WSI v. Boechler, PC

FILED
IN THE OFFICE OF THE
CLERK OF SUPREME COURT
MAY 12, 2022
STATE OF NORTH DAKOTA
IN THE SUPREME COURT
STATE OF NORTH DAKOTA
2022 ND 98State of North Dakota by and through
Workforce Safety and Insurance, Plaintiff and Appellee
v.
Boechler, PC and Jeanette Boechler,
Individually, Defendants and Appellants
No. 20210225
Appeal from the District Court of Cass County, East Central Judicial District,
the Honorable Tristan Jones Van de Streek, Judge.
AFFIRMED.
Opinion of the Court by Tufte, Justice.
Jacqueline S. Anderson, Special Assistant Attorney General, Fargo, N.D., for
plaintiff and appellee.
David C. Thompson, Grand Forks, N.D., for defendants and appellants.
WSI v. Boechler, PC
No. 20210225
Tufte, Justice.
[¶1] Boechler, P.C., and Jeanette Boechler (collectively, “Defendants”) appeal
from a district court judgment holding Boechler, P.C., liable for unpaid workers’
compensation premiums and penalties, and an order dismissing the personal
liability claim against Jeanette Boechler without prejudice. We affirm.
I
[¶2] Workforce Safety and Insurance (“WSI”) sued law firm Boechler, P.C.,
and Jeanette Boechler, individually, to collect unpaid workers’ compensation
premiums and penalties, and to enjoin them from employing others until they
have complied with the North Dakota Workers Compensation Act, including
paying the premiums and penalties.
[¶3] WSI moved for summary judgment. The district court granted summary
judgment against Boechler, P.C., concluding the law firm was liable for the
premiums and penalties and injunctive relief was appropriate. The court
denied summary judgment against Jeanette Boechler, individually, concluding
WSI failed to satisfy the requirements of N.D.C.C. § 65-04-26.1(3), which
requires WSI to determine personal liability in the first instance and issue a
decision.
[¶4] After a bench trial on the personal liability claim, the district court
concluded that WSI failed to provide notice under N.D.C.C. § 65-04-26.1(3) and
dismissed the claim without prejudice, stating the matter was not resolved on
the merits, but rather as a result of a procedural deficiency. The court issued
an order for judgment, and judgment was entered.
II
[¶5] The Defendants contend the district court erred by dismissing the claim
against Jeanette Boechler in her personal capacity without prejudice, as
opposed to with prejudice.
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[¶6] The district court denied WSI’s motion for summary judgment as to
Jeanette Boechler, individually. The court rejected WSI’s argument that its
2015 Notice of Decision holding Jeanette Boechler personally liable for prior
unpaid premiums and penalties had a res judicata effect on Jeanette Boechler’s
personal liability in this case. The court also rejected WSI’s alternative
argument that because Boechler admitted she was the sole attorney, officer,
and shareholder of her law firm, there were no genuine issues of material fact
as to her liability under N.D.C.C. § 65-04-26.1(1) (providing personal liability
for officers). The court reasoned WSI did not follow the requirements of
N.D.C.C. § 65-04-26.1(3), which required WSI to make an administrative
determination and allow the employer an opportunity to challenge that
determination. After denying WSI summary judgment on that issue, the case
proceeded to trial on the sole count regarding liability of Jeanette Boechler.
After a bench trial, the court concluded WSI failed to satisfy the requirements
of N.D.C.C. § 65-04-26.1(3), but requested additional briefing on whether the
remaining count should be dismissed with prejudice. The court dismissed the
count without prejudice, stating the matter was not resolved on the merits, but
rather as a result of a procedural deficiency in WSI’s notice.
[¶7] “Ordinarily, a dismissal without prejudice is not appealable because
either side may commence another action.” Rolette Cty. Soc. Serv. Bd. v. B.E.,
2005 ND 101, ¶ 4, 697 N.W.2d 333. A dismissal without prejudice “may be final
and appealable if it has the practical effect of terminating the litigation in the
plaintiff ’s chosen forum.” Id.; see also Haugenoe v. Bambrick, 2003 ND 92, ¶ 2,
663 N.W.2d 175 (concluding dismissal without prejudice is appealable where
statute of limitations has run). WSI, the plaintiff, has not appealed the
dismissal of the personal liability claim. The Defendants argue that because
WSI sought judgment in its favor on the merits, any adverse determination
must in fairness be on the merits and with prejudice. This argument is
unpersuasive because it commits the logical fallacy of proving too much. Other
than a request for an advisory opinion, every claim is presented to the court
for a decision on the merits. Accordingly, if presentation of a claim for judgment
on the merits were sufficient to require dismissal with prejudice, no claim could
ever be dismissed without prejudice. Thus, we conclude the district court did
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not err by dismissing the personal liability claim against Jeanette Boechler
without prejudice rather than with prejudice.
III
[¶8] The Defendants argue the district court erred in granting summary
judgment and holding the law firm liable for unpaid workers’ compensation
premiums and penalties. Our review of an order granting summary judgment
is well-established:
Summary judgment is a procedural device for the prompt
resolution of a controversy on the merits without a trial if there
are no genuine issues of material fact or inferences that can
reasonably be drawn from undisputed facts, or if the only issues to
be resolved are questions of law. A party moving for summary
judgment has the burden of showing there are no genuine issues
of material fact and the moving party is entitled to judgment as a
matter of law. In determining whether summary judgment was
appropriately granted, we must view the evidence in the light most
favorable to the party opposing the motion, and that party will be
given the benefit of all favorable inferences which can reasonably
be drawn from the record. On appeal, this Court decides whether
the information available to the district court precluded the
existence of a genuine issue of material fact and entitled the
moving party to judgment as a matter of law. Whether the district
court properly granted summary judgment is a question of law
which we review de novo on the entire record.
Wenco v. EOG Res., Inc., 2012 ND 219, ¶ 8, 822 N.W.2d 701.
A
[¶9] The Defendants argue they were denied procedural due process because
WSI failed to provide them with an administrative review process, including
notice, a decision, an administrative hearing, and an opportunity to appeal.
The district court agreed Jeanette Boechler was denied the administrative
process required by N.D.C.C. § 65-04-26.1(3), but concluded the law firm was
not entitled to this process.
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[¶10] “When deciding a due process claim, we consider whether a
constitutionally protected property or liberty interest is at stake and, if so,
whether minimum procedural due process requirements were met.” Whedbee
v. N.D. Workforce Safety & Ins. Fund, 2014 ND 79, ¶ 11, 845 N.W.2d 632.
Procedural due process is analyzed by applying a three-factor balancing test:
First, the private interest that will be affected by the official action;
second, the risk of an erroneous deprivation of such interest
through the procedures used, and the probable value, if any, of
additional or substitute procedural safeguards; and finally, the
Government’s interest, including the function involved and the
fiscal and administrative burdens that the additional or substitute
procedural requirement would entail.
Interest of N.A., 2016 ND 91, ¶ 11, 879 N.W.2d 82.
[¶11] Under N.D.C.C. § 65-04-24, WSI “shall notify an employer of the amount
of premium, assessment, penalty, and interest due the organization from the
employer,” and “[i]f the employer fails to pay that amount within thirty days,
the organization may collect the premium, assessment, penalties, and interest
due by civil action.” Thus, the Legislature has authorized WSI to bring a civil
action for unpaid premiums and penalties, as opposed to issuing a notice of
decision or administrative order under N.D.C.C. § 65-04-32.
[¶12] The record shows WSI notified the law firm of its unpaid premiums and
penalties. In June 2019, WSI sent the law firm a letter informing it that the
2018-2019 payroll report was due the following month. On August 5, 2019, WSI
informed the law firm it had not received the report, the firm had been assessed
a $50 penalty for failure to provide the report, WSI was once again requesting
the report, and an additional $50 penalty would be assessed if not submitted
within ten days. On August 20, 2019, WSI informed the firm it had been
assessed $100 in total penalties for failing to timely file the report.
[¶13] In October 2019, WSI requested additional records, including a copy of
the business check register. In December 2019, WSI informed the law firm it
assessed a penalty of $100 per day (totaling $2,300) for failing to provide the
requested records and would continue to assess the $100 per day penalty until
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the record request was satisfied. On January 6, 2020, WSI sent the firm a
billing statement showing an additional $4,000 was assessed under the $100
per day penalty, at which point WSI stopped assessing the $100 penalty. The
law firm failed to provide the payroll report, and WSI assessed an additional
$5,000 penalty. On January 24, 2020, WSI sent the firm a letter with an
attached billing statement showing the $5,000 penalty and the firm’s unpaid
premiums. As a consequence of the firm’s failure to file payroll reports, WSI
billed Boechler, P.C. at the highest rate for its rate class, for a total premium
of $261.99. The firm had been assessed $250 estimated premium and owed the
remaining premium of $11.99 for the 2018-2019 payroll period and an advance
premium of $250 for the 2019-2020 payroll period. In addition to the letters
and billing statements, the record shows WSI made multiple phone calls to the
law firm notifying the firm of the late payroll report.
[¶14] WSI commenced this civil action in March 2020 by service of the
summons and complaint on the Defendants. This was more than thirty days
after WSI notified the law firm of the amounts owed to it in premiums and
penalties. Thus, WSI satisfied the requirements of N.D.C.C. § 65-04-24.
Further, we agree with the district court’s conclusion that “a pre-assessment
hearing determining whether WSI correctly assessed its penalties under the
statutory scheme would add little to the accuracy of WSI’s determinations.”
The law firm was provided the procedural safeguards that all civil litigants are
entitled to under the North Dakota Rules of Civil Procedure. Accordingly, we
conclude the law firm was not denied due process of law in this case.
B
[¶15] The Defendants argue the penalties assessed against the law firm violate
the excessive fines clauses of the North Dakota and U.S. Constitutions:
“Excessive bail shall not be required, nor excessive fines imposed….” N.D.
Const. art. I, § 11; U.S. Const. amend. VIII. The excessive fines clause was
recently held to apply to state governments through the Fourteenth
Amendment. Timbs v. Indiana, 139 S. Ct. 682 (2019). There is no dispute that
the clause constrains WSI, or that the administrative penalties at issue here
are “fines.” At issue is whether the fine WSI imposed on the law firm is
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“excessive.” Because the parties do not argue that the term “excessive” carried
a different meaning in 1889 when the state’s excessive fines clause was
adopted, we apply federal precedent to the Eighth Amendment claim and
consider it persuasive in applying the state clause. In United States v.
Bajakajian, 524 U.S. 321, 334 (1998), the United States Supreme Court
concluded the federal excessive fines clause is violated if the fine is “grossly
disproportional to the gravity of a defendant’s offense.” In deriving a
constitutional excessiveness standard, the Supreme Court relied upon two
considerations: 1) “judgments about the appropriate punishment for an offense
belong in the first instance to the legislature,” and 2) “any judicial
determination regarding the gravity of a particular criminal offense will be
inherently imprecise.” Id. at 336.
[¶16] WSI assessed the following penalties against the law firm: $100 for
failing to timely file the 2018-2019 payroll report under N.D. Admin. Code § 92-
01-02-14(7); $100 per day ($6,300 total) for failing to provide requested records
under N.D.C.C. § 65-04-33(6)(c); and $5,000 for failing to provide a payroll
report at all under N.D.C.C. § 65-04-33(6)(a).
[¶17] The Defendants argue the total amount of penalties of $11,400 is grossly
disproportional to the underlying liability (i.e., premiums) of $261.99.
However, such a comparison is immaterial to the issue of whether fines are
unconstitutionally excessive. As articulated by the Supreme Court, the
relevant comparison is between the gravity of the defendant’s offense and the
fine. Thus, the proper question is whether the penalties are grossly
disproportional to the defendant’s behavior of failing to file the payroll report
and requested records. We conclude the penalties are not grossly
disproportional to the law firm’s persistent disregard for WSI’s request for
payroll records. By ignoring such lawful requests, an employer directly
compromises WSI’s administration of the workforce safety and insurance fund.
[¶18] The penalties assessed by WSI are authorized by N.D. Admin. Code § 92-
01-02-14(7) and N.D.C.C. § 65-04-33(6). Because “judgments about the
appropriate punishment for an offense belong in the first instance to the
legislature,” and the Defendants provide no persuasive argument that the
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penalties are grossly disproportional to the misconduct, we conclude the
penalties imposed against the law firm were not unconstitutionally excessive.
IV
[¶19] We have considered the remaining arguments made by the parties and
conclude they are either without merit or unnecessary to our decision. We
affirm the judgment and the order dismissing the claim against Boechler
without prejudice.
[¶20] Jon J. Jensen, C.J.
Gerald W. VandeWalle
Daniel J. Crothers
Lisa Fair McEvers
Jerod E. Tufte
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