Employer Exercising Option Not to Renew Contract Cannot be Sued for Wrongful Termination

On August 16, 2012, in Touchstone Television Productions v. Superior Court (Sheridan) (California Courts of Appeal– 2nd District, No. B241137), the court held that when an employer simply decides not to renew the contract of an employee, that employee cannot sue the employer for wrongful termination.

In this case, actress Nicollette Sheridan had an agreement with Touchstone Television Productions to hire her to act in a television series that gave Touchstone the exclusive option to renew Sheridan's contract annually for six seasons of the series. During season five of the series, Sheridan made a complaint about an alleged battery that involved herself and the show's creator. After having renewed Sheridan's contract for five seasons, Touchstone opted not to renew for the sixth season, choosing instead to kill off her character in season five. Following this decision, Sheridan filed suit for wrongful termination, claiming that she was fired in retaliation for the battery complaint.

The case resulted in a mistrial due to a jury deadlock, which prompted Touchstone to move for a directed verdict, based on the fact that Sheridan was not terminated but her contract was simply not renewed. When that motion was denied by the trial court, Touchstone then petitioned the Courts of Appeal for extraordinary relief.

On appeal, the court found that Sheridan was, in fact, not terminated, but that her contract was merely not renewed, and that an employee cannot sue an employer for wrongful termination if that employee was never terminated. Since Touchstone had the sole option to renew on a season-by-season basis, the choice not to renew her contract resulted only in the end of a fixed-term contract, not a termination of employment. The court pointed out that, while Sheridan had no basis of relief for wrongful termination based on precedent law precluding such relief, she could still find sue for damages based on allegations of discrimination.

If you need information regarding disability discrimination, sexual harassment, or retaliation, please do not hesitate to contact a Orange County Employment attorney today.

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