Kobs's first two bases for dismissal rely on New York's employment-at-will doctrine. In particular, Kobs contends that (1) Cole could not reasonably rely on Fantom's representations because she knew that her employment could be terminated at any time; and (2) in any event, Kobs cannot be held liable for injuries to Cole caused by her termination under New York law interpreting the employment-at-will doctrine.
Under New York law, "absent an agreement establishing a fixed duration, an employment relationship is presumed to be hiring at will, terminable at any time by either party." Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329, 514 N.Y.S.2d 209, 211, 506 N.E.2d 919 (1987) (citation omitted). An employer may discharge an at-will employee at any time with or without cause. Allen v. City of Yonkers, 803 F. Supp. 679, 709 (S.D.N.Y. 1992) (citing Rothenberg v. Lincoln Farm Camp, Inc., 755 F.2d 1017, 1020-21 (2d Cir. 1985)); Murphy v. American Home Prods. Corp., 58 N.Y.2d 293, 461 N.Y.S.2d 232, 235, 448 N.E.2d 86 (1983). New York courts routinely reject attempts by employees to circumvent an employer's termination right merely by alleging claims sounding in tort. See, e.g., Cartelli v. Lanier Worldwide, Inc., 872 F. Supp. 1253, 1256 n.2 (S.D.N.Y. 1995) (stating that allowing an employment dispute to proceed as an intentional infliction of emotional distress claim would "make demotion (and even more so dismissal) an extremely high risk step for any employer to take"); Ingle v. Glamore Motor Sales, Inc., 73 N.Y.2d 183, 538 N.Y.S.2d 771, 773-74, 535 N.E.2d 1311 (1989) (stating that New York courts "decline to allow the use of substitute nomenclature or causes, such as prima facie tort or intentional infliction of emotional distress, to bootstrap the threshold deficiency in a wrongful discharge claim") (citations omitted).
In the present case, the parties do not dispute that no employment contract existed between Kobs and Cole. Kobs characterizes Cole's claim as another attempt to evade the employment-at-will doctrine by recasting her wrongful discharge claim as a claim for fraudulent inducement. Kobs relies principally on Garwood v. Sheen & Shine, Inc., 175 A.D.2d 569, 572 N.Y.S.2d 237, 237-38 (4th Dep't 1991), where a New York court dismissed a fraud claim brought by a former employee of the defendant. In Garwood, the plaintiff had been employed as a bookkeeper with the defendant for approximately one year when he received an offer from a local town at a higher salary. 527 N.Y.S.2d at 237. The plaintiff refused the superior offer, relying on an assurance by a representative of the defendant that the company "would continue the plaintiff as an employee as long as plaintiff performed his job in the same manner as he had previously done so." Id. Shortly thereafter, plaintiff's employment was terminated and he commenced an action for fraud based on his former firm's unfulfilled promise of continued employment. Id. In rejecting plaintiff's claim, the court held that "the only fraud alleged relates to the breach of the employment contract" and the company retained its right to terminate plaintiff's employment under the employment-at-will doctrine. Id. at 237-38.
Unlike in Garwood, however, plaintiff in the case at bar does not seek damages arising out of the termination itself.
Rather, Cole alleges that Kobs made phantom promises of a promotion and sustained employment as part of a fraudulent scheme to induce her to remain at Kobs long enough to maneuver a new employee into position to handle the Fidelity account. Cole, unlike the plaintiff in Garwood, seeks damages related to Kobs's allegedly successful effort at sabotaging her relationship with Fidelity and tainting her reputation within the direct market advertising industry, rather than for any damages caused by the termination decision itself.
In Stewart v. Jackson & Nash, 976 F.2d 86, 88 (2d Cir. 1992), the Second Circuit pointed out that this distinction is crucial in assessing whether a plaintiff has an actionable claim or is barred by the employment-at-will doctrine. In Stewart, the plaintiff was employed as an attorney at a law firm when she received an offer from another firm to leave her position and help establish a new environmental law practice. Id. at 87. The soliciting firm represented to the plaintiff that the firm recently had secured a large environmental law client, the firm expected to establish a separate environmental law department, and that plaintiff would be slated to head the new department. Id. The plaintiff accepted the offer, but the promises about the environmental work were never fulfilled after two years of employment with the defendant firm. Id. After the plaintiff was fired, she brought an action for fraud based on the defendant's alleged misrepresentations that lured her from her old job.
The Second Circuit reversed the district court's decision to dismiss the plaintiff's fraud claim. The Court distinguished Murphy v. American Home Prods. Corp., 461 N.Y.S.2d at 235, 237, where an employee sought damages for emotional distress caused by his termination, on the ground that the plaintiff's tort allegations in that case "spring . . . directly from the termination itself" and thus "are a transparent attempt to restate the forbidden contractual challenge in the guise of tort." Stewart v. Jackson & Nash, 976 F.2d at 88. In contrast, plaintiff's injuries in Stewart were quite different from the injuries suffered in Murphy. As the Court explained:
Stewart's alleged injuries, on the other hand, commenced well before her termination and were, in several important respects, unrelated to it. According to the complaint, [defendant's] misrepresentations caused Stewart, a budding environmental lawyer, to leave a firm with an environmental practice and spend two years at one in which she was largely unable to work in her chosen specialty. The resulting damage to her career development was independent of her later termination from [defendant] and began while she was still at the firm. As stated in her complaint, Stewart's "career objective -- continuing to specialize in environmental law -- was thwarted and grossly undermined during her employment with [defendant]."