Alaska Airlines, Inc. v. Stephenson

Brief Fact Summary.

The plaintiff was approached by the Defendant for a position at Defendant’s airline. The plaintiff relied on the offer, and gave upsomething of certain and substantial character.

Synopsis of Rule of Law.

The principle of promissory estoppel permits implementation of an oral employment contract only if a guarantee is made by the promisor that prompts activity of a certain and substantial character with respect to the promisee.

Facts.

Arthur W. Stephenson was employed by Western Airlines in California when he was approached by R.W. Marshall, the Chairman of Alaska Airlines, Inc., with an offer to work as a general manager for the airline. Alaska Airlines, a smaller carrier operating in the Territory of Alaska, was planning to expand its operations to include flights to and from the United States.

Stephenson accepted the oral employment offer and took a six-month leave of absence from Western Airlines to move his family to Alaska. He repeatedly requested a signed written employment contract from Marshall and other executives at Alaska Airlines, but was informed that no contracts would be signed until the airline obtained a certificate to operate interstate flights.

By the time Stephenson’s leave of absence from Western Airlines expired, he could not return to his former job. Shortly thereafter, Alaska Airlines terminated his employment. Stephenson then filed a lawsuit seeking monetary damages in federal district court, which ruled in his favor. Alaska Airlines appealed the decision, arguing various legal points including the application of the statute of frauds and the duty to mitigate damages​.

Issue.

Does the convention of promissory estoppel permit authorization of an oral employment contract if a guarantee is made by the promisor that prompts activity or avoidance of a certain and substantial character with respect to the guarantee?

Held.

Yes. A breach of an employment contract claim is admissible only if the agreement is in writing. Section 90 of the Restatement of the Law of Contracts states that a guarantee made by one person that initiates activity of a ” definite and substantial character on the part of the promisee ” is binding if unfairness can only be evaded by the implementation of the promise.

Dissent.

N/A

Concurrence.

N/A

Discussion.

The Statute of Frauds keeps Stephenson from winning because a breach of an employment contract claim is permissible only if the agreement is in writing.  However, in our case, Stephenson giving up his employment rights with Western Airlines fulfills the prerequisite of the Restatement that an individual gives up something of certain and substantial character.The judgment of the district court is affirmed.