Reimer v. Badger Wholesale Co., Inc.
433 N.W.2d 592, 147 Wis. 2d 389, 1988 Wisc. App. LEXIS 1062 (1988)
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Rule of Law:
An at-will employee can bring a breach of contract claim against their employer for specific contractual promises unrelated to the duration or termination of employment, even if they could be terminated for any or no reason. Damages for such a breach can include reliance damages, which aim to restore the injured party to the position they were in before the contract was made.
Facts:
- Dennis Reimer worked as a wholesale foods salesperson in Missouri, earning $350 per week without commission.
- Following a death in his family in Wisconsin, Reimer considered moving back to the area if he received an offer of suitable employment.
- Badger Wholesale Company (Badger) representatives offered Reimer employment, including a minimum wage base salary plus commission, an exclusive sales territory in the Neenah-Menasha area, an opportunity to expand business into the Oshkosh area, and a ninety-day trial period to make $10,000 in sales, with expected annual earnings of $20,000-$25,000.
- Reimer accepted Badger's offer, quit his previous employment in Missouri, and he and his family incurred slightly over $2000 in moving expenses.
- After Reimer began working for Badger, he discovered that other sales representatives already handled twenty-six accounts in his promised Neenah-Menasha exclusive territory.
- When Reimer pressed Badger about opening up territory near Oshkosh, Badger established a minimum number of sales under which it would not make deliveries, forcing Reimer to deliver goods himself.
- Badger terminated Reimer after seventeen and a half working days for lack of sales, despite an expert witness considering his thirteen sales in new territory to be very good.
Procedural Posture:
- Dennis Reimer brought suit against Badger Wholesale Company in state trial court, alleging breach of contract, misrepresentation, promissory estoppel, and wrongful dismissal.
- The trial court granted Badger's motion for summary judgment, dismissing Reimer's promissory estoppel and wrongful discharge claims.
- Prior to submission of the case to the jury, Reimer elected to proceed solely on the breach of contract theory.
- The trial court answered the first special verdict question, regarding the existence of a contract, in the affirmative.
- A jury found Badger breached the contract and awarded Reimer $16,500 in damages.
- Badger Wholesale Company moved for a new trial, which was denied by the trial court.
- Badger Wholesale Company (appellant) appealed the judgment and the order denying its motion for a new trial to the Wisconsin Court of Appeals (intermediate appellate court).
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Issue:
Does an at-will employee have a valid breach of contract claim against an employer for specific breaches of promises regarding employment terms, such as exclusive territory and business expansion opportunities, that occurred prior to termination and are distinct from the termination itself?
Opinions:
Majority - SCOTT, C.J.
Yes, an at-will employee can bring a breach of contract claim against an employer for specific breaches of promises regarding employment terms that occurred prior to termination and are distinct from the termination itself. The court distinguished between a wrongful discharge claim, which is typically barred for at-will employees, and a claim for breach of specific contractual promises unrelated to the termination itself. While cases like Brockmeyer v. Dun & Bradstreet and Yanta v. Montgomery Ward & Co. establish that an employer can discharge an at-will employee without liability for the termination, these precedents do not relieve the employer of responsibility for other promises made to a prospective employee. The court found that Badger's failure to provide Reimer with the promised exclusive territory and opportunity for expansion constituted breaches prior to his termination, which then led to his termination for 'poor sales.' Therefore, Reimer's claim was a legitimate breach of contract case, not dependent on his at-will status or the termination itself. Regarding damages, the court clarified that this was not a wrongful discharge case, so damages were not limited to what Reimer would have earned had he stayed for a fixed term. Instead, the damages were based on Reimer's 'reliance interest,' as defined by Restatement (Second) of Contracts sec. 344 and 349 comment a, which aims to put the injured party in as good a position as if the contract had not been made. This included lost income from his previous job and moving expenses. The court affirmed the use of reliance damages as appropriate, especially when expectation damages (profit) are uncertain due to a short work history. The court also upheld the duration of damages up to the time of trial because Badger failed to argue for a different cutoff date or present a mitigation-based defense. However, the court reduced the jury award from $16,500 to $16,245.81 because the $5,000 claimed for incidental/consequential damages lacked specific proof beyond Reimer's mere statement, which is insufficient evidence for damages.
Analysis:
This case significantly clarifies the scope of the employment-at-will doctrine in Wisconsin, establishing that it protects employers from liability for the termination itself, but not from liability for breaches of specific contractual promises made during employment that are distinct from the termination. It underscores the importance of reliance damages as a viable remedy for employees who change their circumstances based on an employer's unfulfilled promises. The ruling encourages employers to be precise in their offers and holds them accountable for promises that induce prospective employees to alter their lives, even in at-will relationships.
