Wednesday, December 25, 2013

Fujimoto v. Rio Grande Pickle Co. case brief

Fujimoto v. Rio Grande Pickle Co. case brief summary
414 F.2d 648 (1969)

Defendant employer appealed from the order of an United States district court, which entered judgment on a jury verdict in favor of plaintiff employees. The district court held that employment contracts that promised shares of net profits were formed by acceptance of defendant's offers and that the term "net profits" was ambiguous, and instructed the jury to compute net profits without reference to losses carried over from a prior fiscal year.

Plaintiff employees received and signed written employment contracts that offered shares in defendant employer's net profits, but did not return the signed contracts to defendant. Defendant refused payment when plaintiffs quit and claimed there were no valid contracts. The district court held that plaintiffs had contracts and instructed the jury not to consider carryover losses in calculating net profits for a partial year.


  • On appeal, the court affirmed that plaintiffs had contracts because defendant had not specified a means of acceptance, so a contact was formed when plaintiffs signed the contracts and communicated their acceptance to defendant by continuing to work and in conversations. 
  • The court found that the contract was silent as to the meaning of "net profits," not ambiguous, so that it was the court's role to construe the real intention of the parties as a matter of law. 
  • The court held that to avoid economic distortion, the losses and gains that ordinarily were carried over from fiscal period to fiscal period should be considered in the calculation of net profits. 
  • The court reversed and remanded because the jury had not been allowed to consider a carryover loss.

The court affirmed that plaintiff employees had valid employment contracts that entitled them to shares of defendant employer's net profits. The court held that the contracts were silent as to the meaning of "net profits" rather than ambiguous, so it construed the term to avoid economic distortion and reversed and remanded so that the jury could consider defendant's carryover losses in assessing damages.

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