Jun 15 2011

Promissory Estoppel In Employment: Employee Allowed To Sue For Verbal Pre-Employment Promise

A United States District Court judge has refused to dismiss an employee’s claim that her termination for failing to follow the employer’s procedures was improper. The court ruled that the employee is allowed to proceed with a “promissory estoppel” claim against her former employer because of a verbal pre-employment representation made as part of her interview process. Merricks v. Savers, Inc. C.A. No. 11-10956 (D.Mass). The case presents a cautionary tale for all types of employers.

The plaintiff, Ms. Merricks interviewed for, and was offered, an Assistant Operations Supervisor (AOS) position at a retail store in Plymouth, Massachusetts. Before accepting the position, she met with both the store manager and the operations supervisor. During this meeting, Ms. Merricks indicated that she was interested in the AOS position, but that she needed two and a half weeks off in May to attend her son’s out-of-state high school graduation and to help him move back home. The manager and operations supervisor supposedly assured her that “this would not be a problem,” but also informed her that the time off would be unpaid for such leave. Accordingly, she accepted the position.

Three months into her employment, Ms. Merricks became ill at work. Her manager suggested she leave and see a doctor. The employee did, and was subsequently diagnosed with a severe sinus infection and mononucleosis and was instructed not to return to work for at least 5 days (until April 23, 2009). Ms. Merricks immediately informed the manager of her illness and the doctor’s instructions. The manager then scheduled her to return to work one week later, April 25, 2009. Ms. Merricks returned to work on the designated date, and worked her full schedule until May 5, 2009. At that time, she was scheduled to take her “pre-approved” leave from May 6, 2009 to May 26, 2009 to attend her son’s graduation.

Prior to leaving on May 5, 2009, the manager asked Ms. Merricks to complete a leave of absence form. Ms. Merricks alleged that at no time prior to May 5, 2009, did the manager indicate that there was any issue with her taking the agreed leave time. Accordingly, Ms. Merricks completed the form and then left as planned.

On May 15, 2009, while on leave, Ms. Merricks contacted the manager because her direct deposit paycheck had not been deposited in her bank account. At that time, the manager advised that her leave of absence had not been approved, and that her employment had been terminated because she took an unapproved leave of absence. Ms. Merricks called the operations supervisor to find out why she had been terminated when her leave had been cleared prior to her employment. According to Ms. Merricks, the operations supervisor indicated that he did not know why there was a problem, but presumed that her time off in April, while recovering from illness, had caused her to miss too many days from work, thus resulting in her termination.

Among her claims, Ms. Merricks alleged that she relied to her detriment on the representation of the manager and operations supervisor that she would be able to take a leave of absence in May of 2009. This claim was fashioned as one for “promissory estoppel”, which requires a party to show that “(1) [defendant] ma[de] a promise which he should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, (2) the promise does induce such action or forbearance, and (3) injustice can be avoided only be enforcement of the promise.”1 A promise is a “‘manifestation of an intention to act or refrain from acting in a specified way, so as to justify a promisee in understanding that a commitment has been made.’” 2 Given the facts as alleged by Ms. Merricks,3 the Court found that there was sufficient basis to proceed with this claim.4

“Courts typically invoke the doctrine of promissory estoppel when the formal requirements of contract formation are absent and when enforcing the promise would serve the interests of justice.”5 Essential to such claims is that there be an unambiguous promise upon which the party to whom it was made reasonably relied.6 The employer argued that this element could not be met because any statement by the manager and operations supervisor regarding time off was not an unambiguous promise. The Court disagreed.

Ms. Merricks claimed that the employer told her that if she accepted employment with them, taking a two-and-a-half week leave in May to attend her son’s graduation and move him back home “would not be a problem.” The Court ruled that merely because the specific dates of the leave may not have been discussed does not render the promise ambiguous. Just as a contract does not require that that all terms be precisely specified to be enforceable, the same principle applies to pre-contractual promises.7 Under those circumstances, the Court found it reasonable to infer that the promise that the requested leave would not be a problem contained sufficient essential terms so as not to be ambiguous.

The employer also argued that because Ms. Merricks was an at-will employee, she was subject to termination “at any time for any reason or for no reason at all” unless the “at-will employee is terminated for a reason that violates a clearly established public policy.”8 Accordingly, it argued that any reliance by Ms. Merricks on any promise to treat her differently than her at-will status was unreasonable as a matter of law. Again, the Court disagreed, noting that a promise inducing her to accept employment differed from a promise made during employment.9

Typically, an at-will employee has no greater protection than the right not to be terminated for a discriminatory reason or because their employer is seeking to avoid paying bonuses or commissions. However, that can be changed by pre-employment agreements or inducements, even if they are contrary to an employment handbook or company policy. Accordingly, employers and their insurers must be aware of the promises or representations made by their representatives to prospective employees.

1 Carroll v. Xerox Corp., 294 F.3d 231, 242 (1st Cir. 2002), quoting Loranger Const. Corp. v. E.F. Hauserman Co., 6 Mass. App. Ct. 152, 154 (1978).

2 Rhode Island Hosp. Trust Nat’l Bank v. Varadian, 419 Mass. 841, 849-50 (1995), quoting RESTATEMENT (SECOND) OF CONTRACTS § 2 (1981).

3 Because this was a motion to dismiss, solely for purposes of deciding the motion the Court was required to assume all facts as alleged by Ms. Merricks to be true.

4 Ms. Merricks also claims that her employer breached an express contract of employment and terminated her in violation of Mass. Gen. L. c. 151B, which is considered the Massachusetts analogue to the federal Americans with Disabilities Act. However, the Court found that there was no breach of an express contract as Ms. Merricks was an employee at will (and her termination did not fall into one of the limited exceptions applicable to that status) nor was her termination related to any purported disability. Accordingly, those claims were dismissed by the Court.

5 Steinke v. Sungard Fin. Sys., Inc., 121 F.3d 763, 776 (1st Cir. 1997); see also Bosque v. Wells Fargo Bank, N.A., 762 F.Supp. 2d 342, 353 (D. Mass. 2011) (noting that promissory estoppel is “usually asserted as an alternative theory of recovery for a contract that is not supported by consideration”); Durmic v. J.P. Morgan Chase Bank, NA, 2010 WL 4825632, at *5 (D. Mass. Nov. 24, 2010) (same).

6 Rhode Island Hosp. Trust Nat’l Bank v. Varadian, 419 Mass. 841, 848 (1995).

7 Citing Situation Mgmt. Sys. v. Malouf, Inc., 430 Mass. 875, 878 (2000).

8 Upton v. JWP Businessland, 425 Mass. 756, 757 (1997).

9 The Court contrasted Fitzgerald v. Queen Anne Nursing Home, Inc., 61 Mass. App. Ct. 1103 (2004), upon which the employer primarily relied (which held that an at-will employee, was not entitled to judgment where she was terminated after taking a leave of absence encouraged by her supervisor because those conversations did not “create a contractual commitment between the parties” “convert the plaintiff’s employment to something other than ‘at will.’”) with Grant v. John Hancock Mutual Life Ins. Co., 183 F. Supp. 2d 344, 370 (D. Mass. 2002) (denying summary judgment as to plaintiff’s promissory estoppel claim where a triable issue existed regarding whether the employee’s reliance was reasonable where he ceased his job search and moved to take a position with defendant company based on the representations made to him about his job responsibilities).

 

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