New Jersey Employment Lawyer Blog
Earlier this year, the New Jersey Supreme Court recognized that an employee who quits a job to accept another job offer, only to have the new employer withdraw its offer, may be able to recover “reliance damages.” In other words, he might be able to recover damages based on the salary and benefits he gave up at his previous job.
Jed Goldfarb is an investment advisor. From 2009 to 2013, he worked as a research analyst with Monness, Crespi, Hardt & Co., Inc. During that period, he was paid entirely based on commissions, and earned between $308,000 and $466,000 per year.
In March 2013, Mr. Goldfarb received an oral job offer from David Solimine to manage Mr. Solimine’s family’s substantial investment portfolio. According to Mr. Goldfarb, the offer included a base salary of $250,000 to $275,000, plus commissions. Mr. Goldfarb accepted Mr. Solimine’s offer, and quit his job with Monness, Crespi, Hardt & Co. so he could work for him.
After Mr. Goldfarb quit his job, Mr. Solimine reneged on his promise of employment. As a result, Mr. Goldfarb was unemployed.
Mr. Goldfarb sued Mr. Solimine for promissory estoppel, a claim to remedy the harm caused by reasonably relying on a “clear and definite” promise that was broken, namely Mr. Solimine’s promise of employment, rather than for breach of his employment contract.
Mr. Solimine argued that Mr. Goldfarb could not pursue his claim based on New Jersey’s Uniform Securities Law of 1997. That statute requires investment advisers to have a written document memorializing the terms for their investment relationship, and prohibits anyone from bringing a lawsuit based on any contract which violates that requirement.
The trial court disagreed with Mr. Solimine’s argument, and allowed Mr. Goldfarb’s case to go to trial. A jury found in Mr. Goldfarb’s favor, and awarded him $237,000 as “expectation” or “benefit of the bargain” damages, meaning damages based on a projection of what he would have earned from Solimine. Both sides appealed.
The Appellate Division upheld the finding that Mr. Solimine was liable to Mr. Goldfarb. But it ruled that a new trial was necessary to calculate Mr. Goldfarb’s damages based on “reliance” damages, meaning damages based on what he gave up at the job he quit. In other words, in contrast to benefit of the bargain damages, which look forward, reliance damages look backward.
Mr. Solimine asked the New Jersey Supreme Court to review the case, which it agreed to do.
In its opinion in Goldfarb v. Solimine, the New Jersey Supreme Court affirmed the Appellate Division’s ruling. It concluded that Mr. Goldfarb’s promissory estoppel claim was not a claim based on the unwritten employment contract, and therefore did not run afoul of the Uniform Securities Law.
However, the Supreme Court concluded that the trial court improperly allowed the jury to award Mr. Goldfarb “benefit of the bargain” damages. It explained that, since benefit of the bargain damages are based on what would have happened if Mr. Solimine had honored the oral contract, awarding them to Mr. Goldfarb would have violated the Uniform Securities Law. Instead, the Court agreed with the Appellate Division that Mr. Goldfarb could recover reliance damages.
Accordingly, the New Jersey Supreme Court ruled that Mr. Goldfarb is entitled to a new trial to establish his damages based on what he would have earned if he had not resigned from Monness, Crespi, Hardt & Co.