Foley v. Interactive Data Corp.

Interactive Data Corporation (IDC) (defendant) hired Daniel Foley (plaintiff) in 1976. Foley worked for IDC for almost seven years, during which time he received consistently good evaluations, numerous bonuses, salary increases, and ultimately a promotion to branch manager. IDC maintained a set of termination guidelines which provided grounds for discharging employees and mandated a seven-step pre-termination procedure. In January 1983, Foley learned that his new supervisor, Robert Kuhne, was being investigated by the FBI for embezzling from a previous employer. He informed IDC’s vice president Richard Earnest of the investigation, allegedly for the benefit of IDC. According to Foley, Earnest dismissed the story as a rumor and told Foley to forget it. In March, Kuhne informed Foley that Foley was being replaced for performance reasons. Foley was initially given a choice to transfer, but eventually was simply asked to resign or be fired. Foley sued IDC for wrongful discharge on several grounds. He argued he had been tortiously discharged in violation of public policy, in retaliation for reporting Kuhne’s suspected wrongdoing to IDC officials. Second, Foley alleged that the termination without cause was a breach of an implied contract. Finally, he argued that IDC breached the implied covenant of good faith and fair dealing. IDC moved to dismiss each of Foley’s causes of action for failure to state a claim. The trial court granted the motion to dismiss, and the appellate court affirmed. Foley successfully brought the case to the California Supreme Court.