One Powerful Way to Defeat a Fraudulent Inducement Claim in New York

As you may know, fraudulent inducement claims are, as a general rule, closely related to a breach of fiduciary duty claim. And the reason is fairly straightforward: in both instances, the plaintiff is claiming that they relied to their detriment upon the defendant's representations and/or close relationship.

There is one almost sure-fire way to defeat these claims in New York: where the plaintiff hired the defendant as an at-will employee, with the unfettered right to terminate the defendant at any time.

And the reason that this will almost automatically mean defeat for the fraud claim should be fairly obvious: since the plaintiff retains the right to fire the defendant at their whim, the plaintiff cannot now complain that they undertook long-term plans and incurred expenses in reliance on the defendant's representations.

In other words (and in legalese), a fraudulent inducement claim stands at odds with an at-will employment. Or, as one of New York's appellate courts recently put it:

"[P]laintiff simply cannot satisfy the requirement of demonstrating detrimental reliance, since plaintiff expressly retained [defendant] as an at-will employee with an unfettered right to terminate her employment at any time ( see Abacus v. Datagence, Inc., 66 A.D.3d 552, 553, 887 N.Y.S.2d 94 [2009]; Meyercord v. Curry, 38 A.D.3d 315, 316-317, 832 N.Y.S.2d 29 [2007]; Arias v. Women in Need, 274 A.D.2d 353, 712 N.Y.S.2d 103 [2000])."

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