Elements Needed to Prove Solicitation of Employee by Misrepresentation; CACI No. 2710
Paula claims that Daniel made a false representation about work to persuade her to change her resident. To establish this claim, Paula must prove:
- That Daniel made a representation to Paula about the kind, character, or existence of work; the length of time work would last; the compensation for work; the sanitary or housing conditions relating to work; or the existence or nonexistence of any pending strike, lockout, or other labor dispute affecting work;
- That Daniel’s representation was not true and that Daniel knew when the representation was made that it was not true;
- That Daniel intended that Paula rely on the representation;
- That Paula reasonably relied on Daniel’s representation and changed her residence for the purpose of working for Daniel; and
- That Paula was harmed and that Paula’s reliance on Daniel’s representation was a substantial factor in causing her harm.
The elements of the claim are the same as intentional misrepresentation except the fraud has to do with nature of work as defined in Labor Code section 970. (See Tyco Indus., Inc. v. Superior Court (Richards) (1985) 164 Cal.App.3d 148, 156-157; Finch v. Brenda Raceway Corp. (1994) 22 Cal.App.4th 547, 553.)
Element 1: Misrepresentation Concerning Work
Labor Code section 970 states that the misrepresentation may be spoken, written, or advertised in printed form, concerning either the:
- Kind, character, or existence of the work;
- Length of time such work will last, or the compensation therefor;
- Sanitary or housing conditions relating to or surrounding the work;
- Existence of any strike, lockout, or other labor dispute pending between the employer and the prospective employee’s predecessor.
(Cal. Lab. Code, § 970.)
Misrepresentations about a company’s products and customer support are sufficient to state a claim even though the employer did not misrepresent the job being offered to the plaintiff. (Seubert v. McKesson Corp. (1990) 223 Cal.App.3d 1514, 1522.)
Oral misrepresentations are also sufficient. (Finch v. Brenda Raceway Corp. (1994) 221 Cal.App.4th 547, 553.)
The representation must be affirmative. (Schultz v. Spraylat Corp. (C.D. Cal. 1994) 866 F. Supp. 1535, 1541 [no misrepresentation because circumstances under which employment would cease “was just a subject that never came up and was never talked about.”].)
The plaintiff’s claims failed because he admitted that no one had lied to him and the employer was under no duty to disclose. (Funk v. Sperry Corp. (9th Cir. 1988) 842 F.2d 1129, 1133-34 [plaintiff did not allege or prove that the employer had promised he would never be terminated or that he would be transferred if his division failed].)
A misrepresentation can include the ability to meet sales expectations upon which the employee’s salary would be based. (Seubert v. McKesson Corp. (1990) 223 Cal.App.3d 1514, 1522 [misrepresentations regarding existence of market for sales manager formed basis for claim where sales manager subsequently could not make quota and was fired].)
Misrepresentations regarding the existence of a two-week assignment for migratory workers were actionable. (Collins v. Rocha (1972) 7 Cal.3d 232, 239.)
Misrepresentations regarding a position’s title and duties are actionable. (Tyco Industries, Inc. v. Superior Court (1985) 164 Cal.App.3d 148, 157.)
A misrepresentation that the employee had “lifetime employment” and that the employer had a long-range commitment to employees was actionable. (Finch v. Brenda Raceway Corp. (1994) 221 Cal.App.4th 547, 553 [employer also misrepresented that starting salary was low because of cash flow problems and that employee would receive substantial raise and share of profits in the future].)
An employee’s cause of action under Labor Code section 970 may require the interpretation of a collective bargaining agreement and other pertinent documents. (Levy v. Skywalker Sound (2003) 108 Cal.App.4th 753.)
Element 2: Knowingly False
The employee must allege and establish that the employer’s promise was made without any intention to perform it or that the employer knew that its representations were false at the time they were made. (Tyco Industries, Inc. v. Superior Court (1985) 164 Cal.App.3d 148, 156, 157 [dismissal granted where employee failed to allege that employer had anticipated that business would go downhill, necessitating his termination].)
Where an employee could not show that the employer knew that its representations were false and could not show that the employer intended to restructure its operations and reduce employee’s duties and title, no claim was stated. (Tyco Industries, Inc. v. Superior Court (1985) 164 Cal.App.3d 148, 156-57.)
The employee showed that the employer had made false promises regarding long-term employment and hired her only because employer’s first choice for the position was temporarily unavailable. (Finch v. Brenda Raceway Corp. (1994) 221 Cal.App.4th 547, 553.)
Element 3: Intent to Defraud
Circumstantial evidence of intent to deceive may be used. Some courts have held that the subsequent conduct of failure to honor the promise itself is circumstantial evidence of intent. (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 27; Jarkieh v. Badagliacco (1946) 75 Cal.App.2d 505, 509.)
“Fraudulent intent has been inferred from such circumstances as defendant’s insolvency, his hasty repudiation of the promise, his failure even to attempt performance, or his continued assertions after it was clear he would not perform.” (Tenzer v. Superscope, Inc. (1985) 39 Cal.3d 18, 31.)
Element 4: Reasonable Reliance/Relocation for Work
A reasonable person, would accept the defendant’s representations, without an independent inquiry or investigation. (Kahn v. Lischner (1954) 128 Cal.App.2d 480, 489.)
If the defendant knew of plaintiff’s weaknesses, or particular characteristics, and took advantage of it, more leeway is granted to the plaintiff. (Seeger v. Odell (1941) 18 Cal. 2d 409, 415; Hartong v. Partake (1968) 266 Cal.App.2d 942, 964.)
“[Section 970] requires the employee to demonstrate that his or her employer made ‘knowingly false representations’ concerning the nature, duration or conditions of employment. . . . [¶] Moreover, under the statute an employee must establish that the employer induced him or her to relocate or change residences.” (Eisenberg v. Alameda Newspapers (1999) 74 Cal.App.4th 1359, 1392.)
The employer must directly or indirectly influence, persuade or engage the plaintiff to change from one place to another in this state, or from any place outside to any place within this state, or from any place within this state to any place outside, for the purposes of working in any branch of labor. (Cal. Lab. Code, § 970.)
The new job can be only within one hundred miles of the old job. (Finch v. Brenda Raceway Corp. (1994) 221 Cal.App.4th 547.)
Moves need not be across state lines; moves within the state are actionable. (See Cal. Lab. Code, § 970; Finch v. Brenda Raceway Corp. (1994) 221 Cal.App.4th 547.)
The statute encompasses temporary as well as permanent relocation of the employee’s residence. (Collins v. Rocha (1972) 7 Cal.3d 232 [plaintiff may have cause of action even if move was for period of only two weeks].) “The words ‘to change from one place to another’ import temporary as well as permanent relocation of residence, as contrasted with a mere change in the site of employment. The quantitative fact that the change of residence was to be only for two weeks rather than for a longer period would not appear to affect the qualitative misrepresentations, nor does it render the statute inapplicable.” (Id. at pp. 239-240.)
The move can be within a company, not just from one company to another. (Tyco Industries, Inc. v. Superior Court (1985) 164 Cal.App.3d 148, 157.)
Element 5: Causation and Damages
Traditional notions of tort damages determine whether the harm caused was foreseeable and the damage proximately caused. (See Randi W. v. Muroc Joint Unified School Dist. (1997) 14 Cal.4th 1066, 1068.)
Remedies
Compensatory Damages
Plaintiffs are entitled to all damages flowing from the misrepresentations; however, plaintiffs may not recover twice, once for violation of section 970 and once for breach of contract. (Finch v. Brenda Raceway Corp (1994) 221 Cal.App.4th 547, 555-56.)
Double Damages
Under Labor Code section 972, an employee may bring a civil action against an employer who violates section 970 for double damages that result from such misrepresentations. Thus, plaintiffs are entitled to double his or her compensatory damages. Such damages may include but are not limited to: moving expenses, rejecting other job offers, and currently being unable to find comparable work. (Cal. Lab. Code, § 972.)
Criminal Penalties
Violation of Labor Code section 970 is a misdemeanor punishable by a fine of between $50 and $1000 and/or imprisonment for not more than six months. (Cal. Lab. Code, § 971.)
Punitive Damages
Punitive damages are available, but if plaintiff is awarded both punitive and double damages, plaintiff must choose his remedy. (Marshall v. Brown (1983) 141 Cal.App.3d 408, 419.)
Statute of Limitations
The statute of limitations for recovery under Labor Code section 970 is three years because the claim is in the nature of a fraud and is an action upon a liability created by statute. (Cal. Civ. Proc. Code, § 338, subds. (a), (d).) The limitations period for recovery under Labor Code section 972 is one year from the date the misrepresentation was discovered. (Cal. Civ. Proc. Code, § 340, subd. (1).)
Affirmative Defenses
Statute of Frauds
Oral promise of employment for three years was dismissed based upon statute of frauds. (See Munoz v. Kaiser Steel Corp. (1984) 156 Cal.App.3d 965, 971.)
Contributory Negligence No Defense
Negligence or contributory negligence are not defenses to intentional misrepresentation. (Alliance Mortgage Co. v. Rothwell (1995) 10 Cal.4th 1226, 1239.) Additionally, negligence or contributory negligence are not defenses to negligent misrepresentation. (Van Meter v. Bent Const. Co. (1956) 46 Cal.2d 588; Carroll v. Gava (1979) 98 Cal.App.3d 892, 897.)
Workers Compensation Preemption Not a Defense
Not a defense as there is no employer-employee relationship. (Lazar v. Superior Court (Rykoff-Sexton, Inc.) (1996) 12 Cal.4th 631.)