Erwin Ernst was the sole shareholder and chief executive officer of Matchmaker R

Question

Erwin Ernst was the sole shareholder and chief executive officer of Matchmaker Real Estate Sales Center, Inc., located in Chicago. During 1987 and 1988, the Leadership Council for Metropolitan Open Communities, a nonprofit corporation, conducted a series of tests to see if Matchmaker sales agents engaged in “racial steering”—that is, direct­ing white home buyers to homes in white neighborhoods and black home buyers to homes in black or mixed neighborhoods. In each test, one white couple and one black couple, evenly matched with regard to financial qualifications and housing needs, were sent to Matchmaker and told Matchmaker that they were looking for homes in south­west Chicago. Matchmaker agents consistently directed the white couples to higher-priced homes in white neighborhoods and the black couples to lower-priced homes in black or racially mixed neighborhoods. The city of Chicago, the Leadership Council, and the indi­vidual testers (the plaintiffs) all sued Matchmaker for violations of federal laws prohibit­ing racial discrimination and discrimination in housing. The lower court found the real estate agents to be employees, not independent contractors, and both Ernst and his corporation, Matchmaker, were held liable for compensatory damages under the doc­trine of respon­deat superior. The agents were held liable for both compensatory and pu­nitive damages. Ernst appeals.

1. In view of the fact that Ernst had specifically instructed his agents not to en­gage in discriminatory practices, is it fair to hold Ernst and Matchmaker liable for damages? Why or why not?

2. Should Ernst and Matchmaker be held liable for punitive damages in this case. Why or why not?

3. Ernst argued that the plaintiffs had no standing to sue because they had sus­tained no injury. Should the court rule that plaintiffs have standing to bring suit? The requirements for standing were covered in at the beginning of the term in chapter 3, Miller 11th ed. (3–2d Standing to Sue). How might a plaintiff support it’s claim that it had met the injury requirement for standing to sue?

Explanation / Answer

1.) Under the doctrine of respondeat superior, employer is resp[onsible for employee's actions. But there have been cases(O'Brien v. Dean Witter Reynolds (D. Ariz 1984),Dakis v. Chapman (D. Cal. 1983)) in U.S. where courts have insisted the concept of intentional participation. The reasons are that for a personal benefit or personal belief if an employee does a froud or malpractice or breaks company codes then company cannot be braught under the lens. As company has no participation in employee's act of racial discrimation so it is not fair to make them liable.

I will not be able answer 2nd and 3rd part.

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