UNITED STATES COURT OF APPEALS
Tenth Circuit
Byron White United States Courthouse
1823 Stout Street
Denver, Colorado 80294
(303) 844-3157
Patrick J. Fisher, Jr. Elisabeth A. Shumaker
Clerk Chief Deputy Clerk
February 8, 2000
TO: ALL RECIPIENTS OF THE OPINION
RE: 98-4090; Barela v. C.R. England & Sons
Filed on December 21, 1999
Please be advised of the following correction to the captioned decision.
The correction is a small fragment of a sentence that begins the first paragraph
in section “V. Conclusion.” Please insert that portion of the sentence indicated in
brackets, however, omit the brackets.
V. Conclusion
[Within the framework of summary judgment, accepting all of his allegations
as true] Barela has satisfied the first three...
A copy of the corrected page 11 is attached for your convenience.
Sincerely,
Patrick Fisher, Clerk of Court
By: Theresa Smith
Deputy Clerk
F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS DEC 21 1999
TENTH CIRCUIT PATRICK FISHER
Clerk
BUD F. BARELA,
Plaintiff - Appellant,
v. No. 98-4090
C.R. ENGLAND & SONS, INC., a
Utah Corporation,
Defendant - Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
(D. Ct. No. 95-C-693-S)
Stuart H. Schultz (Glenn C. Hanni and David R. Nielson, with him on the briefs),
Strong & Hanni, Salt Lake City, Utah, appearing for Plaintiff-Appellant.
Alan E. Epstein, Hall & Evans, L.L.C., Denver, Colorado (Daniel R. Satriana, Jr.,
Hall & Evans, L.L.C., Denver, Colorado, and Nathan R. Hyde, Law Offices of
Nathan R. Hyde, Sandy, Utah, with him on the brief), appearing for Defendant-
Appellee.
Before TACHA, KELLY, Circuit Judges, and WEST, * District Judge.
TACHA, Circuit Judge.
Plaintiff Barela sued defendant C.R. England & Sons, Inc. (“England”) for,
*
The Honorable Lee R. West, Senior District Judge for the Western District
of Oklahoma, sitting by designation.
inter alia, wrongful discharge in contravention of Utah public policy. The district
court granted England’s motion for summary judgment, and Barela appealed to
this court. We exercise jurisdiction pursuant to 28 U.S.C. § 1291 and reverse.
I. Facts
Barela joined England as a truck driver in December of 1993. By late
spring of 1994, he had assumed the position of truck instructor in England’s
driver training program. Numerous students praised Barela’s performance as an
instructor. Supervisors and a company publication recognized Barela’s success
with the students. There is no evidence in the record of any problem with
Barela’s work until the two-to-three week period preceding his discharge.
Between June and November of 1994, some of Barela’s students asked him
how it was possible for them to earn the annual pay and time off that they claimed
England had promised in connection with their recruitment. In helping these
students to “do the math,” Barela found that given their pay rates and state and
federal drive-time regulations, it was impossible. There is evidence in the record
that England employees were encouraged to drive in excess of the law. Barela
advised his students that they could not legally earn what they told him they had
been promised, but also told them that England was a great place to work.
On November 4, 1994, England conducted a “Safety Summit” meeting to
facilitate company “brain storming” on accident reduction. Barela raised
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concerns at the meeting based on his students’ questions. Plaintiff and defendant
dispute the tenor of Barela’s comments. However, it is undisputed that Barela
challenged England’s personnel practices and that at least one supervisor
responded negatively. Immediately following the meeting, England’s vice
president of operations instructed Barela’s supervisor, Gary Thompson, to
investigate Barela.
On November 7, Thompson called Barela into his office to discuss the
Safety Summit meeting. He instructed Barela not to answer student questions
about earning and time-off potential and criticized Barela for undermining the
company’s goals.
Three weeks after the meeting in Thompson’s office, Thompson terminated
Barela. England alleged to the district court that it terminated Barela because he
was caught reading a newspaper and balancing his checkbook during work hours.
The record indicates that England did not offer this reason to Barela or enforce a
policy against such activities prior to Barela’s discharge.
II. Standard of Review
“We review the district court’s grant of summary judgment de novo,
applying the same legal standard used by the district court.” Simms v. Oklahoma
ex rel. Dep’t of Mental Health & Substance Abuse Servs., 165 F.3d 1321, 1326
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(10 th Cir. 1999). Summary judgment is appropriate only when “the pleadings,
depositions, answers to interrogatories, and admissions on file . . . show that there
is no genuine issue as to any material fact and that the moving party is entitled to
a judgment as a matter of law.” Fed. R. Civ. P. 56(c). We view the evidence and
draw reasonable inferences therefrom in the light most favorable to the
nonmoving party. Simms, 165 F.3d at 1326.
III. Utah’s Public Policy Exception to the Employment-at-Will Doctrine
Absent a contractual term of duration, Utah law presumes the employment
relation to be at-will. Ryan v. Dan’s Food Stores, Inc., 972 P.2d 395, 400 (Utah
1998). “An at-will employment arrangement allows either the employer or the
employee to terminate the employment for any reason, or no reason at all, at any
time . . . .” Id. However, an employee may overcome the at-will presumption by
showing that his termination violates public policy. Id. In Heslop v. Bank of
Utah, 839 P.2d 828, 837 (Utah 1992), the Utah Supreme Court stated that
a public policy claim generally poses three questions:
(1) Does the plaintiff’s termination implicate a clear
and substantial public policy? (2) Did the employer
violate this public policy by requiring the employee to
engage in conduct violating the policy or by punishing
conduct furthering the policy? (3) Was violation of
this public policy a substantial factor in the plaintiff’s
termination?
The plaintiff in Heslop urged his employer to correct violations of the Utah
Financial Institutions Act, and his employer eventually fired him. Id. at 831-35.
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The Heslop court first found that the plaintiff had alleged a violation of a clear
and substantial public policy because the statute at issue ensured the safety of
Utah financial institutions and protected the public. Id. at 837. Second, the court
found that the plaintiff “acted in furtherance” of that public policy when “he
vocally insisted on adherence to [Utah law].” Id. The court noted that it was not
necessary for the plaintiff to report his employer’s violations to public authorities
in order to satisfy the second element of the test. Id. at 838. The plaintiff
“pursued all internal methods for resolving the problem” and did not need to go
“outside the [company] to try to correct the policy violation.” Id.
In Fox v. MCI Communications Corp., 931 P.2d 857, 858 (Utah 1997), the
plaintiff’s employer terminated her after she reported to her employer that other
employees were violating a Utah statute. The Utah Supreme Court stated that “if
an employee reports a criminal violation to an employer, rather than to public
authorities, and is fired for making such reports, that does not . . . contravene a
clear and substantial public policy.” Id. at 861. The court then held that the
plaintiff had not stated a public policy claim because the employees’ conduct
harmed only the company itself and the company knew about the conduct and
acquiesced in it. Id. Thus, “[n]othing in this case affect[ed] the public interest in
any significant way.” Id.
In Ryan, the plaintiff acted overzealously to “enforce” a statute prohibiting
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pharmacists from knowingly filling improper prescriptions. 972 P.2d at 399-400,
407. Plaintiff went beyond the statute’s requirements by mistreating and
deceiving customers. Id. at 399, 410. As a result, many customers complained.
Id. at 399. Management repeatedly counseled and warned the plaintiff about the
complaints, but the president of the company also complimented the plaintiff on
his thoroughness in detecting fraudulent prescriptions. Id. at 400. Ultimately, the
company terminated the plaintiff for his treatment of customers. Id.
The Ryan court “recast the standard applied” in previous public policy
cases “to make analytical clarity and procedural regularity more easily achievable
by bench and bar.” Id. at 404 n.3. However, the court “d[id] not change the
substantive law regarding discharges in violation of public policy.” Id. Under
Ryan, plaintiff bears the initial burden of establishing a prima facie case of
wrongful discharge in violation of public policy. Id. at 404 (citing, inter alia,
Wilmot v. Kaiser Alum. & Chem. Corp., 821 P.2d 18, 28-29 (Wash. 1991)). The
burden then shifts to defendant to provide a “legitimate” reason for plaintiff’s
discharge. Id. at 405 (citing Wilmot, 821 P.2d at 29). If defendant succeeds, the
burden shifts once more to plaintiff to show that his protected conduct was a
“substantial factor” in his discharge. Id. (citing Wilmot, 821 P.2d at 30). 1
1
If the plaintiff establishes a prima facie case then, at the second stage, “the
employer must articulate a legitimate nonpretextual nonretaliatory reason for the
discharge.” Wilmot, 821 P.2d at 29. “The employer must produce relevant
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To establish a prima facie case of wrongful termination in violation of
public policy, an employee must show
(i) that his employer terminated him; (ii) that a clear and
substantial public policy existed; (iii) that the employee’s
conduct brought the policy into play; and (iv) that the
discharge and the conduct bringing the policy into play are
causally connected.
Id. at 404 (footnote omitted). It was undisputed in Ryan that the plaintiff was
terminated, and the court found that clear and substantial public policies existed.
Id. at 405, 408. The court further found that Ryan brought the public policies into
play when he “questioned prescriptions [that Utah law] required him to question”
and “reported suspected criminal activity to the police.” Id. at 409.
Citing to Fox and Heslop, the Ryan court noted that “determining what
employee conduct implicates or furthers a clear and substantial public policy is a
still-developing inquiry.” Id. at 408. 2 The court recognized that while “Fox
admissible evidence of another motivation, but need not do so by the
preponderance of the evidence necessary to sustain the burden of persuasion,
because the employer does not have that burden.” Id. If the employer produces
some evidence of a legitimate basis for the discharge, then the burden shifts back
to the plaintiff. Id. at 29-30. At the third stage, the plaintiff bears the burden of
persuasion and must prove by a preponderance of the evidence that retaliation was
a substantial or important factor motivating the discharge. See id. at 30-31.
2
We note that the Utah Supreme Court recently granted certiorari in a
public policy case. Rackley v. Fairview Care Ctrs., Inc., 970 P.2d 277, 282 (Utah
Ct. App. 1998), cert. granted, 982 P.2d 87 (1999) (finding that the plaintiff had
not established a prima facie case of wrongful discharge in violation of public
policy because none of the statutes cited to the court expressed a relevant clear
and substantial public policy); id at 283 (Greenwood, J., concurring) (concluding
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suggests that internal reporting does not implicate a clear and substantial public
policy,” Heslop implies that “any internal reporting will support a wrongful
discharge claim.” Id. at 408 n.7. The court resolved the apparent conflict
between Fox and Heslop by “emphasiz[ing] that only internal reporting that
furthers a clear and substantial public policy will satisfy the third element of a
wrongful discharge claim.” Id.
IV. Barela’s Case
When the district court granted England’s motion for summary judgment,
the Utah Supreme Court had not yet decided Ryan. Consequently, the district
court concluded that Barela’s wrongful discharge claim must fail because he
could not satisfy the first element of the Heslop test – that his termination
implicated a clear and substantial public policy. The district court found that
Barela had alleged a violation of clear and substantial public policies promoting
safe roads, 49 C.F.R. § 395.3(a) (1998); Utah Code Ann. § 72-9-301 (Supp.
1999), and deterring fraud, Utah Code Ann. § 76-10-1801(1) (Supp. 1999).
Relying in part on Fox, however, the district court ruled that Barela’s conduct
implicated the private concerns of England rather than the public policies he cited
that a clear and substantial public policy did exist, but under Ryan the plaintiff
did not bring the policy into play because she did not report a co-worker’s
statutory violation to her employer and she did not contact public authorities until
after she was fired).
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to the court. Accordingly, the district court held that Barela’s termination did not
fall within the public policy exception to Utah’s employment-at-will doctrine.
We must apply “the most recent statement of [Utah] law by [Utah’s]
highest court.” Wood v. Eli Lilly & Co., 38 F.3d 510, 513 (10 th Cir. 1994).
Therefore, we must evaluate Barela’s claim under Ryan despite the fact that the
district court did not have the benefit of that opinion. For the purposes of
summary judgment, England concedes that it fired Barela and that Barela has
alleged violations of clear and substantial public policies. Thus, we find that
Barela has satisfied the first two elements of a prima facie case of wrongful
discharge in contravention of public policy.
In light of the Ryan court’s resolution of the apparent conflict between
Heslop and Fox, we further find that Barela has established the third element of
the Ryan prima facie test. The third element requires an employee to show that
his conduct brought a public policy into play. Ryan, 972 P.2d at 404. In Ryan,
the Utah Supreme Court made it clear that an employee need not report a public
policy violation to public authorities in order to further the policy or bring the
policy into play. Internal reporting alone will satisfy the third element of a
wrongful discharge claim as long as it furthers a clear and substantial public
policy. Ryan, 972 P.2d at 408 n.7. In other words, internal reporting alone is
sufficient to bring a public policy into play when an employer’s violation of the
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policy at issue is detrimental to the public interest.
The plaintiff in Fox did not further a public policy when she reported to her
employer that other employees were violating Utah law because the employees’
conduct harmed only the company and did not affect the public interest in any
way. 931 P.2d at 861. In contrast, the plaintiff in Heslop furthered a public
policy when he urged his employer to comply with a law that ensured the safety of
Utah financial institutions and protected the public. 839 P.2d at 837-838.
Similarly, the plaintiff in Ryan brought public policies into play when he engaged
in conduct that furthered the public interest: questioning drug prescriptions that
Utah law required him to question and reporting suspected criminal activity to the
police. See 972 P.2d at 409.
The district court found that Barela’s conduct, like the conduct of the
plaintiff in Fox, implicated only the private interests of England. We disagree.
At the Safety Summit meeting, Barela raised concerns based on his students’
questions about the annual pay and time off they claimed England had promised
them. Barela knew that the students could only earn the promised pay and time
off if they violated state and federal regulations. Barela challenged England’s
personnel practices and at least one supervisor responded negatively. England
then investigated Barela, instructed him not to answer student questions about
earning and time off potential, and criticized him for undermining the company’s
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goals. Shortly thereafter, England fired Barela.
There is no question that Barela only objected internally to England’s
practices; he did not report England’s activity to public authorities. However,
like the plaintiffs’ conduct in Heslop and Ryan, Barela’s conduct implicated
policies that indisputably affect the public interest: promoting safe roads and
deterring fraud. Thus, we hold that Barela brought clear and substantial public
policies into play and has therefore met the third element of the Ryan prima facie
test.
V. Conclusion
Within the framework of summary judgment, accepting all of his
allegations as true Barela has satisfied the first three elements of a prima facie
case of wrongful termination in violation of public policy. Thus, we reverse and
remand this case for the district court to determine whether Barela can establish
the fourth element of the Ryan prima facie test, i.e., whether the discharge and
Barela’s conduct are causally connected. See Ryan, 972 P.2d at 404. If the
district court finds that Barela has satisfied the fourth element, then the district
court must determine whether England can articulate a legitimate reason for
Barela’s discharge. See id. at 405 (citing Wilmot v. Kaiser Alum. & Chem.
Corp., 821 P.2d 18, 29 (Wash. 1991)). If England succeeds in articulating a valid
reason for Barela’s discharge, then Barela must show that his conduct was a
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“substantial factor” in his discharge. See id. (citing Wilmot, 821 P.2d at 30).
REVERSED and REMANDED.
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