
    In the Matter of Totem Taxi, Inc., Appellant, v New York State Human Rights Appeal Board, Respondent.
    Argued February 12, 1985;
    decided June 6, 1985
    POINTS OF COUNSEL
    
      William Gray for appellant.
    I. The administrative tribunal was incorrect when it determined that a violation of Executive Law § 296 (2) (a) had occurred when one of Totem Taxi’s cab drivers used a racial epithet during an argument with a passenger in the light of the uncontradicted testimony that the driver was disciplined and transportation was immediately provided by another of petitioner’s cabs. II. It was improper for the administrative tribunal to award damages to the complainants when they showed no actual damages and testified that they continued to use petitioner’s service after an incident involving racial name calling by both sides. (Matter of State Div. of Human Rights v Luppino, 35 AD2d 107, 29 NY2d 558; Matter of Maskal v State of New York, Executive Dept., Div. of Human Rights, 36 AD2d 46; Batavia Lodge No. 196, Loyal Order of Moose v New York State Div. of Human Rights, 35 NY2d 143; Cullen v Nassau County Civ. Serv. Commn., 53 NY2d 492.) III. The administrative tribunal was incorrect in holding petitioner liable for the conduct of a driver who acted outside of the scope of his employment during a private argument, contrary to his employer’s interests and stated policies and who was disciplined for such behavior. (State Div. of Human Rights v Henderson, 49 AD2d 1026; State Div. of Human Rights v General Motors Corp., 78 AD2d 1006, affd sub nom. Matter of General Motors Corp. v State Human Rights Appeal Bd., 54 NY2d 905; Matter of State Univ. of N. Y. v State Human Rights Appeal Bd., 81 AD2d 688, 55 NY2d 896; Corne v Bausch & Lomb, 390 F Supp 161; Howard v National Cash Register Co., 388 F Supp 603; Johnson v Glick, 481 F2d 1028; Hart v Sullivan, 84 AD2d 865, 55 NY2d 1011; Monell v New York City Dept. of Social Servs., 436 US 658; Smith v County of Livingston, 69 AD2d 993.) IV. The substantial delays beyond the statutory time tables set in Executive Law § 297 which were unexplained by the Division of Human Rights deprived it of jurisdiction and require that the complaints be dismissed. (Matter of Sarkisian Bros. v State Div. of Human Rights, 48 NY2d 816; Board of Educ. v State Div. of Human Rights, 53 AD2d 1043,42 NY2d 862; State Div. of Human Rights v Bethlehem Steel Corp., 86 AD2d 977.)
    
      Sara Toll East and Roberto Albertorio for respondent.
    I. The court below correctly confirmed the Division’s finding that the Human Rights Law was violated when a Totem Taxi driver was abusive to complainants because of their race and color. (Matter of Imperial Diner v State Human Rights Appeal Bd., 52 NY2d 72.) II. The court below correctly found that Totem Taxi is responsible for the malicious conduct of its driver which caused four passengers mental anguish. (Hudson Tr. Lines v State Human Rights Appeal Bd., 47 NY2d 971; Batavia Lodge No. 196, Loyal Order of Moose v New York State Div. of Human Rights, 35 NY2d 143; Matter of Avis-High Bennett Rent-A-Car v State Human Rights Appeal Bd., 40 AD2d 992; State Div. of Human Rights v Henderson, 49 AD2d 1026; Matter of General 
      
      Motors Corp. v State Human Rights Appeal Bd., 54 NY2d 905; Matter of State Univ. of N. Y. v State Human Rights Appeal Bd., 81 AD2d 688; Hart v Sullivan, 84 AD2d 865, 55 NY2d 1011; Corne v Bausch & Lomb, 390 F Supp 161; Anderson v Fidelity & Cas. Co., 228 NY 475; Stewart v Brooklyn & Crosstown R.R. Co., 90 NY 588; Dwinelle v New York Cent. & Hudson R. R. Co., 120 NY 117.) III. The court below correctly found that because complainants suffered mental anguish, humiliation and emotional trauma as the direct result of the driver’s misconduct, the award of compensatory damages was proper. (Batavia Lodge No. 196, Loyal Order of Moose v New York State Div. of Human Rights, 35 NY2d 143; 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176; Cullen v Nassau County Civ. Serv. Commn., 53 NY2d 492; Albermarle Paper Co. v Moody, 422 US 405; Catalina Beach Club v State Div. of Human Rights, 95 AD2d 766.) IV. The statutory time limits do not shelter Totem because Totem has not been injured, but denial of a remedy to complainants would violate the 14th Amendment. (Logan v Zimmerman Brush Co., 455 US 422.)
   OPINION OF THE COURT

Chief Judge Wachtler.

The question on this appeal is whether an employer can be held liable in damages pursuant to the State Human Rights Law (Executive Law § 296) for the discriminatory act of an employee when there has been no showing that the employer approved of, or acquiesced in, the employee’s act. The employer who was held liable below has appealed by leave of this court.

On January 5,1980 four black women, who had been visiting a relative at St. Joseph’s Hospital in Elmira, called Totem Taxi for a cab to take them home. When the women entered the cab, operated by one of Totem’s employees, one of the women told the driver she wanted to go to College Avenue. Another asked him to stop at DeWitt Avenue. At this point the driver said in a belligerent and nasty tone: “Do you people know where you want to go? * * * Why don’t you make up your minds”. One of the passengers said: “We don’t have to take this type of harassment” and left the cab followed by the others. When they had exited the cab the driver said: “You bunch of niggers make me sick”. One of the women replied: “You whities make me sick”. The driver then got out of the cab, approached that woman and threatened to knock her teeth down her throat. The women returned to the hospital and again called Totem, the only cab service in the city, and requested another cab which took them home without incident.

It was found by the hearing officer to be the policy of Totem Taxi to treat all persons with decency and courtesy regardless of color or religion. When the president of the corporation learned of this incident he apologized “profusely” to the complaining passenger and suspended the driver for several months.

Each of the passengers later filed a complaint with the State Division of Human Rights claiming that she had been subjected to an unlawful discriminatory practice relating to a public accommodation in violation of this State’s Human Rights Law (Executive Law art 15). After a hearing the charge was sustained. It was found that the taxi cab driver was guilty of discriminatory acts and that the company was responsible. The hearing officer stated that the “inability [of the employer] to have absolute control over the actions of all of his drivers” together with the immediate apology and suspension of the offending driver “must be considered” but only in mitigation of damages. Totem was held liable for the driver’s insulting behavior because it “had an employer-employee relationship with [the driver] and had the duty of hiring drivers who would not discriminate”. The hearing officer held that each of the complainants had suffered compensable damages in the amount of $500. This was reduced to $250 because of the “mitigating circumstances”.

The employer appealed the Division’s order to the Human Rights Appeal Board. The four members of the Board were evenly divided on the question as to whether the employer could be held liable under the statute solely on the basis of respondeat superior. Because the Board was unable to obtain a majority vote it determined that the Division’s order remained in effect.

The employer then commenced this proceeding seeking judicial review (Executive Law § 298) raising a number of issues, all of which were rejected by the Appellate Division. With respect to the employer’s liability for the racial slurs of its driver, the court found that damages were justified by petitioner’s status as a common carrier. The court stated: “Significantly, the Court of Appeals recently held in Hudson Tr. Lines v State Human Rights Appeal Bd. (47 NY2d 971) that a bus company was liable for the unlawful discriminatory acts of its bus driver even in the absence of proof showing knowledge or acquiescence on the company’s part.” (98 AD2d 923, 924.)

On this appeal petitioner notes that in a number of recent decisions, affirmed by this court, it has been held that an employer is not liable under the State Human Rights Law for the discriminatory acts of an employee, unless the employer had knowledge of or acquiesced in the discriminatory conduct (Hart v Sullivan, 55 NY2d 1011, affg 84 AD2d 865; Matter of State Univ. of N. Y. v State Human Rights Appeal Bd,., 55 NY2d 896, affg 81 AD2d 688; Matter of General Motors Corp. v State Human Rights Appeal Bd., 54 NY2d 905, affg 78 AD2d 1006). Because in this case the agency did not demonstrate that the employer approved of, or acquiesced in, the employee’s act, the petitioner urges that the Division’s determination cannot be sustained.

The Division contends that these cases are distinguishable because they all dealt with the employer’s responsibility for the discriminatory acts of one employee against another (Executive Law § 296 [1]) and not with discrimination by employees against members of the public in connection with the use of public accommodations (Executive Law § 296 [2]). In the latter type of case it is urged that a different and more demanding rule is applicable.

First, the Division argues that the law is settled that the statute imposes strict liability on the employer for all discriminatory acts of its employees in connection with public accommodations. The Division relies on our decisions in Hudson Tr. Lines v State Human Rights Appeal Bd. (47 NY2d 971) and Batavia Lodge No. 196, Loyal Order of Moose v New York State Div. of Human Rights (35 NY2d 143), noting that in each of those cases, involving public accommodations, the employer was held liable even though there was no showing that the employer had knowledge of or acquiesced in the employee’s discriminatory act. In those cases, however, no issue was raised concerning the employer’s liability for the acts of the employee (see also, 300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176 [dealing with discrimination in housing, Executive Law § 296 (5)]). When in subsequent cases the issue has been raised, in the context of employment discrimination, this court has uniformly held that the employer cannot be found to have violated the statute solely because of an employee’s discriminatory act; in order to hold the employer responsible the agency must demonstrate that the employer approved of, or acquiesced in, the employee’s conduct (Hart v Sullivan, supra; Matter of State Univ. of N. Y. v State Human Rights Appeal Bd., supra; Matter of General Motors Corp. v State Human Rights Appeals Bd., supra).

Secondly, the Division argues that this rule should not be extended to discrimination involving public accommodations, but that a rule of strict employer liability should apply by analogy and extension of common-law concepts relating to common carriers, innkeepers, and the like. However, we are dealing here with an independent statutory remedy which is not governed by common-law principles (Batavia Lodge No. 196, Loyal Order of Moose v New York State Div. of Human Rights, supra). Although our prior decisions defining the scope of an employer’s liability under the statute happened to involve employment discrimination, there is no indication that the Legislature intended to impose greater liability on the employer when the employee’s act relates to public accommodations.

Unlawful discriminatory practices are defined in Executive Law § 296. Subdivision 1 of that statute prohibits discrimination in employment and, by its terms, applies only to “an employer or licensing agency”. Subdivision 2 of the statute prohibits discrimination in “any place of public accommodation”, which broadly encompasses public services and conveniences (Matter of United States Power Squadrons v State Human Rights Appeal Bd., 59 NY2d 401,410) and specifically includes “all public conveyances operated on land or water or in the air” (Executive Law § 292 [9]). By its terms, subdivision 2 applies to “any person, being the owner, lessee, proprietor, manager, superintendent, agent or employee of any place of public accommodation”. Neither subdivision provides that a person who employs one who commits a discriminatory act is also guilty of a violation irrespective of fault. If there is any ambiguity in the statute with respect to employer liability for employees’ acts it is not to be found in the subdivision dealing with public accommodations. That subdivision separately identifies the owner or proprietor and the employee as persons independently subject to the statute and expressly imposes liability only on the person who actually commits the discriminatory act. Thus the employer cannot be held liable for an employee’s discriminatory act unless the employer became a party to it by encouraging, condoning, or approving it.

In this case there is no evidence that the employer was guilty in that regard. On the contrary the evidence shows, and the hearing officer found as a fact, that the employer had adopted an antidiscrimination policy before this isolated incident occurred, and when the president of the company learned of it he immediately apologized and suspended the offending driver. Although an employer may be liable for a single act of discrimination to which the employer is a party (Matter of Imperial Diner v State Div. of Human Rights, 52 NY2d 72), it cannot be rationally concluded under the present statute that an employer has been guilty of discrimination whenever any employee at any level commits, out of personal pique, a disapproved and unanticipated discriminatory act.

Finally we note that we are all in agreement that this is a most lamentable incident. The passengers were subjected to ill-mannered abuse, which is not only embarrassing and demeaning to them but to all civilized persons who hear of it, including apparently the owner of the taxi cab in which it occurred. It is the kind of conduct which the Human Rights Law condemns and seeks to eliminate. It may be, as suggested by the concurring opinion, that this can best be accomplished by holding the employer responsible without any showing of fault, or by presuming him guilty until he proves his innocence, a burden arguably met in this case. The question, however, as to whether such measures are needed to insure the basic fairness which the Human Rights Law is designed to encourage involves policy decisions solely within the province of the Legislature.

Accordingly, the order of the Appellate Division should be reversed, the petition granted, and the determinations of the State Human Rights Division and the State Human Rights Appeal Board annulled.

Alexander, J.

(concurring). I believe the court’s holding today is an unwarranted extension of its prior holdings regarding the liability of an employer for the discriminatory acts of an employee. Nevertheless, I am constrained, in the face of those prior holdings and the absence of a legislative response thereto, to concur in the result reached. I urge the court however, to reexamine the rule enunciated in these holdings and today’s extension thereof. Additionally, I invite the Legislature’s attention to the fact that the rule severely limits the availability of the New York State Human Rights Law to the citizens of our State as a means of redressing discrimination, both in the work place and in places of public accommodation.

The court today reaffirms the rule previously enunciated in cases involving employment discrimination that an “employer cannot be found to have violated the statute [Executive Law § 296] solely because of an employee’s * * * discriminatory act; in order to hold the employer responsible the agency must demonstrate that the employer approved of, or acquiesced in, the employee’s conduct” (majority opn, at p 304). The majority now extends this rule to common carriers and places of public accommodations, resort or amusement identified in Executive Law § 296 (2), and holds that they similarly cannot be held liable for the discriminatory acts of a manager, superintendent, agent or employee unless it is demonstrated that the owner, lessee or proprietor approved of or acquiesced in the discriminatory conduct of the manager, superintendent, agent or employee. Thus, the right of a victim of such discrimination to obtain redress, henceforth, for the indignation, harm and debasement resulting from the discriminatory conduct of an individual manager, superintendent, agent or employee effectively will be restricted to proceeding against the specific, identified actor, for rare will be the case where the victim will even know about the condonation of or acquiescence in such conduct by the owner, lessee or proprietor. There is nothing in the legislative history of this statute that warrants such a curtailment of the right of redress nor does the plain language of the statute require it.

It is the clear public policy of this State to combat discrimination in the work place and in places of public accommodation, resort or amusement, and to seek its eradication in all of its varied forms. To achieve that result, “the statute is to be ‘construed liberally for the accomplishment of the purposes thereof’ [Executive Law § 300]” (300 Gramatan Ave. Assoc. v State Div. of Human Rights, 45 NY2d 176, 183).

While there may be some justification for requiring that there be employer “awareness of and acquiescence in discriminatory acts” by one employee against another in order for the employer to be answerable for such discrimination in the work place (but see, Horn v Duke Homes, 755 F2d 599 [7th Cir 1985]; Vinson v Taylor, 753 F2d 141 [DC Cir 1985]; see also, Note, Sexual Harassment Claims of Abusive Work Environment Under Title VII, 87 Harv L Rev 1449 [1984]), there is no justification for exempting a common carrier employer or the owner of a place of public accommodation, resort or amusement from responsibility for discriminatory acts visited upon the public by its employee simply because of the inability to establish employer awareness of or acquiescence in such discriminatory conduct.

We have not extended such an exemption in previous cases. In Hudson Tr. Lines v State Human Rights Appeal Bd. (47 NY2d 971) we affirmed the Commission’s determination holding the employer liable1 for the employee’s conscious discriminatory conduct even though the record “showed that the driver’s orders for the [complainants] to go to the end of the line were inconsistent with company policy and included a refusal to transport them at all” (Hudson Tr. Lines, supra, at p 973). Similarly, in 300 Gramatan Ave. Assoc. (45 NY2d 176, supra), we reinstated a Human Rights Appeal Board determination that the owner of the apartment building was guilty of unlawful discrimination where it was clear that the “discriminatory acts” at issue were those of the superintendent and the managing agent. In Batavia Lodge No. 196, Loyal Order of Moose v New York State Div. of Human Rights (35 NY2d 143), we upheld a Division determination finding the Lodge guilty of unlawful discrimination based solely upon evidence of its bartender-employee’s action in denying service to the complainants.

The court’s ruling today that the subdivision dealing with public accommodations “expressly imposes liability only on the person who actually commits the discriminatory act” (majority opn, at p 305) is, in my view, a strained interpretation of the statute and clearly does not further the legislative purpose of eliminating discrimination in our State. On the contrary, it creates an enormous loophole in the statute and opens the door to circumvention of the statute by employers, owners, lessees and proprietors through the simple expedient of looking the other way.

The legislative intent and public policy would be better served by a rule that places the burden upon the employer to affirmatively demonstrate that all reasonable steps had been taken to insure against discriminatory conduct by its employees, failing which, its liability would be established.

Such a rule, whether based on a risk-allocation theory that the employer rather than the innocent victim of discrimination should be made to bear the costs of the discrimination by its employees as a required cost of doing business, since the employer is a more efficient cost avoider than the injured plaintiff, or upon a public policy determination that discrimination can best be eradicated by enforcing a strict liability rule that insures compensation for victims and creates an incentive for the employer to take the strongest possible affirmative measures to prevent the hiring and retention of employees who engage in discriminatory acts, would better serve the goal of eradicating discrimination in our State.

Judges Jasen, Simons and Kaye concur with Chief Judge Wachtler; Judge Alexander concurs in a separate opinion in which Judge Meyer concurs; Judge Titone taking no part.

Order reversed, with costs, petition granted and determinations of the State Division of Human Rights and the State Human Rights Appeals Board annulled.  