United States District Court, Northern District of Illinois, Eastern Division
April 30, 1999
PHILLIP K. DOUGHERTY, PLAINTIFF,
AKZO NOBEL SALT INC., DEFENDANT.
The opinion of the court was delivered by: Castillo, District Judge.
MEMORANDUM OPINION AND ORDER
Phillip K. Dougherty filed this diversity lawsuit against Akzo
Nobel Salt, Inc. ("Akzo") alleging claims for promissory estoppel
and negligent misrepresentation. Akzo now moves for summary
judgement under Federal Rule of Civil Procedure ("Rule") 56. For
the reasons stated in this opinion, Akzo's motion is granted in
its entirety and this action is dismissed with prejudice.
Dougherty was employed as regional manager of Akzo's Grocery
Group, a corporation that engages in substantial business in
Chicago. In December 1996, Akzo executed an agreement whereby
Cargill Incorporated ("Cargill") purchased Akzo. In April 1997,
when the acquisition became final, Cargill interviewed
former-Akzo employees for the purpose of determining who would be
retained. On April 17, 1997, Cargill informed Dougherty that he
would not be rehired. Dougherty alleges that his supervisor at
Akzo, Art Armstrong, promised that his job would survive
Cargill's acquisition of Akzo. Additionally, he claims he
reasonably relied on Armstrong's assurances and that Armstrong
either knew or should have known his job was at risk. We discuss
the facts in greater detail below.
Summary judgment principles require a party seeking summary
judgment to establish the lack of a genuine issue of material
fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct.
2548, 91 L.Ed.2d 265 (1986). This Court must view the facts in
the light most favorable to the non-moving party, although it "is
not required to draw unreasonable inferences from the evidence."
St. Louis North Joint Venture v. P & L Enters., Inc.,
116 F.3d 262, 265 n. 2 (7th Cir. 1997). As a practical matter, the inquiry
is "whether the nonmovant has a fighting chance at trial."
Shager v. Upjohn Co., 913 F.2d 398, 403 (7th Cir. 1990).
PROMISSORY ESTOPPEL CLAIM
In Count I of his complaint, Dougherty sues Akzo for promissory
estoppel. The elements of a promissory estoppel claim in Illinois
are well established:
promissory estoppel requires proof of the following:
(1) an unambiguous promise of employment communicated
from the employer to the employee; (2) reasonable
reliance on the promise of employment by the
employee; (3) the reliance was expected and
foreseeable by the employer; and (4) the reliance was
to the employee's detriment.
Kalush v. Deluxe Corp., 171 F.3d 489
, 490 (7th Cir. 1999)
(quoting Quake Constr. v. American Airlines, 141 Ill.2d 281
152 Ill. Dec. 308
, 565 N.E.2d 990
, 1004 (1990)); see also
All-Tech Telecom, Inc. v. Amway Corp., 174 F.3d 862
, 869 (7th
Cir. 1999) ("Promissory estoppel is not a doctrine designed to
give a party a second bite at the apple in the event it fails to
prove a breach of contract.") (quoting Walker v. KFC Corp.,
728 F.2d 1215
, 1220 (9th Cir. 1984)). A promise is unambiguous if it
is "clear enough that an employee would reasonably believe that
an offer has been made." Duldulao v. Saint Mary of Nazareth
Hosp. Ctr., 115 Ill.2d 482, 106 Ill.Dec.
8, 505 N.E.2d 314, 318 (1987); see also Tolmie v. United Parcel
Serv. Inc., 930 F.2d 579
, 581 (7th Cir. 1991). "This
determination need not be made by a jury." Tolmie, 930 F.2d at
At issue in this case is the reasonableness of Dougherty's
belief that a promise was made, and whether he suffered any
injury as a result of his reliance. Dougherty alleges Akzo made
two promises. First, he claims that Armstrong, his supervisor,
told him he did not qualify for an early retirement package
because he was a critical employee (the "critical statement").
This promise occurred in November of 1996, approximately five
months before the acquisition. Second, Dougherty alleges that on
the evening before his Cargill interview, Armstrong relayed a
message from Cargill's President: "[t]ell your men not to worry,
the Grocery Group is coming over" (the "last supper
Tolmie is instructive as to the "critical statement." In
Tolmie, the plaintiff expressed concern to his supervisor about
the loss of his "good cause" status if he accepted a promotion to
management. 930 F.2d at 580. The supervisor "assured him that he
would have nothing to worry about, insofar as job security was
concerned, because `it is harder to fire management than other
employees' of UPS." Id. at 580. Soon after the plaintiff
accepted the promotion, UPS discharged him. Id. The court held
that the supervisor's assurances did not qualify as an
unambiguous promise because of the statement's "general nature"
and its many possible interpretations. Id. at 581.
The first of the two Armstrong statements, the "critical
statement," is too general to constitute an unambiguous promise.
Dougherty asked a question about retirement plans and he received
an answer that addressed his inquiry. Even drawing all
permissible inferences in Dougherty's favor, the Court cannot
interpret Armstrong's response as a definite promise of continued
employment. Therefore, the "critical statement" cannot provide a
basis for Dougherty's promissory estoppel claim.
We need not decide whether the "last supper statement" was an
unambiguous promise because Dougherty cannot establish that he
reasonably relied on that statement. Immediately after making the
"last supper statement", Armstrong informed the Grocery Group
members that he would deny making the statement if anyone tried
to hold him to it. See Luciani v. Bestor, 106 Ill. App.3d 878,
62 Ill.Dec. 501, 436 N.E.2d 251, 256 (1982) (holding
circumstances surrounding the transaction and the parties' prior
business experience determine justifiable reliance); see also
Teamsters Local 282 Pension Trust Fund v. Angelos, 839 F.2d 366,
371 (7th Cir. 1988). This should have been Dougherty's first clue
that Armstrong was not making a promise he could depend on.
Moreover, Dougherty's reliance on the "last supper statement"
was unreasonable because Armstrong lacked authority to promise
anything on Cargill's behalf. "The authority of the agent may
only come from the principle and it is therefore necessary to
trace the source of an agent's authority to some word or act of
the alleged principle." Schoenberger v. Chicago Transit Auth.,
84 Ill. App.3d 1132, 39 Ill. Dec. 941, 405 N.E.2d 1076, 1080
(1980). Additionally, "[t]he authority to bind will not be
presumed, but rather, the person alleging authority must prove
its source unless the act has been ratified." Id. Dougherty has
not established an endowment of authority given to Armstrong by
Furthermore, Dougherty knew that Armstrong was without
authority to promise him a job with Cargill; he knew that Cargill
was interviewing all of the former-Akzo
employees before deciding who to retain and that his interview
was scheduled for the following day. Dougherty is an experienced
business person and should have known that he could not rely on
Armstrong's statement, particularly once Armstrong made clear he
would not stand by the statement. Thus, Dougherty's promissory
estoppel claim must fail because his reliance on the "last supper
statement" was unreasonable.*fn2
Finally, there is no evidence that Dougherty suffered any
detriment by relying on the "last supper statement." Armstrong
made the "last supper" remark on April 6, 1997, and on April 17,
1997 Dougherty learned Cargill would not offer him employment.
Dougherty does not allege that he took any action relying on
Armstrong's "last supper statement" between the time of the
statement and the time he was terminated. Thus, he has not
established any injury arising from his reliance on the "last
supper statement." As already noted the "critical statement" was
not definite enough to satisfy the first element of promissory
estoppel, so this Court need not reach the issue of detrimental
reliance on the "critical statement."
In sum, a reasonable jury could not return a verdict in favor
of Dougherty's promissory estoppel claim. Therefore, we must
grant summary judgment on this claim in favor of Akzo.
NEGLIGENT MISREPRESENTATION CLAIM
Dougherty's negligent misrepresentation claim fails because,
under Illinois law, that tort does not apply to a case like this
one. The Illinois Supreme Court recently held that negligent
misrepresentation requires a plaintiff to establish a duty on the
part of the defendant to communicate accurate information.
Brogan v. Mitchell Int'l, Inc., 181 Ill.2d 178, 229 Ill.Dec.
503, 692 N.E.2d 276, 278 (1998). Illinois has only recognized a
duty to communicate accurate information in two circumstances:
when the defendant negligently communicates false information
resulting in physical injury, and when the defendant is "in the
business of supplying information for the guidance of others in
their business transactions." Brogan, 229 Ill.Dec. 503, 692
N.E.2d at 278.
In this case, Dougherty does not allege any physical injury,
and Akzo is not in the business of supplying information to its
employees to guide their business transactions. Illinois
specifically limits the tort of negligent misrepresentation to
"reserve the proper sphere of contractual-based recovery and
prevent the creation of tort liability which could unduly impede
the flow of communication in society." Brogan, 229 Ill.Dec.
503, 692 N.E.2d at 278. While other jurisdictions may permit the
tort of negligent misrepresentation in employment situations,
Illinois does not.
Dougherty asserts that Akzo assumed the duty to disseminate
accurate information about the acquisition process and employment
with Cargill. If Akzo assumed the duty to disseminate accurate
information about Cargill's intentions, Akzo could be liable
despite its lack of a common law duty to disseminate accurate
information. But Dougherty presents no factual basis to support
his argument. Unless Akzo assumed the duty to disseminate
accurate information, Dougherty's argument must fail. See
American States Ins. Co. v. A.J. Maggio Co., 229 Ill. App.3d 422,
171 Ill.Dec. 263, 593 N.E.2d 1083, 1085-86 (1992) (refusing to
impose a duty beyond common law on company that did not assume
such a duty through contract).
Dougherty has not established Akzo assumed the duty to
disseminate accurate information. Instead, he asserts that Akzo
management knew terminations would result from the merger; knew
that employees wanted to know about potential
terminations; and failed to communicate accurate information
about the terminations. These allegations do not in any way
support an inference that Akzo assumed the duty to disseminate
accurate information. Dougherty also asserts Akzo management told
employees that it would attempt to keep the employees updated on
the Cargill transaction. Again, this statement does not establish
Akzo assumed the duty to communicate accurate information.
This court can find no evidence indicating Akzo assumed the
duty to communicate accurate information, and we decline to
"re-negotiate" Dougherty's contract with Akzo to supply such a
duty. To impute to Akzo a duty beyond what Illinois common law
requires is not within the power of this Court.
Finally, Dougherty argues that the "promissory fraud" exception
to negligent misrepresentation applies to this case. But that
exception is a response to an affirmative defense to negligent
misrepresentation. As already noted, the negligent
misrepresentation claim is itself without merit. See Bower v.
Jones, 978 F.2d 1004, 1011-12 (7th Cir. 1992); Johnson v.
George J. Ball, Inc., 248 Ill. App.3d 859, 187 Ill. Dec. 634,
617 N.E.2d 1355, 1361 (1993). Because Dougherty cannot establish a
claim for negligent misrepresentation, Akzo need not assert an
affirmative defense and the promissory fraud exception is not
A claim of negligent misrepresentation must fit into one of two
categories of cases: when negligently false information results
in physical injury, and when the defendant is in the business of
supplying information. This case fits neither category. Thus,
this Court must dismiss Dougherty's negligent misrepresentation
claim as a matter of law.
In the final analysis, Dougherty is one of the many unfortunate
victims of today's corporate mergers and acquisitions. While we
are sympathetic to Dougherty's situation, we conclude that he has
failed to submit sufficient evidence to establish either a
promissory estoppel or a negligent misrepresentation claim.
Accordingly, Akzo's Motion for Summary Judgment is granted (27-1)
and the remaining counts of the current amended complaint are
hereby dismissed with prejudice.