## Facts

- Gordon Tameny worked for Atlantic Richfield Company (Arco) for about 15 years in a sales-related role involving service station dealers.
- Tameny alleged Arco management pressured him to participate in an illegal scheme to fix retail gasoline prices.
- He alleged Arco instructed him to threaten independent dealers that they must lower pump prices to levels set by Arco or face retaliation (including supply cutoffs).
- Tameny refused to participate because he believed the conduct violated state and federal antitrust laws.
- Arco discharged him for his refusal.
- Tameny sought compensatory and punitive damages under tort theories and also pursued contract-based relief.

## Issues

1. Whether an at-will employee fired for refusing to engage in criminal conduct at the employer’s request may sue in tort for wrongful discharge in violation of public policy, rather than being limited to contract remedies.

## Decision

- The California Supreme Court held that when an employer discharges an employee in violation of fundamental public policy, the employee may maintain a tort action and recover tort damages.
- The court ruled that an at-will employee stated a tort claim by alleging termination for refusing to commit a criminal act tied to antitrust price-fixing.
- The court reversed the judgment sustaining the demurrer as to the tort causes of action and remanded for further proceedings.
- The court indicated that, if the required showing is made, punitive damages may be available under California Civil Code § 3294 because the claim is noncontractual and may involve malice, oppression, or fraud.

## Legal Principles

- Employment at will under California Labor Code § 2922 does not permit termination for reasons that contravene fundamental public policy.
- A discharge that retaliates against an employee for refusing to commit a crime or otherwise violate law can violate fundamental public policy.
- Wrongful discharge in violation of public policy may sound in tort, not merely contract, because the wrong implicates public duties and interests independent of the employment agreement.
- Tort classification allows recovery of damages traditionally available in tort actions, including potential punitive damages where statutory standards are met.
- The public policy basis for the claim must be grounded in law and sufficiently fundamental to justify limiting the employer’s otherwise broad termination discretion.

## Conclusion

The court recognized a tort cause of action for wrongful discharge in violation of public policy where an employer terminates an at-will employee for refusing to participate in criminal conduct, permitting tort remedies and, where supported, punitive damages.


Tameny v. Atl. Richfield Co., 27 Cal. 3d 167 (Cal. 1980)