Facts
- Robert H. Sarvis was convicted in federal court of five counts of bank fraud, sentenced to 46 months’ imprisonment, and ordered to pay more than $12 million in restitution.
- After his release, Sarvis applied for positions with the Community College of Vermont, a division of Vermont State Colleges.
- In his résumé, Sarvis represented that he had been “President and Chairman of the Board” of a company from 1984–1998 and described activities during years he was incarcerated in a way that implied continuous corporate employment rather than imprisonment.
- On an instructor information form, Sarvis did not disclose incarceration and referred the college back to his résumé for recent employment information.
- Sarvis sought to prevent the college from contacting prior employers for references.
- The college hired Sarvis under multiple employment agreements, including assigning him to teach business law and business ethics and to serve in an administrative/coordinator role.
- Sarvis’s probation officer contacted the college and disclosed Sarvis’s conviction, incarceration, and restitution obligations.
- The college terminated Sarvis, citing dishonesty in the hiring process and reputational concerns.
- Sarvis sued for breach of contract (asserting lack of “just cause” under the agreements) and asserted a claim under Title VII based on termination for his criminal history.
Issues
- Whether misleading statements and omissions about Sarvis’s incarceration and criminal conviction constituted fraud that supplied “just cause” and allowed rescission of the employment agreements.
- Whether termination based on criminal history (or concealment of it) states a cognizable claim under Title VII absent alleged discrimination based on a protected characteristic.
Decision
- The Vermont Supreme Court affirmed summary judgment for Vermont State Colleges.
- The court held Sarvis’s misleading résumé and related omissions concealed material facts, constituting fraudulent misrepresentation that induced the college to hire him.
- Fraud in the inducement permitted the college to rescind the employment agreements and established just cause for termination.
- The court held Title VII does not protect individuals from adverse action based solely on criminal history, and Sarvis alleged no discrimination based on race, color, religion, sex, or national origin.
Legal Principles
- A contract induced by fraudulent misrepresentation of a material fact may be rescinded by the party that reasonably relied on the misrepresentation.
- Fraud may be shown by affirmative misstatements or by concealment that creates a false impression regarding a material fact, when made with intent to induce reliance and actually relied upon.
- In the employment context, material dishonesty during hiring that undermines trust and integrity can constitute just cause for termination.
- Title VII prohibits discrimination only on specified protected bases (race, color, religion, sex, national origin) and does not create a protected category for persons with criminal records; termination based on criminal history alone is not actionable under Title VII.
Conclusion
The court upheld termination and rescission of the employment agreements because Sarvis fraudulently induced his hiring by materially misleading the college about his incarceration for bank fraud, and it rejected his Title VII theory because criminal history is not a protected class and he alleged no discrimination based on a Title VII-protected characteristic.