## Facts

- Andrew D. Rose worked for many years as in-house counsel for General Dynamics and alleged a strong performance record.
- General Dynamics terminated Rose, stating a “loss of confidence” in his ability to represent the corporation.
- Rose alleged the true reasons were tied to his investigation of workplace drug use, his advice regarding potential legal violations, and his refusal to participate in or ignore suspected unlawful conduct.
- Rose alleged General Dynamics did not follow its own discharge procedures.
- Rose sued for (1) breach of an implied-in-fact employment contract requiring good cause for termination and (2) tortious retaliatory discharge in violation of public policy.
- General Dynamics demurred, arguing the attorney-client relationship and privilege barred such claims by an in-house attorney as a matter of law.
- The trial court overruled the demurrer; appellate relief was denied; the California Supreme Court granted review.

## Issues

1. Whether an in-house attorney is categorically barred from pursuing a wrongful termination claim based on an implied-in-fact “just cause” employment contract against the corporate employer.
2. Whether an in-house attorney is categorically barred from maintaining a tort claim for retaliatory discharge in violation of public policy, in light of the attorney-client relationship and attorney-client privilege.

## Decision

- The court held an in-house attorney is not categorically barred from pursuing an implied-in-fact “just cause” contract claim; such claims generally concern the employment relationship and do not inherently threaten attorney-client values.
- The court held there is no categorical bar to a retaliatory discharge tort claim by in-house counsel, but the claim is limited and may proceed only if it can be litigated without breaching the attorney-client privilege or unduly endangering core attorney-client relationship values.
- The court left privilege and confidentiality constraints to be managed through trial-court procedures and evidentiary rulings, recognizing that such constraints may ultimately narrow or defeat recovery in a given case.
- The court denied the employer’s effort to terminate the action at the pleading stage and allowed further proceedings.

## Legal Principles

- The attorney-client relationship does not, by itself, render in-house counsel an at-will employee for all purposes or preclude employment claims as a matter of law.
- An in-house attorney may assert an implied-in-fact “just cause” employment contract claim on the same general basis as other employees, subject to ordinary proof requirements and applicable privilege limits.
- An in-house attorney may assert a retaliatory discharge claim in violation of public policy only in a constrained form: the claim must be provable without improper disclosure of privileged communications and without substantial harm to protected attorney-client relationship interests.
- Trial courts may use procedural protections (e.g., in camera review, protective orders, and tailored evidentiary rulings) to reduce the risk of disclosure while permitting litigation of a properly limited claim.
- Where proof would require disclosure barred by privilege and no statutory or ethical authorization permits disclosure, the privilege prevails and relief may be restricted or unavailable.

## Conclusion

The court recognized that in-house counsel may pursue an implied just-cause contract claim and may also pursue a narrowly confined public-policy retaliatory discharge claim, but only to the extent the claim can be proven without violating attorney-client privilege or materially impairing the attorney-client relationship.


General Dynamics Corp. v. Superior Court, 7 Cal. 4th 1164 (Cal. 1994)