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Case Law Alert: The New Jersey Supreme Court issues a strong reminder that broken promises can lead to costly consequences

By: Cristina N. Hyde, JD

Last month, the New Jersey Supreme Court reasoned that an oral promise of employment could give rise to a valid claim for reliance damages.  Specifically focusing on the legal theory of promissory estoppel, the court emphasized that if evidence existed that a promise had been made with the knowledge that it would be relied on, and that an individual did reasonably rely upon that promise to their detriment, an award of reliance damages would be appropriate.

In the particular case at issue, Goldfarb v. Solimine (A-24-19) (083256), the plaintiff alleged that the defendant reneged on a job offer after the plaintiff had left his prior employment with a high-paying investment firm in order to manage the defendant’s family’s substantial assets.  According to the plaintiff, the parties had multiple conversations regarding the offer of a position; including discussions relating to start-dates, who the plaintiff would be working for, and compensation.  Relying on the promise of employment, despite the lack of a written contract, the plaintiff also began to provide the defendant with stock tips and financial advice.  Then the defendant went back on the offer.  The plaintiff did eventually find a different position, however he was earning significantly less than he had been at his prior employment.  Therefore, he sued the defendant seeking damages to make up for the difference between the two salaries.

The defense argued that the matter should be dismissed because New Jersey’s Uniform Securities Law of 1997, did not permit the plaintiff to bring suit on the employment agreement itself.  However, the court explained that the securities law prohibition is meant to protect investors from unethical and dishonest conduct, but that it does not extend to barring claims relating to the promise of employment, itself.  The court further explained that a promissory estoppel claim provides equitable relief to restore a plaintiff to the position they would have been in, had they not relied upon the broken promise. Therefore, while some of the plaintiff’s claims were barred, the plaintiff’s case for reliance damages based on the theory of promissory estoppel was remanded back to the trial court so that he could prove the value of those damages.

While cases such as these will always rise or fall on their specific facts, the one thing all employers should take away from this ruling is that is it absolutely essential to be careful with your words and actions so as not to present the impression of a job offer where it may not come to fruition.

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