Legal Memorandum: Damages for Fraudulently Induced Employment

Issue: Does a person who is fraudulently induced to change employment or change her place of employment have a statutory right of action against the inducing employer to recover all actual damages?

A person fraudulently induced to change employment or change her place of employment has a statutory right of action against the inducing employer to recover all actual damages sustained as a consequence of the false or deceptive representations, plus reasonable attorneys’ fees.  Minn. Stat. § 181.65.  In cases where the state is liable, however, damages are limited as set out in § 3.736, subd. 4, and the state will not pay punitive damages.  Id. at subds. 3 (no punitive damages); 4 (limiting damages to $1.5 million for claims arising out of a single occurrence after July 1, 2009). 

In Vaidyanathan v. Seagate U.S. LLC, CIV. NO. 09-1212 DWF/JSM (D. Minn. Mar. 11, 2011), the appellate court upheld a $1.9 million damages award.  The court noted that § 181.65 provides for the recovery of all damages sustained in consequence of the defendant’s false representations, and there, Vaidyanathan testified that his career as a yield engineer was “over” as a result of his termination by defendant Seagate.  Id. Vaidyanathan’s expert testified as to the income he would have received had he remained at his prior position, and the income he could be expected to receive were he unable to work as a yield engineer in the future.  The court concluded that there was enough evidence to support the jury’s $1.9 million verdict, and that the verdict was not excessive, nor in contradiction to Minnesota’s employment-at-will doctrine.  Id.

In a common law case, if the plaintiff can establish that the defendant employer […]