California Supreme Court Limits Public Policy Wrongful Discharge Claims
It has been over three years since the California Supreme Court decided Foley v. Interactive Data Corp., 47 Cal.3d 654, 254 Cal. Rptr. 211 (1988), in which the Court limited the scope of the law of wrongful discharge. The Foley Court ruled that a terminated employee could assert a tort claim for wrongful discharge (for which emotional distress and punitive damages may be sought) only if the termination violated a firmly established, fundamental, and substantial public policy. Because the Court in Foley concluded that no such policy had been implicated in the case before it, it declined to decide whether, to support a wrongful discharge claim, the public policy relied upon must have a statutory or constitutional basis. That issue has now been resolved. In Gantt v. Sentry Insurance, 1 Cal.4th 1083, 4 Cal. Rptr.2d 874 (1992), the California Supreme Court held that, in order to form the basis for a cause of action in tort for wrongful termination, the public policy claimed to have been violated by the discharge must be based on a statutory or constitutional provision.
Plaintiff Gantt was a sales manager for Sentry Insurance in Sacramento. One of Gantt's subordinates apparently complained to him that she had been subjected to sexual harassment by the manager of a different office. Gantt brought these complaints to the attention of upper management and the alleged harasser was demoted. Shortly thereafter, however, Sentry also fired the employee who had complained of sexual harassment, and she filed a discrimination charge with California's Department of Fair Employment and Housing (the "DFEH").
In the course of its investigation, the DFEH requested an interview with Gantt, and Sentry's in-house counsel met with Gantt to prepare him for that interview. Gantt perceived that the attorney was disappointed with his intended testimony and that he was being pressured to misrepresent the underlying facts or to withhold information. As a result, he secretly met with the DFEH investigator before his formal interview and told the investigator the facts of which he was aware. Gantt did not disclose this meeting to the company. The formal interview took place later, with Gantt represented by Sentry's attorney. Two months later, Gantt was demoted, and he resigned shortly thereafter, claiming that he was doing so under pressure.
Gantt sued Sentry and several individual employees on a number of theories, including wrongful termination in violation of public policy. He claimed that he had been terminated in retaliation for testifying truthfully concerning a co-worker's sexual harassment claim. The jury returned a verdict of $1.34 million in his favor. When the Court of Appeal affirmed that judgment, Sentry petitioned the California Supreme Court for review.
The principal issue raised by Sentry was whether Gantt's claims that Sentry attempted to induce him to testify falsely, or to withhold information from the DFEH, were sufficient to support a claim of wrongful discharge in violation of public policy. Sentry argued that Gantt's report of sexual harassment inured only to the benefit of the co-worker, not to that of the public at large. As such, it did not rise to the level of a violation of a fundamental and substantial public policy.
The Supreme Court disagreed and affirmed the judgment for Gantt. After a review of the development and application of the public policy cause of action in California and other jurisdictions, the Supreme Court considered whether non-legislative sources (such as administrative regulations and judicial decisions) could provide the basis for a public policy claim, or whether a plaintiff in such an action would have to show that his termination violated a policy embodied in a statute or constitutional provision. Concluding that public policy claims must be based on specific statutory or constitutional provisions, the Court attempted to strike a balance between the employer's need to have a clear indication of what conduct is prohibited and the employee's right not to be subjected to treatment which contravenes fundamental public policy. The Court also stated that, because the legislative branch was in a better position to identify and define public policies, the legislature's decisions in that regard (embodied in statutes and constitutional provisions) were entitled to deference. Having decided that a constitutional or statutory basis was necessary, the Court identified Section 12975 of the California Government Code as support for Gantt's public policy cause of action. That statute provides that "[a]ny person who shall willfully resist, prevent, impede or interfere with any member of the [DFEH] or any of its agents or employees in the performance of duties pursuant to the provisions of this part relating to employment discrimination . . . is guilty of a misdemeanor." Since the discharge of Gantt, in the Court's view, violated the public policy embodied in this statute, the judgment of the Court of Appeal was affirmed.
Justice Kennard, joined by Justice Mosk, filed a separate opinion, concurring in the result but taking exception with the Court's reasoning. As Justice Kennard noted, since Gantt did, in fact, have a statutory basis for his public policy claim, it was simply unnecessary for the Court to decide at this time whether it should ever permit a plaintiff to proceed with a claim based on a public policy not originating from a statute or constitutional provision. In addition to criticizing the majority's attempt to "decide this issue in a complete factual vacuum," Justice Kennard expressed the view that a number of non-statutory and non-constitutional sources, such as appellate court decisions, executive orders, administrative regulations and decisions, and rules of professional conduct, could, in an appropriate case, support a public policy cause of action.
Under Gantt, California courts will now require a statutory or constitutional basis for a claim of wrongful termination in violation of public policy. The extent to which this ruling will limit the ability of plaintiffs to articulate and prove wrongful discharge claims remains, however, to be seen. In most situations where a fundamental public policy is implicated by the discharge of an employee, it can be expected that there exists some statute or constitutional provision supporting that policy. In most cases, therefore, resourceful plaintiffs and their lawyers will likely be able to meet the standard imposed by the Gantt decision.