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 th e captioned decision. The correction is a small fragment of a sentence th at 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 o f his allegations as true] Barela has satisfied the first three... A copy of the corrected page 11 is attached for you r convenience.
Sincerely, Patrick Fisher, Clerk of Court
By: Theresa Smith Deputy Clerk* The Honorable Lee R. West, Senior District Judge fo r the Western District

of Oklahoma, sitting by designation. 

## F I L E D United States Court of Appeals Tenth Circuit 

### DEC 21 1999 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

BUD F. BARELA,

Plaintiff - Appellant,

v. C.R. ENGLAND & SONS, INC., a Utah Corporation,

Defendant - Appellee. No. 98-4090

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. Niel son, with him on the briefs), Strong & Hanni, Salt Lake City, Utah, appearing forPlaintiff-Appellant. Alan E. Epstein, Hall & Evans, L.L.C., Denver, Colo rado (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 DefendantAppellee.

Before TACHA , KELLY , Circuit Judges, and WEST , * District Judge.

TACHA , Circuit Judge.
Plaintiff Barela sued defendant C.R. England & Sons , Inc. (“England”) for,- 2 -

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 2 8 U.S.C. § 1291 and reverse.
I. Facts Barela joined England as a truck driver in Decemberof 1993. By late spring of 1994, he had assumed the position of truc k 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 rec ord of any problem with Barela’s work until the two-to-three week period pr eceding 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 recru itment. 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 ea rn 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 Su mmit” meeting to facilitate company “brain storming” on accident red uction. Barela raised- 3 -

concerns at the meeting based on his students’ ques tions. Plaintiff and defendant dispute the tenor of Barela’s comments. However, i t is undisputed that Barela challenged England’s personnel practices and that at least one supervisor responded negatively. Immediately following the me eting, England’s vice president of operations instructed Barela’s supervi sor, Gary Thompson, to investigate Barela. On November 7, Thompson called Barela into his offi ce 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 ch eckbook during work hours. The record indicates that England did not offer thi s reason to Barela or enforce a policy against such activities prior to Barela’s di scharge.

II. Standard of Review “We review the district court’s grant of summary ju dgment de novo, applying the same legal standard used by the distri ct court.” Simms v. Oklahoma ex rel. Dep’t of Mental Health & Substance Abuse Se rvs. , 165 F.3d 1321, 1326- 4 -

(10 thCir. 1999). Summary judgment is appropriate only when “the pleadings, depositions, answers to interrogatories, and admiss ions 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 m ost favorable to the nonmoving party. Simms , 165 F.3d at 1326. III. Utah’s Public Policy Exception to the Employment-at-W ill Doctrine Absent a contractual term of duration, Utah law pre sumes 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 e ither 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 pre sumption 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 C ourt stated that

a public policy claim generally poses three questio ns: (1) Does the plaintiff’s termination implicate a cl ear and substantial public policy? (2) Did the employe r violate this public policy by requiring the employe e to engage in conduct violating the policy or by punish ing conduct furthering the policy? (3) Was violation o f this public policy a substantial factor in the plai ntiff’s termination? The plaintiff in Heslop urged his employer to correct violations of the Ut ah Financial Institutions Act, and his employer eventu ally fired him. Id. at 831-35.- 5 -

The Heslop court first found that the plaintiff had alleged aviolation of a clear and substantial public policy because the statute at issue ensured the safety of Utah financial institutions and protected the publi c. 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 pro blem” 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 empl oyer, 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 beca use 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 publ ic interest in any significant way.” Id. In Ryan , the plaintiff acted overzealously to “enforce” a statute prohibiting1 If the plaintiff establishes a prima facie case the n, 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 relev ant - 6 - pharmacists from knowingly filling improper prescri ptions. 972 P.2d at 399-400, 407. Plaintiff went beyond the statute’s requireme nts by mistreating and deceiving customers. Id. at 399, 410. As a result, many customers complain ed. Id. at 399. Management repeatedly counseled and warne d the plaintiff about the complaints, but the president of the company also c omplimented the plaintiff on his thoroughness in detecting fraudulent prescripti ons. Id. at 400. Ultimately, the company terminated the plaintiff for his treatment of customers. Id. The Ryancourt “recast the standard applied” in previous pu blic policy cases “to make analytical clarity and procedural re gularity 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 o f public policy.” Id. Under Ryan , plaintiff bears the initial burden of establishin g 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 “legit imate” 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 h is protected conduct was a “substantial factor” in his discharge. Id. (citing Wilmot , 821 P.2d at 30). 1admissible 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.” I d. If the employer produces some evidence of a legitimate basis for the dischar ge, 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 di scharge. See id. at 30-31.

2 We note that the Utah Supreme Court recently grante d 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 ha d not established a prima facie case of wrongful disc harge in violation of public policy because none of the statutes cited to the co urt expressed a relevant clear and substantial public policy); id at 283 (Greenwood, J., concurring) (concluding - 7 - 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 c lear and substantial public policy existed; (iii) that the e mployee’s conduct brought the policy into play; and (iv) thatthe discharge and the conduct bringing the policy into play are causally connected. Id. at 404 (footnote omitted). It was undisputed in Ryanthat the plaintiff was terminated, and the court found that clear and subs tantial public policies existed. Id. at 405, 408. The court further found that Ryan br ought the public policies into play when he “questioned prescriptions [that Utah l aw] required him to question” and “reported suspected criminal activity to the po lice.” Id. at 409. Citing to Foxand Heslop , the Ryancourt 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 “Foxthat a clear and substantial public policy did exis t, 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 notcontact public authorities until after she was fired). - 8 - 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 confl ict between Foxand 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 fo r summary judgment, the Utah Supreme Court had not yet decided Ryan . Consequently, the district court concluded that Barela’s wrongful discharge cl aim 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 substan tial 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 c onduct implicated the private concerns of England rather t han the public policies he cited- 9 -

to the court. Accordingly, the district court held that Barela’s termination did not fall within the public policy exception to Utah’s e mployment-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 thCir. 1994). Therefore, we must evaluate Barela’s claim under Ry andespite the fact that the district court did not have the benefit of that opi nion. For the purposes of summary judgment, England concedes that it fired Ba rela 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 pr ima facie case of wrongful discharge in contravention of public policy. In light of the Ryan court’s resolution of the apparent conflict betwee n Heslop and Fox , we further find that Barela has established the t hird element of the Ryanprima facie test. The third element requires an e mployee to show that his conduct brought a public policy into play. Rya n , 972 P.2d at 404. In Ryan , the Utah Supreme Court made it clear that an employ ee 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 c lear and substantial public policy. Ryan , 972 P.2d at 408 n.7. In other words, internal re porting alone is sufficient to bring a public policy into play when an employer’s violation of the- 10 -

policy at issue is detrimental to the public interest. The plaintiff in Foxdid not further a public policy when she reported to her employer that other employees were violating Utah l aw 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 publi c. 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: ques tioning drug prescriptions that Utah law required him to question and reporting sus pected criminal activity to the police. See 972 P.2d at 409. The district court found that Barela’s conduct, lik e the conduct of the plaintiff in Fox , implicated only the private interests of England. We disagree. At the Safety Summit meeting, Barela raised concern s based on his students’ questions about the annual pay and time off they cl aimed England had promised them. Barela knew that the students could only ear n the promised pay and time off if they violated state and federal regulations. Barela challenged England’s personnel practices and at least one supervisor res ponded negatively. England then investigated Barela, instructed him not to ans wer student questions about earning and time off potential, and criticized him for undermining the company’s- 11 -

goals. Shortly thereafter, England fired Barela. There is no question that Barela only objected inte rnally 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 intere st: promoting safe roads and deterring fraud. Thus, we hold that Barela broughtclear 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 aprima facie case of wrongful termination in violation of public policy. Thus, we reverse and remand this case for the district court to determin e 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 succee ds in articulating a valid reason for Barela’s discharge, then Barela must sho w that his conduct was a- 12 -

“substantial factor” in his discharge. See id. (citing Wilmot , 821 P.2d at 30). REVERSED and REMANDED.