Usually, a negligent misrepresentation case from the Minnesota Supreme Court would fall a bit outside my usual purview for blogging. But as a lifelong Kentucky basketball fan, how could I resist commenting on Williams v. Smith [pdf]: a suit revolving around the hiring of an assistant basketball coach with an ex-Kentucky coach as a defendant, and a former Kentucky player — the son of another former Kentucky coach — as the plaintiff’s ex-boss? And it turns out there are important takeaways from the case.
Orlando "Tubby" Smith resigned as Kentucky’s head coach in March 2007 to coach the University of Minnesota Golden Gophers. Shortly after he was hired, he contacted several individuals as potential assistants, including plaintiff Jimmy Williams – a former Minnesota assistant with pro coaching experience. After several days of negotiation, Smith allegedly called Williams, and asked if Williams was ready to join him at Minnesota. Williams said "yes." That same day, Williams called his then-boss, Oklahoma State head coach Sean Sutton, and told him he was resigning as assistant at OSU. Oklahoma State quickly moved to replace Williams, but Minnesota Athletic Director Joel Maturi balked at the idea of rehiring Williams, since Williams (among others) had been accused of NCAA rules violations during his earlier tenure at the school. Ultimately, Williams’ apparent offer dissolved, and he sued the school and Maturi for breach of contract and negligent misrepresentation, among other things. Later, he sued Smith too, and the cases were consolidated. The jury found for Williams on the negligent misrepresentation claim, awarding $1.24 million in damages, the court of appeals affirmed, and the Supreme Court granted review.
Which is when several Justices headed for the door. Four of the seven Justices who either held degrees from the University of Minnesota, or in one case had taught there for several years, recused themselves from hearing the case.
So what happens when an appellate court loses its quorum? It’s not unheard of; most recently in California, the entire state Supreme Court recused itself in a case challenging the potential sale of state buildings, including the one where the Court sat. In such cases, pro tem Justices must be appointed from the lower courts — if that’s what it takes, an entire pro tem Court. In Williams v. Smith, two pro tem Justices were appointed, including one retired Justice from the state Supreme Court.
The principal issue before the state Supreme Court was: did Smith have a tort duty of care not to negligently mislead Williams?
The breadth of the negligent misrepresentation tort is an issue which frequently appears before state Supreme Courts around the country. Such cases sometimes illustrate the old maxim that hard cases make bad law, with sympathetic plaintiffs and facts that might seem, at least on the surface, to call for relief. But Minnesota, like most states, has resisted the temptation to expand the tort, limiting it to certain legal relationships and situations where one party had superior knowledge. Most states — including Minnesota — have so far refused to extend a duty of care to arm’s length commercial transactions which are more adversarial rather than advisory.
But can a relationship with a government employee like Smith ever be "adversarial"? By a 3-2 vote, the Court concluded that under the circumstances, Smith owed Williams no tort duty: (1) the parties were sophisticated businessmen negotiating at arm’s length; (2) Smith did not have superior knowledge, since — at least according to the Court majority — the limitations in Smith’s authority to hire were noted in a publicly available website; and (3) the weight of authority around the country has refused to recognize a tort duty in negotiating for prospective government employment.
Williams v. Smith reinforces important lessons in employment litigation, especially when representing government employers. Plaintiffs may attempt to emphasize any sympathetic facts, but defendants should widen the issue, placing the rule plaintiffs advocate in the context of law around the country on negligent misrepresentation. Appellate courts are always concerned about the implications of their holdings for all the cases to come, so consider asking: if the rules are changed to allow the case at hand through the courthouse doors, what sorts of cases will follow?
Plaintiffs may try to blur the distinction between the plaintiff, a potential employee, and the general public; surely government officials should not mislead the public, negligently or otherwise? But this is a distinction that the Minnesota Supreme Court properly rejects. Federal, state and local governments employ millions of people across the country. In many contexts, there is no obvious reason why tort duties should be different for government employers than anyone else. Ultimately, the question rests where the Minnesota Supreme Court wisely left it: opening up arm’s length negotiations between sophisticated business people to negligence suits invites a flood of new litigation in the courts and an entirely unjustified distortion of economic relationships.