Lidow v. Superior Court Of Los Angeles County

206 Cal.App.4th 351 (2012)

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Nature of the Case

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Facts

P worked for D, a Delaware corporation based in California beginning in 1977. P eventually became a member of D’s board of directors, and eventually, he became the CEO in 1999. P never had a written employment contract with D. D's bylaws provided that the corporation's officers (including the CEO) “shall be chosen annually by, and shall serve at the pleasure of, the Board, and shall hold their respective offices until their resignation, removal, or other disqualification from service.” Removal of an officer, according to IR's bylaws, may be “with or without cause, by the Board at any time.” In 2007, D commenced an internal investigation after accounting irregularities surfaced at D's subsidiary in Japan. The Board placed P on paid administrative leave. P had never received any negative criticisms or negative reviews about his performance as CEO. P stepped down as CEO and Board member in October 2007 pursuant to a negotiated separation agreement. P then sued D in superior court, alleging in part wrongful termination in violation of public policy. D moved for summary judgment under the internal affairs doctrine in that Delaware law governed P's wrongful termination claim. Under that law, a CEO serves at the pleasure of the corporation's board of directors and is barred from bringing a wrongful termination claim (unless authorized by specific statutory enactments) as a matter of law. Also, P freely and voluntarily resigned as CEO. The court granted the motion, and P appealed.