75 Cal.App.5th 346
Cal. Ct. App.2022Background
- In summer 2018 Smule (through VP of Engineering Alan Shang) recruited Kenneth White for a lead project manager role, describing multi-year goals: reorganize project management, recruit/train PMs, and support company growth (including an anticipated IPO); White said he wanted long‑term, stable employment and relocated from Washington.
- White executed an integrated offer letter that expressly stated employment was "at‑will" and that oral promises not in the letter were not binding; he admits he read and understood it.
- White alleges Smule represented both the kind/character of the work he would perform and that the position was long‑term; five months after hire Smule terminated him, stating the role was eliminated.
- White sued under Labor Code §970 (making knowingly false representations to induce relocation/employment); Smule moved for summary judgment arguing (1) the at‑will agreement negated justifiable reliance and (2) no knowingly false representations were made.
- The trial court granted summary judgment, finding White’s at‑will status made reliance on the employer’s representations unreasonable as a matter of law.
- The Court of Appeal reversed in part: it held Dore bars reasonable reliance on promises of long‑term employment where an integrated at‑will agreement exists, but an at‑will provision does not as a matter of law negate justifiable reliance on misrepresentations about the kind/character/existence of the job; factual disputes on scienter and intent remained.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether at‑will status precludes justifiable reliance on representations about the kind/character/existence of work (§970(a)) | White: he relied on specific representations about the role (lead PM duties) and would not have moved absent them | Smule: integrated at‑will offer makes any reliance unreasonable as a matter of law | Held: At‑will status does not, as a matter of law, defeat reliance on representations about the kind/character of work; triable issue exists |
| Whether at‑will status precludes reliance on promises of long‑term employment (§970(b)) | White: he was told role was long‑term and that Smule had long‑term employees; this induced relocation | Smule: at‑will agreement and White’s admissions negate reasonable reliance on long‑term promises | Held: At‑will integrated agreement defeats reasonable reliance on promises of long‑term employment (Dore) |
| Whether plaintiff presented triable evidence that employer knowingly made false representations (scienter) | White: circumstantial evidence—rapid elimination after he submitted a multi‑year improvement plan, staffing moved to Bulgaria—supports inference Smule never intended the represented role | Smule: testimony and declarations say role was intended but later eliminated for legitimate reasons; White has no direct facts proving employer’s intent at hiring | Held: Triable issues of fact exist on whether Smule knowingly misrepresented the intended role; summary judgment inappropriate on scienter ground |
| Whether summary judgment may be affirmed for lack of actual reliance | Smule: even if kind/character claim stands, White cannot show actual reliance | White: actual reliance was litigated below; court did not decide; evidence supports reliance (relocation, resignation) | Held: Court will not affirm on this ground because Smule did not move below on lack of actual reliance and parties had no opportunity to develop evidence on that theory |
Key Cases Cited
- Dore v. Arnold Worldwide, Inc., 39 Cal.4th 384 (California Supreme Court) (integrated at‑will agreement defeats reasonable reliance on promises of indefinite/long‑term employment)
- Agosta v. Astor, 120 Cal.App.4th 596 (Cal. Ct. App.) (at‑will status does not immunize employer from fraudulent misrepresentations about material job terms)
- Aguilar v. Atlantic Richfield Co., 25 Cal.4th 826 (California Supreme Court) (summary judgment burden‑shifting standard)
- Seubert v. McKesson Corp., 223 Cal.App.3d 1514 (Cal. Ct. App.) (§970 applies beyond farm/mass hiring and covers misrepresentations about job character)
- Lazar v. Superior Court, 12 Cal.4th 631 (California Supreme Court) (promissory fraud requires intent not to perform at time of promise)
- Funk v. Sperry Corp., 842 F.2d 1129 (9th Cir.) (§970 elements and scienter tied to tort of deceit)