On August 3, 2006, the California Supreme Court decided Dore v. Arnold Worldwide, Inc., No. S 124494, and held that the term employment is at will," contained in an offer letter which was read, accepted, and signed by an employee "contained no ambiguity, patent or latent, in its termination provisions." Language in the letter defining "at will" to mean the employer had the right to terminate employment "at any time" did not create ambiguity as to whether cause for termination was required. The employee’s attempt to show there was evidence of an implied agreement — verbal statements, conduct, and documents — that he would not be discharged except for cause was precluded. California workers were put on notice that at-will jobs are just that: employers don’t need a reason to fire them.
Atlantic Legal Foundation and co-counsel Jackson Lewis, LLP filed an amicus brief on behalf of the Southern California Chapter of the Association of Corporate Counsel, urging the court to rule that the statement in an offer of employment that the parties agree to "at will" status is unambiguous and the agreement may be terminated at any time and for any or no reason by either party.
In this case Dore was provided a written offer stating the terms of employment, including commencement date, compensation, and benefits. The letter also stated there would be a 90-day assessment period and, if Dores performance was satisfactory, the opportunity to be considered to become an officer of the company. In a separate paragraph, the letter stated, "please know that as with all of our company employees, your employment is at will. This simply means [the employer] has the right to terminate your employment at any time just as you have the right to terminate your employment at any time." Dore admitted that he had "read, signed, understood and did not disagree with the terms of the letter.
When Dore was terminated, he sued Arnold Worldwide, the employer, alleging breach of contract and breach of an implied covenant of good faith and fair dealing. He based his claims on various alleged oral representations, conduct, and documents that he claimed led him to believe that he would not be discharged except for cause. Arnold Worldwide moved for summary judgment dismissing the case, which the trial court granted. The trial court determined that the express written contract — the offer letter — was unambiguous and therefore controlling, and there was no need to consider the evidence offered by the employee to establish the existence of an implied agreement to terminate only for cause.
The Court of Appeal Californias intermediate court — disagreed, found that the use of the phrase at any time created an ambiguity as to whether the employer had to have cause to terminate Dore, and ordered that the case be sent back to the trial court for further consideration of Dores claims. Even though it acknowledged that the term "at will" normally conveys an intent that employment may end "at any time without cause," the Court of Appeal held that the language of the letter was ambiguous and other evidence could be offered to show that the employer had agreed not to discharge the employee except for cause.
The Supreme Court of California reversed the Court of Appeal, and held that the trial court’s ruling was correct. Justice Kathryn Mickle Werdegar wrote for a unanimous court, "the verbal formulation ‘at any time’ in the termination clause of an employment contract is [not] per se ambiguous merely because it does not expressly speak to whether cause is required. As a matter of simple logic, rather, such a formulation ordinarily entails the notion of ‘with or without cause.’" The court noted the employer’s language was similar to that used by the California Legislature in codifying the general rule that employment is at will. Further, the specific language used by the parties to state that employment was at will would have no meaning if it was read to provide that employment could be terminated only for cause. "Even though [the employer’s] letter defined `at will’ as meaning `at any time’ without specifying it also meant without cause or for any or no reason, the letter’s meaning was clear." The Court concluded that the letter contained no ambiguity in its termination provisions, and affirmed the decision of the trial court that there were no triable issues of fact with respect to the breach of contract and breach of the implied covenant of good faith and fair dealing. In so ruling, the court agreed with the arguments Atlantic Legal and Jackson Lewis made in their amicus brief on behalf of the Southern California Chapter of the Association of Corporate Counsel.
The unanimous ruling clarifies an area of the law that had gotten increasingly murky because of conflicting appellate court opinions in recent years. The California high court has said that employers may rely on clearly worded and unambiguous statements of at-will status, where the individual has understood, agreed, and accepted the terms. Using additional language to indicate that "at will" means "at any time" does not, by implication, leave the door open as to whether an employer must show cause for discharge.
Jonathan Block, President of ACC-SoCal wrote: I know I speak for many when I say this is exactly the type of matter that this organization should weigh in on and your efforts on our behalf are greatly appreciated.
For more information or questions, contact Martin S. Kaufman, Senior Vice President and General Counsel, at email@example.com or at (212) 867-3322.