CACI 2424 Affirmative Defense—Breach of the Implied Covenant of Good Faith and Fair Dealing—Good Faith Though Mistaken Belief
California Civil Jury Instructions CACI
2424 Affirmative Defense—Breach of the Implied Covenant of Good Faith and Fair Dealing—Good Faith Though Mistaken Belief
[Name of defendant] claims that [he/she/nonbinary pronoun/it] did not breach the duty to act fairly and in good faith because [he/she/nonbinary pronoun/it] believed that there was a legitimate and reasonable business purpose for the conduct.
To succeed, [name of defendant] must prove both of the following:
1.That [his/her/nonbinary pronoun/its] conduct was based on an honest belief that [insert alleged mistake]; and
2.That, if true, [insert alleged mistake] would have been a legitimate and reasonable business purpose for the conduct.
New September 2003; Revised November 2019, May 2020
Directions for Use
In every contract, there is an implied promise that each party will not do anything to unfairly interfere with the right of any other party to receive the benefits of the contract. (Comunale v. Traders & General Ins. Co. (1958) 50 Cal.2d 654, 658 [328 P.2d 198].) Give CACI No. 2423, Breach of Implied Covenant of Good Faith and Fair Dealing—Employment Contract—Essential Factual Elements, if the employee asserts a claim that the employee’s termination or other adverse employment action was in breach of this implied covenant. Give this instruction if the employer asserts the defense that an honest, though mistaken, belief does not constitute a breach.
Sources and Authority
•“[B]ecause the implied covenant of good faith and fair dealing requires the employer to act fairly and in good faith, an employer’s honest though mistaken belief that legitimate business reasons provided good cause for discharge, will negate a claim it sought in bad faith to deprive the employee of the benefits of the contract.” (Wilkerson v. Wells Fargo Bank (1989) 212 Cal.App.3d 1217, 1231 [261 Cal.Rptr. 185], internal citation omitted, disapproved on other grounds in Cotran v. Rollins Hudig Hall International, Inc. (1998) 17 Cal.4th 93, 96 [69 Cal.Rptr.2d 900, 948 P.2d 412].)
•“The jury was instructed that the neglect or refusal to fulfill a contractual obligation based on an honest, mistaken belief did not constitute a breach of the implied covenant.” (Luck v. Southern Pacific Transportation Co. (1990) 218 Cal.App.3d 1, 26 [267 Cal.Rptr. 618].)
•“[F]oley does not preclude inquiry into an employer’s motive for discharging an employee … .” (Seubert v. McKesson Corp. (1990) 223 Cal.App.3d 1514, 1521 [273 Cal.Rptr. 296], overruled on other grounds, Dore v. Arnold Worldwide, Inc. (2006) 39 Cal.4th 384, 389 [46 Cal.Rptr.3d 668, 139 P.3d 56].)
•“[T]he jury was asked to determine in its special verdict whether appellants had a legitimate reason to terminate [plaintiff]’s employment and whether appellants acted in good faith on an honest but mistaken belief that they had a legitimate business reason to terminate [plaintiff]’s employment.” (Seubert, supra, 223 Cal.App.3d at p. 1521 [upholding jury instruction].)