California Civil Jury Instructions (CACI) (2017)

2424. Breach of the Implied Covenant of Good Faith and Fair Dealing - Good Faith Mistaken Belief Defense

Download PDF
2424.Breach of the Implied Covenant of Good Faith and Fair
Dealing—Good Faith Mistaken Belief Defense
[Name of defendant] claims that [he/she/it] did not breach the duty to act
fairly and in good faith because [he/she/it] believed that there was a
legitimate and reasonable business purpose for the conduct.
To succeed, [name of defendant] must prove both of the following:
1. That [his/her/its] conduct was based on an honest belief that
[insert alleged mistake]; and
2. That, if true, [insert alleged mistake] would have been a legitimate
and reasonable business purpose for the conduct.
New September 2003
Sources and Authority
• “[B]ecause the implied covenant of good faith and fair dealing requires the
employer to act fairly and in good faith, an employer’s honest though mistaken
belief that legitimate business reasons provided good cause for discharge, will
negate a claim it sought in bad faith to deprive the employee of the benefits of
the contract.” (Wilkerson v. Wells Fargo Bank (1989) 212 Cal.App.3d 1217,
1231 [261 Cal.Rptr. 185], internal citation omitted, disapproved on other
grounds in Cotran v. Rollins Hudig Hall International, Inc. (1998) 17 Cal.4th
93, 96 [69 Cal.Rptr.2d 900, 948 P.2d 412].)
• “The jury was instructed that the neglect or refusal to fulfill a contractual
obligation based on an honest, mistaken belief did not constitute a breach of the
implied covenant.” (Luck v. Southern Pacific Transportation Co. (1990) 218
Cal.App.3d 1, 26 [267 Cal.Rptr. 618].)
• “[F]oley does not preclude inquiry into an employer’s motive for discharging an
employee . . . .” (Seubert v. McKesson Corp. (1990) 223 Cal.App.3d 1514,
1521 [273 Cal.Rptr. 296], overruled on other grounds, Dore v. Arnold
Worldwide, Inc. (2006) 39 Cal.4th 384, 389 [46 Cal.Rptr.3d 668, 139 P.3d 56].)
• “[T]he jury was asked to determine in its special verdict whether appellants had
a legitimate reason to terminate [plaintiff]’s employment and whether appellants
acted in good faith on an honest but mistaken belief that they had a legitimate
business reason to terminate [plaintiff]’s employment.” (Seubert v. McKesson
Corp. (1990) 223 Cal.App.3d 1514, 1521 [273 Cal.Rptr. 296] [upholding jury
instruction].)
Secondary Sources
Chin et al., Cal. Practice Guide: Employment Litigation (The Rutter Group) ¶¶ 4:5,
4:271
1357
0035
10 California Points and Authorities, Ch. 100, Employer and Employee: Wrongful
Termination and Discipline, § 100.30 (Matthew Bender)
2425–2429. Reserved for Future Use
CACI No. 2424 WRONGFUL TERMINATION
1358
0036