Key Decisions

September 2012 – Failing To Renew An Employee’s Contract

(filed under: Key Decisions Archive | September 26, 2012)

Failing To Renew An Employee’s Contract For An Additional Period Does Not Support A Cause Of Action For Wrongful Termination

Touchstone Television Productions v. Superior Court
(Cal. Ct. of App., 2d Dist.), filed August 16, 2012

KEY FACTS

Touchstone Television Productions hired actress Nicollette Sheridan to appear in the first season of the television series Desperate Housewives. The agreement gave Touchstone the option to renew Sheridan’s services on an annual basis for up to six more seasons. Touchstone renewed Sheridan’s services up to and including Season 5. During Season 5, Touchstone informed Sheridan it would not renew her contract for Season 6.

Sheridan sued Touchstone for wrongful termination. She alleged that Touchstone had fired her because she had complained about a battery allegedly committed upon her by Desperate Housewives’ creator Marc Cherry.

HOLDING & REASONING

The Court of Appeals held that when an employer hires an employee for a specific period of time and then elects not to renew an employee’s contract for an additional period of time, there is no firing and therefore no cause of action for wrongful termination. However, there may be a cause of action under Labor Code section 6310.

Section 6310 permits an action for damages if an employee is discharged, threatened with discharge, or discriminated against by his or her employer because of the employee’s complaints about unsafe work conditions. To prevail on such a claim, the plaintiff must prove that, but for his or her complaints about unsafe work conditions, the defendant would have renewed the employment contract. Damages are limited to lost wages and work benefits.

Since Sheridan had requested leave to amend, the court ordered that she be permitted to amend to allege a cause of action under section 6310.

ANALYSIS

This opinion shows that in many circumstances, a decision not to renew a contract will be treated differently than mid-term termination of a contract.