Pepsi-Cola General Bottlers, Inc. v. Woods
440 N.E.2d 696, 115 L.R.R.M. (BNA) 4450, 1982 Ind. App. LEXIS 1424 (1982)
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Rule of Law:
While promissory estoppel may apply to an offer of at-will employment, damages for the employer's withdrawal of such an offer are generally limited to expenses incurred in reliance on the promise (reliance damages) and do not extend to lost future wages (expectation damages) for an indefinite term.
Facts:
- On March 6, 1981, Kim Elaine Woods was interviewed and hired by Pepsi-Cola General Bottlers, Inc. (Pepsi) as a route settlement clerk.
- Woods held two existing jobs, one with Sears, Roebuck & Company and another with First Federal Savings and Loan.
- Pepsi advised Woods to terminate her prior employment and report to work on March 26, which she did.
- The employment contract between Woods and Pepsi was oral and of indefinite duration, meaning it was "at will."
- After Woods had given notice to her previous employers but before she was to start work for Pepsi, Pepsi discharged her.
- Pepsi's reason for discharge was concern that Woods, whose boyfriend worked at Coca-Cola, would be privy to sensitive customer information, raising suspicion of a security breach.
- At the time of her discharge, Woods had finished her employment at Sears and had only a few days of work left at First Federal.
- Woods later found a less desirable job at Ramada Inn and eventually a comparable job at Oseo Drugs.
Procedural Posture:
- Kim Elaine Woods brought a lawsuit against Pepsi-Cola General Bottlers, Inc. in the Pike Circuit Court.
- The Pike Circuit Court (trial court) rendered a judgment for damages of $2,100 in favor of Woods without a jury.
- Pepsi-Cola General Bottlers, Inc. appealed the trial court's judgment to the Indiana Court of Appeals.
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Issue:
Does promissory estoppel allow an employee to recover expectation damages, such as lost wages, when an employer withdraws an offer for at-will employment after the employee has quit prior jobs in reliance on that offer?
Opinions:
Majority - Neal, Judge
No, promissory estoppel does not allow an employee to recover expectation damages, such as lost wages, when an employer withdraws an offer for at-will employment after the employee has quit prior jobs in reliance on that offer, because the underlying promise for indefinite employment is unenforceable for vagueness regarding its duration. Judge Neal affirmed Indiana's established rule that employment contracts of indefinite duration are "at will" and can be terminated by either party at any time without liability, except in specific statutory or constitutional contexts. The court referenced Ohio Table Pad Co. of Indiana, Inc. v. Hogan, which held that relinquishing an existing job or moving for a new one does not, by itself, constitute sufficient "independent consideration" to convert an at-will contract into one requiring "good cause" for termination. While the court acknowledged that Woods clearly had a right of action under the doctrine of promissory estoppel (Restatement of Contracts, § 90) because she quit her former employment in reliance on Pepsi's promise, the critical issue was the measure of recovery. The court reasoned that promissory estoppel aims to enforce the promise that induced action, but the promise here was for an at-will employment contract of indefinite tenure, which is "unenforceable for vagueness" as to its duration. The court stated it could not "make a contract for the parties" or "supply omitted terms" by creating a fixed term of employment (like the 26 weeks implied by the trial court's damages calculation) where none existed. Therefore, under promissory estoppel, Woods was only entitled to damages for actual "expenses incurred in reliance on Pepsi’s promise" (reliance damages), not the loss of the hypothetical bargain (expectation damages) that the trial court awarded. Since Woods did not provide sufficient proof of out-of-pocket reliance expenses, the trial court's judgment for lost wages was erroneous.
Analysis:
This case significantly limits the application of promissory estoppel in at-will employment contexts, particularly concerning damages. It reinforces the robust nature of Indiana's at-will employment doctrine by distinguishing between reliance damages and expectation damages. Future cases will likely be restricted to awarding only out-of-pocket expenses for broken at-will employment promises, making it more challenging for prospective employees to recover for lost wages when a job offer is rescinded. The ruling underscores that courts will not create definite contract terms where parties did not originally agree to them.
