VERBAL CONTRACT COSTS $800,000 TO EMPLOYER
In Jose Muñiz v Steifel Laboratories, No. 06-1944, The U.S. Court of Appeals for the First Circuit Court affirmed a judgment of $600,000 against Stiefel Laboratories, Inc. in breach of a 2001 binding verbal contract that guaranteed the plaintiff “continued employment if Stiefel were to decide in the future to close its Puerto Rico subsidiary, which plaintiff headed. Stiefel terminated plaintiff’s employment, along with that of all of its other Puerto Rico employees, when it shut down its Puerto Rico operations on January 31, 2003.” Stiefel did not offer plaintiff another position. Besides the $600,000 back pay, front pay, and benefits, the jury awarded $100,000 each to plaintiff for pain and suffering. The case was brought under diversity jurisdiction.
In Puerto Rico, a verbal contract is enforceable as long as it includes the essential conditions required for its validity - the consent of the contracting parties, a definite object which may be the subject of the contract, and the cause for the obligation.
Still pending is the $200,000 award for pain and suffering since under
Puerto Rico law, they are not ordinarily recoverable per se for a breach
of contract claim (particularly to a non-party) except in some case where for
example “the defendant in breach of contract has on the same facts also
committed a tort and [foresaw] and necessarily caused pain and suffering damages.
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