Legal Theories and Damages in a Case Study Involving Wrongful Dismissal

At the Turnip Plaza Hotel in Michigan, Mark was employed as a tour guide for several years. The hotel is located nearby a well-known Turnip Rock in Lake Huron. A month ago, the manager of Stacey Nguyen the Huron Overnight inn - a rival corporation - contacted Mark and offered him a substantial salary increase if he left his company to join the Huron Overnight Inn Corporation.

Edward, the manager of Turnip Plaza, came to know about the offer and after learning he called Mark and offered that he promised that he would get a guaranteed settlement for 2-year terms and a promotion with a 50% increase. After hearing this, he made up his mind not to accept Stancy's offer. However, Mark was terminated from Turnip Plaza last week when he was about to sign his new agreement. The legal issue arise is whether it is right to terminate Mark due to the restructuring of the corporation due to fears about the augmented liability dangers of handling large adventure tours via hotels of Colossal. The ethical issue that arises in this case is whether the company should give a notice period before the dismissal or concern an employee who has worked very well for such a long period.

Two legal theories might Mark use to attempt to enforce Edward’s promise lawfully

Under the common-law theories, there are 2 legal theories that Mark can use:

1. Bargain theory
2. Promissory Estoppel theory

Bargain theory – In Bargain theory, parties individually see the agreement to be the product of a bargain or exchange. It recognised what promise will be held with a view to be validly binding. A bargain is an autonomous contract between parties in exchange for consideration (Legal Information Institute, 2022). There must be three elements present: offer, acceptance, and consideration. This issue can be arisen by Mark if all the required elements would be met. An offer (promotion and incentive by Edward) needs to be delivered to the offeree (Mark) and stated in a manner that would result in a rational individual to suppose a binding agreement to occur from its acceptance. On the other hand, acceptance states the act or promise of an offeree (Mark) who shows his readiness to be bound by the conditions and terms specified in an offeror’s (Edward) proposal (Michak, 2021).

This principle may apply in the given scenario as Mark was called in by Edward and promised that the next month, he would receive a guaranteed contract for a period of 2 years and a promotion with a 50% increase. It can be said that Edward offered Mark a promotion and a two-year term contract. Mark gives his acceptance to Edward and in return he would not accept Stacy's offer. Therefore, it can be assumed that this scenario had all the necessary elements of this principle. Thus, Mark can use this legal principle to enforce Edward's promise.

Two Legal Theories that Mark Might Use to Enforce Edward’s Promise

Promissory Estoppel Theory – It is a theory which imposes or enforces a promise whether performed or executed as an agreement or not. This theory safeguards the legal rights of an aggrieved party or promise against the promisor (Martin, 2016). Under this principle, the law enforces a promise even when a promisor such as Edwin made a promise verbally to Mark. The party puts himself in a place in which he would face a damage or loss in case if other contracting party does not execute (Harris, 2018).

The following essential component need to be existed for the theory to be enforceable:

1. According to the Central London Property Trust Ltd V. High Trees House Ltd [1947] KB 130, a significant promise must be made by a promisor to cause the promisee to act on it (Ashton & Turner, 2018). In the given scenario, Edward made a promise to give 2 year guaranteed contract and a promotion with a 50% increase.
2. According to Quake Constr., Inc. V. American Airlines, Inc. – 141 III 2d 281 (1991), promisee must depend on the promise. It can be said that Mark's action for not accepting Stacey's offer shows that he also lived up to the promise made by Edward.
3. The promisee suffered a loss on the basis of the promise. Mark is in an even worse position to rely on or fulfil a promise (Marks, 2019).
4. Completion of the promise is the sole method the Mark could be compensated. Mark declines Stacy's offer, who offers to pay her a substantial salary increase when he leaves Turnip Plaza. Thus, he was at a loss as he thought that Turnip Plaza would execute their offer but they broke their promise when he was about to receive a new contract.

Apart from this, a manager Edward Griffin who works for Turnip Plaza promised Mark 2 years guaranteed agreement and a promotion. Thus, Turnip Plaza would be considered the principle and Edward would be the agent. Usually, an agent (Edward) practices in accordance with the principle (Turnip Plaza) in his trades or dealings with a 3^rd individual (Mark). It can be said that Edward promised Mark on behalf of the Turnip Plaza. Thus, the principal (Edward) is accountable on an agent’s agreement merely if the principal authorized to form the agreement (Persson, Weitz & Nilsson, 2016). Thus, the third part, Mark can file a suit against the principal of Edward for not providing proper notice period before dismiss.

Apparent authority theory can also be applied in this case because in this theory, an agent can act on behalf of a principal in spirt of the fact not impliedly or expressly granted. The principal of the agent would be held accountable for the agent’s actions if the agent has apparent authority (Legal Information Institute, 2022). Thus, Mark might also use this theory to enforce Edward’s promise.

Sort of damages that Mark is entitled

After dismiss from job, Mark might file a lawsuit against breach of good faith, breach of implied agreement, and wrongful dismissal of job. According to the Worker Adjustment and Retraining Act, this act safeguards workers, their families, and the public by needing workers to provide a 60 days of notice period to the affected workers because early notice gives workers adjust to the probable loss of employment and time to transition (Lail et al., 2016). Therefore, Mark can also file a lawsuit on the ground of unfair dismissal without serving notice of 60 days. Unfair dismissal is one of the chief legal issues in this case. Moreover, the reason behind Mark dismissal was the company rearrangement leading apprehensions on the huge danger in continuing augmented tours in hotels. It seems that dismissal of Mark contradicts the Worker Adjustment and Retraining Act. Failing to obey this act result in 60 days’ pay as reimbursement after dismissal (Satiani & Davis, 2020).

Sort of Damages that Mark is Entitled to After the Dismissal

Consequential damage 

Mark can also receive consequential damage. Consequential damages are the damages of court-awarded from uncommon losses which the contracting parties recognised would result in from breach of agreement. The court would determine every fact and circumstance of the case before compensating to Mark (Goldberg, 2018). Apart from this, if the company (Turnip Plaza Hotel) unsuccessful to inform the government as needed by the Worker Adjustment and Retraining Act, fine up to $500 could be imposed by the court for regular desecrations with other court charges. It can be said that Applicant (Mark) has great chances of winning the case in court as his termination is not covered under any of the WARN Act provisions of exception like force majeure, refinancing and strike.

According to the Fair Labor Standards Act, a petition can also be filed in court against the Turnip Plaza Hotel by Mark on the grounds of low wages (Wilmsen, 2019). Thus, he could receive compensation in the financial term, which can be combined with reasonable attorney's fees and court charges. The ruling could pose considerable monetary inferences to Turnip Plaza Hotel.

Employment is “at-will” unless a collective bargaining or employment contract safeguards against termination under various circumstances (Arnow-Richman, 2016). Every employee is safeguarded against termination because of protected activity or unlawful discrimination. There are three chief exceptions of the employment at-will doctrine: public policy, implied contract exception, covenant-of-good-faith exception. Mark could also receive compensation on the ground of covenant-of-good-faith exception.

Ethical theory and principles 

Business ethics refers to the study of suitable practices and policies of business respecting probable contentious subjects comprising CSR, discrimination, bribery, insider trading, corporate governance, and fiduciary duties. There are generally 3 sections to the discipline of corporate ethics: corporate, professional, and personal.

Utilitarian Theory 

The utilitarian theory is considered the easiest and most familiar to aware of every approach to ethics. It is an ethical approach that consider correct from incorrect by emphasizing on results. It examines an exercise in regard of its outcomes or consequences (Giubilini, Douglas & Savulescu, 2018). Similarly, Edward should have also adopted this approach and provided Mark a 60 days of notice period because Turnip Plaza Hotel and Mark had created an implied agreement. He should have thought that dismissal without notice period is not justified, it may affect Mark both professionally and in monetary terms.

Apart from this, the unjustified dismissal of Mark result in the destruction of public policy. Nevertheless, if the action of Edward could be observed as per the corporate view, he exercised such actions in order to safeguard his corporation from rivals. The step was not retaliatory or discriminatory and therefore not violating local, state, or federal legislations. It can be said that dismissal of Mark was not against public policy because Edward’s promise lacked any formal contract and was not written. Moreover, Kenneth Dodger the Vice President must direct Edward to make full and final settlement to severance pay and Mark. The Vice President need to work hard in order to enhance faith and confidence in the corporation. Issues related to ethical could have safeguarded acquiescence with government rules and regulations.

Consequential Damages

Deontological approach 

Furthermore, deontological is considered an ethical approach that place special focus on the connection between the morality and duty of human practices. In this theory, a practice is recognised morally and ethically effective due to certain traits of the practice itself, not due to the outcome of the practice is good. Moreover, it is duty based ethical theory that focuses on duties, rules, and obligations and places value on the purpose or aim of the person. Faithfulness to these rules and obligations is considered as ethically right (Baumane-Vitolina, Cals & Sumilo, 2016). From the given scenario, it can be said that the intention of Turnip Plaza Hotel was not erroneous as the company's rearrangement resulted in the dismissal of Mark because of the fear that the huge increased exposure of adventurous visitors through hotel liabilities was a risk. Moreover, Turnip Plaza action is recognised ethically and morally correct because it was as per some list of obligations and duties.

Apart from this, the Turnip Plaza Hotel also has a moral and ethical duty to complete promise of Edward to Mark because it was wrong to terminate him. Moreover, Edward should have collected every fact and ethical decision-making before dismissing Mark (Millar, 2016). Furthermore, it can be said that it is not right to lay off Mark under these circumstances as Mark had been working in that company for many years and also developed an image as one of the leading skilled tour guides in Michigan. The company should have concerned about him before terminating at Turnip Plaza. In addition, they could also offer him an alternate job as he was a reputed employee who had been working for the company for many years. He should have spoken to Mark about his dismissal in advance and also given him a notice period so that he could find another job and make advance future arrangements.

However, a company that employs "at-will" employees is not lawfully obligated to provide a reasonable advance period of notice to an employee who is being terminated. Although, if an employer provides worker a dismissal notice assists a corporation improve an affirmative reputation (Arnow-Richman, 2016). Similarly, Turnip Plaza should have also provided notice as it assists the company enhance an affirmative image.

Reference

Arnow-Richman, R. (2016). Modifying At-Will Employment Contracts. BCL Rev., 57, 427.

Ashton, J., & Turner, J. (2018). Between Rock and a hard place? No consideration from the Supreme Court in Rock Advertising Ltd. v MWB Business Exchange Centres Ltd.[2018] UKSC 24. International Company and Commercial Law Review, 29(10), 593-607.

Ethical Theory and Principles

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Giubilini, A., Douglas, T., & Savulescu, J. (2018). The moral obligation to be vaccinated: utilitarianism, contractualism, and collective easy rescue. Medicine, Health Care and Philosophy, 21(4), 547-560.

Goldberg, V. P. (2018). Consequential Damages and Exclusion Clauses. Criterion J. on Innovation, 3, 27.

Harris, A. P. (2018). The Doctrine of Promissory Estoppel in an Arm's Length Commercial Transaction in Tennessee: A Primer. U. Mem. L. Rev., 49, 813.

Lail, P. J., Laird, S. S., McCall, K., Naretto, J., & York, A. (2016). Facility closure: How to get in, get out, and get what is important. Perspectives in Health Information Management, 13(Fall).

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Martin, S. L. (2016). Kill the Monster: Promissory Estoppel as an Independent Cause of Action. Wm. & Mary Bus. L. Rev., 7, 1.

Michak, G. A. (2021). Alex Lyon & Son, Sales Managers & Auctioneers v. Leach: Auction Contracts, Bidder Qualifications, Offer and Acceptance, Waiver, and the Fallacy of Treating All Bidders the Same. West Virginia Law Review Online, 124(2), 19.

Millar, J. (2016). An ethics evaluation tool for automating ethical decision-making in robots and self-driving cars. Applied Artificial Intelligence, 30(8), 787-809.

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