Opinion ID: 1203370
Heading Depth: 3
Heading Rank: 1

Heading: Sources of the Public Policy Exception

Text: This court first recognized a public policy exception to the at-will employment doctrine in Tameny, supra, 27 Cal.3d 167, and has since reaffirmed its commitment to that principle on several occasions ( Foley v. Interactive Data Corp., supra, 47 Cal.3d 654, 665-671; Shoemaker v. Myers (1990) 52 Cal.3d 1, 23 [276 Cal. Rptr. 303, 801 P.2d 1054, A.L.R.4th 1720]), and most recently in Rojo v. Kliger, supra, 52 Cal.3d 65, 88-89. Indeed, following the seminal California decision in Petermann v. International Brotherhood of Teamsters (1959) 174 Cal. App.2d 184 [344 P.2d 25], the antecedent to our holding in Tameny, the vast majority of states have recognized that an at-will employee possesses a tort action when he or she is discharged for performing an act that public policy would encourage, or for refusing to do something that public policy would condemn. (See Cloutier v. Great Atlantic & Pac. Tea Co. (1981) 121 N.H. 915 [436 A.2d 1140, 1144]; Coman v. Thomas Mfg. Co., Inc. (1989) 325 N.C. 172 [381 S.E.2d 445, 447]; Cummins v. EG & G Sealol, Inc. (D.R.I. 1988) 690 F. Supp. 134, 137; Phipps v. Clark Oil & Refining Corp. (Minn. Ct. App. 1986) 396 N.W.2d 588, 591, and the cases cited therein.) Yet despite its broad acceptance, the principle underlying the public policy exception is more easily stated than applied. The difficulty, of course, lies in determining where and how to draw the line between claims that genuinely involve matters of public policy, and those that concern merely ordinary disputes between employer and employee. This determination depends in large part on whether the public policy alleged is sufficiently clear to provide the basis for such a potent remedy. In Foley v. Interactive Data Corp., supra , 47 Cal.3d 654, we endeavored to provide some guidelines by noting that the policy in question must involve a matter that affects society at large rather than a purely personal or proprietary interest of the plaintiff or employer; in addition, the policy must be fundamental, substantial and well established at the time of the discharge. ( Id. at pp. 669-670.) We declined in Foley to determine whether the violation of a statute or constitutional provision is invariably a prerequisite to the conclusion that a discharge violates public policy. A review of the pertinent case law in California and elsewhere, however, reveals that few courts have recognized a public policy claim absent a statute or constitutional provision evidencing the policy in question. Indeed, as courts and commentators alike have noted, the cases in which violations of public policy are found generally fall into four categories: (1) refusing to violate a statute (see, e.g., Tameny, supra, 27 Cal.3d 167 [employee discharged for refusing to participate in illegal pricefixing scheme]; Petermann v. International Brotherhood of Teamsters, supra, 174 Cal. App.2d 184 [employee terminated for refusing to perjure himself before state legislative committee]); (2) performing a statutory obligation (see, e.g., Nees v. Hocks (1975) 272 Ore. 210 [536 P.2d 512] [performing jury duty]); [4] (3) exercising a statutory right or privilege ( Wetherton v. Growers Farm Labor Assn. (1969) 275 Cal. App.2d 168 [79 Cal. Rptr. 543] [engaging in union activities]); and (4) reporting an alleged violation of a statute of public importance ( Hentzel v. Singer Co. (1982) 138 Cal. App.3d 290 [188 Cal. Rptr. 159, 35 A.L.R.4th 1015]; see generally Note, Protecting Employees At Will Against Wrongful Discharge: The Public Policy Exception (1983) 96 Harv. L.Rev. 1931, 1936-1937; Rust et al., Employee Termination At Will: A Principled Approach (1982) 28 Vill. L.Rev. 1, 26-27.) To be sure, those courts which have addressed the issue appear to be divided over the question whether nonlegislative sources may ever provide the basis of a public policy claim. Pierce v. Ortho Pharmaceutical Corp. (1980) 84 N.J. 58 [417 A.2d 505, 12 A.L.R.4th 520] is the leading case for a broad interpretation. As the New Jersey Supreme Court explained: The sources of public policy [which may limit the employer's right of discharge] include legislation; administrative rules, regulations or decisions; and judicial decisions. In certain instances, a professional code of ethics may contain an expression of public policy. ( Id. at p. 512.) Several other states have adopted similarly broad views of the public policy exception. (See Parnar v. Americana Hotels, Inc. (1982) 65 Hawaii 370 [652 P.2d 625, 631] [In determining whether a clear mandate of public policy is violated, courts should inquire whether the employer's conduct contravenes the letter or purpose of a constitutional, statutory, or regulatory provision or scheme. Prior judicial decisions may also establish the relevant public policy.]; Palmateer v. International Harvester Co. (1981) 85 Ill.2d 124 [52 Ill. Dec. 13, 421 N.E.2d 876, 878] [In general, it can be said that public policy concerns what is right and just and what affects the citizens of the State collectively. It is to be found in the State's constitution and statutes and, when they are silent, in its judicial decisions.]; Boyle v. Vista Eyewear, Inc. (Mo. Ct. App. 1985) 700 S.W.2d 859, 871 [`Public policy' is that principle of law which holds that no one can lawfully do that which tends to be injurious to the public or against the public good.... It finds its sources in the state constitution, ... in the letter and purpose of a constitutional, statutory or regulatory provision or scheme, ... in the judicial decisions of the state and national courts, ... in `the constant practice of the government officials,' ... and, in certain instances, in professional codes of ethics.]; Phipps v. Clark Oil & Refining Corp., supra, 396 N.W.2d 588, 593 [A public policy exception can be reasonably defined by reference to clear mandates of legislative or judicially recognized public policy.]; Cloutier v. Great Atlantic & Pac. Tea Co., supra, 436 A.2d 1140, 1144 [Public policy exceptions giving rise to wrongful discharge actions may also be based on non-statutory policies.]; Wagenseller v. Scottsdale Memorial Hospital (1985) 147 Ariz. 370 [710 P.2d 1025, 1034] [reliance on prior judicial decisions, as part of the body of applicable common law, is appropriate ...]; Yetter v. Ward Trucking Corp. (1991) 401 Pa.Super. 467 [585 A.2d 1022, 1027] [appellant has failed to point to any statutorily or judicially recognized public policy which was violated by appellee in terminating appellant]; Payne v. Rozendaal (1986) 147 Vt. 488 [520 A.2d 586, 589] [we necessarily reject ... the holdings of some courts that the public policy exception to at will employment contracts must be legislatively defined.]; accord, Burk v. K-Mart Corp. (Okla. 1989) 770 P.2d 24, 28; Thompson v. St. Regis Paper Co. (1984) 102 Wn.2d 219 [685 P.2d 1081, 1089]; Moore v. A.H. Riise Gift Shops (D.V.I. 1987) 659 F. Supp. 1417, 1423.) Other courts have applied a stricter definition to public policy claims. The leading case is Brockmeyer v. Dun & Bradstreet (1983) 113 Wis.2d 561 [335 N.W.2d 834]. There, the Wisconsin Supreme Court, while recognizing a public policy exception to the employment at-will doctrine, nevertheless limited plaintiffs to contract damages and confined such claims to statutory or constitutional violations. Given the vagueness of the concept of public policy, the court explained, it is necessary that we be more precise about the contours of the public policy exception. A wrongful discharge is actionable when the termination clearly contravenes the public welfare and gravely violates paramount requirements of public interest. The public policy must be evidenced by a constitutional or statutory provision. ( Id. at p. 840.) Voicing similar concerns, the Kentucky Supreme Court adopted the Brockmeyer definition in Firestone Textile Co. Div. v. Meadows (Ky. 1983) 666 S.W.2d 730: Employers as a group have a legitimate interest to protect by having the cause of action for wrongful discharge clearly defined and suitably controlled.... [¶] When a discharged employee seeks to establish a cause of action for wrongful discharge, it is a question of law for the court to decide whether the reason for discharge is unlawful because of a constitutionally protected right or a right implicit in a statute. ( Id. at p. 733.) Other courts have adopted similarly restrictive views of the contours of the public policy exception. (See Sabine Pilot Service, Inc. v. Hauck (Tex. 1985) 687 S.W.2d 733, 735; Adams v. George W. Cochran & Co., Inc. (D.C. 1991) 597 A.2d 28, 33-34; Miller v. Fairfield Communities, Inc. (1989) 299 S.C. 23 [382 S.E.2d 16, 19]; Merck v. Advanced Drainage Systems, Inc. (4th Cir.1990) 921 F.2d 549, 554-555 [applying S.C. law].) [5] Turning from other jurisdictions to California law, one finds the courts similarly divided. As we recently observed in Foley v. Interactive Data Corp., supra , 47 Cal.3d 654: Several subsequent Court of Appeal cases have limited our holding [in Tameny ] to policies derived from statute. (See Shapiro v. Wells Fargo Realty Advisors (1984) 152 Cal. App.3d 467, 477 [199 Cal. Rptr. 613]; Gray v. Superior Court (1986) 181 Cal. App.3d 813, 819 [226 Cal. Rptr. 570]; Tyco Industries, Inc. v. Superior Court (1985) 164 Cal. App.3d 148, 159 [211 Cal. Rptr. 540].) ... [¶] At least three other Court of Appeal decisions addressing the issue of where policy giving rise to an action may be found have concluded in dicta that public policy, as a basis for a wrongful discharge action, need not be policy rooted in a statute or constitutional provision. (See Koehrer v. Superior Court [(1986)] 181 Cal. App.3d 1155, 1165, 1167 [226 Cal. Rptr. 820]; Garcia v. Rockwell Internat. Corp. (1986) 187 Cal. App.3d 1556, 1561 [232 Cal. Rptr. 490]; Dabbs v. Cardiopulmonary Management Services (1987) 188 Cal. App.3d 1437, 1443-1444 [234 Cal. Rptr. 129].) ( Id. at pp. 668-669; see also Verduzco v. General Dynamics, Convair Div. (S.D.Cal. 1990) 742 F. Supp. 559.) Although we have not taken a position on this precise issue, it is true, as plaintiff notes, that this court has not previously confined itself to legislative enactments when determining the public policy of the state. We have, for example, long declined to enforce contracts inimical to law or the public interest (see Kreamer v. Earl (1891) 91 Cal. 112, 117 [27 P. 735]), and long ago declared racial discrimination to be contrary to public policy under the common law duty of innkeepers and common carriers to furnish accommodations to all persons. ( James v. Marinship Corp. (1944) 25 Cal.2d 721, 740 [155 P.2d 329, 160 A.L.R. 900]; see Safeway Stores v. Retail Clerks etc. Assn. (1953) 41 Cal.2d 567, 574 [261 P.2d 721] [In cases without number the state courts have declared contracts, transactions and activities of individuals, associations and corporations to be contrary to public policy where their legislative departments have not spoken on the subject.]; see also Craemer v. Superior Court (1968) 265 Cal. App.2d 216, 222 [71 Cal. Rptr. 193]; Wagenseller v. Scottsdale Memorial Hosp., supra, 710 P.2d at p. 1033.) [6] The analogy to illegal contracts has particular force. For at root, the public policy exception rests on the recognition that in a civilized society the rights of each person are necessarily limited by the rights of others and of the public at large; this is the delicate balance which holds such societies together. (1) Accordingly, while an at-will employee may be terminated for no reason, or for an arbitrary or irrational reason, there can be no right to terminate for an unlawful reason or a purpose that contravenes fundamental public policy. Any other conclusion would sanction lawlessness, which courts by their very nature are bound to oppose. (See Morrill v. Nightingale (1892) 93 Cal. 452, 458 [28 P. 1068] [`Courts owe it to public justice and to their own integrity to refuse to become parties to contracts essentially violating morality or public policy by entertaining actions upon them.'].) It is a very short and logical step, therefore, from declining to enforce contracts inimical to law or the public interest, to refusing to sanction terminations in contravention of fundamental public policy. Indeed, we expressly acknowledged the analogy in Foley, noting, in the context of our Tameny discussion: A comparison of the manner in which contracts for illegal purposes are treated is useful. (47 Cal.3d at p. 667, fn. 7; see also Phipps v. Clark Oil & Refining Corp., supra, 396 N.W.2d at p. 593.) Unfortunately, as we have also previously acknowledged, [t]he term `public policy' is inherently not subject to precise definition.... `By public policy is intended that principle of law which holds that no citizen can lawfully do that which has a tendency to be injurious to the public or against the public good....' ( Safeway Stores v. Retail Clerks etc. Assn., supra, 41 Cal.2d at p. 575.) It was this rather open-ended definition on which the court relied in Petermann v. International Brotherhood of Teamsters, supra, 174 Cal. App.2d 184, 188, the seminal decision articulating the public policy exception to the employment at-will doctrine. Surveying the extensive and conflicting decisional law summarized above, several general observations are possible. First, notwithstanding the lively theoretical debate over the sources of public policy which may support a wrongful discharge claim, with few exceptions courts have, in practice, relied to some extent on statutory or constitutional expressions of public policy as a basis of the employee's claim. (See, e.g., Dabbs v. Cardiopulmonary Management Services (1987) 188 Cal. App.3d 1437, 1443 [234 Cal. Rptr. 129] [We disagree with the ... suggestion that the Legislature is the only source of policy determinations.... However, ... in this case there is statutory support for plaintiff's assertion her discharge violated a substantial public policy principle.]; see also Wagenseller v. Scottsdale Memorial Hosp., supra, 710 P.2d at pp. 1033-1035; Palmateer v. International Harvester Co., supra, 421 N.E.2d at pp. 878-880; Boyle v. Vista Eyewear, Inc., supra, 700 S.W.2d at pp. 871-872; Cloutier v. Great Atlantic & Pac. Tea Co., supra, 436 A.2d at pp. 1143-1145.) Second, it is generally agreed that public policy as a concept is notoriously resistant to precise definition, and that courts should venture into this area, if at all, with great care and due deference to the judgment of the legislative branch, lest they mistake their own predilections for public policy which deserves recognition at law. ( Hentzel v. Singer Co., supra, 138 Cal. App.3d 290, 297.) Indeed, one of the most frequently cited decisions favoring a broad interpretation, Parnar v. Americana Hotels, Inc., supra, 652 P.2d 625, observed that courts should proceed cautiously if called upon to declare public policy absent some prior legislative expression on the subject. ( Id. at p. 631; accord Wagenseller v. Scottsdale Memorial Hosp., supra, 710 P.2d at p. 1034; Burk v. K-Mart Corp., supra, 770 P.2d at pp. 28-29; Townsend v. L.W.M. Management, Inc., supra, 494 A.2d at p. 242.) (2) These wise caveats against judicial policymaking are unnecessary if one recognizes that courts in wrongful discharge actions may not declare public policy without a basis in either constitutional or statutory provisions. A public policy exception carefully tethered to fundamental policies that are delineated in constitutional or statutory provisions strikes the proper balance among the interests of employers, employees and the public. The employer is bound, at a minimum, to know the fundamental public policies of the state and nation as expressed in their constitutions and statutes; so limited, the public policy exception presents no impediment to employers that operate within the bounds of law. Employees are protected against employer actions that contravene fundamental state policy. And society's interests are served through a more stable job market, in which its most important policies are safeguarded.