[¶ 1.] Workers’ compensation claimant appeals circuit court’s denial of motion for remand after he learned administrative law judge took employment with claimant’s employer four days after issuing opinion adverse to claimant. We reverse.
FACTS
[¶2.] This dispute arises from hearings conducted by the Department of Labor (Department) to determine whether John Mor-rell & Co. (Morrell) was obligated to continue payment of workers’ compensation benefits to Karl Voeltz (Voeltz). The hearings were held November 11, 1993 and April 20, 1994. Administrative Law Judge (ALJ) Jean A Koehler (Koehler) issued the Department’s decision September 19,1994 in favor of Mor-rell. The decision denied Voeltz 1) continued temporary total disability benefits; 2) permanent total disability benefits under the odd-lot doctrine; 3) medical expenses incurred after February 26, 1986; 4) permanent partial disability benefits; additionally, Department held that Voeltz must 5) repay tempo *316 rary total benefits received from June 16, 1986 to August 9,1986.
[¶ 3.] Voeltz appealed to the circuit court. When he learned that Koehler accepted employment with Morrell four days after issuing the decision, he filed a motion with the court to stay the appeal while he conducted discovery to determine whether the case should be remanded for new hearing because of a conflict of interest by Koehler.
[¶ 4.] Discovery showed that Koehler responded to a “blind” classified advertisement in the Sioux Falls Argus Leader by letter dated June 13, 1994. The advertisement recruited applicants for the position of “Director of Worker’s Compensation” with an unnamed employer. She received a response dated July 22, 1994 from Gary Junso, vice-president of human resources with Morrell, inviting her to complete an application. In a letter dated August 26, 1994, Junso acknowledged receipt of the application and indicated an interview was the “next step.” Arrangements for an interview were made via telephone between Koehler and Junso’s office on September 2 and September 6. The interview was conducted at Morrell September 12, 1994.
[¶ 5.] During this same timeframe, Koehler applied for and accepted a position as staff attorney with the Public Utilities Commission (PUC). She gave notice of her resignation to the Department and set her last day at September 23, 1994, and her start date with the PUC at October 3, 1994. She informed Junso of her employment with the PUC and told him she would not accept employment with Morrell once she began the PUC job.
[¶ 6.] When Koehler gave notice to the Department, she had 15 or 20 cases pending upon which she intended to write decisions. The Voeltz case was on that list, and was apparently the only one which involved Mor-rell. Koehler telephoned Junso September 16, 1994 to inform him she had a Morrell case pending and that “I didn’t want to discuss an offer, whether an offer would be made, whether they were considering one or whether I would accept one until that was wrapped up.” However, she admits that during the same phone conversation, she “asked about benefits and a few other questions about the job.” She did not inform Voeltz or his attorney of her negotiations for employment with Morrell.
[¶ 7.] Koehler issued her written decision in this ease September 19,1994. On September 21, she called Junso to tell him “that I was completely done with anything having to do with John Morrell.” Id. On September 23, Junso called Koehler to offer her the job and she accepted. Koehler advised the PUC that same day that she was withdrawing her acceptance of employment. She went to work for Morrell October 17,1994.
[¶ 8.] The circuit court held an evidentiary hearing on Voeltz’ motion for remand and later denied the motion. The court dealt with the appeal of the workers’ compensation case separately, affirming the Department’s decision, with the exception of ordering Mor-rell to pay an additional $6,628.29 for Voeltz’ medical expenses. Voeltz appeals both decisions. By notice of review, Morrell appeals the circuit court’s modification of Department’s decision. We reverse and remand on the disqualification issue for a new hearing by the Department. 1
STANDARD OF REVIEW
[¶ 9.] The facts in this case are essentially undisputed. This appeal concerns whether the circuit court applied the correct legal standard to these facts. “[(Questions requiring application of a legal standard are reviewed as are questions of law — de novo.”
Phipps Bros. Inc. v. Nelson’s Oil & Gas, Inc.,
[¶ 10.] WHETHER EMPLOYMENT NEGOTIATIONS WITH A PARTY TO A PENDING CASE CONSTITUTE GROUNDS FOR DISQUALIFICATION OF AN ADMINISTRATIVE LAW JUDGE.
[¶ 11.] “Administrative officials are presumed to be objective and capable of judging controversies fairly on the basis of their own circumstances.”
Northwestern Bell Tel. Co., Inc. v. Stofferahn,
[¶ 12.] The circuit court ignored the second basis for disqualification set out in Stofferahn, Riter, Strain, and Schneider, supra, and erred as a matter of law when it held that
[the presumption of objectivity and impartiality] can only be overcome by proof of a due process violation. A due process violation must be shown by proof of actual bias, prejudice or interest. A showing of implied bias is not sufficient.
Additionally, Morrell misconstrues the holding in
Stofferahn;
Stofferahn was disqualified from a legislative, not an adjudicative proceeding. His challenger proved by clear and convincing evidence that Stofferahn should be disqualified from pending deregulation proceedings because he had
“an unalterably closed mind on matters critical to the disposition of the proceeding.”
[¶ 13.] We find persuasive the language employed in
In re Bergen County Utilities Authority,
To disqualify a member of an administrative agency from performing an adjudicative function, it is unnecessary to show actual bias. Members must be able to perform the duties of office free of any interest, personal or pecuniary, having the potentiality of influencing their judgment. ... It is the potential for conflict that disqualifies. There need be no show *318 ing that the official succumbed to temptation or was even aware of it.
Nothing before us indicates conscious impropriety on Guido’s part. The circumstances, however, could reasonably be interpreted as having the likely capacity to tempt. If Guido had been employed by BCUA in 1987 he clearly would have been disqualified. So too if Guido had ongoing negotiations for employment with BCUA. ... [T]he job opportunity ... could reasonably be interpreted as having the likely capacity to tempt Guido to avoid a decision contrary to BCUA’s interests.
Id.
at 853 (emphasis added) (citations omitted);
cf. Pepsico, Inc. v. McMillen,
[¶ 14.] Likewise, we do not need to decide that Koehler was actually biased, or require evidence of “conscious impropriety,” to conclude that the job opportunity with Morrell could reasonably be perceived “as having the likely capacity to tempt [Koehler] to avoid a decision contrary to [Morrell’s] interests,”
BCUA,
[¶15.] Voeltz argues that Koehler violated Rule 1.12(b) of the South Dakota Rules of Professional Conduct for attorneys, which provides, in relevant part:
A lawyer shall not negotiate for employment with any person who is involved as a party or as attorney for a party in a matter in which the lawyer is participating personally and substantially as a judge or other adjudicative officer, or arbitrator.
SDCL ch. 16-18 app. (emphasis added). The comments accompanying this rule state that “adjudicative officer” includes a hearing officer. The circuit court held, and Morrell argues, that if proven, this violation can not be a basis for remand because the preamble to the Rules states they “are not designed to be a basis for civil liability.” That is not the point; Voeltz does not seek relief against Koehler in a civil action. The fact this rule exists goes to the very heart of whether Koehler should have recused herself. The use of “shall not” in the Rule indicates it is “imperative” and defines “proper conduct for purposes of professional discipline.” See preamble to id.
[¶ 16.] Koehler indicates unfamiliarity with the Rule: 3
Q: And you have a license to practice law in South Dakota?
A: Yes.
Q: And you’ve studied ... South Dakota Rules of Professional Conduct[?]
A: I went to school in Colorado so I took the, it’s a standardized test on ethics. Whether South Dakota is completely in. line with that I don’t know.
Nevertheless, her testimony demonstrates she recognized there was a problem with her conduct:
A: I just told them [Morrell] that I had that ease and I
needed to get that wrapped up before there were any further conversations, *319 whether it be with an offer or without. I didn’t want anybody then saying I was mad at them and did something wrong for that reason.
(Emphasis added). Furthermore, Koehler testified she “understood” that she was bound by the Code of Judicial Conduct. While the Code may not apply, 4 her belief that she was bound should have prompted her to disqualify herself. See Code of Judicial Conduct, Canon 3EQL), SDCL ch. 16-2 app.:
A judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned[.]
The comments to this section state:
[I]f a judge were in the process of negotiating for employment with a law firm, the judge would be disqualified from any matters in which that law firm appeared, unless the disqualification was waived by the parties after disclosure by the judge.
[¶ 17.] In
Mordhorst v. Egert,
“A fair trial in a fair tribunal is a basic requirement of due process.” In re Murchison,349 U.S. 133 ,136,75 S.Ct. 623 , 625,99 L.Ed. 942 , 946 (1955). This applies to administrative agencies which adjudicate as well [as] to courts. Gibson v. Berryhill,411 U.S. 564 ,93 S.Ct. 1689 ,36 L.Ed.2d 488 (1973). Not only is a biased decision maker constitutionally unacceptable, but “our system of law has always endeavored to prevent even the probability of unfairness.” In re Murchison, supra,349 U.S. at 136 ,75 S.Ct. at 625 ,99 L.Ed. at 946 . The standard to be applied is whether the record establishes either actual bias on the part of the Board or the existence of circumstances that lead to the conclusion that an unacceptable risk of actual bias or prejudgment inhered in the Board’s procedure. Withrow v. Larkin,421 U.S. 35 ,95 S.Ct. 1456 ,43 L.Ed.2d 712 (1975); Schneider v. McLaughlin Independent Sch. Dist.,90 S.D. 356 ,241 N.W.2d 574 (S.D.1976).
[¶ 18.] Koehler apparently believed forestalling an offer from Morrell was a sufficient, ethical course of action in this case. However, Yoeltz was not even provided the opportunity to waive disqualification. This was clearly unfair. For all of these reasons, we reverse. It was not necessary for Voeltz to demonstrate an actual bias. A disqualification in an adjudicative proceeding only requires an “unacceptable risk of actual bias”— a risk clearly present when an AL J is negotiating employment with a party to a pending case.
The scales need to be tipped. The adjudicator should be under a duty to guarantee that he harbors no bias regarding the outcome of the case. It should be remembered “that the final refuge people have in all governmental procedures is that of due process, the eternal friend of justice and unrelenting foe of undue passion.”
Circuit Court Judge Judith K. Meierhenry, The Due Process Right to an Unbiased Adjudicator in Administrative Proceedings, 36 SDLRev 551, 573 (1990-91) (footnote & citation omitted).
[¶ 19.] The order denying Voeltz’ motion for remand for rehearing is reversed.
Notes
. Because of our decision on the disqualification issue, we do not reach the merits of Voeltz' workers’ compensation claim or Morrell’s notice of review.
. The persons who approached Guido did not have the power to appoint him Executive Director.
. Regardless, all South Dakota attorneys are governed by the Rules.
In re Claggett,
. The Code of Judicial Conduct does not expressly apply to ALJ's. See Code of Judicial Conduct, Canon 5E(A), SDCL ch. 16-2 app.