Continuing from our previous article, the Court next analyzed Plaintiff’s claims under the “promissory estoppel” theory.
Maryland adopted the Restatement (Second) of Contracts § 90 (1979) for promissory estoppel, which considers four elements:
1) a clear and definite promise;
2) where the promisor has a reasonable expectation that the offer will induce action or forbearance on the part of the promisee;
3) which does induce actual and reasonable action or forbearance by the promisee; and
4) causes a detriment which can only be avoided by the enforcement of the promise.
Pavel Enters., Inc. v. A.S. Johnson Co., 342 Md. 143, 674 A.2d 521, 532 (1996).
Maryland courts have noted, however, that at-will employment is a “far-reaching rule” such that “attempts to circumvent it by relying on estoppel or similar theories have consistently met with failure.” Adler v. Am. Standard Corp., 538 F.Supp. 572, 581 (D.Md.1982). Relying on this principle, Defendant argued that Plaintiff could not establish reasonable reliance in the context of at-will employment to state a cognizable claim for promissory estoppel.
The Court found that the Complaint, however, was not attempting to modify an at-will employment relationship. Plaintiff did not argue that he had an employment contract for a set term or that Defendant did not describe his promised employment as at-will. Rather, Plaintiff’s promissory estoppel claim was based on detrimental reliance on the same fraudulent statement that formed the crux of the negligent misrepresentation claim.
The Court held that Maryland offered no binding authority regarding whether reasonable reliance on a promise of at-will employment can support a claim of promissory estoppel. Defendant relied on Greene, an unpublished Fourth Circuit opinion, where the court, with little discussion, found that Maryland’s at-will employment doctrine precludes promissory estoppel. Greene v. Nat’l Car Rental Sys., Inc., 977 F.2d 572, No. 91–2756, 1992 WL 296364 at *2 (4th Cir. Oct. 16, 1992)
In Greene, a Budget Rent–A–Car employee quit his job in reliance of an employment offer from National Car Rental that was then rescinded when National learned of prior misconduct on the part of the plaintiff. In our case, however, the Court found Greene distinguishable not only on its facts, but also on the ground that, in that action, the plaintiff was asserting promissory estoppel to establish the existence of a binding employment contract.
Instead, the Court was persuaded by the more recent treatment of reasonable reliance by the Maryland Court of Appeals in Griesi. To support the viability of reasonable reliance in the context of a promise of at-will employment, the Griesi court cited with apparent approval several other jurisdictions that have recognized similar claims. Griesi, 756 A.2d at 557 n. 10. Plaintiff argued that one of the cited cases, Grouse, was directly on point. In Grouse, the Minnesota Supreme Court permitted a claim of promissory estoppel where an employee resigned from his job to accept an at-will job offer that was later rescinded. Grouse v. Grp. Health Plan, Inc., 306 N.W.2d 114, 115–16 (Minn.1981). The court reasoned that the employee “had a right to assume he would be given a good faith opportunity” to begin work and relied to his detriment on that assumption. Grouse, 306 N.W.2d at 116.
Other courts have also recognized a claim of promissory estoppel in the context of a promise of at-will employment. In a factually similar case, the Court of Appeals for the Eighth Circuit reasoned that Illustration 8 of Restatement (Second) of Contracts § 90 is functionally analogous to reliance on a promise of at-will employment:
A applies to B, a distributor of radios manufactured by C for a “dealer franchise” to sell C’s products. Such franchises are revocable at-will. B erroneously informs A that C has accepted the application and will soon award the franchise, that A can proceed to employ salesmen and solicit orders, and that A will receive an initial delivery of at least 30 radios. A expends $1,150 in preparing to do business, but does not receive the franchise or any radios. B is liable to A for the $1,150 but not for the lost profit on 30 radios.
Bower v. AT & T Techs., Inc., 852 F.2d 361, 365 (8th Cir.1988) (citing Restatement (Second) of Contracts § 90, cmt. d, ilus. 8 (1979)).
In Bower, the court explained that while the franchise contract cannot be enforced because it is revocable at-will, the would-be franchisee is still entitled to reliance damages.
The Court noted that jurisdictions that recognize promissory estoppel in an at-will context limit available relief to reliance damages. Since the promissory estoppel claim rested on the same fraudulent statement as the negligent misrepresentation claim, Plaintiff’s reliance damages would be the same.