In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 06-4290

STEVEN PETERS,

Plaintiff-Appellant,

v.

GILEAD SCIENCES, INCORPORATED,

Defendant-Appellee.

____________

Appeal from the United States District Court

for the Southern District of Indiana, Indianapolis Division.

No. 04 C 1338—John Daniel Tinder, Judge.

____________

ARGUED MAY 22, 2007—DECIDED JULY 14, 2008

____________

Before EASTERBROOK, Chief Judge, and WILLIAMS and

SYKES, Circuit Judges.

SYKES, Circuit Judge. Steven Peters suffered a shoulder

injury while he was employed by Gilead Sciences, Inc.

He took a relatively short medical leave to have corrective surgery, and when his condition did not improve

after returning to work, he took another leave. During his

second absence, Gilead filled his position with another

employee, and when Peters returned to work, Gilead

offered him a different position. He declined and Gilead

terminated his employment.
2 No. 06-4290

Peters filed suit against Gilead, alleging (as relevant

here) a violation of the Family and Medical Leave Act

(“FMLA”), 29 U.S.C. §§ 2601 et seq., and a claim for promissory estoppel under Indiana law. Gilead moved for

summary judgment on the FMLA claim, arguing that

Peters was ineligible for FMLA leave based on a provision in the Act that excludes employees at worksites at

which less that 50 employees are employed “if the total

number of employees employed by that employer

within 75 miles of that worksite is less than 50.” 29 U.S.C.

§ 2611(2)(B)(ii). It was undisputed that Gilead employed

less than 50 employees within 75 miles of Peters’ worksite,

making him statutorily ineligible for FMLA leave. It

was also undisputed that if Peters was eligible for FMLA

leave, Gilead had miscalculated the 12-week duration of

his leave and replaced him before it expired.

Relying on language in Dormeyer v. Comerica Bank-Illinois,

223 F.3d 579, 582 (7th Cir. 2000), Peters argued that

Gilead was equitably estopped from asserting the FMLA’s

50/75 exclusion based on representations made in

Gilead’s employee handbook and in letters it sent to

Peters regarding his entitlement to 12 weeks of medical

leave. The district court concluded Peters had not established the elements of equitable estoppel and granted

summary judgment for Gilead.

We reverse. While Dormeyer suggested that FMLA

eligibility might, “in an appropriate case,” arise by

estoppel, the issue need not have been addressed in this

case. Peters alleged a state-law claim for promissory

estoppel—an equitable contract remedy that permits

enforcement of a promise that induces actual and reasonable reliance on the part of the plaintiff, at least to the

extent of the plaintiff’s reliance damages. The doctrine is
No. 06-4290 3

available when a promise lacks the elements of contract; a

threshold question is whether the promise created an

enforceable contract.

The medical-leave representations contained in Gilead’s

employee handbook (repeated in its letters to Peters) may

have created an enforceable contract under Indiana

law, giving Peters a contractual right to the equivalent

of FMLA leave (that is, 12 weeks) regardless of his statutory ineligibility. If the representations in the handbook

are not contractually enforceable, Indiana’s promissoryestoppel cause of action allows enforcement of Gilead’s

promises to the extent of the reliance harm Peters suffered. Accordingly, we need not decide whether this is an

“appropriate case” to apply FMLA eligibility-by-estoppel,

a possibility assumed but not decided in Dormeyer.

I. Background

In July 2001 Peters began employment as a Therapeutic

Specialist for Gilead, a pharmaceutical company. As a

Therapeutic Specialist, Peters worked from his home in

Indianapolis representing and marketing Gilead’s products to physicians and healthcare professionals in its

Midwest region. In November 2001 Peters suffered a workrelated injury to his neck and right shoulder. When he

reaggravated his shoulder in October 2002, Peters reported

the injury to Gilead and filed a worker’s compensation

claim. At the end of November, his physician imposed

lifting restrictions, and Peters worked under these restrictions until early December of that same year. He then

underwent corrective surgery, taking what he thought

was FMLA medical leave from December 5 through

December 16, 2002.
4 No. 06-4290

The day after his leave started, Peters received a letter

from Gilead stating in part:

The Federal Family and Medical Leave Act

(“FMLA”) went into effect August 5, 1993. The act

grants eligible employees of covered employers up

to twelve weeks of unpaid leave in a twelve month

period to care for a newborn or adopted or foster

child, to care for the seriously ill parent, child, or

spouse of the employee, or to attend to the employee’s

own serious health condition. To be eligible for FMLA

benefits, an employee must have worked for a covered employer for a total of 12 months and have

worked at least 1,250 hours over the previous twelve

months.

You will retain your employee status during the

period of your FMLA Leave. This includes accrual of

tenure and vacation, in addition to continued health

benefits coverage. You will be guaranteed reinstatement in your position, or equivalent position, if

you return to work by the time your FMLA leave

expires. In this case, since your leave began December

5, 2002, you will need to return to work by February 28,

2003 to be guaranteed such reinstatement.

This excerpt (with the exception of the specific start and

end dates for the leave) tracks language in Gilead’s employee handbook regarding employees’ entitlement to

family and medical leave. The handbook provides, under

the bold heading “FAMILY AND MEDICAL CARE

LEAVE” and the subheading “ELIGIBILITY”: “A request

for family and medical care leave will be granted for all

employees employed by the Company [Gilead] for at

least twelve months and who have worked 1,250 hours

during the twelve months preceding the commencement
No. 06-4290 5

1 There is no dispute that the second letter miscalculated

Peters’ available leave time.

2 May 9 is the last day of the twelfth workweek of available

leave. According to Gilead’s employee handbook, “[e]ligible

(continued...)

of leave.” Like the letter Peters received, the handbook

guarantees 12 weeks of family and medical leave during

a 12-month period and reinstatement to the same (or an

equivalent) position with the company upon return to

work.

Peters returned to work on December 16, 2002, and

worked under restrictions that limited him to left hand and

arm work. On March 4, 2003, Peters took a second leave

when his doctors began treating him with Neurontin, a

drug that causes significant side effects. This second

leave lasted until May 5, 2003. At the start of this second

leave, Gilead sent Peters a letter, similar to the first,

again setting forth his eligibility for medical leave. Dated

March 17, 2003, this letter stated:

In this case, your original leave began December 5,

2002, and you returned to work as of January 26, 2003

(7 weeks and 4 days). Since you reestablished your

leave as of March 4, 2004, you will need to return to

work by April 4, 2003 (4 weeks and 3 days) to be

guaranteed such reinstatement.

The letter erroneously identified January 26 as the date

Peters returned from his first leave. In fact, his first leave

only lasted until December 16, 2002. Accordingly, the

April 4, 2003 return-to-work deadline in the letter

was incorrect.1

 Properly calculated, Peters’ second

leave would have run through May 9, 2003.2

 Peters never
6 No. 06-4290

2 (...continued)

employees shall be entitled to twelve workweeks of designated

family and medical care leave during a twelve-month period.”

This corresponds to the FMLA’s guarantee of twelve weeks of

family and medical care leave during a twelve-month period.

29 U.S.C. § 2612(a)(1). 

3 The FMLA permits employers to deny job restoration protection for “key” salaried FMLA-eligible employees. See 29 U.S.C.

§ 2614(b)(2). A Department of Labor Regulation states “an

employer may deny job restoration to salaried eligible employees (’key employees,’ as defined in paragraph (c) of

§ 825.217) if such denial is necessary to prevent substantial

and grievous economic injury to the operations of the employer.” 29 C.F.R. § 825.216(c). “A ‘key employee’ is a salaried

FMLA-eligible employee who is among the highest paid 10

percent of all the employees employed by the employer within

75 miles of the employee’s worksite.” 29 C.F.R. § 825.217(a);

29 U.S.C. § 2614(b)(2). Gilead’s employee handbook states

(continued...)

received this second letter with the miscalculated return-towork date, however. Gilead sent it by certified mail, but

apparently no one at Peters’ residence signed for it.

In early April 2003, Gilead decided to replace Peters

with another employee. On April 16, 2003, Frank Romeo,

Gilead’s Associate Director for Human Resources, received a letter from Peters’ doctor releasing him to return

to work on May 5, 2003, within what would have been

his properly calculated return-to-work deadline. On

April 21 Gilead offered Peters’ Therapeutic Specialist

position to an outside candidate who accepted and

began employment on April 28, 2003. By letter dated

April 25, 2003, Gilead informed Peters that because he

held a “key” position, Gilead could not keep his job open.3
No. 06-4290 7

3 (...continued)

that “[c]ertain key employees may be denied job reinstatement if substantial and grievous economic injury to Gilead

would result if the employee were reinstated.” The handbook

also states that “Gilead will notify any key employee of

his/her job status as a key employee upon requesting leave.”

Gilead did not notify Peters that he was considered a “key

employee” until April 25, 2003, long after his second leave

request was granted. In any event, the issue of whether

Peters is a “key employee” has not been raised on appeal.

4 The dismissal of these claims is not at issue on appeal.

This letter advised Peters that his old position had been

filled but offered him placement as a Senior Sales Analyst.

Peters declined this alternative position, and Gilead

terminated his employment.

Peters sued Gilead in federal court, alleging causes of

action under Title VII, the FMLA, and the Americans

with Disabilities Act. Peters also asserted claims for

retaliatory discharge and promissory estoppel under

Indiana law. Gilead moved for summary judgment.

Regarding the FMLA claim, Gilead argued Peters was

not an “eligible employee” as defined in the Act. Peters

filed a cross-motion for partial summary judgment,

claiming Gilead was estopped from asserting a statutory

ineligibility defense to FMLA liability.

The district court granted summary judgment for

Gilead on the Title VII and ADA claims, as well as the

state-law claim for retaliatory discharge.4

 The FMLA

count survived, and the state-law promissory-estoppel
8 No. 06-4290

5 In its brief supporting its summary-judgment motion, Gilead

noted that Peters brought an Indiana common-law claim for

promissory estoppel/detrimental reliance but recharacterized

it as a claim for equitable estoppel: “Because this is an equitable

estoppel claim under a federal statute, federal (not Indiana) law

principals [sic] of equitable estoppel are applicable.” We

disagree that a claim for relief grounded in promissory

estoppel is interchangeable with the doctrine of equitable

estoppel. While both are equitable judicial doctrines based on

detrimental reliance, the former is a cause of action and the

latter is a defensive doctrine used to bar the opposing party

from asserting a claim or defense. A remedial aspect of state

contract law, a promissory-estoppel cause of action permits

the enforcement of a promise that otherwise lacks the elements

of a contract. “Promissory estoppel is a sword, and equitable

estoppel is a shield.” Jablon v. United States, 657 F.2d 1064,

1068 (9th Cir. 1981). 

claim was not specifically addressed.5 Gilead then filed a

motion for reconsideration as to the FMLA claim, which

the court granted, concluding that Peters had not established the elements of equitable estoppel. The court held

that Peters failed to present evidence from which a trier

of fact reasonably could have inferred he was capable of

returning to work by April 4, the return-to-work date

specified in Gilead’s second letter to Peters. If Peters

was physically unable to work by that date, the court

reasoned, he could not have detrimentally relied on

Gilead’s representations in deciding when to return to

work.

II. Discussion

We review the district court’s order granting summary judgment de novo, viewing the facts and all reason-
No. 06-4290 9

able inferences drawn from them in the light most favorable to the nonmoving party. Nissan N. Am., Inc. v. Jim

M’Lady Oldsmobile, Inc., 486 F.3d 989, 994 (7th Cir. 2007);

DeBoer v. Vill. of Oak Park, 267 F.3d 558, 565 (7th Cir. 2001).

The parties agree that Peters did not meet the statutory

requirements for FMLA eligibility. More precisely,

Peters falls within an exception to the general statutory

definition of “eligible employee” for employees at

worksites at which the employer employs less than 50

employees “if the total number of employees employed

by that employer within 75 miles of that worksite is

less than 50.” 29 U.S.C. § 2611(2)(B)(ii). The so-called

“50/75” provision is an exception to the FMLA’s general

eligibility provision, which premises eligibility on an

employee’s having worked for the employer for at least

12 months and worked a minimum of 1,250 hours during

the previous 12 months. See 29 U.S.C. § 2611(2)(A).

Gilead’s employee handbook and its letters to Peters

recited the 12-month, 1,250-hour prerequisites for familyand medical-leave eligibility, but listed no further requirements or exceptions. That is, the handbook and letters

stated that family and medical leave would be provided

to “all employees” who were employed with Gilead for

at least 12 months with a minimum of 1,250 hours

worked during the prior 12 months; neither the handbook

nor the letters contained any reference to the 50/75 exception.

Peters claims this omission equitably estops Gilead

from asserting a defense of statutory ineligibility that

would otherwise bar his FMLA claim. It is true that in

Dormeyer we suggested equitable estoppel might, “in an

appropriate case,” be applied to block the assertion of an

available statutory defense in an FMLA action: “[A]n
10 No. 06-4290

6 Other circuits have recognized the availability of equitable

estoppel to defeat a defense of FMLA ineligibility. See Minard v.

ITC Deltacom Commc’ns, Inc., 447 F.3d 352, 358 (5th Cir. 2006);

Duty v. Norton-Alcoa Proppants, 293 F.3d 481, 493-94 (8th Cir.

2002); Kosakow v. New Rochelle Radiology Assocs., 274 F.3d 706,

723-25 (2d Cir. 2001).

employer who by his silence misled an employee concerning the employee’s entitlement to family leave might,

if the employee reasonably relied and was harmed as a

result, be estopped to plead the defense of ineligibility

to the employee’s claim to entitlement to family leave.”

Dormeyer, 223 F.3d at 582. But the factual predicates for

application of equitable estoppel were not present in

Dormeyer, and the issue was not further elaborated.6 Id.

at 582-83.

We need not consider whether this is an appropriate

case to take up where Dormeyer left off. Peters brought a

state-law claim for promissory estoppel based on his

reliance on Gilead’s representations regarding his entitlement to medical leave. Indiana recognizes this cause of

action in the employment context and has adopted the

formulation of the claim set forth in the Restatement (Second)

of Contracts § 90(1): “A promise which the promisor should

reasonably expect to induce action or forbearance on the

part of the promisee or a third person and which does

induce such action or forbearance is binding if injustice can

be avoided only by the enforcement of the promise.” See

Jarboe v. Landmark Cmty. Newspapers of Ind., Inc., 644 N.E.2d

118, 121 (Ind. 1994). This species of contract claim sounds

in equity, as do other forms of estoppel, see Brown v. Branch,

758 N.E.2d 48, 51-52 (Ind. 2001), but is an affirmative cause

of action and thus differs from equitable estoppel, which
No. 06-4290 11

7 We questioned counsel about the state-law theory of this case

at oral argument, and the parties agreed that jurisdiction was

secure under 28 U.S.C. § 1332. Pursuant to 28 U.S.C. § 1653,

Peters has since repleaded the jurisdictional component of

his complaint to properly invoke diversity jurisdiction. 

operates defensively to bar the assertion of a claim or

defense. Promissory estoppel steps in where a promise

lacks the elements of a binding contract but has induced

detrimental reliance on the part of the promisee. Sometimes

the facts of a given case raise a threshold question of

whether the promise created an enforceable contract in

the first place.7

Gilead’s employee handbook promised 12 weeks of

medical leave—the equivalent of the leave guaranteed by

the FMLA—and Gilead repeated these promises in its

letters to Peters. It is not clear whether this is sufficient

to establish a binding contract under Indiana law. See Orr

v. Westminster Vill. N., Inc., 689 N.E.2d 712, 719-20 (Ind.

1997) (discussing, without resolving, the question whether

“unilateral contracts in the employment context always

require adequate independent consideration and whether

an employee handbook can ever constitute a unilateral

contract serving to modify the otherwise at-will employment relationship”); see also Workman v. United Parcel Serv.,

Inc., 234 F.3d 998, 1000 (7th Cir. 2000) (citing Orr and noting

that “Indiana has yet to decide whether to follow” other

states in holding that employee handbooks may, under

certain circumstances, create binding contracts); Damon

Corp. v. Estes, 750 N.E.2d 891, 893 (Ind. Ct. App. 2001)

(enforcing the terms of an employee handbook in favor of

employer); Ind. Heart Assocs., P.C. v. Bahamonde, 714 N.E.2d

309, 311-12 (Ind. Ct. App. 1999) (same); Die & Mold, Inc. v.
12 No. 06-4290

8 In Orr, the Indiana Supreme Court was confronted with the

question of whether an employee handbook was sufficiently

contractual to convert an at-will employment relationship

into one terminable only for cause. Orr v. Westminster Vill. N.,

Inc., 689 N.E.2d 712, 719-20 (Ind. 1997). After declining to

specifically decide the question, id. at 720 (“we decline plaintiffs’

invitation to use this case as a vehicle for resolving these

questions”), the Court went on, for the sake of argument, to

analyze the case under the approach used in Illinois for determining whether an employee handbook creates a contract. Id.

(citing Duldulao v. Saint Mary of Nazareth Hosp. Ctr., 505 N.E.2d

314, 318 (Ill. 1987)). We have previously noted, based on Orr,

that the issue remains unresolved in Indiana. Workman v. United

Parcel Serv., Inc., 234 F.3d 998, 1000 (7th Cir. 2000). We are aware

of two decisions of the Indiana Court of Appeals that read Orr

as rejecting the proposition that an employee handbook can

create a contract. McCalment v. Eli Lilly & Co., 860 N.E.2d 884,

889 (Ind. Ct. App. 2007) (citing Orr for the proposition that

“[u]nder Indiana law, employee handbooks do not constitute

unilateral contracts of employment”); City of Indianapolis v.

Byrns, 745 N.E.2d 312, 317 n.3 (Ind. Ct. App. 2001) (“We also

note our supreme court’s explicit rejection of the proposition

that employee handbooks or guidelines create so-called unilateral contracts of employment[,]” citing Orr.). These decisions

are difficult to reconcile with the language of Orr itself and also

with a line of Indiana cases that has enforced the terms of

employee handbooks running in favor of employers on the

issue of employees’ entitlement to vacation pay upon termination. Damon Corp. v. Estes, 750 N.E.2d 891, 893 (Ind. Ct. App.

2001); Ind. Heart Assocs., P.C. v. Bahamonde, 714 N.E.2d 309,

312 (Ind. Ct. App. 1999); Die & Mold, Inc. v. Western, 448

N.E.2d 44, 48 (Ind. Ct. App. 1983).

Western, 448 N.E.2d 44, 48 (Ind. Ct. App. 1983) (same).8
No. 06-4290 13

In the absence of a binding contract, however, Indiana

permits enforcement of Gilead’s promises to the extent

of Peters’ reliance damages. Orr, 698 N.E.2d at 718; Jarboe,

644 N.E.2d at 121; Clark v. Millikin Mortgage Co., 495

N.E.2d 544, 547 (Ind. Ct. App. 1986). Under Indiana law,

the promissory-estoppel cause of action requires: “(1) a

promise by the promissor; (2) made with the expectation

that the promisee will rely thereon; (3) which induces

reasonable reliance by the promisee; (4) of a definite and

substantial nature; and (5) injustice can be avoided only

by enforcement of the promise.” Brown, 758 N.E.2d at 52.

The undisputed evidence here establishes the first four

elements of this cause of action; the fifth relates to the scope

of the remedy. Jarboe, 644 N.E.2d at 121-22.

If the medical-leave provisions in Gilead’s employee

handbook are actionable as a contract or as a promise

giving rise to recovery under promissory estoppel, Gilead’s

invocation of the FMLA’s 50/75 exception, and Peters’

assertion of equitable estoppel to block it, are simply beside the point. Gilead’s handbook does not exclude any

employees from the entitlement to 12 weeks of family

and medical leave except those who do not meet the basic

prerequisites of 12 months’ employment with the company and 1,250 hours of work in the preceding 12 months.

There is no reason employers cannot offer FMLA-like

leave benefits using eligibility requirements less restrictive than those in the FMLA, cf. Harrell v. United States

Postal Serv., 445 F.3d 913, 924 (7th Cir. 2006), and that is

what Gilead did. Peters’ statutory ineligibility is irrelevant

to the contract-based theories of liability.

The issue of Peters’ ability to return to work by the

April 4 date specified in Gilead’s second letter is likewise

irrelevant. There is no dispute that if Peters is entitled to
14 No. 06-4290

12 weeks of medical leave (either contractually or by

application of promissory estoppel), then the April 4

date was miscalculated. Twelve weeks of leave expired

on May 9, and it is undisputed that Peters was medically

cleared to return to work on May 5.

The district court did not address whether Gilead’s

promises are actionable as a contract or under promissory

estoppel. This was understandable because the parties

focused their arguments on Dormeyer and the equitable

estoppel theory as a means of establishing eligibility

under the FMLA. As we have explained, however, using

equitable estoppel to block an employer from asserting

a statutory defense to FMLA liability is not the same as

using promissory estoppel to enforce a promise by an

employer to allow 12 weeks of medical leave. Promissory

estoppel is a well-established state-law remedy; on the

other hand, the availability of equitable estoppel to block a

statutory defense to FMLA eligibility has been assumed but

not decided in this circuit. We think the prudent course is

to remand this case for consideration of Gilead’s liability

under state law. The leave provisions in Gilead’s employee

handbook may be enforceable as a contract under Indiana

law; at the least, they are promises giving rise to recovery

under promissory estoppel. We note for purposes of the

proceedings on remand that the scope of recovery may

differ. See Jarboe, 644 N.E.2d at 121-22 (discussing the

difference between contract “expectancy” damages and

promissory estoppel “reliance” damages).

REVERSED and REMANDED.

USCA-02-C-0072—7-14-08