The Wisconsin Court of Appeals held on Jan. 26 that only manual laborers may recover attorney fees for fraud in the inducement to employment, under sec. 103.43.
In 1999, Christina Bellon read an advertisement for a tenure track faculty position at Ripon College. On Jan. 31, 2000, she met with David Seligman, Ripon’s vice president and dean of faculty at the time, to interview for the position. During her interview, Bellon asked about Ripon’s financial condition.
In response to her questions, Seligman described Ripon’s endowment, discussed past and current student enrollments, and told Bellon that one of the goals of Ripon’s comprehensive plan was to raise faculty salaries to be more competitive with comparable institutions.
On March 3, 2000, Ripon offered Bellon a position as assistant professor of philosophy. Four days later, the University of Nevada-Las Vegas offered Bellon a similar position with a higher salary. Nevertheless, Bellon accepted Ripon’s offer and continued to negotiate salary and employment-related expenses.
Bellon taught for Ripon during the 2000-01 academic year, and in May 2001, she accepted an offer for continued employment through the 2001-02 academic year.
Ripon notified Bellon in August 2001 that budget circumstances required Ripon’s Board of Trustees to eliminate her position and that her employment with Ripon would terminate at the end of the 2001-02 year.
Bellon filed suit against Ripon, alleging fraudulent advertising contrary to sec. 103.43, as well as intentional, negligent and strict liability misrepresentation. She claimed special damages in the amount of $24,398, plus attorney fees.
What the court held
Case: Christina Bellon v. Ripon College, No. 04-0515.
Issue: Does sec. 103.43 permit a white-collar employee to recover attorney’s fees in an action for fraudulent inducement to an employment contract?
Holding: No. Binding Supreme Court precedent limits such fees to manual laborers.
Counsel: Lester A. Pines, Madison; Tamara Packard, Madison, for appellant; Shannon M. Trevithick, Milwaukee, for respondent.
Ripon moved for summary judgment, and Fond du Lac County Circuit Court Judge Dale L. English granted the motion. Bellon appealed, but the court of appeals affirmed in a decision by Judge Harry G. Snyder.
The court held that, although Wisconsin recognized misrepresentation to commence an employment relationship as an actionable claim, in Mackenzie v Miller Brewing Co., 2001 WI 23, par. 18 n.15, 241 Wis. 2d 700, 623 N.W.2d 739, no facts were present from which a jury could find misrepresentation.
The court reasoned, "Our review of the record demonstrates that Ripon told Bellon the actual value of the endowment, and the actual student enrollment figures and trends as of the time of Bellon’s interview with Seligman. Further, we observe that Seligman showed Bellon the faculty salary handbook which contained the current salary charts and told her that a goal of Ripon’s comprehensive plan was to increase faculty salaries by four to five percent each year until salaries were comparable to those at similar institutions. All of this information was true at the time of the interview."
The court rejected Bellon’s contention that Ripon had a duty to say more under the doctrines of "passive fraud" or "misrepresentation by nondisclosure."
Under the doctrine, a failure to disclose a fact is a misrepresentation if the nondisclosing party has a duty to disclose that fact. The court found the doctrine inapplicable, reasoning, "Bellon seeks to impose a duty on Ripon to supply predictions, not facts. As we have held in the past, predictions as to future economic events are not generally actionable misrepresentations. It would be illogical to hold that failure to predict the future constitutes misrepresentation. The record demonstrates that Bellon’s teaching position, along with others, was eliminated due to unforeseen economic circumstances. Ripon had no duty to predict future economic realities (cites omitted)."
The court also held that the circuit court properly restricted sec. 103.43 to manual laborers, and that therefore, Bellon couldn’t pursue the fraudulent advertising claim and recover attorney fees.
The statute provides in relevant part: "(1)(a) No person may influence, induce, persuade or attempt to influence, induce, persuade or engage a worker … to accept employment in this state, and no person may bring a worker of any class or calling into this state to work in any department of labor in this state, through or by means of any false or deceptive representations, false advertising or false pretenses concerning or arising from any of the following:
1. The kind and character of the work to be done.
2. The amount and character of the compensation to be paid for work.
3. The sanitary or other conditions of the employment.
4. The failure to state in any advertisement, proposal or contract for the employment that there is a strike or lockout at the place of the proposed employment, when a strike or lockout then actually exists in the employment at the proposed place of employment."
Bellon argued that the plain language of the statute, which applies to workers "of any class or calling," clearly encompasses all people who work.
The court rejected the argument, however, concluding it is bound by the contrary interpretation of the Wisconsin Supreme Court in Biersach & Neider-meyer Co. v. State, 177 Wis. 388, 188 N.W. 650 (1922). In Biersach, the State prosecuted Biersach under the predecessor statute, after Biersach had advertised for tinners, but failed to include a notice that there was a strike at the Biersach plant.
Biersach challenged the constitutionality of the statute, arguing that it violated the Equal Protection Clause because it applied only to manual laborers and did not restrain employers of other workers, such as stenographers or clerks, but the court found the distinction rational.
Because the court of appeals has no authority to overturn Supreme Court precedent, it affirmed the grant of summary judgment to Ripon.
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David Ziemer can be reached by email.