Opinion ID: 1986991
Heading Depth: 1
Heading Rank: 6

Heading: promissory estoppel allowed

Text: The following cases have held that a prospective employee had a cause of action for damages incurred in reliance upon a promise of employment. In Grouse v. Group Health Plan, Inc., 306 N.W.2d 114 (Minn.1981), a pharmacist working at a drugstore desired employment with a hospital or clinic. He accepted employment with a clinic and gave 2 weeks' notice to the drugstore. During this period, he declined a job with a hospital because he had accepted employment with the clinic. Upon reporting to work, he was told that someone else had been hired because the pharmacist did not satisfy certain hiring requirements of the clinic. He had difficulty obtaining other full-time employment and suffered wage loss as a result. The clinic argued that the application of promissory estoppel would create an anomalous rule such that an employee who is told not to report to work the day before he is scheduled to begin has a remedy, while an employee who is discharged after the first day does not. In rejecting the clinic's argument and allowing recovery, the court concluded that under the circumstances it would be unjust not to hold the clinic to its promise. The court stated: [A]ppellant had a right to assume he would be given a good faith opportunity to perform his duties to the satisfaction of respondent once he was on the job. He was not only denied that opportunity but resigned the position he already held in reliance on the firm offer which respondent tendered him. Id. at 116. The court also recognized that under appropriate circumstances, promissory estoppel could apply even if the employee was fired after he had commenced employment, thus concluding that its ruling would not necessarily create an anomalous result. Since the prospective employment could have been terminated at any time, the court explained that the damages were not what the pharmacist would have earned from the clinic, but, rather, what he lost by quitting the job he held and declining at least one offer of employment elsewhere. See, also, Gorham v. Benson Optical, 539 N.W.2d 798 (Minn.App. 1995); Rognlien v. Carter, 443 N.W.2d 217 (Minn.App.1989). In Gorham, summary judgment was granted against the employee, who sued the employer for breach of contract, fraud, and promissory estoppel. The appellate court reversed the summary judgment on the promissory estoppel claim. The employee had been called in September 1993 about a job opportunity with Benson Optical. At the time, he earned $38,000 annually as a manager for LensCrafters. He was offered a position for $50,000 with Benson Optical, and he accepted and gave notice of resignation to LensCrafters. The employee's last day of work for LensCrafters was October 1, and on October 3, he attended Benson Optical's national sales meeting. On October 4, he attended a getting to know you meeting which left him with the impression that his employment had been or would be terminated, and on October 15, his employment was officially terminated. Relying upon Grouse, the Gorham court found no relevant difference between the prospective Benson Optical employee, who reported for work and was terminated 1 day later, and the employee in Grouse, who was denied even 1 day on the job. Both men had relied to their detriment on the promise of a new job. Neither man had a good faith opportunity to perform his duties. In Ravelo v. County of Hawaii, 66 Haw. 194, 658 P.2d 883 (1983), a police officer resigned from his position in reliance on an offer of employment in another city. His wife resigned her job, and they informed the private school where their children were enrolled that they were being removed from school. Subsequently, the police officer was told that he was not going to be hired, and he and his wife were unsuccessful in attempting to get back their previous jobs. Relying upon the Restatement of Contracts § 90 (1932), the Supreme Court reversed the trial court's dismissal and concluded that promissory estoppel could be applied in the case of a promise of at-will employment. In Bower v. AT & T, Technologies, Inc., 852 F.2d 361 (8th Cir.1988), the court distinguished between an at-will employer who fires an employee 1 day after beginning work and an at-will employer who withdraws the offered employment before the employee is given an opportunity to perform. The court stated that an employer who withdraws the offered employment before the employee is given an opportunity to perform fails to keep its promise in any respect. The court concluded that the prospective employee whose offer was withdrawn had a cause of action. In Peck v. Imedia, Inc., 293 N.J.Super. 151, 679 A.2d 745 (1996), the court stated that the application of promissory estoppel to prospective at-will employees recognizes that there may be losses incident to reliance upon a job offer itself, even though the employer can terminate the relationship at any time. The court concluded that reliance on the promise of at-will employment gave rise to a cause of action for damages flowing from the prospective employee's giving up her prior business and moving to another state. The court stated that the prospective employer's delay in informing the employee of its decision not to employ could give rise to damages based upon the employer's lack of good faith and fair dealing. In Sheppard v. Morgan Keegan & Co., 218 Cal.App.3d 61, 266 Cal.Rptr. 784 (1990), the court held that under a theory of either breach of implied covenant of good faith and fair dealing or promissory estoppel, an investment banker could recover for damages incurred when a prospective employer failed to fulfill its promise of at-will employment. In reliance upon the promise of employment, the banker had resigned his previous employment and arranged to move to another city, signing a lease on an apartment there. Adopting the reasoning of Grouse v. Group Health Plan, Inc., 306 N.W.2d 114 (Minn. 1981), the court stated: [A]n employer cannot expect a new employee to sever his former employment and move across the country only to be terminated before the ink dries on his new lease, or before he has had a chance to demonstrate his ability to satisfy the requirements of the job. Sheppard, 218 Cal.App.3d at 67, 266 Cal.Rptr. at 787. See, also, Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d 1264 (9th Cir.1990).