## Facts

- Daniel D. Foley worked for Interactive Data Corporation (IDC) from 1976, received favorable evaluations, bonuses, raises, and was promoted to branch manager.
- IDC maintained written “Termination Guidelines” describing grounds and procedures for discharge; Foley alleged they reflected a promise of discharge only for good cause.
- In 1983, Foley learned his new supervisor, Robert Kuhne, was reportedly under FBI investigation for embezzlement at a prior employer.
- Foley reported the matter internally to an IDC vice president; he was told to disregard it.
- Soon after, Kuhne replaced Foley as branch manager, and Foley was asked to resign or be terminated.
- Foley sued asserting: (1) wrongful discharge in violation of public policy, (2) breach of an implied-in-fact agreement to terminate only for good cause, and (3) tortious breach of the implied covenant of good faith and fair dealing.

## Issues

1. Whether internal reporting of a supervisor’s suspected criminal conduct supports a tort claim for discharge in violation of fundamental public policy.
2. Whether the statute of frauds bars an implied-in-fact agreement of indefinite duration limiting termination to good cause.
3. Whether breach of the implied covenant of good faith and fair dealing in an employment contract supports tort remedies, or only contract remedies.

## Decision

- The court held Foley did not state a viable public-policy wrongful discharge claim because the alleged reporting implicated the employer’s private interests, not a fundamental public policy.
- The court held the statute of frauds did not bar Foley’s implied-in-fact “good cause” contract claim because an indefinite employment arrangement can be performed within one year.
- The court held breach of the implied covenant of good faith and fair dealing in the ordinary employment relationship does not give rise to tort damages; remedies are limited to contract.
- The judgment was affirmed in part, reversed in part, and remanded to allow Foley to proceed on the implied-in-fact contract theory.

## Legal Principles

- A tort claim for wrongful discharge requires a dismissal that contravenes a fundamental public policy; an internal report tied only to an employer’s private interests is insufficient without a clear public-policy basis.
- An implied-in-fact limitation on termination to “good cause” may be inferred from the parties’ conduct, assurances, policies, and course of dealing, and is generally a question for the trier of fact.
- The statute of frauds does not automatically defeat an implied-in-fact employment agreement of indefinite duration because such an agreement may be performed within one year.
- The implied covenant of good faith and fair dealing is part of every contract, but in ordinary employment contracts its breach sounds in contract, not tort; insurance-style bad-faith tort remedies do not apply absent a distinct basis for tort liability.

## Conclusion

The court limited tort liability in employment termination cases by rejecting both a public-policy tort on these facts and tort damages for breach of the implied covenant, while preserving an employee’s ability to pursue contract relief based on an implied-in-fact promise of discharge only for good cause.


Foley v. Interactive Data Corp., 47 Cal. 3d 654 (Cal. 1988)