## Facts

- Robert Newman sued his former employer, Emerson Radio Corporation, over his termination.
- Newman alleged an oral or implied-in-fact agreement that he would not be terminated except for good cause.
- Newman asserted contract-based wrongful discharge and tort theories, including breach of the implied covenant of good faith and fair dealing and intentional infliction of emotional distress, seeking tort damages.
- While the case was pending, the California Supreme Court decided *Foley v. Interactive Data Corp.*, which limited tort recovery in employment termination cases and characterized breach of the implied covenant in employment as remediable in contract only.

## Issues

1. Whether *Foley v. Interactive Data Corp.* should apply retroactively to cases arising before *Foley* but not yet final.
2. If *Foley* applies retroactively, whether it bars tort damages for breach of the implied covenant of good faith and fair dealing in an employment relationship.
3. Whether *Foley*’s contract holdings recognizing enforcement of oral or implied good-cause termination agreements (and rejecting a statute of frauds bar) apply to earlier-accrued cases.

## Decision

- The court held *Foley* applies retroactively to cases not yet final, including Newman’s.
- *Foley*’s contract rules applied retroactively, allowing Newman to pursue contract remedies based on an oral or implied-in-fact good-cause termination agreement and rejecting a statute of frauds bar.
- *Foley*’s limitation on tort remedies applied retroactively, precluding tort damages for breach of the implied covenant of good faith and fair dealing in the employment context.
- Newman’s tort-based theories tied to implied-covenant breach and related emotional distress allegations were barred or substantially limited absent an independent tort basis such as discharge violating fundamental public policy.

## Legal Principles

- Judicial decisions presumptively apply retroactively to nonfinal cases absent sufficient justification for prospective-only application.
- In employment termination cases, breach of the implied covenant of good faith and fair dealing is treated as breach of a contract term, supporting contract damages but not tort damages.
- Tort damages for wrongful discharge are generally limited to terminations violating fundamental public policy or involving an independent tort duty.
- An oral or implied-in-fact agreement not to terminate except for good cause may be enforceable in contract, and the statute of frauds does not bar contract relief for such a claim.

## Conclusion

The court applied *Foley* retroactively, preserving Newman’s implied-contract wrongful termination claim for contract remedies while eliminating tort damages for implied-covenant breach and restricting related tort theories not grounded in a public-policy discharge or independent tort.


Newman v. Emerson Radio Corp., 48 Cal. 3d 973 (Cal. 1989)