## Facts

- Earthgrains operated a bakery plant in Charlotte, North Carolina, within a corporate chain that included Campbell Taggart Baking Company and Anheuser-Busch.
- Barry Beracha served as CEO of Campbell and as a director of both Campbell and Earthgrains.
- In 1995, Anheuser-Busch decided to spin off Campbell/Earthgrains as a separate public company.
- At an August 1995 meeting with Charlotte plant employees, Beracha made statements about the plant and employees’ job security; the parties disputed the content.
- Plaintiffs alleged Beracha said the plant was “profitable” and employees’ jobs were “safe.”
- Defendants contended Beracha only stated the plant would not close and jobs would not be lost *because of the spin-off*.
- Earthgrains later conducted a study of the plant’s operations; defendants’ evidence indicated the closure decision followed completion of that study in December 1995.
- In December 1995, employees were informed the plant would close; the plant closed in early 1996 and employees lost their jobs.
- Employees previously pursued federal litigation alleging fraudulent misrepresentation based on the same meeting statements; that effort failed, and they later sued in state court for negligent misrepresentation.

## Issues

1. Whether a corporate officer/director owed rank-and-file employees a duty under negligent-misrepresentation doctrine when making general statements at an all-employee meeting.
2. Whether the alleged statements about profitability and job safety constituted false information supplied for the guidance of others in their business transactions.
3. Whether employees produced evidence of justifiable reliance and resulting pecuniary loss sufficient to survive summary judgment.

## Decision

- The North Carolina Court of Appeals affirmed summary judgment for defendants.
- The court held plaintiffs failed, as a matter of law, to establish the elements of negligent misrepresentation.
- The court concluded the meeting statements did not create a § 552-type duty to employees, were not transactional guidance, and were not shown to be justifiably relied upon to plaintiffs’ detriment.

## Legal Principles

- Negligent misrepresentation requires that, in the course of business or a transaction with a pecuniary interest, a defendant supplies false information for the guidance of others in their business transactions, and the plaintiff justifiably relies on it to suffer pecuniary loss.
- Corporate officers’ and directors’ duties generally run to the corporation, not to individual employees, absent special circumstances creating a separate duty of care to the employee.
- General, morale-oriented assurances about future job security or plant prospects, made in a broad employee meeting and not tied to a specific transaction, do not ordinarily qualify as information supplied for guidance in a business transaction under Restatement (Second) of Torts § 552 principles.
- Justifiable reliance requires evidence of specific, reasonably foreseeable action or forbearance taken because of the alleged misrepresentation and a resulting compensable loss.
- Evidence that a closure decision was made after the challenged statements can negate an inference that the speaker negligently conveyed false information at the time of the statement and can undermine causation.

## Conclusion

The court upheld summary judgment because generalized assurances by a corporate executive at an employee meeting did not establish a negligent-misrepresentation duty to individual employees and, in any event, plaintiffs failed to show actionable transactional guidance and justifiable reliance causing pecuniary loss.


Jordan v. The Earthgrains Cos., 155 N.C. App. 762, 576 S.E.2d 336 (2003)