Newman v. Emerson Radio Corp.

Plaintiff Newman's employment with Emerson Radio Corp. began in September 1972 and was terminated on May 11, 1982; during his employment he received seven pay raises, three of which were merit increases. He alleged the company had orally agreed not to terminate him except for good cause, and that in the event of such cause he would be notified and given an opportunity to correct it, an agreement he claimed was manifested by his long service, the company's stated termination policies, and its communications with him about his continued employment. After his discharge, Newman sued alleging breach of an implied contract not to terminate except for good cause, wrongful termination in violation of fundamental public policy, and breach of the implied covenant of good faith and fair dealing, the latter seeking tort damages. The Court of Appeal affirmed in part and reversed in part, giving Newman leave to amend his public-policy claim. While the case was pending, the California Supreme Court decided Foley v. Interactive Data Corp. (1988), holding that a wrongfully discharged employee may not recover tort damages for breach of the implied covenant of good faith and fair dealing in an employment contract, since the covenant is a contract term and any remedy for its breach is limited to contract damages. The Supreme Court granted review to decide whether Foley applies retroactively to cases, like this one, that were not yet final when Foley was decided.