 1 (describing study in Charlotte, North Carolina, area that found that 60% of apartment complexes discriminated on basis of race and national origin, and that 100% of complexes surveyed did not meet the Fair Housing Act's accessibility requirements for the physically disabled); Joan Treadway, New Orleans Housing Study Finds Extensive Bias, NEW ORLEANS TIMES-PICAYUNE, Apr. 27, 2000, at B1 (describing study in New Orleans area that found that African Americans, families with children, and Latinos experience discrimination at least forty percent of the time when inquiring about multifamily housing, and that large numbers of apartment complexes did not meet the Fair Housing Act's requirement that multifamily housing be accessible to disabled persons); Ted Rohrlich, Two Studies Find Bias in Rental Housing, L.A. TIMES, Sept. 27, 1999, at B1 (describing five-year study of Los Angeles area that concluded that African Americans and Latinos seeking apartments experience discrimination about forty percent of the time). The United States Department of Housing and Urban Development ("HUD") is currently funding a two-year national study of housing discrimination. See Fair Housing 2000: An Interview with Eva M. Plaza, 57 J. HOUSING & COMMUNITY DEV. 14, 15 (2000).
15. The most recent national study of discrimination in housing, conducted in 1989, concluded that African Americans and Hispanics experience discrimination roughly fifty percent of the time when they inquire about buying or renting a dwelling. MARGERY A. TURNER ET AL., U.S. DEP'T OF HOUS. & URBAN DEV., HOUSING DISCRIMINATION STUDY: SYNTHESIS, at vi-vii (1991). The results and methodology of this study are summarized in Margery Austin Turner, Discrimination in Urban Housing Markets: Lessons from Fair Housing Audits, 3 HOUSING POL'Y DEBATE 185, 191-92 (1992) [hereinafter Turner, Discrimination in Urban Housing Markets]. See also YINGER, supra note 6, at 19-41. More recent studies in selected metropolitan areas have also reported high levels of discrimination. E.g., Jennifer Boyd, Housing Test Alleges Discrimination, BUS. J. CHARLOTTE, Dec. 10, 1999, at 1 (describing study in Charlotte, North Carolina, area that found that 60% of apartment complexes discriminated on basis of race and national origin, and that 100% of complexes surveyed did not meet the Fair Housing Act's accessibility requirements for the physically disabled); Joan Treadway, New Orleans Housing Study Finds Extensive Bias, NEW ORLEANS TIMES-PICAYUNE, Apr. 27, 2000, at B1 (describing study in New Orleans area that found that African Americans, families with children, and Latinos experience discrimination at least forty percent of the time when inquiring about multifamily housing, and that large numbers of apartment complexes did not meet the Fair Housing Act's requirement that multifamily housing be accessible to disabled persons); Ted Rohrlich, Two Studies Find Bias in Rental Housing, L.A. TIMES, Sept. 27, 1999, at B1 (describing five-year study of Los Angeles area that concluded that African Americans and Latinos seeking apartments experience discrimination about forty percent of the time). The United States Department of Housing and Urban Development ("HUD") is currently funding a two-year national study of housing discrimination. See Fair Housing 2000: An Interview with Eva M. Plaza, 57 J. HOUSING & COMMUNITY DEV. 14, 15 (2000).
16. The most recent national study of discrimination in housing, conducted in 1989, concluded that African Americans and Hispanics experience discrimination roughly fifty percent of the time when they inquire about buying or renting a dwelling. MARGERY A. TURNER ET AL., U.S. DEP'T OF HOUS. & URBAN DEV., HOUSING DISCRIMINATION STUDY: SYNTHESIS, at vi-vii (1991). The results and methodology of this study are summarized in Margery Austin Turner, Discrimination in Urban Housing Markets: Lessons from Fair Housing Audits, 3 HOUSING POL'Y DEBATE 185, 191-92 (1992) [hereinafter Turner, Discrimination in Urban Housing Markets]. See also YINGER, supra note 6, at 19-41. More recent studies in selected metropolitan areas have also reported high levels of discrimination. E.g., Jennifer Boyd, Housing Test Alleges Discrimination, BUS. J. CHARLOTTE, Dec. 10, 1999, at 1 (describing study in Charlotte, North Carolina, area that found that 60% of apartment complexes discriminated on basis of race and national origin, and that 100% of complexes surveyed did not meet the Fair Housing Act's accessibility requirements for the physically disabled); Joan Treadway, New Orleans Housing Study Finds Extensive Bias, NEW ORLEANS TIMES-PICAYUNE, Apr. 27, 2000, at B1 (describing study in New Orleans area that found that African Americans, families with children, and Latinos experience discrimination at least forty percent of the time when inquiring about multifamily housing, and that large numbers of apartment complexes did not meet the Fair Housing Act's requirement that multifamily housing be accessible to disabled persons); Ted Rohrlich, Two Studies Find Bias in Rental Housing, L.A. TIMES, Sept. 27, 1999, at B1 (describing five-year study of Los Angeles area that concluded that African Americans and Latinos seeking apartments experience discrimination about forty percent of the time). The United States Department of Housing and Urban Development ("HUD") is currently funding a two-year national study of housing discrimination. See Fair Housing 2000: An Interview with Eva M. Plaza, 57 J. HOUSING & COMMUNITY DEV. 14, 15 (2000).
17. E.g., Alexander v. Riga, 208 F.3d 419, 424 (3d Cir. 2000) (reversing district court's refusal to submit issue of punitive damages where landlords falsely told African American couple on ten different occasions that apartment was not available and repeatedly failed to return their phone calls inquiring about the apartment), cert. denied, 121 S. Ct. 757 (2001); La. ACORN Fair Hous. v. LeBlanc, 211 F.3d 298 (5th Cir. 2000), cert. denied, 121 S. Ct. 1225 (2001); Allahar v. Zahora, 59 F.3d 693 (7th Cir. 1995) (affirming denial of summary judgment where owner initially refused to sell house to Indian man, stating that he had talked to his neighbors and they did not want African Americans on the block); United States v. Big D Enters., Inc., 184 F.3d 924, 929 (8th Cir. 1999) (affirming punitive damage award where apartment owner instructed resident managers not to rent to African Americans and to tell African Americans who inquired about vacancies that no apartments were available), cert. denied, 529 U.S. 1018 (2000); van den Berk v. Mo. Comm'n on Human Rights, 26 S.W.3d 406, 409 (Mo. Ct. App. 2000) (noting that defendant landlord told an African American couple that she would not rent them an advertised apartment because she did not "racially 'mix' her properties because 'black people and white people just don't get along well, living together'").
18. See H.R. REP. NO. 100-711, at 15 (1988).
19. See Fair Housing Act Amendments of 1988, Pub. L. No. 100-430, 102 Stat. 1619 (codified as amended in 42 U.S.C. §§ 3601-3619 (1994)). As amended, the Fair Housing Act now prohibits discrimination on the basis of race, color, sex, religion, national origin, familial status (having one or more children under age eighteen), and handicap. 42 U.S.C. § 3604 (1994).
20. 42 U.S.C. §§ 3612(o)-3614; H.R. REP. NO. 100-711, at 40. Prior to this amendment, the Fair Housing Act limited punitive damage awards to $1,000. Unlawful housing discrimination on the basis of race or ethnicity also gave rise to claims under the Civil Rights Act of 1966, 42 U.S.C. § 1982 (1994), which did not place a ceiling on punitive damages. See, e.g., Miller v. Apartments and Homes of N.J., Inc., 646 F.2d 101 (3d Cir. 1981); Parker v. Shonfeld, 409 F. Supp. 876 (N.D. Cal. 1976). In practice, however, the $1,000 limit in the Fair Housing Act often dissuaded courts from awarding more than $1,000 in punitive damages in cases brought under §1982 as well. See Hughes v. Dyer, 378 F. Supp. 1305, 1311 (W.D. Mo. 1974); Robert G. Schwemm, Compensatory Damages in Federal Fair Housing Cases, 16 HARV. C.R.-C.L. L. REV. 83, 87 (1981);
21. see also Wright v. Kane Realty, 352 F. Supp. 222 (N.D. Ill. 1972) (stating that $1,000 limitation would "be a consideration" in determining appropriate amount of punitive damages in § 1982 claim).
22. 42 U.S.C. §§ 3612(o), 3614. The Fair Housing Act Amendments of 1988 created a new administrative mechanism whereby complainants whose claims were determined by HUD to have merit could elect to have their cases heard in federal court with the Attorney General pursuing a claim on their behalf for monetary relief, including punitive damages. 42 U.S.C. §§ 3610-3612. For a description of this system, see Eugene R. Graetke & Robert G. Schwemm, Government Lawyers and Their Private "Clients" Under the Fair Housing Act, 65 GEO. WASH. L. REV. 329, 335-40 (1997). The Amendments also gave the Attorney General the authority to seek monetary damages, including punitive damages, on behalf of victims in cases alleging a pattern or practice of discrimination or a denial of rights to a group of persons raising an issue of general public importance. The amendments also permitted the United States to obtain civil penalties in such cases. 42 U.S.C. § 3614. Prior to the 1988 amendments, courts had held that the United States could only obtain equitable relief - even when a pattern of discrimination raised an issue of general public importance. See ROBERT G. SCHWEMM, HOUSING DISCRIMINATION LAW AND LITIGATION § 26.2(5)(c), at 26-23 n.104 (Supp. July 2000) [hereinafter SCHWEMM, HOUSING DISCRIMINATION].
23. 42 U.S.C. §§ 3612(o), 3614. The Fair Housing Act Amendments of 1988 created a new administrative mechanism whereby complainants whose claims were determined by HUD to have merit could elect to have their cases heard in federal court with the Attorney General pursuing a claim on their behalf for monetary relief, including punitive damages. 42 U.S.C. §§ 3610-3612. For a description of this system, see Eugene R. Graetke & Robert G. Schwemm, Government Lawyers and Their Private "Clients" Under the Fair Housing Act, 65 GEO. WASH. L. REV. 329, 335-40 (1997). The Amendments also gave the Attorney General the authority to seek monetary damages, including punitive damages, on behalf of victims in cases alleging a pattern or practice of discrimination or a denial of rights to a group of persons raising an issue of general public importance. The amendments also permitted the United States to obtain civil penalties in such cases. 42 U.S.C. § 3614. Prior to the 1988 amendments, courts had held that the United States could only obtain equitable relief - even when a pattern of discrimination raised an issue of general public importance. See ROBERT G. SCHWEMM, HOUSING DISCRIMINATION LAW AND LITIGATION § 26.2(5)(c), at 26-23 n.104 (Supp. July 2000) [hereinafter SCHWEMM, HOUSING DISCRIMINATION].
24. H.R. REP. NO. 100-711, at 16.
25. Id. at 40.
26. Juries have produced significant damage awards in several recent cases. E.g., United States v. Big D Enters., Inc., 184 F.3d 924, 932 (8th Cir. 1999) (upholding punitive damage awards totaling $100,000 to three victims), cert. denied, 529 U.S. 1018 (2000); Little Field v. McGuffey, 954 F.2d 1337, 1348-50 (7th Cir. 1992) (upholding punitive damage award of $100,000 to single plaintiff); Edwards v. Flagstar Bank, 109 F. Supp. 2d 691, 698 (E.D. Mich. 2000) (awarding $325,000 in punitive damages to single victim of mortgage lending); Darby v. Heather Ridge, 827 F. Supp. 1296, 1300-01 (E.D. Mich. 1993) (reducing jury's award of $250,000 in punitive damages to couple to $50,000); Broome v. Biondi, 17 F. Supp. 2d 211 (S.D.N.Y. 1997) (affirming award of $410,000 to couple and $47,000 to single individual); Nationwide Mut. Ins. Co. v. Hous. Opportunities Made Equal, Inc. 523 S.E.2d 217 (Va. 2000) (discussing jury's $100 million punitive damage award to fair housing organization in insurance discrimination case), petition for reh'g granted, No. 990733, 2000 Va. LEXIS 56, at *1 (Va. Mar. 3, 2000); see also SCHWEMM, HOUSING DISCRIMINATION, supra note 12, §25.3(3)(a), at 25-37 n.134.1 (citing additional cases).
27. See Victoria A. Roberts, With a Handshake and a Smile: The Fight to Eliminate Housing Discrimination, 73 MICH. B.J. 276 (1994) (explaining the importance of punitive damages to obtaining large damage awards); JOHN P. RELMAN, HOUSING DISCRIMINATION PRACTICE MANUAL § 3.2(b), at 3.21 (Supp. 2000); see also infra Part I.A.
28. See Victoria A. Roberts, With a Handshake and a Smile: The Fight to Eliminate Housing Discrimination, 73 MICH. B.J. 276 (1994) (explaining the importance of punitive damages to obtaining large damage awards); JOHN P. RELMAN, HOUSING DISCRIMINATION PRACTICE MANUAL § 3.2(b), at 3.21 (Supp. 2000); see also infra Part I.A.
29. See infra note 22.
30. See infra Part II.
31. See infra Part III.
32. See infra Part IV.
33. 527 U.S. 526 (1999).
34. E.g., Badami v. Flood, 214 F.3d 994, 997 (8th Cir. 2000) (reversing district court determination that evidence of landlord's refusal to rent home to a family with eight children because of family size did not warrant punitive damage instruction); Pumphrey v. Stephen Homes, Inc., No. CA-93-1329-HAR, 1997 WL 135688, at **1 (4th Cir. Mar. 25, 1997) (per curium) (finding that district court erred in refusing to instruct jury on punitive damages even though evidence showed salesman intentionally misrepresented the availability of a home lot to an African American man); Tyus v. Urban Search Mgmt., 102 F.3d 256, 266 (7th Cir. 1996) (remanding case for new trial where district court refused to instruct jury on punitive damages despite evidence that established that luxury apartment complex used exclusively white human models in its advertising); United States v. Balistrieri, 981 F.2d 916, 936 (7th Cir. 1992) (reversing district court's decision to enter a directed verdict on punitive damages despite evidence that landlord systematically misrepresented availability of apartments to black home seekers).
35. Badami, 214 F.3d at 997; Pumphrey, 1997 WL 135688, at **4; Tyus, 102 F.3d at 266; Balistrieri, 981 F.2d at 937.
36. A plaintiff may either decide that the cost and inconvenience of a new trial on punitive damages is not worth the effort, or agree not to appeal in exchange for a similar promise by the defendant.
37. Smith v. Wade, 461 U.S. 30, 56 (1983).
38. See DAN B. DOBBS, HANDBOOK ON THE LAW OF REMEDIES § 3.11(2), at 321 (2d ed. 1993) ("[T]here is always room for difference of opinion in the application of such abstract standards as 'recklessness' or 'malice.'").
39. See, e.g., Smith, 461 U.S. at 54; RESTATEMENT (SECOND) OF TORTS § 908(1) (1965) (stating that punitive damages are awarded "to punish [the defendant] for his outrageous conduct and to deter him and others like him from similar conduct in the future"); see also City of Newport v. Fact Concerts, Inc., 453 U.S. 247, 266-67 (1981).
40. Although numerous terms have been used to describe punitive damages, the two terms most commonly used today are "punitive damages" and "exemplary damages." Most jurisdictions use the two terms interchangeably. During the last century, punitive damages were also frequently referred to as "vindictive damages" and "smart money," while the terms "punitory," "speculative," "imaginary," "presumptive," or "added" damages have also been used. See Smith, 461 U.S. at 41; LINDA L. SCHLUETER & KENNETH R. REDDEN, PUNITIVE DAMAGES § 21(A) (4th ed. 2000); Note, Exemplary Damages in the Law of Torts, 70 HARV. L. REV. 517 (1957).
41. See A. Mitchell Polinsky & Steven Shavell, Punitive Damages: An Economic Analysis, 111 HARV. L. REV. 869, 879-81 (1998). This concept may be expressed through the formula N = B-PL, where B is the benefit that defendant derives from the conduct, P is the probability that the defendant will be held responsible for the conduct, L is the expected loss that the defendant will incur if a law suit is brought, and N is the net gain or loss. As long as N is positive, the defendant will continue to engage in the harmful conduct.
42. See id.
43. See generally Dorsey Ellis, Fairness and Efficiency in the Law of Punitive Damages, 56 S. CAL. L. REV. 1 (1982). These considerations also suggest that the term "punitive damages" is something of a misnomer because it does not fully or precisely describe the purpose of such damages. Although punitive damages do serve to punish wrongful conduct, they also serve to increase the penalty to the wrongdoer and to create an appropriate incentive for victims to file suit so as to deter wrongful conduct. In any event, it is not surprising that punitive damages have also been known as "exemplary damages," and the contemporary predominance of the shorthand term "punitive damages" appears to be an historical accident. See supra note 28.
44. See Alex S. Navarro, Bona Fide Damages for Tester Plaintiffs: An Economic Approach to Private Enforcement of the Antidiscrimination Statutes, 81 GEO. L.J. 2727, 2752-67 (1993); Gary T Schwanz, Deterrence and Punishment in the Common Law of Punitive Damages: A Comment, 56 S. CAL. L. REV. 133, 139 (1982) ("[G]iven the difficulty victims experience in proving that they have been subject to racial discrimination in the sale or rental of housing, Congress may have acted intelligently in authorizing punitive damages in the fair housing provisions of the Civil Rights Act of 1968.").
45. See Alex S. Navarro, Bona Fide Damages for Tester Plaintiffs: An Economic Approach to Private Enforcement of the Antidiscrimination Statutes, 81 GEO. L.J. 2727, 2752-67 (1993); Gary T Schwanz, Deterrence and Punishment in the Common Law of Punitive Damages: A Comment, 56 S. CAL. L. REV. 133, 139 (1982) ("[G]iven the difficulty victims experience in proving that they have been subject to racial discrimination in the sale or rental of housing, Congress may have acted intelligently in authorizing punitive damages in the fair housing provisions of the Civil Rights Act of 1968.").
46. See Robert D. Cooter, Punitive Damages for Deterrence: When and How Much?, 40 ALA. L. REV. 1143, 1149-66 (1989); Ellis, supra note 31, at 25-26; Polinsky & Shavell, supra note 29, at 886-95. Polinsky and Shavell have described this justification more broadly by saying that punitive damages are necessary whenever there is a significant probability that the wrongdoer will escape liability. Id. at 886. The probability that a wrongdoer will avoid liability is a function of two variables: (1) the probability that the victim will detect the wrongdoing and believe that the perpetrator is responsible: and (2) the probability that the victim will choose to bring suit. See Keith Hylton, Reply: Punitive Damages and the Economic Theory of Penalties, 87 GEO. L.J. 421, 460 (1998). For clarity, I analyze these variables separately.
47. See Robert D. Cooter, Punitive Damages for Deterrence: When and How Much?, 40 ALA. L. REV. 1143, 1149-66 (1989); Ellis, supra note 31, at 25-26; Polinsky & Shavell, supra note 29, at 886-95. Polinsky and Shavell have described this justification more broadly by saying that punitive damages are necessary whenever there is a significant probability that the wrongdoer will escape liability. Id. at 886. The probability that a wrongdoer will avoid liability is a function of two variables: (1) the probability that the victim will detect the wrongdoing and believe that the perpetrator is responsible: and (2) the probability that the victim will choose to bring suit. See Keith Hylton, Reply: Punitive Damages and the Economic Theory of Penalties, 87 GEO. L.J. 421, 460 (1998). For clarity, I analyze these variables separately.
48. See Robert D. Cooter, Punitive Damages for Deterrence: When and How Much?, 40 ALA. L. REV. 1143, 1149-66 (1989); Ellis, supra note 31, at 25-26; Polinsky & Shavell, supra note 29, at 886-95. Polinsky and Shavell have described this justification more broadly by saying that punitive damages are necessary whenever there is a significant probability that the wrongdoer will escape liability. Id. at 886. The probability that a wrongdoer will avoid liability is a function of two variables: (1) the probability that the victim will detect the wrongdoing and believe that the perpetrator is responsible: and (2) the probability that the victim will choose to bring suit. See Keith Hylton, Reply: Punitive Damages and the Economic Theory of Penalties, 87 GEO. L.J. 421, 460 (1998). For clarity, I analyze these variables separately.
49. See Polinsky & Shavell, supra note 29, at 888.
50. See Navarro, supra note 32, at 2733 ("Housing discrimination is difficult to detect, often unprosecuted when detected, and difficult to prove even when prosecuted.").
51. See, e.g., Alexander v. Riga, 208 F.3d 419, 424 (3d Cir. 2000), cert. denied, 121 S. Ct. 757 (2001); United States v. Big D Enters., Inc., 184 F.3d 924, 929 (8th Cir. 1999), cert. denied, 529 U.S. 1018 (2000); YINGER, supra note 6, at 19-35 (summarizing national study demonstrating the prevalence of this form of discrimination); see also supra note 7 and accompanying text.
52. See YINGER, supra note 6, at 51-56.
53. See id. at 19-20; see also George C. Galster, Research on Discrimination in Housing and Mortgage Markets: Assessment and Future Directions, 3 HOUSING POL'Y DEBATE 639, 661 (1992);
54. See id. at 19-20; see also George C. Galster, Research on Discrimination in Housing and Mortgage Markets: Assessment and Future Directions, 3 HOUSING POL'Y DEBATE 639, 661 (1992);
55. Michael Selmi, Public vs. Private Enforcement of Civil Rights: The Case of Housing and Employment, 45 UCLA L. REV. 1401, 1409 (1998); Turner, Discrimination in Urban Housing Markets, supra note 7, at 191-92.
56. Michael Selmi, Public vs. Private Enforcement of Civil Rights: The Case of Housing and Employment, 45 UCLA L. REV. 1401, 1409 (1998); Turner, Discrimination in Urban Housing Markets, supra note 7, at 191-92.
57. See Turner, Discrimination in Urban Housing Markets, supra note 7, at 192.
58. See United States v. Youritan Constr. Co., 370 F. Supp. 643 (N.D. Cal. 1973) (granting injunction where defendants used various tactics to discourage African American applicants, including showing African American applicants the most expensive apartments, giving them incomplete tours of the complex, and misrepresenting the availability of apartments).
59. There is also considerable evidence that African Americans and other racial and ethnic minorities often face discrimination in obtaining a home mortgage. See SCHWEMM, HOUSING DISCRIMINATION, supra note 12, § 18.2(i); YINGER, supra note 6, at 63-85; Selmi, supra note 38, at 1423-25. Such discrimination is difficult to detect because of the number and complexity of factors that lenders take into account in considering whether to approve a loan. In many cases, the lender can offer plausible reasons for denying a mortgage to a minority applicant but can choose to apply its standards with less rigor to white applicants. Alternatively, the lender can provide white applicants with information about how to improve their credit and qualify for a mortgage but withhold this information from minority applicants. Often, such discrimination can be detected only through a detailed examination of the lender's loan files and practices, something that a typical home seeker cannot undertake. See id. at 1425.
60. In 1985, based on existing studies of housing discrimination, HUD estimated that approximately two million acts of housing discrimination occur each year. The vast majority of these acts go unchallenged. H.R. REP. NO. 100-711, at 15 (1988) (quoting testimony of John Knapp, General Counsel, Department of Housing and Urban Development).
61. See Polinsky & Shavell, supra note 29, at 886. The following example is illustrative. Assume X derives a $90 per unit benefit from conduct that causes $100 per unit in compensable harm. Assume also that X estimates that her conduct will be detected only ten percent of the time. Although the conduct is socially inefficient (i.e., it causes more harm than benefit), X will choose to engage in the harmful conduct because she derives a net benefit of $80 per unit. If X expects that courts will award punitive damages equal to ten times the compensable harm, however, then X will alter her conduct to avoid a net loss.
62. See Polinsky & Shavell, supra note 29, at 888.
63. See Marc Galanter & David Luban, Poetic Justice: Punitive Damages and Legal Pluralism, 42 AM. U. L. REV. 1393, 1426, 1447-48 (1993) (arguing that punitive damages are necessary to give parties and attorneys an incentive to bring suit).
64. See Polinsky & Shavell, supra note 29, at 890, 901-02. A rational, economically motivated plaintiff will thus choose to file suit whenever the likely recovery (discounted by the probability of no recovery) exceeds the likely burden of filing suit. This can be illustrated through the formula B < PL, where B represents the costs and burdens on the plaintiff of filing suit, P is the probability of recovery, and L is the expected average recovery if liability is proven. Of course, there may be intangible costs and benefits that are difficult to measure in economic terms. A plaintiff may obtain sufficient moral satisfaction in maintaining a suit to make a point, even if the plaintiff knows that the likelihood of a significant monetary recovery is low. For other plaintiffs, a reluctance to put themselves or family members through the stress of litigation may dissuade them from bringing suit even if they believe that, from a purely monetary standpoint, the lawsuit is a good choice. In any event, the decision as to whether to bring suit will be made after weighing the likely costs and benefits of doing so.
65. For all but the most affluent victims, the only desirable fee arrangement is likely to be a contingent fee with a modest retainer.
66. Galanter & Luban, supra note 45, at 1452-53 (demonstrating how plaintiffs' lawyers will decline representation in favor of more lucrative work if incentives for particular type of litigation are not offered).
67. 49 See id. at 1451-54; David Luban, A Flawed Case Against Punitive Damages, 87 GEO. L.J. 359 (1998) (arguing that punitive damages will induce attorneys to enter a field, and will finance and reward specialty in an area). As I discuss in more detail later, the availability of attorney's fees does not obviate the need for punitive damages because attorney's fees only compensate the attorney for his or her costs in bringing a successful suit, not for the risk that the suit would be unsuccessful. See infra text accompanying note 69.
68. 49 See id. at 1451-54; David Luban, A Flawed Case Against Punitive Damages, 87 GEO. L.J. 359 (1998) (arguing that punitive damages will induce attorneys to enter a field, and will finance and reward specialty in an area). As I discuss in more detail later, the availability of attorney's fees does not obviate the need for punitive damages because attorney's fees only compensate the attorney for his or her costs in bringing a successful suit, not for the risk that the suit would be unsuccessful. See infra text accompanying note 69.
69. See Trafficante v. Metro. Life Ins. Co., 409 U.S. 205, 211 (1972); Alexander v. Riga, 208 F.3d 419, 424 (3d Cir. 2000), cert. denied, 121 S. Ct. 757 (2001); Selmi, supra note 38, at 1416-22.
70. Selmi, supra note 38, at 1418.
71. See, e.g., RELMAN, supra note 16, § 3.2(2)(a)-(b) (weighing advantages and disadvantages of enforcement through HUD administrative process).
72. See Selmi, supra note 38, at 1438-39.
73. See Schwemm, supra note 11, at 104 (noting that compensatory damage awards generally have been too low to justify the cost of bringing suit in many cases); see also Johnnie Scott, Jr., Eradicating Discriminatory Housing Practices: The Role of Damages and the Discriminatory Effects of Evidentiary Standards in Fair Housing Litigation, 22 N.M. L. REV. 572, 577 (1992).
74. SCHWEMM, HOUSING DISCRIMINATION, supra note 12, § 25.3(2)(b), at 25-19 ("Most fair housing cases do not involve major economic losses."); Alan W. Heifetz & Thomas C. Heinz, Separating the Objective, the Subjective, and the Speculative: Assessing Compensatory Damages in Fair Housing Adjudications, 26 J. MARSHALL L. REV. 3, 9 (1992). Economic damages are the total of out-of-pocket and other tangible expenses caused by the denial of housing. They may include: the increased cost of alternative housing; wages or other income lost during the time spent looking for alternative housing; moving, storage, or packing costs; temporary housing costs; and costs of commuting to and from work in excess of costs that would have been incurred commuting to and from the denied housing. Id. at 10. Such economic damages rarely exceed a few thousand dollars and often are considerably less. E.g., HUD v. Blackwell, 908 F.2d 864, 873 (11th Cir. 1990) ($4,591 award for economic losses); Hamilton v. Svatik, 779 F.2d 383, 388 (7th Cir. 1985) ($500 award); Philips v. Hunter Trails Cmty. Ass'n, 685 F.2d 184, 190-91 (7th Cir. 1982) ($2,675 award); Steele v. Title Realty Co., 478 F.2d 380, 383-84 (10th Cir. 1973) ($138.25 award); Lamb v. Sallee, 417 F. Supp. 282, 287 (E.D. Ky. 1976) (no award). In fact, in some cases, economic damages have been so low that plaintiff's counsel waived them for strategic reasons and focused instead on intangible harms.
75. See Polinsky & Shavell, supra note 29, at 888, 901.
76. See Margalynne Armstrong, Desegregation Through Private Litigation, 64 TEMP. L. REV. 909, 923 (1991).
77. Heifetz & Heinz, supra note 55, at 17-24. Of course, if the plaintiff incurs medical or psychological counseling expenses as a result of housing discrimination, those expenses are recoverable under a compensatory scheme. See Jones v. Rivers, 732 F. Supp. 176, 178 (D.D.C. 1990).
78. See Armstrong, supra note 57, at 923-24.
79. See, e.g., Larry Heinrich, The Mental Anguish and Humiliation Suffered by Victims of Housing Discrimination, 26 J. MARSHALL L. REV. 39 (1992); Nancy Krieger & Stephen Sidney, Racial Discrimination and Blood Pressure: The CARDIA Study of Young Black and White Adults, 86 AM. J. PUB. HEALTH 1370 (1996) (finding that differences between African American and Caucasian blood pressure levels could be attributable to discrimination); David S. Strogatz et al., Social Support, Stress, and Blood Pressure in Black Adults, 8 EPIDEMIOLOGY 482 (1997) (demonstrating that discrimination, as self-reported, may contribute to increased blood pressure in African Americans). But see Clifford L. Broman, The Health Consequences of Racial Discrimination: A Study of African Americans, 6 ETHNIC DISCRIMINATION 148 (1996).
80. See, e.g., Larry Heinrich, The Mental Anguish and Humiliation Suffered by Victims of Housing Discrimination, 26 J. MARSHALL L. REV. 39 (1992); Nancy Krieger & Stephen Sidney, Racial Discrimination and Blood Pressure: The CARDIA Study of Young Black and White Adults, 86 AM. J. PUB. HEALTH 1370 (1996) (finding that differences between African American and Caucasian blood pressure levels could be attributable to discrimination); David S. Strogatz et al., Social Support, Stress, and Blood Pressure in Black Adults, 8 EPIDEMIOLOGY 482 (1997) (demonstrating that discrimination, as self-reported, may contribute to increased blood pressure in African Americans). But see Clifford L. Broman, The Health Consequences of Racial Discrimination: A Study of African Americans, 6 ETHNIC DISCRIMINATION 148 (1996).
81. See, e.g., Larry Heinrich, The Mental Anguish and Humiliation Suffered by Victims of Housing Discrimination, 26 J. MARSHALL L. REV. 39 (1992); Nancy Krieger & Stephen Sidney, Racial Discrimination and Blood Pressure: The CARDIA Study of Young Black and White Adults, 86 AM. J. PUB. HEALTH 1370 (1996) (finding that differences between African American and Caucasian blood pressure levels could be attributable to discrimination); David S. Strogatz et al., Social Support, Stress, and Blood Pressure in Black Adults, 8 EPIDEMIOLOGY 482 (1997) (demonstrating that discrimination, as self-reported, may contribute to increased blood pressure in African Americans). But see Clifford L. Broman, The Health Consequences of Racial Discrimination: A Study of African Americans, 6 ETHNIC DISCRIMINATION 148 (1996).
82. See, e.g., Larry Heinrich, The Mental Anguish and Humiliation Suffered by Victims of Housing Discrimination, 26 J. MARSHALL L. REV. 39 (1992); Nancy Krieger & Stephen Sidney, Racial Discrimination and Blood Pressure: The CARDIA Study of Young Black and White Adults, 86 AM. J. PUB. HEALTH 1370 (1996) (finding that differences between African American and Caucasian blood pressure levels could be attributable to discrimination); David S. Strogatz et al., Social Support, Stress, and Blood Pressure in Black Adults, 8 EPIDEMIOLOGY 482 (1997) (demonstrating that discrimination, as self-reported, may contribute to increased blood pressure in African Americans). But see Clifford L. Broman, The Health Consequences of Racial Discrimination: A Study of African Americans, 6 ETHNIC DISCRIMINATION 148 (1996).
83. Cf. Schwemm, supra note 11, at 106-07 (noting possibility of jury prejudice against victims of housing discrimination).
84. See, e,g., Gray v. Serruto Builders, Inc., 265 A.2d 404, 416 (N.J. Super. Ct. Ch. Div. 1970) (awarding plaintiff only $500 because "[h]e is a man not likely to be bowled over by a single set-back"); see also Davis v. Mansards, 597 F. Supp. 334, 347-48 (N.D. Ind. 1984) (awarding $5,000 in compensatory damages to female tester who was "deeply affected" and "decimated" by the discrimination, but awarding $2,500 to tester who approached complex with "cynicism" and was "steadied for the blow").
85. Nancy Krieger, Raciel and Gender Discrimination: Risk Factors for High Blood Pressure?, 30 Soc. Sci. MED. 1273 (1990).
86. See Heinrich, supra note 60, at 49-51.
87. Heifetz & Heinz, supra note 55, at 12-13.
88. A home seeker of modest means is likely to give up after facing obstacles obtaining housing in a desired neighborhood and return to a neighborhood where she is treated with more dignity. This is particularly true if affordable housing is scarcer in the desired neighborhood. See infra note 73 and accompanying text.
89. Cf. Galanter & Luban, supra note 45, at 1453 (noting that good litigators will seek to apply their skills to the specialties that pay best).
90. 42 U.S.C. § 3613(c)(2) (1994); Blum v. Stevenson, 465 U.S. 886, 895 (1984) (finding that reasonable attorney's fees, as permitted by 42 U.S.C. § 1988 (1994), are to be calculated according to prevailing market rates in the community).
91. See City of Burlington v. Dague, 505 U.S. 557 (1992) (reversing enhancement of lodestar amount under relevant fee-shifting statutes); SCHWEMM, HOUSING DISCRIMINATION, supra note 12, § 25.3(5)(C), at 25-70.
92. See Ellis, supra note 31, at 26-27; Hylton, supra note 33, at 435-36.
93. See Armstrong, supra note 57, at 922-24.
94. See Schwemm, supra note 11, at 99. American neighborhoods remain profoundly segregated according to race and ethnicity. Since the 1970s there has been little decrease in the level of segregation. See Turner, Discrimination in Urban Housing Markets, supra note 7, at 185.
95. See Lawrence Bobo & Camille Zubrinsky, Attitudes on Residential Integration: Perceived Status Differences, Mere In-Group Preference, or Racial Prejudice?, 74 SOC. FORCES 883 (1996); Reynolds Farley et al., Stereotypes & Segregation: Neighborhoods in the Detroit Area, 100 AM. J. Soc. 750 (1994).
96. See Lawrence Bobo & Camille Zubrinsky, Attitudes on Residential Integration: Perceived Status Differences, Mere In-Group Preference, or Racial Prejudice?, 74 SOC. FORCES 883 (1996); Reynolds Farley et al., Stereotypes & Segregation: Neighborhoods in the Detroit Area, 100 AM. J. Soc. 750 (1994).
97. See Brief for the United States as Amicus Curiae at 25, Alexander v. Riga, 208 F.3d 419 (3d Cir. 2000) (No. 98-3597) (citing testimony by executive director of fair housing group that housing discrimination in a predominantly white area will discourage other minorities who hear about discrimination from seeking housing there); Reynolds Farley et al., Continued Racial Residential Segregation in Detroit: Chocolate City, Vanilla Suburbs Revisited, 4 J. HOUSING RES. 1, 20, 32 (1993); cf. Reynolds Farley, Racial Differences in the Search for Housing: Do Whites and Blacks Use the Same Techniques to Find Housing?, 7 HOUSING POL'Y DEBATE 367 (1996) (noting that perceptions of housing discrimination may lead to differences in housing search strategies between black and white home seekers).
98. See Brief for the United States as Amicus Curiae at 25, Alexander v. Riga, 208 F.3d 419 (3d Cir. 2000) (No. 98-3597) (citing testimony by executive director of fair housing group that housing discrimination in a predominantly white area will discourage other minorities who hear about discrimination from seeking housing there); Reynolds Farley et al., Continued Racial Residential Segregation in Detroit: Chocolate City, Vanilla Suburbs Revisited, 4 J. HOUSING RES. 1, 20, 32 (1993); cf. Reynolds Farley, Racial Differences in the Search for Housing: Do Whites and Blacks Use the Same Techniques to Find Housing?, 7 HOUSING POL'Y DEBATE 367 (1996) (noting that perceptions of housing discrimination may lead to differences in housing search strategies between black and white home seekers).
99. Some sociologists claim that continued racial segregation is solely, or predominantly, a function of the preferences of blacks and whites to live near persons of their own race Eg., William A.V. Clark, Understanding Residential Segregation in American Cities: Interpreting the Evidence, a Reply to Galster, 8 POPULATION RES. & POL'Y REV. 193 (1989). A growing body of research, however, suggests that discrimination materially contributes to residential racial segregation. E.g., Reynolds Farley et al., The Residential Preferences of Blacks and Whites: A Four-Metropolis Analysis, 8 HOUSING POL'Y DEBATE 763 (1997). These researchers' findings "challenge the hypothesis that levels of black-white residential segregation remain high solely because of the distinctly different preferences of blacks and whites. It is probable, however, that preferences interact with the other two factors - discrimination in the marketing of housing and economic differences - in reinforcing high segregation levels." Id. at 796; see also YINGER, supra note 6, at 119-22; George Galster & W. Mark Keeney, Race, Residence, Discrimination and Economic Opportunity: Modeling the Nexus of Urban Racial Phenomenon, 24 URB. AFF. Q. 87, 87-88 (1988).
100. Some sociologists claim that continued racial segregation is solely, or predominantly, a function of the preferences of blacks and whites to live near persons of their own race Eg., William A.V. Clark, Understanding Residential Segregation in American Cities: Interpreting the Evidence, a Reply to Galster, 8 POPULATION RES. & POL'Y REV. 193 (1989). A growing body of research, however, suggests that discrimination materially contributes to residential racial segregation. E.g., Reynolds Farley et al., The Residential Preferences of Blacks and Whites: A Four-Metropolis Analysis, 8 HOUSING POL'Y DEBATE 763 (1997). These researchers' findings "challenge the hypothesis that levels of black-white residential segregation remain high solely because of the distinctly different preferences of blacks and whites. It is probable, however, that preferences interact with the other two factors - discrimination in the marketing of housing and economic differences - in reinforcing high segregation levels." Id. at 796; see also YINGER, supra note 6, at 119-22; George Galster & W. Mark Keeney, Race, Residence, Discrimination and Economic Opportunity: Modeling the Nexus of Urban Racial Phenomenon, 24 URB. AFF. Q. 87, 87-88 (1988).
101. Some sociologists claim that continued racial segregation is solely, or predominantly, a function of the preferences of blacks and whites to live near persons of their own race Eg., William A.V. Clark, Understanding Residential Segregation in American Cities: Interpreting the Evidence, a Reply to Galster, 8 POPULATION RES. & POL'Y REV. 193 (1989). A growing body of research, however, suggests that discrimination materially contributes to residential racial segregation. E.g., Reynolds Farley et al., The Residential Preferences of Blacks and Whites: A Four-Metropolis Analysis, 8 HOUSING POL'Y DEBATE 763 (1997). These researchers' findings "challenge the hypothesis that levels of black-white residential segregation remain high solely because of the distinctly different preferences of blacks and whites. It is probable, however, that preferences interact with the other two factors - discrimination in the marketing of housing and economic differences - in reinforcing high segregation levels." Id. at 796; see also YINGER, supra note 6, at 119-22; George Galster & W. Mark Keeney, Race, Residence, Discrimination and Economic Opportunity: Modeling the Nexus of Urban Racial Phenomenon, 24 URB. AFF. Q. 87, 87-88 (1988).
102. See Schwemm, supra note 11, at 98 ("[T]he right to buy or rent a home, free from racial discrimination, carries with it the opportunity to find new employment, to enroll one's children in different schools, and many other advantages."); see also MASSEY & DENTON, supra note 6, at 183; CAROL M. SWAIN, BLACK FORCES, BLACK INTERESTS: THE REPRESENTATION OF AFRICAN AMERICANS IN CONGRESS (1993); David Cutler & Edward Glaeser, Are Ghettos Good or Bad?, 112 Q.J. ECON. 827 (1997); George C. Galster, Research on Discrimination in Housing and Mortgage Markets: Assessment and Future Directions, 3 HOUSING POL'Y DEBATE 639, 643 (1992); Turner, Discrimination in Urban Housing Markets, supra note 7, at 187.
103. See Schwemm, supra note 11, at 98 ("[T]he right to buy or rent a home, free from racial discrimination, carries with it the opportunity to find new employment, to enroll one's children in different schools, and many other advantages."); see also MASSEY & DENTON, supra note 6, at 183; CAROL M. SWAIN, BLACK FORCES, BLACK INTERESTS: THE REPRESENTATION OF AFRICAN AMERICANS IN CONGRESS (1993); David Cutler & Edward Glaeser, Are Ghettos Good or Bad?, 112 Q.J. ECON. 827 (1997); George C. Galster, Research on Discrimination in Housing and Mortgage Markets: Assessment and Future Directions, 3 HOUSING POL'Y
104. See Schwemm, supra note 11, at 98 ("[T]he right to buy or rent a home, free from racial discrimination, carries with it the opportunity to find new employment, to enroll one's children in different schools, and many other advantages."); see also MASSEY & DENTON, supra note 6, at 183; CAROL M. SWAIN, BLACK FORCES, BLACK INTERESTS: THE REPRESENTATION OF AFRICAN AMERICANS IN CONGRESS (1993); David Cutler & Edward Glaeser, Are Ghettos Good or Bad?, 112 Q.J. ECON. 827 (1997); George C. Galster, Research on Discrimination in Housing and Mortgage Markets: Assessment and Future Directions, 3 HOUSING POL'Y DEBATE 639, 643 (1992); Turner, Discrimination in Urban Housing Markets, supra note 7, at 187.
105. In Gladstone Realtors v. Village of Bellwood, 441 U.S. 91 (1979), and Trafficante v. Metropolitan Life Insurance Co., 409 U.S. 205 (1972), the Supreme Court upheld Title VIII claims by residents who alleged that the defendants' racial discrimination against others had prevented their communities from being racially integrated, resulting in lower property values, missed business opportunities, and lost social benefits. Other cases making similar claims include Broadmore Improvement Association v. Stan Weber & Associates, 597 F.2d 568 (5th Cir. 1979), and Sherman Park Community. Association v. Wauwatosa Realty, 486 F. Supp. 838 (E.D. Wis. 1980).
106. See, e.g., Allahar v. Zahora, 59 F.3d 693, 693-94 (7th Cir. 1995) (affirming district court's decision to set aside punitive damage award where defendant homeowner initially refused to sell house to an Indian man, stating that he had talked to his neighbors and that they did not want minorities on the block). Judge Posner argues that even racially biased homeowners will be indifferent about the race or ethnicity of the person who buys their house because they will be leaving the neighborhood. RICHARD POSNER, ECONOMIC ANALYSIS OF LAW 658 (4th ed. 1992). Posner's analysis overlooks the fact that homeowners' warped sense of "loyalty" to their neighborhood, or their desire to maintain good relations with their neighbors may motivate them to find agents who are more likely to steer minorities away. See T. Alexander Aleinikoff, Note, Racial Steering: The Real Estate Broker and Title VIII, 85 YALE L.J. 808, 824 (1976) (arguing that residents of white areas are likely to prefer to list their homes with brokers who will steer black buyers to other neighborhoods). Even if Posner's analysis is valid as a general matter, real estate agents who help control the access to information about houses will often have a continuing business relationship with persons in a neighborhood and may have an incentive to discriminate to foster those relationships. See id. at 811-12 (arguing that brokers fear loss of patronage if they facilitate the sale of housing to a minority).
107. See, e.g., Allahar v. Zahora, 59 F.3d 693, 693-94 (7th Cir. 1995) (affirming district court's decision to set aside punitive damage award where defendant homeowner initially refused to sell house to an Indian man, stating that he had talked to his neighbors and that they did not want minorities on the block). Judge Posner argues that even racially biased homeowners will be indifferent about the race or ethnicity of the person who buys their house because they will be leaving the neighborhood. RICHARD POSNER, ECONOMIC ANALYSIS OF LAW 658 (4th ed. 1992). Posner's analysis overlooks the fact that homeowners' warped sense of "loyalty" to their neighborhood, or their desire to maintain good relations with their neighbors may motivate them to find agents who are more likely to steer minorities away. See T. Alexander Aleinikoff, Note, Racial Steering: The Real Estate Broker and Title VIII, 85 YALE L.J. 808, 824 (1976) (arguing that residents of white areas are likely to prefer to list their homes with brokers who will steer black buyers to other neighborhoods). Even if Posner's analysis is valid as a general matter, real estate agents who help control the access to information about houses will often have a continuing business relationship with persons in a neighborhood and may have an incentive to discriminate to foster those relationships. See id. at 811-12 (arguing that brokers fear loss of patronage if they facilitate the sale of housing to a minority).
108. See Schwemm, supra note 11, at 100, 102.
109. A rare case recognizing the secondary harms of housing discrimination is HUD v. Blackwell, 908 F.2d 864 (11th Cir. 1990). In that case, the white couple who obtained the housing that the landlord refused to rent to the African American plaintiffs sued the landlord claiming that the adverse publicity of the discrimination claim had harmed their reputation and caused them emotional distress. By affirming the award of compensatory damages, the court of appeals properly recognized that housing discrimination can increase racial tension and distrust in a neighborhood. Id. at 873. In most cases, however, such claims are difficult to prove, and persons are often unwilling to endure the publicity and hostility of their neighbors that could result should they press such claims.
110. See Galanter & Luban, supra note 45, at 1406-07.
111. See id. Some have objected that such a use of punitive damages is illegitimate because it allows juries to inflate punitive awards based on crude estimates of harm without the restraint of the burden of proof and evidentiary rules that govern the assessment of compensatory damages. See Polinsky & Shavell, supra note 29, at 940. This objection appears to be an argument for careful review of punitive damage awards, not a persuasive reason for excluding estimates of secondary harm altogether. There may be situations when a fact finder can determine with reasonable certainty that the wrongful conduct caused harms beyond those suffered by the victim. There also may be situations when it would be administratively unworkable to bring before the court every person likely to have suffered such secondary harms. It may be more efficient simply to permit punitive damage awards in such cases to ensure that the wrongdoer internalizes the full social cost of the conduct. See Hylton, supra note 33, at 435-36.
112. Galanter & Luban, supra note 45, at 1426-48; Michael Rustad & Thomas Koenig, The Historical Continuity of Punitive Damage Awards, 42 AM. U. L. REV. 1269, 1320 (1990); Cass Sunstein et al., Assessing Punitive Damages, 107 YALE L.J. 2071, 2075 (1998); Note, supra note 28, at 524.
113. Galanter & Luban, supra note 45, at 1426-48; Michael Rustad & Thomas Koenig, The Historical Continuity of Punitive Damage Awards, 42 AM. U. L. REV. 1269, 1320 (1990); Cass Sunstein et al., Assessing Punitive Damages, 107 YALE L.J. 2071, 2075 (1998); Note, supra note 28, at 524.
114. See Ellis, supra note 31, at 9.
115. See id. at 32; Polinsky & Shavell, supra note 29, at 907.
116. The decision to ignore a perpetrator's individual gain when performing society's cost-benefit analysis is fundamentally a policy decision. In the housing context, the passage of the Fair Housing Act serves as a strong indicator of society's wish to ignore the illicit benefits of discrimination.
117. See Ellis, supra note 31, at 32; Hylton, supra note 33, at 464; Polinsky & Shavell, supra note 29, at 907, 913.
118. See ELISABETH YOUNG-BRUEHL, THE ANATOMY OF PREJUDICES 26-39 (1996) (arguing that discriminatory attitudes often flow from psychological insecurities and phobias). Perpetrators may obtain some pleasure and satisfaction from acting on prejudice. See David Charny & G. Mitu Gulati, Efficiency-Wages, Tournaments, and Discrimination: A Theory of Employment Discrimination Law for "High Level" Jobs, 33 HARV. C.R.-C.L. L. REV. 57, 77 (1998). Punitive damages are necessary to counter these motives.
119. See ELISABETH YOUNG-BRUEHL, THE ANATOMY OF PREJUDICES 26-39 (1996) (arguing that discriminatory attitudes often flow from psychological insecurities and phobias). Perpetrators may obtain some pleasure and satisfaction from acting on prejudice. See David Charny & G. Mitu Gulati, Efficiency-Wages, Tournaments, and Discrimination: A Theory of Employment Discrimination Law for "High Level" Jobs, 33 HARV. C.R.-C.L. L. REV. 57, 77 (1998). Punitive damages are necessary to counter these motives.
120. See, e.g., Aleinikoff, supra note 78, at 811-12, 824; Galster, supra note 38, at 653; Navarro, supra note 32, at 2742-45; John Yinger, Measuring Racial Discrimination with Fair Housing Audits: Caught in the Act, 76 AM. ECON. REV. 881, 892 (1986); cf. Joseph B. Treaster, Insurer Agrees It Overcharged Black Clients, N.Y. TIMES, June 22, 2000, at A1 (describing insurer who systematically charged African Americans higher premiums than whites based on the assumption, since disproved, that African Americans have shorter life spans than white customers).
121. See, e.g., Aleinikoff, supra note 78, at 811-12, 824; Galster, supra note 38, at 653; Navarro, supra note 32, at 2742-45; John Yinger, Measuring Racial Discrimination with Fair Housing Audits: Caught in the Act, 76 AM. ECON. REV. 881, 892 (1986); cf. Joseph B. Treaster, Insurer Agrees It Overcharged Black Clients, N.Y. TIMES, June 22, 2000, at A1 (describing insurer who systematically charged African Americans higher premiums than whites based on the assumption, since disproved, that African Americans have shorter life spans than white customers).
122. See Aleinikoff, supra note 78, at 811-12.
123. See POSNER, supra note 78, at 651-52. With respect to racial discrimination, for example, Posner points out that what he terms the "white sector" of the economy is self-sufficient, while the "black sector" is much smaller and more dependent on trade. Thus, the refusal of whites to deal with African Americans disproportionately harms African Americans. Id. at 651. Additionally, in communities where discrimination runs rampant, the threat of crippling short-term financial losses due to loss of traditional customer base discourages firms from adopting nondiscriminatory practices. See Alenikoff, supra note 78, at 811-12. Analysts observe a similar phenomenon in employment discrimination. See Charny & Gulati, supra note 88, at 83.
124. 42 U.S.C. § 3613(c) (1994).
125. 42 U.S.C. § 1982 (1994), which prohibits discrimination in property-related transactions, is silent on the relief available. However, courts have interpreted the statute to incorporate common law remedies, including punitive damages. SCHWEMM, HOUSING DISCRIMINATION, supra note 12, § 27.6(3)(b) (1983).
126. E.g., Smith v. Wade, 461 U.S. 30, 34 ("In the absence of more specific guidance, we look[ ] first to the common law of torts . . . with such modification or adaptation as might be necessary to carry out the purpose and policy of the statute."). In Smith, the Supreme Court looked both to the common law standards for awarding punitive damages as they existed in 1871, when 42 U.S.C. § 1983 was enacted, and to contemporary standards to determine when punitive damages may be assessed in § 1983 actions. Id. The Supreme Court has also looked to common law agency principles to determine when employers should be held liable under Title VII for sexual harassment perpetrated by their employees. Faragher v. City of Boca Raton, 524 U.S. 775, 793-809 (1998); Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 754-55 (1998); Meritor Sav. Bank v. Vinson, 477 U.S. 57, 72 (1986). The Court also applied common law agency principles to determine when nonprofit organizations should be liable for antitrust violations carried out by agents acting within the scope of their apparent, but not actual, authority in American Society of Mechanical Engineers, Inc. v. Hydrolevel Corp., 456 U.S. 556, 565-70 (1982). Courts may modify these common law standards where necessary to serve the objectives of the underlying statute. See Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 545 (1999); Faragher, 524 U.S. at 804-07. Of course, the circumstances in which punitive damages are assessed in fair housing are defined by federal law, not state law. See, e.g., La. ACORN Fair Hous. v. LeBlanc, 211 F.3d 298, 302 (5th Cir. 2000), cert. denied, 121 S. Ct. 1225 (2001). Federal courts must sometimes look to common law principles, however, in determining what federal rule is appropriate. In such cases, courts rely on '"the general common law of agency rather than on the law of any particular State.'" Ellerth, 524 U.S. at 754. In cases where the underlying statute was enacted long ago, it may be necessary to examine both the common law at the time of the statute's enactment as well as contemporary standards, with the assumption that Congress generally intends to "incorporate applicable general legal principles as they evolve." Smith, 461 U.S. at 34. Because the Fair Housing Act was passed in 1968 and amended in 1989, and because the common law standards have not changed substantially in that time, see id., contemporary standards should inform the applicable standard under the Fair Housing Act.
127. RESTATEMENT (SECOND) OF TORTS § 908(2) (1965); see also Smith, 461 U.S. at 53 (surveying common law and concluding that punitive damages are appropriate whenever there is a showing of evil intent, recklessness, or callous indifference to federally protected rights); W. PAGE KEETON ET AL., PROSSER & KEETON ON THE LAW OF TORTS § 2, at 14-15 (5th ed. 1984); SCHLUETER & REDDEN supra note 28, § 9.1.
128. See Polinsky & Shavell, supra note 29, at 909 n.120 (observing that punitive damages cannot overdeter intentional conduct because a potential tortfeasor would rather avoid the intentional act than take excessive precautions to avoid "accidentally" incurring punitive damages). Richard Posner notes that, for intentional torts, the danger of deterring socially valuable conduct by making the damages award greater than [actual damages] is minimized and other policies come to the fore, such as making sure that the damage award is an effective deterrent by resolving all doubts as to the plaintiff's actual damages in his favor; this can be done by adding a dollop of punitive damages to the estimate of his actual damages. POSNER, supra note 78, at 209. Courts have implemented this reasoning. E.g., Smith, 461 U.S. at 53 (noting that punitive damages normally are available where the plaintiff proves intentional infliction of emotional distress or defamation of a public figure); Nader v. Allegheny Airlines, Inc. 445 F. Supp. 168, 178 (D.D.C. 1978) (holding that proof of fraudulent representation is sufficient to support an award of punitive damages); RESTATEMENT (SECOND) OF TORTS § 908 cmt. c (1965) ("[I]n torts . . . that require a particular antisocial state of mind, the improper motive of the tortfeasor is both a necessary element in the cause of action and a reason for awarding punitive damages."); cf. Delahanty v. First Pa. Bank, 464 A.2d 1243, 1263 (Pa. Super. Ct. 1983) (noting that "it is difficult to picture a fact pattern which would support a finding of intentional fraud without providing proof of 'outrageous conduct' to support an award of punitive damages").
129. RESTATEMENT (SECOND) OF TORTS § 908(2) cmt. b (1965).
130. See Ellis, supra note 31, at 36; cf. Smith, 461 U.S. at 39 (noting the "ambiguity and slipperiness" of common law terms); Developments in the Law - The Civil Jury, 110 HARV. L. REV. 1408, 1513 (1997) (discussing the ambiguity in legal doctrines around punitive damage awards).
131. See Smith, 461 U.S. at 39-40 (noting that jurisdictions differ "over the degree of negligence, recklessness, carelessness, or culpable indifference that should be required" for the imposition of punitive damages).
132. Cf. POSNER, supra note 78, at 206 ("[T]he term 'intentional' is vague. Most accidental injuries are intentional in the sense that the injurer knew that he could have reduced the probability of the accident by taking additional precautions.").
133. See RESTATEMENT (SECOND) OF TORTS § 500 (1965) (necessitating conduct in which the risk of harm is "substantially in excess of that necessary to make . . . [the] conduct negligent"); see also Smith, 461 U.S. at 64 n.2 (Rehnquist, J., dissenting) (arguing that "reckless" conduct is somewhat more dangerous and unreasonable than merely negligent conduct).
134. See BLACK'S LAW DICTIONARY 1270 (6th ed. 1990) (defining recklessness as including behavior that ranges from "desperately heedless" and "willful" to "inattentive" or "negligent"); see, e.g., State v. Vertefeuille, 217 A.2d 725, 726 (Conn. App. Ct. 1965) (finding recklessness when tort defendant acted in circumstances that a reasonable person would consider dangerous); see also Saaybe v. Penn Cent. Transp. Co., 438 F. Supp. 65, 69 n.6 (E.D. Pa. 1977); Beeman v. State, 115 N.E.2d 919, 922 (Ind. 1953).
135. See Mark Grady, Punitive Damages and Subjective States of Minds: A Positive Economic Theory; 40 ALA. L. REV. 1197, 1199-1200, 1214 (1989) [hereinafter Grady, Punitive Damages and Subjective States of Minds]; see also Mark Grady, Efficient Negligence, 87 GEO. L.J. 397 (1998) [hereinafter Grady, Efficient Negligence]. For example, although everyone knows that it is important to pay attention when driving, some accidents will inevitably occur. It is highly unlikely that sharply increasing the penalties for negligent driving would eliminate traffic accidents. On the other hand, strict penalties for driving while intoxicated, speeding, or failing to observe traffic lights seem more likely to be effective because those actions involve more volition.
136. See Mark Grady, Punitive Damages and Subjective States of Minds: A Positive Economic Theory; 40 ALA. L. REV. 1197, 1199-1200, 1214 (1989) [hereinafter Grady, Punitive Damages and Subjective States of Minds]; see also Mark Grady, Efficient Negligence, 87 GEO. L.J. 397 (1998) [hereinafter Grady, Efficient Negligence]. For example, although everyone knows that it is important to pay attention when driving, some accidents will inevitably occur. It is highly unlikely that sharply increasing the penalties for negligent driving would eliminate traffic accidents. On the other hand, strict penalties for driving while intoxicated, speeding, or failing to observe traffic lights seem more likely to be effective because those actions involve more volition.
137. See Mark Grady, Punitive Damages and Subjective States of Minds: A Positive Economic Theory; 40 ALA. L. REV. 1197, 1199-1200, 1214 (1989) [hereinafter Grady, Punitive Damages and Subjective States of Minds]; see also Mark Grady, Efficient Negligence, 87 GEO. L.J. 397 (1998) [hereinafter Grady, Efficient Negligence]. For example, although everyone knows that it is important to pay attention when driving, some accidents will inevitably occur. It is highly unlikely that sharply increasing the penalties for negligent driving would eliminate traffic accidents. On the other hand, strict penalties for driving while intoxicated, speeding, or failing to observe traffic lights seem more likely to be effective because those actions involve more volition.
138. See Mark Grady, Punitive Damages and Subjective States of Minds: A Positive Economic Theory; 40 ALA. L. REV. 1197, 1199-1200, 1214 (1989) [hereinafter Grady, Punitive Damages and Subjective States of Minds]; see also Mark Grady, Efficient Negligence, 87 GEO. L.J. 397 (1998) [hereinafter Grady, Efficient Negligence]. For example, although everyone knows that it is important to pay attention when driving, some accidents will inevitably occur. It is highly unlikely that sharply increasing the penalties for negligent driving would eliminate traffic accidents. On the other hand, strict penalties for driving while intoxicated, speeding, or failing to observe traffic lights seem more likely to be effective because those actions involve more volition.
139. See Grady, Efficient Negligence, supra note 103, at 417.
140. For example, Professor Grady observes that "inadvertently" designing a building that does not conform to a safety code is more likely to involve what he terms "willful negligence" than failing to observe proper precautions when driving. See Grady, Punitive Damages and Subjective States of Minds, supra note 103, at 1201.
141. See id. at 1199-1200.
142. 461 U.S. 30 (1983). The inmate (Wade) claimed that he had been assaulted by his iwo cellmates because Smith, a reformatory guard, had placed three youths in that cell even though cells occupied by only one inmate were available. Id. at 32. There was also be disputed that intentionally discriminating against a black man on the basis of his skin color is worthy of some outrage?"); cf. Smith v. Wade, 461 U.S. 30, 54-55 (1983) ("[S]ociety has an interest in deterring and punishing all intentional or reckless invasions of the rights of others . . . ."); Gresham v. Windrush Partners, Ltd., 730 F.2d 1417, 1423 (11th Cir. 1984) (affirming district court finding that, in light of "strong national policy against race discrimination" in housing, irreparable injury must be presumed when plaintiff has demonstrated the likelihood of success on the merits of a housing discrimination claim).
143. See Kolstad, 527 U.S. at 535-37.
144. See id. at 536 (noting that the malice or reckless indifference standard must be applied "in the context of 42 U.S.C. § 1981(a) (1994), which imposes a higher standard for punitive damages than for compensatory damages); see also Kolstad v. Am. Dental Ass'n, 139 F.3d 958, 970 (D.C. Cir. 1998) (en banc) (Randolph, J., concurring) ("[T]he majority opinion convinces me that Congress wanted the subsections kept separate, that it intended punitive damages to be reserved for only the worst cases"). Although the Title VII standards are similar in wording to the common law standards, the terms "reckless disregard" and "malice" are malleable concepts. See supra notes 98-102 and accompanying text.
145. See supra text accompanying note 92.
146. See Smith, 461 U.S. at 53.
147. Id. at 50-51, 54.
148. See supra notes 27-32, 103-106 and accompanying text. At least in a formal sense, the argument for greater use of punitive damages rests largely on a deterrence rationale. To the extent, however, that traditional calculations of compensatory damages do not fully compensate victims, punitive damages can even serve a compensatory function.
149. See Alexander v. Riga, 208 F.3d 419, 425 (3d Cir. 2000) ("[T]he objectives of the [discrimination statutes] are furthered when even a single [individual] establishes that [another individual] has discriminated against him or her. The disclosure through litigation of incidents and practices that violate national policies respecting nondiscrimination . . . is itself important." (quoting McKennon v. Nashville Banner Publ'g Co., 513 U.S. 352, 358-59 (1992))), cert. denied, 121 S. Ct. 757 (2001).
150. Cf. Polinsky & Shavell, supra note 29, at 909.
151. See W. Kip Viscusi, The Social Costs of Punitive Damages Against Corporations in Environmental and Safety Torts, 87 GEO. L.J. 285 (1998); Developments in the Law - The Civil Jury, supra note 98.
152. See W. Kip Viscusi, The Social Costs of Punitive Damages Against Corporations in Environmental and Safety Torts, 87 GEO. L.J. 285 (1998); Developments in the Law - The Civil Jury, supra note 98.
153. See Viscusi, supra note 133; Developments in the Law - The Civil Jury, supra note 98, at 1513-21.
154. See Viscusi, supra note 133; Developments in the Law - The Civil Jury, supra note 98, at 1513-21.
155. Critics might also argue that the risk of erroneous liability determinations cautions against punitive damages. Nonetheless, given the difficulty of proving housing discrimination and the relative ease with which it can be concealed, there is a greater risk of systematically underestimating punitive liability. At most, the fear of erroneous liability determinations might support reducing excessive awards, not disallowing punitive damages altogether.
156. See SCHLUETER & REDDEN, supra note 28, §§ 6.Ka)-(C), 6.2; Galanter & Luban, supra note 45, at 1408-10. Indeed, post-verdict review of punitive damage awards is constitutionally required. See Honda Motor Co. v. Oberg, 512 U.S. 415 (1994). Moreover, there are constitutional standards that govern review of allegedly excessive awards. See, e.g., BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996); TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443 (1993). Courts often substantially reduce awards in fair housing cases, though these reductions are, in my view, unwarranted or at least excessive. See, e.g., Allahar v. Zahora, 59 F.3d 693 (7th Cir. 1995); Darby v. Heather Ridge, 827 F. Supp. 1296 (E.D. Mich. 1993); see also infra Part IV.
157. A jury's decision not to award punitive damages is often unreviewable. See, e.g., United States v. Balistrieri, 981 F.2d 916, 936 (7th Cir. 1992) ("[T]he jury was not required to award punitive damages, for punitive damages are always discretionary."). In bench trials, however, a judge's decision not to award punitive damages is reviewed for abuse of discretion. See Gore v. Turner, 563 F.2d 159, 164 (5th Cir. 1977) (declaring that punitive damages were mandatory given the nature of defendant's discriminatory conduct); Ragin v. Harry Macklowe Real Estate Co., 801 F. Supp. 1213 (S.D.N.Y. 1992).
158. A pre-Kolstad analysis of this issue under Title VII reached a similar conclusion. See Judith Johnson, A Standard for Punitive Damages Under Title VII, 46 FLA. L. REV. 521 (1994) (concluding that if a plaintiff proves intentional discrimination, punitive damages are permissible unless the defendant proves it acted pursuant to a reasonable good faith belief that its actions were legal).
159. RESTATEMENT (SECOND) OF TORTS § 908(2) (1965).
160. See Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 536 (1999).
161. Thus, in Jones v. Alfred H. Mayer Co., 392 U.S. 409, 414 n.14 (1968), the Supreme Court correctly held that punitive damages should not be assessed against the defendants for discrimination that occurred before this decision was rendered. The Court's landmark holding that § 1982 outlawed private discrimination was a significant departure from the Court's prior rulings concerning the reach of the statute. See id. at 449-51 (Harlan, J., dissenting) Lower courts also declined to award punitive damages for conduct that occurred prior to Jones. E.g., Lee v. S. Home Sites Corp., 429 F.2d 290, 294-95 (5th Cir. 1970).
162. United States v. Southern Management, 955 F.2d 914 (4th Cir. 1992), is an example of a case in which a court wrongly vacated a punitive damage award merely because the claim was "novel," not because the defendant could reasonably have believed that its conduct was lawful. See infra notes 152-157 and accompanying text.
163. Kolstad, 527 U.S. at 536.
164. Id.; see also supra note 102.
165. Kolstad, 527 U.S. at 536 ("[A]n employer must at least discriminate in the face of a perceived risk that its action will violate federal law to be liable in punitive damages.").
166. In stating otherwise, the Kolstad Court fixated on a definition of recklessness (subjective awareness of harm) without considering that recklessness is often broadly construed to deter even well-motivated but plainly unreasonable conduct. See DOBBS, supra note 26, § 3.11(2), at 321 ("[S]ome cases have found malice or recklessness [warranting punitive damages] even where the defendant believes he is actually within his legal rights.").
167. E.g., Bryan v. United States, 524 U.S. 184, 195 (1998) (noting "'traditional rule' that ignorance of the law is no excuse" (citing Cheek v. United States, 498 U.S. 192, 200 (1991))); United States v. Wagner, 940 F. Supp. 972, 981 (N.D. Tex. 1996) (noting that, in housing discrimination cases, citizens "are charged with knowledge of the law").
168. Cf. supra text accompanying notes 93-102.
169. See Bruso v. United Airlines, Inc., 239 F.3d 848 (7th Cir. 2001); see also, e.g., Passantino v. Johnson & Johnson Consumer Prods., Inc., 212 F.3d 493, 516 (9th Cir. 2000) (holding that a jury may infer that defendant did not reasonably believe its conduct was lawful from evidence that it lied to conceal nature of its actions); Lowery v. Circuit City Stores, Inc., 206 F.3d 431, 443 (4th Cir. 2000) (inferring reckless disregard from perpetrator's general knowledge of nondiscrimination laws); EEOC v. EMC Corp. of Mass., No. 98-1517, 2000 WL 191819, at *7 (6th Cir. Feb. 8, 2000); United States v. Balistrieri, 981 F.2d 916, 936 (7th Cir. 1992) (holding that evidence that defendant systematically treated black apartment seekers less favorably than white apartment seekers supported punitive damage awards, without considering whether defendant knew that its conduct was unlawful).
170. Examples include the National Association of Realtors and the National Association of Homebuilders, both of which represent the interests of the real estate sales and rental industries.
171. Possible exceptions include situations where the defendant reasonably believed that its practice was covered by one of Title VIII's exemptions from coverage, see 42 U.S.C. §§ 3603(b), 3607 (1994), or where the defendant took some race-conscious efforts to remedy past discrimination or to promote or maintain integration that it reasonably thought lawful. See e.g., United States v. Starret City Assocs., 840 F.2d 1096 (2d Cir. 1988); cf. Kolstad v. Am. Dental Ass'n, 139 F.3d 958, 974 (D.C. Cir. 1998) (en bane) (Tatel, J., dissenting), vacated, 527 U.S. 526 (1999). In fact, the Act's prohibition of discrimination based on familial status provides an exemption for housing for persons fifty-five or older. The exemption provides a defense against monetary damages for those who reasonably rely in good faith on the exemption. 42 U.S.C. § 3607(b)(5)(A).
172. 955 F.2d 914 (4th Cir. 1992).
173. Id. at 916-17.
174. Id. at 917, 920 (citing 42 U.S.C. § 3602(h)).
175. Id.
176. W. at 921 (citing H.R. REP. NO. 100-711, at 22 (1988)).
177. Id. at 919 ("Congressional intent was to treat drug abuse as significant impairments [sic] that would constitute handicaps unless otherwise excluded.").
178. See Ragin v. Harry Macklowe Real Estate Co., 801 F. Supp. 1213, 1235 (S.D.N.Y. 1992) (setting aside advisory jury verdict of punitive damages in part because defendant had consulted with in-house counsel before continuing to run discriminatory advertisements), aff'd, 6 F.3d 898 (2d Cir. 1993); cf. Fox v. Aced, 317 P.2d 608, 610 (Cal. 1957) (invalidating punitive damage award where defendant acted both on advice of counsel and in good faith).
179. See United States v. Wagner, 940 F. Supp. 972 (N.D. Tex. 1996) (regarding neighbors seeking to block group home who retained an attorney who lived next door to proposed group home); Harry Macklowe, 801 F. Supp. at 1235 (regarding defendant who consulted in-house counsel).
180. 42 U.S.C. § 3604(c) (1994).
181. See Tyus v. Urban Search Mgmt., 102 F.3d 256, 265 (7th Cir. 1996); Hous. Opportunities Made Equal, Inc. v. Cincinnati Enquirer, 943 F.2d 644, 648 (6th Cir. 1991); Ragin v. N.Y. Times Co., 923 F.2d 995, 999-1002 (2d Cir. 1991); Spann v. Colonial Vill., Inc., 899 F.2d 24, 29-30 (D.C. Cir. 1990); 24 C.F.R. pt. 109 (1999).
182. See, e.g., N.Y. Times, 923 F.2d at 999; Spann, 899 F.2d at 29-30; United States v. Hunter, 459 F.2d 205, 215 (4th Cir. 1972).
183. Harry Macklowe, 6 F.3d at 909 (holding that court "did not abuse its discretion in declining to award punitive damages"); Saunders v. Gen. Servs. Corp., 659 F. Supp. 1042, 1061 (E.D. Va. 1987).
184. See Tyus, 102 F.3d at 266. Although Tyus reached the right result, its reasoning - that the defendant had failed to include the equal opportunity logo on its advertisements even though HUD regulations required it to do so - was unduly narrow. The court should have held that due to the clear rule barring exclusive use of white human models in an advertising campaign for an apartment complex, the jury could infer that the defendant acted in reckless disregard of the law.
185. See, e.g., N.Y. Times, 923 F.2d at 1000; Sounders, 659 F. Supp. at 1058-59 (citing expert testimony).
186. See Tyus, 102 F.3d at 265; Hous. Opportunities, 943 F.2d at 648.
187. See Tyus, 102 F. 3d at 265.
188. See 42 U.S.C. § 3604(f)(3)(C) (1994). This provision requires that all "covered multifamily dwellings" built for first occupancy after March 13, 1991 must contain six accessibility-enhancing features: (1) accessible public and common use areas; (2) doors wide enough to accommodate passage by persons with wheelchairs; (3) an accessible route into and through the dwelling; (4) light switches, electrical outlets, and environmental controls in an accessible location; (5) reinforcements in bathrooms to allow for the later installation of grab bars; and (6) kitchens and bathrooms with sufficient space to permit persons with wheelchairs to maneuver in the rooms. Id. Covered multifamily dwellings include all dwellings in buildings with four or more units with one elevator and ground floor dwellings in buildings with four or more units without an elevator. Id. at § 3604(f)(7).
189. See, e.g., Perland Corp., HUDALJ 05-96-1517-8, 1998 WL 142159, at *15 (U.S. Dep't of Hous. & Urban Dev. Mar. 30, 1998) (finding that builder was put on notice of requirements of law for the purpose of assessing civil penalties): cf. Balt. Neighborhoods, Inc. v. LOB, Inc. 92 F. Supp. 2d 456 n.1 (D. Md. 2000); Mont. Fair Hous., Inc. v. Am. Capital Dev., Inc., 81 F. Supp. 2d 1057, 1069 (D. Mont. 1999) (referencing claim that defendants did not engage in knowing violation of law due to ambiguity of the Fair Housing Act).
190. See 42 U.S.C. § 3604(f)(3)(C); Fair Housing Accessibility Guidelines, 56 Fed. Reg. 9472 (Mar. 6, 1991) (codified at 24 C.F.R. Ch. I, Subch. A, App. II); BARRIER FREE ENVIRONMENTS, INC., FAIR HOUSING ACT DESIGN MANUAL (1996) (prepared for HUD's Office of Fair Housing and Equal Opportunity and Office of Housing). The statute also provides that compliance with the appropriate requirements of the American National Standards Institute for buildings and facilities providing accessibility and usability for physically handicapped people will satisfy the last four accessibility requirements of the statute. 42 U.S.C. § 3604(f)(3)(C).
191. E.g., Boyd, supra note 7; Treadway, supra note 7.
192. But see HUD v. Perland, Nos. 98-2269, 98-2608 (7th Cir. July 14, 1998) (order enjoining further sales until owner had brought units he still owned into compliance with the Fair Housing Act).
193. Alexander v. Riga, 208 F.3d 419, 430 (3d Cir. 2000), cert. denied, 121 S. Ct. 757 (2001). The Seventh and Ninth Circuits have also stated that punitive damages may be awarded in fair housing litigation in the absence of compensatory damages, but their statements are arguably dicta. See Rogers v. Loether, 467 F.2d 1110, 1112-13 (7th Cir. 1972), aff'd sub nom. Curtis v. Loether, 415 U.S. 189 (1974); Fountila v. Carter, 571 F.2d 487, 492 (9th Cir. 1978).
194. People Helpers Found., Inc. v. City of Richmond, 12 F.3d 1321, 1327 (4th Cir. 1993).
195. Hodge v. Seiler, 558 F.2d 284, 288 (5th Cir. 1977) (holding that when victim admitted the absence of actual damages, trial court should have awarded nominal damages and then assessed punitive damages).
196. La. ACORN Fair Hous. v. LeBlanc, 211 F.3d 298, 303 (5th Cir. 2000) (vacating $10,000 punitive damage award to victim of racial discrimination where jury awarded no compensatory damages), cert. denied, 121 S. Ct. 1225 (2001). The LeBlanc court erred in failing to explain Hodge. The only difference between the two cases is that the plaintiff in Hodge sued under § 1982, while the plaintiff in LeBlanc sued under the Fair Housing Act. Since neither statute addresses the standards for assessing punitive damages, Hodge's general holding should apply both to the Fair Housing Act and to § 1982. The LeBlanc court also held that the jury was not required to award nominal damages once it determined that the defendant had discriminated. Id. at 304. This contradicts the Fifth Circuit's prior holding in Gore v. Turner, 563 F.2d 159, 164 (5th Cir. 1977), which required the district court to award nominal damages if the plaintiff was the victim of racial discrimination in housing, even though no actual damages were proven. See also Hodge, 558 F.2d at 287. The LeBlanc court attempted to distinguish Turner as a case involving constitutional rights rather than statutory rights. LeBlanc, 211 F.3d at 303. In both Turner and LeBlanc, however, the same right was at issue: the right to be free from private racial discrimination in housing. See Turner, 563 F.2d at 164 (citing Jones v. Alfred H. Mayer Co., 392 U.S. 409, 441 (1968)).
197. See supra note 94.
198. See supra notes 55, 57-60 and accompanying text.
199. See supra notes 71-76 and accompanying text.
200. The violation of a plaintiff's statutory right confers standing to sue, regardless of whether that plaintiff has suffered a compensable injury. "[The] injury required by Art. III may exist solely by virtue of 'statutes creating legal rights, the invasion of which creates standing." Lujan v. Defenders of Wildlife, 504 U.S. 555, 578 (1992); see also Havens Realty Corp. v. Coleman. 455 U.S. 363, 374 (1982) ("That the tester may have approached the real estate agent fully expecting that he would receive false information, and without any intention of buying or renting a home, does not negate the simple fact of injury within the meaning of [Section] 804(d)."); Trafficante v. Metro. Life Ins. Co., 409 U.S. 205, 208-12 (1972) ("The person on the landlord's blacklist is not the only victim of discriminatory housing practices; it is . . . 'the whole community . . . .'" (citation omitted)).
201. See supra notes 60-62 and accompanying text.
202. See, e.g., SCHLUETER & REDDEN, supra note 28, § 6.1(D)(4)(a) (defamation); Maganini v. Coleman, 362 A.2d 882, 883 (Conn. 1975) ("Now, there is no doubt that, for any wrongful invasion of another's property, some damage necessarily results; and the law does not require any distinct injury to be shown, in order to justify a recovery." (quoting Nicholson v. N.Y. & New Haven R.R. Co., 22 Conn. 74, 84 (1852))). In Wayne v. Venable, the Eighth Circuit noted: In the eyes of the law th[e] right [to vote] is so valuable that damages are presumed from the wrongful deprivation of it without evidence of actual loss of money, property, or any other valuable thing, and the amount of the damages is a question peculiarly appropriate for the determination of the jury.
203. F. 64, 66 (8th Cir. 1919).
204. See SCHLUETER & REDDEN, supra note 28, § 6.1(D)(4)(a).
205. Cf. Sunstein et al., supra note 83, at 2077-78 (finding that diverse groups reach strong consensus when asked to rate a defendant's blameworthiness from one to five, but vary significantly when translating the judgement into dollars).
206. Timm v. Progressive Steel Treating, Inc., 137 F.3d 1008, 1011 (7th Cir. 1998).
207. See Galanter & Luban, supra note 45, at 1406-07 (explaining the symbolic effect of labeling an award "punitive").
208. See La. ACORN Fair Hous. v. LeBlanc, 211 F.3d 298, 304 (5th Cir. 2000), cert. denied, 121 S. Ct. 1225 (2001); People Helpers Found., Inc. v. City of Richmond, 12 F.3d 1321, 1327 (4th Cir. 1993).
209. E.g., Carlson v. Green, 446 U.S. 14, 22 n.9 (1980) ("[P]unitive damages may be the only significant remedy available in some § 1983 actions where constitutional rights are maliciously violated but the victim cannot prove compensable injury."); Buckner v. Franco, Inc., No. 97-6028, 1999 WL 232704, at **1 (6th Cir. Apr. 12, 1999); Timm, 137 F.3d at 1010-11; Kerr-Selgas v. Am. Airlines, Inc., 69 F.3d 1205, 1215 (1st Cir. 1995) (concluding that timely request for nominal damages may support award of punitive damages even in the absence of compensatory damage award); Erwin v. County of Manitowoc, 872 F.2d 1292, 1299 (7th Cir. 1989) (§ 1983 case); Ryland v. Shapiro, 708 F.2d 967, 976 (5th Cir. 1983) (§ 1983 case); Basista v. Weir, 340 F.2d 74, 87-88 (3d Cir. 1965) (§ 1983 case).
210. RESTATEMENT (SECOND) OF TORTS § 908 cmt. b (1965) ("Although a defendant has inflicted no harm, punitive damages may be awarded because of, and measured by, his wrongful purpose or intent, as when he unsuccessfully makes a murderous assault upon the plaintiff, who suffers only a momentary apprehension."). The Restatement stops one step short of asserting that punitive damages could have deterred the murder attempt if the defendant had known that even the attempt would result in punishment.
211. DOBBS, supra note 26, § 3.11(10), at 342 ("[T]he absence of recoverable compensatory damages - actual, presumed, or otherwise - does not seem to have much bearing on the propriety of a punitive award."); KEETON ET AL., supra note 95, § 2, at 14-15; SCHLUETER & REDDEN, supra note 28, § 6.1(D)(4)(a) ("Punitive damages would seem especially appropriate in situations where actual damages are unascertainable or difficult to calculate but where the wrongful mental state of the defendant is clear.").
212. DOBBS, supra note 26, § 3.11(10), at 341-43; 4 FOWLER V. HARPER, FLEMING JAMES, JR. & OSCAR S. GRAY, THE LAW OF TORTS § 25.5A nn.29-31 (1986 & Supp. 2000); JOHN KIRCHER & CHRISTINE WISEMAN, PUNITIVE DAMAGES: LAW AND PRACTICE § 5.21 (2d ed. 2000); SCHLUETER & REDDEN, supra note 28, § 6.1(D)(4)(a) nn.70-72.
213. E.g., SCHLUETER & REDDEN, supra note 28, § 6.1(D)(4)(a); Loftsgaarden v. Reiling, 126 N.W.2d 154, 154-55 (Minn. 1964) ("The need for . . . a deterrent is at least as great where the person libeled cannot show actual loss in money caused by the false statement as where some measurable damage is provable").
214. 4 HARPER, JAMES & GRAY, supra note 191, at 25.5A n.27; KIRCHER & WISEMAN, supra note 191, § 5.21; SCHLUETER & REDDEN, supra note 28, § 6.1(D)(4)(c).
215. SCHLUETER & REDDEN, supra note 28, § 6.1(D)(2).
216. Id.; KEETON ET AL., supra note 95, § 2, at 14; see also Shell Oil Co. v. Parker, 291 A.2d 64 (Md. 1972); Hubert v. Roth, 149 A.2d 648, 649 (Pa. 1959) ("The right to punitive damages is a mere incident to a cause of action and an element which the jury may consider in making its determination and not the subject of an action itself.").
217. KEETON ET AL., supra note 95, § 2, at 14.
218. See Alexander v. Riga, 208 F.3d 419, 427-29 (3d Cir. 2000), cert. denied, 121 S. Ct. 757 (2001); see also supra note 180.
219. People Helpers Found., Inc. v. City of Richmond, 12 F.3d 1321 (4th Cir. 1993).
220. Id. at 1327 (citing KEETON ET AL., supra note 95, § 2, at 14).
221. Prosser and Keeton only cites a handful of cases, most of which are old; a more thorough summary of the cases on this issue appears in SCHLUETER & REDDEN, supra note 28, § 6.1(D), and KIRCHER & WISEMAN, supra note 191. See generally supra notes 191-196 and accompanying text.
222. People Helpers Found., Inc. 12 F.3d at 1327.
223. See supra note 94.
224. 211 F.3d 298 (5th Cir. 2000), cert. denied, 121 S. Ct. 1225 (2001).
225. Id. at 302-04.
226. Id. at 303.
227. Timm v. Progressive Steel Treating, Inc., 137 F.3d 1008, 1010-11 (7th Cir. 1998).
228. The Restatement defines nominal damages as "a trivial sum of money awarded to a litigant who has established a cause of action but has not established that he is entitled to compensatory damages." RESTATEMENT (SECOND) OF TORTS § 907 (1965).
229. RESTATEMENT (SECOND) TORTS § 907 cmt. b (1965).
230. Carey v. Piphus, 435 U.S. 247, 266 (1978).
231. E.g., Farrar v. Hobby, 506 U.S. 103 (1994) (holding that a plaintiff is entitled to nominal damages if she establishes liability for denial of procedural due process); Carey, 435 U.S. at 267 (determining that a basic purpose of § 1983 is to compensate persons for injuries caused by deprivation of constitutional rights, and awarding nominal damages absent proof of actual injury in public school students' procedural due process claim); Gibeau v. Nellis, 18 F.3d 107, 110-11 (2d Cir. 1994) (requiring jury to award nominal damages upon finding violation of § 1983).
232. Compare LeBlanc-Sternberg v. Fletcher, 67 F.3d 412, 431 (8th Cir. 1995) (holding in a fair housing case that nominal damages are mandatory if plaintiff proves a civil rights violation even if she does not prove compensable injury). Cabrera v. Jakabovitz, 24 F.3d 372, 391 (2d Cir. 1994) (upholding an award of attorney's fees and costs against landlord in Title VIII housing discrimination action), McKenna v. Peekskill Hous. Auth., 648 F.2d 332, 335-46 (2d Cir. 1981) (directing district court on remand to enter a judgment for nominal damages in suit under § 1983 brought by tenants in housing project operated by housing authority), and Hodge v. Seiler, 558 F.2d 284 (5th Cir. 1977) (§ 1982), with La. ACORN Fair Hous. v. LeBlanc, 211 F.3d 298, 304 (5th Cir. 2000) (declining to find nominal damages mandatory in Fair Housing Act case), cert. denied, 121 S. Ct. 1225 (2001), and Buckner v. Franco, Inc., No. 97-6028, 1999 WL 232704, at **1 (6th Cir. Apr. 12, 1999) (finding nominal damages are not mandatory in Title VII case). LeBlanc stands alone, however, in holding that nominal damages are not mandatory in the context of housing discrimination. The LeBlanc court relied primarily on Kerr-Selgas v. American Airlines, Inc., 69 F.3d 1205, 1215 (1st Cir. 1995), a Title VII case. That case held only that plaintiffs may waive a claim for nominal damages if they do not make a timely request for such damages after the jury verdict, not that juries have discretion over whether to award nominal damages once the plaintiff proves a civil rights violation.
233. See supra notes 175-176 and accompanying text.
234. Compare Alexander v. Riga, 208 F.3d 419, 423, 432 (3d Cir. 2000) (holding owner liable for punitive damages even though he did not participate in the discrimination, know about the discrimination, or involve himself in the management of the apartment building), cert. denied, 121 S. Ct. 757 (2001), with Chicago v. Matchmaker Real Estate Sales Ctr., Inc., 982 F.2d 1086, 1101 (7th Cir. 1992) (requiring greater showing than negligence to find principal liable for punitive damages), Hamilton v. Svatik, 779 F.2d 383, 389 (7th Cir. 1985) (holding owner not liable for punitive damages merely because of ownership), and Fort v. White, 530 F.2d 1113, 1117 (2d Cir. 1975) (holding that employer himself must have failed to prevent known discriminatory actions, or have had willful disregard of employee's actions to be held liable for punitive damages).
235. Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 543-44 (1999).
236. The Kolstad Court explained that "even intentional torts are within the scope of an agent's employment if the conduct is 'the kind [the employee] is employed to perform,' Occurs substantially within the authorized time and space limits,' and 'is actuated, at least in part, by a purpose to serve the' employer." Id. at 543 (quoting RESTATEMENT (SECOND) OF AGENCY § 228(1), at 504 (1958)). This is so "even if the employee engages in acts 'specifically forbidden' by the employer and uses 'forbidden means of accomplishing results.'" Id. at 544 (quoting RESTATEMENT (SECOND) OF AGENCY § 230, at 511 cmt. b (1958)).
237. E.g., Walker v. Crigler, 976 F.2d 900, 904 & n.5 (4th Cir. 1992); Phiffer v. Proud Parrot Motor Hotel, 648 F.2d 548, 552 (9th Cir. 1980); Marr v. Rife, 503 F.2d 735, 741 (6th Cir. 1974). Courts impose vicarious liability under the Fair Housing Act based on a housing provider's "non-delegable" duty not to discriminate, rather than on the principle of respondeat superior, where the agent who discriminated claims to be an independent contractor. E.g., Saunders v. Gen. Servs. Corp., 659 F. Supp. 1042, 1059 (E.D. Va. 1987).
238. See Briner v. Hyslop. 337 N.W.2d 858, 861 (Iowa 1983).
239. Twenty jurisdictions have adopted this rule. KIRCHER & WISEMAN, supra note 191, § 24.07; see also KEETON ET AL., supra note 95, § 2, at 13 & n.58; SCHLUETER & REDDEN, supra note 28, § 4.4(B)(2)(a); Philip H. Corboy, Vicarious Liability for Punitive Damages: The Effort to Constitutionalize Tort Reform, 6 SETON HALL CONST. L.J. 5, 16 & n.50 (1991).
240. See SCHLUETER & REDDEN, supra note 28, § 4.4(B)(2)(a); KEETON ET AL., supra note 95, § 2, at 12; KIRCHER & WISEMAN, supra note 191, § 24.02 (noting that twenty-two jurisdictions have adopted this rule). Minnesota has also adopted the Restatement approach by statute. MINN. STAT. § 549.20(2) (2000).
241. The Restatement does not define the term "managerial capacity" except to note that it includes "important" positions. RESTATEMENT (SECOND) OF TORTS § 909 cmt. c (1965). Courts have interpreted this comment to mean that persons other than top management, officers, and directors may act in a managerial capacity. KIRCHER & WISEMAN, supra note 191, § 24.05.
242. RESTATEMENT (SECOND) OF TORTS § 909 (1965) is identical to RESTATEMENT (SECOND) OF AGENCY § 217(c) (1958).
243. RESTATEMENT (SECOND) OF TORTS § 909 (1965); KIRCHER & WISEMAN, supra note 191, § 24.04. As Kircher and Wiseman note, although the Restatement lists recklessness in employing or retaining an unfit employee as one of the circumstances in which punitive damages may be imposed vicariously, liability for punitive damages flows directly from the principal's recklessness. Vicarious liability doctrine need not be invoked. Id. § 24.01, .04.
244. Ellis, supra note 31, at 63-64.
245. Id. at 64; see, e.g., Hatrock v. Edward D. Jones & Co., 750 F.2d 767 (9th Cir. 1984) (stock broker who was sole operator of a branch office); Egan v. Mut. of Omaha Ins. Co., 133 Cal. Rptr. 899 (Dist. Ct. App. 1976) (insurance claims manager), vacated by 169 Cal. Rptr. 691 (Cal. 1979); Gould v. Taco Bell, 722 P.2d 511 (Kan. 1986) (assistant manager at franchise); Tennant Co. v. Advance Mach. Co., 355 N.W.2d 720 (Minn. Ct. App. 1984) (poorly supervised salesman who helped train other personnel); Gill v. Montgomery Ward & Co., 129 N.Y.S.2d 288 (App. Div. 1954) (head of store's "protective department"); Purvis v. Prattco, Inc., 595 S.W.2d 103 (Tex. 1980) (night manager of hotel); Canon-USA v. Carson Map Co., 647 S.W.2d 321 (Tex. App. 1982) (salesman who performed demonstration of copier).
246. E.g., Gen. Motors Acceptance Corp. v. Froelich, 273 F.2d 92, 94 (D.C. Cir. 1959) (holding that corporation is not shielded from punitive damages by absence of explicit authorization or ratification of particular conduct of agent); Briner v. Hyslop, 337 N.W.2d 858 (Iowa 1983) (holding corporation liable for punitive damages with respect to fatal accident caused by the company's truck driver when the corporation was aware that its drivers drove long hours with little rest yet took little action to control their driving habits); Templin v. Mountain Bell Tel. Co., 643 P.2d 263 (N.M. Ct. App. 1982) (holding that phone company can be held liable for general policies authorizing procedures that permitted installation of extension of phone to intercept private conversations); K-Mart No. 4195 v. Judge, 515 S.W.2d 148 (Tex. Civ. App. 1974) (holding defendant store that ratified action of security guards liable); cf. CEH, Inc. v. F/V Seafarer, 70 F.3d 694 (1st Cir. 1995) (finding boat owner liable for punitive damages where boat's captain had virtually complete authority and owner had knowledge of captain's potential conflict with plaintiffs). But see Dart-Drugs, Inc. v. Linthicum, 300 A.2d 442 (D.C. 1973) (store owners not liable for punitive damages where manager had overall supervisory control of store).
247. KIRCHER & WISEMAN, supra note 191, § 24.06; SCHLUETER & REDDEN, supra note 28, § 4.4(B)(2)(a).
248. E.g., Hartman v. Shell Oil Co., 137 Cal. Rptr. 244, 250 (Ct. App. 1977) (holding that failure to discharge or reprimand employee is some evidence of the principal's approval); Tennant Co., 355 N.W.2d at 724 (imposing vicarious punitive damages where corporate officers failed to take any action against employee for one year after the misconduct). But see Woodward v. City Stores Co., 334 A.2d 189, 191 (D.C. 1975) (holding that retention of an employee and subsequent promotion, standing alone, do not establish ratification or approval).
249. See. e.g., Hale v. Farmers Ins. Exch., 42 Cal. App. 3d 681, 691 (Ct. App. 1974) ("Where an agent is authorized to do an act, and he transcends his authority, it is the duty of the principal to repudiate the act as soon as he is fully informed of what has been thus done in his name.").
250. Hartman, 137 Cal. Rptr. at 250 ("[T]he bringing of an action or the basing of a defense on an unauthorized act with knowledge of the material facts is, at a minimum, some evidence of ratification.").
251. 503 F.2d 735 (6th Cir. 1974). The district court awarded $250 in punitive damages against the real estate agent but nothing against the owner. Although the plaintiffs did not appeal this aspect of the ruling, the United States, as amicus curiae, argued that the owner should be held jointly liable for the punitive damage award. Id. at 744.
252. Id. at 744.
253. W. at 744-45.
254. Id. at 745. The Marr court declined to rule on punitive damages since [n]either appellants' brief nor that of the United States, amicus, sets out what facts support a claim that there was a pattern or practice of discrimination in the agency, or that [the owner] was aware of [the agent's] misconduct. If the District Judge, upon his review of the entire record, is persuaded that [the owner] was, by action or knowledgeable inaction, involved in the wrongdoing, he may tie him into the award for punitive damages. Again, we issue no relevant command. Id. at 744-45; cf. Navarro, supra note 32, at 2762-63 (arguing that Marr's brief discussion of punitive damages, an issue not argued by either party, should be given little precedential weight).
255. Fort v. White, 530 F.2d 1113, 1117 (2d Cir. 1975) (citing Marr as
256. See Pumphrey v. Stephen Homes, Inc., No. CA-93-1329-HAR, 1997 WL 135688, at **2 (4th Cir. Mar. 25, 1997) (per curiam); Portee v. Hastava, Nos. 94-7988, 95-7982, 1996 WL 520981, at **3 (2d Cir. Sept. 13, 1996); City of Chicago v. Matchmaker Real Estate Sales Ctr., Inc., 982 F.2d 1086, 1101-11 (7th Cir. 1992); Asbury v. Brougham, 866 F.2d 1276, 1282 (10th Cir. 1989); Hamilton v. Svatik, 779 F.2d 383, 389 (7th Cir. 1985); Fort, 530 F.2d at 1117.
257. See Hamilton, 779 F.2d at 389.
258. See Pumphrey, 1997 WL 135688, at **3.
259. See, e.g., Hatrock v. Edward D. Jones & Co., 750 F.2d 767, 771-72 (9th Cir. 1984).
260. Matchmaker, 982 F.2d at 1086.
261. Id. at 1089-93.
262. City of Chicago v. Matchmaker Real Estate Sales Ctr., Inc., No. 88-C-9695, 1991 WL 55770, at *1 (N.D. Ill. Apr. 8, 1991).
263. See id. at *4.
264. Matchmaker, 982 F.2d at 1100-01.
265. Darby v. Heather Ridge, 827 F. Supp. 1296, 1298 (E.D. Mich. 1993).
266. E.g., Miller v. Apartments & Homes of N.J., Inc., 646 F.2d 101, 111 (3d Cir. 1981) (inferring culpability when defendant took no action to ensure that he complied with reporting requirements of consent decree); Portee v. Hastava, Nos. 94-7988, 95-7982, 1996 WL 520981, at **3 (2d Cir. Sept. 13, 1996) (upholding punitive damage liability when owner of real estate firm failed to offer his agents guidance about fair housing law); Darby, 827 F. Supp. at 1298 (finding punitive damage liability due to inconsistent statements by corporation as to whether its employees received training in civil rights laws).
267. Asbury v. Brougham, 866 F.2d 1276, 1282-83 (10th Cir. 1989) (inferring culpability where employer failed to modify or formalize rental policies after complaints by minorities).
268. Id. at 1283 (holding, in the alternative, that jury could find employer ratification in failure to apologize for or remedy the situation after he confirmed that his agent had improperly denied housing to plaintiff).
269. 981 F.2d 916 (7th Cir. 1992).
270. Id. at 930, 936.
271. Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 542 (1999).
272. Id. at 544.
273. W. at 545.
274. Id.
275. Id. (quoting Kolstad v. Am. Dental Ass'n, 139 F.3d 958, 974 (D.C. Cir. 1998) (en banc) (Tatel, J., dissenting)).
276. Id. at 547-52 (Stevens, J., concurring in part and dissenting in part).
277. Alexander v. Riga, 208 F.3d 419, 433 n.9 (3d Cir. 2000), cert. denied, 121 S. Ct. 757 (2001).
278. Navarro, supra note 32, at 2759-68.
279. E.g., Goddard v. Grand Trunk Ry., 57 Me. 202, 223-24 (1869) ("When it is thoroughly understood that it is not profitable to employ careless and indifferent agents . . . better men will take their place, and not before."); KEETON ET AL., supra note 95. § 2, at 13 (punitive damages "will encourage employers to exercise closer control over their [employees] for the prevention of outrageous torts"); David Owen, Punitive Damages in Product Liability Litigation, 74 MICH. L. REV. 1257, 1305-06 (1976) (vicarious imposition of punitive damages in product liability litigation encourages upper-level management to increase its involvement in the manufacturing process and adopt improved procedures for gathering, transmitting, and using product safety information); see also Clarence Morris, Punitive Damages in Personal Injury Cases, 21 OHIO ST. L.J. 216, 220 (1960); Note, supra note 28, at 526.
280. E.g., Goddard v. Grand Trunk Ry., 57 Me. 202, 223-24 (1869) ("When it is thoroughly understood that it is not profitable to employ careless and indifferent agents . . . better men will take their place, and not before."); KEETON ET AL., supra note 95. § 2, at 13 (punitive damages "will encourage employers to exercise closer control over their [employees] for the prevention of outrageous torts"); David Owen, Punitive Damages in Product Liability Litigation, 74 MICH. L. REV. 1257, 1305-06 (1976) (vicarious imposition of punitive damages in product liability litigation encourages upper-level management to increase its involvement in the manufacturing process and adopt improved procedures for gathering, transmitting, and using product safety information); see also Clarence Morris, Punitive Damages in Personal Injury Cases, 21 OHIO ST. L.J. 216, 220 (1960); Note, supra note 28, at 526.
281. See Bruce Chapman & Michael Trebilcock, Punitive Damages: Divergence in Search of a Rationale, 40 ALA. L. REV. 741, 821 (1989).
282. Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 13-14 (1991). The Pacific Mutual Court ruled that the Alabama course of employment rule for punitive damages did not violate due process, noting that "[i]mposing exemplary damages on the corporation when its agent commits intentional fraud creates a strong incentive for vigilance by [the employer]. If an insurer were liable for such damages only upon proof that it was at fault independently, it would have an incentive to minimize oversight of its agents." Id. at 14; see also Am. Soc'y of Mech. Eng'rs, Inc. v. Hydrolevel Corp., 456 U.S. 556, 573-74 (1982).
283. DOBBS, supra note 26, § 3.11(6), at 215; Corboy, supra note 218, at 21.
284. See supra text accompanying notes 44-49.
285. Schmidt v. Minor, 184 N.W. 964, 966 (Minn. 1921) ("[A] judgment against an employee is often uncollectible."); Corboy, supra note 218, at 20-21; Morris, supra note 258, at 220.
286. See Ellis, supra note 31, at 66; Randy S. Parlee, Vicarious Liability for Punitive Damages: Suggested Changes in the Law Through Policy Analysis, 28 MARQ. L. REV. 27, 35-36, 40, 50 (1984); Comment, The Assessment of Punitive Damages Against an Entrepreneur for the Malicious Torts of His Employees, 70 YALE L.J. 1296, 1307-08 (1961).
287. See Ellis, supra note 31, at 66; Randy S. Parlee, Vicarious Liability for Punitive Damages: Suggested Changes in the Law Through Policy Analysis, 28 MARQ. L. REV. 27, 35-36, 40, 50 (1984); Comment, The Assessment of Punitive Damages Against an Entrepreneur for the Malicious Torts of His Employees, 70 YALE L.J. 1296, 1307-08 (1961).
288. A nineteenth-century Maine Supreme Judicial Court decision contains the classic statement of this argument: A corporation is an imaginary being. It has no mind but the mind of its servants; it has no voice but the voice of its servants; and it has no hands with which to act but the hands of its servants. All its schemes of mischief, as well as its schemes of public enterprise, are conceived by human minds and executed by human hands; and these minds and hands are its servants' minds and hands. All attempts, therefore, to distinguish between the guilt of the servant and the guilt of the corporation; or the malice of the servant and the malice of the corporation; or the punishment of the servant and the punishment of the corporation, is sheer nonsense. Goddard v. Grand Trunk Ry., 57 Me. 202, 223 (1869).
289. Owen, supra note 258, at 1303.
290. Id. at 1304.
291. See id.
292. See William T. Curtis, Note, Liability of Employers for Punitive Damages Resulting from Acts of Employees. 54 CHI.-KENT L. REV. 829, 846 (1978); cf. Henry W. Edgerton, Corporate Criminal Responsibility, 36 YALE L.J. 827, 837 (1927) ("However 'innocent' the owners of the corporate enterprise may be, the general interest requires that . . . corporate representatives be deterred, so far as corporate responsibility can deter them, from conducting the business in criminal ways.").
293. See William T. Curtis, Note, Liability of Employers for Punitive Damages Resulting from Acts of Employees. 54 CHI.-KENT L. REV. 829, 846 (1978); cf. Henry W. Edgerton, Corporate Criminal Responsibility, 36 YALE L.J. 827, 837 (1927) ("However 'innocent' the owners of the corporate enterprise may be, the general interest requires that . . . corporate representatives be deterred, so far as corporate responsibility can deter them, from conducting the business in criminal ways.").
294. Owen, supra note 258, at 1302; see also RESTATEMENT (SECOND) OF AGENCY § 217D cmt. d (1958).
295. E.g., United States v. Ill. Cent. R.R. Co., 303 U.S. 239, 244 (1938); United States v. Atl. Coast Line R.R. Co., 173 F. 764 (4th Cir. 1909).
296. Am. Soc'y of Mech. Eng'rs, Inc. v. Hydrolevel Corp., 456 U.S. 556, 575 (1982).
297. Some suggest that it is unfair and pointless to impose liability for punitive damages on the employer when the employer has taken all reasonable measures to prevent the wrong. This argument contradicts the Restatement approach, which does not absolve the employer of liability for punitive damages when the employer has taken suitable precautions. See supra text accompanying notes 219-222. The argument could support a limited good faith defense. I therefore address this argument when discussing the good faith defense. See infra text accompanying note 320.
298. Tolle v. Interstate Sys. Truck Lines, Inc., 356 N.E.2d 625, 627 (Ill. App. Ct. 1976) ("The ability to better control the actions of the employee through greater supervision is often illusory."); Parlee, supra note 264, at 33-34; Comment, supra note 264, at 1304 ("It is quite difficult . . . to predict or control human conduct, especially malicious behavior which is generally sporadic.").
299. Comment, supra note 264, at 1304.
300. Pac. Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 14 (1991) (noting that employer is in the best position to "guard substantially against the evil to be prevented" (quoting Louis Pizitz Dry Goods Co. v. Yeldell, 274 U.S. 112, 116 (1927))); HARPER, JAMES & GRAY, supra note 191, § 26.3, at 14-15.
301. There may be situations in which skepticism about the ability of the employer to prevent wrongful conduct by employees is justified. A significant number of tort cases finding the employer not liable for punitive damages have involved instances in which a private security guard is alleged to have acted in error or with misplaced zeal in arresting a patron for shoplifting, or claims of assault and battery arising out of conflicts between customers and employees in certain service industries. See, e.g., Lake Shore & Mich. S. Ry. Co. v. Prentice, 147 U.S. 101 (1893) (train conductor ejecting unruly passenger from train); Dart Drug, Inc. v. Linthicum, 300 A.2d 442, 444 (D.C. 1973); cf. KIRCHER AND WISEMAN, supra note 191, § 24.07, at 22-23 (discussing hypothetical of school bus driver who loses temper and paddles an unruly child). Although the courts invoked vicarious liability doctrines in these cases, the decisions reflect a judgment that punitive damages are ill advised because the wrongs, although nominally intentional torts, are more akin to unavoidable accidents. They involve errors of judgment that juries may conclude inevitably result from decisions made in the heat of the moment under difficult circumstances. Cf. Iacobucci v. Boulter, 193 F.3d 14, 26-27 (1st Cir. 1999) ("Where . . . the evidence shows no more than that an exasperated police officer, acting in the heat of the moment, made an objectively unreasonable mistake, punitive damages will not lie."). These concerns under-value the potential of punitive damages to encourage employers to improve the training of security guards and other employees exercising similar authority or to be more selective in hiring such persons. Furthermore, in cases of housing discrimination, fraud, and similar intentional torts, which are the product of more deliberate action, these concerns are not valid.
302. E.g., Chapman & Trebilcock, supra note 259, at 820; Morris, supra note 258, at 218-19; Parlee, supra note 264, at 33; Alan O. Sykes, The Economics of Vicarious Liability, 93 YALE L.J. 1231, 1241 (1984).
303. See Ellis, supra note 31, at 69-70.
304. Hamilton v. Miller, 477 F.2d 908, 910 n.1 (10th Cir. 1973) ("It would be difficult indeed to prove discrimination in housing without this means of gathering evidence."); SCHWEMM, HOUSING DISCRIMINATION, supra note 12, § 32.2.
305. See SCHWEMM, HOUSING DISCRIMINATION, supra note 12, § 32.2. Testers have been described by the Supreme Court as "individuals who, without an intent to rent or purchase a home or apartment, pose as renters or purchasers for the purpose of collective evidence of unlawful . . . practices." Havens Realty Corp. v. Coleman, 455 U.S. 363, 373 (1982).
306. SCHWEMM, HOUSING DISCRIMINATION, supra note 12, § 33.3(2) (recommending that housing providers use testers to determine whether preventive measures are needed to stop discrimination by their employees).
307. KIRCHER & WISEMAN, supra note 191, § 24.07.
308. Chapman & Trebilcock, supra note 259, at 820.
309. Curtis, supra note 269, at 847; Ellis, supra note 31, at 69, 74.
310. Northwestern Nat'l Cas. Co. v. McNulty, 307 F.2d 432, 440 (5th Cir. 1962) (Wisdom, J.) ("Where a person is able to insure himself against punishment he gains a freedom of misconduct."); Parlee, supra note 264, at 34. See generally Mary Coate McNeely, Illegality as a Factor in Liability Insurance, 41 COLUM. L. REV. 26 (1941); Note, Should an Intentional Discriminator Be Insured?, 13 NOVA L. REV. 671 (1989).
311. Northwestern Nat'l Cas. Co. v. McNulty, 307 F.2d 432, 440 (5th Cir. 1962) (Wisdom, J.) ("Where a person is able to insure himself against punishment he gains a freedom of misconduct."); Parlee, supra note 264, at 34. See generally Mary Coate McNeely, Illegality as a Factor in Liability Insurance, 41 COLUM. L. REV. 26 (1941); Note, Should an Intentional Discriminator Be Insured?, 13 NOVA L. REV. 671 (1989).
312. SCHLUETER & REDDEN, supra note 28, § 17.2(C)(2) & n.8. Compare McNulty, 307 F.2d at 445 (asserting that insurance of claims for punitive damages is against public policy), with Lazenby v. Universal Underwriters Ins. Co., 383 S.W.2d 1, 7 (Tenn. 1964) (suggesting that insurance against punitive damages is not necessarily against public policy).
313. SCHLUETER & REDDEN, supra note 28, § 17.2(C)(2) & n.14.
314. SCHWEMM, HOUSING DISCRIMINATION, supra note 12, § 12.3(5). Sometimes the pleadings may bring the claim sufficiently within the language of the policy so as to trigger the duty to defend, although there ultimately may not be a duty to indemnify punitive damage awards or damages awarded for acts that are determined to be intentional. See, e.g., United States v. Sec. Mgmt. Co., 96 F.3d 260, 268-69 (7th Cir. 1996).
315. See, e.g., Price v. Hartford Accident & Indem. Co., 502 P.2d 522, 524 (Ariz. 1972); Cieslewicz v. Mut. Serv. Cas. Ins. Co., 267 N.W.2d 595, 601 (Wis. 1978).
316. See Owen, supra note 258, at 1309-10. Indeed, liability insurers frequently ask landlords what actions they have taken to ensure compliance with fair housing laws.
317. Comment, supra note 264, at 1301, 1306; Parlee, supra note 264, at 40, 43.
318. Charny & Gulati, supra note 88, at 77.
319. See Morris, supra note 258, at 220-21.
320. CHARLES T. MCCORMICK, HANDBOOK ON THE LAW OF DAMAGES § 80, at 285 (1935) ("[I]f prevention be the purpose of exemplary damages against corporations, the threat and hence the prevention would seem to be lessened substantially by a rule which imposes upon the plaintiff the difficult task of showing wrongdoing by those 'higher up.'"); JOHN SALMOND, JURISPRUDENCE § 152, at 402 (12th ed. 1966) (''There are . . . immense difficulties in the way of proving actual authority . . . . A word, a gesture, or a tone may be a sufficient indication from a master to his servant that some lapse from the legal standard of care or honesty will be deemed acceptable service."); Owen, supra note 258, at 1305 (arguing that if authorization and ratification were required, "[o]nly the most extreme forms of manufacturer misconduct would ever be punished . . . and then only when the manufacturer was imprudent enough to create, preserve, and relinquish evidence of participation by its upper-level management in some improper conduct").
321. Corboy, supra note 218. at 20; Curtis, supra note 269, at 846; Owen, supra note 258, at 1305-06 ("Documentary evidence of flagrant misconduct by managerial employees rarely exists and, when it does, it may never be located by even the most diligent discovery and investigative procedures.").
322. Owen, supra note 258, at 1305.
323. RESTATEMENT (SECOND) OF TORTS § 909(c) (1965).
324. Id. § 909(c) cmt. b.
325. Mobile & Ohio R.R. Co. v. Scales, 13 So. 917, 919 (Ala. 1893) (holding railroad liable for wanton, willful, or reckless act of brakeman who fired pistol at trespasser); Stroud v. Denny's Rest., Inc., 532 P.2d 790 (Or. 1975) (holding restaurant liable for actions of cook who made citizen's arrest of patron according to restaurant's directions); Parlee, supra note 264, at 49; Timothy R. Zinneker, Note, Corporate Vicarious Liability for Punitive Damages, 1985 BYU L. REV. 317, 321.
326. Corboy, supra note 218, at 27.
327. Id.; see also Egan v. Mut. of Omaha Ins. Co., 620 P.2d 141, 148 (Cal. 1979) ("Defendant should not be allowed to insulate itself from liability by giving an employee a nonmanagerial title and relegating to him crucial policy decisions." (quoting Merlo v. Standard Life & Accident Ins. Co., 130 Cal. Rptr. 416, 429 (Ct. App. 1976) (Tamura, J., concurring in part and dissenting in part))).
328. United States v. Balistrieri, 981 F.2d 916, 930 (7th Cir. 1992); Marr v. Rife, 503 F.2d 735, 741 (6th Cir. 1974); Darby v. Heather Ridge, 827 F. Supp. 1296, 1298 (E.D. Mich. 1993) (ruling that punitive damages were permissible where, inter alia, there was evidence of a pattern of discrimination).
329. See Curtis, supra note 269, at 849; see also Morris, supra note 258, at 221.
330. See Curtis, supra note 269, at 849.
331. Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 543 (1999) (quoting SCHLUETER & REDDEN, supra note 28, § 4.4(B)(2)(a), at 181-82).
332. See KIRCHER & WISEMAN, supra note 191, § 24.05, at 15.
333. See Briner v. Hyslop, 337 N.W.2d 858, 865 (Iowa 1983) (finding that deterrence is the major justification for punitive damages under the course of employment rule).
334. See, e.g., Alexander v. Riga, 208 F.3d 419, 432 (3d Cir. 2000), cert. denied, 121 S. Ct. 757 (2001); Hamilton v. Svatik, 779 F.2d 383, 386 (7th Cir. 1985).
335. Some courts have ruled that a resident manager or employee with comparable responsibilities is employed in a "managerial capacity" within the meaning of the Restatement. See Alexander, 208 F.3d at 432; Deal v. Byford, 537 N.E.2d 267, 272 (Ill. 1989) (upholding punitive damage award against management company based on actions of employee where the company admitted that the employee was "the resident manager of the apartment complex); cf. Hammerly Oaks, Inc. v. Edwards, 958 S.W.2d 387, 391 (Tex. 1997) (noting that parties agreed that acting manager of apartment complex was a managerial agent).
336. Hatrock v. Edward D. Jones & Co., 750 F.2d 767, 772 (9th Cir. 1984) (noting broad authority of broker in matters relating to customer relations).
337. See, e.g., United States v. Youritan Constr. Co., 370 F. Supp. 643, 646 (N.D. Cal. 1973).
338. See, e.g., Kimmel v. Iowa Realty Co., 339 N.W.2d 374, 382-83 (Iowa 1983) (concluding without analysis that real estate agent was not acting in a managerial capacity); Hammerly Oaks, 958 S.W.2d at 391 (holding that rental agent was not a managerial agent where agent had acted negligently in failing to prevent assault on tenant by carpet cleaning contractor).
339. See Egan v. Mut. of Omaha Ins. Co., 620 P.2d 141, 148 (Cal. 1979) ("[T]he critical inquiry is the degree of discretion the employees possess in making decisions that will ultimately determine corporate policy. When employees dispose of insureds' claims with little if any supervision, they possess sufficient discretion for the law to impute their actions concerning those claims to the corporation."); Canon, U.S.A. v. Carson Map Co., 647 S.W.2d 321 (Tex. 1982); see also Fitzgerald v. Mountain States Tel. & Tel. Co., 68 F.3d 1257, 1264 (10th Cir. 1995) (indicating that agent is "managerial" if she has the "typical discretion of a manager, such as the power to make independent decisions regarding personnel matters or determine policy").
340. See RESTATEMENT (SECOND) TORTS § 909 cmt. c (1965).
341. Egan, 620 P.2d at 148 ("Manifestly, to plaintiff, [the claims representative's] actions were actions of defendants. [The claims representative] personally managed the most crucial aspects of his employer's relationship with its policyholders.").
342. See id.; Ann M. Anderson, Note, Whose Malice Counts?: Kolstad and the Limits of Vicarious Liability for Title VII Punitive Damages, 78 N.C. L. REV. 799 (2000); cf. Faragher v. City of Boca Raton, 524 U.S. 775, 790 (1998) (noting in employment discrimination context that when supervisor denies or alters tangible job benefits of an employee the supervisor "'merges' with the employer, and his act becomes that of the employer.").
343. Edwards v. Flagstar Bank, 109 F. Supp. 2d 691 (E.D. Mich. 2000).
344. Texas has adopted an interesting approach, defining "managerial agents" as those who exercise "nondelegable" duties on behalf of the principal, regardless of whether they otherwise act with the authority and discretion ordinarily required to make them managerial agents. Hammerly Oaks, Inc. v. Edwards. 958 S.W.2d 387 (Tex. 1997). This approach carves out an exception to the Restatement rule, and means that employers should not be able to avoid liability for punitive damages by delegating the power to commit such torts to their employees Courts often hold that the duty not to discriminate in housing is nondelegable. See, e.g., Saunders v. Gen. Servs. Corp., 659 F. Supp. 1042, 1059 (E.D. Va. 1987). Courts could adopt this approach to define all employees in positions that permit them to discriminate as "managerial" agents for purposes of the Restatement rule. Since the Restatement approach, properly applied, permits the vicarious imposition of punitive damages in housing discrimination cases, however, this approach is probably unnecessary. See supra notes 220-221 and accompanying text.
345. Although commentators have criticized Kolstad's good faith defense, none has yet addressed the advisability of applying this defense to fair housing cases. See, e.g., Anderson, supra note 317; The Supreme Court, 1998 Term-Leading Cases, 113 HARV. L. REV. 200, 359 (1999) [hereinafter Leading Cases].
346. Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 544-45 (1999).
347. Id.
348. Comment, supra note 264, at 1302.
349. WERNER Z. HIRSCH, LAW AND ECONOMICS: AN INTRODUCTORY ANALYSIS 194 (2d ed. 1988) ("[T]he defendant has the incentive to adopt efficient safety precautions until the judgment cost is lower than the cost of precaution."); see also Anderson, supra note 317, at 826-27.
350. See supra text accompanying notes 147-148. This concern is implicated only in cases where the law is novel or unclear.
351. See Anderson, supra note 317, at 828; Susan Bisom-Rapp, Discerning Form from Substance: Understanding Employer Litigation Prevention Strategies, 3 EMPLOYEE RTS. & EMP. POL'Y J. 1, 34-35 (1999) (noting that existing law encourages employers to make symbolic gestures rather than eliminate discrimination).
352. This assumes that compensatory damages alone will not achieve optimal deterrence, which is almost certainly the case with respect to housing discrimination claims. See supra Part I.A.
353. See, e.g., United States v. Ill. Cent. R.R. Co., 303 U.S. 239 (1938); United States v. Atl. Coast Line R.R. Co., 173 F. 764 (4th Cir. 1909); Mont. Cent. Ry. Co. v. United States, 164 F. 400 (9th Cir. 1908). In these three cases, all involving a federal statute that placed strict limits on how long railroads crossing state lines could confine cattle in railcars before releasing them for exercise, food, and water, the railroad posted or distributed bulletins instructing their employees in the requirements of the law. Some employees still failed to comply. The courts held the carriers liable for civil penalties for the employees' noncompliance.
354. As the Fourth Circuit has noted: If the publication of circulars, as well as rules, delivered to train masters, yard masters, station agents, and others concerned in the transportation of live stock, and posted on bulletin boards at designated points, which conductors are required to read and sign . . . is sufficient to relieve the company from liability for the acts of its servants and agents, the corporation would thus be enabled to practically nullify the statute and render its provisions nugatory. Atl. Coast Line R.R. Co., 173 F. at 770.
355. As the Fifth Circuit has stated: [I]t is a common regulatory practice to impose a kind of strict liability on the employer as an incentive for him to take all practicable measures to ensure the workers' safety, the idea being that the employer is in a better position to make specific rules and to enforce them than the agency is. Allied Prods. Co. v. Fed. Mine Safety & Health Review Comm'n, 666 F.2d 890, 893 (5th Cir. 1982).
356. Kolstad v. Am. Dental Ass'n, 527 U.S. 526, 544 (1999); accord Briner v. Hyslop, 337 N.W.2d 858, 865-66 (Iowa 1983).
357. See Maria M. Carrillo, Hostile Environment Sexual Harassment by a Supervisor Under Title VII: Reassessment of Employer Liability in Light of the Civil Rights Act of 1991, 24 COLUM. HUM. RTS. L. REV. 41, 89 (1992-1993).
358. See Bisom-Rapp, supra note 326, at 13.
359. See supra notes 295-296.
360. See Anderson, supra note 317, at 826; cf. Cadena v. The Pacesetter Corp., 224 F.3d 1203, 1208 n.4 (10th Cir. 2000) (noting that the question of whether the good faith standard is an affirmative defense or an element of the plaintiff's case is unclear); Leading Cases, supra note 320, at 367 (concluding that plaintiff has the burden of proving the employer did not make good faith efforts and arguing this is unfair).
361. Kolstad v Am. Dental Ass'n, 527 U.S. 526, 546 (1999); see also Alexander v. Riga, 208 F.3d 419, 433 (3d Cir. 2000), cert. denied, 121 S. Ct. 757 (2001); Anderson, supra note 317 at 827-28; David B. Ritter, Kolstad v. American Dental Association: Punitive Damages Under Title VII, 88 ILL. B.J. 36, 38 (2000) (noting that Kolstad requires employers to have procedures that are "designed to - and that actually do - prevent and reduce instances of discrimination").
362. Anderson, supra note 317, at 828 n.27. Post-Kolstad decisions considering the issue have found that a nondiscrimination policy alone will not shield employers from liability. These cases have held that employers should not be permitted to insulate themselves from liability for punitive damages without taking effective efforts to enforce antidiscrimination policies E.g., Bruso v. United Airlines, Inc., 239 F.3d 848 (7th Cir. 2001); Passantino v. Johnson & Johnson Consumer Prods., Inc., 212 F.3d 493, 517 (9th Cir. 2000).
363. See supra text accompanying notes 326-329.
364. See YOUNG-BRUEHL, supra note 88, at 12-13.
365. The literature on "unconscious bias" makes clear that training programs alone will not prevent discrimination. "Unconscious bias" is intentional discrimination in the sense that the disparate treatment results from a deliberate act. However, the perpetrator may claim to be unaware that she is discriminating or may convince herself that she is not discriminating. See, e.g., id. at 13; Amy L. Wax, Discrimination as Accident, 74 IND. L.J. 1129 (1999); Michael Selmi, Response to Professor Wax - Discrimination as Accident: Old Whine, New Bottle, 74 IND. L.J. 1233 (1999). If much intentional discrimination does result from subtle bias, then training is unlikely to alter an employee's behavior if it is not accompanied by a genuine commitment to equal opportunity.
366. The literature on "unconscious bias" makes clear that training programs alone will not prevent discrimination. "Unconscious bias" is intentional discrimination in the sense that the disparate treatment results from a deliberate act. However, the perpetrator may claim to be unaware that she is discriminating or may convince herself that she is not discriminating. See, e.g., id. at 13; Amy L. Wax, Discrimination as Accident, 74 IND. L.J. 1129 (1999); Michael Selmi, Response to Professor Wax - Discrimination as Accident: Old Whine, New Bottle, 74 IND. L.J. 1233 (1999). If much intentional discrimination does result from subtle bias, then training is unlikely to alter an employee's behavior if it is not accompanied by a genuine commitment to equal opportunity.
367. See supra notes 280-282. The extent of the measures required for good faith should vary depending on the size of the employer. In general, larger employers should be required to take more extensive preventive measures because they have a larger potential for profit, which justifies a correspondingly larger investment in preventive measures.
368. See, e.g., Alexander v. Riga, 208 F.3d 419, 433-34 (3d Cir. 2000), cert. denied, 121 S. Ct. 757 (2001); Lowery v. Circuit City Stores, Inc., 206 F.3d 431, 444-46 (4th Cir. 2000), cert. denied, 121 S. Ct. 66 (2001).
369. See Lowery, 206 F.3d at 446 (upholding punitive damage award when evidence showed discrimination occurred and employees feared retaliation for reporting disparate treatment despite diversity training and company policy against discrimination); cf. Deffenbaugh-Williams v. Wal-Mart Stores, Inc., 188 F.3d 278, 286 (5th Cir. 1999) (holding that jury could infer from proof of discrimination that company policy against discrimination was poorly enforced).
370. See supra note 15.
371. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574 (1996).
372. Id. at 574-75.
373. Id. at 575.
374. Id. at 580 (citation omitted).
375. Id. at 582.
376. TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 454 (1993).
377. BMW, 517 U.S. at 582.
378. Big D Enters., Inc., 184 F.3d at 933.