§ 6.6.4.4 Employment Fraud Claims in Other Jurisdictions. Since 1992, employment claims relying on various fraud and fraud in the inducement theories have increased.52 Claims have been brought based on fraudulent statements relating to promised duration53 of employment, terms of employment, economic stability of the company or division,54 future ownership/partnership,55 retirement benefits,56 permanent status of employees hired to replace strikers,57 and promotion to head of a department that neither existed nor was slated to exist.58
In Stewart v. Jackson & Nash,59 the plaintiff was an attorney licensed to practice in New York who was recruited to the firm of Jackson and Nash from another firm. She had previously chosen to specialize in environmental law and was specifically recruited by a partner at Jackson and Nash with the following statements: (1) that Jackson and Nash had recently secured a large environmental law client; (2) that the firm was in the process of establishing an environmental law department of which Stewart would become the head; and (3) that Stewart would be expected to service the firm's substantial existing environmental law client. These statements were all false at the time they were made.
After a period of being given only general litigation work, Stewart learned the falsity of the representations regarding the large environmental client. She sued, claiming that her career as an environmental attorney was undermined and thwarted during her two years at Jackson and Nash.
The Second Circuit reversed the trial court's dismissal of Stewart's fraud claim, but upheld dismissal of her claim for negligent misrepresentation (for discussion, see § 6.6.5, infra). Of interest is the court's analysis of the promise that Stewart would become the head of the developing environmental law department. That was a misstatement of present fact rather than a future promise, because at the time the statement was made, the firm had no intention of establishing an environmental law department or promoting Stewart to head that department. The promise was actually made with a preconceived and undisclosed intention of not performing it, thereby creating a misrepresentation of material existing facts.60
In Brody v. Bock,61 the Colorado Supreme Court applied a similar theory in the employment setting. Brody induced employee Bock to refrain from searching for other work and continue performing certain sales functions within Brody's company by promising in exchange to execute a codicil to his will leaving all of his stock in the two companies that he owned to Bock, and giving Bock a lifetime directorship of the two companies. Brody showed Bock the executed codicil at his bank. A year later, the relationship between them broke down, and Brody asked Bock...
