Court: District Court, W.D. Michigan; December 12, 2018; Federal District Court
In Michigan, employment is generally "at-will," allowing either party to terminate the relationship at any time. However, certain employer-employee relationships may have unique characteristics that exempt them from this presumption. Del Kostanko retired from the Lansing Police Department in June 2015 and sought new employment in law enforcement. By May 2017, he had to choose between two job offers: one as a Narcotics Analyst with the Michigan State Police and another as a Healthcare Fraud Senior Investigator with MVM, Inc., contracted by the U.S. Attorney's Office. Kostanko opted for the MVM position due to its significantly higher pay and declined the MSP offer. Despite MVM's assurances and an offer letter, the U.S. Attorney's Office sought additional candidates, ultimately selecting another applicant, Barbara Birdsong. Kostanko filed a lawsuit against MVM claiming promissory estoppel. The court is tasked with determining if Kostanko's relationship with MVM had distinguishing features that negated the at-will employment presumption and whether MVM's promise induced Kostanko's reliance, which caused him an injustice. The court concluded that Kostanko's relationship with MVM did not have such distinguishing features, thus granting MVM summary judgment without addressing other potential factual disputes. MVM is identified as a staffing agency contracted to place employees with the U.S. Attorney's Office. The process began when the office solicited bids for a Senior Investigator position, which Kostanko applied for, but the position was ultimately filled by another candidate, James Adamcheck, prior to Kostanko’s consideration.
Kostanko engaged with Adamcheck, who encouraged him to apply for a Senior Investigator position. Following their discussion, Kostanko sent his resume to Adamcheck, who forwarded it to Operations Manager Kevin Reyes. Concurrently, Kostanko was also in the process of being considered by the Michigan State Police (MSP) for a Strategic Narcotics Intelligence Analyst role, for which he had applied on March 31, 2017, and interviewed on May 8, 2017. By May 22, Kostanko had received a conditional offer from the MSP, pending a drug screening, and anticipated a formal offer soon.
On May 25, 2017, Kostanko received the formal offer from MSP and interviewed for the Senior Investigator position with MVM that same day. He informed MVM's recruiter, Shaneice Singleton, about his MSP offer. Though Reyes initially indicated that Kostanko's resume would be prioritized for the USAO's review, he later stated it would be sent along with others. Following this shift, Kostanko expressed his preference for the more secure offer from MSP. Shortly after, Reyes assured Kostanko that he had the job. Subsequently, Kostanko declined the MSP offer and accepted MVM’s contingent offer on June 2, 2017.
However, after Kostanko accepted MVM’s offer, Reyes informed him that the USAO wanted to consider additional candidates before making a decision. Reyes forwarded the resume of another applicant, Barbara Birdsong. Despite being told he was the most qualified candidate, Kostanko learned on June 12, 2017, that the USAO had hired Birdsong instead. Consequently, Kostanko transitioned from having two job offers to none within two weeks and remains employed by Brooks Investigations without securing full-time employment.
Kostanko initiated a lawsuit in this Court on September 5, 2017, claiming diversity jurisdiction based on the parties being citizens of different states and the amount in controversy exceeding $75,000, as per 28 U.S.C. 1332. MVM filed a motion for summary judgment on August 23, 2018. Summary judgment is warranted if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law, according to Fed. R. Civ. P. 56(c). The moving party must demonstrate the absence of evidence for the nonmoving party's case, while the nonmoving party must provide specific facts to show a genuine issue exists. The evidence must be viewed favorably towards the nonmoving party, and it must establish significant probative evidence rather than mere allegations. The court's role is to ascertain if a genuine issue for trial exists, not to weigh evidence or determine truth. The plaintiff's single claim is for promissory estoppel, which requires proving a promise that reasonably induced action, resulting in reliance or forbearance that necessitates enforcement to avoid injustice, as defined in Zaremba Equip. Inc. v. Harco Nat'l Ins. Co.
Kostanko's ability to evade the at-will employment rule in Michigan hinges on whether his employment agreement contains "distinguishing features" that differentiate it from a standard at-will arrangement. MVM asserts that Kostanko's claim is invalid under the prevailing at-will doctrine, which allows termination by either party at any time and without cause, as established in Lynas v. Maxwell Farms. While Kostanko acknowledges this general principle, he contends that his situation qualifies for an exception due to specific provisions in his employment agreement.
The concept of "distinguishing features" arises from judicial interpretations of permanent employment contracts, which are typically considered indefinite and terminable at will unless they include provisions indicating a different intention. A notable example is a collective bargaining agreement that restricts termination to instances of cause, signaling a deliberate intention to limit employer discretion. In Toussaint v. Blue Cross, the inclusion of stock options that could not fully vest for five years was deemed a distinguishing feature, suggesting an implied promise to discharge only for cause, thus making the termination questionable for a jury.
Furthermore, an employer’s assurances regarding job security or employment duration can also create distinguishing features, although the criteria for this have historically been ambiguous. The case of Hackett v. Foodmaker highlights this point, where a plaintiff moved to Michigan based on the employer's promise of a managerial position, only to find the position unavailable upon arrival. This illustrates the potential for employer statements to influence the nature of the employment relationship and challenge the at-will presumption.
The plaintiff sued, claiming he was promised a managerial position at the Ypsilanti store with a salary of $225 per week. A jury ruled in his favor, awarding $8,995 for breach of contract. The Michigan Court of Appeals upheld this decision, emphasizing that the plaintiff's employment contract had unique aspects since he was never given the chance to manage as agreed. Consequently, if a contract existed and he was denied the role entitled to him, he could seek damages for breach. The court referenced Corbin on Contracts to support its ruling.
However, subsequent cases, particularly Milligan v. The Union Corporation, criticized the Hackett decision. In Milligan, the court determined that an employee who declined other job offers but was terminated before starting work did not possess distinguishing features to exempt the situation from at-will employment. The court argued that any detriment incurred in preparing for the new job was not part of the contractual consideration.
The Milligan court also commented that the Hackett case's unique circumstances regarding wrongful discharge were insufficient to establish a cause of action without performance having begun. Further complicating the legal landscape, in Filcek v. Norris-Schmid Incorporated, another panel of the court affirmed a denial of a directed verdict when an employer retracted an offer before the employee started. The Filcek court acknowledged that if employment had commenced, it would be terminable at will, but allowed a cause of action for an employee who resigned from previous employment based on an employer's promise. The dissent in Filcek argued against allowing recovery for an employee who had not started work, while denying it for one terminated shortly after commencing work.
In Cunningham v. 4-D Tool Company, the Michigan Court of Appeals addressed a dispute involving a plaintiff from Detroit who relocated to Mesick for a job after being offered a position following a tryout. Despite confirming his employment multiple times, he was informed upon arrival that the job was no longer available. The court referenced prior cases, concluding that the plaintiff's job relocation and resignation were customary incidents of changing employment, not distinguishing factors for a promissory estoppel claim. This rationale was echoed in Marrero v. McDonnell Douglas Capital Corp., reinforcing that resignation and relocation are typical when changing jobs.
In Barnell v. Taubman Company, a plaintiff moved for a vice president position but was terminated after eighteen months. Although the trial court initially viewed his promissory estoppel claim as linked to wrongful discharge, the appellate court clarified that these are separate claims but upheld the dismissal based on precedents set in Cunningham and Marrero. In Meerman v. Murco, executives persuaded a plaintiff to leave her job for a position that fell through due to one executive's termination; she subsequently accepted a different role within the same company. The outcomes of these cases illustrate a consistent legal trend in Michigan regarding the treatment of job transitions and promissory estoppel claims.
The plaintiff was informed that the job she sought was no longer available after she attempted to return to her previous position but was unsuccessful. The Meerman panel, finding the case similar to Barnell, affirmed the district court's summary judgment. The court indicated that if not bound by precedent, it might have ruled differently due to Vesta and Murray's actions in inducing the plaintiff to leave her former job. Kostanko argued that MVM's job offer contained distinguishing features that removed his situation from the at-will employment doctrine, citing his decision to decline a position with the Michigan State Police based on MVM's assurances. However, the court concluded that Kostanko did not demonstrate distinguishing features as required by prior cases, as he did not resign or relocate. Kostanko also posited that public policy considerations should affect the court's decision since MVM had financial incentives to fill the position quickly. The court rejected this argument, stating that it is common for employers to seek to fill vacancies promptly and that such motives do not constitute distinguishing features. Ultimately, the court ruled in favor of MVM, granting its motion for summary judgment and deeming further analysis unnecessary.
Plaintiff Del Kostanko's claim for promissory estoppel against Defendant MVM, Inc. was dismissed because the promise of at-will employment was deemed legally insufficient. Kostanko, who declined other job offers to pursue employment with MVM, could not establish the necessary consideration for his claim, as his actions were determined to be a customary aspect of job transition rather than a unique reliance on MVM's promise. The court granted MVM's Motion for Summary Judgment, resulting in Kostanko's complaint being dismissed with prejudice. The court acknowledged a dispute regarding the accuracy of phone call records related to Kostanko's claims, but for the purposes of the motion, the court resolved factual disputes in Kostanko's favor. Michigan law, which governs the case, does not recognize a standalone claim for detrimental reliance; it is instead a component of promissory estoppel claims. The passage also notes the procedural history of related Michigan case law, indicating the courts' evolving stance on appeals concerning promissory estoppel.
