991 N.W.2d 89
S.D.2023Background
- Darcy Bracken and her husband operated White Tail Ridge Bed and Breakfast; by Feb–May 2020 bookings ceased and many reservations were canceled amid the COVID-19 public‑health emergency.
- Bracken applied for Pandemic Unemployment Assistance (PUA) under the CARES Act as a self‑employed person and received $14,080 for March–early August 2020.
- The South Dakota Department of Labor later determined she was ineligible and declared the payments an overpayment; an ALJ affirmed, concluding her loss was an "indirect" economic consequence of COVID‑19, not a qualifying cause.
- The ALJ found Bracken had regular guests pre‑pandemic, no new reservations in Feb 2020, many cancellations, and no guests until late May 2020.
- The Department adopted the ALJ decision; the Custer County circuit court affirmed under the administrative‑law standard, noting deference to factual findings.
- On appeal to the South Dakota Supreme Court, Bracken (now with counsel) argued the ALJ misinterpreted the Secretary of Labor’s Self‑Employment guidance (UIPL 16‑20) by requiring a "direct result" causation and by requiring closure of the business.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Proper causation standard for Self‑Employment Rule ("because of") | Bracken: "because of" requires but‑for causation and does not impose a stricter "direct result" or closure requirement; indirect effects suffice. | Dept.: PUA eligibility for self‑employed should require a direct‑result causal showing (analogous to DUA rules). | Court: "because of" is ordinary but‑for causation and does not mandate a separate "direct result" or closure requirement; ALJ erred by importing a stricter standard. |
| Sufficiency of evidence of "significant diminution" of customary services | Bracken: ALJ found substantial loss (no guests by May 2020), which satisfies the Self‑Employment Rule. | Dept.: Alternatively argued the evidence fails to prove a significant diminution caused by COVID‑19. | Court: Did not reach Dept.'s sufficiency challenge because Dept. did not contest ALJ findings on appeal; ALJ's factual findings show a significant diminution, so reversal of ineligibility. |
Key Cases Cited
- Ehlebracht v. Crowned Ridge Wind II, LLC, 972 N.W.2d 477 (S.D. 2022) (de novo review applies to administrative questions of law)
- Christenson v. Crowned Ridge Wind, LLC, 978 N.W.2d 756 (S.D. 2022) (standard for appellate review of agency findings)
- United States v. Miller, 767 F.3d 585 (6th Cir. 2014) ("because of" denotes but‑for causation in ordinary usage)
- Est. of Gaspar v. Vogt, Brown & Merry, 670 N.W.2d 918 (S.D. 2003) (proximate/legal cause need not be sole cause)
- Martin v. Dep't of Workforce Servs., 507 P.3d 847 (Utah Ct. App. 2022) (discusses causation standards in related administrative guidance; court found claimant failed proof)