Author Question: Liability for Employee's Acts. Federated Financial Reserve Corp leases consumer and business ... (Read 53 times)

magmichele12 · **on:** Jun 24, 2018

Liability for Employee's Acts. Federated Financial Reserve Corp leases consumer and business equipment. As part of its credit-approval and debt-collection practices, Federated hires credit collectors and authorizes them to obtain credit reports on its customers. Janice Caylor, a Federated collector, used this authority to obtain a report on Karen Jones, who was not a Federated customer but who was the former wife of Caylor's roommate, Randy Lind. When Jones discovered that Lind had her address and how he had obtained it, she filed a suit in a federal district court against Federated and the others. Jones claimed in part that they had violated the Fair Credit Reporting Act, the goal of which is to protect consumers from the improper use of credit reports. Under what theory might an employer be held liable for an employee's violation of a statute? Does that theory apply in this case? Explain.

Question 2

Agency relationships may be based on an oral agreement.
a. True
b. False
Indicate whether the statement is true or false

nothere · **Reply #1 on:** Jun 24, 2018

Answer to Question 1

Liability for employee's acts
The court ruled in favor of Federated and Jones appealed. The U.S. Court of Appeals for the Sixth Circuit reversed the ruling of the lower court and remanded the case. The appellate court stated that a principal may be vicariously liable for an agent's tortious conduct based upon an apparent authority theory, if the principal cloaked its agent with apparent authority, i.e., held the agent out to third parties as possessing sufficient authority to commit the particular act in question, and there was reliance upon the apparent authority. The court reasoned that this theory is in keeping with the goal of the Fair Credit Reporting Act (FCRA) because employers are in a better position to protect consumers by use of internal safeguards. Besides, failure to impose liability on a corporation like Federated under a theory of apparent authority would allow it to escape liability. Because a company like Federated can act only through its agents, it is difficult to imagine a situation in which a company would ever be found to have willfully violated the statute directly by obtaining a credit report for an impermissible purpose. The FCRA's goal would be subverted if a corporation could escape liability for a violation that could only occur because the corporation cloaked its agent with the apparent authority to re-quest credit reports. The court concluded that if Federated created an appearance of authority that caused the credit reporting agency reasonably and prudently to believe that Caylor had made a proper request for a permissible purpose, and that there was reliance on Caylor's apparent authority, Federated may be held liable for violations of the FCRA.

Answer to Question 2

TRUE