Hunter v. Up-Right, Inc.

Charles Hunter (plaintiff) worked as a welding supervisor for Up-Right, Inc. (defendant). Up-Right terminated Hunter on September 10, 1987, and Hunter subsequently sued Up-Right and his former supervisor, Pat Nelson (defendant), alleging claims including breach of contract, breach of the implied duty of good faith and fair dealing, and fraud. At trial, Hunter testified that he had received excellent performance evaluations at Up-Right. Hunter further testified that at the end of his workday on September 10, Nelson told Hunter that Up-Right’s corporate office had decided to eliminate Hunter’s position and that Hunter could either resign or be terminated. Nelson denied Hunter’s allegations and testified that Hunter had voluntarily decided to resign for personal reasons. A former Up-Right plant superintendent who had worked with Hunter testified that Hunter was an excellent employee and that Up-Right had a policy of terminating employees only for good cause. The jury found that Up-Right lacked good cause to terminate Hunter and thus found in favor of Hunter on his contract, good-faith-and-fair-dealing, and fraud claims and awarded damages of $120,000. The court of appeal affirmed, noting, among other things, that Hunter had proved that Nelson made a knowing misrepresentation to Hunter about the alleged corporate decision to terminate Hunter’s position that was intended to defraud Hunter into resigning. The California Supreme Court granted review.