Singer v. Beach Trading Co., Inc.
876 A.2d 885, 379 N.J. Super. 63 (2005)
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Rule of Law:
An employer who voluntarily provides an employment reference to a third party owes a duty of reasonable care to the former employee and can be held liable for negligent misrepresentation if they provide false or inaccurate information that proximately causes the employee to suffer economic damages.
Facts:
- Marsha Singer was employed by Beach Trading Co., Inc., where a company-wide e-mail introduced her as the Vice President of Daily Operations.
- At some point, Singer was asked to temporarily oversee the customer service department, but her title and salary remained unchanged.
- Eli Hizami began working at Beach Trading as a customer service representative while Singer was working in that department.
- Singer left Beach Trading and accepted a position as customer service manager at HRK Industries, Inc.
- Henry Kasindorf, the owner of HRK, became dissatisfied with Singer's performance and called Beach Trading to verify her previous role.
- Kasindorf, misrepresenting his identity, spoke with Hizami, who was then a customer service supervisor.
- Hizami erroneously told Kasindorf that Singer had only been a customer service representative at Beach Trading, not a Vice President or supervisor.
- After the call with Hizami, Kasindorf terminated Singer's employment from HRK, stating that she had misrepresented her previous position.
Procedural Posture:
- Marsha Singer filed a complaint against Beach Trading Co., Inc. and Eli Hizami in the Law Division (New Jersey's trial court of general jurisdiction).
- The complaint alleged causes of action for defamation, tortious interference, and negligent misrepresentation.
- Defendants moved for summary judgment to dismiss all claims.
- The Law Division judge granted the motion, dismissing Singer's entire complaint.
- Singer, as plaintiff-appellant, appealed the dismissal to the Superior Court of New Jersey, Appellate Division.
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Issue:
Does a former employer owe a duty of reasonable care to a former employee when voluntarily providing an employment reference to a prospective employer, such that providing false information can lead to liability for negligent misrepresentation?
Opinions:
Majority - Fuentes, J.A.D.
Yes. A former employer who chooses to provide an employment reference owes a duty of reasonable care to the former employee to avoid making negligent misrepresentations. The court held that a cause of action for negligent misrepresentation exists in this context, even though the former employee was not the direct recipient of the false information, because she falls within the class of individuals foreseeably injured by its dissemination. Drawing guidance from the Restatement (Second) of Torts § 552, the court established a five-part test for liability. The court found that genuine issues of material fact existed as to: (1) whether the prospective employer clearly identified the nature of the inquiry, thereby triggering a duty of care; (2) whether Beach Trading's response breached that duty; (3) whether the new employer justifiably relied on the misrepresentation; and (4) whether the misrepresentation caused the employee's economic loss. The court affirmed the dismissal of the defamation claim because the statement was not defamatory per se, and the tortious interference claim because there was no evidence of malicious intent.
Analysis:
This case is significant as it establishes for the first time in New Jersey a cause of action for negligent misrepresentation against a former employer providing an employment reference. It creates a duty of care for employers who choose to speak about former employees, holding them accountable for carelessness that leads to economic harm, even without malicious intent. This precedent may encourage employers to adopt stricter policies for providing references, such as confirming only titles and dates of employment, to mitigate the risk of litigation. The decision expands the scope of negligent misrepresentation liability to protect a non-recipient third party (the former employee) who is the foreseeable subject and victim of the misinformation.
