CACI No. 2424. Affirmative Defense - Breach of the Implied Covenant of Good Faith and Fair Dealing - Good Faith Though Mistaken Belief

Judicial Council of California Civil Jury Instructions (2020 edition)

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2424.Affirmative Defense - Breach of the Implied Covenant of
Good Faith and Fair Dealing - Good Faith Though Mistaken Belief
[Name of defendant] claims that [he/she/nonbinary pronoun/it] did not
breach the duty to act fairly and in good faith because [he/she/nonbinary
pronoun/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/nonbinary pronoun/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; Revised November 2019, May 2020
Directions for Use
In every contract, there is an implied promise that each party will not do anything to
unfairly interfere with the right of any other party to receive the benefits of the
contract. (Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658 [328
P.2d 198].) Give CACI No. 2423, Breach of Implied Covenant of Good Faith and
Fair Dealing - Employment Contract - Essential Factual Elements, if the employee
asserts a claim that the employee’s termination or other adverse employment action
was in breach of this implied covenant. Give this instruction if the employer asserts
the defense that an honest, though mistaken, belief does not constitute a breach.
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.
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(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, supra, 223
Cal.App.3d at p. 1521 [upholding jury instruction].)
Secondary Sources
Chin et al., California Practice Guide: Employment Litigation, Ch. 4-A, Employment
Presumed At Will, ¶ 4:5 (The Rutter Group)
Chin et al., California Practice Guide: Employment Litigation, Ch.4-C, “Good
Cause” for Termination, ¶ 4:271 (The Rutter Group)
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
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Copyright Judicial Council of California

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