9 N.Y.3d 54 (2007)
An at-will employee cannot maintain a fraudulent inducement claim against their employer based solely on misrepresentations regarding the stability of their employment, absent a showing of injury separate and distinct from the termination itself.
Summary
Five at-will employees sued The Dreyfus Corporation, alleging fraudulent inducement based on Dreyfus’s repeated denials of a planned merger with another company, Standish, Ayer & Wood. The employees claimed they relied on these denials in accepting and remaining in their positions, foregoing other job opportunities. After the merger occurred and the employees were terminated, they sought damages for fraudulent inducement. The New York Court of Appeals reversed the Appellate Division’s decision to reinstate the claim, holding that the employees failed to allege injuries distinct from their termination, a requirement for such claims in the context of at-will employment.
Facts
Gerald Thunelius, a director at Dreyfus, heard rumors of a potential acquisition of Standish, Ayer & Wood by Dreyfus’s parent corporation, Mellon Financial Corporation. Dreyfus’s CEO denied these rumors. Other plaintiffs accepted employment or continued their employment at Dreyfus, relying on repeated denials by Dreyfus officers regarding any planned merger with Standish. In April 2004, Dreyfus’s CEO stated a merger was “off the table.” Despite these assurances, Dreyfus merged with Standish in late 2004, and in February 2005, all five plaintiffs were terminated.
Procedural History
The plaintiffs sued Dreyfus in the Supreme Court, asserting several causes of action, including fraudulent inducement. The Supreme Court dismissed the entire complaint. The Appellate Division modified the order, reinstating the fraudulent inducement claim. The New York Court of Appeals reversed the Appellate Division’s decision, dismissing the fraudulent inducement claim.
Issue(s)
Whether at-will employees can maintain a cause of action for fraudulent inducement against their employer based on misrepresentations regarding the security of their employment, when the only damages alleged arise from the termination of their employment.
Holding
No, because the employees failed to allege any injury separate and distinct from the termination of their at-will employment, which is required to sustain a fraudulent inducement claim under these circumstances.
Court’s Reasoning
The Court of Appeals emphasized the established principle that at-will employment can be terminated by either party for any reason, or for no reason, absent a constitutionally impermissible purpose, statutory proscription, or an express limitation in the employment contract. Citing Murphy v American Home Prods. Corp., 58 NY2d 293, 305 (1983), the court reiterated the unimpaired right of an employer to terminate at-will employment. The court distinguished the case from Stewart v Jackson & Nash, 976 F2d 86 (2d Cir 1992), where the plaintiff suffered damages distinct from termination, such as thwarted professional goals and damaged career potential. Here, the court found that the plaintiffs’ sole alleged injury was the termination of their employment, which is an inherent aspect of at-will employment. The court stated, “In that the length of employment is not a material term of at-will employment, a party cannot be injured merely by the termination of the contract—neither party can be said to have reasonably relied upon the other’s promise not to terminate the contract.” The court concluded that absent an injury independent of termination, the plaintiffs’ claim was essentially a breach of contract claim disguised as a tort, which is not permissible in the context of at-will employment. Therefore, the fraudulent inducement claim failed.