NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 24 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
CHARLES DANIEL SMITH, No. 21-35149
Plaintiff-Appellant, D.C. No. 1:18-cv-00069-SPW-TJC v.
CHARTER COMMUNICATIONS, INC., MEMORANDUM*
Defendant-Appellee.
Appeal from the United States District Court for the District of Montana Susan P. Watters, District Judge, Presiding
Argued and Submitted December 8, 2021 Submission Vacated and Deferred January 18, 2022 Resubmitted July 20, 2023 San Francisco, California
Before: GRABER and COLLINS, Circuit Judges, and CHOE-GROVES,** Judge. Concurrence by Judge COLLINS.
Plaintiff Charles Daniel Smith alleges in this diversity action that Defendant
Charter Communications, Inc., violated Montana law by wrongfully discharging
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Jennifer Choe-Groves, Judge for the United States Court of International Trade, sitting by designation. him from employment. The district court granted summary judgment to
Defendant, and Plaintiff timely appealed.
In a published order, we certified to the Montana Supreme Court the
question whether, in a wrongful-discharge action, an employer may rely on a
reason other than the reasons stated in a discharge letter. Smith v. Charter
Commc’ns, Inc., 22 F.4th 1134, 1141 (9th Cir. 2022) (order). In Galbreath v.
Golden Sunlight Mines, Inc., 890 P.2d 382 (Mont. 1995), the Montana Supreme
Court held that, in defending against a wrongful-discharge claim, an employer may
rely only on the reasons given in a letter. Id. at 385. But statutory amendments in
1999 called into question the continuing vitality of the Galbreath rule, resulting in
a split in both federal-court and state-court rulings on the question. See Smith, 22
F.4th at 1139–41 (discussing the 1999 statutory amendments and relevant cases).
The Montana Supreme Court accepted our request for certification and
issued a published opinion. Smith v. Charter Commc’ns, Inc., 529 P.3d 871
(Mont. 2023). The court held that the statutory amendments did not affect the
Galbreath rule. Id. at 877. The court summarized that, although “the Galbreath
Rule precludes admitting irrelevant evidence of collateral reasons for discharge
other than the sole reason stated in the discharge letter, evidence offered to
substantiate the reasons already given in the discharge letter is admissible.” Id.
The parties have filed supplemental briefs to us on the effect of the Montana
2 Supreme Court’s decision. We now reverse the grant of summary judgment and
remand for further proceedings.
Defendant fired Plaintiff in early 2018 and, in a corrective action report
provided to Plaintiff, gave two reasons for the dismissal. Smith, 22 F.4th at 1136–
37. First, Defendant explained that Plaintiff allowed an employee to work as an
electrician, in violation of the company’s policy. Id. The parties do not dispute
that genuine issues of material fact preclude summary judgment as to that reason.
Id. at 1137.
Second, Defendant asserted that Plaintiff failed to fulfill a 50% travel
requirement in December 2017. Id. As we held initially, a genuine issue of
material fact precludes summary judgment as to this specific reason as well. Id. at
1138. In particular, both parties have presented conflicting evidence as to
“whether Defendant had imposed a 50% travel requirement on Plaintiff during
2017.” Id.
In sum, the Montana Supreme Court clarified that Defendant may defeat a
wrongful-discharge action only for the reasons given in a discharge letter. Smith,
529 P.3d at 877. Genuine issues of material fact exist as to both of the two reasons
in the corrective action report. Accordingly, summary judgment was improper.
Defendant points out that the Montana Supreme Court emphasized that the
Galbreath rule “does not restrict courts from considering evidence that supports or
3 substantiates the reason in the discharge letter by making its existence more
probable than not.” Id. at 876. According to Defendant, evidence that Plaintiff
was subject to a quarterly site-visit travel requirement and evidence that he failed
to meet that requirement falls within the Montana Supreme Court’s broad
description of relevant evidence. We need not decide that evidentiary question
because summary judgment was inappropriate even assuming that the evidence is
admissible.
The Montana Supreme Court explained that evidence is relevant if it tends to
prove a “fact of consequence,” and “the proffered reason an employer provides in a
termination letter is the ‘fact of consequence’ as to whether the employee was
wrongfully discharged.” Id. at 875. The relevant fact of consequence here is the
one specified in the corrective action report: Plaintiff’s failure to meet a 50%
travel requirement in December 2017. In order to justify the firing, then,
Defendant must prove that Plaintiff was subject to a 50% travel requirement in
December 2017.
Even assuming that the evidence concerning quarterly site visits is
admissible because it tends to show that Defendant imposed a similar requirement
in December 2017 (or that Plaintiff failed to meet that requirement), summary
judgment remains inappropriate. The evidence concerning the quarterly site-visit
requirement does not definitively prove that Plaintiff also was subject to a 50%
4 travel requirement in December—the “fact of consequence.” And, as noted,
Defendant may not justify the firing on the ground that Plaintiff failed to meet a
quarterly site-visit requirement, because that was not a reason specified in the
corrective action report.
REVERSED AND REMANDED for further proceedings. Costs on
appeal awarded to Plaintiff.
5 FILED Smith v. Charter Communications, Inc., No. 21-35149 JUL 24 2023 MOLLY C. DWYER, CLERK COLLINS, Circuit Judge, concurring: U.S. COURT OF APPEALS
I concur in the memorandum disposition, which correctly resolves this case
in light of the Montana Supreme Court’s answer to our certified question. See
Smith v. Charter Commc’ns, Inc., 529 P.3d 871 (Mont. 2023). There is, however,
one aspect of the Montana Supreme Court’s decision that I think warrants special
comment.
In our certification order, we requested that the Montana Supreme Court
answer the following question of Montana law:
Whether, in an action for wrongful discharge pursuant to Montana Code Annotated section 39-2-904, an employer may defend a termination solely for the reasons given in a discharge letter, as the court held in Galbreath v. Golden Sunlight Mines, Inc., 270 Mont. 19, 890 P.2d 382 (1995), or whether the 1999 statutory amendments have superseded the Galbreath rule.
Smith v. Charter Commc’ns, Inc., 22 F.4th 1134, 1141 (9th Cir. 2022) (emphasis
added). We explained that this issue was case-dispositive here because, if “good
cause” for termination under Montana law could be based on reasons other than
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NOT FOR PUBLICATION FILED UNITED STATES COURT OF APPEALS JUL 24 2023 MOLLY C. DWYER, CLERK U.S. COURT OF APPEALS FOR THE NINTH CIRCUIT
CHARLES DANIEL SMITH, No. 21-35149
Plaintiff-Appellant, D.C. No. 1:18-cv-00069-SPW-TJC v.
CHARTER COMMUNICATIONS, INC., MEMORANDUM*
Defendant-Appellee.
Appeal from the United States District Court for the District of Montana Susan P. Watters, District Judge, Presiding
Argued and Submitted December 8, 2021 Submission Vacated and Deferred January 18, 2022 Resubmitted July 20, 2023 San Francisco, California
Before: GRABER and COLLINS, Circuit Judges, and CHOE-GROVES,** Judge. Concurrence by Judge COLLINS.
Plaintiff Charles Daniel Smith alleges in this diversity action that Defendant
Charter Communications, Inc., violated Montana law by wrongfully discharging
* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36-3. ** The Honorable Jennifer Choe-Groves, Judge for the United States Court of International Trade, sitting by designation. him from employment. The district court granted summary judgment to
Defendant, and Plaintiff timely appealed.
In a published order, we certified to the Montana Supreme Court the
question whether, in a wrongful-discharge action, an employer may rely on a
reason other than the reasons stated in a discharge letter. Smith v. Charter
Commc’ns, Inc., 22 F.4th 1134, 1141 (9th Cir. 2022) (order). In Galbreath v.
Golden Sunlight Mines, Inc., 890 P.2d 382 (Mont. 1995), the Montana Supreme
Court held that, in defending against a wrongful-discharge claim, an employer may
rely only on the reasons given in a letter. Id. at 385. But statutory amendments in
1999 called into question the continuing vitality of the Galbreath rule, resulting in
a split in both federal-court and state-court rulings on the question. See Smith, 22
F.4th at 1139–41 (discussing the 1999 statutory amendments and relevant cases).
The Montana Supreme Court accepted our request for certification and
issued a published opinion. Smith v. Charter Commc’ns, Inc., 529 P.3d 871
(Mont. 2023). The court held that the statutory amendments did not affect the
Galbreath rule. Id. at 877. The court summarized that, although “the Galbreath
Rule precludes admitting irrelevant evidence of collateral reasons for discharge
other than the sole reason stated in the discharge letter, evidence offered to
substantiate the reasons already given in the discharge letter is admissible.” Id.
The parties have filed supplemental briefs to us on the effect of the Montana
2 Supreme Court’s decision. We now reverse the grant of summary judgment and
remand for further proceedings.
Defendant fired Plaintiff in early 2018 and, in a corrective action report
provided to Plaintiff, gave two reasons for the dismissal. Smith, 22 F.4th at 1136–
37. First, Defendant explained that Plaintiff allowed an employee to work as an
electrician, in violation of the company’s policy. Id. The parties do not dispute
that genuine issues of material fact preclude summary judgment as to that reason.
Id. at 1137.
Second, Defendant asserted that Plaintiff failed to fulfill a 50% travel
requirement in December 2017. Id. As we held initially, a genuine issue of
material fact precludes summary judgment as to this specific reason as well. Id. at
1138. In particular, both parties have presented conflicting evidence as to
“whether Defendant had imposed a 50% travel requirement on Plaintiff during
2017.” Id.
In sum, the Montana Supreme Court clarified that Defendant may defeat a
wrongful-discharge action only for the reasons given in a discharge letter. Smith,
529 P.3d at 877. Genuine issues of material fact exist as to both of the two reasons
in the corrective action report. Accordingly, summary judgment was improper.
Defendant points out that the Montana Supreme Court emphasized that the
Galbreath rule “does not restrict courts from considering evidence that supports or
3 substantiates the reason in the discharge letter by making its existence more
probable than not.” Id. at 876. According to Defendant, evidence that Plaintiff
was subject to a quarterly site-visit travel requirement and evidence that he failed
to meet that requirement falls within the Montana Supreme Court’s broad
description of relevant evidence. We need not decide that evidentiary question
because summary judgment was inappropriate even assuming that the evidence is
admissible.
The Montana Supreme Court explained that evidence is relevant if it tends to
prove a “fact of consequence,” and “the proffered reason an employer provides in a
termination letter is the ‘fact of consequence’ as to whether the employee was
wrongfully discharged.” Id. at 875. The relevant fact of consequence here is the
one specified in the corrective action report: Plaintiff’s failure to meet a 50%
travel requirement in December 2017. In order to justify the firing, then,
Defendant must prove that Plaintiff was subject to a 50% travel requirement in
December 2017.
Even assuming that the evidence concerning quarterly site visits is
admissible because it tends to show that Defendant imposed a similar requirement
in December 2017 (or that Plaintiff failed to meet that requirement), summary
judgment remains inappropriate. The evidence concerning the quarterly site-visit
requirement does not definitively prove that Plaintiff also was subject to a 50%
4 travel requirement in December—the “fact of consequence.” And, as noted,
Defendant may not justify the firing on the ground that Plaintiff failed to meet a
quarterly site-visit requirement, because that was not a reason specified in the
corrective action report.
REVERSED AND REMANDED for further proceedings. Costs on
appeal awarded to Plaintiff.
5 FILED Smith v. Charter Communications, Inc., No. 21-35149 JUL 24 2023 MOLLY C. DWYER, CLERK COLLINS, Circuit Judge, concurring: U.S. COURT OF APPEALS
I concur in the memorandum disposition, which correctly resolves this case
in light of the Montana Supreme Court’s answer to our certified question. See
Smith v. Charter Commc’ns, Inc., 529 P.3d 871 (Mont. 2023). There is, however,
one aspect of the Montana Supreme Court’s decision that I think warrants special
comment.
In our certification order, we requested that the Montana Supreme Court
answer the following question of Montana law:
Whether, in an action for wrongful discharge pursuant to Montana Code Annotated section 39-2-904, an employer may defend a termination solely for the reasons given in a discharge letter, as the court held in Galbreath v. Golden Sunlight Mines, Inc., 270 Mont. 19, 890 P.2d 382 (1995), or whether the 1999 statutory amendments have superseded the Galbreath rule.
Smith v. Charter Commc’ns, Inc., 22 F.4th 1134, 1141 (9th Cir. 2022) (emphasis
added). We explained that this issue was case-dispositive here because, if “good
cause” for termination under Montana law could be based on reasons other than
those given in Plaintiff Charles Daniel Smith’s discharge letter, we would affirm.
Id. at 1137–39. That was true, we held, because the “record decisively establishes”
good cause to terminate Smith on a ground that was not included in his termination
letter. Id. at 1137. But if “good cause” is limited to the reasons set forth in the discharge letter, we would reverse, because both reasons given in Smith’s
termination letter involve triable issues of fact. Id. at 1137–39. We therefore
asked the Montana Supreme Court to tell us whether intervening statutory
amendments had undermined Galbreath’s rule that only the reasons stated in a
discharge letter may be invoked to establish “good cause” for a termination under
Montana law.
In response, the Montana Supreme Court stated that, “[b]ecause the
Galbreath Rule is an evidentiary rule predicated on the Montana Rules of
Evidence, it has not been superseded by the 1999 statutory amendments.” Smith,
529 P.3d at 877 (emphasis added). In particular, the state high court held, Montana
caselaw applying the Galbreath rule “reflects analyses grounded in [Montana
Rules of Evidence] 401 and 402” about what counts as “relevant” evidence. Id. at
875. From the perspective of a federal court, this is a somewhat unsatisfying
answer to receive because, of course, the Montana Rules of Evidence generally do
not apply in a diversity case in federal court. See Primiano v. Cook, 598 F.3d 558,
563 (9th Cir. 2010) (noting the general rule that “[t]he question whether evidence
is admissible” in a diversity case “is governed by federal law”). Instead, Federal
Rule of Evidence 401 governs any determination in this case as to what evidence
“has any tendency to make” a fact of consequence “more or less probable than it
would be without the evidence.” See FED. R. EVID. 401(a).
2 On the other hand, state substantive law does determine what counts as a
fact “of consequence” in a diversity case. A leading treatise has explained this
crucial distinction as follows:
Deciding whether evidence is relevant and hence admissible as to an issue governed by state law sometimes requires careful analysis to distinguish between materiality (whether the fact sought to be proved “is of consequence in determining the action”—an issue governed by the applicable state substantive law) and relevance (whether the evidence offered has “any tendency” to make the fact’s existence more or less probable—an issue governed by the federal standard defined in Rule 401 and not by state law).
19 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & EDWARD H. COOPER, FEDERAL
PRACTICE AND PROCEDURE § 4512, at p.539 (3d ed. 2016) (“WRIGHT & MILLER”).
Here, the Montana Supreme Court squarely held that, “[i]n wrongful discharge
cases, this Court has determined that the proffered reason an employer provides in
a termination letter is the ‘fact of consequence’ as to whether the employee was
wrongfully discharged.” Smith, 529 P.3d at 875 (emphasis added) (citing, inter
alia, Galbreath, 890 P.2d at 385). That holding is a substantive rule of Montana
employment law, and its resolution in binding on us here.1 Under Montana law,
1 It is therefore irrelevant whether we are able to discern from the Montana Supreme Court’s opinion where that substantive rule comes from or what it is based on. Candidly, I am not sure that I know. As our certification order explained, this substantive rule of Montana law appeared to be derived from Swanson v. St. John’s Lutheran Hospital, 597 P.2d 702 (1979), which in turned derived it from since-repealed language in a statute. See Smith, 22 F.4th at 1139–
3 only the grounds for termination that are stated in the termination letter qualify as
the requisite “good cause.” Under that substantive rule, we must reverse the
summary judgment here.
I think that it is important to note, however, that the Montana Supreme
Court’s specification of the ultimate “fact of consequence” is the only aspect of
that court’s decision here that is applicable in any further proceedings in this case.
Much of the state high court’s decision in this matter is devoted to explaining that
court’s views as to the “wide range of evidence” that may be said to make the
grounds stated in the termination letter “more or less probable.” Smith, 529 P.3d at
876. That discussion will certainly be of interest to the lower courts of Montana,
but it is not controlling in federal court. “[W]hether the evidence offered has ‘any
tendency’ to make” the grounds stated in the termination letter “more or less
probable” is “an issue governed by the federal standard defined in Rule 401 and
not by state law.” WRIGHT & MILLER, supra, § 4512, at p.539.
Subject to these observations, I concur in the memorandum disposition
reversing the district court’s judgment.
40. The Montana Supreme Court has now clarified that Galbreath’s substantive rule is not based on the statute cited in Swanson and that the rule “reflects analyses and applications of the Montana Rules of Evidence.” Smith, 529 P.3d at 876. From the perspective of a federal court that is not bound by the Montana Rules of Evidence but that is bound by Montana law’s specification of what counts as an ultimate fact of consequence, this answer appears somewhat question-begging.