Some Believe Ruling Will Actually Aid Fired Workers

Although the California Supreme Court’s decision limiting the ability of fired employees to collect big damage awards was widely regarded Thursday as a victory for employers, legal experts contend it still leaves some room for wrongful termination lawsuits.

There is even a minority view among employment law specialists that the ruling actually helps workers who believe they were fired illegally.

“The court’s decision leaves unresolved more issues than it resolves,” said William B. Gould IV, a professor at Stanford Law School. And that, he added, “opens the door to a potentially expansive use” of suits by employees who believe that they were fired improperly.

William C. Quackenbush, a lawyer who represents employees and has 35 wrongful termination suits pending, agreed that the decision could be interpreted as a victory for employees in California, where more than 1,000 wrongful discharge suits are filed annually.

“The court has confirmed that there are three totally distinct bases on which an employee may sue,” he said.

First, it held that an employer may not fire an employee without good cause.

Second, it confirmed that an employee may not be fired if the employer is thereby violating a public policy. For example, an employee could not be fired on the basis of racial or sexual discrimination or for refusing to do something illegal at the employer’s request.

Third, the court upheld the notion that an employee can sue an employer who violates codes of good faith and fair dealing.

“Before today,” Quackenbush said, “we didn’t know whether these three would be held viable. From that standpoint, it may make some attorneys more willing to take a case. The extent of damages is limited, but the legitimacy of the claims is more clear.”

Many other legal experts contended, however, that the decision will reduce the incentive of attorneys to accept such cases, given that lawyers generally are paid a percentage of funds secured for the employee. So-called punitive damages, which usually are far greater than amounts recovered as back pay, were outlawed by the 4-3 decision.

As a result, “the bottom drops out of the wrongful termination market for plaintiffs’ attorneys,” said George M. Wallace, an attorney at Spray, Gould & Bowers, a Mid-Wilshire law firm, who represents employers. “More and more the only claims . . . will be for breach of contract. It will be tougher and tougher for employees to find attorneys to take the case.”

“It would have a tendency to inhibit frivolous suits,” said Lou Custrini, a vice president for the Merchants and Manufacturers Assn., an employer organization in Los Angeles that had filed a friend of the court brief in the suit on behalf of employers.

One attorney who represents plaintiffs in such cases described the ruling as “outrageous.”

The effect is that “employees won’t sue,” said Jerry Webb of Encino. “They won’t be able to afford it. We can’t take (the case) on a contingency fee basis. There won’t be enough money.”

He added that it is not unusual to spend as much as 500 hours on wrongful termination cases. “The client will give up as soon as he sees the tab running up.” Moreover, he said, the right to reinstatement “is not much of a remedy. Most employees won’t want to go back to their old jobs.”

Thursday’s ruling reinstates but sharply limits a suit by Daniel D. Foley, who was fired from his $56,164-a-year job as Los Angeles branch manager of Interactive Data Corp. in 1983 after telling the company that the FBI was investigating whether his boss had embezzled from a former employer.

The court said Foley could sue only on the grounds that his encouraging treatment during nearly seven years of employment might have amounted to a promise that he would not be fired without good cause. Should he prevail, his damages, the court said, would be limited to lost pay.