Rudman claims that he was employed by contract to perform executive and administrative functions subject to the supervision of senior executives only.  Since the orders came from people lower in rank to him, he claims his refusal to obey does not amount to insubordination.  Rudman sued for wrongful discharge and fraud/misrepresentation in intent to perform the contract (“number one man”).

There was no clear and convincing evidence to sustain the fraud claim.  As for the wrongful discharge claim, the court states that if an employee is engaged to fulfill a certain position, any material change in his duties, or significant reduction in rank, may constitute a breach.  As such, acts done in defense of his contract rights, or in assertion of an agreed status or function in the enterprise, are not insubordination.  Evidence of the negotiations (“number one man”) and Rudman’s reasonable expectations  will be let in as parol evidence since it is not contradictory to the written agreement.

•    As for the Restatement, this is an “otherwise agreed” case.
•    Defiant disobedience may not be insubordination if the order is invalid as interpreted on the face of the contract and the negotiations that led up to it.
•    Constructive discharge results when duties are significantly reduced but salary is kept up.  In such cases, an employee may cease working and sue for damages.
•    Would the contractual obligations have been satisfied if Rudman had been given someone to supervise, although he still had to report to those of lower rank?
•    Rudman only gets damages here because the court says rescission of the acquisition agreement is impracticable since assimilation of the companies is complete.