Wednesday, February 25, 2009

3Ls Getting Hosed

Res I've just started hearing of major law firms rescinding or "indefinitely deferring" employment offers to this year's 3Ls.  At our school, this is disproportionately hurting our top students -- students who clerked for major firms last summer, received what they thought was a job offer, did not participate last fall or early this spring in the job-search process under the rational assumption that they already had a job, and only now are being informed that that job does not exist.  Some of these students are being put on indefinite "hold" -- they might have a job in January, they might not.  Others are not being given a stipend, a "severance" package, or anything else to help tide them over -- they're just being told "see ya later."

I'm soliciting comments on:

  1. What firms are withdrawing offers to their 3Ls?  There's a reputational cost to doing this, which I am more than happy to facilitate.  I have heard about several large firms, but have only confirmed Thompson Hine and Luce Forward.
  2. Do the 3Ls have a promissory estoppel claim?  Share your thoughts.


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In many jurisdictions, courts do not recognize the promissory estoppel doctrine in the context of at-will employment. So, it certainly would depend on the location of the 3L/firm. A recent case in New Jersey would seem to give some hope to a "hosed" 3L: Schley v. Microsoft, 2008 WL 5075266 (former NLRB attorney working at Bear Sterns accepted an offer from Microsoft; after moving to Redmond, Microsoft rescinded the offer based on a criminal background check; court held that he stated an estoppel claim).

Posted by: Jeff Wilson | Feb 25, 2009 1:31:46 PM

An Oklahoma Court of Appeals wrote: "An employer's right to terminate an at-will employee without cause does not protect the employer from liability for fraud in inducing the employee to accept employment."
[Stehm v. The Nordam Group (OK 2007) no. 104000]

A California Appellate Court wrote about an employee named Toscano who quit a prior job based on Greene's (later-revoked) offer: "Toscano, who relinquished his job in reliance on an unfulfilled promise of employment, may on an appropriate showing recover the lost wages he would have expected to earn from his former employer but for [Greene's] promise." Still, the "award in these circumstances must not be speculative, remote, contingent or merely possible." Instead, Toscano may only collect "for the loss of future earnings ... where the evidence makes reasonably certain their occurrence and extent."
[Toscano v. Greene Music (CA 2004) no. D043281]

Similarly, a radio station may have the right to fire its new sales manager (since he was an at-will employee), but that doesn't mean the station could trick the manager into quitting his previous job with deceptive promises of compensation that the station never intended to honor.
[Agosta v. Arthur (CA 2004) no. D042200]

An employee named Arboireau who sought a stable job with the Adidas shoe company in Washington state, and who was reassured about the stability (despite there being rumors to move his job to Germany) and of whom the company asked for a 2-3 year commitment, could sue for fraud after the company changed course and discharged him six months after he began (it also transferred his job to an executive in Germany).
While the Ninth Circuit Court acknowledged that Arboireau was an at-will employee, it ruled that he and his wife were entitled to sue because the company was considering moving the position but failed to disclose this possibility. [Arboireau v. adidas-Salomon (9th Cir. 2003) no. 02-35398]

Posted by: kent | Feb 25, 2009 2:40:37 PM

@ Jeff:

But they would have shown reasonably expected, definite lost wages. There can be no such finding regarding interviews, as there is absolutely no guarantee that any interviewee will secure any job at all. They should have been interviewing with other firms anyway. Simply put, I think their reliance on an offer only gave them the impression that they may be lazy, haphazard and too comfortable about their future...not actually cost them real wages

Posted by: Anon | Feb 26, 2009 8:30:36 AM

Philadelphia District Attorney has also rescinded 3L offers...all 12 of them.

Posted by: PhillyLaw | Feb 26, 2009 11:46:38 AM


I agree. Damages here would be highly speculative and thus not recoverable, because who can prove that participation in on-campus interviews would have yielded a job. There may exist a few instances where offers from other firms were turned down in reliance on the offers that have been rescinded. Assuming damages are not speculative, I think there are some jurisdictions where a promissory estoppel claim would at least be a recognized cause of action. In the absence of provable fraudulent inducement, however, I wouldn't put much stock in one of these cases.

Posted by: Jeff Wilson | Feb 26, 2009 12:25:44 PM

"But they would have shown reasonably expected, definite lost wages. There can be no such finding regarding interviews."

But these 3Ls in fact were extended and accepted offers of employment. These were not just interviews -- they actually had an employment-at-will contract that was rescinded.

Posted by: jane smith | Feb 26, 2009 3:46:38 PM

It would seem the interview piece is in the question of what they gave up--what did these students forego or undertake that would suffice to satisfy that they relied to their detriment and suffered damages? It may be speculative to say what it is they would have received had they interviewed at other firms. It would be a much better promissory estoppel case if they had turned down other concrete jobs that now were unavailable, although, even then, there's still a question of whether it's ever reasonable to rely on a promise of at-will employment.


Posted by: Marcia McCormick | Feb 27, 2009 7:51:07 AM

There are also issues surrounding the rescission of summer offers for 2Ls. Suppose a 2L was given a job offer in October and signed a contract (although the contract contains an "at-will" clause). The employer then rescinded its offer for summer employment in February. The student knew the amount that would have been made. Additionally, this student received a concrete offer also in October from another firm also knowing the definite compensation per week. The student assuredly relied to her detriment in choosing one job over the other. At the time of the rescission the other position was no longer available. Does the student have a cause of action to recover lost definite and concrete wages?

Posted by: John Brown | Mar 11, 2009 6:03:47 PM

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