Yeitrakis v. Schering-Plough Corp.

• Decision Date: 17 September 1992
• Docket Number: Civ. No. 90-0389-JB.
• Parties: Theo YEITRAKIS, Plaintiff, v. SCHERING-PLOUGH CORPORATION, Walter Gough, and Frank Markovich, Defendants.
• Court: U.S. District Court — District of New Mexico

804 F. Supp. 238

Theo YEITRAKIS, Plaintiff, v. SCHERING-PLOUGH CORPORATION, Walter Gough, and Frank Markovich, Defendants.

Civ. No. 90-0389-JB.

United States District Court, District Court, D. New Mexico.

September 17, 1992.

Dan A. McKinnon III, Marron, McKinnon & Ewing, Alburquerque, N.M., for plaintiff.

Thomas M.J. Hathaway, Brady Hathaway P.C., Detroit, Mich., Timothy L. Salazar, Cherpelis, Vogel & Salazar, Albuquerque, N.M., for defendants.

AMENDED MEMORANDUM OPINION AND ORDER

BURCIAGA, Chief Judge.

In this opinion, the Court is required to consider the prelude and postscript to employment, that is, the negotiations preceding its commencement and the consequences of its termination, and must determine the extent to which alleged wrongs then done to an employee may properly expose an employer to tortious liability. Specifically, the Court addresses whether a cause of action will lie against an employer:

1) for negligent misrepresentation, where the employee, relying on assurances of job security in pre-employment negotiations, is induced to give up secure employment elsewhere only to find his new employment to be terminable at will; and

2) for prima facie tort, where an at will employee is terminated for an express reason unsupported by fact which defames and attributes to the employee characteristics which interfere with his obtaining future employment.

THIS MATTER came on for a hearing on March 3, 1992, on Defendants' May 6, 1991, Motion to Dismiss and for Summary Judgment as to Counts IV and V of the Complaint, alleging fraudulent and/or negligent misrepresentation and prima facie tort respectively.¹ The Court took these motions under advisement and now renders its Opinion and Order.

For the purposes of a motion to dismiss, the material allegations of the Complaint must be accepted as true. Franklin v. Meredith, 386 F.2d 958, 959 (10th Cir.1967). The Complaint should not be dismissed unless "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 102, 2 L.Ed.2d 80 (1957). Further, "the Federal Rules reject the approach that pleading is a game of skill in which one misstep by counsel may be decisive to the outcome and accept the principle that the purpose of pleading is to facilitate a proper decision on the merits." Id., at 48, 78 S.Ct. at 103. The Court shall construe the pleadings liberally, and if there is any possibility of relief, the case should not be dismissed. Gas-a-Car, Inc. v. American Petrofina, Inc., 484 F.2d 1102, 1107 (10th Cir.1973).

Summary judgment is proper when there is no genuine issue as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56; Adickes v. S.H. Kress & Co., 398 U.S. 144, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). The movant bears the burden of informing the Court of the basis for the motion and of demonstrating by reference to the pleadings, together with affidavits, the absence of disputed issues of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The Court's ultimate inquiry is to determine whether the evidence is so one-sided that the moving party must prevail as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).

I. Negligent Misrepresentation

In June 1979, after 23 years' military service during which he rose to the rank of major, Plaintiff Theo Yeitrakis re-entered civilian life intent on pursuing a second career. To that end, he found employment as a sales representative with a pharmaceutical company, G.D. Searle & Company. In June 1982, without cause, his employment with Searle was terminated. In consequence, he was without a job, without a career and, because he had been an employee at will, without a remedy at law. For the next three months he was unemployed until, in September 1982, he was appointed Public Relations and Marketing Director for the United States Employees Credit Union in Albuquerque, New Mexico.

In early 1983, as he was approaching 45 years of age, he was "headhunted" by another pharmaceutical company, Defendant Schering-Plough ("Schering"), a New Jersey corporation, to again become a sales representative. To this end, he had a number of meetings with Philip Peacock, Schering's Phoenix District Manager, Albuquerque and New Mexico then being under the purview of that District. At least one such meeting was also attended by Jim Goode, Peacock's supervisor and Schering's Western Regional Director. In May 1983, these meetings culminated in Plaintiff giving up his job at the Credit Union and commencing work as a sales representative with Schering. In September 1989, however, Plaintiff's employment was summarily terminated, for reasons discussed more fully at II. below.

The Complaint, at ¶¶ 3 and 4, sets out the salient points of Plaintiff's employment history and the pre-employment negotiations and, at ¶ 22, alleges:

But for the representations made by Schering, THEO would not have left the secure employment of the Credit Union. If not made intentionally the representations and assurances were negligently made and reasonably relied upon by THEO. (Emphasis added.)²

The emphasized phrase is ambiguous. Plaintiff further muddies the waters by submitting that, if proved, such a claim means "a fraud was practiced on him" and that "in New Mexico it is clear that a negligent misrepresentation of fact can result in a fraud claim for damages". See Response, at 23.

If the allegedly false representations of fact were made knowingly or recklessly with intent to deceive, Plaintiff's claim would be for fraudulent misrepresentation. Sauter v. St. Michael's College, 70 N.M. 380, 374 P.2d 134 (1962). However, the Court does not understand the Complaint, considered as a whole, to allege fraudulent misrepresentation against Schering. Indeed, if it purports to do so, it does not meet the particularity requirements of Fed.R.Civ.P. 9(b).³ Furthermore, each element of fraud must be shown by clear and convincing evidence, Sauter, supra. The record contains no such evidence of fraudulent intent on the part of Schering and its agents. Therefore, to the extent Plaintiff's claim is expressed as fraudulent misrepresentation, Defendants are entitled to summary judgment.

Assuming Plaintiff's claim is for negligent misrepresentation, Defendants argue that New Mexico does not recognize the tort in the context of an employment relationship.

Following the Restatement (Second) of Torts § 552 (1977), New Mexico recognizes the tort of negligent misrepresentation. Stotlar v. Hester, 92 N.M. 26, 28-29, 582 P.2d 403 (Ct.App.1978); Maxey v. Quintana, 84 N.M. 38, 42, 499 P.2d 356 (Ct.App. 1972).

Section 552 of the Restatement reads in pertinent part:

Information Negligently Supplied for the Guidance of Others

(1) One who, in the course of his business ... supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance upon the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

(2) ... The liability ... is limited to loss suffered (a) by the person ... for whose benefit and guidance he intends to supply the information ...; and (b) through reliance upon it in a transaction that he intends the information to influence or knows that the recipient so intends....

Although no New Mexico case has expressly addressed the tort in the employment context, neither its elements nor its limitations make it inapplicable to the employment field. The Court therefore considers the extent to which evidence of the required elements may be found in the record. Peacock and Goode were clearly acting in the course of Schering's business in conducting recruitment discussions with Plaintiff.

Throughout these negotiations, Peacock was struck by "the degree of emphasis that Plaintiff ... put in the interviewing process ... of sic the fact that he wanted a stable and permanent career," an objective reiterated in Plaintiff's employment application ("I am looking for a career position.") (Emphasis in original.) Confronted with the language of at will employment in both the pre-printed application form⁴ and the subsequent hiring agreement⁵, Plaintiff specifically questioned Peacock about its meaning and effect, "because I was very concerned that I didn't want to be terminated without cause or for any other reason, for that matter...."

Peacock admits he "offered him every reassurance that if he was hired and if he performed at an adequate level that there should be no problem with job security."⁶ And, according to Peacock, Goode "essentially said the same thing...." Furthermore, Peacock understood the source of Plaintiff's concern about job security: "Because of what had happened to Plaintiff at Searle, he was extremely gun-shy, so to speak, of getting into any kind of situation that might be transitory or unstable." Thus, Plaintiff "may reasonably expect to hold the maker to a duty of care ... as the maker was manifestly aware of the use to which the information was to be put and intended to supply it for that purpose." Restatement, § 552, Comment a.

Under the circumstances, the trier of fact could conclude this information was given for Plaintiff's guidance in the business transaction of deciding whether to leave his existing job and accept Defendant's offer of employment. Certainly, it was only after those reassurances that Plaintiff signed the hiring agreement of May 5, 1983.

Negligent misrepresentation "requires that the person receiving information have a right to rely upon it." Stotlar v. Hester, supra, 92 N.M. at 28, 582 P.2d 403. It remains a factual issue whether Plaintiff was justified in relying upon the information. The trier of fact...