John Guz (plaintiff) began working for Bechtel National, Inc. (Bechtel) (defendant) in 1971 as an administrative assistant. Over the years, Guz received a number of raises and promotions, as well as favorable performance reviews. In 1991, Bechtel issued Personnel Policy 1101, which essentially stated that employees were employed at will. However, Personnel Policy 1101 limited Bechtel’s ability to terminate employees for unsatisfactory performance by requiring Bechtel to first provide employees with notice of a deficiency and an opportunity to improve. Personnel Policy 1101 also addressed layoffs, which were defined as terminations caused by reductions in work, by reorganizations, or by other circumstances. No limitations were placed on Bechtel’s ability to lay off employees. In 1992, Guz was working in Bechtel’s BNI Management Information Group (BNI-MI) when Bechtel decided to eliminate the BNI-MI. As a result, Guz was laid off. Guz sued Bechtel, claiming that his layoff breached an implied contract to be terminated only for good cause. Guz also claimed that the implied covenant of good faith and fair dealing precluded Bechtel from terminating him arbitrarily or in bad faith. The trial court granted summary judgment in favor of Bechtel. The court of appeal reversed. Bechtel appealed.