Does Salaita Have a Contract Claim?

apparent-authority

Dave Hoffman

Dave Hoffman is the Murray Shusterman Professor of Transactional and Business Law at Temple Law School. He specializes in law and psychology, contracts, and quantitative analysis of civil procedure. He currently teaches contracts, civil procedure, corporations, and law and economics.

You may also like...

15 Responses

  1. Kevin Jon Heller says:

    Perhaps someday someone who argues Salaita’s legal claim is weak will address the fact — openly admitted to by Chancellor Wise — that the Board of Trustees was not scheduled to approve Salaita’s appointment until nearly a month after his classes would have begun at Illinois.

  2. Dave Hoffman says:

    Kevin

    It’s almost as if you didn’t read my comment replying to an almost identical comment you left on my last post on this topic!

  3. Kevin Jon Heller says:

    I did not see that response, so apologies. But I don’t find it particularly persuasive. You are arguing that when a university extends an offer and says “you’ll begin teaching on date X but the trustees won’t finalise your appointment until date Y, a month later,” the reasonable response is to ask the university you are leaving permanently to give you a year off just in case the new university decides after you’ve started teaching for it that it’s decided to rescind the offer. If that’s the “reasonable” course of action, promissory estoppel means nothing.

  4. dave hoffman says:

    Kevin,
    I’m pretty sure that convincing you on any of these issues isn’t on the table. But perhaps the disagreement we’re having is over the meaning of the word reasonable. You seem to think that in PE cases it carries its ordinary meaning. I don’t – I think it carries a more restricted meaning, especially when asserted against the state (in Illinois, and elsewhere).

  5. Nancy says:

    Hi Dave,

    Here are my thoughts:

    1. I think Restatement 26 actually supports a finding of a contract because it was clear that the parties intended one based upon their actions. I don’t think the “subject to approval” language was express enough to overcome the clear sense that the parties intended a binding agreement. Why else would they behave the way they did (quit a tenured position, pay or at least discuss moving expenses, list his class in the catalog, etc). I think this is like the letter of intent cases where courts have found the “subject to a final written agreement” language to be a mere formality. Whether it is a condition in any given case depends upon the facts. Here, the facts (including when the Board expected to meet and the start date of his classes, as well as the other things mentioned above, like paying for moving costs, etc) supplemented by custom, suggest they intended a binding contract.

    2. Wasn’t there actual authority? I thought the person making the offer had authority to do so. (Who was it? Was it the person who typically extended offers?) There would seem to be at least apparent authority. I think a reasonable person would think the hiring party had authority to make the offer here.

    3. I think this case is different given the way “industry norms” and custom serve as gap fillers. Given how academic hiring is done, it would be odd for Salaita to go around calling the university to check up on the authority of the person who extended the offer. I think it would make him seem paranoid and unusually untrusting.

    4. As I mentioned above, there are cases having to do with letters of intent which are “subject” to a final agreement. Generally, courts (even in Illinois) have found that what matters is the intent of the parties in interpreting the proviso. Here is a citation to one case: Quake Construction v. American Airlines, 537 NE 2d 863 (1989).

    The primary and overriding reason that I think there should be a contract here is that the parties intended it and to find otherwise would undermine academic hiring – what would happen if everyone now treated offers as non-binding until Board approval? Chaos and lots of uncertainty.

    I can understand why the University wants to reserve the right to rescind offers –but that right is only valid until it’s been accepted. They should at least have submitted his appointment to the Board. The Board could still have disapproved his appointment but had to act in good faith – whether his tweets constituted grounds for withholding approval should at least have been discussed by the Board. Does the fact that the University didn’t even bother with going to the Board for approval mean the University failed to act in good faith? Unfortunately, I think it might.

    Nancy

  6. dave hoffman says:

    Focusing on #2,
    1. How can there be actual authority? The grant of authority specifically states that the Acting Dean had no power to conclude a contract. This would seem pretty clearly beyond the scope of the authority explicitly granted and communicated under RST Agency (2.02.) I grant that understandings matter (see illustration. 11) but not as to a reasonable person – that is, what matters is what the principal and agent thought and believed. I’m probably being obtuse, but I simply don’t see how actual authority to hire is possible when the instruction that the agent sent the 3rd party explicitly reserved authority to the principal to decide.

    2. I think the discussion about apparent authority is slightly more complex. Comment (g) to 2.03 denies apparent authority in situations involving government actors, like the University of Illinois. Even if this were not true, if, as some of supposed, there are side channel communications, that might make the agent liable but not obviously the principal. What belief, “traceable to the principal’s manifestations,” made Salaita think that the agent had discretion to contract?

  7. Nancy says:

    Dave,

    Re your 1. – The question about actual authority on my part wasn’t rhetorical – I didn’t know what the circumstances were. If the Board didn’t give the Acting Dean express authority, and if it wasn’t inherent in the authorization that wasn’t given, then you’re right – no actual authority. But I suspect this is not the full story – I think both the board and Acting Dean understood that the Acting Dean had authority to give an offer that was subject to the implied understanding that there was no material misrepresentation or that the hiring party wouldn’t do anything unexpected….So yes, I think we are back to the interpretation question. I’m also not quite sure what you mean by “understandings matter, but not as to a reasonable person” and how that explains your position on whether there was actual authority.

    Re your 2. The act would have to be the way the university acted with this hire and the past hiring practices of the university. It’s complicated because we’re talking about an institution and not an individual, but it seems that the “university” acted (approving expenses relating to his interview and hiring, advertising and enrolling students in his class – was there an announcement regarding his hiring? If so, that would also indicate the Acting Dean had authority, etc) in a way that would lead a reasonable person to think that the Acting Dean had authority to make the hire. Again, it’s all the facts together that would constitute whether the parties intended an offer.

    Nancy

  8. Nancy says:

    In my above comment I meant “contract” not “offer.”

  9. dave hoffman says:

    1. I think we’ve batted around actual authority enough for this thread – I’m content to rest on the briefs, as they say.

    2. On apparent authority, everything I’ve been able to glean about Illinois law strongly suggests that you can’t win such claims against the State. See Dunteman v. State, 38 Ill. Ct. Cl. 51 (1985); Student House, Inc. v. Board of Regents of Regency Universities, 44 Ill. 2d. 89 (1969). The typical line is “such a policy could be disastrous to the State\’s budget.” The University is clearly an agent of the state for these purposes. See Faulkner-King v. Dep\’t of Human Rights 225 Ill. App. 3d at 787-88, 587 N.E.2d at 601 (1992). So I don’t think apparent authority would give a remedy if there’s no actual authority.

  10. R Schieler says:

    Seems to me that someone, somewhere in the university, jumped the gun. Warrior has already admitted to giving approval for Salaita’s travel and moving expenses. Usually, such approval must await final offer–in this case the Board. To schedule classes well before approval is nothing new–they may be courses that the department would need to offer regardless of who’s teaching them. But I will add that many, many university leaders have vetoed departmental offers. I assume state labor laws give them the right to do so.

  11. Michael Risch says:

    While I fall on the Hoffman side of this for analysis (no way you can have actual authority in a letter that says “I have no actual authority”), I continue to be troubled by the timing of the approval. It is not reasonable for the hired party to wait until after the semester begins to move. It is not reasonable to seek a leave in October beginning 10 months later, so that 11 months later the trustees can approve someone who has already started teaching classes.

    But these facts do not create a contract – the agreement just isn’t there. Which leads me to believe that it has to be promissory estoppel. The department didn’t jump the gun, as R Schieler puts it, the department approved the payment because ALL the departments at the University ALWAYS approve moving expenses early because the trustees ALWAYS approve after the fact because you can’t run a university where all your faculty is put on payroll before they know if their $10K or $20K moving expenses will be paid. Which means that it was reasonable to rely on the offer and move. I don’t think the apparent authority argument flies – because the university apparently does this every year without killing the budget. If the UIUC administration wanted to retain real ability to turn down offers, it had to do so way earlier than after people moved to campus and started teaching.

  12. R Schieler says:

    The department appeared to have jumped the gun without final approval. Warrior admitted that–which is why the university is offering to cover expenses. And many universities have vetoed departmental offers, so it’s not a good idea for department heads to approve funds without an offer. But as another professor has pointed out, other personnel factors may have come into play as well.

  13. Dave Hoffman says:

    Michael,
    I too am troubled about the timing, but I don’t think it gives rise to a legal claim. On PE, I understand why you’d think that the particular threat to the fisc is low here, but the point remains that in Illinois estoppel against the state (UI counts), in the court of claims, is basically impossible to win. In case of doubt, that law requires that salaita make affirmative efforts to contact the principal to ascertain if the agent’s apparently a-contractual representations were warranted.
    I get that what’s left is detrimental reliance, in that he’s out of pocket expenses, and he’s quit his job. And I further get that many people would behave just as he did in response to the offer. (There is a dispute as to whether the prudent & common practice in Big 10 universities that have this kind of late approval system is to take a leave.) But that doesn’t mean he has a PE claim against an instrumentality of the State of Illinois under existing caselaw.

  14. Michael Risch says:

    OK, fair enough. If the rules of PE don’t apply to the state, then they don’t. But that’s a really broken system – enough so that anyone doing business with any public U ought to take real notice.

  15. Akiva Cohen says:

    Kevin,

    I think the easiest response to the “but he was scheduled to start teaching” argument is one of two things:

    1) At best (for Salaita), there is an implicit promise that the candidate will be allowed to finish out the semester regardless of the Board’s decision (in which case, Salaita’s damages are quite limited); or

    2) That the offer is being expressly made subject to a risk that the board will disapprove the candidate, and therefore a candidate who accepts the offer and begins teaching does so while expressly assuming the risk that they will be disapproved and terminated mid-class (in which case Salaita’s damages are $0).

    Either of those options has the benefit of not reading the express “subject to board approval” language entirely out of the contract, which I assume that Illinois (like most states) has a strong preference against doing.

    How do you address the preference against reading language out of a contract?