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Court of Appeal finds nonrenewal of contract not a wrongful termination

Touchstone Television Productions v. Superior Court (2012) 208 Cal.App.4th 676, 145 Cal.Rptr.3d 766

Background: Actress Nicollette Sheridan (Sheridan) was hired by Touchstone Television Productions (Touchstone) to appear in television series Desperate Housewives. Sheridan was hired only for the first season, but the agreement gave Touchstone the exclusive option to renew Sheridan’s services on an annual basis for an additional six seasons. Subsequently, Touchstone renewed the contract up to and including Season 5. During season 5, Sheridan was informed that Touchstone would not renew her contract for an additional year.

Sheridan alleged wrongful termination in violation of public policy against Touchstone and claimed that she was fired for a pretext because she had complained about a battery allegedly committed by the show creator, Marc Cherry (Cherry).

Court History: The jury deadlocked on the wrongful termination claim and the trial court declared a mistrial. Relying upon, Daly v. Exxon Corp. (1997) 55 Cal.App.4th 39, 63 Cal.Rptr.2d 727 (Daly) Touchstone moved for a directed verdict on the wrongful termination claim arguing that his decision to not exercise an option to renew a contract only expressed an expiration of a fixed-term contract and there was no termination of employment. The trial court denied the motion and set the matter for retrial. Touchstone filed a petition in the Court of Appeal for writ of mandate.

Pertinent Issues addressed: The Court of Appeal agreed with Touchstone’s argument and found Daily the leading case on the issue and made the following findings:

a.  Touchstone did not terminate Sheridan’s employment. Instead, it only decided not to exercise its contractual option to hire Sheridan for another season.

b.  Sheridan was not fired before the contract period expired. Instead, Both Sheridan and Touchstone had performed their reciprocal contractual obligations for Season 5. Among other things, Touchstone informed Sheridan that it had decided not to exercise its option to hire her Season 6 during Season 5, Sheridan was paid for the entire season 5 and her profit sharing program vested, Sheridan filmed three more episodes and did publicity for the series after being informed of non-renewal of contract for next Season.

c.  Sheridan could sue under section 6310, subdivision (b) which permits “an action for damages if the employee is discharged, threatened with discharge, or discriminated against by his or her employer because of the employee’s complaints about unsafe work conditions.

Accordingly, Touchstone’s petition was granted.

Pointers:

  • Employers should not be misguided by the case, though the Court refused to allow to wrongful termination claim, it did allow a retaliation claim under Section 6310, which allows for “reinstatement and reimbursement for lost wages and work benefits caused by the acts of the employer”.