Court Opinion

ID: 9667635
Source: CourtListenerOpinion
Date Created: 2023-08-24 01:51:09.483126+00
Date Added: 2024-06-11T18:13:13.362986
License: Public Domain

Robert H. Dudley, Justice, dissenting. The issues and the facts are exactly as stated in the majority opinion. There was substantial evidence to show that the defendants, the appellants in this court, through defendant Stowe, induced the plaintiff, appellee, to quit his job elsewhere and to accept employment with them. The defendant was to clean the interior of a building and prepare it for the opening of a restaurant, and then, after opening the restaurant, was to manage it. Defendant Stowe told the plaintiff that his salary would be $500.00 per week, that he would have paid vacations, hospitalization and other insurance, and 10% of the gross profits. The plaintiff accepted the defendants’ oral offer of employment for an indefinite term. In their briefs in this court, both parties agree that the contract of employment was one of employment-at-will, that both parties performed the oral contract through the opening of the restaurant, that both parties performed the contract through the first four days the restaurant was in operation, but after only four days of operation, defendant Stowe discharged the plaintiff and installed someone else as manager. The jury found the defendants guilty of the tort of deceit and awarded compensatory and punitive damages. The majority opinion affirms the finding, but modifies the amount of damages. The majority opinion states that it affirms the judgment because the defendants had the “hidden intent of installing their own workers at the restaurant after the initial start-up work had been completed.” I can only interpret the opinion as standing for the proposition that now, when an employer hires an employéeat-will, but intends to later replace him with someone else, the employer can be liable for the tort of deceit. This seems to me to be an evisceration, if not a partial overruling, of our employee-at-will doctrine. In Griffin v. Erickson, 277 Ark. 433, 642 S.W.2d 38 (1982), dictum of the opinion states that the employment-at-will doctrine is deeply embedded in our case law and that the doctrine expressly recognizes the right of either party to terminate at will even where the conditions of employment are that an employee would not be discharged except for good cause. Then, in the significant case of Gladden v. Arkansas Children’s Hosp., 292 Ark. 130, 136, 728 S.W.2d 501, 505 (1987), we re-examined our position on the employment-at-will doctrine, and wrote: “The firm rule at common law is that either party can terminate at will, and while the rule has been criticized, . . . we are unwilling to replace it with a rule that subjects the employer to suit for wrongful discharge whenever an employee is terminated.” [Emphasis added.] [Citation omitted.] We affirmed that position just two weeks ago. See Mertyris v. P.A.M. Transp., Inc., 310 Ark. 132, 832 S.W.2d 823 (1992). The rationale of the doctrine is that the obligation must be mutual for a specified period of time. If the employee does not agree to work a specified length of time, the employer is not obligated to employ him for any specified length of time. If the employer does not agree to employ the employee for a specified length of time, the employee is free to leave at any time. We have created some exceptions to the doctrine, for example, if the employee is discharged “in violation of a well-established public policy of the state,” Sterling Drug, Inc. v. Oxford, 294 Ark. 239, 249, 743 S.W.2d 380, 385 (1988), and “where an employer’s employment manual contains an express provision stating that the employee will only be dismissed for cause and that provision is relied on by the employee.” Crain Indus., Inc. v. Cass, 305 Ark. 566, 571, 810 S.W.2d 910, 913 (1991). However, none of the exceptions are applicable in this case, and it is undisputed that the plaintiff was an employee at-will. Thus by operation of law, the contract of employment provided that the defendant-employer had the right to discharge the plaintiff-employee at any time for any reason not contrary to public policy. The majority opinion does not explain its reasoning in holding that the employer is liable for the tort of deceit. I can only assume that the gist of the holding is not that the discharge gave rise to the damages, but instead that the act of the employer in falsely representing that he would retain the employee for some unspecified term, when in fact he never intended to do so, was the act which the majority holds gives rise to the damages. The discussion in the majority opinion about the measure of damages states that the majority holds that the term of employment was implied to be for a reasonable period of time, and that will normally be defined as the period from termination of employment until trial. Thus, the majority holds that the employer falsely promised to give up his lawful right to discharge the at-will employee. The holding is based only upon the facts that the employer discussed vacations, insurance, and future business expectations and later replaced the employee. In a comparable fact situation, involving the tort of outrage, we said the statement “looking forward to a continued employment or association for many more years” was a statement “expressing a hope or expectation rather than a promise.” We additionally said, “Surely, most employers express hope that the newly hired employees will enjoy a long career with them, but those employers hardly intend for their sentiments to form a contract with the employee.” Harris v. Arkansas Book Co., 287 Ark. 353, 357, 700 S.W.2d 41, 43 (1985). It would seem that comparable facts should be construed in the same manner in this case. A number of other courts have addressed the issue, including two of our neighboring states. In Price v. Mercury Supply Co., Inc., 682 S.W.2d 924, 934 (Tenn. Ct. App. 1984), the Tennessee Court wrote: Upon examination of this record, we find no material fact presented by Mr. Price that would support a claim of fraud — promissory or otherwise. On the contrary, Mr. Price’s own testimony defeats this claim because he repeatedly admits that the defendants honored all commitments to him except the perceived commitment for lifetime employment. This statement, even if made, cannot provide the basis of an allegation of fraud because, at most, it created a contract terminable at the will of either party. [Emphasis added.] In Deschler v. Brown & Williamson Tobacco Co., 797 F.2d 695 (8th Cir. 1986), the Eighth Circuit Court of Appeals, citing and applying Missouri law, wrote that a discharged employee had no cause of action for fraudulent misrepresentation based on an employer’s alleged oral promises of lifetime employment where a written contract was unambiguous and terminable at will by either party. There are a number of comparable holdings, see Annotation, Employer’s Misrepresentation As To Prospect, Or Duration, Of Employment As Actionable Fraud, 24 A.L.R.3d 1412 (1969), and while some jurisdictions have ruled that misrepresentations by an employer are actionable, none of those cases discuss the fraud claim in the context of employment-at-will. While there is no Arkansas case squarely on point, we have a number of cases that seem to be contrary, at least in spirit, to the holding of the majority opinion. In Sterling Drug, Inc. v. Oxford, 294 Ark. 239, 743 S.W.2d 380 (1988), we held that even though an employee was wrongfully discharged under one of the exceptions to the employment-at-will doctrine, the employee had no cause of action in tort for the wrongful discharge. Instead, we limited the employee to a breach of contract action. Id. at 249, 743 S.W.2d at 385. In Scullin v. Newman, 127 Ark. 221, 191 S.W. 922 (1917), the trial court held that an employer was guilty of fraud when it orally promised future employment to an employee in exchange for a written release from liability and then discharged the employee. We reversed, stating: Fraud cannot be predicated upon a promise of future employment unfilled that is not recited in the instrument which constitutes the contract of release. . . . ‘This was not a false statement upon which fraud may be predicated; such fraud must be of existing facts or facts which previously existed, and cannot consist of mere promises as to future acts, although such promises are subsequently broken. . . . The representations here complained of relate solely to promises as to matters in the future.’ Id. at 232, 191 S.W. at 923-24 (quoting Conoway v. Newman, 91 Ark. 324, 121 S.W. 353 (1909)). In Harris v. Arkansas Book Co., 287 Ark. 353, 356, 700 S.W.2d 41, 43 (1985), while discussing the tort of outrage and the dismissal of an employee, we wrote: “Because of the employer’s right to discharge an at-will employee, a claim of outrage by an at-will employee cannot be predicated upon the fact of the discharge alone.” We quoted the same language, with approval, in Smith v. American Greetings Corp., 304 Ark. 596, 804 S.W.2d 683 (1991) and in Mertyris v. P.A.M. Transp., Inc., 310 Ark. 132, 832 S.W.2d 823 (1992). Finally, in Victor Broadcasting Co., Inc. v. Mahurn, 236 Ark. 196, 365 S.W.2d 265 (1963), a minority stockholder was fraudulently induced to sell his stock to the majority stockholder for cash and the promise of future employment by the corporation. After the minority stockholder sold his stock, and the majority stockholder had control of the corporation, the former minority stockholder was discharged. The trial court apparently found that fraud was committed, did not award damages for a fraudulent discharge, but instead awarded a fair cash value for the minority stock fraudulently obtained. The majority stockholder appealed, and we affirmed. It is significant that the majority opinion does not cite any cases in which we have upheld an award of damages for the false representation of the duration of employment of an employee at-will. The case cited in the majority opinion, Morris v. Valley Forge Ins. Co., 305 Ark. 25, 805 S.W.2d 948 (1991), deals with an attorney’s alleged wrong act against his client. As previously set out, the rationale of the employment-at-will doctrine is mutuality of obligation. Unless a contract of employment is for a specified period of time, it may be terminated at the will of either party. It is only when both parties are bound for a specified period that there is mutuality for a specified period, and the contract will be binding for that future period. The majority opinion does not discuss the need for mutuality, but the tort of deceit also obviously requires mutuality. If one party can be guilty of the tort, so can the other. Under the precedent of the majority opinion, if an employee takes a job and inquires about vacations, insurance, and future business expectations, but has a hidden intent to take a better job when it comes along, as most employees do, he too will be subject to suit for the tort of deceit and will be liable to the employer for damages for a reasonable period of time. Under our established law, the employer in this case had the right to discharge the employee at any time, so long as it was not for a reason against public policy. There was no evidence of a representation by the employer that he would give up his right to terminate the employment-at-will. Thus, there was no deceit. To hold, as the majority opinion does, that the facts of this case give rise to a cause of action for deceit against an employer because an employee was not retained for a reasonable time is to disembowel the employment-at-will doctrine without discussing the reasoning. I dissent.