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Lidow v. Superior Court of Los Angeles County

California Court of Appeal
206 Cal.App.4th 351 (2012)


Facts

In 1977, Alexander Lidow (plaintiff) began working for International Rectifier Corporation (IRC) (defendant), a Delaware corporation based in California, and later became a member of IRC’s board of directors (Board) and the chief executive officer (CEO). Lidow did not have a written employment agreement with IRC. In early 2007, IRC began an internal investigation at a subsidiary in Japan after learning of accounting irregularities. The employees of the subsidiary complained about the tactics used by the internal investigators and threatened to resign. Lidow was concerned and traveled to Japan to ease relations with the employees. Lidow expressed his dissatisfaction with the internal investigation and told IRC about the tactics that the investigators used. Lidow further criticized the conduct of the outside law firm hired to oversee the internal investigation. The internal investigation resulted in a report to the IRC’s Board concluding that Lidow was responsible for the accounting irregularities at the subsidiary. In 2007, the Board placed Lidow on paid leave, and Lidow subsequently stepped down as CEO as part of a negotiated separation agreement. Lidow sued IRC, alleging wrongful termination in violation of public policy. IRC moved for summary adjudication, asserting that the internal-affairs doctrine made Delaware law applicable to Lidow’s claim and that, under Delaware law, a CEO was barred from claiming wrongful termination. The superior court granted IRC’s motion for summary adjudication, and Lidow appealed.

Rule of Law

Issue

Holding and Reasoning (Boren, J.)

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