206 Cal. App. 4th 351
Cal. Ct. App.2012Background
- Petitioner Lidow, with a Ph.D. in applied physics, worked for International Rectifier Corporation (IR), a Delaware corporation based in California, and served as CEO and board member from 1995–2007; no written employment contract existed.
- IR’s bylaws allowed removal of officers by the board with or without cause, and officers serve at the board’s pleasure.
- IR’s board launched an internal investigation into accounting irregularities at IR’s Japan subsidiary in 2007; Lidow was placed on paid administrative leave in Aug. 2007 and stepped down in Oct. 2007 under a separation agreement that did not release liability.
- About 18 months later, Lidow sued IR in superior court for multiple claims including wrongful termination in violation of public policy, but IR moved for summary adjudication on that claim.
- IR argued the internal affairs doctrine—Delaware law—governs the wrongful termination claim, that Lidow’s resignation defeated a termination claim, and that even if there was a discharge, IR had legitimate nonretaliatory reasons.
- The superior court granted summary adjudication on the first ground; this court granted an alternative writ and reviewed de novo, reversing to deny summary adjudication for the wrongful termination claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the internal affairs doctrine applies to a corporate officer’s wrongful termination claim. | California law governs; the claim involves retaliation for exposing possible illegal activity. | Delaware law governs as internal affairs; termination was within corporate governance. | California law governs; internal affairs doctrine inapplicable given retaliation/whistleblower context. |
| If applicable, whether Lidow’s resignation forecloses a wrongful termination claim. | Resignation does not negate wrongful termination if pretext or retaliation is shown. | Resignation constitutes voluntary termination, defeating the claim. | Not resolved as dispositive on the issue; focus is on applicable law. |
| Whether California has vital public policy interests that trump internal affairs doctrine. | California policies protect against retaliatory or coerced misconduct by employers. | Internal governance concerns predominate; California interests limited. | California has vital public interests here, supporting California law governing the claim. |
Key Cases Cited
- Western Air Lines, Inc. v. Sobieski, 191 Cal.App.2d 399 (Cal.App.2d 1961) (internal affairs may be overcome by protecting California residents and interests in certain contexts)
- Friese v. Superior Court, 134 Cal.App.4th 693 (Cal.App.4th 2005) (public-interest securities regulation can override internal affairs in certain misconduct cases)
- State Farm Mutual Automobile Ins. Co. v. Superior Court, 114 Cal.App.4th 434 (Cal.App.4th 2003) (internal affairs doctrine applied to dividends; less vital interests favor internal governance)
- Vaughn v. LJ Internat., Inc., 174 Cal.App.4th 213 (Cal.App.4th 2009) (foreign-based governance and derivative actions; limited California interest in certain corporate-rights disputes)
- VantagePoint Venture Partners 1996 v. Examen, Inc., 871 A.2d 1108 (Del. 2005) (Delaware Supreme Court; voting rights and internal affairs doctrine context; forum choice matters)