In a unanimous decision, the Supreme Court of California in Dore v. Arnold Worldwide, Inc. (August 3, 2006) held that the term “at will” in an employment contract means “at any time without cause.”  In Dore, the plaintiff employee asserted that the “at will” provision in his employment contract was ambiguous concerning whether his employment could be terminated without cause, and, therefore, evidence other than his offer letter of employment (“letter”) should be considered to prove that an implied agreement existed so that Dore could only be terminated for cause.  The Court disagreed, ruling that the “at will” provision in the letter was not ambiguous and therefore could not be overcome by evidence of a prior or contemporaneous implied-in-fact contract requiring good cause for termination. 

In April 1999, Dore received a verbal offer from Arnold Worldwide, Inc. (“AWI”), followed up on April 16, 1999, with an official letter which confirmed his offer, and discussed key employment terms such as compensation, benefits, and start date.  In the letter, in a separate paragraph central to the Court’s decision, AWI stated: 

“Brook, please know that as with all of our company employees, your employment with Arnold Communications, Inc. is at will.  This simply means that Arnold Communication has the right to terminate your employment at any time just as you have the right to terminate your employment with Arnold Communications, Inc. at any time.”

Dore read, signed and returned the letter to AWI and began working at AWI shortly thereafter.

In August 2001, Dore’s employment was terminated.  AWI failed to cite a reason for Dore’s termination, and Dore filed suit against AWI seeking redress for multiple causes of action related to wrongful termination.  Dore alleged that the letter was ambiguous concerning AWI’s right to terminate an employee without cause in light of the inclusion of “at any time” language, that an “implied-in-fact” contract existed which required termination for cause, and therefore evidence other than the letter should be considered to prove that an implied agreement existed between the parties that the employee may only be terminated for cause.  The Court ruled in favor of AWI that no such ambiguity existed, and upheld the trial court’s dismissal of Dore’s multiple causes of action for wrongful at will termination. 

In prior cases, the California Courts of Appeal have been in conflict over whether a provision in an employment contract providing for termination “at any time” is reasonably susceptible to an interpretation allowing for the existence of an implied-in-fact agreement that termination will occur only for cause.  However, in Dore, the Court explicitly disagreed with the Court of Appeal's ruling that the language “at any time” in the termination clause of an employment contract is “per se ambiguous” because it does not expressly speak to whether cause is required.  The Court reasoned that logic dictates that the phrase “at any time” without further clarifying language “ordinarily entails the notion of ‘with or without cause’” and does not in itself create an ambiguity with regard to requirements for termination.

Use of Extrinsic Evidence to Prove Ambiguity

Although the Court found the “at will” termination language to be clear and unambiguous, it still went on to consider the ambiguity of the letter within the greater context of existing extrinsic evidence.  As the Court stated:  “That the phrase “at any time” is not in itself ambiguous does not preclude the possibility that AWI’s letter, when considered as a whole, contains ambiguity on this topic.”  Further, the Court recognized that the presumption of at will employment, as codified in Section 2922 of the California Labor Code (“Section 2922”), “can be overcome by an express or implied agreement to the contrary.”