April 2019 Medley CLE

April May

May 1, 2019

Medley CLE

Ramkota Hotel Sheridan Room, Rapid City

Special THANKS to the Public Sector Section and the Administrative Law and Labor & Employment Law Committees for organizing this CLE!

9:00AM-9:15AM

Check-in: 8:30 am MST

Introductory Remarks

Public Sector Law 9:15AM-10:15AM

Ensuring Public Access – An Update on Open Meetings Laws Steve Blair, Attorney General’s Office, Pierre

10:15AM-11:15AM

Navigating the Quasi-Judicial Hearing

David Pfeifle, South Dakota Public Assurance Alliance , Sioux Falls

Administrative Law 11:15AM-12:15PM

Start to Finish: Handling an Administrative Appeal

ALJ Catherine Williamson, Office of Hearing Examiners, Pierre

12:15PM-1:30PM

Administrative Law Practice: A Perspectives Panel (LUNCH PROVIDED BY SD PUBLIC ASSURANCE ALLIANCE)

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ALJ Catherine Williamson, Office of Hearing Examiners, Pierre Steve Blair, Attorney General’s Office, Pierre

Labor & Employment Law 1:30PM-2:30PM

Navigating the Employment Relationship: Hiring, Firing & Disciplining Employees Jennifer Frank, Lynn, Jackson, Shultz & Lebrun, Rapid City

2:30PM-3:30PM

Recent Developments & What Lies Ahead for Public Sector Employment Law & Labor Relations Nichole Mohning, Cutler Law Firm, Sioux Falls

This program is free to all Active Members of the State Bar of South Dakota; all others $100.

Introductory Remarks

Ensuring Public Access – An Update on Open Meetings Laws Steve Blair Attorney General’s Office Pierre

Steve Blair is an Assistant Attorney General working in Pierre, South Dakota. Steve has been with the Attorney General’s Office for almost 14 years and currently works within the Civil Division of the Attorney General’s Office. Steve has experience in the areas of administrative law, state and federal appeals, civil litigation, and criminal prosecution. Prior to joining the Attorney General’s Office, Steve clerked for the 5th Judicial Circuit in Aberdeen, South Dakota. Steve graduated from Northern State University in 2001, and received his law degree from the University of South Dakota in 2004.

OPEN MEETINGS

South Dakota Office of the Attorney General Steve Blair Assistant Attorney General

DISCLAIMER • All content and comments are the presenter’s individual impressions or opinions, and may contain errors or omissions. Individuals are specifically advised to consult with appropriate legal counsel regarding any individual open meetings issue.

• Nothing contained in, or said during, this presentation is intended to be the official position of the South Dakota Open Meetings Commission or any member of the Commission.

• Nothing contained in, or said during, this presentation is intended to be the opinion of the Attorney General or the official opinion of the Attorney General’s Office.

OBJECTIVES 1. Overview of state open meetings statutes • SDCL ch. 1-25 2. Enforcement of open meetings violations

2019 LEGISLATIVE CHANGES Senate Bill 91 • Minor changes to the substantive content of SDCL ch. 1-25 • Reorganized and made other style & form changes • Takes effect on July 1, 2019

BASIC RULE SDCL 1-25-1 • “The official meetings of the state and its political subdivisions are open to the public…”

PURPOSE “…to prohibit actions being taken at secret meetings where it is impossible for the interested public to become fully informed and to detect improper influences.”

• Olson v. Cass, 349 N.W.2d 435 (S.D. 1984)

OFFICIAL MEETING? An official meeting is: “Any meeting of a quorum of a public body at which official business or public policy of that public body is discussed or decided … whether in person or by means of teleconference.”

• SB 91, § 1(3)

OFFICIAL MEETING Regular meetings of the body… But, what about?

• Lunches • Sporting events • Social events • Email discussions?

OFFICIAL MEETING Email Discussions?

• Definition of teleconference includes

“any … electronic medium, including the internet.”  SB 91, § 1(4)

OFFICIAL MEETING -- EXCEPTIONS All found in SDCL 1-25-1 1. Meeting with other bodies • “provide information or attend the official meeting of another [body]…” SDCL 1-25-1 • 2nd body must meet the notice requirements of Ch. 1-25

OFFICIAL MEETING -- EXCEPTIONS 2. Attending

a press conference “called by a representative of the public body.” SDCL 1-25-1

3. Event

by Non-gov’t entity where the public body does not control the agenda • Must post “notice of agenda” to include date, time, and location • must meet posting requirements of SDCL ch. 1-25

OFFICIAL MEETING -- EXCEPTIONS 4. Quorum of “township supervisors, road district trustees, or trustees for a [3rd class municipality] who meet solely for the purpose of:” • Implementing previously adopted public policy, • Carrying out ministerial functions, or • Undertaking factual investigations of conditions related to public safety.

PUBLIC NOTICE

SDCL 1-25-1.1 -- Political Subdivisions • Must Provide:  Notice of the meeting, including a proposed agenda  Must state the date, time and location • Must Be:  Visible to the public, readable, and in an accessible location  At least “an entire, continuous twenty-four hours immediately preceding ” the meeting  Posted at the principal office of the public body • Must also be posted on website if website exists

PUBLIC NOTICE Special or rescheduled meetings • Notice requirements the same “to the extent that circumstances permit” SDCL 1-25-1.1 • Notice must be delivered by mail, email, or in person to news media who have requested notice 

Must make an honest effort

Remember: must comply with any other requirements of state code?

• Special publication or other notice requirements elsewhere in state law

PUBLIC NOTICE

SDCL 1-25-1.3 -- State (incl. all boards and agencies) • Must Provide:  Notice of the meeting with proposed agenda  Must state the date, time and location • Must Be:  Visible to the public, readable, and in an accessible location  Posted at the principal office of the public body  At least 72 hours before the meeting is scheduled to start - Does not include weekends, or holidays • Must also be posted on state website designated by BFM  http://boardsandcommissions.sd.gov/

PRINTED MATERIALS SDCL 1-27-1.16 • Must be made public when provided to the members of the body or at least 24 hrs prior to the meeting  Posted on the website  Made available at prin. place of business • If not posted on website: at least ONE copy in the meeting room • Not required for exempt material  Attorney-client or Executive session materials

MEETING MINUTES SDCL 1-25-3: State entities must keep detailed minutes • Must include each members vote on any roll call • Must be available for inspection at all times at PPOB SDCL 7-10-1 • County Auditor to keep accurate record of official proceedings SDCL 9-18-1.1 • Auditor/Clerk responsible for keeping a record of the proceedings

MEETING MINUTES SDCL 1-27-1.17 • Unapproved draft minutes of any meeting held pursuant to SDCL 1-25-2  Must be made available w/in 10 business days after meeting  Does not apply if audio/video recording is available on website within 5 business days after meeting

TELECONFERENCES Teleconference: information exchanged by audio, video, or electronic medium including the internet • SB 91, § 1(4) Can be used to conduct a hearing or take final disposition on an administrative rule • SDCL 1-25-1; SB 91, § 3 Member is present if answers present during roll call Every vote must be taken by roll call

TELECONFERENCES Notice Requirements •

Posting and Agenda Requirements are the SAME

•

Allow “at least one” place for the public to listen and participate.  SDCL 1-25-1; SB 91, § 4

• If less than quorum of members present at the location for public participation, then must provide public the opportunity to listen via telephone or internet • Does not apply to executive or closed meetings

COMMITTEES/TASK FORCES Must follow open meetings rules if created by statute, ordinance, or resolution and have authority to exercise “sovereign power.”

• SDCL 1-25-1 If not one of the above, then not a public body bound by open meeting statutes, and then…

• Final recommendation, finding, or report SHALL be reported in open meeting of the governing body.

• Governing body MUST DELAY final action until next meeting (SDCL 1-27-1.18) • Encouraged to comply with open meetings requirements

EXECUTIVE SESSION May be held for the purpose of discussing: • Employee competence or qualifications (independent contractors are not “employees”) • Student discipline or eligibility for programs or activities • Communications with attorney regarding proposed or pending litigation, or contract matters • Preparing for or conducting labor negotiations • Marketing strategies of government owned business • Public safety information (SDCL 1-27-1.5(8)), or emergency response information (SDCL 1-27-1.5(17)).

EXECUTIVE SESSION Not limited to only the 6 listed situations •

“Nothing in 1-25-1 or this section prevents an executive or closed meeting if the federal or state Constitution or the federal or state statutes require or permit.” SDCL 1-25-2

Covers other grants of confidentiality or privilege found in state or federal law •

attorney/client privilege

•

economic development information (SDCL 9-39-19)

•

Confidential medical or mental health information

EXECUTIVE SESSION Motion, second and majority vote of those present to enter • Purpose and legal citation must be stated in the closure motion.

NO official action can be taken in executive session • Official action may only be taken upon return to open session

NO discussions of any other matters other than those cited in the motion

PUBLIC RECORDING SDCL 1-25-11 • The public is allowed to audio or video record a public meeting as long as  Reasonable  Obvious  Not disruptive

PUBLIC COMMENT SDCL 1-25-1; SB 91, § 2 Must allow public comment period at meeting Limited at the public body’s discretion Minimum -- Must be allowed at every regularly scheduled meeting designated as such by statute, rule, or ordinance

STATE’S ATTORNEY ENFORCEMENT SDCL 1-25-6 & 1-25-6.1 State’s Attorney has 3 options: • Charge Class 2 Misdemeanor • Dismiss (“no merits” letter)  Send copy of complaint and investigation file to AG

• Refer to Open Meeting Commission for further action Conflict of interest – refer to another SA • Refer to AG only if complaint against Board of County Commissioners, and only if no other conflict option available

OPEN MEETINGS COMMISSION 5 State’s Attorneys appointed by the Attorney Gen. Jurisdiction only once referred by a State’s Attorney • No independent review of open meetings complaints Jurisdiction only over SDCL ch. 1-25 No investigative authority • Rely upon the record developed by the State’s Attorney and the parties

OPEN MEETINGS COMMISSION Procedure: • State’s Attorney makes referral to OMC • Public Body given opportunity respond in writing • Hearing scheduled and arguments heard • Majority of OMC makes decision • Written decision issued and filed with A.G.

OPEN MEETINGS COMMISSION No right of appeal -- decision of the OMC is final No mechanism for reconsideration in statutes If OMC finds a violation: • Can only issue public reprimand • Cannot impose fines or other penalties • Cannot send back to State’s Attorney or to Attorney General for criminal prosecution Final decision is a public record

QUESTIONS?

CONTACT INFO (605) 773-3215 steven.blair@state.sd.us

Navigating the Quasi-Judicial Hearing David Pfeifle South Dakota Public Assurance Alliance Sioux Falls

Dave Pfeifle is the Executive Director of the South Dakota Public Assurance Alliance (SDPAA), the Liability and Property risk-sharing pool for 428 local governments in South Dakota. SDPAA Members include counties, municipalities, townships, and other local public entities in SD. He is a graduate of the University of South Dakota, the USD School of Law, and a member of the State Bar of South Dakota.

Dave began his public service journey almost thirty years ago as an intern for the U.S. Senate and has since held positions with other branches of Federal and State government. Prior to joining the SDPAA, he represented dozens of local governments as either outside litigation counsel or as in-house counsel while serving as a Deputy State’s Attorney for Stanley County and as a City Attorney for Pierre and Sioux Falls. He also served as a Public Defender for Lincoln County. In 2012, he was appointed and served as the local government representative for Governor Dennis Daugaard’s Open Government Task Force.

THE QUASI-JUDICIAL QUAGMIRE STATE BA R O F S D CO N T I N U ING L EG A L E DU CAT I O N S E M INAR M AY 1 , 2 0 1 9 DAV E P F E I F L E

Nature of Governmental Actions: Governmental bodies, tribunals, agencies, boards, and officials, in performance of their public duties, exercise functions that are divided into three general categories: 1.

Legislative 2.

Quasi-Judicial 3.

Executive • Source: M. Holman, Ohio State LJ, Vol. 33, Zoning Amendments— the Product of Judicial or Quasi-Judicial Action, at 130, 134 (1972).

Historical understanding of “Legislative” vs. “Quasi-judicial”

A “legislative” action is usually open-ended, affecting a broad class of individuals or situations. A “quasi-judicial” action tends to be more retrospective, affecting certain individuals.

A “legislative” action results in the formulation of a general rule or policy. A “quasi-judicial” action results in the application of a general rule or policy.

Source: M. Holman, Ohio State LJ, supra, at 130, 134.

Court scrutiny of Legislative Actions: Legislative action has a strong presumption of constitutionality. This presumption is overcome by evidence beyond reasonable doubt . State v.

Allison, 2000 SD 21, ¶ 5, 607 N.W.2d 1, 2.

Generally, Legislative action must bear substantial relation to the public health, safety, morals or welfare. If “fairly debatable,” then it withstands court scrutiny.

Legislative action requires only limited safeguards. The legislative process is highly visible and is “self-remedying at the polls.” M. Holman, Ohio State LJ, supra, at 132-134.

Executive Actions • An executive or administrative action is simply executing or administering a law already in existence.

• Any one government action can be a combination of the three categories, including executive and quasi-judicial.

• Source: M. Holman, Ohio State LJ, supra, at 132-134

“Quasi-judicial” defined by statute: SDCL 1-32-1 (10): “Quasi-judicial function” means an adjudicatory function exercised by an agency, involving the exercise of judgment and discretion in making determinations in controversies. The term includes the functions of interpreting, applying, and enforcing existing rules and laws; granting or denying privileges, rights, or benefits; issuing, suspending, or revoking licenses, permits and certificates; determining rights and interests of adverse parties; evaluating and passing on facts; awarding compensation; fixing prices; ordering action or abatement of action; holding hearings; adopting procedural rules or performing any other act necessary to effect the performance of a quasi-judicial function[.]”

Procedural issues for the “Quasi-judicial� hearing: Armstrong v. Turner Co., 772 N.W.2d 643 (SD 2009) Hanson v. Minnehaha Co., 2014 S.D. 75

Questions after Hanson: 1. What quasi-judicial matters beyond CUPs are affected by the decision?

2. Can Public Officials have any ex parte communications with/from constituents on a “quasi-judicial� matter? Would those communications disqualify that Public Official as a decision-maker?

3. Can Public Officials use background knowledge in a quasi-judicial matter?

Would its use in rendering a decision disqualify that Public Official as a decision-maker?

4. How should a quasi-judicial hearing be conducted?

Recognized Quasi-judicial functions: Granting or denying Conditional Use Permits Issuing Licenses Issuing Variances Resolution of a Land drainage dispute See: Croell Redi-Mix, Inc. v. Penn. Co. Bd of Comm’rs, 905 N.W.2d 344, 352 n. 5 2017 SD 87 (CUPs & Variances) Surat Farms, LLC v. Brule Co. Bd. Of Comm’rs, 2017 SD 52

The 2015 SD Legislature’s response: Adopts SDCL §§ 6-1-18 through 21.

Governs Public Officers of municipalities, counties, and townships.

SDCL 6-1-18

An elected or appointed municipal, county, or township officer may receive and consider relevant information from any source to perform the duties of office. An elected or appointed municipal, county, or township officer may rely on his or her own experience and background on any official matters, subject to the applicable law and rule concerning recusal and disqualification of a public officer.

SDCL 6-1-19: Any public hearing or meeting conducted by an elected or appointed municipal, county, or township officer regarding any proposed ordinance, resolution, or regulation on any subject is legislative in nature and may be conducted informally to the extent the officer deems necessary to secure public comment on matters of public interest. The formal rules of procedure and evidence do not apply to the conduct of the public hearing or meeting. This provision does not abrogate any open meeting requirements in chapter 1-25.

SDCL 6-1-20: Any public hearing or meeting conducted by an elected or appointed municipal, county, or township officer regarding a quasi-judicial matter as defined in subdivision 1-32-1(10) may be conducted informally to secure the information required to make a decision. The formal rules of procedure and evidence do not apply to the conduct of the public hearing or meeting. If an officer relies upon any evidence not produced at a public hearing or meeting, the officer shall disclose the evidence publicly and include the information in the public record to afford all parties an opportunity to respond or participate. Failure to make this disclosure may be grounds for the municipal, county, or township officer's disqualification for that particular decision, pursuant to the grounds for disqualification pursuant to ยง 6-1-21.

When is Recusal required?

Would any ex parte communications with/from constituents on a “quasi-judicial” matter disqualify that Public Official as a decisionmaker?

Would a Public Official’s use of any background knowledge not produced at the hearing in a quasi-judicial matter disqualify that Public Official as a decision-maker?

SDCL 6-1-21: An elected or appointed municipal, county, or township officer may receive input from the public, directly or indirectly, about any matter of public interest. Such contact alone does not require the officer to recuse himself or herself from serving as a quasi-judicial officer in another capacity. An elected or appointed officer is presumed to be objective and capable of making decisions fairly on the basis of the officer's circumstances and may rely on the officer's own general experience and background. Only by a showing of clear and convincing evidence that the officer's authority, statements, or actions regarding an issue or a party involved demonstrates prejudice or unacceptable risk of bias may an officer be deemed disqualified in a quasijudicial proceeding.

“Quasi-judicial” watershed moment: • State of SD, Department of GFP v. Troy Township, Day County et al, 900 N.W.2d 840, 2017 SD 50.

• Township boards vacated section line highways. GFP appealed.

• “Since the 1970s, however, some of this Court’s decisions have blurred the distinction between quasi-judicial and non-quasijudicial acts. Today we reassert the separation-of-powers doctrine.

[W]e hold that de novo review is not constitutionally permissible in this case and that the [GFP] has the burden of proof. Id. at ¶13.

The Judiciary’s Role under the Separation of Powers Doctrine: • Court will not exercise or participate either directly or on appeal in the exercise of legislative, administrative, political, discretionary, or purely ministerial functions.

• Court rejects any cases that fail to distinguish between quasijudicial and non-quasi-judicial administrative action.

• Under the separation of powers doctrine, the Courts may not substitute their judgment for that of an administrative board on issues that are not quasi-judicial.

• Source: State of SD, Department of GFP v. Troy Township, Day County et al, 900 N.W.2d 840, at ¶¶14, 15, 20 (SD 2017)

Troy Township defines “Quasi-judicial” • “Administrative action is quasi-judicial if it investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist rather than looking to the future and changing existing conditions by making a new rule, to be applied thereafter to all or some part of those subject to its power.”

• Source: State of SD, Department of GFP v. Troy Township, Day County et al, supra, at ¶ 21 (quotations omitted)(emphasis added)

De Novo Review only for “Quasi-judicial” • “[W]hen presented with an appeal of administrative action under a statute prescribing de novo review, a circuit court must determine whether the action appealed is quasi-judicial. De novo review is only appropriate if the administrative action is quasijudicial.”

• If not quasi-judicial, then review is limited to whether the action was arbitrary, unreasonable, or a manifest abuse of discretion.

• Source: State of SD, Department of GFP v. Troy Township, Day County et al, supra, at ¶ 24.

A Closer look at Conflicts of Interest • SDCL 6-1-17 (2005): “No county, municipal or school official may participate in discussing or vote on any issue in which the official has a conflict of interest.”

• Identifies a specific conflict: “direct pecuniary interest.”

• Or any conflict that a two-thirds vote of the body determines is an identifiable conflict of interest that should prohibit the official from voting.

• “If an official with a direct pecuniary interest participates in discussion or votes on a matter before the governing body, the legal sole remedy is to invalidate that official's vote.”

Conflicts of Interest (part 2) • SDCL 6-1-1 prohibits any officer of a county, municipality, township, or school district, either appointed or elected, “to be interested, either by himself or agent,” in the listed contracts entered into by the local government; contract is null and void.

• SDCL 3-16-7: A public officer who has authority to enter into a contract in their official capacity, who “voluntarily becomes interested individually” is guilty of a Class 2 Misdemeanor.

Other Conflicts of Interest (part 3) 1. Indirect Pecuniary Interest: participating or voting on a matter that financially benefits someone closely tied to the official such as an employee or family member.

2. Direct Personal Interest: participating or voting on a matter that benefits a blood relative or close friend in a non-financial way but in a matter of importance to the individual.

3. Indirect Personal Interest: participating or voting on a matter in which an individual’s judgment may be affected because of membership in some organization or relationship to a nonrelative

Conducting a Quasi-judicial hearing Any specific Notice or Agenda requirements?

Decision-maker disclosures of actual or potential conflicts.

Pre-hearing disclosure of written communications received?

Formal Rules of Procedure & Evidence do not apply, SDCL 6-1-20.

Final Note on Zoning: Joffer et al v. Turner Co., Turner Co. Civ. No. 15-18 (9/29/15) Planning Commission holds hearing and recommends County Commission approve Proposed Revisions to Zoning Ordinances.

County Commission during Second Reading first discloses certain amendments then adopts as amended.

County then issues CUP per amended Ordinances, neighbors allege statutory due process violations, Circuit Court agrees.

2016 SD Legislature’s response: SDCL ch. 11-2 amended to allow a County Commission to adopt or reject a Planning Commission recommendation “with or without changes.” 2016 SD Session Laws, ch. 71 § 1.

An additional response: SDCL 9-19-7.1 (2016): “If any amendment presented and approved by the governing body at the second reading of an ordinance substantially alters the substance of the ordinance from the first reading, the proposed ordinance as amended may not be considered for final adoption until at least five days after a duly noticed public meeting of the governing body pursuant to chapter 1-25.”

Compare: SDCL 6-1-19 (adoption of ordinance is a “legislative” act)

QUESTIONS?

Thank you!

Disclaimer: while the presenter is an attorney, this presentation is for general information purposes only and should not be construed as providing legal advice or opinions for a specific situation. The audience is encouraged to contact the attorney of their choice for any specific legal discussion and legal advice.

Start to Finish: Handling an Administrative Appeal ALJ Catherine Williamson Office of Hearing Examiners Pierre

Catherine Williamson graduated from USD Law School in 2000. She has been employed as the Chief Hearing Examiner since January 2016. Mrs. Williamson began her legal career with the State of South Dakota as a Department of Labor Administrative Law Judge in November 2003. She heard Unemployment Insurance hearings and moved on to Workers Compensation and Labor Issues. She then spent 8 months as Legal Counsel to the Bureau of Administration before taking her current position with the Office of Hearing Examiners. Prior to her tenure in Pierre, she spent time as a Deputy State’s Attorney in Meade County and as a Law Clerk for the Fifth Circuit. In her spare time, she volunteers with Rotary and other local organizations.

Administrative Law: Handling your First Administrative Matter and Appeal Andrew Fergel October 10, 2014 ADMINISTRATIVE HEARINGS I.

Legal Representation in Contested Cases.

A. As in court proceedings, corporations must be represented by counsel in administrative proceedings. There are exceptions. See, e.g., SDCL 10-11-42.3 – Designated shareholder permitted to represent subchapter S corporation during a property tax appeal.

B. In order to appear in an administrative hearing, nonresident counsel must seek and obtain court approval through a pro hoc vice motion.

SDCL 16-18-2. Resident counsel must appear with the counsel if the pro hoc vice motion is granted. Id. This is the same rule as for circuit court.

C. Natural persons are entitled to appear pro se. Pro se litigants are not entitled to capitalize on unfamiliarity with the law and are bound by the same rules of evidence and procedure that bind attorneys and judges. Oesterling v. Oesterling, 354 N.W.2d 735, 737 (S.D. 1984); Farmers Coop. Elevator Co. of Revillo v. Johnson, 90 S.D. 36, 42, 237 N.W.2d 671, 674 (1976);see also Citibank S.D., N.A. v. Schmidt, 2008 S.D. 1, ¶ 26, 744 N.W.2d 829, 836 (Zinter, J., concurring in part and dissenting in part).

II.

Pre-hearing Procedure.

A. Pursuant to SDCL 1-26-16, a notice of hearing must be issued for a contested case hearing. See also SDCL 1-26-17. The notice “must fairly apprise a party of the issues so the party can adequately prepare a defense.” In re One-Time Special Underground Assessment by N. States Power Co., 2001 S.D. 63, ¶ 19; 628 N.W.2d 332, 336; In re Bertram, 343 N.W.2d 382, 384 (S.D. 1984). Other than notices for contested cases before the Public Utilities Commission, all notices must state that if the case involves termination of a property right or a dispute involving more than $2,500, any party has a right to use the Office of Hearing Examiners. SDCL 1-26-17. The party must make the request to the agency within ten days after service of the notice of hearing. SDCL 1-26-17. In some cases, the agency itself will elect to obtain the 1

services of a hearing examiner and one will be appointed. SDCL ch.

1-26D. However, the Office of Hearing Examiners is required to “hear all cases that arise under Titles 10 and 58 and chapter 1-27.”

SDCL 1-26D-4.

B. The notice of hearing must give the parties time to prepare a defense. Seven days is likely inadequate. In re S.D. Water Mgmt.

Bd. Approving Water Permit No. 1791-2, 351 N.W.2d 119, 124 (S.D. 1984) (reiterating its prior ruling that notice by publication seven days (which included a three-day weekend) prior to the hearing was insufficient); In re Union Carbide Corp., 308 N.W.2d 753, 759 (S.D. 1981). Twenty days’ notice is common.

C. Some agencies routinely issue procedural orders at the initiation of cases before a notice of hearing is even issued. The procedural orders usually include, times for filing notice of appearance with all other parties, exchange of exhibits, and pre-hearing conferences. If law does not establish times for intervention, the procedural orders may include a deadline for such filings. These scheduling orders may also include briefing or motion deadlines.

D. The administrative rules for some agencies provide for a prehearing chairperson to decide on prehearing motions at a prehearing conference. The administrative rules governing the Board of Minerals and Environment provide that “Any decision made by the chair of the hearing is a final decision of the board unless the board overrules the decision of the chair of the hearing.” ARSD 74:09:01:08. Further, any matter that may properly be discussed “at a pretrial conference under the rules of civil procedure may be heard at the prehearing conference.” ARSD 74:09:01:10.

E. Prehearing decisions do not require findings of fact and conclusions of law. The Supreme Court equates this procedure with that found in SDCL 15-6-52(a). Because “findings of fact and conclusions of law are typically not required when deciding civil pretrial motions,” the same applies for administrative cases. In re SDDS, Inc., 472 N.W.2d 502, 509 (S.D. 1991).

III.

Administrative “Civil Procedure.”

A. The rules of civil procedure are not generally applicable at the agency level. Enger v. FMC, 2000 S.D. 48, ¶ 16, 609 N.W.2d 132, 136; Sowards v. Hills Materials Co., 521 N.W.2d 649, 652 (S.D. 1994); Lawler v. Windmill Rest., 435 N.W.2d 708, 709 n.3 (S.D. 1988).

2

B. Discovery is specifically authorized. SDCL 1-26-19.2. It is to be conducted in the same manner as civil cases. SDCL 1-26-19.2.

Also, informal discovery is permissible. Sowards v. Hills Materials Co., 521 N.W.2d 649, 652 (S.D. 1994). In Sowards, a worker’s compensation proceeding, the Court held that the Department of Labor’s order establishing rules for informal discovery was “a reasonable means of protecting the claimant’s privacy interests while accommodating the nonadversarial, informal nature of worker’s compensation proceedings.”

C. Summary judgment at the administrative level is allowed under SDCL 1-26-18(1). Agencies may, upon motion, dispose of any defense or claim “[i]f the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and a party is entitled to a judgment as a matter of law[.]” Id. A “directed verdict” at the administrative level is also allowed under SDCL 1-26-18(2).

D. Although subpoenas are not issued under the rules of civil procedure, SDCL 1-26-18 provides that parties may “have subpoenas issued to compel attendance of witnesses and production of evidence in the party’s behalf.” See also SDCL 1-26-19.1.

E. Like civil cases, failure to present issues at the administrative level constitutes waiver of that issue on appeal. Stuckey v. Sturgis Pizza Ranch, 2011 S.D. 1, ¶ 19 n.3, 793 N.W.2d 378, 386 n.3; Enger v.

FMC, 2000 S.D. 48, ¶ 16, 609 N.W.2d 132, 136. In Enger, the Court stated that “the need to present an issue to the decisionmaker is inherent in administrative proceedings.” 2000 S.D. 48, ¶ 16, 609 N.W.2d at 136.

IV.

Estoppel, Res Judicata, and Stare Decisis.

A. An administrative agency is not bound by its own precedent. In re W. River Elec. Ass’n, 2004 S.D. 11, ¶ 25 & n.3, 675 N.W.2d 222, 230 & n.3; Yellow Robe v. Bd. of Trs. of S.D. Ret. Sys., 2003 S.D. 67, ¶ 14, 664 N.W.2d 517, 520; Interstate Tel. Coop. v. Pub. Utilities Comm’n, 518 N.W.2d 749, 752-53 (S.D. 1994) (stating that “administrative agencies are not bound by stare decisis as it applies to previous agency decisions”); Motor Vehicle Mfrs. Ass’n of the United States, Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 42 (1983). This is because “public interest” is a factor the agency must consider. Interstate Tel. Coop., 518 N.W.2d at 752-53. The “agency’s view of what is in the public interest may change, either with or without a change in circumstances.” Id. 3

B. The Court has adopted the doctrine of judicial estoppel for administrative proceedings. Hayes v. Rosenbaum Signs & Outdoor Adver., Inc., 2014 S.D. 64, ¶¶ 13-15, ___ N.W.2d ___; see also Guthmiller v. S.D. Dep’t Transp., 502 N.W.2d 586, 589 (S.D. 1993) (reiterating its prior holdings that “a party cannot claim the benefit of a version of the facts more favorable than given in testimony.”)

C. The doctrine of res judicata is “equally applicable to contested administrative hearings as it is to judicial proceedings.” Gottschalk v. S.D. Real Estate Comm’n, 264 N.W.2d 905, 907 (S.D. 1978). See also Jundt v. Fuller, 2007 S.D. 62, ¶ 12, 736 N.W.2d 508, 513; McElhaney v. Anderson, 1999 S.D. 78, ¶ 13, 598 N.W.2d 203, 206; Schmidt v. Zellmer, 298 N.W.2d 178, 180 (S.D. 1980).

D. Both claim preclusion and issue preclusion can be applied in the administrative setting in South Dakota. Krull v. Jones, 46 F. Supp.

2d 997 (D.S.D. 1999). See also Hayes v. Rosenbam Signs & Outdoor Adver., Inc., 2014 S.D. 64, ¶¶ 9-11, ___ N.W.2d ___; Farmer v. S.D. Dep’t of Revenue & Regulation, 2010 S.D. 35, ¶¶ 9-10, 781 N.W.2d 655, 659-60. In Interstate Tel. Coop. v. Pub. Utilities Comm’n, 518 N.W.2d 749 (S.D. 1994), the Supreme Court explained that “in the administrative setting, . . . ‘res judicata is at its best in foreclosing a second determination of issues of fact,’” (citing 4 Kenneth Culp Davis, Administrative Law Treatise § 21:2 at 49 (2d ed. 1983)).

E. Administrative decisions are entitled to preclusive effect in the courts, including federal courts. Krull v. Jones, 46 F. Supp. 2d 997, 1000-01 (D.S.D. 1999). If a final unappealed decision meets the requisite tests for issue preclusion or claim preclusion, the federal courts recognize it as binding on the question. Id. V.

Contested Case Hearings.

A. Be prepared and think about your case in advance.

1. Every attorney or pro se party appearing before an agency should understand the statutory requirements regarding the issue to be presented. For example, if the question is whether a water right should be granted, the attorney should know the statutory requirements for the granting of the water right. The appeal, if any, will most likely be narrowly focused on just those issues.

2. The attorney or pro se party should make the argument in terms of the statutory requirements.

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3. An applicant for a state license or permit should make sure that there is evidence presented on each statutory requirement. The opponent probably wants to select one or more requirements which he or she believes are not met and present evidence on that or those issues.

4. If there is a dispute over whether a requirement is met, the applicant (or opposing party) should directly confront the opposing evidence, if possible. The applicant (or opposing party) should, in any case, introduce enough evidence to persuade a reasonable person of the rightness of his or her position. The applicant (or opposing party) should introduce enough evidence to allow the formulation of a finding which has substance. It is surprising how often an issue arises, and the direct evidence in the record supporting a particular point of view is only a sentence or two. The finding will be based on the record, nothing more, and it is prevailing party’s responsibility to make sure that there is support in the record for the position he or she is taking.

5. Know the applicable burdens of proof. The general burden of proof is “preponderance of the evidence.” In re Setliff, 2002 S.D. 58, ¶ 13, 645 N.W.2d 601, 605; Foley v. State ex rel. S.D. Real Estate Comm’n, 1999 S.D. 101, ¶ 6, 598 N.W.2d 217, 219; Kent v. Lyon, 1996 S.D. 131, ¶ 15, 555 N.W.2d 106, 111. However, if a professional license is at stake and a person’s livelihood is involved, then the State’s burden is stronger and the “clear and convincing evidence” burden applies. In re Setliff, 2002 S.D. 58, ¶ 13, 645 N.W.2d at 605; Foley, 1999 S.D. 101, ¶ 6, 598 N.W.2d at 219; Kent, 1996 S.D. 131, ¶ 15, 555 N.W.2d at 111; In re Zar, 434 N.W.2d 598, 602 n.7 (S.D. 1989). “The “clear and convincing” standard lies somewhere between the rule in ordinary civil cases and requirements of our criminal procedure, that is, it must be more than a mere preponderance but not beyond a reasonable doubt.” In re Setliff, 2002 S.D. 58, ¶ 13, 645 N.W.2d at 605 (internal quotation marks omitted).

6. Discuss the various issues pertaining to the hearing with the other parties in advance. Often times, a simple clarification of facts avoids lengthy confusion at hearing. Regardless of whether a formal procedural order has been entered, you should be able to request and receive a copy of most exhibits in advance, as well as a copy of the agency file.

7. Absent a statutory exception, the circuit court’s review is confined to the administrative record below. In re B.Y. Dev., Inc., 2000 S.D. 102, ¶ 9, 615 N.W.2d 604, 608-09; Stanley Cnty. Sch. 5

v. Stanley Cnty. Educ. Ass’n, 310 N.W.2d 162, 164 (S.D. 1981).

Consequently, often your only chance to get facts in the record is at the administrative hearing.

8. Deposition testimony may be introduced in administrative proceedings. However, keep in mind that on appeal, it will be considered differently than other testimony. Where the agency has had an opportunity to evaluate the credibility and demeanor of the witness, the standard of review is “clearly erroneous.”

Tucek v. S.D. Dep't of Soc. Servs., 2007 S.D. 106, ¶ 12, 740 N.W.2d 867, 870. Where deposition testimony is involved, the reviewing court examines the testimony as if it was being presented for the first time and does not apply the clearly erroneous rule. Streeter v. Canton Sch. Dist., 2004 S.D. 30, ¶ 16, 677 N.W.2d 221, 225; Davidson v. Horton Indus., Inc., 2002 S.D. 27, ¶ 20, 641 N.W.2d 138, 142; Caldwell v. John Morrell & Co., 489 N.W.2d 353, 357 (S.D. 1992); Foltz v. Warner Transp., 516 N.W.2d 338 (S.D. 1994).

9. As with any court hearing, exhibits should be marked in advance and provided to all parties. If you are appearing before a board or commission, it is desirable to have a copy for each board member. Just like a court proceeding, frequent interruptions for copying materials and marking exhibits are annoying.

10. If your expert often appears before the same agency, seek a stipulation as to expert qualifications or put in a curriculum vitae for the possible appellate record.

11. Maps, schematics, or large pictures are often used and can be quite helpful. Parties often point to a place on the map, however, and there is no way for a reviewing court to determine what was pointed at. If it is important to a reviewing court to know what was pointed at, have the witness mark the map. If this is not done, that evidence is lost.

12. The topography and geography of a particular area will most probably be unknown to the agency decision maker. To the extent that it is important, have a witness explain it in such a way as it pertains to the pending proceeding.

13. Try to avoid evidence that is not relevant to the decision that must be made. Much of the evidence introduced in some cases does not help decision making.

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14. The rules of evidence apply to information submitted at hearing.

See SDCL 1-26-19. The rules of evidence allow for admission of public records and reports of various types, SDCL 19-16-12, 1916-13, 19-16-14, and for admission of business records, SDCL 19-16-10. Agencies must also “give effect to the rules of privilege recognized by law.” SDCL 1-26-19.

15. Under SDCL 1-26-19(1), evidence not otherwise admissible under the rules of evidence may be admitted “[w]hen necessary to ascertain facts not reasonably susceptible to proof under [the rules of evidence]” and “if it is of a type commonly relied upon by reasonably prudent persons in the conduct of their affairs.” See Dubray v. S.D. Dep’t of Soc. Servs., 2004 S.D. 130, ¶¶ 9-10, 690 N.W.2d 657, 661; Daily v. S.D. Real Estate Comm’n, 257 N.W.2d 709, 712 (S.D. 1977). However, this is not a general invitation to admit hearsay testimony. Affidavits, citizen petitions, newspaper articles, and the like will often be rejected unless the parties stipulate to admit such documents.

16. SDCL 1-26-19(3) allows the agency to officially notice not only judicially cognizable facts, but also generally recognized technical or scientific facts within the agency’s specialized knowledge.

Parties must be given an opportunity to refute matters of which official notice is taken. In In re Schramm, 414 N.W.2d 31, 36-37 (S.D. 1987), the South Dakota Supreme Court pointed out that despite this provision, the dental board could not rely on its own expertise to discipline a dentist without some expert testimony.

Schramm recognizes, however, that so long as there is some expert testimony in the record, the dental board could still use its collective expertise in making its decision.

B. Anticipate the logistics.

1. As with any other trial, check ahead to see if the room for the hearing has the equipment you need.

2. The extent to which hearings may be conducted by teleconference or DDN varies among the agencies. Generally speaking, evidentiary hearings for SDCL ch. 1-26 contested case proceedings are not conducted by telephone or DDN. See SDCL ch. 1-25. However, individual witnesses may sometimes appear by telephone.

3. The rules permit the agency to use a tape recorder and a court reporter is not required. SDCL 1-26-22, -32.2, -32.3. Agencies sometimes hire one anyway, depending on budget issues. Check 7

to see if the agency intends to do so. It is always the right of the non-agency party to hire and provide a court reporter. If you do rely on a tape recording, the appellate court will need a transcript of the tape recording and you will need to make those arrangements. a. Administrative agencies are not required to provide transcripts and so, transcripts must be requested. SDCL 1-26-22.

VI.

Findings of Fact.

A. Findings of Fact must be issued for agency decisions. SDCL 1-2625. The intent of SDCL 1-26-25 is to require adequate findings to aid in meaningful judicial review.

B. Some agencies prepare the findings. Some ask for proposed findings to be submitted for agency consideration. In either case, the ultimate findings must be more than a “mere statement of a general conclusion in the statutory language (e.g., that ‘public interest, convenience and necessity’ will be served) or in language of similar generality.” In re SDDC, Inc., 472 N.W.2d 502 (S.D. 1991).

C. The number of findings is not key in determining whether findings are adequate. In In re Dorsey & Whitney Trust Co., 2001 S.D. 35, ¶ 12, 623 N.W.2d 468, 472, the Court concluded that twelve total findings were adequate. However, the Dorsey & Whitney Trust Co. case did not involve scientific testimony and many facts were essentially undisputed.

VII.

Costs A. In some administrative cases, the licensee pays the costs of the hearing. SDCL 1-26-29.1 provides that if a case results in discipline, censure, suspension, revocation, or denial of a professional or occupational license under Title 36, the agency may assess all or part of its actual expenses against the licenses or applicant.

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ADMINISTRATIVE APPEALS I.

Are you thinking about appealing?

A. Pre-Appeal considerations 1. Stay of an agency decision (SDCL 1-26-32) a. An application for a stay of the agency’s decision must be made within ten (10) days of receipt of the agency’s decision or refusal to accept delivery of the agency’s decision.

Exception: Stays are not applicable to appeals involving permit or license renewal proceedings. Under SDCL 1-26-28, a licensee may continue operations until the entire appellate process concerning the license renewal is completed. In re Exploration Permit Renewal of Silver King Mines, Permit EX-5, 323 N.W.2d 858, 860 (SD 1982); Moulton v. State, 412 N.W.2d 487, 495 (SD 1987). b. Application for a stay of the agency decision is made to the circuit court. c. Within ten (10) days of receiving the application for stay, the court may order a temporary stay pending a hearing. After a hearing, the court may order a further stay pending final decision of the court. d. As a condition of granting an application for a stay, the court may require the appellant to furnish a bond or other security, or order supervision as the court may direct to indemnify or protect from loss, damage, or costs which may occur during the stay.

2. Additional evidence on the merits (SDCL 1-26-34) a. Motion to present additional evidence is made to circuit court before the date set for hearing. b. If the additional evidence is material and there were good reasons for failure to present the additional evidence to the agency, the circuit court may grant the request.

(1) The circuit court’s authority to order the presentation of additional evidence is discretionary. S.D. Div. of Human 9

Rights ex rel. Miller v. Miller, 349 N.W.2d 42, 45 (S.D. 1984).

(2) Party requesting to present additional evidence must demonstrate to the circuit court that there was good reason for the party’s failure to present the evidence in the initial proceeding before the agency. Cavender v. Bodily, Inc., 1996 S.D. 74, ¶¶ 15, 18-23, 550 N.W.2d 85, 88-90; In re Gridley, 345 N.W.2d 860, 863 (S.D. 1984).

(3) There is no time limit on the application for additional evidence other than it must be made prior to the date of hearing. Cavender v. Bodily, Inc., 1996 S.D. 74, ¶ 17 & n.3, 550 N.W.2d 88-89 & n.3; Vilhauer v. Dixie Bake Shop, 453 N.W.2d 842, 846 (S.D. 1990).

(4) As a practical matter, the request to present additional evidence should be made as soon as possible. c. Any additional evidence which is ordered by the circuit court is presented to the agency. (SDCL 1-26-34). d. The agency may modify its findings and decision after hearing the additional evidence. The additional evidence and any modifications, new findings, or decisions by the agency shall be filed with the reviewing court.

B. Appealable decisions 1. Final agency decisions (SDCL 1-26-30; 1-26-30.2) a. The appellate procedure in SDCL ch. 1-26 is somewhat broader than the rest of SDCL ch. 1-26. Although a statute may require that local government appeals be taken using the procedure in SDCL ch. 1-26, the remainder of SDCL ch. 1-26 is inapplicable unless expressly stated. See SDCL 1-26-1(1) (excluding units of local government from the definition of “agency” unless a statute specifically provides otherwise).

(1) Decisions of local civil service boards are reviewed under SDCL ch. 1-26. SDCL 1-26-1(1), 9-14-14; see also Irvine v.

City of Sioux Falls, 2006 S.D. 20, ¶ 4, 711 N.W.2d 607, 608; City of Sioux Falls v. Miller, 1996 S.D. 132, 555 N.W.2d 368.

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(2) SDCL ch. 1-26 applies to appeals from local historic preservation decisions. SDCL 1-19A-11.1; see also In re B.Y. Dev., Inc., 2000 S.D. 102, 615 N.W.2d 604. However, SDCL 1-26-25 (which requires written Findings of Fact and Conclusions of Law at the agency level) is inapplicable. In re B.Y. Dev., Inc., 2000 S.D. 102, ¶¶ 18-19, 615 N.W.2d at 611-12. SDCL 1-26-25 applies only to contested cases determined by agencies. Because local governmental entities are not “agencies,” the Court held that written Findings of Fact and Conclusions of Law were not required. b. An agency decision is effective ten days after the date of receipt or the failure to accept delivery of the decision. (SDCL 1-26-32).

(1) The agency’s decision must be in written form or stated in the record. (SDCL 1-26-25).

(2) The agency’s decision must include findings of fact and conclusions of law.

(3) A letter decision indicating only the outcome but not the findings of fact and conclusions of law on which the decision was made is not a final decision. Hein v. Marts, 295 N.W.2d 167, 170 (S.D. 1980). But see In re Benton, 2005 S.D. 2, ¶¶ 9-12 , 691 N.W.2d 598, 601-02 (approving the Board’s issuance of a proposed decision and its modification of that decision in ultimately entering final findings of fact and conclusions of law ).

2. Intermediate decisions (SDCL 1-26-30) “A preliminary, procedural, or intermediate agency action or ruling is immediately reviewable [only] if review of the final agency decision would not provide an adequate remedy.”

3. Agency’s failure to act (SDCL 1-26-30.1) a. If an agency fails to make and file a decision within thirty (30) days after the matter is submitted, a party may appeal on the existing record as if the decision had been made adversely. b. An agency may extend the time allowed to make and file a decision by filing and serving on all parties an order extending the time for an additional period not to exceed sixty (60) days.

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c. At the expiration of the allowable time for the agency decision, a party may submit a proposed decision to the agency. If the proposed decision is not adopted within five (5) days after filing, the party may appeal as if the proposed decision had been denied.

(1) “This section does not apply to contested cases determined by the Public Utilities Commission.” (SDCL 1-26-30.1).

(2) A party is not required to file a proposed decision when an agency fails to act. Moulton v. State, 412 N.W.2d 487, 494 (S.D. 1987); see also Kassube v. Dakota Logging, 2005 S.D. 102, ¶ 28, 705 N.W.2d 461, 466.

4. Administrative remedies must be exhausted before appealing (SDCL 1-26-30). a. Exhaustion of all administrative remedies is required before proceeding in circuit court.

(1) Judicial relief on a claim or a dispute actionable by an administrative agency will be withheld until administrative remedies are exhausted. Small v. State, 2003 S.D. 29, ¶ 16, 659 N.W.2d 15, 18-19; Johnson v. Kolman, 412 N.W.2d 109, 111 (S.D. 1987); Robinson v. Human Relations Comm’n of Sioux Falls, 416 N.W.2d 864, 866 (S.D. 1987).

(2) Administrative remedies are exhausted when a party has undergone all legislatively mandated requirements of the administrative process. Dan Nelson, Auto., Inc. v. Viken, 2005 S.D. 109, ¶ 13, 706 N.W.2d 239, 244; Jansen v.

Lemmon Fed. Credit Union, 1997 S.D. 44, ¶ 10, 562 N.W.2d 122, 124; Montgomery v. Big Thunder Gold Mine, Inc., 531 N.W.2d 577, 579 (S.D. 1995).

(3) Failure to exhaust administrative remedies where required is a jurisdictional defect. Kolda v. City of Yankton, 2014 S.D. 60, ¶ 30, 852 N.W.2d 425, 433; City of Brookings v.

Ramsay, 2007 S.D. 130, ¶ 16, 743 N.W.2d 433, 438-39; S.D. Bd. of Regents v. Heege, 428 N.W.2d 535, 539 (S.D. 1988). b. Exceptions to exhaustion requirements (See Jansen v.

Lemmon Fed. Credit Union, 1997 S.D. 44, ¶ 10, 562 N.W.2d 122, 124-25; Heege, 428 N.W.2d 535, 539 (S.D. 1988)).

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(1) “Exhaustion is not required where persons, through no part of their own, do not discover the purported wrong until after the time for application of administrative relief.”

Jansen v. Lemmon Fed. Credit Union, 1997 S.D. 44, ¶ 10, 562 N.W.2d 122, 124; Lick v. Dahl, 285 N.W.2d 594, 598 (S.D. 1979) (taxpayers unaware of increased assessment of property tax until after the administrative body ceased to exist were not required to appeal the assessment to the body before seeking judicial review).

(2) “Exhaustion is not required where the agency fails to act.”

Jansen v. Lemmon Fed. Credit Union, 1997 S.D. 44, ¶ 10, 562 N.W.2d 122, 124; Weltz v. Bd. of Educ. of Scotland, 329 N.W.2d 131, 133 (S.D. 1983) (school board’s failure to renew teacher’s contract allowed teacher to appeal to circuit court).

(3) Exhaustion is not required where the agency does not have jurisdiction over the subject matter or parties, or authority to deal with the particular question raised. O’Brien v. W. Dakota Tech. Inst., 2003 S.D. 127, ¶ 17, 670 N.W.2d 924, 929; Johnson, 412 N.W.2d at 112 (Department of Labor is without jurisdiction to decide claims not presented to it or claims outside the department’s authority).

(4) Exhaustion is not required where agency improperly made a decision prior to the hearing or is so biased that a fair and impartial hearing cannot be had. Jansen v. Lemmon Fed. Credit Union, 1997 S.D. 44, ¶ 10, 562 N.W.2d 122, 125; Mordhorst v. Egert, 223 NW2d 501, 504 (SD 1974) (past conduct of board in holding written complaints was so biased, primary jurisdiction was properly with the circuit court).

(5) Exhaustion is not required in extraordinary circumstances where a party faces impending irreparable harm of a protected right and the agency cannot grant adequate or timely relief. McElhaney v. Anderson, 1999 S.D. 78, ¶ 15 n.3, 598 N.W.2d 203, 207 n.3; Jansen v. Lemmon Fed. Credit Union, 1997 S.D. 44, ¶ 10, 562 N.W.2d 122, 125; Johnson, 412 N.W.2d at 112 (when agency has no authority to deal with claims presented, the exhaustion of agency remedies is not required.) Mordhurst, 223 N.W.2d at 504 (corporation unlawfully practicing in an unprofessional manner was properly subjected to circuit 13

court review to allow all issues raised to be decided in one proceeding).

5. An appeal must be allowed in the circuit court to any “aggrieved party” in a “contested case” from a final decision, ruling, or action of an agency. (SDCL 1-26-30). However, SDCL 1-26-30.2 does not limit appeals to “aggrieved” parties. Under the latter statute, any party may appeal a final decision in a contested case.

6. Primary Jurisdiction a. A party may not proceed in circuit court if an administrative agency has primary jurisdiction. b. The doctrine of primary jurisdiction arises when both the circuit court and an agency have authority to decide a question. Jundt v. Fuller, 2007 S.D. 62, ¶ 4, 736 N.W.2d 508, 511; Moulton v. State, 223 N.W.2d at 504. c. The doctrine or primary jurisdiction concerns the determination of whether the circuit court or the agency should decide the pending question. Jundt v. Fuller, 2007 S.D. 62, ¶ 4, 736 N.W.2d 508, 511; Moulton v. State, 223 N.W.2d at 504. d. “In South Dakota, the legislature is constitutionally permitted to limit the original jurisdiction of the circuit courts. The legislature exercises this prerogative when it locates the remedy for some cause of action in an administrative agency.

In such cases, ‘that agency has exclusive primary jurisdiction which precludes the parties from directly seeking adjudication in a court.’” Claggett v. Dep’t of Revenue, 464 N.W.2d 212, 214 (S.D. 1990) (quoting Meyerink v. Nw. Pub. Serv. Co., 391 N.W.2d 180, 184 (S.D. 1986) (Circuit court lacked jurisdiction to hear an appeal from the Department of Revenue’s tax assessment because applicable statute precluded appeal without compliance with legislative mandates).

C. Arguments preserved for appeal 1. Waiver of appeal arguments a. An issue may not be raised for the first time on appeal. An issue not presented to the fact-finding tribunal will not be reviewed on appeal. Finck v. Nw. Sch. Dist. No. 52-3, 417 N.W.2d 875, 878 (S.D. 1988). Like civil cases, failure to 14

present issues at the administrative level constitutes waiver of that issue on appeal. Stuckey v. Sturgis Pizza Ranch, 2011 S.D. 1, ¶ 19 n.3, 793 N.W.2d 378, 386 n.3; Enger v. FMC, 2000 S.D. 48, ¶ 16, 609 N.W.2d 132, 136; Finck v. Nw. Sch. Dist. No. 52-3, 417 N.W.2d 875, 878 (S.D. 1988). In Enger, the Court stated that “the need to present an issue to the decision-maker is inherent in administrative proceedings.”

2000 S.D. 48, ¶ 16, 609 N.W.2d at 136. b. An issue raised for the first time in briefing is also waived. An appellant may not raise an issue in the reply brief which essentially forecloses appellee’s opportunity to respond. Finck v. Nw. Sch. Dist. No. 52-3, 417 N.W.2d 875, 878 (S.D. 1988).

2. Preserving appeal issue a. An issue is not properly preserved for appeal when a party fails to file a notice of review with the circuit court. Whitesell v. Rapid Soft Water & Spas., Inc., 2014 S.D. 41, ¶¶ 10-11; 850 N.W.2d 840, 842; Schuck v. John Morrell & Co., 529 N.W.2d 894, 896-97 (S.D. 1995). See IID infra. b. In an administrative appeal, the appellate court may consider whether the agency had substantive jurisdiction of the appeal even though the question was not raised by the parties. Lehr v. Dep’t of Labor, 391 N.W.2d 205, 206 (S.D. 1986).

II.

Perfecting an appeal A. Notice of Appeal (SDCL 1-26-31, -31.2) 1. Contents of Notice (SDCL 1-26-31.2) “The notice of appeal shall contain the names of the parties and the county to which the appeal is taken; it shall designate in plain and concise language the order or decision from which the appeal is taken; and it shall be dated and signed by the appellant or his attorney.”

2. Filing and service of Notice of Appeal (SDCL 1-26-31) a. The notice of appeal must be filed with the clerk of courts, and served on the agency, on the adverse party, and on the hearing examiner, if any, within thirty (30) days after the agency served notice of the final decision.

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b. If a rehearing is authorized by law and is requested, notice of appeal must be filed within thirty (30) days of notice of the decision on rehearing. c. If a notice of appeal is not filed within thirty days, the circuit court lacks jurisdiction to review the agency’s decision.

Oberle v. City of Aberdeen, 470 N.W.2d 238 (S.D. 1991); Kulesa v. Dep’t of Public Safety, 278 N.W.2d 637, 638 (S.D. 1979). Even if a statement of issues is filed, the appellate court lacks jurisdiction absent the notice of appeal. d. Failure to serve the notice of appeal is also jurisdictional.

Slama v. Landmann Jungman Hosp., 2002 S.D. 151, 654 N.W. 2d 826; Stark v. Munce Bros. Transfer and Storage, 461 NW2d 587, 589 (SD 1990). However, failure to serve the notice of appeal on the hearing examiner is not a jurisdictional defect. SDCL 1-26-31. e. Service may be waived if there is no objection at the appropriate time. Rapid City Educ. Ass’n ex rel Lynch v.

Rapid City Sch. Dist. #51-4, 446 N.W.2d 770, 771 (S.D. 1989). f. An appeal to a circuit court from an administrative case is not perfected unless and until the filing fee or appropriate waiver is deposited with the clerk of the circuit court. See Hansen v.

Bd. of Pardons & Paroles, 1999 S.D. 135, 601 N.W.2d 617.

But see Watertown Coop. Elevator Ass’n v. S.D. Dep’t of Revenue, 2001 S.D. 56, ¶¶ 7-9, 627 N.W.2d 167, 170-71 (concluding that “a charge to a firm’s account at the time of filing is equivalent to depositing a fee”).

3. Methods of Service of Notice (SDCL 1-26-31) Notice of appeal may be served by registered or certified mail or any manner in which a summons and complaint or other pleadings are served, i.e., personal service including service by ordinary, first class mail. Matter of Groseth Intern’l. Inc., 442 N.W.2d 229, 232 (S.D. 1989).

B. Statement of issues (SDCL 1-26-31.4).

1. A statement of issues is required (SDCL 1-26-31.4).

2. Only those issues presented to the circuit court by a statement of issues are properly before the circuit court for review on appeal.

The statement of issues on appeal encompasses the circuit 16

court’s scope of review for the appeal. Meade Educ. Ass’n. v.

Meade Sch. Dist. 46-1, 399 N.W.2d 885, 889 (S.D. 1987). a. Time requirement (1) Within ten (10) days after filing the notice of appeal, the appellant, if there are multiple issues, shall present the clerk of courts and other parties with a statement of the issues to be presented on appeal.

(2) Failure to file a statement of issues is not jurisdictional.

Fair v. Nash Finch Co., 2007 S.D. 16, 728 N.W.2d 623; Oberle v. City of Aberdeen, 470 N.W.2d 238, 242 (S.D. 1991). b. If any other party wishes to raise issues in addition to those listed by appellant’s statement of issues, the party shall file an additional statement of issues on appeal within ten (10) days after service of appellant’s statement of issues.

C. Transcripts 1. Request for transcript (SDCL 1-26-32.2) a. Appellant must request a written transcript or such parts as deemed necessary from the agency or reporter within ten (10) days of filing the notice of appeal or a transcript is waived. b. “If appellee deems a transcript of other parts of the proceedings necessary, he shall, within ten days after the service of the appellant’s request or statement of issues, file with the clerk of the circuit court and serve upon the appellant a request for a transcript of additional parts to be included[.]” Failure to request parts of the transcript is a waiver of the right to such parts of the transcript. c. Appellant’s request for a written transcript or portions thereof must be in writing. d. Appellant’s written request for a written transcript must be served on all parties to the action and filed with the clerk of courts.

2. Costs of transcript (SDCL 1-26-32.3)

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a. The ordering party, other than the agency, must “make satisfactory arrangements with the agency or reporter . . . for the payment of the costs of the transcript and all necessary copies.” b. The agency or reporter shall acknowledge receipt of the request and transmit the order to the circuit court. c. “If the transcript cannot be completed within thirty (30) days, the agency or reporter shall request an extension of time from the circuit court judge assigned to the appeal and the action of the circuit court judge shall be entered on the record and the parties notified.”

D. Notice of review – Appellee’s right of review (SDCL 1-26-36.1) 1. “[A]ppellee may obtain review of a final decision, ruling, or action . . .which may adversely affect him by filing a notice of review with the clerk of court within twenty days after service of the notice of appeal.” The notice of review must be served on all other parties.

2. The party who prevailed before the agency must also file a notice of review on any issues that party wishes to preserve as an alternate ground to sustain the agency decision. An issue is not properly preserved for appeal when a party fails to file a notice of review with either the circuit court (pursuant to SDCL 1-26-36.1) or the Supreme Court (pursuant to SDCL 15-26A-22) even though the ruling below was not adverse. Whitesell v. Rapid Soft Water & Spas, Inc., 2014 S.D. 41, ¶¶ 10-11, 850 N.W.2d 840, 842-43; Schuck v. John Morrell & Co., 529 N.W.2d 894, 897 (S.D. 1995). See also Day v. John Morrell & Co., 490 N.W.2d 720, 724 (S.D. 1992); Midwest Motor Express, Inc. v. S.D. Pub. Utilities Comm’n, 431 N.W.2d 160, 162 (S.D. 1988).

3. A notice of review must be filed to preserve an issue even though the agency’s decision below was not “adverse” to the party desiring to preserve the issue. Schuck v. John Morrell & Co., 529 N.W.2d 894, 897 (S.D. 1995).

4. A notice of review is required to preserve the issue even if the agency did not rule on the issue presented below. Schuck v.

John Morrell & Co., 529 N.W.2d 894, 897 (S.D. 1995).

E. Settling the record (SDCL 1-26-33) 18

1. Within thirty (30) days of the notice of appeal, the agency must assemble and consecutively number all documents, exhibits, and papers filed with the agency or by the agency as the record.

2. By stipulation of all parties, the record may be shortened. a. A party who unreasonably refuses to limit the record may be taxed by the court for additional costs.

3. In preparing the record for transmittal to circuit court, the agency shall prepare and attach an alphabetical and chronological index to the record and shall serve a copy of both on all parties to the review proceeding.

4. The court may require or permit subsequent corrections or additions to the record. See SDCL 1-26-34; 1-26-35.

F. Venue of appeal 1. Original venue (SDCL 1-26-31.1) a. If appellant is a resident of South Dakota, appeal may be made in appellant’s county of residence or Hughes County.

Schreifels v. Kottke Trucking, 2001 S.D. 90, ¶ 8, 631 N.W.2d 186, 188. In Kottke, appellant found it more convenient to file a Notice of Appeal in Minnehaha County and believed that the case’s significant contacts were there, but the Court concluded that venue did not properly lie there in the absence of a stipulation under SDCL 1-26-31.1 b. If appellant is not a resident of South Dakota, appeal must be made in Hughes County. c. The parties may stipulate to venue in any county in the state, however, all appeals from the action must be filed in the same county. If multiple appeals from the same action are filed in different counties, the appeal will be consolidated in the county where first filed or the venue for the appeal is Hughes County.

2. Special venue in assessment cases (SDCL 10-11-43) a. A party aggrieved by a property assessment determination of the board of equalization may appeal such assessment to the Office of Hearing Examiners by the third Friday in May. (SDCL 10-11-42). The party may subsequently appeal the 19

decision of the Office of Hearing Examiners to circuit court (SDCL 10-11-44). Venue of this appeal shall be the county in which the property is located. (SDCL 10-11-43). b. Hughes County is the venue for all appeals to circuit court of valuation of centrally assessed property. (SDCL 10-38-30).

3. Change of venue (SDCL 1-26-31.3) The circuit court in which the appeal is originally venued may, upon good cause shown and upon reasonable terms, change the venue to the circuit court of any other county. The party seeking a change in venue must apply and provide notice within thirty days after the appeal is taken.

G. Supersedeas bonds 1. Appeals to circuit court from the Department of Revenue on tax assessments may only be made upon the payment of assessed tax or if a bond is filed to insure payment. SDCL 10-59-9.

Absent payment of the assessed tax or filing of a bond, the circuit court is without jurisdiction to hear an appeal. AEG Processing Center No. 58, Inc. v. S.D. Dep’t of Revenue & Regulation, 2013 S.D. 75, 838 N.W.2d 843; Claggett, 464 N.W.2d at 214.

F. Rules of Civil Procedure 1. Rules of civil procedure in circuit court apply to administrative appeals (SDCL 1-26-32.1).

III.

Pre-briefing considerations A. Clearly articulate the type of error to be argued because the type of error argued determines the standard of review to be applied.

1. Dispute of fact 2. Dispute of law 3. Mixed question of law and fact a. A mixed question of law and fact arises when the facts are admitted or established, the law to be applied is undisputed and the issue before the court is whether the facts, as applied to the law, satisfy the legal requirements. Erdahl v. Groff, 20

1998 S.D. 28, ¶ 25, 576 N.W.2d 15, 20; Permann v. Dep’t. of Labor, 411 N.W.2d 113, 118 (S.D. 1987).

4. Arbitrary, capricious or abuse of discretion by the decision maker B. The standard of review statute (SDCL 1-26-36) SDCL 1-26-36 provides the standard of review to be used by the circuit court: The court shall give great weight to the findings made and inferences drawn by an agency on questions of fact. The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if substantial rights of the appellant have been prejudiced because the administrative findings, inferences, conclusions, or decisions are: (1) In violation of constitutional or statutory provisions; (2) In excess of the statutory authority of the agency; (3) Made upon unlawful procedure; (4) Affected by other error of law; (5) Clearly erroneous in light of the entire evidence in the record; or (6) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion.

C. Application of standards of review.

1. Disputes of fact (SDCL 1-26-36(5)) a. In reviewing an administrative record, the circuit court must examine the whole record. City of Brookings v. Dep’t of Envtl.

Prot., 274 N.W.2d 887, 889 (S.D. 1979). SDCL 1-26-36 says the “entire evidence” shall be considered by the circuit court on review. b. Findings of the agency based on certain types of evidence (e.g. live testimony) are reversed “only when those findings are clearly erroneous in light of the entire record.” Manuel v.

Toner Plus, Inc., 2012 S.D. 47, ¶ 8, 815 N.W.2d 668, 670; Zacher v. Homestake Mining Co., 514 N.W.2d 394, 395 (S.D. 1994).

21

(1) Where the agency has had an opportunity to evaluate the credibility and demeanor of the witness, the standard of review is “clearly erroneous.” Tucek v. S.D. Dep't of Soc. Servs., 2007 S.D. 106, ¶ 12, 740 N.W.2d 867, 870. The circuit court may not substitute its own judgment for the agency’s judgment as to the weight of evidence on questions of fact. McKibben v. Horton Vehicle Components, Inc., 2009 S.D. 47, ¶ 11, 767 N.W.2d 890, 894; Lends His Horse v. Myrl & Roy’s Paving, Inc., 2000 S.D. 146, ¶ 17, 619 N.W.2d 516, 521-22.

(2) Under the clearly erroneous standard, the appellate court will not reverse unless they are “definitely and firmly convinced a mistake has been made.” In re Prevention of Significant Deterioration (PSD) Air Quality Permit Application of Hyperion Energy Center, 2013 S.D. 10, ¶ 41, 826 N.W.2d 649; 661; In re Dorsey & Whitney Trust Co., 2001 S.D 35, ¶ 6, 326 N.W.2d 468, 470; Foltz v. Warner Transp., 516 N.W.2d 338, 340 (S.D. 1994); Dakota Harvestore Sys., Inc. v. S.D. Dep’t of Revenue, 331 N.W.2d 828, 830 (S.D. 1983). c. However, if the question of fact being reviewed was based on documentary evidence (e.g. depositions), the clearly erroneous standard does not apply. Rather, a de novo review of deposition and documentary evidence is appropriate. Hendrix v. Graham Tire Co., 520 N.W.2d 876, 879 (S.D. 1994); Caldwell v. John Morrell & Co., 489 N.W.2d 353, 357 (S.D. 1992). The circuit court examines the testimony as presented for the first time and does not apply the clearly erroneous standard. Streeter v. Canton Sch. Dist., 2004 S.D. 30, ¶ 16, 677 N.W.2d 221, 225; Davidson v. Horton Indus., Inc., 2002 S.D. 27, ¶ 20, 641 N.W.2d 138, 142; Caldwell v. John Morrell & Co., 489 N.W.2d 353, 357 (S.D. 1992); Foltz v. Warner Transp., 516 N.W.2d 338 (S.D. 1994). d. The standard of review for factual determinations made by the administrative agency based on both “live” and documentary evidence is unclear.

(1) Evidence submitted entirely by deposition is reviewed de novo. Caldwell v. John Morrell & Co., 489 N.W.2d 353, 357 (S.D. 1992) (emphasis original).

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(2) When “almost all the expert testimony that would aid the fact finder” is presented through deposition, the testimony is reviewed de novo. Foltz v. Warner Transp., 516 N.W.2d 338, 340 (S.D. 1994) (emphasis added).

(3) However, “live” testimony is entitled to “special deference.”

Zacher v. Homestake Mining Co., 514 N.W.2d 394, 395 (S.D. 1994).

2. Questions of law a. Questions of law are fully reviewable de novo by the circuit court on appeal. Manuel v. Toner Plus, Inc., 2012 S.D. 47, ¶ 8, 815 N.W.2d 668, 670: Foltz, 516 N.W.2d at 340; In re SDDS, 472 N.W2.d at 507. b. The agency’s conclusions of law are given no deference by the circuit court on appeal. S.D. Subsequent Injury Fund v.

Heritage Mutual Ins. Co., 2002 S.D. 34, ¶ 13, 641 N.W.2d 656, 659; Enger v. FMC, 2000 S.D. 48, ¶ 7, 609 N.W.2d 132, 134.

Exception: In circumstances where the agency is given express statutory authority to interpret a statute, the circuit court gives great weight to the agency interpretation.

N. States Power Co. v. S.D. Dep’t of Revenue, 1998 S.D. 57, ¶ 4, 578 N.W.2d 579, 580. An agency is usually given a reasonable range of informed discretion in the interpretation and application of its own rules when the language subject to construction is technical in nature or ambiguous, or when the agency interpretation is one of long standing. Paul Nelson Farm v. S.D. Dep’t of Revenue, 2014 S.D. 31, ¶ 22, 847 N.W.2d 550, 557; Krsnak v. S.D. Dep’t of Env’t & Natural Res., 2012, S.D. 89, ¶ 16, 824 N.W.2d 429, 436; Island v. Dep’t of Corr., 1996 S.D. 28, ¶ 8, 545 N.W.2d 201, 203; Nelson v. S.D. State Bd. of Dentistry, 464 N.W.2d 621, 624 (S.D. 1991). For example, an agency’s definition of a technical term or an agency practice is given deference by the circuit court on review.

3. Mixed Questions of Law and Fact- Further analysis is required.

Manuel v. Toner Plus, Inc., 2012 S.D. 47, ¶ 8, 815 N.W.2d 668, 670: “If application of the rule of law to the facts requires an inquiry that is “essentially factual”—one that is founded “on 23

the application of the fact-finding tribunal's experience with the mainsprings of human conduct”—the concerns of judicial administration will favor the [circuit] court, and the [circuit] court's determination should be classified as one of fact reviewable under the clearly erroneous standard. If, on the other hand, the question requires us to consider legal concepts in the mix of fact and law and to exercise judgment about the values that animate legal principles, then the concerns of judicial administration will favor the appellate court, and the question should be classified as one of law and reviewed de novo.”

4. Abuse of discretion review (SDCL 1-26-36(6)) a. An abuse of discretion refers to a discretion exercised to an end or purpose not justified by, and clearly against reason and evidence. Hicks v. Gayville-Volin Sch. Distr., 2003 S.D. 92, ¶ 11, 668 N.W.2d 69, 74; Iversen v. Wall Bd. of Educ., 522 N.W.2d 188, 192 (S.D. 1994). b. The abuse of discretion standard evaluates two aspects of the decision maker's decision: (1) Whether there is authority for making the decision; (2) Whether the decision is justified under the facts as determined. Williams v. S.D. Bd. of Pardons & Paroles, 2007 S.D. 61, ¶ 6 n.1, 736 N.W.2d 499, 500 n.1.

5. Arbitrary and capricious review (SDCL 1-26-36(6)) a. An action is arbitrary and capricious if “it is based on personal, selfish, or fraudulent motives, or on false information, and is characterized by a lack of relevant and competent evidence to support the action taken.” Hicks v.

Gayville-Volin Sch. Dist., 2003 S.D. 92, ¶ 11, 668 N.W.2d 69, 74; Tri-County Landfill Ass’n v. Brule Cnty., 535 N.W.2d 760, 764 (S.D. 1995). b. A decision is arbitrary and capricious when it is clearly not justified under the existing facts and circumstances. Iversen, 522 N.W.2d at 192. c. An arbitrary and capricious decision is one which “conveys the sense that [it] is totally intolerable; it rejects only those decisions which are outside any conceivable rational 24

alternative.” Heritage of Yankton, Inc. v. S.D. Dep’t of Health, 432 N.W.2d 68, 72-73 (S.D. 1988) (citation omitted). d. Evidence that the agency may have ignored facts or not made a good faith effort to gather or consider significant information may constitute arbitrariness. Heritage of Yankton, Inc. v. S.D. Dep’t of Health, 432 N.W.2d 68, 72-73 (S.D. 1988) IV.

The Record on Appeal A. Review is confined to the agency record and new issues cannot be raised on appeal. Guthmiller v. S.D. Dep’t of Transp., 502 N.W.2d 586 (S.D. 1993).

1. The agency record is made much as in other adjudications. See SDCL 1-26-21. It includes pleadings and documents, evidence received and considered, statements of matters officially noticed which have been refuted, questions and offers of proof, proposed findings and exceptions, decisions, proposed decisions, opinions, etc., as well as any staff memoranda submitted to the hearing officer as he or she is considering the case. The South Dakota Supreme Court has held that where confidential matters are considered, they must be made a part of the record if needed for meaningful review. Reid v. State Employment Servs., 248 N.W.2d 361, 362 (S.D. 1976).

2. In In re B.Y. Dev., Inc., 2000 S.D. 102, 615 N.W.2d 604, the circuit court admitted additional affidavits containing information “referred to” in the record. The Court made it clear that “to the extent an affidavit contained information not specifically in or referred to in the record, it would not be considered.” Id. ¶ 9, 615 N.W.2d at 609. The Supreme Court concluded this procedure was acceptable because the circuit court announced that it was confining its determination to matters considered below.

3. The Supreme Court has not only limited the use of appellate affidavits to matters considered below, it has also limited such affidavits to adjudicative facts involving the parties. In re Dorsey & Whitney Trust Co., 2001 S.D. 35, ¶ 12, 623 N.W.2d 468, 472.

Regardless of whether information is “readily verifiable in the public record[,]” it cannot be used for judicial notice under SDCL ch. 19-10. The Court stated that for judicial notice, “adjudicative facts are those which relate to the immediate parties involved— the who, what, when, where and why as between the parties.” Id. Further, because the affidavit “was not before the Commission,” 25

but simply involved other trust company applications over the last four years, it was not adjudicative. Id. V.

Briefs (SDCL 1-26-33.2, -33.3, -33.4) A. Time limits (SDCL 1-26-33.2) 1. Appellant’s brief Appellant shall serve its brief within thirty (30) days of delivery of the written transcript of the contested case hearing or within thirty (30) days after the agency record is delivered to the circuit court, whichever event occurs later.

2. Appellee’s brief Appellee shall serve brief within thirty (30) days of service of appellant’s brief. In the case of multiple parties, appellee shall serve brief within thirty (30) days after service of appellant’s last brief.

3. Appellant’s reply brief Appellant may serve a reply brief within ten (10) days of service of the last appellee’s brief.

B.

Requirements 1. Appellant’s brief (SDCL 1-26-33.3) a. Jurisdictional statement The jurisdictional statement should set out the date of agency decision, form of decision, ruling sought to be reviewed, and the date when notice of appeal was filed in circuit court. b. Legal issue(s) involved on appeal A statement of the legal issue(s) involved on appeal should broadly state the issue(s) and how the agency decided the issue(s). Failure to present an issue is a waiver of the issue on appeal. c. Statement of case and facts

26

(1) The statement of the case must identify the agency and briefly indicate the nature of the case and the agency’s disposition.

(2) The statement of the facts must contain those facts relevant to the grounds urged for reversal, modification, or other relief. Under Klein v. Klein, 500 N.W.2d 236 (S.D. 1993), the factual statements in briefs should not be considered on appeal if there is no citation to the record.

See also Dakota Indus. v. Cabela’s.com, Inc., 2009 S.D. 39, ¶ 18 n.4, 766 N.W.2d 510, 515 n.4. d. Argument (1) The argument must contain the party’s contentions with respect to the issue(s), the reasons for the contentions, and citations to the authorities relied on. Failure to cite authorities for argument constitutes waiver of that issue on appeal. Stuckey v. Sturgis Pizza Ranch, 2011 S.D. 1, ¶ 19 n.3, 793 N.W.2d 378, 386 n.3; Guthmiller v. S.D. Dep’t of Transp., 502 N.W.2d 586 (S.D. 1993); see also SDCL 1526A-60(6).

(2) Each issue must be presented separately. e. Relief sought Party should state the precise relief sought. f. Appendix An appendix, if any, may include the agency decision, ruling, or action, and any regulations or any relevant parts to which the parties wish to direct the attention of the circuit court. g. Request for oral argument 2. Appellee’s brief (SDCL 1-26-33.4) a. Appellee need not present a jurisdictional statement, a statement of legal issues, or a statement of the case and facts except as to the extent with which appellee disagrees with appellant’s statements.

27

b. If notice of review is filed by appellee, the appellee’s brief shall contain the issues noticed for review and argument thereon. c. Appellee’s brief shall contain an answer to appellant’s brief. d. Failure to raise an issue in brief waives that issue on appeal.

Finck v. Nw. Sch. Dist. No. 52-3, 417 N.W.2d 875, 878 (S.D. 1988).

VI.

Remedies available in circuit court (SDCL 1-26-36) A. Affirm The circuit court may affirm the decision of the agency.

B. Remand for further proceedings 1. Agency’s failure to make findings of fact or conclusions of law requires the circuit court remand the case to the agency to make such findings and conclusions. In re Brown, 1997 S.D. 133, ¶ 15, 572 N.W.2d 435, 438; Meade Educ. Ass’n v. Meade Sch. Dist.

46-1, 399 N.W.2d 885, 889; S.D. Dep’t of Pub. Safety v. Eastman, 273 N.W.2d 159, 161 (S.D. 1978).

2. Agency’s failure to make findings which aid in meaningful judicial review or which fail to reveal the underlying facts upon which the agency’s decision is made requires remand. Conclusory findings of fact require remand. The court may not review the record to find the underlying findings. In re SDDS, Inc., 472 N.W.2d 502, 512 (S.D. 1991).

3. Otherwise, there are NO GUIDELINES. The decision to remand lies within judicial discretion. See In re Conditional Use Permit Granted to Van Zanten, 1999 S.D. 79, ¶¶ 12-14, 598 N.W.2d 861, 864-65; In re State and City Sales Tax Liability, 437 N.W.2d 209, 212 (S.D. 1989).

4. A remand for a new hearing means a new hearing, not reconsideration of the existing record. O’Neill v. S.D. Bd. of Charities & Corr., 377 N.W.2d 587 (S.D. 1985). A “new hearing” is “synonymous to a new trial, except a hearing is before the Commission.” Id. In other words, a “new trial” is “a trial anew, with as little prejudice to either party as if the cause had never been heard before.” Id. C. Reverse or modify 28

1. The circuit court may reverse or modify the agency decision if substantial rights of the appellant have been prejudiced by the administrative findings, inferences, conclusions or decision (recognition of harmless error rule). SDCL 1-26-36.

“Prejudicial error must produce some effect upon the final result and affect the rights of the party assigning it.” Welch v. Auto.

Co., 528 N.W.2d 406, 412 n.6 (S.D. 1995) (internal quotation marks omitted).

2. If the circuit court reverses or modifies the agency decision, findings of fact and conclusions of law must be entered consistent with the action of the circuit court. Lends His Horse v.

Myrl & Roy’s Paving, Inc., 2000 S.D. 146, ¶ 18,619 N.W.2d 516, 522; Schroeder v. Dep’t of Soc. Servs., 529 N.W.2d 589, 591 (S.D. 1995); Miller, 349 N.W. 2d 42, 45 (S.D. 1984).

D. Form of circuit court decision 1. Circuit court must clearly articulate findings of fact and conclusions of law to support the decision on appeal. Amundson v. S.D. Bd. of Pardons & Paroles, 2000 S.D. 95, ¶ 30, 614 N.W.2d 800, 806; Schroeder v. Dep’t of Soc. Servs., 529 N.W.2d 589, 592 (S.D. 1995).

2. The rules of civil procedure apply in administrative appeals in circuit court. a. SDCL 15-6-52(a) is the procedure for submission of findings of fact and conclusions of law. b. Appellant has ten (10) days after the announcement of the decision to submit findings and conclusions; Appellee has five (5) days to respond. c. The circuit court’s decision should be incorporated by reference.

E. Taxation of costs (disbursements) (SDCL 1-26-36) The circuit court may award costs (disbursements) in the manner and amount specified in SDCL Ch. 15-17.

VII.

Appeal to the Supreme Court (SDCL 1-26-37) 29

A. Same manner as civil appeals B. Briefs are not part of the record (SDCL 1-26-33.2 and SDCL 15-65(d)) VIII. Practice Pointers A. Win your factual disputes at the administrative level – it is an uphill battle if clearly erroneous standard applies B. Clearly articulate the type of error alleged and appropriate standard of review.

C. Use only accurate, specific, and controlling citations to the record to greatly improve your case.

D. Use an Appendix.

1. It highlights dispositive evidence.

2. Better assurance crucial evidence will not be missed.

3. Attach Findings of Fact and Conclusions of Law. 4. Attach Memorandum Decision if there was one.

5. Attach any crucial testimony from the trial or deposition transcripts.

6. Attach any crucial documentation.

E. Notify the reviewing court when the case is ready for a hearing or decision.

SDCL 1-26-33.6 provides that it is the duty of the court to set a hearing and to determine the case when the court’s “attention is called to the matter by the parties.”

IX.

Ethical considerations A. Candor to the court 1. Rule 3.3(a)(3) requires an attorney to disclose to the tribunal legal authority in the controlling jurisdiction known to the lawyer to be directly adverse to the position of their client and not disclosed by 30

opposing counsel. This duty continues until the conclusion of the proceeding. Rule 3.3(b).

2. “A lawyer is not required to make a disinterested exposition of the law, but must recognize the existence of pertinent legal authorities.” Comment to Rule 3.3.

3. A lawyer is required to state the facts fairly and with candor when presenting argument. (SDCL 15-26A-60, 15-26A-61; 1-2633.3; 1-26-33.4).

Note: The above outline was developed, in great part, by using CLE materials prepared earlier by Diane Best and Justice Steven L. Zinter. I would like to thank both Ms. Best and Justice Zinter for allowing me to use their materials.

31

Administrative Law Practice: A Perspectives Panel LUNCH PROVIDED BY SD PUBLIC ASSURANCE ALLIANCE ALJ Catherine Williamson Office of Hearing Examiners Pierre Steve Blair Attorney General’s Office Pierre

Navigating the Employment Relationship: Hiring, Firing & Disciplining Employees Jennifer Frank Lynn, Jackson, Shultz & Lebrun Rapid City

Jennifer Suich Frank is an employment lawyer with the law firm of Lynn, Jackson, Shultz & Lebrun, in Rapid City, SD. Jennifer has been an attorney for 22 years, and was previously employed in several positions in human resources. Jennifer advises businesses and human resources professionals on a variety of employment issues, including discrimination, FMLA, ADA/disability, wage & hour, hiring/firing/discipline, and non-compete issues. She also counsels and drafts employment contracts, including executive agreements, severance plans and separation agreements, as well as reviews, revises and drafts employment handbooks, policies and procedures. When more formal disputes arise, Jennifer handles administrative charges of discrimination and employment litigation. She is a frequent lecturer and trainer on various employment issues affecting employers. In addition, she conducts neutral workplace investigations for a range of organizations.

NAVIGATING THE EMPLOYMENT RELATIONSHIP: HIRING / FIRING / DISCIPLINING April 12, 2019 JENNIFER SUICH FRANK

Disclaimer

• This presentation is intended for educational purposes only. It is not intended to convey legal advice pertaining to any particular situation and is not a substitute for legal advice.

• These materials and Jennifer Suich Frank comments do not constitute, and should not be treated as legal advice regarding the use of any particular technique or the tax consequences associated with any such technique. Although every effort has been made to assure the accuracy of these materials and comments at this presentation, Jennifer Suich Frank and Lynn, Jackson, Shultz& Lebrun, P.C., do not assume responsibility for any individual’s reliance on the written or oral information disseminated during this presentation. Further, most every rule and technique has an exception.

• Each participant should independently verify all statements made in the materials and at this presentation before applying them to a particular fact situation.

2 SERVING SOUTH DAKOTA AND THE UPPER MIDWEST REGION SINCE 1946 RAPID CITY | SPEARFISH | SIOUX FALLS

Hiring Qualified Employees

3

A. Hiring Qualified Employees What you can and can’t ask at the interview As many of you know, there are federal, state and even local laws that protect individuals against discrimination based on protected classifications, such as: Age Race Color National origin Sex/gender Disability, and Religion.

These laws apply to protect applicants for employment as well against improper interview questions and recruitment practices, such as advertising.

4

A. Hiring Qualified Employees – cont’d Here are some questions that are improper and suggested better response:  Better – “Are you legally authorized to work in the United States?”

 National Origin or Place of Birth – Where were you born or where did your relatives come from?  Better – do not ask!

 Age** (covered by federal ADEA) – asking for date of birth or age, even year of graduation from high school, college, etc.  Better – do not ask!

** not covered by South Dakota law

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

 Citizenship - Are you a citizen of the United States?

5

A. Hiring Qualified Employees – cont’d

 Better – “Can you work these stated hours or this schedule?”

 Race – asking any question which would indicate race or requesting a photograph before hiring  Better – only ask for photo after a conditional job offer is made if required for certain hiring purposes (e.g. driver’s license, ID)

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

 Religion – asking about religion or whether the applicant can work on a particular holiday

6

A. Hiring Qualified Employees – cont’d

 Better – ask about future career or employment plans

 Sex and/or marital status – Does your spouse object to you working?

Do you have a spouse? Do you have any young children?  Better – “Can you work the stated hours or schedule?”

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

 Pregnancy – Are you pregnant or do you plan to become pregnant?

Do you practice birth control?

7

A. Hiring Qualified Employees – cont’d

 Better – “Can you perform the essential functions of the job with or without an accommodation?”

 Show or describe the essential functions of the job to the applicant so there is no ambiguity

 Criminal Activity – asking whether someone has been arrested or convicted of a crime – also better not to put this question on your job applications . . .

 Better - once a condition offer of employment has been made, can do a background check that involves checking for criminal conduct, if done for every other applicant for the same job category.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

 Disability – asking about the person’s disability, if they have a disability, how they became disabled or whether they are taking any medications.

Also, do not ask about applicant’s prior Workers’ Compensation history.

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A. Hiring Qualified Employees – cont’d

 Best practice is to not Google applicants for employment, since an applicant could argue that what the potential employer discovers on the internet could be used in a discriminatory fashion or somehow involves employer bias.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

 Googling Applicants

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A. Hiring Qualified Employees – cont’d

Equal Employment Opportunity Commission (EEOC) • Revised guidance in 2012 for employers on the use of criminal background checks in employment decision-making • Enforcement Guidance on the Consideration of Arrest and Conviction Records in Employment Decisions Under Title VII of the Civil Rights Act of 1964 – www.eeoc.gov/laws/guidance/qa_arrest_conviction.cfm

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Criminal background information: what are the rules?

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A. Hiring Qualified Employees – cont’d Not illegal to ask: Questions about an applicant’s background; or

• An arrest or criminal conviction should not be an automatic bar to employment.

• The EEOC has found that African Americans and Hispanics are arrested and incarcerated in numbers disproportionate to their representation in the general population.

• Criminal record exclusions from employment have a disparate impact based on race and national origin.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

To require a background check.

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A. Hiring Qualified Employees – cont’d

 Is exclusion from employment job related and consistent with business necessity?  What is the nature of the job held or sought? Essential functions?  What is the nature and gravity of the offense or conduct?  What is the time that has passed since the offense/conduct and/or the completion of the sentence?

-- The longer the time passed, the more diluted the fact of the offense becomes.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Best guidelines to consider when making an employment decision based on criminal arrest or conviction:

12

A. Hiring Qualified Employees –

cont’d

Best guidelines to consider – cont’d:

̵ ̵ ̵ ̵

has the person been employed elsewhere been rehabilitated performed community service met the conditions of probation, etc.

Individualized assessment – character references, employment references, facts or circumstances surrounding the offense or conduct?

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Any mitigating measures such as

13

A. Hiring Qualified Employees –

cont’d

Arrest alone does not establish that criminal conduct occurred.  The underlying conduct, not the arrest, could make individual unfit for position

Develop written policy and procedure for screening applicants  Identify essential functions of the job  What specific offenses that may demonstrate unfitness for performing job.  Determine appropriate duration of exclusions for criminal conduct  Include an individualized assessment.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Here are some other thoughts and practices to consider:

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A. Hiring Qualified Employees –

cont’d

Train managers, HR and other decision makers with regard to implementing and carrying out policy consistently. Keep information about applicants and employees confidential  Use only for purpose gathered.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Other thoughts and practices to consider: cont’d

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Handling Terminations and Layoffs Employees’ salaries/wages, benefits, payroll and other related taxes can account for as much as 70% of the total business costs.

Reduction in Force (RIF) –Permanently sever relationship with employee –No promise of reemployment.

Layoff –Temporary separation of employment –Possibility of returning to employment

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

1. Legal considerations, e.g., ADEA/OWBPA, RIFs

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Handling Terminations and Layoffs – CONT’D

a. Age Discrimination in Employment Act (ADEA)  Federal statute that prohibits age discrimination for individuals age 40 and older.  South Dakota does not prohibit discrimination on the basis of age.  Prohibits an employer from failing to hire, discharging or otherwise discriminating against an individual because of his or her age in terms, conditions and privileges of employment, including compensation.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Legal considerations for a company if RIF or layoff is initiated:

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Handling Terminations and Layoffs – CONT’D

b. ADEA amended in 1990 by the Older Workers Benefit Protection Act (OWBPA)  Clarifies the prohibitions against age discrimination  In the RIF context, severance agreements with associated waivers and releases, are common.  Waivers of rights and claims are specifically detailed and minimum standards must be met under OWBPA to have a valid waiver agreement.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Legal considerations – cont’d

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Handling Terminations and Layoffs – CONT’D

The severance plan document will contain information such as: i. ii. iii. iv.

v. vi.

eligibility for participation; commencement and duration of participation; what are the benefits or payments; what are the circumstances giving rise to payment of benefits (e.g., termination without cause or elimination of an employee’s job); exclusions; and when and/or under what conditions severance pay ends.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

2. Structuring severance and separation packages a.Severance Plans – may be for employees or certain employee groups such as executives.

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Handling Terminations and Layoffs – CONT’D

Severance Agreement Employee signs Releases claims against the company in exchange for the benefits provided.

If the reduction is to a group (2 or more employees being offered the same benefit/package), OWBPA disclosures are required as an exhibit.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Summary Plan Description (SPD) Explains the information in an understandable format and language.

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Business Cases A good practice for RIF is to create business cases that explain justification for proposed elimination. Consider giving an overview, describing the decisional unit, the proposed elimination, and the analysis and reasoning for the elimination.

Disparate Impact Testing Good protocol to conduct disparate impact testing Ensures that proposed action does not have disparate impact on particular protected classification/group. If it does, the employer can take steps prior to the elimination and reduce or eliminate the impact.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Handling Terminations and Layoffs – CONT’D

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Handling Terminations and Layoffs – CONT’D

 An individually negotiated agreement between employer and employee.  Generally used or offered in situations where there is some risk present, and employer wants to ensure that the employee releases all claims against the employer to eliminate that risk rather than having it develop into something more serious such as a charge or lawsuit.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

b. Separation Agreements

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Handling Terminations and Layoffs – CONT’D 3. Employment Agreements

Employees at will  Can be terminated for any reason or no reason, so long as the reason is not discriminatory or prohibited by law.

Employees subject to an employment agreement  If considering a termination of employment, review agreement first.  Agreement will tell you what you can do and how to do it.  Provisions in agreement can determine if a termination is feasible and the notice requirements under each circumstance.  Notice can be required in writing!  May have “For Cause” provision

•

For example, even for a termination for any reason, the notice period might be as much as 180 days’ notice!

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

a. Not every employee is an employee at will!

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Handling Terminations and Layoffs – CONT’D

These provisions can be in an employment agreement In employer’s best interest to ensure they are valid following separation of employment and enforced. If provision triggered by separation of employment, remind employee of obligation to honor the terms.  If they do not, take steps to enforce the employer rights so that this employee and others with restrictive covenants will know that the company takes them seriously and intends to enforce them.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

b. Non-Compete and Non-Solicitation Clauses

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Handling Terminations and Layoffs – CONT’D

 May not be terminable at-will  Can have property interest in employment  Can be subject to a collective bargaining agreement (CBA)  Some statutory rights may apply (e.g., teachers)  These can all require certain notice and due process rights be given and exhausted prior to termination.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

4. Public Employees

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Handling Terminations and Layoffs – CONT’D

While having to terminate an employee is never pleasant, there are certain things you can do to minimize the risk of a future complaint or legal claim.

THE BEST DEFENSE IS A GOOD OFFENSE!! a. Do not surprise the employee - unless this is a recent major event to cause termination (such as theft or harassment), the employee should have been warned and provided feedback. b. Give employees an opportunity to improve – consider using a Performance Improvement Plan

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

5. Termination: strategies for avoiding claims

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c. d. e. f. g.

Be fair Reward employees for doing a good job and provide incentives Be consistent & treat similarly situated employees the same Focus on legitimate, objective business reasons Be sure to review policies, contracts, collective bargaining agreements, and applicable state and/or federal statutes. h. Document, document, document! Keeping good documentation on problems and issues helps you to demonstrate that any reason you had to terminate is supported by legitimate, non-discriminatory reasons, and were made out of business necessity.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Handling Terminations and Layoffs – CONT’D

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i. Have good policies and practices in place and review them regularly j. Provide adequate training for managers, supervisors, and HR on a regular basis. k. Have good communication with employees and an open door policy. l. Properly investigate complaints made by employees. m. Make it clear that you will not retaliate against employees for bringing concerns forward. n. If there is risk present, consider offering a separation package in exchange for the employee’s waiver and release of claims.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Handling Terminations and Layoffs – CONT’D

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Handling Terminations and Layoffs – CONT’D

    

This can provide insight as to company “brand” and how employer comes across to employees Can help to decrease employee turnover Reduce likelihood employee will sue organization Learn about opportunities for improvement Consider conducting exit interviews for employees who are involuntarily terminated, too.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

o. Conduct exit interviews

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Handling Terminations and Layoffs – CONT’D

a. Not conducting a proper or thorough investigation into alleged wrongdoing by employee b. Not considering an employee’s file and documentation c. Terminating an employee too quickly or impulsively d. Not providing a sufficient reason or explanation for termination e. Terminating an employee close in time to a complaint f. Not following handbook, collective bargaining agreement, policy or procedure, applicable statute g. Not being prepared for termination meeting or mismanaging logistics of the separation of employment

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

6. Termination: mistakes to avoid

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Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Disciplining and Documentation!

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   



Best practice is to develop a sound and thorough discipline policy Outline the process and procedure to make it clear to employees expectations and consequences Serves to minimize potential legal liability or risk Establish an effective means of dealing with employee behavior, actions (or inactions) that will not be tolerated, and provide a means to correct problems before they escalate into larger ones Consider collective bargaining agreement steps and procedures that are in place

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

A. Putting a Discipline Policy in Place Proactively

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1.

2.

What is unacceptable behavior? –handbook should cover various topics ranging from attendance to anti-discrimination/harassment, to proper timekeeping, etc.

Penalty or consequence –what penalty or consequence will be imposed for a violation of the particular work rule or policy.

- what happens in the case of a second or any subsequent violation?

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Here are some recommended ideas to consider when developing a disciplinary program or policy:

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4.

5.

Consistency and equal treatment –policy and any consequences under it will be imposed equally for any similarly situated employee and consistently as well.

The employer should be FAIR. Progressive disciplinary policy? Progressive disciplinary policies typically follow a particular order of discipline, and the severity of the discipline increases as each infraction of the rules/policies occurs. a) Common in CBAs

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

3.

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   

Oral warning Written warning Suspension Termination

Usually starts out with more informal coaching conversations - - so that the employee has at least been talked to about the behavior or conduct and given an opportunity to correct his or her behavior.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

A typical progression is as follows:

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Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Advantages of Progressive Discipline • Step-by-step system that conveys that you will deal with problems in an orderly and systematic way and that employees ordinarily won’t be terminated at first blush.

• Employees are better able to determine what their status is on a particular issue or area.

• A step-by-step approach can be easier to defend from a legal standpoint - employer is following the process and is not making decisions rashly or arbitrarily.

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• More tedious – more documentation and follow-up work.

• Requires supervisors and managers to understand all of the policies and the progressive system well, so that they can apply it fairly and consistently to all.

• Risk that the at-will status of employees could be at jeopardy; steps can become a guarantee and contractual in nature.

• Risky if any step is not followed.

• Can take a while to discipline until ultimately the employee can be terminated – employer’s hands are more “tied.”

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Disadvantages of Progressive Discipline

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Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Policy violations which warrant immediate termination –identify these so that there is no confusion of when an employee can be terminated immediately for the offense.

Examples include: • Harassment or discriminatory behavior (including sexual harassment); • Theft; • Vandalism or misappropriation of company property; • Excessive or extended absenteeism; • Reporting to work under the influence or drugs or alcohol;

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• Violation of confidentiality or theft of trade secrets; • Insubordination.

Respond to incidents quickly – do not let a situation linger – the sooner it is addressed, the better.

Reserve employer rights – employers should reserve the right to take what appropriate action is needed, based on the particular facts and circumstances.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Policy violations which warrant immediate termination – examples continued:

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• no employee handbook can address every single possible form of improper employee behavior or action in the workplace!

• Have a “catch-all policy” that covers various unacceptable employee behaviors. Employers can call it an Offensive Workplace Conduct policy or an Unacceptable Behaviors policy.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

What to do when there is no policy addressing an offense

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• • • • • • • •

Violence or harassment of any kind Theft or damage to company property Fighting or threatening to fight at work Falsification of time records Improper access and/or use of company property Possessing a firearm or weapon on company property Failure to follow reporting procedures Improper disclosure of confidential information

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Examples of misconduct can be the following, including, but not limited to:

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 not possible to list all of forms of behavior that are considered unacceptable and not tolerated in the workplace  will not tolerate certain behaviors and employees can be subject to disciplinary action, up to and including termination of employment.  reserve the right to discipline as it determines is needed, in its discretion, for a situation that may not be listed specifically.  To the extent possible, similar situations should be handled similarly in terms of discipline or consequences

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

The Employer’s policy should state:

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 Do its best to deal with the employee situation misconduct fairly  Similar situations and discipline should be handled similarly  Be as consistent as possible based on past precedent, and  Consider developing more policies, or a catch-all policy, to cover itself and particular situations in the future.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

If an employer does not have a policy addressing the topic or a “catch-all policy,” it should:

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Evaluating Employee Performance While Mitigating Liability

!!! An organization is nothing without its employees !!!

Conducting employee performance reviews is no manager’s favorite task, but very important to do and to do correctly.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Employee performance is important to every organization

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a) Helps employer document issues b) May decrease potential liability for employment-related claims by providing a written defense c) Helps center on the importance of job responsibilities d) Increase communication and provide clarity e) Mechanism to reward employees for hard work and achievements f) May inspire employees to stretch to increase skills and goals g) Potentially improve morale, and h) Assist in decision making of compensation increases

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Advantages of employee performance evaluations:

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Disadvantages:

Example: • Employee does not want to say something negative to employee in fear that employee will become discouraged or feelings will be hurt or “sugar-coats” the performance review, a true picture is not represented -- called “evaluation inflation.”

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

If not done correctly, the employee’s performance review can come back to haunt the employer.

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When employer wants to discipline or terminate that employee, but has sugar-coated performance reviews, the decision to terminate appears unsupported or fabricated harder to defend its actions Harder to defend a discrimination claim or lawsuit Harder to make a pretext argument (employer’s true reason something other than stated reason, thus discriminatory)

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Disadvantages, cont’d:

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Goals and Tips Addressing an Employee’s Performance and Goals – - Provide examples to the employee about the performance and any problems.

- Describe issues with specificity and take the opportunity to reinforce performance standards.

- Plan for improvement or Performance Improvement Plan (date to follow up - provides opportunity for improvement and feedback) - Offer help such as training, coaching or classes if needed.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

1.

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2. Document to Mitigate Liability and Provide Clarity – • written evidence that the performance or behavioral issues were addressed • employee has participated in the process • employee is aware of what is being addressed • employee should sign the performance review • opportunity for the employee to provide comments • documentation of success or failure of key components of the employee’s job is a critical part of the process • provides evidence of non-discriminatory reasons for pay or promotion decisions • provides a basis for a potential disciplinary action, up to and including termination of employment

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Goals and Tips

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3. Clearly Written and Avoid Problematic Language – • performance reviews should be clearly written, be specific, and avoid using subjective language • avoid any discriminatory language and not focus on any protected classifications (age, sex, religion, disability, race, etc.)

• stick to performance and not attitude • performance reviews should not make any legal conclusions and should not have legal language contained in them • consider the rating system that is utilized (ensure that it is defensible and applied consistently among employees)

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Goals and Tips

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4. Consider Employee Self-Evaluation – • mitigate liability to show that you have included employees in their own performance evaluation, and it is not so one sided • encourages employees to think thoughtfully about their job role and their performance, and to consider what they have contributed to the organization throughout the year • takes into account where the employees see their future with the company, and where they want to apply their skills and abilities down the road

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Goals and Tips

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5. Time Frequency – • do them regularly and consistently (e.g., annually) • provides a routine and regular method to allow communication and feedback to occur • Employers should not skip reviews - key way to discuss any issues or performance problems and to document them • frequent communication and documentation is key in terms of mitigating employer liability

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Goals and Tips

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Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

What Goes in the Discipline/Discharge Letter? • The key to employee communications is to be clear and concise. • No need to over explain, but the employee should understand what error or violation was made and why the decision is being made.

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Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Disciplinary Letter/Corrective Action a. corrective action form • guides managers or human resources as well as to provide consistency.

• key items  employee’s name,  employee ID,  date,  employee’s job title and/or department,  level of corrective action (e.g., verbal warning, written warning, suspension, termination?),

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b. If using a letter format, employers should try to include all of the elements described above • The letter does not need to be super lengthy, but should be clear and explain the situation with enough detail to get the key points across.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Disciplinary Letter/Corrective Action Key items (cont’d):  description of the incident(s) or behavior(s), including dates, times and/or locations, expectations about future conduct,  consequences of a future violation or if the issue continues, and  written acknowledgment by the employee that the employer has met with them and described the disciplinary action.

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a. Similar to corrective action letters or communications, termination or discharge letters need to be - clearly worded, - succinct, - not too brief.

The key is to strike the right balance between getting the reason for termination communicated, but not going into too much detail.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Discharge/Termination Letter

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- the termination decision, - the reason for the termination, and - provide key details that the former employee will need to know.

• Provide information about the continuation of benefits or whom the former employee can contact for further details.

• The letter should be handed to the employee at the termination meeting or sent to his or her last know address on file.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

• The termination letter will confirm

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The employment relationship, if it is at-will, can be terminated by the employer (or the employee) at any time and for any reason, so long as the reason is not discriminatory.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

At What Point Should Discharge (Termination) be Considered?

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Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

When an employer considers an involuntary discharge, it can occur for the following general reasons: 1. The employee has been experiencing performance or attendance problems that have not been resolved over time;

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• If the employee is unable to bring their performance up to the standard that the employer expects, then termination can occur in this instance.

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

• Employers also have actual progressive disciplinary systems that it will follow before it can terminate an employee according to its policy. In that case the exhaustion of the prior steps must occur before termination can happen.

• Be aware of any applicable CBA steps or procedures.

• Finally, employers may try performance improvement plans, or PIPs.

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• Committing sexual or other harassment against another employee, customer, patient, etc.

• Theft or stealing • Act of violence or aggression in the workplace • Failure to report to work or return to work • Violation of the corporation’s Code of Conduct

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

2.The employee has committed an egregious or serious offense that results in immediate termination of employment. This could be the result of the employee:

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Reduction in Force – An economic downturn or an employer’s declining financial position can cause the company to go through downsizing or reduction in force, whereby it eliminates positions and therefore has to terminate employees; Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

3.

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There are various laws at play with any given situation and employers should be thoughtful and plan carefully for any termination that it conducts.

An ounce of prevention is worth a pound of cure!!!

Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

Always advisable to connect with your employment lawyer to get advice before terminating an employee or a group of employees.

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Serving South Dakota and the Upper Midwest Region since 1946 Rapid City | Spearfish | Sioux Falls

LYNN, JACKSON, SHULTZ & LEBRUN, P.C. Serving South Dakota and the Upper Midwest region since 1946.

Rapid City 909 Saint Joseph Street Suite 800 Rapid City, SD 57701 (605) 342-2592

Spearfish 135 East Colorado Boulevard Spearfish, SD 57709 (605) 722-9000

Sioux Falls 110 N. Minnesota Ave Suite 400 Sioux Falls, SD 57104 (605) 332-5999

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Recent Developments & What Lies Ahead for Public Sector Employment Law & Labor Relations Nichole Mohning Cutler Law Firm Sioux Falls

Nichole Mohning is a partner with the Cutler Law Firm, LLP. She primarily practices in the area of employment law providing advice and counsel to both public and private employers on human resource policies and practices, state and federal compliance issues, employee benefits and leave, and non-compete agreements. She also assists clients with employment-related claims in the courts and administrative agencies. Along with her employment practice, Nichole is also actively involved in litigating commercial disputes.

Nichole is originally from Le Mars, Iowa. She graduated from the University of Kansas with a B.A. in history and American studies. Following graduation, Nichole was involved in secondary and higher education where she served as a teacher and administrator. Nichole returned to school at the University of Kansas School of Law. She practiced in Kansas for several years before joining the Cutler Law Firm in 2008.

Recent Developments and What Lies Ahead in Employment Law and Labor Relations December 6, 2018

Nichole J. Mohning Cutler Law Firm, LLP 140 North Phillips Avenue, 4th Floor Sioux Falls, South Dakota 57104 605-335-4950 nichole@cutlerlawfirm.com

This document does not constitute formal legal advice. You are encouraged to seek the advice of legal counsel with regards to specific questions you may have on how the law impacts your particular circumstances.

Public Employment Landscape • 82% of the HR professionals indicated recruitment and retention is the greatest challenge. ▫ Center for State & Local Government

• “Silver Tsunami” ▫ Congressional Research Service  52% of public workers are age 45 to 64 as compared to 42%of private workforce.  52.1% of local employees  49.7% of state employees

Factors Impact Employment • Pay & Benefits • Culture and policies • Room for collaboration and growth All of these items are impacted by recent developments and “hot topics” in the law.

Proposed Rule on Calculation of “Regular Rate” for overtime.

• Proposed Rule issued on March 28, 2019 • Seeks to clarify items excluded from calculation of the regular rate. ▫ Items not tied to hours worked or services rendered.

• Exclusions:

▫ The cost of providing wellness programs, onsite specialist treatment, gym access and fitness classes, and employee discounts on retail goods and services ▫ Payments for unused paid leave, including paid sick leave  Including payouts ▫ Reimbursed expenses, even if not incurred “solely” for the employer’s benefit ▫ Reimbursed travel expenses that do not exceed the maximum travel reimbursement permitted under the Federal Travel Regulation System regulations and that satisfy other regulatory requirements ▫ “Show up” and “Call Back” pay in excess of hours actually worked ▫ Predictability or Schedule Change premiums ▫ Benefit plans, including accident, unemployment, and legal services ▫ Tuition programs, such as reimbursement programs or repayment of educational debt ▫ Discretionary Bonuses ▫ Shift Premiums

• Premiums to be excluded:

▫ For “hours worked in excess of eight in a day ▫ For work by the employee on Saturdays, Sundays, holidays, or regular days of rest, or on the sixth or seventh day of the workweek where is not less than one and one-half times the rate established in good faith for like work performed in non-overtime hours on other days ▫ In accordance with an employment contract or collectivebargaining agreement  For work outside of the hours established in good faith by the contract or agreement as the regular workday (not exceeding eight hours) or workweek (not exceeding the maximum workweek applicable to such employee  Not less than one and one-half times the rate established in good faith by the contract or agreement for like work performed during such workday or workweek

Proposed Changes to the White Collar Exemption • White Collar Exemptions: ▫ ▫ ▫ ▫ ▫

Executive Administrative Professional Outside Sales (alternative wage test) Computer Professions (alternative wage test)

• Applies to overtime and minimum wage • Salary Test and Duty Test for Each Exemption

Proposed Changes to the White Collar Exemption • Duties Test

▫ No Change

• Salary Test

▫ Must be paid on a salary basis of not less than $455 a week ($23,660 annually). ▫ Proposed Rule: $679 ($35,308)  10% can come from non-discretionary bonuses and incentive payments.

▫ Highly compensated employee: from $100,000 to $147,414 ▫ No Automatic updates. ▫ Comment period runs through mid-May.

FMLA Guidance • U.S. Department of Labor Opinion Letter FMLA2019-1-A ▫ Issued March 14, 2019 ▫ Employee cannot decline qualifying FMLA leave as being designated as FMLA leave. ▫ Paid leave such as vacation, etc. cannot be exhausted and then have leave designated as FMLA moving forward. ▫ Is conflicting case law, so watch to see what happens.

Keep any eye on: • Paycheck Fairness Act (Passed U.S. House)

▫ Amends Equal Pay Act of 1963 ▫ Current pay disparities for men and women doing equal work based on “any other factor other than sex” are lawful. ▫ Would change standard to “a factor other than sex” that is job-related, consistent with business necessity, related to the position, account for the entire pay differential and must not be “based upon or derived from” a sex-based differential. ▫ Expands penalties

• Equality Act

▫ Would expand protection from discrimination in employment, housing, public accommodation to individuals on the basis of sexual orientation, gender identity or gender expression.

Oliver Wendell Holmes, writing for the Supreme Judicial Court of Massachusetts in 1892, upheld the firing of a police officer for violating a municipal political speech regulation by stating: “[t]he petitioner may have a constitutional right to talk politics, but he has no constitutional right to be a policeman.�

• Social media are services that allow individuals to exchange myriad types of information (words, pictures, videos, news, etc) and are constantly evolving • Some examples: ▫ ▫ ▫ ▫ ▫

Facebook Twitter Instagram SnapChat LinkedIn

Social Media • Many issues have not yet been addressed by courts, in part because technology continues to change rapidly.

• In many cases, balancing tests have to be applied, and there are not always clear answers • Employer v. Employee Accounts

Government agencies’ online accounts • Employees develop and maintain these as part of work duties.

• Should be identified as Official accounts.

• Subject to all policies, rules and regulations governing communication on behalf of the public entity.

• Entity should have a social media policy addressing: ▫ ▫ ▫ ▫ ▫

Access What information can be posted Who can comment A public and use comment policy Saving content for open records purposes

Personal Accounts and Use • General First Amendment Protections Apply • Should have a written policy

▫ All policies regarding harassment, discrimination and confidential information apply. ▫ To avoid confusion on status should recommend the individual not identify as a public employee. ▫ Prohibition on use of work email for the account. ▫ Should not access on work devices or network.

• Content-based policies that place restrictions on the private speech of employees will be subject to strict scrutiny by reviewing courts.

Reviewing posts • “Employee

Speech”

• Speech that is made as part of the employee’s official duties and in furtherance of an employee’s work responsibilities, even if that speech is not required by the job or made in response to a supervisor’s request.

• Is not protected.

• “Citizen Speech”

▫ Speech that is (1) off-duty, (2) unconnected to the workplace and (3) related to issues of public concern has the most protection • ▫ Matters of public concerns can be anything related to a matter of political, social or other community concern ▫ Can be hard to define  Does not include internal workplace grievances

• If Citizen Speech then use a balancing test ▫ Balance employee’s right to free speech with public employer’s interests in ensuring public services are performed effectively and efficiently ▫ Interests in:     

Avoiding disruptions Maintaining good working relationships Confidentiality Maintaining discipline Cannot be content driven.

Items to Remember: • Ensure you have comprehensive social media policies in place for personal accounts/use and official accounts. ▫ Ensure it references the harassment, discrimination and confidential information policies. ▫ Address how comments will be handled. ▫ Address open records items.

• Conduct training for all levels of employees.

• Don’t forget about Fourth Amendment issues when conducting investigations or monitoring.

2019 Legislative Session • HB 1009- Form and style changes regarding state employment.

• HB 1010 – Form and style changes to clarify and repeal certain provisions related to the South Dakota Retirement System.

• HB 1011 – Clarify intent, remove obsolete provisions and compliance with IRS qualification requirements.

• HB 1034- Unemployment Compensation Contribution Rates

Harvey v. Regional Health Network 2018 S.D. 3 (Jan. 3, 2018)

• Employee terminated from a senior care facility.

• Filed claims for: slander, malicious prosecution, intentional and negligent infliction of emotional distress and breach of contract.

• Summary Judgement granted to defendants on all counts by trial court.

• Employee alleged to have slapped a resident and secluded a resident in her room.

• Alleged failure to fully investigate the allegations could not serve as a basis for slander.

• Employer could not be held responsible under respondeat superior for co-workers making a false report to get another employee fired as that was solely to serve own interests.

• Grievance procedure did not alter at-will employment status expressly set out in other parts of the employee handbook.

Winslow v. Fall River County 2018 S.D. 25 (March 14, 2018)

• Employee was a member of the Courthouse Clerical and Office employee bargaining unit of Laborer’s Local Union 620 • Employee filed a written grievance with the County Auditor in accordance with the CBA asking to be added to the next County Commission meeting asserting hostile work environment and discrimination. The auditor did not respond to the request.

• Employee resigned four (4) months later.

• Filed a formal grievance with the County Auditor five days after resigning.

• Employee was informed that as she was no longer an employee the grievance process was not available.

• Union filed a petition requesting a hearing on an unfair labor practice, which the County moved to dismiss.

• Department of Labor dismissed the petition finding that the record did not show the constructive discharge was driven by an effort to undermine her collective bargaining power or due to membership in the bargaining group thus no jurisdiction.

• Jurisdictional issue- scope of authority under SDCL 3-18-3.1 • The failure to follow the CBA is not an unfair labor practice.

Riggs v. Bennet County Hospital & Nursing Home, 2018 S.D. 51 (June 27, 2018)

• Hospital terminated Riggs’ employment and opposed unemployment.

• Filed a Complaint asserting the opposition to unemployment was in retaliation for the request to bring a companion dog to work.

• SD Dept of Labor Division of Human Rights found no probable cause on the complaint asserting which the Circuit Court affirmed.

• Riggs had been allowed to bring dog to work until policies changed. In January 2015 made a formal request with documentation from her psychiatrist. Committee denied the request based on performance, duties and her ability to handle stressful situations at work. Following the denial tensions increased.

• When confronted Riggs refused to speak with CEO and supervisor and was terminated for insubordination.

• DHR determined no probable cause to believe Riggs second discrimination claim opposition to UI benefits was in retaliation for engaging in protected activity.

• DHR did not consider all evidence in determining whether there was evidence of pretext. Did not consider letters appealing denial of accommodation.

• Remanded for further consideration.

Anderson v. South Dakota Retirement System (Feb. 20, 2019)

• Deborah Cady retired from the Rapid City Police Department in May 2012.

• She married Debra Anderson in July 2015.

• Ms. Cady passed away on March 10, 2017 and Ms. Anderson applied for surviving spouse benefits.

• She was denied as the plan requires the surviving spouse to have been married to the member on the date of retirement.

• At the time of Ms. Cady’s retirement same-sex marriage was not legal. The application was denied.

• Ms. Anderson appealed under the SDAPA. • The South Dakota Supreme Court declined to treat the couple as married retroactively as they had not been married under the law of another state and SD does not recognize common law marriage.

Janus v. AFSCME, Council 31, U.S Supreme Court (June 27, 2018)

• 5-4 decision on the final day of the 2017-2018 term, the • First Amendment prohibits public sector entities from collecting fees from non-union members who are covered by the collective bargaining agreement.

• Eliminates fair share fee arrangements as a significant source of revenue.

• Impact public employees in 32 states.

▫ Some states are taking legislative action to try to counteract impact by modifying state law regarding organizing and opt-out time periods.

• NEA membership down 3% and AFSCME down 8% in 2019

Changes in the Collective Bargaining Landscape • State laws addressing items subject to collective bargaining , limit grievances and requiring recertification. ▫ Iowa law before the state Supreme Court.

• Missouri Senate Bill 1007 & Paycheck Protection Law.

▫ Designated all employees at-will with limited merit exception. ▫ Eliminated appeals process ▫ Recertification requirements

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