SARA HALLBERG, Plaintiff and Appellant, v. SOUTH DAKOTA BOARD OF REGENTS, JEREMY REED, and FRANCESCA LEINWALL, Individually, Defendants and Appellees.
#28683-aff in pt & rev in pt-JMK
IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA
2019 S.D. 67. OPINION FILED 12/31/19
2019 S.D. 67
THE HONORABLE SCOTT P. MYREN, Judge
APPEAL FROM THE CIRCUIT COURT OF THE FIFTH JUDICIAL CIRCUIT, BROWN COUNTY, SOUTH DAKOTA. ARGUED ON APRIL 30, 2019.
ALEX M. HAGEN, MICHELLE I. STRATTON of Cadwell, Sanford, Deibert & Garry, LLP, Sioux Falls, South Dakota. Attorneys for plaintiff and appellant.
REED RASMUSSEN of Siegel, Barnett & Schutz, LLP, Aberdeen, South Dakota. Attorneys for defendants and appellees.
[¶1.] Sara Hallberg filed a complaint in circuit court against the South Dakota Board of Regents and two of its employees, alleging retaliatory discharge. The circuit court dismissed the case, holding that the court lacked jurisdiction and that the Board and its employees were shielded from the suit by sovereign immunity. Hallberg appeals. We affirm in part and reverse in part.
Facts and Procedural History
[¶2.] We relate the following facts as alleged in Hallberg‘s complaint. The Student Affairs Department at Northern State University (NSU) hired Hallberg as its Director of the Counseling Center (Center). Her employment term ran from September 25, 2017 to June 21, 2018, with the possibility of an annual reappointment. Hallberg‘s supervisors were Francesca Leinwall, the associate vice president of student affairs, and Jeremy Reed, the vice president of enrollment management and student affairs.
[¶3.] Shortly after Hallberg began working at NSU, she noticed unlicensed student employees counseling patients and signing therapy notes which, in her view, violated the ethical standards of the American Counseling Association. Although she communicated her concerns about this practice to her supervisors and discussed it with NSU‘s legal counsel, both informed her that the student employees were not required to be licensed to perform their employment duties.
[¶4.] Because she still believed the behavior was improper, Hallberg contacted other Board of Regents institutions about their protocols. She asserted that each informed her that it did not permit counselors to practice without a license. She also contacted the South Dakota Counselors and Marriage and Family Therapist Examiners Licensing Board. The Board told her that practicing without a license is prohibited by law.
[¶5.] Additionally, Hallberg discovered that staff members, including student employees, had access to the Center‘s Titanium program, a system used to store patient records and counseling notes. She likewise observed that student employees were the primary point of contact for students calling the Center to schedule counseling services. This practice allowed student employees access to their peers‘s student identification numbers and other sensitive information. Hallberg began restricting
[¶6.] At a full staff meeting of the student affairs office in December 2017, Hallberg presented her concerns regarding the Center‘s possible violation of the American Counseling Association‘s ethical standards. She discussed the option of installing a firewall in the Titanium system to restrict access to patient records. She also explained her decision to make Gramlow the primary phone contact to remedy the confidentiality issues with the front desk protocol. The following day, Hallberg received a termination letter from Leinwall for disrupting the “efficiency or morale of the [D]epartment” in violation of the Board of Regents‘s policy.
[¶7.] Hallberg filed suit in circuit court, naming The Board of Regents, along with Reed and Leinwall individually, as defendants. Although the provisions of
[¶8.] The Board of Regents, Reed, and Leinwall moved to dismiss Hallberg‘s complaint for lack of jurisdiction and failure to state a claim under
[¶9.] Hallberg appeals, raising two issues that we restate as follows:
- Whether the circuit court erred by dismissing Hallberg‘s claims against the Board of Regents.
- Whether the circuit court erred by dismissing the claims against Leinwall and Reed.
Analysis and Decision
[¶10.] We review the circuit court‘s decision granting a motion to dismiss de novo with no deference to the circuit court‘s determination. N. Am. Truck & Trailer, Inc. v. M.C.I. Commc‘n. Servs., 2008 S.D. 45, ¶ 6, 751 N.W.2d 710, 712. “A motion to dismiss under
1. Whether the circuit court erred by dismissing Hallberg‘s claims against the Board of Regents.
[¶11.] Determining whether the circuit court erred requires that we address the extent to which the Legislature has waived sovereign immunity against the Board. When sued in their official capacities,
[¶12.] We look to the basic maxims of the doctrine of sovereign immunity to guide us in determining whether and to what extent the State has waived its immunity by passing
[¶13.]
No department, bureau, board, or commission of the [S]tate or any of its political subdivisions may dismiss, suspend from employment, demote, decrease the compensation of, or take any other retaliatory action against an employee because the employee reports in good faith to an appropriate authority a violation or suspected violation of a law or rule, an abuse of funds or abuse of authority, or substantial and specific danger to public health or safety, unless the report is specifically prohibited by law . . . . A [S]tate employee who is the subject of retaliation under this section may file a grievance with the Civil Service Commission pursuant to
§ 3-6D-22 . For purposes of an employee of a political subdivision, an appropriate authority includes any human resources department of that political subdivision, if any, any state‘s attorney, or the attorney general.
(Emphasis added.) The purpose of
An employee may file a grievance with the Civil Service Commission if the employee believes that there has been retaliation because of reporting a violation of [S]tate law through the chain of command of the employee‘s department, to the attorney general‘s office, the State Government Accountability Board, or because the employee has filed a suggestion pursuant to this section.1
(Emphasis added.)
[¶14.] Review of the plain language of
[¶15.] Nevertheless, Hallberg argues she is entitled to file a direct cause of action because
[¶16.] In Montgomery v. Big Thunder Gold Mine, Inc., 531 N.W.2d 577, 579 (S.D. 1995), we were asked to determine the meaning of the word “may” in
[¶17.] Our conclusion is reinforced by the language of the next statute in the chapter—
[¶18.] Hallberg chose not to file her claim with the Commission. Therefore, under the current statutory framework, the fate of her claim against the State remains unchanged regardless of whether
[¶19.] Should the Legislature wish to expand its waiver to allow whistleblowers to sue a state entity beyond filing a grievance with the Commission, it need only insert language indicating that filing in circuit court is appropriate. See, e.g.,
[¶20.] Alternatively, Hallberg argues that she should be allowed to proceed in circuit court under our Constitution‘s mandate that every injured plaintiff “shall have a remedy by due course of law[.]”
[¶21.] There is little question that the Legislature intended to create a remedy for whistleblowers, but that remedy is confined to the grievance procedure before the Commission.
2. Whether the circuit court erred by dismissing Hallberg‘s claims against Leinwall and Reed.
[¶22.] The circuit court dismissed Hallberg‘s complaint against Leinwall and
[¶23.] Actions “against officers of the [S]tate in their official capacity[] are in reality suits against the State itself.” Reisch, 2008 S.D. 72, ¶ 12, 754 N.W.2d at 818. Likewise, “state employees who are sued in an individual capacity are entitled to immunity dependent upon the function performed by the employee. State employees are generally immune from suit when they perform discretionary functions, but not when they perform ministerial functions.” Id. ¶ 12, 754 N.W.2d at 818-19.
[¶24.] Hallberg concedes that under ordinary circumstances, the decision to terminate an employee is a discretionary act that shields state employees from liability even if they are sued in their individual capacities. However, she also correctly notes that state employees are not safeguarded from liability if they commit intentional torts or ultra vires acts that exceed the scope of their authority. Bego v. Gordon, 407 N.W.2d 801, 808 (S.D. 1987). By firing her out of retaliation, Hallberg argues Leinwall and Reed exceeded the scope of their official capacities and lost their right to be shielded by the sovereign. Id.
[¶25.] We have previously acknowledged “a cause of action for wrongful discharge [that] arises on behalf of an employee where an employer‘s motivation for termination contravenes a clear mandate of public policy.” Niesent v. Homestake Mining Co. of Cal., 505 N.W.2d 781, 783 (S.D. 1993). Tiede v. CorTrust Bank, N.A., 2008 S.D. 31, ¶ 10, 748 N.W.2d 748, 751. “Retaliatory discharge is a tort arising from a breach of public policy duties independent of the employment contract.” Tiede, 2008 S.D. 31, ¶ 15, 748 N.W.2d at 752. The public policy to be protected must be “substantial.” Id. An employee who alleges a wrongful discharge claim is provided a remedy in tort not just to compensate for loss of employment, but also to preserve the underlying fundamental public policy itself.
[¶26.] Determining what is a clearly mandated public policy can be challenging. In fact, it “has been called the Achilles heel of the principle underlying the tort of retaliatory discharge.” Hicks v. Resolution Trust Corp., 736 F. Supp. 812, 815 (N.D. Ill. 1990) (vacated on other grounds). Yet, we addressed this question years prior to the enactment of
[¶27.] We see no meaningful difference between private sector and public sector employees for purposes of the intentional tort of retaliatory discharge. Although the existence of sovereign immunity would ordinarily draw a distinction between public and private employees, sovereign immunity is inapplicable to intentional torts committed by State employees. Hart v. Miller, 2000 S.D. 53, ¶ 38, 609 N.W.2d 138, 148. Accordingly, the public policy considerations we first articulated in Dahl apply to this case. With this precedent in mind, we review the circuit court‘s decision to dismiss Hallberg‘s claims against Leinwall and Reed on the grounds that Hallberg‘s discharge was a discretionary act protected by sovereign immunity. See Gruhlke v. Sioux Empire Fed. Credit Union, Inc., 2008 S.D. 89, ¶ 17, 756 N.W.2d 399, 408.
[¶28.] Pleadings may be considered to determine whether a plaintiff is alleging a state employee has committed “wrongful acts in excess of the employee‘s official authority.” Bego, 407 N.W.2d at 809. Under notice pleading principles, we require “a short and plain statement of the claim showing that the pleader is entitled to relief.” St. Pierre v. State ex rel. S.D. Real Estate Comm‘n, 2012 S.D. 25, ¶ 17, 813 N.W.2d 151, 157. This standard requires that Hallberg plead “more than labels and conclusions.” Sisney v. Best, 2008 S.D. 70, ¶ 7, 754 N.W.2d 804, 808. A complaint must put “a person of common understanding” on notice, “with reasonable certainty of the accusations against [them] so [they] may prepare [their] defense.” Id. ¶ 18, 813 N.W.2d at 157. While detailed factual allegations are not necessary, Hallberg must set forth “a statement of circumstances, occurrences, and events in support of [her] claim” that Leinwall and Reed committed acts outside the scope of their employment. Gruhlke, 2008 S.D. 89, ¶ 17, 756 N.W.2d at 409. But even if a complaint sets forth a detailed set of facts, a failure to plead each element of a claim is fatal. Id. ¶ 21, 756 N.W.2d at 410.
[¶29.] In her complaint against Leinwall, Hallberg avers that: (1) she reported the counseling center‘s allegedly unlawful practices; (2) she received a termination letter from Leinwall shortly after she made her report; and (3) her termination for reporting the practices was unlawful because it violated public policy. To support her belief that the Center was engaged in unlawful activity, Hallberg alleged that unlicensed individuals were signing therapy notes, engaging in counseling without a license, and accessing confidential records.
[¶30.] These allegations, when taken as true, raise more than a “formulaic recitation of the elements of a cause of action . . . .” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555, 127 S. Ct. 1955, 1965, 167 L. Ed. 2d 929 (2007). Therefore, the circuit court erred in dismissing Hallberg‘s claim of retaliatory discharge against Leinwall
[¶31.] We turn next to Hallberg‘s allegations against Reed. To establish her claim of retaliatory discharge against Reed, Hallberg asserts that he served as Leinwall‘s direct supervisor. Aside from this, however, Hallberg has not pled specific allegations regarding how Reed retaliated against her. For instance, the complaint does not allege that Reed ordered Leinwall to send the letter terminating Hallberg. Nor does it allege that Reed had personal knowledge of her attempts to report the allegedly unethical or unlawful conduct.
[¶32.] Pleading that Reed served as Leinwall‘s supervisor, without more, does not include the “circumstances, occurrences, and events in support of the claim presented” and is, therefore, insufficient under our notice pleading standard to establish the threshold for an intentional tort. See Gruhlke, 2008 S.D. 89, ¶ 17, 756 N.W.2d at 409. Because Hallberg did not aver that Reed was acting outside the scope of his authority, the circuit court did not err by concluding that Reed was acting in a discretionary capacity and shielded by the doctrine of sovereign immunity.
Conclusion
[¶33.] The circuit court did not err by dismissing Hallberg‘s claims against the Board. The Legislature waived the Board‘s sovereign immunity for whistleblower claims only to the extent that it allowed employees to file claims with the Commission. Additionally, Hallberg adequately pled the tort of retaliatory discharge against Leinwall, but failed to adequately plead a cognizable tort against Reed. We affirm the circuit court‘s dismissal of Reed and reverse and remand Hallberg‘s claim against Leinwall for further proceedings consistent with this opinion. We affirm in part and reverse in part.
[¶34.] GILBERTSON, Chief Justice, and JENSEN and SALTER, Justices, and WILBUR, Retired Justice, concur.
Notes
A civil service employee may file a grievance with the commission if the employee believes that there has been retaliation because of reporting a violation of state law through the chain of command of the employee‘s agency, to the attorney general‘s office, the State Government Accountability Board, or because the employee has filed a suggestion pursuant to this section.
Presidents, deans, administrative and policy-making positions, student health service physicians, teaching and professional research positions under the jurisdiction of the State Board of Regents and other directors or administrative policy-making positions of such institutions as determined by the human resources commissioner[.]We note that Hallberg has not claimed that she is an excluded employee. Rather, she claims that it is “unclear” whether she falls within the exclusion set out in