Wednesday, December 25, 2013

Hayes v. Plantations Steel Co. case brief

Hayes v. Plantations Steel Co. case brief summary
438 A.2d 1091 (1982)

The Superior Court (Rhode Island) granted judgment in favor of plaintiff employee on the basis that he had an implied-in-fact contract with defendant employer to pay him a yearly pension. The court held that the payments to the employee were not governed by the Employee Retirement Income Security Act (ERISA), 29 U.S.C.S. §§ 1001-1461, and consequently he was not entitled to attorney's fees under § 1132(g) of ERISA. Both parties appealed.

The employee worked for the employer for 25 years. Starting one year after he retired and continuing for three years, the employee received an annual sum from the employer. The employee testified that approximately one week before his actual retirement he spoke with an officer of the employer who stated that the employee would be taken care of. There was no mention of a sum of money and no formal authorization for payments by the shareholders. The lower court held that the employer owed the employee an annual sum for four years because the employee had a right to expect the continued payments.


  • The court disagreed and reversed the judgment. 
  • The court held that the employee did not supply the required consideration to make the employer's promise binding. 
  • The court held that the employee announced his intent to retire well in advance of any promise by the employer to pay him, and therefore the intention to retire was arrived at without regard to any promise by the employer. 
  • The court held that the employee's long years of dedicated service was legally insufficient consideration because his service was rendered without being induced by the employer's promise.

The court reversed the judgment in favor of the employee and determined that the employer did not have a contractual obligation to pay the employee a pension.

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