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Rooney v. Tyson, 1998 N.Y. Int. 0060 (June 4, 1998).

EMPLOYMENT AT WILL - ORAL PERSONAL SERVICES CONTRACT - INDEFINITENESS

An express limitation in a durational employment term is sufficiently definite to avoid New York's "at will" presumption even if the terms are not precisely ascertainable.

[SUMMARY] | [ISSUE & DISPOSITION] | [AUTHORITIES CITED] | [COMMENTARY]

SUMMARY

In 1980, a fourteen year old Tyson was placed in the care of D'Amato, a renowned boxing figure and manager. D'Amato became his legal guardian in 1983 upon the death of Tyson's mother. At the beginning of Tyson's career, Rooney and D'Amato agreed that Rooney would, without compensation, train Tyson until he became a professional boxer. In addition, the two agreed that when Tyson became a professional, Rooney would continue as Tyson's trainer "for as long as [Tyson] fought professionally."

Rooney trained Tyson for over two years without compensation. In March 1985, Tyson became a professional boxer and "began enjoying meteoric success." Also in 1985, D'Amato died. In 1986, James Jacobs became Tyson's new manager. Rumors began to circulate in the media that Rooney would be replaced as trainer. To quash such rumors, Tyson allegedly authorized Jacobs to state that "Kevin Rooney will be Mike Tyson's trainer as long as Mike Tyson is a professional fighter." A copy of a press release to that effect was sent by Jacobs to Rooney. Until 1988, Rooney continued to train Tyson and was paid for each of Tyson's professional fights.

In 1988, after a falling out, Rooney first read in a newspaper that Tyson was considering terminating Rooney's employment as trainer. Later in the same year, Tyson formally terminated the trainer relationship with Rooney. In 1989, Rooney initiated a federal lawsuit, claiming breach of the 1982 oral agreement.

The jury in federal court returned its verdict in favor of Rooney in 1996, but the district court granted Tyson's motion for judgment not withstanding the verdict. This decision was based on the argument, made by Tyson, "that the agreement was for an indefinite duration and was terminable at will under New York law and therefore unenforceable as a matter of law." The district court found "that 'under New York law, terms such as "permanent employment," "until retirement" or "long term" do not state a definite term of employment as a matter of law' (956 F Supp 213, 216)." The court concluded that the alleged contract language at issue - "for as long as Tyson boxes professionally" - failed to state, as a matter of law, a term of definite duration, and therefore that the employment arrangement at issue was terminable at will.

In connection with an appeal of the district court decision, the Second Circuit certified the following question to the New York Court of Appeals: "whether an oral personal services contract between a fight trainer and a boxer to last 'for as long as the boxer fights professionally' provides a definite legally cognizable duration."

ISSUE & DISPOSITION

Issue

Whether the language "for as long as the boxer fights professionally" in an oral contract between a fight trainer and a professional boxer constitutes employment for an definite duration.

Disposition

Yes. This contractual language is capable of being determined and is therefore sufficient to satisfy an employment term of definite duration.

AUTHORITIES CITED

Cases Cited by the Court

Other Sources Cited by the Court

  • New York Constitution, Art. VI, § 3[b][9].
  • 22 NYCRR § 500.17.
  • Wood, Master and Servant § 136 (2d ed. 1886).
  • 1A Corbin, Contracts § 152, at 14.
  • Karger, Powers of the New York Court of Appeals § 65, at 393, 396 (3d ed.).
  • Cardozo, Nature of the Judicial Process, in Selected Writings of Benjamin N. Cardozo 115, 134 (Margaret E. Hall, Ed. 1947).

Cases Relied on by the Dissent

  • Arlege v. Stratmar Systems, 948 F.2d 845 (2d Cir. 1991).
  • O'Conner v. Eastman Kodak Co., 65 N.Y.2d 724 (N.Y. 1985).
  • Haines v. New York City, 41 N.Y.2d 769 (N.Y. 1977)
  • Parker v. Borock, 5 N.Y.2d 156 (N.Y. 1959)
  • Mencher v. Weiss, 306 N.Y. 1 (N.Y. 1953).
  • Cuppy v. Stollwerck Bros., 216 N.Y. 591 (N.Y. 1916)
  • Watson v. Gugino, 204 N.Y. 535 (N.Y. 1912).
  • Carter v. Bradlee, 245 A.D. 49, aff'd 269 N.Y. 664 (N.Y. App. Div. 1935).

Other Sources Cited by the Dissent

  • General Obligations Law § 5-701[a][1]
  • 2 Story, Contracts § 1290, 1291 (5th ed. 1874)
  • Schuler, Domestic Relations § 458 (4th ed. 1889)
  • 1 Blackstone, Commentaries, at 425 (1765)
  • 1 Proskauer, Rose, Goetz & Mendelsohn, New York Employment Law § 2.03[2], 2.04[2][a]
  • Bakaly & Grossman, Modern Law of Employment Contracts, § 3.2 (2d ed.)

RELATED SOURCES

  • North Shore Bottling Co. v. C. Schmidt & Sons, 22 N.Y.2d 175 (N.Y. 1968).
  • Cammack v. J.B. Slattery & Bro., 241 N.Y. 39 (N.Y. 1925).
  • Ehrenworth v. George F. Stuhmer & Co., 229 N.Y. 210 (N.Y. 1920).
  • Jugla v. Trouttet, 120 N.Y. 21 (N.Y. 1890).
  • UCC § 2-309[2]

COMMENTARY

State of the Law Before Rooney v. Tyson

In New York, an employment relationship is presumed to be at will, terminable at any time by either party, unless there is an agreement establishing a fixed duration for the relationship. See De Petris v Union Settlement Assn., Inc., 86 NY2d 406, 410 (N.Y. 1995). The Court of Appeals had held that the at will presumption may arise whenever an employment agreement fails to state a "definite period of employment," "fix[] employment of a definite duration," "establish[] a fixed duration" or is otherwise "indefinite." See Rooney comparing Ingle v. Glamore Motor Sales, Inc., 73 NY2d 183, 186, 188 (N.Y. 1989); Sabetay v. Sterling Drug, Inc., 69 NY2d 329, 333 (N.Y. 1987); Murphy v American Home Products Corp., 58 NY2d 293, 300, 305, (N.Y. 1983); with Weiner v McGraw Hill, Inc., 57 NY2d 458, 460, 465 466 N.Y. 1982); Martin v New York Life Ins. Co., 148 NY 117 (N.Y. 1895).

In New York, if the employment agreement indicates a definite duration, the at will doctrine is inapplicable. In contrast, if the employment agreement provides for a term that is indefinite or undefined, the rebuttable at will presumption arises. See Rooney (citing Weiner, 57 NY2d at 466; Martin, 148 NY at 121; Ingle, 73 NY2d at 186). Prior to Rooney, the Court of Appeals had failed to "delineated what may differentiate a "definite," "indefinite," or "fixed" employment term or duration utilized in various contractual formulations." Rooney at para. 11.

Effect of Rooney v. Tyson on Current Law

Mindful of the federal court's exclusive jurisdiction and authority to apply New York law, the court in Rooney acknowledged its limited role in formulating a focused response to the certified question. However, by answering that the admitted oral contract's durational clause, "for as long as the boxer fights professionally," was sufficiently definite, the court rendered unnecessary any further analysis concerning New York's rebuttable "employment at will" presumption.

The Rooney court relied on precedent finding that only an employment term of indefinite or undefined duration would trigger the at will presumption. The court reasoned that such doctrine was inapplicable because the durational period was "capable of being determined." (quoting Weiner, 57 N.Y.2d at 465)(emphasizing the court's recital of 1A Corbin, Contracts § 152, at 14). Conceding that "Tyson's boxing career was not precisely calculable," the court nevertheless held that the boundaries were reasonably ascertainable.

While the dissent expressed fear that this expansion of the definition of "definiteness" initiated a significant shift from the court's consistent application of the "employment at will" doctrine, the majority asserted that adherence to the doctrine's enduring principles requires flexibility, noting the reality of "the personal and commercial consequences of the myriad types of arrangements made between parties." Rooney at para. 21.

According to the majority, the dissent overdramatized the consequences of the decision to recognize a definiteness concerning the duration of this particular employment agreement. The majority emphasized that flexibility was required due to compelling circumstances: Rooney had promised and rendered years of free service in exchange for compensation during Tyson's "professional" career. On the other hand, characterizing a time period that has no exact ending date as "definite" does seem to approve of durational clauses that are dependent on the occurrence of some unspecified event, so long as it is reasonably certain to occur.

More likely, however, the court's consideration of two additional criteria avert the risk of enforcing truly indefinite employment contracts. Whether the term was understandable between the parties, and whether it was reasonably determinable by the fact finder are criteria that prevent general hiring contracts or "permanent employment" agreements from leaving the "terminable at will" track. Unlike the indeterminateness of one's life expectancy, the "life" of a corporation, or the duration of a non-athlete's professional career, the uniqueness of the boxing profession may prevent a larger shift in doctrine from taking place.

Dissent

The dissent concluded that the contractual language at issue constituted employment of indefinite duration and therefore raised the rebuttable presumption of employment at will. The dissent analogized "career long employment" to a "corporate employer remaining in business" and an employment that has been held to be one of indefinite duration - a "permanent position" measured by an employee's lifetime. Dissent at para. 12. The dissent believed that when the majority concluded that the end of a professional boxing career is more definite than death, the majority drew an arbitrary line between definite and indefinite. "The majority recasts precedent to hold that an event, which could happen at any time for any reason, may also precisely fix the length of an employment relationship." Dissent at para. 32.

The dissent suggested that the majority's ruling avoided the "at will" presumption and the Statute of Frauds by eliminating important elements of proof that the court required under substantially similar facts. One such element requires that the employee show consideration independent of a mere promise to work. The dissent also expressed concern that the majority's holding avoided the Statute of Frauds by allowing a potentially long term obligation to be based on an oral promise.

Unanswered Questions

Because so much depends on the facts of a given case, definiteness is a slippery doctrine. Many of the dissent's objections in Rooney illuminate the difficulty in interpreting the doctrine of definiteness. Even after Rooney, the question remains: When is a contract term sufficiently precise to warrant enforcement? To find a durational term in an employment agreement definite, even in the absence of temporal precision, a court must be able to ascertain with reasonable certainty the boundaries of a given employment period. Rooney at Para. 16.

While the court limited its holding to the question certified by the Second Circuit, its decision raises numerous questions about durational clauses in employment contracts. The court held that the term, "for as long as the boxer fights professionally," Rooney at Para. 1, is a definite period of employment (fixes an intended end to an employment period). The dissent argued that the "end" to the period in this case (the end of a professional boxing career) could occur at any time and was therefore ambiguous.

If permanent employment contracts, which conclude when a person can no longer perform the job in question, (i.e. in the event of death), are indefinite as to duration, Arentz v. Morse D.D. Repair Co., 249 N.Y 439, 444, but employment contracts which conclude at the end of a professional career (say in boxing) are definite, what is the distinction? What is the rule when the end of a worker's lifetime coincides with the conclusion of his profession (dying in the ring)? Is this lifetime employment or merely coincidence?

The Rooney decision leaves open the question of when a durational employment term is sufficiently definite to avoid the presumption of at will employment. In particular, the court fails to articulate a clear line between lifetime and career-long employment. A professional boxer may end his boxing career long before his capacity for any sort of employment ends. Therefore, one could suppose that the employment period, at least with respect to boxing, could be for shorter than lifetime employment. This seems an appropriate distinction between lifetime and profession-long employment. However, the court's holding is far more problematic for more common occupations. A durational term which reads; "for as long as Mrs. Doe performs secretarial services," creeps much closer to potential lifetime employment (and thereby indefiniteness?) than does a professional boxing term. Mrs. Doe is much more likely to be able to perform secretarial services for the entirety of her lifetime than Tyson is to perform as a professional boxer for the entirety of his lifetime. Has the court unwittingly endorsed lifetime employment contracts as definite and enforceable? May parties who intend to sign permanent employment contracts circumvent established definiteness doctrine by tinkering with contract terms ("for as long as Mrs. Doe performs secretarial services").

This case is interesting because the durational measuring event is the career of the employer, not the career of the employee. Permanent employment contracts, which are indefinite, are usually measured by the working life of an employee. Is the material distinction in this case that the employment term is based on the employer's working life rather than the employee's? But contrary authority holds that an employment period fixed by the life of a corporation (i.e. the employer) is indefinite. Surprisingly, Rooney holds that a contract fixed by the duration of an employer's professional career is definite. By attempting to limit its holding to this case's particular facts, the court has indefinitely defined definiteness.

Survey of the Law in Other Jurisdictions

New York has been one of the jurisdictions which has been most hesitant to relax the presumption of at will employment. At the other end of the spectrum are states like California which have been more open to erosions of traditional at will doctrine. Rooney may indicate a willingness on the part of the Court of Appeals to entertain arguments that may lead to further erosion of the at will doctrine.

Most American jurisdictions recognize some form of implied contract exception to the "at will" employment doctrine. In California, evidence of oral assurances of job security (cause required for termination), consistent promotions, salary increases, cause required for termination, and failure to follow dismissal guidelines may, individually or together, modify the "at will" presumption. See Foley v. Interactive Data Corp., 765 P.2d 373 (Cal. 1988). Similarly, in Illinois the courts recognized contracts that are implied by the parties oral promises and behavior. See Martin v. Federal Life Insurance Co., 644 N.E.2d 42 (Ill. App. Ct. 1994) (reviewing Illinois cases and holding that contract based on oral assurances of employment coupled with the employee's turning down another job was not subject to at-will presumption.)

On the narrow issue of what oral commitments create a contract for a definite duration, the courts of other jurisdictions conduct a fact-specific inquiry. In Toussaint v. Blue Cross & Blue Shield, 408 Mich. 579, 292 N.W.2d 880 (1980), the Michigan Supreme Court held that an alleged oral promise of continued employment, as long as the employee continued to do his job, created an issue of fact on whether a contract with dismissal only for cause was created. In Buchanan v. Martin Marietta Corp., 494 A.2d 677 (Me. 1985) the court upheld a jury verdict based on an alleged promise by the employer to retain the employee until retirement. By contrast, in Mursch v. Van Dorn Co., 851 F.2d 990 (7th Cir. 1988), the Seventh Circuit, applying Wisconsin law, held that the employer's casual oral assurance of employment until retirement, which was given during the plaintiff's continuing job rather than at an initial interview or job offer, was not specific enough to create an implied contract for a definite term.

Forgone opportunities often provide the basis for a contract for a definite term. An Illinois court, for example, held that where the employer promised to employ a worker until retirement if he would forgo another job offer, the issue was for the jury to decide whether a just cause contract was established. See Martin v. Federal Life Ins. Co., 440 N.E.2d 998, 1004 (Ill. App. 1982). Similarly, when the employee demands and receives assurances of job security, courts sometimes find that a just cause contract is created. See Boothby v. Texon, Inc., 608 N.E.2d 1028 (Mass. 1993) (offer to give Boothby "an essentially permanent opportunity to spend the rest of your professional career" at Texon limited employer's ability to discharge without cause.)

Important jurisdictional splits have emerged over judicial administration of the implied contract exception to the "at will" doctrine. The Toussaint court found that "the promise to terminate employment for cause only would be illusory if the employer were permitted to be the sole judge and final arbiter of the propriety of the discharge." Id., 292 N.W.2d at 895-96. Consequently, the Michigan Supreme Court allowed the jury to determine whether the misconduct used by the employer to justify the allegedly for-cause termination actually occurred. Id. The California Supreme Court recently rejected this approach, applying instead an analysis developed in Oregon and Nevada decisions: the fact finder reviews only whether the employer's finding that the employee engaged in misconduct ( "good cause" for the discharge) was made in good faith and for legitimate business objectives. See Cotran v. Rolins Hudig Hall International, Inc., 948 P.2d 412 (Cal. 1998); see also Simpson v. Western Graphics Corp., P.2d 1276 (Or. 1982) (in absense of evidence of express or implied agreement under which the employer contracted its fact-finding prerogative away, employees with just cause' employment contract, who were fired for allegedly threatening a fellow worker, were entitled only to a judicial determination of whether employer acted in good faith after reasonable investigation); Southwest Gas v. Vargas, 901 P.2d 693 (Nev. 1995) (jury does not review factual basis for employer's decision to discharge employee with a long-term employment contract de novo.)

Prepared By:

  • Regina Cheung, '99
  • Sam Go '00
  • Stuart Grose, '99
  • Maryann Landrigan, '00
  • Sue Mancuso '00
  • James Wiseman, 99