Tameny v. Atlantic Richfield Co.
The Birth of California’s Public-Policy Wrongful-Discharge Tort
Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167
PUBLISHED.
Wrongful discharge
Tort remedy
At-will employment
Reversed
In brief. This is the decision that created California’s tort of wrongful discharge in violation of public policy. An at-will employee fired for refusing to break the law — here, refusing to join an illegal gasoline price-fixing scheme — is not limited to a contract remedy. Such a discharge breaches a duty that public policy imposes independent of the employment contract, and is therefore a tort, exposing the employer to ordinary tort damages, including punitive damages.
Facts
Gordon Tameny worked for Atlantic Richfield Company (Arco) beginning in 1960, advancing to retail sales representative for the Bakersfield territory; his employment had no fixed term, making him an at-will employee. Beginning in the early 1970s, Arco and its managers allegedly engaged in a scheme to fix the retail gasoline prices of Arco franchisees in violation of the Sherman Antitrust Act, the Cartwright Act, and a federal consent decree, and pressured Tameny to coerce independent dealers into cutting their prices. Tameny refused. In 1975, after fifteen years, Arco discharged him, ostensibly for unsatisfactory performance. He sued for wrongful discharge in both tort and contract, seeking compensatory and punitive damages.
Procedural history
The trial court sustained Arco’s general demurrer to the tort causes of action, accepting Arco’s contention that the remedy for such a discharge sounds only in contract, not tort. Tameny appealed from the ensuing judgment.
Issue
May an employee discharged for refusing to commit an illegal act at the employer’s direction maintain a tort action for wrongful discharge, or is the remedy limited to an action for breach of contract?
Holding
The employee may sue in tort. When an employer’s discharge of an employee violates fundamental principles of public policy, the discharged employee may maintain a tort action and recover the damages traditionally available in tort. The trial court erred in sustaining the demurrer to the tort causes of action. The judgment is reversed and the case remanded. (27 Cal.3d at p. 170.)
Reasoning
An employer’s right to discharge an at-will employee is not absolute. An employer has no authority to direct an employee to violate the law, and it may not coerce obedience to an unlawful order by firing the employee who refuses. The duty not to discharge an employee for that reason is imposed by law and reflects fundamental public policy — embodied here in the antitrust and penal statutes — and it exists independent of the terms of the employment contract. Breach of that independent, legally imposed duty is therefore tortious and exhibits the classic elements of a tort cause of action. (27 Cal.3d at pp. 170, 174.)
The Court built on Petermann v. International Brotherhood of Teamsters (1959) 174 Cal.App.2d 184, which had recognized that an employee discharged for refusing to commit perjury could sue, reasoning that public policy forbids an employer from compelling unlawful conduct on pain of termination. Because the wrong sounds in tort, the full range of tort remedies — including punitive damages — is available, beyond what contract law would allow.
Key quote
The Court held that when a discharge violates fundamental public policy, “the discharged employee may maintain a tort action and recover damages.” (27 Cal.3d at p. 170.)
Read the full opinion (free full text — Stanford California Supreme Court archive).
Practice pointer
For plaintiff-side counsel, Tameny is the foundation of every public-policy wrongful-termination claim in California. It establishes that at-will status is no shield when a firing offends a fundamental, well-established public policy — and that the tort label matters, because it unlocks tort remedies (punitive damages and tort measures of harm) unavailable in contract. The enduring battleground is sourcing the policy: a Tameny claim must rest on a policy that is fundamental, public, and well-established, tethered to a constitutional or statutory provision — not a generalized sense of unfairness. Plead the specific constitutional or statutory anchor, and tie the discharge to the protected conduct.
Open questions
As a 1980 decision, Tameny launched the doctrine but left its boundaries to be drawn: what makes a public policy “fundamental” and sufficiently established, whether the policy may be sourced from regulations as well as statutes, and the limits of punitive-damages exposure. Subsequent California Supreme Court decisions refined these questions — see, for example, Green v. Ralee Engineering Co. (1998) 19 Cal.4th 66 — and that line of authority should be consulted and independently verified before relying on the doctrine’s present contours.