## Facts

- Insteel Industries, Inc. recruited John Hudson to become general manager of one of its plants.
- Insteel allegedly promised Hudson that if he made the plant profitable within seven years, he would receive a share of the profits the plant generated during that seven-year period.
- Hudson accepted the position in reliance on Insteel’s alleged promise.
- Within about five years, the plant began to generate a profit.
- Soon after the plant became profitable, Insteel terminated Hudson, who was 53 years old.
- Insteel replaced Hudson with a much younger man.
- Hudson sued in federal district court asserting: (1) breach of an alleged employment contract, (2) promissory fraud based on promises made without intent to perform, and (3) illegal age discrimination.
- A jury rejected Hudson’s breach-of-contract claim but found for Hudson on promissory fraud and age discrimination and awarded damages on both claims.
- Insteel appealed the judgment to the Sixth Circuit.

## Issues

1. Whether the evidence permitted the jury to find promissory fraud under Tennessee law based on Insteel’s alleged promise of profit sharing over a seven-year period—specifically, that the promise was made without a present intent to perform and that Hudson reasonably relied on it to his injury.
2. Whether the evidence permitted the jury to find illegal age discrimination based on Hudson’s termination at age 53 and replacement by a substantially younger person, including whether the jury could reject Insteel’s stated reasons for the termination.
3. Whether the damages awarded on the fraud and age-discrimination verdicts were legally supportable (including challenges that the awards were unsupported or improperly overlapping).

## Decision

- The Sixth Circuit affirmed the district court’s judgment entered on the jury’s verdict for Hudson on promissory fraud and age discrimination.
- The court held the record permitted the jury to find that Insteel’s profit-sharing promise was made to induce Hudson’s acceptance of the job and that the promise could support tort liability even though the jury rejected Hudson’s contract theory.
- The court upheld the age-discrimination verdict, concluding the evidence allowed the jury to find that Hudson’s age was a determining factor in his termination and replacement.
- The court declined to disturb the damages awarded on the verdicts.

## Legal Principles

- A claim for promissory fraud may be based on a promise of future conduct if the plaintiff proves the promisor lacked a present intent to perform at the time the promise was made; a later failure to perform, standing alone, is not enough.
- A plaintiff may recover in tort for promissory fraud even when the factfinder rejects an alleged employment contract, because fraud focuses on whether the promise was used to induce reliance and was false when made.
- Fraudulent intent is commonly proven through circumstantial evidence and reasonable inferences drawn from the sequence of events.
- In age-discrimination cases, evidence that a protected employee was terminated and replaced by a substantially younger person, together with proof permitting rejection of the employer’s stated reasons, can support a finding that age caused the adverse action.
- On appeal from a jury verdict, the court gives substantial deference to the jury’s resolution of disputed facts and credibility and will not overturn the verdict where the record supports the jury’s findings.

## Conclusion

Hudson v. Insteel Industries affirmed a jury verdict finding that Insteel fraudulently induced Hudson to accept a general-manager position by promising profit sharing tied to a seven-year profitability goal without a present intent to honor that promise, and that Insteel illegally discriminated based on age when it fired Hudson at 53 after the plant became profitable and replaced him with a much younger manager; the Sixth Circuit upheld both liability findings and the damages award.


Hudson v. Insteel Industries, 5 Fed. Appx. 378 (2001)