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55. Is the applicant likely to prevail in an action for negligent misrepresentation?
The personnel director of an investment company told a job applicant during an interview that the company was worth millions of dollars and that the company's portfolio would triple in the next several months. The applicant was very excited about the company's prospects and accepted an offer to work for the company. Two days later, the applicant read in the newspaper that the investment company had filed for bankruptcy reorganization. As a result of reading this news, the applicant suffered severe emotional distress, but he immediately found another comparable position.
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A is correct. The applicant's claim fails on the damages element. In negligent misrepresentation claims, if the applicant suffered emotional distress and no other harm, damages for that emotional distress are not recoverable. One exception to that rule is negligent infliction of emotional distress, but most jurisdictions require a physical injury that came from the emotional distress. Here, the facts state the applicant suffered emotional distress but did not state he suffered any physical harm; the question also states that he found another position «immediately,» suggesting he did not suffer pecuniary harm either.
B is incorrect. This answer choice mischaracterizes the facts. It is true that a plaintiff's reliance can be deemed unjustified if the reliance was based on statements of future events or statements of pure speculation. Here, the personnel director's statements were at least partially a statement about factual matters. For example, the company's current value is a factual assertion that would reasonably induce reliance in an applicant during a job interview for that company. Thus, the applicant justifiably relied on that statement.
C is incorrect. This answer choice misstates the law. As explained above, reliance is one element of negligent misrepresentation, but the tort has several other requirements. The applicant's claim will still fail on the damages element despite meeting the reliance element.
D is incorrect. This answer choice misstates the law. It was likely foreseeable that the personnel director's misrepresentation would lead to distress in the applicant when he learned the truth. However, the tort of negligent misrepresentation requires more than mere foreseeable harms.