Court Report

Also: No disability needed to support retaliation claim; no liability for rude e-mail.

Mar 1, 2004

May 2004 HR Magazine

Employer Pays for Reneging on Promise

[ Stewart v. Cendant Mobility Services Corp.,Conn., No. SC 16913, Dec. 23, 2003. ]

An employer’s statements to an at-will employee that her husband’s possible employment by a competitor would not adversely affect her employment were sufficiently clear and definite to be binding, ruled the Connecticut Supreme Court in affirming an $850,000 jury verdict.

Elizabeth Stewart, considered a top producer in the relocation industry, was vice president of sales for Cendant Mobility Services Corp. Her husband was an executive in the company’s operations division until April 1998, when his employment with Cendant was terminated as a result of a major reorganization.

Believing that her husband would seek a position within the industry, Stewart was concerned about how his possible employment by a Cendant competitor might affect her. She discussed this matter with her immediate supervisor, James Simon, Cendant’s executive vice president of sales, who told Stewart that she was a “highly valued employee” and that she had nothing to be worried about.

Simon also conveyed to Stewart the CEO’s assurance that her husband’s future employment would have no bearing on her continued employment. In March 1999, however, on learning that Stewart’s husband was consulting for a competitor, Cendant reduced Stewart’s duties and limited her client contact. Cendant thereafter terminated Stewart’s employment when she refused to sign a conflict of interest agreement. Stewart sued Cendant for wrongful discharge, asserting promissory estoppel and negligent misrepresentation claims. At trial, the jury found in favor of Stewart and awarded damages against Cendant in the amount of $850,000.

On appeal, Cendant argued that Simon’s purported promise lacked the degree of clarity and definiteness required to bind the company. The company further asserted that Stewart failed to establish that she had relied to her detriment on the alleged promise.

The Connecticut Supreme Court rejected Cendant’s arguments and sustained the jury’s verdict on Stewart’s promissory estoppel claim, therefore finding no need to address the negligent misrepresentation claim.

To establish a claim of promissory estoppel, Stewart had to prove that Cendant made a clear and definite promise to her, that Cendant knew or should reasonably have expected that she would rely on the promise, that she did take or refrain from some action in reliance on the promise and that she was damaged as a result.

The court concluded, first, that the jury reasonably could have found that Simon’s representations to Stewart were sufficiently clear and definite to constitute a binding promise.

Not all promises in the employment context must amount to a complete employment contract to support a claim of promissory estoppel, the court said.

Because Simon’s representations were not a promise of future employment, but a promise that Stewart’s current employment would not change for the worse based on her husband’s employment, it was unnecessary for Stewart to prove anything more specific as to the terms of her future employment.

The court also found that the jury reasonably could have determined that Stewart relied to her detriment on Simon’s representations. Stewart testified that after securing Simon’s assurances, she decided not to pursue other employment, though she easily could have found a new job. As a result of abandoning other opportunities, Stewart said she lost out on a signing bonus that the jury reasonably could have found to be in excess of $800,000.

Although Stewart’s at-will status did not change, “the evidence supported the conclusion that Cendant could have terminated [her] for any reason except her husband’s employment with a competing firm,” the court said.

By Lawrence Peikes, an attorney with the law firm of Wiggin & Dana in Stamford, Conn.

Retaliation Claim Survives Without Covered Disability

[Wright v. CompUSA, Inc., No. 03-1099, 1st Cir., Dec. 19, 2003.]

The 1st U.S. Circuit Court of Appeals has held that, despite an employee’s inability to show that his impairment was a covered disability, his request for accommodation was a protected act supporting a retaliation claim under the Americans with Disabilities Act (ADA).

Stephen Wright began working for CompUSA in Brighton, Mass., in 1994. In 1997, Wright was diagnosed with attention deficit disorder (ADD), which caused him to experience severe stress and anxiety.

In June 1998, Wright was assigned to a new manager and began to experience heightened levels of stress, allegedly because of the new manager’s supervisory style. While on medical leave for work-related stress, Wright requested a transfer and later asked for other accommodations based on his physician’s recommendations. No accommodation was granted.

In August 1998, Wright missed an assigned meeting because of his son’s illness. Although Wright made arrangements to obtain the meeting materials, his manager terminated his employment for insubordination. Wright filed a claim of disability discrimination and a claim of retaliatory discharge. The lower court dismissed both claims.

On appeal, the 1st Circuit upheld the dismissal of the ADA claim, finding that the evidence presented was insufficient to show that Wright’s ADD qualified as a disability.

However, the court went on to reverse the lower court’s dismissal of Wright’s retaliation claim, specifically stating that an ADA plaintiff need not succeed on a disability claim to assert a retaliation claim. Rather, to establish discriminatory retaliation, an employee must show that he or she was engaged in a legally protected activity, that an adverse employment action occurred and that there was a causal connection between the adverse action and the protected conduct.

By Maria Greco Danaher, an attorney with the law firm of Dickie, McCamey & Chilcote in Pittsburgh.

Employer Not Liable For Employee’s Rude E-mail

[Booker v. GTE.Net., 6th Cir., No. 02-6190, Dec. 5, 2003.]

An employer is not liable for e-mails that employees create and send outside the scope of their employment, according to the 6th U.S. Circuit Court of Appeals, interpreting Kentucky law.

The case started when a customer e-mailed a complaint to Verizon and sent a copy to the attorney general’s office. A Verizon employee responded to the customer but pretended to be Jarmilia Booker, an employee of the Kentucky attorney general’s office.

The Verizon employee’s e-mail response stated in part: “Your repeated e-mails lambasting people for doing the job for which they were trained to do is baseless and petty. You sir are a grumpy, horrible man who needs to grow up and realize that you are on earth, not some crazy place where everything works out for [Verizon customer] and company!”

When Booker found out the Verizon employee had used her name, she sued Verizon. Booker claimed intentional infliction of emotional distress, civil conspiracy and libel, arguing that Verizon was vicariously liable for its employee’s e-mail and for negligent supervision under Kentucky law.

Affirming the trial court’s dismissal of the complaint, the 6th Circuit held that the negligent supervision claim was defective because it failed to allege that Verizon knew -- or should have known -- that the employee would act as he did.

The court also rejected the vicarious liability claim on the basis of the Kentucky common-law rule that such a claim will not be sustained “unless the intentional wrongs of the agent were calculated to advance the cause of the principal or were appropriate to the normal scope of the operator’s employment.”

Particularly persuasive to the court was that the highly offensive e-mail message specifically encouraged the customer to discontinue his Verizon service and therefore was not in any way designed to benefit Verizon’s business. The court noted that the employee sent the e-mail from a personal account rather than from a business account, implicitly acknowledging the inappropriateness of the conduct. Moreover, the court agreed that “creating false third-party e-mail accounts and sending intentionally-offensive e-mails is not expected from company employees.”

By John L. Hines Jr., an attorney with the Chicago law firm of Sachnoff & Weaver.

Professional Pointers

This ruling is an eye-opening illustration of how the employment-at-will rule is susceptible to erosion. Specific and definite representations on a single issue may bind an employer even in the absence of an intent to form an employment contract. As in this case, such a promise may not alter an at-will employee’s status. But if the employee then suffers an adverse change in employment contrary to the employer’s specific representations, that employee could have a viable claim.

Regardless of whether an employer believes an employee to have an ADA-covered disability, the employer should avoid taking any adverse action based on an employee’s assertion of ADA rights. Moreover, unless a requested accommodation creates an undue hardship, most conscientious employers would consider such a request, so long as it was motivated by the employee’s good-faith belief in the need for the accommodation. In most cases, managers should consult with HR, and HR should double-check with legal counsel, before refusing a requested accommodation on any grounds other than “undue hardship.”  

Although applied to new technologies, the principles of this case adhere to established precedent. To help defend against claims in which the critical question is whether employee conduct is within the scope of employment, consider implementing and consistently enforcing a communications policy that clearly articulates permitted uses of e-mail. The employer also will want to consider how best to audit employee use of employer systems within the bounds of applicable state and federal law.


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