Hallberg v. S.D. Bd. of Regents

• Decision Date: 31 December 2019
• Docket Number: #28683
• Citation: 937 N.W.2d 568
• Parties: Sara HALLBERG, Plaintiff and Appellant, v. SOUTH DAKOTA BOARD OF REGENTS, Jeremy Reed, and Francesca Leinwall, Individually, Defendants and Appellees.
• Court: South Dakota Supreme Court

937 N.W.2d 568

Sara HALLBERG, Plaintiff and Appellant,

v.SOUTH DAKOTA BOARD OF REGENTS, Jeremy Reed, and Francesca Leinwall, Individually, Defendants and Appellees.

#28683

Supreme Court of South Dakota.

ARGUED ON APRIL 30, 2019

OPINION FILED December 31, 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.

KERN, Justice

[¶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 employee access to confidential information by assigning the primary phone line to Jobi Gramlow, a senior secretary. Gramlow did not agree with this staffing decision. Hallberg also challenged Gramlow’s attempt to hire a student who was also a client of the Center.

[¶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 SDCL 3-16-9 appear designed to protect state employee "whistleblowers," Hallberg, in her complaint, claimed whistleblower status generally without citing the statute and alleged that her termination constituted unlawful retaliation for reporting the Center’s unethical practices. She sought compensatory damages, back and front pay, damages for emotional distress and mental anguish, and punitive damages. Hallberg did not file a grievance before the Civil Service Commission (Commission) prior to filing her action in circuit court.

[¶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 SDCL 15-6-12(b)(1) and (5). After a hearing on the motion, the circuit court dismissed Hallberg’s complaint. In its order, it stated, "[T]he [c]ourt has determined it has no jurisdiction because [d]efendant South Dakota Board of Regents is entitled to sovereign immunity as the State of South Dakota has only waived sovereign immunity with respect to claims under SDCL 3-16-9 to the extent that it has created an administrative remedy." The court also found Leinwall and Reed protected by the doctrine of sovereign immunity because their decision to fire Hallberg was a discretionary act done within the scope of their employment.

[¶9.] Hallberg appeals, raising two issues that we restate as follows:

1. Whether the circuit court erred by dismissing Hallberg’s claims against the Board of Regents.

2. 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 SDCL 15-6-12(b) tests the legal sufficiency of the pleading, not the facts which support it." Id. For purposes of this appeal, we "treat as true all facts properly pled in the complaint and resolve all doubts in favor of the pleader." Id.

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, the provisions of Article III, § 27 of the South Dakota Constitution and the common law provide that the State, its entities, and its employees are immune from suit. See Pennington Cty. v. State ex rel. Unified Judicial Sys. , 2002 S.D. 31, ¶ 14, 641 N.W.2d 127, 131 ; Sisney v. Reisch , 2008 S.D. 72, ¶ 12, 754 N.W.2d 813, 818 ("[S]uits against officers ... in their official capacity[ ] are in reality suits against the State itself."). The Board of Regents, as a State entity, is protected by sovereign immunity. See Kringen v. Shea , 333 N.W.2d 445, 446 (S.D. 1983). Yet, sovereign immunity is not necessarily an impenetrable shield. It, like many other defenses, may be waived. Truman v. Griese , 2009 S.D. 8, ¶ 9, 762 N.W.2d 75, 78 ; see also S.D. Const. art. III, § 27.

[¶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 SDCL 3-16-9. Because the existence of immunity is a legal question, we make this inquiry under the de novo standard of review. Hansen v. S.D. Dep't of Transp. , 1998 S.D. 109, ¶ 7, 584 N.W.2d 881, 883. "The [S]tate may ... waive sovereign immunity by legislative enactment identifying the conditions under which lawsuits of a specified type would be permitted." Wilson v. Hogan , 473 N.W.2d 492, 494 (S.D. 1991). In these instances, the State waives its immunity only to the extent the plaintiff follows the established procedure. See CitiBank, N.A. v. S.D. Dep't of Revenue , 2015 S.D. 67, ¶ 36, 868 N.W.2d 381, 397.

[¶13.] SDCL 3-16-9 provides:

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 SDCL 3-16-9 is to protect state employees from retaliatory employment actions when they report suspected conduct that violates state laws, breaks rules, or affects public safety. SDCL 3-6D-22, a related statute, details the process a grievant must follow to file a complaint with the Commission. At the time Hallberg filed her complaint, the statute provided:

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 SDCL 3-16-9 and SDCL 3-6D-22 reveals that neither statute expressly authorizes Hallberg to initiate her action in circuit court. It is well established that absent "specific constitutional or statutory authority, an action cannot be maintained against the State." Pourier v. S.D. Dep't of Revenue , 2010 S.D. 10, ¶ 14, 778 N.W.2d 602, 606 (emphasis added).

[¶15.] Nevertheless, Hallberg argues she is entitled to file a direct cause of...