Case Title: Jerold J. Mackenzie v. Miller Brewing Company

Citation: 2001 WI 23

Docket Number: 1997AP003542

State: wisconsin

Court: Wisconsin Supreme Court

Date: 2001-03-20T00:00:00Z

Document:
2001 WI 23 
 
SUPREME COURT OF WISCONSIN 
 
 
Case No.: 
97-3542 
 
 
Complete Title 
of Case: 
 
Jerold J. Mackenzie,  
 
Plaintiff-Respondent-Cross-Appellant- 
 
Petitioner, 
 
v. 
Miller Brewing Company and Robert L. Smith,  
 
Defendants-Appellants-Cross-Respondents, 
Patricia G. Best,  
 
Defendant-Cross-Respondent.  
 
 
REVIEW OF A DECISION OF THE COURT OF APPEALS 
2000 WI App 48 
Reported at 234 Wis. 2d 1, 608 N.W.2d 331 
(Published) 
 
 
Opinion Filed: 
March 20, 2001 
Submitted on Briefs: 
      
Oral Argument: 
November 28, 2000 
 
 
Source of APPEAL 
 
COURT: 
Circuit 
 
COUNTY: 
Milwaukee 
 
JUDGE: 
Louise Tesmer 
 
 
JUSTICES: 
 
Concurred: 
ABRAHAMSON, C.J., concurs (opinion filed). 
 
 
BABLITCH, J., joins concurrence. 
 
Dissented: 
      
 
Not Participating: CROOKS, J., did not participate. 
 
 
ATTORNEYS: 
For the plaintiff-respondent-cross appellant-
petitioner there were briefs by Michael A. Whitcomb and Michael 
A.I. Whitcomb, S.C., Milwaukee, and Gerald P. Boyle and Boyle, 
Boyle & Smith, S.C., Milwaukee, and oral argument by Michael A. 
Whitcomb and Gerald P. Boyle. 
 
 
2 
 
For the defendants-appellants-cross respondents 
and for the defendant-cross respondent there was a brief by Mary 
Pat Ninneman, John A. Casey, Frank J. Daily and Quarles & Brady 
LLP, Milwaukee, and oral argument by John A. Casey and Frank J. 
Daily. 
 
 
An amicus curiae brief was filed by C. Gregory 
Stewart, Philip B. Sklover, Lorraine C. Davis, Robert J. Gregory, 
Washington, D.C., and Dennis R. McBride, Milwaukee, on behalf of 
the Equal Employment Opportunity Commission. 
 
 
An amicus curiae brief was filed by Patrick O. 
Dunphy, Mark L. Thomsen and Cannon & Dunphy, S.C., Brookfield, on 
behalf of the Wisconsin Academy of Trial Lawyers. 
 
 
An amicus curiae brief was filed by Lisa M. 
Bergersen, Bethany C. McCurdy and Lindner & Marsack, S.C., 
Milwaukee, on behalf of the Human Resources Management 
Association (HRMA). 
 
 
An amicus curiae brief was filed by Donald L. 
Heaney, Kenneth B. Axe and Lathrop & Clark, Madison, on behalf of 
Wisconsin Manufacturers and Commerce. 
 
2001 WI 23 
 
NOTICE 
This opinion is subject to further editing and 
modification.  The final version will appear 
in the bound volume of the official reports. 
 
 
No. 97-3542 
 
STATE OF WISCONSIN                    :  
  IN SUPREME COURT 
 
 
Jerold J. Mackenzie,  
 
          Plaintiff-Respondent-Cross- 
          Appellant-Petitioner, 
 
     v. 
 
Miller Brewing Company and Robert L.  
Smith,  
 
          Defendants-Appellants-Cross- 
          Respondents, 
 
Patricia G. Best,  
 
          Defendant-Cross-Respondent. 
 
 
REVIEW of a decision of the Court of Appeals.  Affirmed.  
 
¶1 
JON P. WILCOX, J.   The question in this case is 
whether an at-will contract employee can maintain an action 
against 
his 
or 
her 
employer 
in 
tort 
for 
intentional 
misrepresentation to induce continued employment.  Because we 
believe that it would be imprudent for this court to recognize 
such a cause of action at this time, we conclude that those who 
are party to an at-will contract must seek recourse in contract 
rather than tort law. 
FILED 
 
MAR 20, 2001 
 
Cornelia G. Clark 
Clerk of Supreme Court 
Madison, WI 
 
 
 
 
 
No. 
97-3542 
 
 
2 
¶2 
The plaintiff in this case, Jerold J. Mackenzie 
(Mackenzie), sued Miller Brewing Company (Miller) in tort for 
intentional 
misrepresentation 
and 
wrongful 
termination.1  
Mackenzie also sued his supervisor, Robert L. Smith (Smith), in 
tort for intentional misrepresentation and tortious interference 
with prospective contract.2  Finally, Mackenzie sued a co-worker, 
Patricia 
G. 
Best 
(Best), 
for 
tortious 
interference 
with 
contract.  After a jury trial in the Circuit Court for Milwaukee 
County, 
Louise 
M. 
Tesmer, 
Judge, 
Mackenzie 
was 
awarded 
$24,703,000 against Smith and Miller.3  The court of appeals 
overturned the circuit court decision.  For the reasons set 
forth below, we now affirm the court of appeals ruling. 
I 
 
¶3 
Mackenzie was hired by Miller in 1974 as an area 
manager of Miller distributors with a salary grade level of 7.4  
In 1982 he had progressed to grade level 14, and he attained the 
position of Sales Services and Development Manager reporting to 
                     
1 The circuit court dismissed the wrongful termination claim 
against Miller at summary judgment.  Mackenzie does not contest 
that ruling before this court. 
2 Mackenzie 
has 
not 
raised 
the 
claim 
of 
tortious 
interference with prospective contract before this court.  
3 The jury awarded Mackenzie $1,500,000 in punitive damages 
against Best, but the circuit judge dismissed the award because 
the jury failed to award Mackenzie any compensatory damages 
against Best. 
4 Miller utilizes a grade level system that classifies each 
position according to responsibilities and corresponding salary 
range and benefits.  
No. 
97-3542 
 
 
3 
Smith in 1987.  In late 1987 Miller undertook a corporate 
reorganization, which led to a transfer of many of Mackenzie's 
responsibilities.  Concerned, Mackenzie asked Smith whether the 
reorganization affected his grade level.  Smith responded that 
it did not.  In 1989 Miller reevaluated the grade levels of 716 
positions, including Mackenzie's.  As a result, Mackenzie's 
position was downgraded to grade level 13.  The reevaluation, 
however, was prospective and applied to the position, not the 
employee.  Therefore, Mackenzie was grandfathered as a grade 
level 14, even though his position was a grade level 13.  That 
same year, Mackenzie's secretary, Linda Braun, made a sexual 
harassment complaint against him.  She made another sexual 
harassment complaint against him in 1990.   
¶4 
In August of 1992 Miller sent a memo to employees 
whose 
positions 
had 
been 
downgraded 
but 
who 
had 
been 
grandfathered to their current grade level informing them that 
they would be downgraded to their position grade level.  
Therefore, as of January 1, 1993, Mackenzie would be at grade 
level 13.  He would receive the same salary and benefits of a 
grade level 14, but he would not be entitled to any future 
grants of stock options. 
¶5 
On March 23, 1993, Best, a Miller distributor services 
manager who had previously reported to Mackenzie, told her 
supervisor, Dave Goulet, that Mackenzie had told her about a 
sexually suggestive episode of the "Seinfeld" television show, 
which made her uncomfortable.  Miller immediately investigated 
the matter and Mackenzie denied sexually harassing Best.  After 
No. 
97-3542 
 
 
4 
concluding its investigation, Miller discharged Mackenzie for 
"exercising poor judgment." 
¶6 
Mackenzie 
subsequently 
commenced 
this 
suit 
on 
September 29, 1994.  He alleged four causes of action in tort 
against 
Miller, 
Smith, 
and 
Best: 
 
(1) 
intentional 
misrepresentation 
against 
Smith 
and 
Miller; 
(2) 
tortious 
interference with 
prospective 
contract 
against 
Smith; (3) 
tortious interference with contract against Best; and (4) 
wrongful termination against Miller.  His theory supporting the 
intentional misrepresentation torts against Smith and Miller was 
that Miller had a duty to disclose after the 1987 reorganization 
that his position had been grandfathered and that Smith 
misrepresented to Mackenzie that he would not be affected by the 
reorganization.  In support of the tortious interference claim 
against Best, he contended that she improperly induced Miller to 
terminate Mackenzie by fraudulently misrepresenting to Miller 
that she felt harassed by his discussion of the Seinfeld 
program.  The circuit court denied the defendants' motion to 
dismiss. 
¶7 
However, the circuit court did grant Miller's motion 
for summary judgment as to the wrongful termination claim, but 
allowed Mackenzie's three remaining claims to survive.  On June 
23, 1997, a jury trial began and resulted in a verdict three 
weeks later.  The jury awarded $6,501,500 in compensatory 
damages and $18,000,000 in punitive damages against Miller on 
the intentional misrepresentation claim.  The jury also awarded 
$1,500 in compensatory damages and $500,000 in punitive damages 
No. 
97-3542 
 
 
5 
against Smith on the same tort.  The jury found Smith liable for 
tortious interference with Mackenzie's promotion and awarded him 
compensatory damages of $100,000.  Finally, the jury failed to 
award 
Mackenzie 
any 
compensatory 
damages 
for 
tortious 
interference with contract against Best, but did award him 
$1,500,000 in punitive damages.  The circuit court reduced the 
punitive damages against Smith to $100,000giving Mackenzie the 
option to take the reduction or risk a new trial on the issue of 
damagesand dismissed Mackenzie's claim against Best because the 
jury failed to award compensatory damages.  Miller and Smith 
appealed. 
¶8 
In an exhaustive opinion, the court of appeals 
reversed the judgment of the circuit court.  Mackenzie v. Miller 
Brewing Co., 2000 WI App 48, 234 Wis. 2d 1, 608 N.W.2d 331.  The 
majority found that this court's recent ruling in Tatge v. 
Chambers & Owen, Inc., 219 Wis. 2d 99, 579 N.W.2d 217 (1998), 
foreclosed the tort of intentional misrepresentation in the 
employment at-will context.  Mackenzie, 2000 WI App 48 at ¶25.  
The court proceeded to examine whether Miller had a duty to 
disclose information to Mackenzie that potentially affected his 
decision to continue employment at Miller and determined that 
the creation of such a duty "would undermine sound public 
policy."  Id. at ¶43. 
¶9 
Then Judge Charles Schudson, writing for the majority, 
examined Mackenzie's evidence to determine whether even if the 
court were to recognize such a tort, Mackenzie had met the 
elements.  Id. at ¶¶44-61.  In the court's view, Mackenzie 
No. 
97-3542 
 
 
6 
failed to present any credible evidence upon which the jury's 
verdict could be based.  Id. at ¶¶46, 48.  Therefore, the court 
rejected his claim and reversed the circuit court decision.5  Id. 
at ¶102.  
II 
¶10 Although Mackenzie's claim is fraught with problems, 
we need only examine the first issue.  For Mackenzie, the 
insurmountable obstacle is that Wisconsin does not recognize a 
cause of action for the tort for intentional misrepresentation 
to induce continued employment in the at-will employment 
context.  Nor do we now recognize such a cause of action.  
Because Mackenzie does not state a cause of action, Miller's 
motion to dismiss should have been granted by the circuit court.  
A 
¶11 This case requires us to revisit the question of 
whether 
there 
is 
a 
cause 
of 
action 
for 
the 
tort 
of  
misrepresentation in the employment context.  Whether or not a 
defendant has a cause of action in tort is a question of law 
subject to de novo review.  Slawek v. Stroh, 62 Wis. 2d 295, 
317, 215 N.W.2d 9 (1974). 
                     
5 As noted earlier, the court of appeals also affirmed the 
circuit court's dismissal of Mackenzie's wrongful termination 
claim at summary judgment.  Mackenzie v. Miller Brewing Co., 
2000 WI App 48, 234 Wis. 2d 1, 608 N.W.2d 331.  Mackenzie does 
not contest that ruling here.  The court of appeals also 
reversed the ruling in favor of Mackenzie on his tortious 
interference with prospective contract action against Smith 
based on its review of the evidence.  Id. at ¶¶62-70.  
Apparently, Mackenzie does not appeal that ruling either. 
No. 
97-3542 
 
 
7 
¶12 Although it is unclear when employment at-will became 
an embedded fixture of Wisconsin employment relations, we first 
implicitly recognized the doctrine in 1871.  See Prentiss v. 
Ledyard, 28 Wis. 131, 133 (1871).6  Recent scholarship on at-will 
employment has indicated that the doctrine was the default rule 
for employment contracts in this country because of a severe 
labor shortage in the late eighteenth and throughout the 
nineteenth centuries.7  This scholarship calls into question the 
view that employment at-will was created at the end of the 
nineteenth century to benefit employers.8  Regardless, we 
                     
6 In Prentiss, this court did not use the term "employment 
at-will."  Rather, in a contract dispute between an employee and 
his employer over the term of a services contract, this court 
merely stated that "[e]ither party, however, was at liberty to 
terminate the service at any time, no definite period for which 
the service was to continue having been agreed upon."  Prentiss 
v. Ledyard, 28 Wis. 131, 133 (1871).  Therefore, while Prentiss 
is the first Wisconsin case where the employment at-will 
doctrine was applied to an employment dispute, this court did so 
without acknowledging it as a new doctrine. 
7 See Deborah A. Ballam, The Development of the Employment 
At Will Rule Revisited:  A Challenge to Its Origins as Based in 
the Development of Advanced Capitalism, 13 Hofstra Lab. & Emp. 
L.J. 75 (1995) (observing that employment at-will was prevalent 
throughout the nineteenth century); Mayer G. Freed & Daniel D. 
Polsby, The Doubtful Provenance of "Wood's Rule" Revisited, 22 
Ariz. St. L.J. 351 (1990) (noting that Wood's statement of the 
employee 
at-will 
rule 
was 
based 
on 
a 
well-established 
understanding of labor relations); Andrew P. Morriss, Exploding 
Myths:  An Empirical and Economic Reassessment of the Rise of 
Employment At-Will, 59 Mo. L. Rev. 679 (1994) (disputing earlier 
scholarship on the employment at-will rule that had previously 
formed the basis for courts and commentators to advocate 
modification to the rule). 
8 See Jay M. Feinman, The Development of the Employment At 
Will Rule, 20 Am. J. Legal Hist. 118, 135 (1976).  According to 
Feinman, the employment at-will rule was essentially created by 
No. 
97-3542 
 
 
8 
recently acknowledged the centrality of employment at-will in 
Hausman v. St. Croix Care Ctr., 214 Wis. 2d 655, 663, 571 N.W.2d 
393 (1997), by asserting that "[t]he employment-at-will doctrine 
is an established general tenet of workplace relations in this 
jurisdiction."  This is because the employment-at-will rule 
                                                                  
Horace Gray Wood in his 1877 treatisesix years after our own 
decision implicitly applied the doctrine in Prentisswith little 
foundation and adopted by the judiciary throughout the country, 
which sought to preserve our free enterprise system.  Feinman, 
126, 135.  Thus, he contended that in light of "radical 
political economics," it is apparent that "[i]n the context of 
the control of labor and the discharge of employees, [the 
employment at-will] rule served the purposes of the owners of 
capital."  Id. at 135.  According to Feinman, employment at-will 
was created at the end of the nineteenth century to support "the 
dominion of the owners of capital over their employees and their 
enterprises . . . a basic element of the capitalist system."  
Id. at 133.  His interpretation, however, has been questioned in 
recent years by other scholars who have asserted that employment 
at-will inured to the benefit of employees in a period of labor 
shortage. Professor Ballam has observed:  
 
Employment at will was adopted in colonial times in 
response to the unique economic conditions in the 
colonies created by the ready availability of free 
land, a severe labor shortage, and high labor costs.  
Laborers who could easily obtain free land wanted to 
work only long enough to accumulate enough capital to 
start their own farms and thus did not want to be 
bound to a long-term employment relationship. 
 
Ballam, Employment At Will Rule Revisited, 13 Hofstra Lab. & 
Emp. 
L.J. 
at 
88 
n.86. 
Professor 
Ballam 
buttressed 
her 
observation in two subsequent articles that analyzed the law in 
nine states.  See Deborah A. Ballam, The Traditional View on the 
Origins of the Employment-At-Will Doctrine:  Myth or Reality, 33 
Am. Bus. L.J. 1 (1995); Exploding the Original Myth Regarding 
Employment-At-Will:  The True Origins of the Doctrine, 17 
Berkeley J. Emp. & Lab. L. 91 (1995). 
No. 
97-3542 
 
 
9 
serves the interests of employees as well as employers.9  It 
works to the employees' advantage to have an at-will contract 
that allows them to leave their employers at any time for any 
reason.10  An employment contract with a specific term could lock 
an employee into a disadvantageous relationship.  The at-will 
doctrine provides employees and employers with much needed 
flexibility to fashion their own relations in a vibrant economy. 
 It is a practical manifestation of our nation's values such as 
freedom of movement and entrepreneurial spirit.  And it provides 
employees with the means to take control of their livelihoods.  
Therefore, it is the matrix of employee-employer contracts in 
Wisconsin. 
B 
¶13 Given the flexibility that employment at-will affords 
employees, this court has been reluctant to interpose the 
                     
9 See Richard A. Epstein, In Defense of the Contract At 
Will, 51 U. Chi. L. Rev. 947, 982 (1984) (concluding that "[t]he 
flexibility afforded by the contract at will permits the 
ceaseless marginal adjustments that are necessary in any ongoing 
productive 
activity 
conducted . . . in 
conditions 
of 
technological and business change"); Mayer G. Freed & Daniel D. 
Polsby, 
Just 
Cause 
for 
Termination 
Rules 
and 
Economic 
Efficiency, 38 Emory L.J. 1097 (1989) (discussing the greater 
efficiency created by an at-will employment system, which serves 
both the worker and employer). 
10 For example, Professor Holt argues that in the nineteenth 
century employers utilized the courts to hold employees to 
written employment 
contracts 
with 
specific 
terms, thereby 
revealing a bias against workers.  Wythe Holt, Recovery by the 
Worker Who Quits:  A Comparison of the Mainstream, Legal 
Realist, and Critical Legal Studies Approaches to a Problem of 
Nineteenth Century Contract Law, 1986 Wis. L. Rev. 677, 732 
(1986). 
No. 
97-3542 
 
 
10
judicial branch between employees and employers.  See Strozinsky 
v. District of Brown Deer, 2000 WI 97, ¶33, 237 Wis. 2d 19, 614 
N.W.2d 443 ("Courts will not second guess employment or business 
decisions, even when those decisions appear ill-advised or 
unfortunate.").  In Brockmeyer v. Dun & Bradstreet, 113 Wis. 2d 
561, 572, 569, 335 N.W.2d 834 (1983), we recognized a narrow 
"public policy" exception to the doctrine of employment at-will 
and expressly rejected imposing a much broader "implied duty to 
terminate in good faith."  Instead, this court adopted the 
"public policy exception" to the employment at-will doctrine by 
holding "that an employee has a cause of action for wrongful 
discharge when the discharge is contrary to a fundamental and 
well-defined public policy as evidenced by existing law."  Id. 
at 573.11  Several of our subsequent decisions have confronted 
                     
11 In adopting this exception, we stated that "[n]o employer 
should be subject to suit merely because a discharged employee's 
conduct was praiseworthy or because the public may have derived 
some benefit from it."  Brockmeyer v. Dun & Bradstreet, 113 
Wis. 2d 561, 573-74, 335 N.W.2d 834 (1983).  
No. 
97-3542 
 
 
11
this narrow exception.12  None of our decisions, however, has 
abrogated the at-will doctrine by recognizing the tort of 
misrepresentation in the employment context.  In fact, our 
recent decision in Tatge expressly forecloses such a cause of 
action. 
¶14 In Tatge, an employee was dismissed for refusing to 
sign a non-compete agreement, despite being told that "nothing" 
would happen to him if he refused to sign.  219 Wis. 2d at 102-
03.  The employee sued his employer for breach of contract and 
three 
forms 
of 
fraudulent 
misrepresentation, 
including 
negligent, strict liability, and intentional misrepresentation. 
 Id. at 104.  The circuit judge allowed the employee to proceed 
on his negligent misrepresentation cause of action.  This court 
reversed, 
emphatically 
stating 
that 
"[t]he 
breach 
of 
an 
                     
12 See Strozinsky v. District of Brown Deer, 2000 WI 97, 237 
Wis. 2d 19, 614 N.W.2d 443 (finding that an employee can raise 
constructive discharge defense in public policy exception cases 
where the employer alleges voluntary resignation); Hausman v. 
St. Croix Care Ctr., 214 Wis. 2d 655, 668, 571 N.W.2d 393 (1997) 
(including situations where an employee is fired for his or her 
compliance with an affirmative obligation under the law); 
Kempfer v. Automated Finishing, Inc., 211 Wis. 2d 100, 114, 564 
N.W.2d 692 (1997) (holding that an employee cannot be forced to 
violate highway safety regulations); Bushko v. Miller Brewing 
Co., 134 Wis. 2d 136, 142-44, 396 N.W.2d 167 (1986) (limiting 
the scope of the public policy exception to situations where the 
employee is terminated for refusing a command, instruction, or 
request of the employer to violate public policy as established 
by existing law); Wandry v. Bull's Eye Credit Union, 129 Wis. 2d 
37, 46-47, 384 N.W.2d 325 (1986) (extending Brockmeyer's public 
policy exception to include the "spirit" of a statutory 
provision). 
No. 
97-3542 
 
 
12
employment contract is not actionable in tort."  Id. at 107 
(citations omitted). 
¶15 Mackenzie attempts to evade the force of our opinion 
in Tatge by first arguing that there we were confronted with 
negligent misrepresentation, while here the cause of action is 
intentional misrepresentation.  While the only cause of action 
that reached us in Tatge was negligent misrepresentation, we did 
not limit the holding in the manner that Mackenzie suggests.  In 
Tatge, we stated unequivocally that "no duty to refrain from 
misrepresentation exists independently of the performance of the 
at-will employment contract."  Id. at 108.  Whether the 
misrepresentation was negligent or intentional was irrelevant to 
our holding that Tatge, like Mackenzie, failed to state a cause 
of action under Wisconsin law. 
¶16 Mackenzie then argues that his "misrepresentation 
damages did not result from his termination, but from Miller and 
Smith's misrepresentations inducing the employment relationship. 
 Absent the misrepresentations, Miller would not have been in a 
position to terminate Mackenzie because he would not have 
continued his employment with Miller."  Therefore, Mackenzie 
maintains 
that 
his 
damages 
arise 
independently 
of 
his 
employment-at-will contract with Miller.  Our Tatge opinion 
anticipated this argument.  Although "Tatge's request for 
damages in [that] case illustrates that his misrepresentation 
claim is dependent upon his termination from employment," we 
confronted Mackenzie's argument.  Id.  In Tatge, we wrote: 
 
No. 
97-3542 
 
 
13
We 
do 
not 
mean 
to 
suggest 
that 
litigants 
may 
circumvent the holding of this court simply by 
pleading damages which somehow do not arise solely 
from one's termination of employment.  As we have 
said, a duty must exist independently from the 
performance of the employment contract in order to 
maintain a cause of action in tort. 
Id. at n.4.  Mackenzie is attempting to do exactly what we 
expressly prohibited in Tatge:  circumvent the holding by 
pleading damageshis speculative loss of opportunity in finding 
employment elsewherethat arose independently of the performance 
of the employment contract.  We decline to overrule our decision 
in Tatge to create a new retroactive cause of action for 
Mackenzie.13 
III 
¶17 Although we have recognized a new cause of action in 
certain compelling instances, we are apprehensive of injecting 
the judiciary between employees and their employers, thereby 
altering basic tenets of our labor market and our economy.  See 
Anderson v. Continental Ins. Co., 85 Wis. 2d 675, 691-92, 271 
N.W.2d 368 (1978) (recognizing an action for bad faith by an 
insurance company in denying a claim).  First, the cause of 
                     
13 We recently reiterated the fundamental principle of stare 
decisis in State v. City of Oak Creek, 2000 WI 9, ¶55 n.27, 232 
Wis. 2d 612, 605 N.W.2d 526: 
Fidelity to precedent, the doctrine of stare decisis 
'stand by things decided', is fundamental to 'a 
society governed by the rule of law.'  When legal 
standards 'are open to revision in every case, 
deciding cases becomes a mere exercise of judicial 
will, 
with 
arbitrary 
and 
unpredictable 
results.'  
(citations and quotations omitted). 
 
No. 
97-3542 
 
 
14
action for intentional misrepresentation to induce continued 
employment that Mackenzie proposes would impose a corollary duty 
upon 
employeesthat 
is, 
if 
the 
tort 
of 
intentional 
misrepresentation exists independently of the at-will contract, 
it could subject employees as well as employers to liability.  
Second, because such a cause of action would have a profound 
effect on potentially millions of employees, we believe that the 
legislature, not the courts, would be a more appropriate forum 
to address whether the at-will doctrine should be so altered.  
See Slawek, 62 Wis. 2d at 317-18.  Finally, we decline to blur 
the essential lines that divide tort from contract.  See State 
Farm Mut. Ins. Co. v. Ford Motor Co., 225 Wis. 2d 305, 316-17, 
592 N.W.2d 201 (1999). 
A 
 
¶18 The cause of action that Mackenzie urges this court to 
inject into the employment-at-will context would be based on 
Wisconsin's fraudulent representation tort.14  See Montreal River 
Lumber Co. v. Mihills, 80 Wis. 540, 50 N.W. 507 (1891).  The 
elements of a fraud claim are:  (1) false representation; (2) 
                     
14 Mackenzie argues in his brief to this court that 
"[a]lthough the tort [intentional misrepresentation to induce 
continued employment] is a novel one in Wisconsin, it is a 
logical and reasonable extension of the law of fraud to the 
workplace."  We agree that the proposed cause of action for 
intentional misrepresentation to induce continued employment is 
novel, but we disagree that it is a logical and reasonable 
extension of the law of fraud.  Instead, we believe this cause 
of action would engender a dramatic change in employee-employer 
relations, the effects of which cannot be fully comprehended by 
this court based on the record before us. 
No. 
97-3542 
 
 
15
intent to defraud; (3) reliance upon the false representation; 
and (4) damages.  According to Mackenzie, "the policy of the 
State of Wisconsin is founded upon fundamental principles and 
must provide an employee the remedial right to recover from an 
employer for intentional misrepresentation to induce continued 
employment."  
Mackenzie 
argues that 
"fundamental fairness 
considerations require honest disclosure between employees and 
employers."  But see Brockmeyer, 113 Wis. 2d at 567 (reiterating 
the rule that "an employer may discharge an employee 'for good 
cause, for no cause, or even for cause morally wrong'").  In 
Mackenzie's view, this court should impose a duty of disclosure 
in the workplace.15  The parameters of this new tort are 
difficult for us to fathom.  Although Mackenzie frames the cause 
of action in lofty language, he fails to note the possible 
effects.  Such a cause of action could severely limit the 
freedom, flexibility, and privacy of employees as well as 
employers. 
 
¶19 Injecting this cause of action into the at-will 
contract could require an employee to disclose information that 
                     
15 We note, as the court of appeals did below, that there is 
a distinction between actions involving fraudulent inducements 
to commence employment and fraudulent inducements to continue 
employment.  See Mackenzie, 2000 WI App 48 at ¶30 n.5.  The 
essential difference is that fraudulent inducement to commence 
employment occurs prior to the formation of the at-will 
contract.  Of course, both employees and employers may be 
subjected to a fraud action based on conduct that occurred prior 
to the formation of an at-will contract. 
No. 
97-3542 
 
 
16
an employer may reasonably rely upon to his or her detriment.16  
There are many perfectly good reasons that an employee may wish 
to keep a personal fact from his or her employer, even though if 
his or her employer knew the personal fact, the employer might 
dismiss the employee.  See Folely v. Interactive Data Corp., 765 
P.2d 373 (Cal. 1988) (acknowledging that an employee has no duty 
to disclose information when it serves only the employer's 
private interest).  In accordance with the reasons that 
supported the at-will doctrine at its inception in this country, 
an employee may not wish to disclose to his or her employer that 
he or she currently is seeking financing for his or her own 
venture or looking for employment elsewhere.  To allow an 
employer to pursue a cause of action against that employee could 
change the employee and employer relationship and conceivably 
                     
16 If the ostensible reason for this new cause of action is 
to promote honesty in the workplace, employers as well as 
employees 
would 
be 
able 
to 
utilize 
a 
fraudulent 
misrepresentation to induce continued employment cause of action 
against each other.  Under current Wisconsin law, employers do 
not stand in a fiduciary relationship with their employees.  See 
Lehner v. Crane Co., 448 F. Supp. 1127, 1131 (E.D. Pa. 1978) 
(asserting that "an employer-employee relationship does not, in 
and of itself, give rise to a fiduciary relationship from which 
a duty to disclose could be derived").  Therefore, there is no 
distinction that would make this new cause of action applicable 
only to employees, unless this court were to arbitrarily fashion 
such a dichotomy.  Such a dichotomy, however, would lack the 
clarity and legitimacy of statutory definitions of the key 
terms, such as "employee" and "employer." 
No. 
97-3542 
 
 
17
stifle the free movement of employees.17  By removing the 
essential freedom an employee has to leave a firm at any time, 
we would concentrate power in the hands of a few large 
established firms that could use their ample resources to bind 
their employees to their payrolls through this new cause of 
action.  In contrast, small start-ups or family businesses are 
less likely than large companies to have sophisticated personnel 
departments, which this new cause of action would require to 
reduce the risk of litigation.  Instead, in a small company that 
has only a few employees, the employers and employees work with 
each other in a relatively unstructured relationship that 
develops and strengthens over time. 
 
¶20 Indeed, Mackenzie's proposed broad cause of action 
fails to recognize the dynamic nature of at-will employment in 
practice.  The employment at-will doctrine derives its vitality 
from the fact that the future is unknowable.  Although the 
employee may tell his or her employer that he or she will be 
available for a certain period of time, subsequent events may 
cause the employee to leave, either to pursue an opportunity 
elsewhere or for some personal reason.  Similarly, an employer 
may be unable to predict what will happen in the future.  As 
Professor Epstein observed: 
                     
17 See Gail L. Heriot, The New Feudalism:  The Unintended 
Destination of Contemporary Trends in Employment Law, 28 Ga. L. 
Rev. 167 (1993) (arguing that limiting the at-will doctrine will 
contribute to the "feudalization" of employment relations and 
lead employers to become more active in influencing what an 
employee does off the job).  
No. 
97-3542 
 
 
18
 
The future is not clearly known.  More important, 
employees, like employers, know what they do not know. 
 They are not faced with a bolt from the blue, with an 
'unknown unknown.'  Rather they face a known unknown 
for which they can plan.  The at-will contract is an 
essential part of that planning [for the known 
unknown] because it allows both sides to take a wait-
and-see attitude to their relationship so that new and 
more accurate choices can be made on the strength of 
improved information. 
Richard A. Epstein, In Defense of the Contract At Will, 51 U. 
Chi. L. Rev. 947, 969 (1984).  The at-will employment doctrine 
creates a subtle contractual relationship between the employee 
and employer that enables each to deal with this known unknown, 
which is that the employee and employer both know that something 
will happen in the future, but neither the employee nor the 
employer knows what that something is.  When a future event 
occurs, the employee and the employer have the freedom to 
respond appropriately.  Interposing the courtsabsent a clearly 
defined statuteinto this subtle relationship could suppress its 
dynamic nature. 
B 
 
¶21 These unforeseen effects lead us to stay our hand from 
creating a new cause of action for intentional misrepresentation 
to induce continued employment.18  Over 3,000,000 Wisconsin 
                     
18 We have been unable to find any jurisdiction in this 
country that recognizes the cause of action advanced by 
Mackenzie.  
No. 
97-3542 
 
 
19
citizens 
are 
currently 
employed.19 
 
Of 
those 
3,000,000, 
approximately 490,000 are labor union members and therefore are 
presumably covered by a collective bargaining contract.20  A 
substantial number of the remaining 2,500,000 undoubtedly have 
at-will contracts with their employers since it is the default 
rule in our state.  Brockmeyer, 113 Wis. 2d at 572.  We believe 
that this courtin accordance with the principle of judicial 
restraintshould tread lightly when asked to recognize a new 
cause of action that could affect so many citizens, particularly 
since we have only the present record before us.  See Doering v. 
WEA Ins. Group, 193 Wis. 2d 118, 132, 532 N.W.2d 432 (1995) 
(noting that this court is aware "drawing lines and creating 
distinctions to establish public policy are legislative tasks"); 
Ollerman v. O'Rourke Co., 94 Wis. 2d 17, 27, 288 N.W.2d 95 
(1980) (observing that "when a court resolves a question of 
legal duty the court is making a policy determination").  As 
Justice Frankfurter observed in his dissent in Sherrer v. 
Sherrer, 334 U.S. 343, 366 (1948): 
 
Courts are not equipped to pursue the paths for 
discovering wise policy.  A court is confined within 
                     
19 Chicago 
Regional 
Economic 
Analysis 
and 
Information 
Office, Bureau of Labor Statistics (Dec. 15, 2000).  There are 
no definite statistics on how many workers have at-will 
contracts, but since it is the default rule, most workers, 
except union members and independent contractors, work on an at-
will basis.  
20 Barry Hirsch & David Macpherson, Union Membership and 
Earnings Data Book:  Compilations from the Current Population 
Survey, The Bureau of National Affairs, Inc., Washington, D.C. 
(1999).  
No. 
97-3542 
 
 
20
the bounds of a particular record, and it cannot even 
shape the record.  Only fragments of a social problem 
are seen through the narrow windows of a litigation.  
Had we innate or acquired understanding of a social 
problem in its entirety, we would not have at our 
disposal adequate means for constructive solution. 
Such is the case here.  The legislature, with all its resources 
and investigative powers, is the appropriate forum for such a 
sweeping policy decision, which would affect millions of 
Wisconsin citizens.  See Brockmeyer, 113 Wis. 2d at 573 ("Courts 
should 
proceed 
cautiously 
when 
making 
public 
policy 
determinations."). 
¶22 In other circumstances, we likewise have declined to 
create a new cause of action that would dramatically alter our 
social fabric.  In Slawek, we considered whether or not to 
recognize the tort of "wrongful birth" as a cause of action.  
While we acknowledged that this court has the power to recognize 
such a cause of action, we declined because "recognition of a 
cause of action for wrongful birth would have vast social 
ramifications and the creation of such a cause of action is the 
type of public policy decision that should be made by the people 
of this state or their elected representatives."  62 Wis. 2d at 
317-18.  A cause of action for intentional misrepresentation to 
induce continued employment 
would 
similarly 
have profound 
economic ramifications and cause corresponding social changes.  
Hence, we believe that it would be inappropriate for us to 
abrogate the employment at-will doctrine by injecting into it a 
tort cause of action.  See Tatge, 219 Wis. 2d at 107 ("We 
No. 
97-3542 
 
 
21
decline to give our blessing to such an irreverent marriage of 
tort and contract law."). 
C 
¶23 By asking us to recognize a tort cause of action in a 
contractual relationship, Mackenzie is essentially asking us to 
envelop contract law with tort law.  It is undisputed that 
Mackenzie had an at-will contract with Miller.  Rather than a 
breach of contract claim, Mackenzie's action for intentional 
misrepresentation necessarily sounds in tort.21   
¶24 In another case, the facts may support a remedy in 
contract law.  For example, the employee handbook may form the 
terms of the employment contract and the employer or the 
employee may violate those terms.  In Ferraro v. Koelsch, 124 
Wis. 2d 154, 169, 368 N.W.2d 666 (1985), we held that "the 
particular personnel manual used by Hyatt . . . containing the 
conditions it did and which were specifically accepted by 
Ferraro and under which conditions he agreed to continue work, 
constituted a contract for something other than an employment 
contract terminable at will."  We further noted that "we do not 
hold that all personnel manuals or employee handbooks will have 
that effect."  Id.; see also Vorwald v. School Dist. of River 
Falls, 167 Wis. 2d 549, 558, 482 N.W.2d 93 (1992) (holding that 
a particular personnel policy without evidence that either party 
                     
21 Mackenzie acknowledges his inability to bring a contract 
action against Miller.  In his brief, he states that "Mackenzie 
had no contract cause of action against Miller or Smith for 
their intentional misrepresentations.  Miller did not break any 
promise."  
No. 
97-3542 
 
 
22
agreed to be bound by its terms did not create a contract, 
implied or otherwise).  Thus, while a particular employee 
handbook could give rise to an action in contract, that is not 
the case presently before us. 
¶25 Similarly, there might be a cause of action sounding 
in contract under promissory estoppel.  We first recognized 
promissory estoppel in Hoffman v. Red Owl Stores, Inc., 26 
Wis. 2d 683, 698, 133 N.W.2d 267 (1965).  There, we asserted 
that three questions must be answered affirmatively to give rise 
to an action for promissory estoppel:  "(1) Was the promise one 
which the promisor should reasonably expect to induce action or 
forbearance of a definite and substantial character on the part 
of the promisee?  (2) Did the promise induce such action or 
forbearance?  (3) Can injustice be avoided only by enforcement 
of the promise?"  We have previously examined this doctrine in 
the at-will employment context.  See Smith v. Beloit Corp., 40 
Wis. 2d 550, 556-57, 162 N.W.2d 585 (1968) (reasserting that 
justice does not require the application of promissory estoppel 
where employee left former job based on promise of "permanent 
employment"); Forrer v. Sears, Roebuck & Co., 36 Wis. 2d 388, 
392, 153 N.W.2d 587 (1967) (holding that justice does not 
require the invocation of promissory estoppel where employee 
alleges that he gave up his farming operations at great 
financial 
loss 
in 
consideration 
for 
"full-time 
permanent 
employment").  Therefore, in another case, promissory estoppel 
might be an appropriate cause of action in the employment 
context.  A cause of action for promissory estoppel in the 
No. 
97-3542 
 
 
23
employment context, like a contract cause of action based on an 
employee handbook, is in accordance with Wisconsin contract law 
when the particular facts indicate that the parties altered the 
default relationship of at-will employment. 
¶26 But here, the record demonstrates that there is no 
remedy for Mackenzie in contract law.  Therefore, he seeks to 
shoehorn a tort cause of action into his at-will contractual 
relationship with Miller.  Absent an applicable statute, we 
reject his attempt to create this tort within a contractual 
relationship and emphasize the need to preserve the boundary 
between tort law and contract law. 
¶27 We have noted that "[i]t is important to maintain this 
distinction [between tort and contract law] because the two 
theories serve very different purposes."  State Farm, 225 
Wis. 2d at 315.  Tort law "rests on obligations imposed by law." 
 Daanen & Janssen, Inc. v. Cedarapids, Inc., 216 Wis. 2d 395, 
405, 573 N.W.2d 842 (1998).  On this score, we said "[t]ort law 
is rooted in the concept of protecting society as a whole from 
physical harm to person or property."  Id. (citations omitted). 
 Further explicating the foundations of tort law, we wrote that 
"[t]ort law was designed to protect people from unexpected 
losses that amount to an overwhelming misfortune that a person 
may be unprepared to meet."  State Farm, 225 Wis. 2d at 316 
(citations omitted).  Hence, tort law "serves the 'prophylactic' 
purpose of preventing future harm; payment of damages provides a 
strong incentive to prevent the occurrence of harm."  Merten v. 
Nathan, 108 Wis. 2d 205, 211-12, 321 N.W.2d 173 (1982).  Because 
No. 
97-3542 
 
 
24
tort law protects society as a whole, recovery in appropriate 
circumstances can include punitive or exemplary damages, which 
are designed "to punish the wrongdoer and to deter the wrongdoer 
and others from engaging in similar conduct."  Apex Electronics 
Corp. v. Gee, 217 Wis. 2d 378, 389, 577 N.W.2d 23 (1998) 
(citations omitted). 
¶28 In contrast, contract law "is based on obligations 
imposed by bargain, and it allows parties to protect themselves 
through bargaining."  State Farm, 225 Wis. 2d at 316-17 
(citations omitted).  Contract law does not involve the same 
broader societal concerns as tort law for "the individual 
limited duties implicated by the law of contracts arise from the 
terms of the agreement between the particular parties."  Daanen, 
216 Wis. 2d at 404 (citations omitted).  Thus, the damages 
allowed in a contract action "[are] limited to the parties to 
the contract or those for whose benefit the contract was made." 
 State Farm, 225 Wis. 2d at 317.  Because the law encourages 
economic exchanges and seeks to foster predictability, punitive 
damages are not allowed in a breach of contract action; to allow 
otherwise would chill the formation of contracts and reduce 
No. 
97-3542 
 
 
25
predictability.22  Parties who enter into contracts expect courts 
to enforce the terms, which the law requires unless the contract 
is for an illegal purpose or a party lacked capacity.  See 
Merten, 108 Wis. 2d at 211 ("The courts protect each party to a 
contract by ensuring that the promises will be performed.  The 
law protects justifiable expectations and the security of 
transactions.").  Essentially, contract law is based upon the 
principles of free will and consent, whereas tort law is based 
upon the principles of risk-sharing and social duties. 
¶29 In the present case, Mackenzie freely consented to 
entering into a contractual at-will relationship with Miller in 
1974there is no allegation that he was fraudulently induced 
into this relationship.  During his tenure at Miller, he was 
free to leave at any point for opportunities elsewhere, just as 
Miller was free to dismiss Mackenzie.  Under the at-will 
contract between Miller and Mackenzie, Miller had no obligation 
to inform Mackenzie of any decisions that it made or intended to 
make and Mackenzie had no obligation to inform Miller of any 
decisions he made or intended to make.  Now, after Miller 
                     
22 In Merten, we acknowledged the important public policy of 
the freedom to contract by quoting the Supreme Court in 
Baltimore & Ohio Sw. Ry. Co. v. Voigt, 176 U.S. 498, 505 (1900): 
 "'if there is one thing which more than another public policy 
requires it is that men of full age and competent understanding 
shall have the utmost liberty of contracting, and that their 
contracts, when entered into freely and voluntarily, shall be 
held sacred, and shall be enforced by courts of justice.'"  
Merten v. Nathan, 108 Wis. 2d 205, 212 n.5, 321 N.W.2d 173 
(1982).  Mackenzie does not allege that he did not freely enter 
into his at-will contract with Miller. 
No. 
97-3542 
 
 
26
exercised its contractual right in dismissing Mackenzie, he asks 
this court to create a retroactive cause of action in tort that 
would address his alleged grievancethat Miller had a duty to 
inform him of his status and failed to do so.  We decline to 
create such an action.  Under the law of Wisconsin, individuals 
can enter into at-will employment contracts and terminate those 
relationships for good cause, no cause, or morally wrong cause. 
 While we do not condone employers misrepresenting a fact to 
their 
employeesjust 
as 
we 
do 
not 
support 
employees 
misrepresenting a fact to their employerswe find that the cause 
of action must be found in contract rather than tort law.  
Finally, we reject the notion that either employees or employers 
have a duty to inform the other of a fact the other conceivably 
may rely upon absent a statute to the contrary. 
IV 
¶30 In conclusion, we hold that there is not a cause of 
action in Wisconsin for intentional misrepresentation to induce 
continued employment.  Thus, Mackenzie failed to state a cause 
of action against Miller and Smith.  We therefore affirm the 
decision of the court of appeals.   
By the Court.—The decision of the court of appeals is 
affirmed.  
¶31 N. PATRICK CROOKS, J., did not participate.   
 
No. 97-3542.ssa 
 
1 
¶32 SHIRLEY S. ABRAHAMSON, CHIEF JUSTICE (concurring).  
The lengthy majority opinion boils down to adopting this rule of 
law: When an employer deliberately and intentionally lies to an 
at-will employee to induce the employee to continue employment 
and the employee continues to work relying on those lies, and 
then sustains damages as a result of reliance on the lies, the 
employee cannot sue in a tort action for damages.  I cannot join 
this opinion. 
¶33 Wisconsin's general rule of law is that everyone is 
liable for damages for intentional misrepresentation.23  The 
majority opinion carves out an exception to this general rule 
and states that employers are not liable to at-will employees 
for damages for intentional misrepresentation.  It's one thing 
to 
say 
that 
the 
elements 
of 
the 
tort 
of 
intentional 
misrepresentation have not been met in the present case.  I 
therefore concur.  It's entirely another thing to say, as the 
majority opinion does in the present case, that the tort of 
                     
23 The elements of the tort of intentional misrepresentation 
are: 
the 
defendant 
made 
a 
representation 
of 
fact; 
the 
representation of fact was untrue; the untrue representation was 
made by the defendant knowing the representation was untrue or 
recklessly without caring whether it was true or false; the 
defendant made the representation with intent to deceive and 
induce the plaintiff to act upon it to the plaintiff's pecuniary 
damage; and the plaintiff believed such representation to be 
true and relied on it.  See Wis JI—Civil 2401.  
No. 97-3542.ssa 
 
2 
intentional misrepresentation never applies in an employment-at-
will relationship.24   
¶34 I join ¶25 of the opinion in which the majority 
opinion recognizes an employee-at-will's cause of action under 
the doctrine of promissory estoppel.  It is the lack of a 
contract in at-will employment that allows claims for promissory 
estoppel.25 
                     
24 The majority overlooks persuasive authority from numerous 
jurisdictions that have allowed this cause of action in the 
employment-at-will context.  See, e.g., Frank J. Cavico, 
Fraudulent, Negligent, and Innocent Misrepresentation in the 
Employment Context: The Deceitful, Careless, and Thoughtless 
Employer, 20 Campbell L. Rev. 1, 4-5 (1997) (providing an 
overview 
of 
the 
case 
law 
on 
employer 
misrepresentation, 
including several cases in the at-will employment context). 
25 Other theories of recovery exist.  See, e.g., ¶24 of the 
majority opinion; Brodsky v. Hercules, Inc., 966 F.Supp. 1337, 
1351 (D. Del. 1997) (a cause of action for breach of an implied 
covenant of good faith and fair dealing exists when the employer 
misrepresents some important fact, most often the employers' 
present intention, and the employee relies thereon either to 
accept a new position or remain in a present one). 
No. 97-3542.ssa 
 
3 
¶35 For the reasons set forth, I write separately. 
¶36 I am authorized to state that Justice WILLIAM A. 
BABLITCH joins this concurrence.