Vincenti & Vincenti, P.C. http://www.vincenti.com/blog Just another WordPress weblog Sat, 08 Oct 2011 23:44:15 +0000 http://wordpress.org/?v=2.9.2 en hourly 1 Arbitration Clauses In International Commercial Disputes http://www.vincenti.com/blog/2010/01/arbitration-clauses-in-international-commercial-disputes/ http://www.vincenti.com/blog/2010/01/arbitration-clauses-in-international-commercial-disputes/#comments Tue, 12 Jan 2010 22:50:44 +0000 John http://www.vincenti.com/blog/?p=16 Arbitration clauses contained in international commercial contracts – those involving parties domiciled in different countries and dealing with the cross-border supply and distribution of goods or services – are afforded more liberal construction by U.S. courts.  Thanks to a United Nations Convention adopted by 144 countries, disputes arising out of or related to an international commercial contract containing a properly-drafted arbitration clause are highly likely to be arbitrated in the place specified in that clause, notwithstanding the creative legal maneuvers of an unwilling party.  Surprisingly, the same cannot always be said of arbitration clauses in domestic commercial contracts.

Courts Engage in Limited Inquiry Under UN Convention

The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards1 (the “UN Convention”) was adopted by Congress in the Federal Arbitration Act and must be enforced by both U.S. federal and state courts according to its terms.2

To determine whether an arbitration agreement falls under the UN Convention, U.S. courts engage in a very limited inquiry based on the following four preliminary questions:3

  1. Is there a written agreement to arbitrate the subject of the dispute?4
  2. Does the agreement provide for arbitration in the territory of a signatory of the Convention?5
  3. Does the agreement arise out of a legal relationship which is considered as commercial?6
  4. Is a party to the agreement a foreign citizen, or does the commercial relationship have some reasonable relationship with a foreign state?7

If all of the above questions are answered in the affirmative, the court must compel arbitration and, in particular, it must do so at the situs set forth in the parties’ arbitration clause.  This last requirement, unique to the UN Convention, is an important one.

UN Convention Mandates Arbitration Take Place at Location Set Forth in Clause, Even if Outside the U.S.

Several U.S. Circuits, narrowly interpreting Section 4 of the Federal Arbitration Act, hold that a district court may only compel arbitration in the district where that court sits, even if the contract provides otherwise.8 Thus, if a domestic commercial agreement provides for arbitration in New York and a contracting party commences an action in a California court, that court may only compel arbitration in California, and only in the particular district where that court is located.9 Therefore, a party to a domestic commercial contract seeking to avoid arbitration in a place contained in an arbitration clause it previously agreed to, usually because it deems that location undesirable, need only be the first to the courthouse door and commence a suit in a district it finds favorable to it or its position in the case.  If the responding party moves to compel arbitration, the court will likely compel arbitration in the district where it sits.

In international commercial disputes, the UN Convention, unlike the Federal Arbitration Act, specifically directs courts to compel arbitration only at the place set forth in the arbitration agreement, even if that place is outside the United States.10 The UN Convention also gives the court the option to either dismiss the international commercial dispute outright or stay the action pending a decision in arbitration.11 In domestic commercial disputes, the court can only stay the action pending the issuance of an arbitral award.

Arbitration Clauses in International Context Viewed More Liberally Than Those Applicable to Domestic Matters

In analyzing an arbitration clause contained in an international commercial agreement, the U.S. courts have consistently reiterated their strong policy in favor of upholding and enforcing agreements to arbitrate disputes, as well as the underlying principals and purposes of the UN Convention.12 U.S. courts have consistently held that this liberal and “emphatic federal policy in favor of arbitral dispute resolution . . . applies with special force in the field of international commerce.”13

Under the first prong of UN Convention analysis, the scope and application of the parties’ arbitration clause is governed by the federal substantive law of arbitrability.14 The existence of a written arbitration clause creates a presumption that disputes must be resolved in arbitration which is rebuttable only by showing a purpose exhibited by the contracting parties to exclude particular disputes from the scope of the clause.15 Where the parties’ controversy involves a contractual dispute, the Supreme Court mandates that it be sent to arbitration “unless it can be said ‘with positive assurance’ that the arbitration clause is not susceptible of an interpretation that covers the asserted dispute.”16 All doubts as to the scope of an arbitration clause must be resolved in favor of arbitration.17 This policy preferring arbitration is particularly strong where the arbitration clause is broad.18

“Arising Out Of” and “In Connection With” Arbitration Clauses Afforded Broadest Interpretation Under UN Convention

A contractual clause which calls for the arbitration of any disputes arising out of or in connection with an international commercial agreement, even further mandates the arbitration of any issues arising out of or in connection with the interpretation, validity, construction or performance of that agreement, is construed broadly by courts as encompassing any and all contractual claims, as well as any non-contractual, statutory and business tort claims, having any connection to the parties’ written agreement.19 As one district court stated:  “…every court that has construed the phrase ‘arising in connection with’ within an arbitration clause has found it to be broad, ‘reaching every dispute between the parties having a significant relationship to the contract and all disputes having their origin or genesis in the contract.’”20

Arbitration is required in such cases even if the parties’ allegations merely “touch matters” covered by, or involve any examination of, a contract containing an arbitration clause.21 Accordingly, if an examination of the contract containing a broad arbitration clause must be undertaken to determine whether the parties’ activities at issue in the dispute are governed by the agreement, the matter must be sent to arbitration.22

In Bennett, 968 F.2d 969 (9th Cir. 1992), there was a dispute between the parties over the interpretation of a contractual provision.  The plaintiff, suing to recover reinsurance and other payments, argued that the parties’ dispute over asset ownership did not arise out of the parties’ reinsurance contract.  The defendants disagreed, claiming that the action for reinsurance payments must be arbitrated since, although the claims did not involve a breach of the reinsurance agreement, an examination and interpretation of that contract was required.  The arbitration clause at issue was broad, calling for the arbitration of any disputes that arise as to “the interpretation of this Contract or the performance of the respective obligations of the parties”.  Id. at 971.  Even though it eventually could be found that the contract did not govern the parties’ dispute, the 9th Circuit Court of Appeals compelled arbitration since the arbitration clauses “focus on contract interpretation and performance” and the parties’ dispute could not be resolved without an examination and interpretation of the contract. Id. at 972.

Similarly, in Chloe Z, 109 F.Supp.2d 1236 (S.D.Cal. 2000) the court applied the four preliminary questions mandated by the UN Convention in connection with an arbitration clause contained in an international insurance agreement.  In opposing a motion to compel, the plaintiff argued that its claims were unrelated to the contract, but instead were based on actions undertaken by the defendant outside of the contract.  In granting the defendant’s motion to compel arbitration in London, the court held that its conclusion was consistent with the Supreme Court’s pronouncement requiring arbitration since it could not be said “with positive assurance” that the arbitration clause is not susceptible of an interpretation that covered the parties’ dispute.  Id. at 1257.

The liberal view of the U.S. courts in analyzing broad arbitration clauses is also exemplified in cases involving a dispute between the parties as to whether the contract was terminated or expired.  Under federal substantive law, such disputes must also be resolved in arbitration, even if it is eventually determined by the arbitrator that the contract, including the arbitration clause, terminated or expired and is of no further force or effect.23 In Flores, 2007 U.S.Dist.LEXIS 53127 (E.D.Ca. 2007), the plaintiff argued that the claims at issue arose after a release was signed by the parties which terminated the parties’ original agreement for the purchase and sale of crops and rendered that contract’s broad arbitration clause irrelevant to the claims plaintiff asserted based on the defendants non-payment for goods purchased after the release was signed and after the original contract was supposedly terminated. Id. at *2-7.  The release did not contain an arbitration clause.  The defendants disagreed, interpreting the release as only dealing with claims as to advances, fees and marketing services, and claiming that the original contract, including its arbitration clause, was not terminated and continued to govern the parties’ post-release purchase and sales activity.  Id.  Given the broad language of the arbitration clause in the original contract, the court granted the motion to compel arbitration, holding that the issue as to whether the original contract was terminated “is a question for the arbitrator and not for this court.” Id. at *22.

Conclusion

The cases interpreting and applying the UN Convention are instructive both for purposes of insuring that arbitration clauses in international commercial contracts are broadly drafted and  in preparing motions to compel and to stay or dismiss a case commenced by the party attempting to avoid arbitration.  Contracting parties must be aware that it is the policy of the U.S. courts to respect the parties’ intentions, especially in the international commercial context, and to require the parties to abide by their agreement to arbitrate any disputes touching matters attendant to the parties’ commercial agreement and in the exact place they set forth in their arbitration clause.

Parties to a domestic commercial contract, on the other hand, must take that extra step to insure the arbitration proceeding takes place at the location expressed in the agreement.  If such a party anticipates a dispute, even one involving only claims advanced against it by the other party, it should consider commencing the arbitration sooner rather than later in order to avoid arbitrating in an unfavorable venue.

References
A.B. Makar, K.E. McMartin, M. Palese, and T.R. Tephly, “Formate assay in body fluids: application in methanol poisoning.”, Biochemical medicine, vol. 13.

  1. 9 U.S.C. §§201 et seq.; 21 U.S.T. 6997 (1970). ↩
  2. 9 U.S.C. §§201 – 208; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 614, 681-619 n.3, 105 S. Ct. 3346, 3350 (1985); Chloe Z Fishing Co., Inc. v. Odyssey Re (London) Limited, 109 F.Supp.2d 1236, 1241 (S.D.Cal. 2000). ↩
  3. Bautista v. Star Cruises, 396 F.3d 1289, 1297 (11th Cir. 2005); Sedco, Inc. v. Petroleos Mexicanos Mexican National Oil Co., 767 F.2d 1140, 1145 (5th Cir. 1985); Ledee v. Ceramiche Ragno, 684 F.2d 184, 186-187 (1st Cir. 1983); Rogers v. Royal Carribean Cruise Lines, 2007 U.S. Dist. LEXIS 89088 ,*12-13 (C.D.Cal 2007) aff’d 547 F.3d 1140 (9th Cir. 2008), cert. den. 2009 U.S.LEXIS 4598 (2009); Chloe Z Fishing, 109 F.Supp.2d at 1243; Tennesee Imports, Inc. v. Filippi, 745 F.Supp. 1314, 1321  (M.D. Tenn. 1990); Corcoran v. Ardra Insurance Co., Ltd., 657 F.Supp. 1223, 1227 (S.D.N.Y. 1987). ↩
  4. UN Convention, Article II, §§1 and 2; 9 U.S.C. §201. ↩
  5. UN Convention, Article II, §§1 and 3; 9 U.S.C. §206. For a list of signatories to the UN Convention, see 9 U.S.C. §201 and 21 U.S.T. 2517 “Note by the Department of State” appearing after the text of the Treaty. ↩
  6. UN Convention, Article II, §3; 9 U.S.C. §202. ↩
  7. 9 U.S.C. §202. ↩
  8. The Fifth and Ninth Circuits interpret Section 4 of the Federal Arbitration Act as restricting the arbitration venue to the district where the suit was originally filed, regardless of the language of the parties’ arbitration agreement.  Textile Unlimited, Inc. v. A.BMH and Co., Inc., 240 F.3d 781, 785 (9th Cir. 2001); Continental Grain Co. v. Dant & Russell, 118 F.2d 967, 968-969 (9th Cir. 1941); Dupuy-Busching Gen. Agency v. Ambassador Insurance Co., 524 F.2d 1275, 1276-1278 (5th Cir. 1975), cert. denied 537 U.S. 826, 123 S.Ct. 114 (2002).  At least one district court in the Second Circuit follows this interpretation.  Indian Harbor Insurance Co. v. Global Transportation Systems Inc., 197 F.Supp 2d. 1 (S.D.N.Y. 2002).  The Seventh Circuit, however, noting the inequity of such a rule, does not subscribe to this narrow interpretation and will compel arbitration at the place agreed to by the parties in their arbitration clause.  Snyder v. Smith, 736 F.2d 409, 419-420 (7th Cir. 1984), overruled on other grounds Feltzen v. Andreas, 134 F.3d 873 (7th Cir. 1998)(“any party to an arbitration agreement could avoid the effect of the agreed-to forum merely by filing suit in a different district.  This in turn could lead to the parties racing to different courthouses to obtain what each thinks is the most convenient forum for it, in disregard of its contractual obligations”). ↩
  9. See also Homestake Lead Co. of Missouri v. Doe Run Resources Corp., 282 F.Supp. 1131 (N.D. Cal 2003).
    ↩
  10. There is a split in authority as to whether the UN Convention permits the courts to stay an action pending arbitration, or whether they are required to simply dismiss the action for lack of subject matter jurisdiction.  Cf. McCreary Tire & Rubber Co., 501 F.2d 1032, 1037 (3d Cir. 1974)(dismissing action) and Borden Inc. v. Meiji Milk Products Co., Ltd., 919 F.2d 822, 826 (2d Cir. 1990) cert. denied 500 U.S. 953, 111 S.Ct. 2259 (staying action). The District Court for the Central District of California in Rogers recently dismissed an action simultaneously with its granting of a motion to compel arbitration in accordance with the Convention, whereas the California Court of Appeals in Metalclad and the District Court for the Southern District of California in Chloe Z Fishing stayed such an action pending arbitration.  Metalclad, 109 Cal. App. 4th at 1711 and 1719 (arbitration compelled in Mexico); Chloe Z Fishing, 109 F.Supp.2d at 1261, n 24 (arbitration compelled in London).  See also Ministry of Defense of the Islamic People of Iran v. Gould, Inc., 969 F.2d. 764, 770 (9th Cir. 1992)(arbitration in Iran); Rogers, 2007 U.S. Dist. LEXIS 89088 at *14 (arbitration compelled in Turkey). ↩
  11. Metalclad, 109 Cal. App. 4th at 1719; Rogers, 2007 U.S. Dist. LEXIS 89088 , at *14; Chloe Z Fishing, 109 F.Supp.2d at 1261. ↩
  12. Id.; Moses H. Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 941 (1983)(“questions of arbitrability must be addressed with a healthy regard for the federal policy favoring arbitration”). ↩
  13. Mitsubishi Motors, 473 U.S. at 631, 105 S.Ct. at 3356 (emphasis added);  Scherk v. Alberto-Culver Co., 417 U.S. 506, 516-517, 94 S.Ct. 2449, 2455-2456 (1974)(“a parochial refusal by the courts of one country to enforce an international arbitration agreement would not only frustrate these purposes, but would invite unseemly and mutually destructive jockeying by the parties to secure tactical litigation advantages”); Metalclad Corp. v. Ventana Environmental Organizational Partnership (2003), 109 Cal. App. 4th 1705, 1712. ↩
  14. Mitsubishi Motors, 473 U.S. at 626, 105 S.Ct. at 3353 (citing Moses H. Cone, 460 U.S. at 24, 103 S.Ct. at 941); Metalclad, 109 Cal. App. 4th at 1712. ↩
  15. Mitsubishi Motors, 473 U.S. at 631, 105 S.Ct. at 3356; Chloe Z Fishing, 109 F.Supp.2d at 1255 n.17. ↩
  16. Chloe Z Fishing, 109 F.Supp.2d at 1257 (quoting United Steelworkers of America v. Warrior & Gulf Navigation Co.,  363 U.S. 574, 582-583, 80 S.Ct. 1347, 1352-1353 (1960)). ↩
  17. Republic of Nicaragua v. Standard Fruit Co., 937 F.2d 469, 471 and 475 (9th Cir. 1991). ↩
  18. AT&T Techs., Inc. v. Communication Workers, 475 U.S. 643, 650, 106 S. Ct. 1415, 1419 (1986); Metalclad, 109 Cal. App. 4th at 1712; Homestake Lead Co. of Missouri v. Doe Run Resources Corp., 282 F.Supp. 1131, 1138 (N.D. Cal 2003). ↩
  19. Simula, Inc. v. Autoliv, Inc., 175 F.3d 716, 719 (9th Cir. 1991)(“in connection with” language in arbitral clause warrants broadest interpretation); Manetti-Farrow, Inc. v. Gucci America Inc., 858 F.2d 509 (9th Cir. 1988)(clause providing for resolution of controversies “involving interpretation or fulfillment of the contract” in Italy broadly enforceable). ↩
  20. Homestake Lead, 282 F.Supp. at 1138 (quoting Simula, 175 F.3d. at 721). ↩
  21. Mitsubishi Motors, 473 U.S. at 624 n13, 105 S.Ct. at 3353; Genesco, Inc. v. T. Kaliuchi & Co., Ltd., 815 F.2d 840, 846 (2d Cir. 1987); Bennett v. Liberty National Fire Insurance Co., Inc., 968 F.2d 969, 972 (9th Cir. 1992)(motion to compel arbitration granted where an examination and interpretation of the contract was necessary); Homestake Lead, 282 F.Supp. at 1138 (“the threshold for arbitrability is not high”).  See also Chloe Z Fishing, 109 F.Supp.2d at 1257. ↩
  22. Id.; Seaboard C. L. R. Co. v. National Rail Passenger Corp., 554 F.2d 657, 660 (5th Cir. 1977)(applying broad policy favoring arbitration, motion to compel granted where clause provided that disputes dealing with the “interpretation, application, or implementation” of the contract shall be settled by arbitration, including non-movant’s argument that the contract does not apply to services at issue in parties’ dispute). ↩
  23. Brotherhood of Teamsters & Auto Truck Drivers Local No. 70 v. Interstate Distribution Co., 832 F.2d 507, 590-511 (9th Cir. 1987)(arbitration compelled where dispute was not over broad arbitration clause, but over proper interpretation of expiration and termination provisions); McKinney v. Emery Air Freight Corp., 954 F.2d 590, 593 (9th Cir. 1992) (dispute over whether contract was terminated is to be resolved in arbitration); Homestake Lead, 282 F.Supp. at 1140; Flores v. Jewels Marketing & Agribusiness, 2007 U.S.Dist.LEXIS 53127 (E.D.Ca. 2007). ↩
]]> http://www.vincenti.com/blog/2010/01/arbitration-clauses-in-international-commercial-disputes/feed/ 0 No End-Around for the At Will Employee http://www.vincenti.com/blog/2008/08/no-end-around-for-the-at-will-employee/ http://www.vincenti.com/blog/2008/08/no-end-around-for-the-at-will-employee/#comments Tue, 26 Aug 2008 14:13:14 +0000 John http://www.vincenti.com/blog/?p=5 The general rule in New York is that an employee who does not work under an agreement for a definite term of employment is an “at-will” employee:  She or he may be terminated at any time, with or without cause, for any reason whatsoever.

Earlier this year, New York State’s highest court reaffirmed this general rule, and made a clear showing that it will guard closely against efforts to encroach on it.  In Smalley v. Dreyfus Corp., 10 N.Y.3d 55, 853 N.Y.S.2d 270 (2008), the plaintiffs were a group of employees at the Taxable Fixed Income Group at Dreyfus.  Each employee was hired at different times over a three year period.  Both prior to and during their employment, rumors had been circulating that this group might be merged with another fund management company.  Allegedly, the employees asked repeatedly about these rumors, and allegedly, these rumors were repeatedly and flatly denied.  Based upon these alleged denials, the employees claim they turned down other employment and remained with Dreyfus.  Four years after the first plaintiff was hired, Dreyfus merged the fixed income group with the fund management company, and shortly thereafter, all of the plaintiff-employees were terminated.

The plaintiff employees sued, asserting several claims, of which only one is relevant.  Plaintiffs claimed that Dreyfus fraudulently induced them to accept and remain in the employment of Dreyfus.  The plaintiffs alleged that they were misled into believing that Dreyfus’s Taxable Fixed Income Group would not merge with another company, and on that basis, they accepted and continued employment, and in some cases, turned down other employment.

The trial court dismissed all of the Smalley employees’ claims on the basis that their employment was at-will.  The intermediate appellate court (the Appellate Division), by a 4-1 majority,  reversed the dismissal with respect to the fraudulent misrepresentation claim, relying in large part upon a 1992 federal Court of Appeals case, Stewart v. Jackson & Nash, in which the federal court sustained a plaintiff’s claim of fraudulent inducement on a motion to dismiss.

A little background on the Stewart case – it involved an environmental lawyer employee who interviewed with the defendant law firm.  The plaintiff alleged that the law firm told her that it had secured a large environmental law client, was setting up an environmental law department in the firm, and wanted her to head up that environmental law department, including handling the environmental matters for the newly-obtained client.  She took the position, and began to receive general litigation work – not environmental matters.  She allegedly inquired and was assured repeatedly that she would be handling environmental work.  Stewart alleged that she eventually learned that the firm had not in fact secured any environmental law client and was not in the process of setting up an environmental law department.  She was later terminated, and following the termination, she sued for damages.  The federal appeals court, interpreting New York law, ruled that Stewart had stated a proper claim and denied the defendant’s motion to dismiss.

There were two key rationales for the federal court’s ruling in Stewart.  First, Stewart had alleged a misstatement of present facts,  rather than future plans (that they had in fact secured an environmental law client and were in the process of setting up an environmental law department).  Second, the injury claimed by Stewart was separate and distinct from the termination of her at-will employment.  The court noted that, “Stewart’s alleged injuries…commenced well before her termination and were, in several important respects, unrelated to it.  According to the complaint, [the employer’s] misrepresentations allegedly caused Stewart, a budding environmental lawyer, to leave a firm with an environmental practice and spend two years at one in which she was largely unable to work in her chosen specialty.  The resulting damage to her career development was independent of her later termination … and began while she was still at the firm.”

Coming back to the Smalley case, the New York Court of Appeals dismissed the employees’ misrepresentations claims.  It concluded that the situation in Stewart was fundamentally different from Smalley in that the Smalley plaintiffs had alleged no injury separate and distinct from the termination of their at-will employment.  The plaintiffs’ core claim was that they relied upon no-merger promises in accepting and continuing employment with Dreyfus, and eschewing other job opportunities – the misrepresentation did not thwart their career objectives, or cause them stray from their chosen specialties – it simply resulted in the termination of their at will employment earlier than they had wanted.  The court therefore ruled that, “[a]bsent injury independent of termination, the plaintiffs cannot recover damages for what is at bottom an alleged breach of contract in the guise of a tort.”

The 4-1 majority in the lower appellate court is indicative that the facts were not as clear as the Court of Appeals suggests, but the Court of Appeals wanted to make a clear and unequivocal statement in this case.  The ramifications of allowing the employees to proceed with their claim would have been far-reaching.  The Smalley case looked, smelled and sounded very much like ex at-will employees suing their employers for being terminated after assurances that they would not be.  To rule that the case could proceed would permit at-will employees to maintain lawsuits upon termination, armed with little more than allegations of oral misrepresentations inducing them to take the job or stay on.  These cases necessarily would survive a motion to dismiss, and because they would be largely fact-driven, many, if not most, would probably continue through to trial.  The Court of Appeals simply was not willing to permit the lower courts to crack open these floodgates.

Aside from reaffirming the general rule in New York on at-will employment relationships, the decision underscores the importance of setting forth the terms of employment clearly and in writing.  The Court of Appeals quoted the at-will language of the plaintiffs’ employment contracts, noting that the plaintiffs had signed and agreed to that term.  Accordingly, if an employer does not wish to commit to hire an employee for a definite period of time, it is of paramount importance that the employer state in writing the at-will nature of the employment and that the writing be agreed to and signed by the employee.  That written agreement will go a long way to avoiding costly disputes later, so long as the employer has not modified or contradicted those terms in writing.

The employer also should not say or do, and certainly not put in writing, anything that could be construed to modify or contradict the “at-will” term of employment.  Some common provisions, such as schedules for bonuses or raises, end of trial periods, renewals, or any benefits at future dates – end of year, each year for the next five years, etc. – can be included in an at-will agreement, but they must be in writing and phrased carefully, so they do not muddle the agreement, and create an impression that a fixed term has been agreed to.

Finally, the employer should include a basic “merger clause” – stating that the written agreement is the whole agreement, that there are no other understandings other than what is in writing – as well as a clause stating that no modifications to the agreement are effective unless in writing and signed by the employer.

The prospective employee must understand that reliance on an oral assurance is almost always at his or her peril – enforcement is the rare exception, not the rule – and if that assurance is so fundamental that the prospective employee would not proceed without it, then the employee should ask for the assurance in writing as part of his or her employment agreement.

The prospect of hammering home the “at-will” nature of the employment, or insisting on putting important representations into the employment agreement, does not sit well with anyone – neither employers, nor employees.  There is a strong impetus at the outset of an employment relationship to keep the honeymoon going – to avoid discussion of sensitive matters that might disrupt the good feelings.  After all, the intent is to motivate the new employee, not remind him that he can be cut loose on a moment’s notice.  Without a doubt, that is a difficult impetus to resist, but both employers and employees must bear in mind that if they do not reduce their important terms to writing, there may well be problems later.  To paraphrase the saying – the terms will not be worth the paper they were not printed on.

There are limited exceptions to the general rule where the termination would violate express prohibitions, i.e., termination on the basis of race, gender, ethnicity, religion, etc.

832 N.Y.S.2d 157 (1st Dept. 2007).

976 F2d 86 (2d Cir. 1992).

Id. at 88.

The New York Court of Appeals refused to adopt or reject the Stewart court’s rationale for allowing the environmental lawyer’s claim to proceed.  Smalley, 853 N.Y.S.2d at 270.

It is also important to bear in mind the general rule that any oral agreement that is not capable of performance within one year, with certain exceptions, will be unenforceable due to the statue of frauds – a legal basis that is  independent of the at-will nature of the employment.

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