## Facts

- Jetta Goudal, a motion-picture actress, signed a written exclusive employment contract with Cecil B. DeMille Pictures Corp. for one year beginning around May 1925; it characterized her services as “special, unique, unusual, extraordinary and intellectual.”
- The studio exercised renewal options twice, increasing her compensation; the dispute arose during the third contract year.
- Mid-term, the studio terminated Goudal, asserting failure to perform and invoking statutory grounds allowing discharge for willful breach, habitual neglect, or continued incapacity to perform.
- The studio claimed Goudal interfered with creative control by disputing directors’ directions, offering suggestions, and at times taking disagreements to the company president.
- The studio also alleged tardiness and production delays.
- Evidence showed the president encouraged “thinking” performers and invited her to explain artistic choices; directors testified films made with her were among their best.
- Goudal attributed delays to production-related tasks (e.g., costuming and scene preparation) undertaken as part of her work.
- Much of the complained-of conduct occurred before the studio renewed the contract and raised her pay, despite knowledge of her on-set behavior.
- Goudal sued for wrongful discharge and breach of contract; the trial court found termination unjustified and awarded damages for the remainder of the term.

## Issues

1. Whether Goudal’s alleged insubordination and tardiness constituted a material or willful breach justifying mid-term termination of the personal-services contract.
2. Whether the evidence established statutory grounds for discharge—willful breach of duty, habitual neglect of duty, or continued incapacity to perform.
3. Whether substantial evidence supported the trial court’s findings and damages award for wrongful discharge.

## Decision

- The Court of Appeal affirmed the judgment for Goudal.
- The court held the record supported findings that Goudal did not commit willful misconduct or habitual neglect and did not materially breach the contract.
- The court concluded the studio lacked statutory justification to discharge her mid-term and was liable for damages.

## Legal Principles

- An employer may terminate a fixed-term employment contract for cause only upon a breach sufficiently serious to be material; minor deficiencies or disagreements do not justify cancellation when substantial performance is shown.
- Under the then-applicable statute, discharge required proof of willful breach, habitual neglect, or continued incapacity; good-faith efforts to perform artistic services are not willful misconduct.
- Where a contract expressly contemplates “special” and “unique” artistic services, reasonable good-faith suggestions and objections in service of the production may fall within the expected performance rather than constitute insubordination.
- Contract renewal and increased compensation after known conduct may support an inference that the conduct was not treated as a material breach at the time, weakening a later claim of justification for termination.
- On appeal, a judgment supported by substantial evidence will be affirmed even if conflicting evidence exists.

## Conclusion

The court upheld damages for wrongful discharge because the studio failed to prove a material breach or the statutory grounds required to terminate a fixed-term, artist-driven personal-services contract based on good-faith creative input and production-related delays.


Goudal v. Cecil B. DeMille Pictures Corp., 118 Cal. App. 407, 5 P.2d 432 (Cal. Ct. App. 1931)