Grouse v. Group Health Plan, Inc.

Supreme Court of Minnesota · 1981 · Contracts

Contractspromissory estoppelat-will employmentreliancejob offerpromissory estoppelat-will employmentillusory promises

Facts

Group Health interviewed Grouse for a pharmacist position and on December 4, 1975, its chief pharmacist offered him the job, which Grouse accepted. Grouse told Group Health he would need to give two weeks' notice to his current employer, resigned that job, and declined another job offer after accepting Group Health's offer. Group Health later determined that its internal hiring requirements included a favorable written reference, background check, and general manager approval, and because it could not obtain a favorable reference, it hired someone else. When Grouse called to report that he was free to begin work, he was told the position had been filled, and he later suffered wage loss.

Issue

Whether an applicant who accepts an at-will employment offer and resigns his current job in reliance states a claim for damages when the employer repudiates the offer before he begins work. More specifically, whether promissory estoppel applies even though no enforceable contract existed because the employment would have been terminable at will.

Rule

No contract exists where an employment arrangement is terminable at will by either party because the promises are illusory, but promissory estoppel may nevertheless bind a promise when the promisor should reasonably expect it to induce action or forbearance, it does induce such action or forbearance, and injustice can be avoided only by enforcement of the promise. In that setting, the remedy may be limited as justice requires, including reliance damages rather than the value of the promised employment.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Milwaukee, Lena Ortiz worked full-time for Harbor Square Pharmacy. North Lake Care Clinic offered her an at-will pharmacist position, and Lena told the clinic's hiring manager she would need to resign her current job to accept. After the manager confirmed that she had given notice, the clinic withdrew the offer two days before her start date because it decided to postpone hiring.

If Lena sues, which is the strongest argument for recovery under the governing rule?

Explanation. The majority held that no enforceable contract exists where the employment is terminable at will because the promises are illusory, but promissory estoppel may still apply. Where the employer should reasonably expect the applicant to resign existing employment in reliance, and the applicant does so, injustice may be avoided only by enforcement. That is the best basis for Lena's claim.