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Court of Appeal:
At-Will Employee Is Bereft of Remedy for Wrongful Firing
Sixth District Says There’s No Cause of Action Based on Breach of Implied Covenant of Good Faith, Fair Dealing; Rejects Promissory Estoppel Theory Based on Plaintiff Having Turned Down Lucrative Offer From Walmart
By a MetNews Staff Writer
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FRANK HAN plaintiff |
A man who turned down an employment offer by Walmart to run a $600 million subsidiary with about 200 employees at an annual salary of $360,000 and millions of dollars worth of stock—instead going to work for a technology company that wooed him with assurances of job stability but fired him after less than 11 weeks—is foreclosed from recovering damages in light of a contractual at-will proviso, the Sixth Court of Appeal has held.
The unpublished opinion by Presiding Justice Mary J. Greenwood, filed Wednesday, reverses a judgment in favor of software expert Frank Han on a cause of action alleging a breach of the implied covenant of good faith and fair dealing claim. In pressing that claim, he invoked a generally discrete promissory estoppel theory.
Greenwood’s opinion strips Han of a jury’s award of about $250,000 in his action against the San Francisco-based Eshares, Inc. a $7 billion company that does business as Carta.
The jury, in the courtroom of Santa Clara Superior Court Judge Roberta Hayashi, found in favor of Carta on other causes of action.
Letter Offering Employment
Carta appealed, arguing that it had an unfettered right to fire Han because its offer letter cautioned:
“Your employment is at-will and Company can terminate the employment relationship at any time.”
Han’s position was that the clause does not bar his action because Henry Ward, Carta’s co-founder and chief executive officer, told him, before he accepted employment in 2018 as senior vice president of operations, that “for the foreseeable future,” he would function as the company’s chief operating officer, advising that a search for someone to fill that position had ceased and that “You run this.”
He argued in his appellate brief:
“In this case, the ‘foreseeable future’ was the reasonable length of time within which Han would be given the opportunity to prove himself. This was not antithetical to the express at-will contract. It merely limited Carta’s discretionary power to terminate Han at-will during the limited period of time that the jury determined to be ‘reasonable’ for Han to be given the chance or opportunity to prove himself. Once that time elapsed or expired, Carta was free to exercise its discretionary right to terminate Han.”
Greenwood’s Opinion
Rejecting Han’s view, Greenwood wrote:
“We conclude that, to the extent Han relies on an alleged implied understanding protected by the covenant of good faith and fair dealing that he would be given a reasonable amount of time to prove himself, any such understanding imposed an obligation inconsistent with the at-will provision of the written employment contract.”
She declared that “any oral statements made by Carta’s chief executive officer could not limit Carta from discharging Han under the express at will provision in the written employment agreement.”
1990 Opinion Cited
Han argued that the judgment in his favor withstands attack, citing the 1990 decision by Div. Five of the First District Court of Appeal in Sheppard v. Morgan Keegan & Co. There, the plaintiff gave up a job in California after he was hired by the defendant, a Tennessee company, but was fired before he assumed his new employment.
The appeals court reversed a summary judgment in favor of the defendant, finding triable issues. It said:
“Although appellant has not demonstrated that respondent required good cause to terminate him, implicit in such an employment agreement, and certainly implicit within the implied covenant of good faith and fair dealing, is the understanding that an employer cannot expect a new employee to sever his former employment and move across the country only to be terminated before the ink dries on his new lease, or before he has had a chance to demonstrate his ability to satisfy the requirements of the job….Further, the employer’s conduct here is governed by the doctrine of promissory estoppel….”
Distinguishing Precedent
Differentiating that case, rather than expressing disagreement with it, Greenwood wrote:
“There the plaintiff was fired before his first day of work….In contrast to the plaintiff in Sheppard, Han actually worked at his new job, starting at Carta on December 3, 2018, and continuing until the end of February 2019.”
Greenwood did not explain why it mattered that the plaintiff in Sheppard relinquished his present employment in anticipation of going to work for a new company while Han bypassed a job offer from Wal Mart when he accepted the employment bid by Carta.
The presiding justice continued:
“Further, while the plaintiff in Sheppard was paid no salary…, Han received approximately $1,000,000 in stock for his time at Carta.”
Han was provided with stock in lieu of cash under a provision in the offer letter that “[i]n the event of such termination without cause within the first twelve (12) months of your employment” he would receive compensation in the amount of three months’ salary. Greenwood did not elucidate as to why the fact that Han had been paid for his services rendered Sheppard inapposite. The presiding justice added:
There is no basis to apply promissory estoppel under the circumstances of this case. Han had two job opportunities; he chose one and commenced work. To hold that he could assert reliance on his acceptance of the job at Carta to transform an at-will contract into one for cause would mean that in all instances where a job applicant chooses to accept employment at one employer over another that would be the case. Such a conclusion does not find support in the law. The other California cases Han cites do not involve termination of employment under an agreement with an at-will clause and are likewise inapposite.
She rejected Han’s contention in a cross-appeal that Hayashi erred in declining to give an instruction on fraudulent concealment. The jurist said that while Han argued that he was not told of Ward’s leeriness, expressed to executives in his company, about hiring him, there was no harm because he had testified that he discerned that Ward was unenthusiastic about bringing him aboard and had been persuaded by others to do so.
The case is Han v. Eshares, Inc., H050478.
Han, is now CEO of CARIAD China, a software subsidiary of Volkswagen.
He was fired on Nov. 4, 2022, as an executive of the drug company Pfizer and brought suit, alleging whistle-blower retaliation. The case is pending in the U.S. District Court for the Northern District of California.
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HENRY WARD business executive |
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