Lead Opinion
In this breach of contract action, plaintiff appeals from a judgment granting summary judgment in favor of defendants. On appeal, plaintiff argues that defendants breached an agreement to hire him and, in the alternative, that he is entitled to recover damages under a promissory estoppel theory. We affirm.
On review of a summary judgment, we determine whether there are any genuine issues of material fact and, examining the evidence in the light most favorable to the nonmoving party, whether the moving party is entitled to judgment as a matter of law. ORCP 47 C; Jones v. General Motors Corp.,
The facts in this case do not appear to be in dispute. Plaintiff worked as a law clerk for the defendant attorneys, beginning in June 1992. In December 1993, apparently after plaintiffs clerkship was completed, defendants offered him a position as an associate attorney. The offer was premised on the condition that plaintiff take and pass the Oregon bar examination. The offer also was contingent on the renewal of defendants’ juvenile court and indigent defense contracts. The offer was not for a fixed term and did not contain a “termination only for cause” provision. Plaintiff accepted defendants’ offer and took the February 1994 Oregon bar examination. Plaintiff passed the bar examination, and defendants’ juvenile court and indigent defense contracts were renewed. In March 1994, defendants advised plaintiff that they were terminating the planned employment arrangement, although plaintiff had not yet begun working for them.
Plaintiff sued defendants, seeking relief for the termination. Plaintiff contends that, because he had accepted defendants’job offer, he took the Oregon bar when he otherwise might not have and did not seek other employment opportunities. Defendants moved for summary judgment. The trial court granted the motion and plaintiff appeals, assigning error to the ruling. We hold that defendants are entitled to judgment as a matter of law, because plaintiff has no right of action under either of his alternative theories.
“Defendants’ termination of their contract with plaintiff was a breach of an agreement for employment, not a breach of the employment-at-will contract itself. Whether they could or would have fired him after he began working for them is not the issue. Plaintiff reasonably relied on defendants’job offer, and they had reason to know that he would change his plans and incur expenses based on that promise, which he did.”
It is unclear whether defendants accept plaintiffs thesis that there was or could be an “agreement for employment” that was somehow separate from the prospective “employment contract itself.”
“Defendants * * * argue that, as a matter of law, plaintiff cannot prevail on his breach of contract claim because defendants’ offer to plaintiff was for employment ‘at will.’ Defendants contend that it is illogical to allow an employee-at-will to recover damages if the employer terminates him*5 before he commences work because the employee could not recover contractual damages if he were fired one hour after beginning work. But * * * defendants’ logic does not hold water. The mere fact that defendants could have fired plaintiff at any time after hiring him does not absolve them of all liability for damages caused by their decision to breach their promise to employ him. Contrary to defendants’ assertion, it does matter whether defendants repudiated the contract before plaintiff commenced employment instead of firing him after he began.” (Emphasis plaintiffs.)
Although the question does not appear to have arisen before in any reported Oregon decision, there are numerous cases from other jurisdictions that deal with the actionability of an employer’s termination of an at will employment agreement before the employee has begun his or her performance of the job. Cases related to the issue are assembled in Tracy A. Bateman, Annotation, Employer’s State-Law Liability for Withdrawing, or Substantially Altering, Job Offer for Indefinite Period Before Employee Actually Commences Employment, 1ALR 5th 401 (1992). In relatively equivalent numbers, the courts deciding those cases have resolved the issue in both of the possible ways, with respect both to claims based on breach of contract and claims based on promissory estoppel.
For purposes of a case like this one, which presents the issues in fairly pristine form (i.e., there are no variations from the at will model in the terms of the parties’ agreement, and the only claimed consequences of defendants’ action is that plaintiff secured his license to practice law in Oregon rather than elsewhere and did not seek alternative employment while he thought he had this job), we agree with the conclusion of the courts that have held that there is no cause of action in these circumstances.
In our view, it would be completely illogical to hold that an employer is exposed to liability if it invokes the right to terminate at will before the employee begins working but is absolved from liability if it defers doing so until immediately after the employee first reports for work. In addition to being illogical, such a holding would also be most undesirable in its consequences. It would serve the interests of no one— least of all new professional persons in search of work — to
Even given that fiction, however, plaintiffs argument does not succeed. His distinction between a contract for employment and a contract of employment does not alter the fact that, both before the time of performance and after, whatever contractual relationship there was between the parties was one that related to plaintiffs employment by defendants. As we have noted, the general rule in this state is that employment contracts are terminable at will unless they specify a duration or different conditions for or methods of termination. Plaintiff offers no persuasive reason why that general rule should not apply as much to the post-acceptance, but pre-performance, phase of his contractual relationship with defendants as to the post-performance phase, even if the two phases are viewed as two separate contracts. The parties did not specify a duration or conditions of termination other than at will in connection with either phase.
The dissent’s reliance on Taylor v. Mult. Dep. Sher. Ret. Bd.,
We also hold, although for reasons that appear to be somewhat different from the trial court’s and defendants’, that the court was correct in granting summary judgment as to plaintiffs promissory estoppel theory. Assuming that promissory estoppel ever could provide a basis for recovery under circumstances of this general kind, but see DeJonge v. Mutual of Enumclaw,
Given the established facts here
Plaintiff relies on our statement in Neiss that “promissory estoppel [can] provide a basis for relief under circumstances where traditional contract remedies would not.”
Affirmed.
Notes
Defendants’ brief repeatedly refers to the withdrawal or termination of their offer. In any event, they do not expressly make the possibly meritorious and decisive argument that they made an offer, that defendant accepted it, that there was consideration in the form of mutual promises of future performance, and that there was accordingly only one contract with one implied termination provision that could as well be invoked while the contract was in an executory phase as after performance had begun. We therefore will not decide the case on that ground.
This case does not involve a person with an established career — as distinct from the threshold phase where plaintiff is situated — that he or she is induced to change by a promise of alternative employment. In the unlikely event that such a person would be obliged to or would agree to an at will employment arrangement and ultimately pursues an action of this kind, we will deal with that situation when it arises.
Dissenting Opinion
dissenting.
Because I believe that defendants are not entitled to summary judgment as a matter of law, I dissent.
According to the majority, the issue here is an employer’s right to terminate an at will employment agreement before the employee has begun work. I disagree. Plaintiff was not yet an employee who could be “terminated.” Rather, the issue is whether defendants impermissibly revoked a unilateral contract on which plaintiff had begun performance. The following facts are significant: In October 1993, after plaintiff had been working for defendants for over one year, plaintiff informed defendants that, because of professional opportunities outside of Oregon, he did not intend to
As the majority notes, the usual ride in Oregon is that employment contracts are terminable at will, Lewis v. Oregon Beauty Supply Co.,
A unilateral contract exists when one party makes a promise in return for consideration other than a promise. The Oregon Home Builders v. Crowley,
The majority states that my reliance on Taylor, Horton and similar cases is misplaced. My point in looking to those cases is not to imply that plaintiff is an employee who has already accrued a benefit (in fact, quite the opposite is true), but rather that, when obligations are undertaken in fulfillment of a unilateral contract, the contract cannot be revoked with impunity by the promising party merely because the employment itself is at will. Surely if the principles underlying unilateral contracts cannot be defeated during at will employment, then those principles cannot be defeated before employment. Furthermore, contrary to the majority’s assertion that plaintiff has “accrued nothing” prior to revocation, plaintiff in this instance has accrued the detriment of having paid for, studied for and taken the Oregon bar examination, in fulfillment of the conditions of defendants’ promise, when he would otherwise not have.
I am persuaded by decisions from other jurisdictions holding that a prospective employee can sue his employer when an offer of employment is accepted and later revoked, either because the contract to employ is seen as a separate contract that is not at will or because recovery is based on a promissory estoppel theory. See Comeaux v. Brown & Williamson Tobacco Co., 915 F2d 1264, 1270-73 (9th Cir 1990) (separate contract to employ plaintiff; court does not reach promissory estoppel theory because plaintiff is limited to reliance damages in any event); Hackett v. Foodmaker,
Admittedly, some decisions have reached the opposite conclusion and have held that even when a prospective employee detrimentally relies on a promise of employment, no recovery may be had. See White v. Roche Biomedical Laboratories, Inc.,
I reject the position that no recovery is available when an employee relies and acts on a promise of employment. First, that outcome is inconsistent with our Supreme Court’s decisions regarding an employee’s right to rely on an employer’s unilateral contract offer as to the terms and conditions of employment and as to the irrevocable nature of such an offer. I see no reason to distinguish between a prospective employee’s right to rely on a promise of employment and an employee’s right to rely on a promise that benefits will follow from the employee’s work. Second, as acknowledged by at least one court holding that a prospective employee cannot rely on a promise of employment, that outcome is a “harsh” one, “the result of which is that an employee who,” for example, “resigns one job for another at-will employment does so
I am also not convinced by the rationale of the majority and some other courts that an employee has no recourse when he or she has relied on an offer of employment that is later revoked. One reason given is that, if “the actual employment was [to be] terminable at will, it would be illogical to hold * * * that somehow the offer of such employment was not terminable at will.” Sartin,
Another reason given by the majority for holding that a prospective employee has no recourse when an offer of employment is withdrawn is that the employee’s reliance on the employer’s promise is not reasonable. The promise of employment is, instead, considered to be “illusory since an employer who promises at-will employment has the right to renege on that promise at any time for any reason.” White,
The majority also states that “[i]t would serve the interests of no one * * * to discourage putative employers from discharging [prospective employees] earlier rather than later * * * .” The majority misconstrues the purpose of contract law. The purpose of contract law is not to punish the breaching party, in this case a putative employer, but is, instead, to protect the legal interests of the contracting parties and to compensate the nonbreaching party who has reasonably and foreseeably relied on the contract and suffered harm from the breach. In this instance, the facts indicate that plaintiff may have suffered harm as a result of defendants’ breach of contract.
In sum, I would hold that a prospective employee who, in fulfillment of a unilateral contract offer, reasonably relies on an employer’s separate promise to hire the employee is not barred from seeking relief simply because the ultimate employment would be at will. The trial court erred in granting summary judgment to defendants. Because I would resolve the issue under a breach of contract theory, I decline to address plaintiffs promissory estoppel theory.
For the above reasons, I dissent.
I fail to see how the situation here differs from the traditional unilateral contract hypothetical where the contract is not based on mutual promises, but rather on a promise and the performance of an action. A typical unilateral contract hypothetical is: Company A agrees to pay manufacturer B $5 per widget if B delivers 10,000 widgets to A by June 15. On June 1, B ships 10,000 widgets to A. On June 2, prior to receiving the widgets, A attempts to revoke the contract. In such a situation, we would have no trouble concluding that Company A breached a unilateral contract.
In both its breach of contract and promissory estoppel analysis, the majority opinion implies that the result might be different if the plaintiff were other than a
The majority takes exception to the analytical approach that two contracts, as opposed to one, may exist in this instance. They claim that I find it “necessary” to create the “fiction” that two contracts exist. The majority of cases from other jurisdictions that have examined this issue have applied the analytical approach of recognizing two contracts where appropriate — regardless of whether the outcome was favorable to the employer or the employee. That is so because that approach follows established principles of contract law, not because it is a “fictional” construct that favors one party over another.
The majority argues that this statement is not on point because the language appears in connection with the plaintiffs fraud claim and the plaintiffs breach of contract argument was rejected by the court. However, the majority fails to explain why reliance on a promise of at will employment is not per se unreasonable for purposes of fraud, but would be per se unreasonable for purposes of a unilateral contract for employment.