California Civil Jury Instructions (CACI)

2401. Breach of Employment Contract - Unspecified Term— Essential Factual Elements

[Name of plaintiff] claims that [name of defendant] breached their employment contract. To establish this claim, [name of plaintiff] must prove all of the following:

1. That [name of plaintiff] and [name of defendant] entered into an employment relationship. [An employment contract or a provision in an employment contract may be [written or oral/partly written and partly oral/created by the conduct of the parties]];

2. That [name of defendant] promised, by words or conduct, to [discharge/demote] [name of plaintiff] only for good cause;

3. That [name of plaintiff] substantially performed [his/her] job duties [unless [name of plaintiff]'s performance was excused [or prevented];

4. That [name of defendant] [discharged/demoted] [name of plaintiff] without good cause; and

5. That [name of plaintiff] was harmed by the [discharge/ demotion].

Directions for Use

In cases where constructive discharge is alleged, use CACI No. 2402 instead of this one.

The element of substantial performance should not be confused with the "good cause" defense: "The action is primarily for breach of contract. It was therefore incumbent upon plaintiff to prove that he was able and offered to fulfill all obligations imposed upon him by the contract. Plaintiff failed to meet this requirement; by voluntarily withdrawing from the contract he excused further performance by defendant." (Kane v. Sklar (1954) 122 Cal.App.2d 480, 482 [265 P.2d 29], internal citation omitted.) Element number 3 may be deleted if substantial performance is not a disputed issue.

See also CACI No. 304, Oral or Written Contract Terms, and CACI No. 305, Implied-in-Fact Contract.

The California Supreme Court has extended the implied contract theory to encompass demotions or other similar employment decisions that violate the terms of an implied contract. (See Scott v. Pacific Gas & Electric Co. (1995) 11 Cal.4th 454, 473-474 [46 Cal.Rptr.2d 427, 904 P.2d 834].) As a result, the bracketed language regarding an alleged wrongful demotion may be given, or other appropriate language for other similar employment decisions, depending on the facts of the case.

Sources and Authority

Labor Code section 2922 provides: "An employment, having no specified term, may be terminated at the will of either party on notice to the other. Employment for a specified term means an employment for a period greater than one month."

Civil Code section 1439 provides, in part: "Before any party to an obligation can require another party to perform any act under it, he must fulfill all conditions precedent thereto imposed upon himself; and must be able and offer to fulfill all conditions concurrent so imposed upon him on the like fulfillment by the other party. . . ."

"Where there is no express agreement, the issue is whether other evidence of the parties' conduct has a 'tendency in reason' to demonstrate the existence of an actual mutual understanding on particular terms and conditions of employment. If such evidence logically permits conflicting inferences, a question of fact is presented. But where the undisputed facts negate the existence or the breach of the contract claimed, summary judgment is proper." (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 337 [100 Cal.Rptr.2d 352, 8 P.3d 1089], internal citations omitted.)

The employee bears the ultimate burden of proving that he or she was wrongfully terminated. (Pugh v. See's Candies, Inc. (Pugh I) (1981) 116 Cal.App.3d 311, 330 [171 Cal.Rptr. 917].)

"The presumption that an employment relationship of indefinite duration is intended to be terminable at will is therefore 'subject, like any presumption, to contrary evidence. This may take the form of an agreement, express or implied, that . . . the employment relationship will continue indefinitely, pending the occurrence of some event such as the employer's dissatisfaction with the employee's services or the existence of some "cause" for termination.' " (Foley v. Interactive Data Corp. (1988) 47 Cal.3d 654, 680 [254 Cal.Rptr. 211, 765 P.2d 373], internal citation omitted.)

"In Foley, we identified several factors, apart from express terms, that may bear upon 'the existence and content of an . . . [implied-in-fact] agreement' placing limits on the employer's right to discharge an employee. These factors might include ' "the personnel policies or practices of the employer, the employee's longevity of service, actions or communications by the employer reflecting assurances of continued employment, and the practices of the industry in which the employee is engaged." ' " (Guz v. Bechtel National, Inc. (2000) 24 Cal.4th 317, 336-337 [100 Cal.Rptr.2d 352, 8 P.3d 1089], internal citations omitted.)

Civil Code sections 1619-1621 together provide as follows: "A contract is either express or implied. An express contract is one, the terms of which are stated in words. An implied contract is one, the existence and terms of which are manifested by conduct."

" 'Good cause' or 'just cause' for termination connotes ' "a fair and honest cause or reason," ' regulated by the good faith of the employer. The term is relative. Whether good cause exists is dependent upon the particular circumstances of each case. In deciding whether good cause exists, there must be a balance between the employer's interest in operating its business efficiently and profitably and the employee's interest in continued employment. Care must be exercised so as not to interfere with the employer's legitimate exercise of managerial discretion. While the scope of such discretion is substantial, it is not unrestricted. Good cause is not properly found where the asserted reasons for discharge are 'trivial, capricious, unrelated to business needs or goals, or pretextual.' Where there is a contract to terminate only for good cause, the employer has no right to terminate for an arbitrary or unreasonable decision." (Walker v. Blue Cross of California (1992) 4 Cal.App.4th 985, 994 [6 Cal.Rptr.2d 184], internal citations omitted, abrogated on another ground in Guz, supra, 24 Cal.4th at p. 351.)

"The general rule is that the measure of recovery by a wrongfully discharged employee is the amount of salary agreed upon for the period of service, less the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment." (Parker v. Twentieth Century Fox-Film Corp. (1970) 3 Cal.3d 176, 181 [89 Cal.Rptr. 737, 474 P.2d 689], internal citations omitted.)

Secondary Sources

4 Wilcox, California Employment Law, Ch. 60, Liability for Wrongful Termination and Discipline, §§ 60.05, 60.07 (Matthew Bender)

1 Wrongful Employment Termination Practice (Cont.Ed.Bar 2d ed. 1997) Contract Actions, §§ 8.1-8.21

21 California Forms of Pleading and Practice, Ch. 249, Employment Law: Termination and Discipline, §§ 249.90, 249.43, Ch. 250, Employment Law: Wage and Hour Disputes, § 250.66 (Matthew Bender)

10 California Points and Authorities, Ch. 100, Wrongful Termination and Discipline, Forms 2, 5, 11, 15, Ch. 50, Contracts, §§ 50.10-50.11, 50.350 (Matthew Bender)

Bancroft-Whitney's Cal. Civil Practice: Employment Litigation (1993) Termination of Employment, §§ 6:11-6:13, 6:18

(New September 2003)