Smalley v. Dreyfus Corp.

• Citation: 853 N.Y.S.2d 270,882 N.E.2d 882,10 N.Y.3d 55
• Decision Date: 12 February 2008
• Docket Number: 19.
• Parties: Kenneth D. SMALLEY et al., Respondents, v. The DREYFUS CORPORATION et al., Appellants.
• Court: New York Court of Appeals

882 N.E.2d 882

10 N.Y.3d 55

853 N.Y.S.2d 270

Kenneth D. SMALLEY et al., Respondents, v. The DREYFUS CORPORATION et al., Appellants.

19.

Court of Appeals of New York.

February 12, 2008.

Reed Smith LLP, New York City (Gil Feder, Paul P. Rooney and Lance Gotthoffer of counsel), for appellants.

The Law Offices of Neal Brickman, PC, New York City (Neal Brickman and Melinda M. Dus of counsel), for respondents.

OPINION OF THE COURT

KAYE, Chief Judge.

Five at-will employees sued their former employer, the Dreyfus Corporation, for fraudulent inducement to enter into and remain in the employment of Dreyfus. We conclude that these plaintiffs have not stated a cause of action.

As alleged in the amended complaint, in January 2001, plaintiff Gerald Thunelius, then the director of Dreyfus' Taxable Fixed Income Group (TFIG), heard a rumor that Mellon Financial Corporation, Dreyfus' parent corporation, had made an offer to acquire the fund management company of Standish, Ayer & Wood. When asked, Dreyfus' chief executive officer (CEO) told Thunelius that no merger had occurred or was being considered. Relying on those assurances, plaintiff Martin Fetherston in December 2000 accepted employment in the TFIG. Mellon acquired Standish in March 2001. Between 2001 and 2004, Thunelius repeatedly asked Dreyfus' officers whether there were plans to merge the TFIG with Standish, and they denied any planned merger. During these years, plaintiffs Kenneth Smalley, Darlene Haut and Michael Allen allege that they accepted jobs with the TFIG in reliance on the denials by Dreyfus' officers.¹

The amended complaint continues that in April 2004, Dreyfus' CEO told the TFIG that any merger of the group into Standish was "off the table," and that the group would remain intact for at least another year. By early fall 2004, merger rumors resurfaced, which at the time Dreyfus' officers refused to confirm or deny. In late 2004, the two groups merged, and in February 2005 — four years after the alleged merger discussions began — Dreyfus fired every member of the TFIG.

The five sued Dreyfus² in Supreme Court, asserting several causes of action, only one of which — fraudulent inducement — remains relevant. The court dismissed the entire complaint noting that at-will employees cannot reasonably rely upon their employers' promises of continued employment, and that these employees failed to allege injuries apart from their termination. The Appellate Division, four-one, modified Supreme Court's order by reinstating the fraudulent inducement claim, concluding that Dreyfus misrepresented a present material fact and that the plaintiffs alleged injuries distinct from termination; the fifth Justice would have dismissed the entire complaint. We now reverse.

New York law is clear that absent "a constitutionally impermissible purpose, a statutory proscription, or an express limitation in the individual contract of employment, an employer's right at any time to terminate an employment at will remains unimpaired" (Murphy v. American Home Prods. Corp., 58 N.Y.2d 293, 305, 461 N.Y.S.2d 232, 448 N.E.2d 86 [1983]). Thus, either the employer or the employee generally may terminate the at-will employment for any reason, or for no reason. In the decades since Murphy, we have repeatedly refused to recognize exceptions to, or pathways around, these principles (see Horn v. New York Times, 100 N.Y.2d 85, 760 N.Y.S.2d 378, 790 N.E.2d 753 [2003]; Ingle v. Glamore Motor Sales, 73 N.Y.2d 183, 538 N.Y.S.2d 771, 535 N.E.2d 1311 [1989]; Sabetay v. Sterling Drug, 69 N.Y.2d 329, 514 N.Y.S.2d 209, 506 N.E.2d 919 [1987]; see also Weiner v. McGraw-Hill, Inc., 57 N.Y.2d 458, 457 N.Y.S.2d 193, 443 N.E.2d 441 [1982]).

Relying on a decision of the United States Court of Appeals for the Second Circuit — Stewart v. Jackson & Nash, 976 F.2d 86 (2d Cir.1992) — plaintiffs urge that theirs is not a breach of contract case, but rather a legally cognizable tort claim, for fraudulent inducement.

In Stewart, defendant law firm recruited an...