Rudman v. Cowles Communication, Inc.

Jack Rudman (plaintiff) started a successful company publishing test-prep materials. Rudman sold his business to Cowles Communication, Inc. (Cowles) (defendant). Rudman and Cowles entered two contracts. Under the first, Cowles acquired Rudman’s business. Under the second, Rudman became a Cowles employee. The employment agreement did not provide much detail about Rudman’s duties, but Rudman was named a vice-president and understood that he would be in charge of the test-prep-publishing division. Shortly after starting at Cowles, Rudman became upset about how much Cowles changed Rudman’s test-prep books without Rudman’s approval. Rudman discovered both that Cowles had a large team working on the materials outside Rudman’s control and that Rudman’s name would not be on the published books. Cowles then informed Rudman that Rudman ranked below two other Cowles employees working on the test-prep materials. Rudman said that this arrangement was unacceptable, leading Cowles to ignore him for several months and finally fire him before his contract expired. Rudman sued Cowles for: (1) wrongful discharge and (2) rescission of the business-acquisition contract based on fraud. The trial court ruled in favor of Rudman on the wrongful discharge claim, but it ruled for Cowles on the fraud claim. Rudman appealed. Rudman argued that, because the two contracts were intertwined, the employment contract breach required rescission of the acquisition contract.