Ageton v. Jackley

#27485-a-LSW
2016 S.D. 29
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
****
ERIN AGETON, Appellant,
v.
MARTY J. JACKLEY, in his capacity
as South Dakota Attorney General, Appellee.
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APPEAL FROM THE CIRCUIT COURT OF
THE SIXTH JUDICIAL CIRCUIT
HUGHES COUNTY, SOUTH DAKOTA
****
THE HONORABLE KATHLEEN F. TRANDAHL
Judge
****
ALAN T. SIMPSON
EDWARD D. GREIM of
Graves Garrett, LLC
Kansas City, Missouri
and
REBECCA L. MANN
SARA FRANKENSTEIN of
Gunderson, Palmer, Nelson & Ashmore, LLP
Rapid City, South Dakota Attorneys for appellant.
MARTY J. JACKLEY
Attorney General
PATRICIA ARCHER
STEVEN R. BLAIR
Assistant Attorneys General
Pierre, South Dakota Attorneys for appellee.
****
ARGUED ON
FEBRUARY 16, 2016
OPINION FILED 03/30/16
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WILBUR, Justice
[¶1.] In this writ of certiorari action, the applicant asserted that the
Attorney General failed to prepare an adequate ballot explanation under SDCL 12-
13-25.1. The ballot explanation related to a proposed measure to regulate the
maximum finance charge certain lenders can impose on certain loans. The
applicant, an opponent to the proposed measure, alleged that the Attorney
General’s explanation does not educate the voters that the purpose and effect of the
measure is to ban short-term lending in South Dakota. After a hearing, the circuit
court issued an order denying the application for a writ. The applicant appeals. We
affirm.
Background
[¶2.] Then-State Representative Steve Hickey sponsored an initiated
measure to be certified for the November 2016 general election. If adopted, the
measure would impose a maximum finance charge against certain lenders for
specific types of loans. Before a petition for an initiated measure can be circulated
for signatures, the sponsor of the measure must submit a final version to the South
Dakota Attorney General. SDCL 12-13-25.1. On April 1, 2015, Representative
Hickey submitted a copy of the final version to Attorney General Marty Jackley.
[¶3.] Under SDCL 12-13-25.1, Attorney General Jackley must prepare a
title and explanation related to the measure. “The title shall be a concise statement
of the subject of the proposed initiative[.]” Id. “The explanation shall be an
objective, clear, and simple summary to educate voters of the purpose and effect of
the proposed initiated measure[.]” Id. The Attorney General must also “include a
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description of the legal consequences of the proposed . . . measure[.]” Id. “The
explanation may not exceed two hundred words in length.”
[¶4.] In regard to this measure, Attorney General Jackley drafted the
following title and explanation:
Title: An initiated measure to set a maximum finance charge for
certain licensed money lenders.
Explanation:
The initiated measure prohibits certain State-licensed
money lenders from making a loan that imposes total interest,
fees and charges at an annual percentage rate greater than 36%.
The measure also prohibits these money lenders from evading
this rate limitation by indirect means. A violation of this
measure is a misdemeanor crime. In addition, a loan made in
violation of this measure is void, and any principle, fee, interest,
or charge is uncollectable.
The measure’s prohibitions apply to all money lenders
licensed under South Dakota Codified Laws chapter 54-4. These
licensed lenders make commercial and personal loans, including
installment, automobile, short-term consumer, payday, and title
loans. The measure does not apply to state and national banks,
bank holding companies, other federally insured financial
institutions, and state chartered trust companies. The measure
also does not apply to businesses that provide financing for
goods and services they sell.
On May 27, 2015, Attorney General Jackley filed the title and explanation with the
Secretary of State and submitted a copy to the sponsor. SDCL 12-13-25.1.
[¶5.] On June 5, 2015, Erin Ageton, an opponent of the measure, filed an
application for a writ of certiorari in circuit court to challenge the Attorney
General’s explanation. She asserted that the Attorney General did not comply with
his legal duties under SDCL 12-13-25.1 because his explanation failed to educate
the voters about the measure’s true purpose and effect and failed to describe the
legal consequences.
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[¶6.] The process governing a challenge to a ballot explanation is expedited
under SDCL 12-13-9.2. “The action takes precedence over other cases in circuit
court,” and the circuit court must issue a final order “within fifteen days of the
commencement of the action.” Id. On June 15, the court held a hearing. Ageton
asked the circuit court to take judicial notice of the documents attached to her
application for a writ. Those documents included: (1) a letter from Attorney
General Jackley to Secretary of State Shantel Krebs dated May 27, 2015, (2) a letter
written by an attorney to Attorney General Jackley in 2013, related to a similar
initiated measure, (3) a 2011 University of Washington scholarly article related to
the effects of a price cap on payday lenders, (4) a fiscal analysis related to a
proposed measure in Missouri that set a 36% cap on certain loans, (5) a 2009 FDIC
nationwide survey related to banks’ efforts to serve the unbanked and
underbanked, and (6) a 2009 study from George Washington University School of
Business analyzing consumers’ use of payday loans. Counsel for the Attorney
General objected because Ageton’s documents were not part of the “certified record”
submitted by the Attorney General under SDCL 21-31-4. The court expanded the
record to include the first two exhibits—the letters—but took under advisement
whether to consider the other documents. The court then invited counsel to present
oral arguments.
[¶7.] Ageton argued that, as written, the explanation is mere tautology. She
claimed that the explanation does not differentiate purpose from effect: the purpose
of the measure is to cap the finance charge on certain loans by certain lenders at
36% and the effect is that certain lenders will be subject to a 36% cap for finance
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charges on certain loans. She alleged that the true purpose and effect of the
measure is to ban short-term lending in South Dakota because of the “general
knowledge” that short-term lending cannot exist under a 36% cap.
[¶8.] Counsel for the Attorney General responded that Ageton’s view of the
true purpose and effect “could very well be considered advocacy[.]” Counsel argued
that “this is not intended to be the proceeding to litigate whether or not payday
lenders are going to be put out of business, and whether or not the 36-percent cap
will result in that. . . . As much as counsel and the applicant would like to argue
that it is, I think it’s fair to say that it’s not certain.” Counsel also noted that
whether the Attorney General “woulda-shoulda-coulda” written the explanation
differently is not the standard. In counsel’s view, the Attorney General complied
with SDCL 12-13-25.1.
[¶9.] On June 18, 2015, the circuit court issued a memorandum decision.
The court declined to take judicial notice of the articles attached to Ageton’s
affidavit in support of her application for a writ. It ruled that Ageton’s documents
“do not state facts that are ‘generally known’ or ‘capable of accurate and ready
determination by sources whose accuracy cannot be reasonably questioned’ as is
required before a court can take judicial notice.” It further ruled that the
documents were inadmissible because “certiorari review is limited to considering
the record of the proceedings before the officer,” which evidence “is pertinent to his
decision and the court may not consider matters outside that record.”
[¶10.] The court then addressed whether the Attorney General complied with
SDCL 12-13-25.1. It noted that the Legislature recently amended SDCL 12-13-25.1.
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Prior to its amendment, the statute did not specifically require that the explanation
educate the voters. The circuit court reviewed Attorney General Jackley’s
explanation in light of the statutory amendment and this Court’s past cases. It
found that the Attorney General stated the purpose of the measure. “The
explanation educates the voters that while some money lenders are subject to this
rate cap, not all money lenders will be subject to this change in law.” “The effect or
consequence of the initiated measure is that these money lenders licensed under
SDCL Ch. 54-4 will be subject to this maximum rate cap, which would be a
departure from current state law.” In the court’s view, the explanation
“summarizes the legal consequences if a loan is made in violation of the initiated
measure.” The court held, therefore, that Attorney General Jackley did not “exceed
his statutory authorization under SDCL 12-13-25.1” and “did not abuse his
discretion in his drafting of the explanation of the initiated measure to set a
maximum finance charge for certain licensed money lenders.”
[¶11.] Ageton appeals, asserting the following issues for our review:
1. Whether the circuit court erred by limiting the record and
determining that the circuit court may not consider facts
outside the record.
2. Whether the Attorney General abused his discretion in
failing to consider the information he had notice of
regarding the proposed initiated measure.
3. Whether the Attorney General’s ballot explanation
educates voters about the initiated measure’s “purpose,”
“effect,” and “legal consequences” pursuant to SDCL 12-
13-25.1.
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Standard of Review
[¶12.] Ageton instituted this action challenging the Attorney General’s ballot
explanation by filing an application for a writ of certiorari. It is well settled that
our scope of review of certiorari proceedings is limited—we examine only whether
the officer had jurisdiction and whether the officer regularly pursued the authority
conferred upon him. SDCL 21-31-1; See Cole v. Bd. of Adjustment of the City of
Huron, 1999 S.D. 54, ¶ 4, 592 N.W.2d 175, 176. When the officer has jurisdiction,
the officer’s decision will be sustained unless he “did some act forbidden by law or
neglected to do some act required by law.” Peters v. Spearfish ETJ Planning
Comm’n, 1997 S.D. 105, ¶ 6, 567 N.W.2d 880, 883 (quoting Save Centennial Valley
Ass’n, Inc. v. Schultz, 284 N.W.2d 452, 454 (S.D. 1979)).
[¶13.] In previous cases involving a challenge to the Attorney General’s ballot
explanation, we have adhered to this limited scope of review. See S.D. State Fed’n
of Labor AFL-CIO v. Jackley, 2010 S.D. 62, ¶ 7, 786 N.W.2d 372, 375; Hoogestraat v.
Barnett, 1998 S.D. 104, ¶ 13, 583 N.W.2d 421, 424; Schulte v. Long, 2004 S.D. 102,
¶ 11, 687 N.W.2d 495, 498. Ageton, however, argues that “ancient forms of
certiorari review” should not “frustrate meaningful review of individual officers’
actions[.]” She contends that the Legislature “expressly” created an action under
SDCL 12-13-9.2 “with its own substantive standards.”
[¶14.] Enacted in 2007, SDCL 12-13-9.2 provides,
If the proponents or opponents of a proposed amendment to the
Constitution, initiated measure, or referred measure believe
that the attorney general’s statement does not satisfy the
requirements of § 12-13-9 or 12-13-25.1, they shall, within seven
days of delivery of the statement to the secretary of state, file an
action in circuit court challenging the adequacy of the statement.
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The action takes precedence over other cases in circuit court and
a final order shall be filed within fifteen days of the
commencement of the action. Any party appealing the circuit
court order to the Supreme Court shall file a notice of appeal
within five days of the date of the circuit court order.
(Emphasis added.) From our review of this statute, the Legislature did not create a
specific action with its own substantive standards. The Legislature did, however,
add the requirement that the Attorney General’s statement be adequate. Therefore,
in addition to deciding whether the Attorney General “did some act forbidden by
law or neglected to do some act required by law,” we must also review whether the
Attorney General’s statement is adequate under SDCL 12-13-25.1. See Peters, 1997
S.D. 105, ¶ 6, 567 N.W.2d at 883 (explaining this Court’s review of certiorari
proceedings).
Analysis
1. Whether the circuit court erred by limiting the record
and determining that the circuit court may not consider
facts outside the record.
A. Scope of the Record
[¶15.] Ageton claims the circuit court improperly limited the scope of the
record when it excluded her evidence of information and general knowledge she
argues the Attorney General had a duty to consult when drafting the ballot
explanation. According to Ageton, the circuit court compounded this error when it
confined its certiorari review “to the few documents ‘self-certified’ by the Attorney
General[.]” She directs this Court to SDCL 21-31-4 and claims “there is only a
‘certified record’ after the court grants the writ.” Ageton also insists “judicial notice
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should be available to prove the background facts that should have informed the
Attorney General’s ballot explanation.”
i. Evidence of Background Facts
[¶16.] Ageton asks, “Can the Attorney General’s statutory duty to educate
voters require the Attorney General to consider outside information, or even general
economic facts about how annual percentage rates work over a short term?”
(Emphasis added.) In Ageton’s view the answer is “Yes” because the “initiated
measure proposes to regulate a complex market” and “accurate voter education may
require a basic understanding of that complex market.” She avers, therefore, that
the circuit court “should have allowed” her “to make her argument, utilizing
information and exhibits for the court’s consideration.” In response, the Attorney
General emphasizes that the only “record” relevant to the court’s review is the one
that was before the Attorney General when he drafted the ballot explanation.
[¶17.] Although the Attorney General certified a record without first being
commanded to do so under SDCL 21-31-4, we reject Ageton’s claim that “the circuit
court jumped the gun when it limited the scope of review” to the record of the
proceedings before the officer. The circuit court did not limit its review to the record
certified by the Attorney General. The court expanded the record to include two
letters the court found pertinent to the Attorney General’s decision. It then took
under advisement whether to include the additional evidence offered by Ageton.
ii. Judicial Notice
[¶18.] Ageton next argues that the circuit court erred when it held that
judicial notice is not appropriate in a certiorari proceeding. Ageton is incorrect.
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Judicial notice is available in a certiorari proceeding, and the circuit court did not
hold otherwise. Rather, the court declined to take judicial notice of Ageton’s
documents because the documents did not contain facts that would be generally
known or capable of accurate and ready determination “from sources whose
accuracy cannot reasonably be questioned.” See SDCL 19-19-201(b)(1), (2)
(requirements for judicial notice). The court found that the documents were not
pertinent to the Attorney General’s decision and contained opinions from authors
based on research those authors or others had done.
[¶19.] In a footnote in her reply brief, Ageton alternatively argues that the
circuit court clearly erred when it refused to take judicial notice of her documents.
She claims that the documents were offered as “examples of general economic
knowledge” that the “36% cap on finance charges is a de facto ban on short-term
lending.” She then faults the court for not examining the documents to determine
“whether some or all of the background material contained therein was appropriate
for judicial review.”
[¶20.] The circuit court was not required to scrutinize approximately 100
pages submitted by Ageton to determine if somewhere in those many pages there
was a fact worthy of judicial notice. And from our review of the documents, we
cannot say the facts are generally known or capable of accurate and ready
determination from sources whose accuracy cannot reasonably be questioned. For
example, in one document offered by Ageton, the author uses a formula to calculate
simple interest—“r = l/Pt”—and opines that “an interest rate ceiling of 36 percent or
below do not generate revenues to meet variable costs and stores shut down.”
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Another article “reviews existing evidence and presents new evidence on the
economic and demographic characteristics of payday loan customers, their patterns
of payday loan use, their understanding of payday loan costs and alternatives, and
outcomes of payday loan use.” The court did not err when it concluded that
Ageton’s documents were not appropriate for judicial notice.
2. Whether the Attorney General abused his discretion in
failing to consider the information he had notice of
regarding the proposed initiated measure.
and
3. Whether the Attorney General’s ballot explanation
educates voters about the initiated measure’s “purpose,”
“effect,” and “legal consequences” pursuant to SDCL 12-
13-25.1.
[¶21.] We combine Ageton’s next two issues.* Whether the Attorney General
abused his discretion necessarily depends on whether the Attorney General’s ballot
explanation is adequate under SDCL 12-13-25.1. Ageton contends the Attorney
General failed to “consider information received regarding the proposed initiated
measure” and ignored “generally known facts.” She also avers that the Attorney
General’s explanation does not meet the requirements of SDCL 12-13-25.1 because
the ballot explanation fails to educate voters on the measure’s true purpose, effect,
and legal consequences. In Ageton’s view, the Attorney General was required to
“explain the effect of a 36% cap on short-term lenders’ finance charges.”
* According to Ageton, “[t]his case presents the first true test of South Dakota’s
new standard for judging ballot measure ‘explanations’ drafted by the
attorney general pursuant to SDCL 12-13-25.1.” On the contrary, we
examined the new statutory standard in Jackley, 2010 S.D. 62, 786 N.W.2d
372. Although Jackley involved SDCL 12-13-9, that statute contains the
same language as SDCL 12-13-25.1 governing what the Attorney General
must include in an explanation.
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Otherwise, “only economically and financially astute voters or petition signers will
realize the initiated measure bans short-term lending.”
[¶22.] In Jackley, we recognized that the Legislature amended the statute
governing Attorney General ballot explanations. 2010 S.D. 62, ¶ 8, 786 N.W.2d at
375. Prior to the amendment, the purpose of a ballot explanation was to inform
voters. Id. Now a ballot explanation must contain an “objective, clear, and simple
summary to educate the voters of the purpose and effect” of the initiated measure.
Id. ¶ 9. We also highlighted that the explanation must contain a description of the
legal consequences, including the likely exposure of the state to liability if a
measure is adopted. Id. And, under SDCL 12-13-9.2, the Attorney General’s
statement must be adequate.
[¶23.] Despite these statutory changes, we reiterated that the “Attorney
General ‘is granted discretion as to how to author the ballot statement.’” Id. ¶ 7
(quoting Schulte, 2004 S.D. 102, ¶ 11, 687 N.W.2d at 498). This is because the
Attorney General is the officer charged by the Legislature with the duty of
preparing a “statement which consists of a title and explanation.” SDCL 12-13-1, -
25.1. So when reviewing a challenge to the Attorney General’s statement, our
function is limited. Schulte, 2004 S.D. 102, ¶ 11, 687 N.W.2d at 498. “We merely
determine if the Attorney General has complied with his statutory obligations and
we do not sit as some type of literary editorial board.” Id.
[¶24.] Here, even if we accept that the proponent’s true purpose with the
initiated measure is to end short-term lending in South Dakota, that purpose and
effect is more appropriate for political dispute and advocacy. There is no language
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in the initiated measure that specifically bans short-term lending in South Dakota.
And, although a 36% interest rate cap on short-term loans for certain lenders might
prompt those lenders to cease providing short-term loans, the initiated measure
does not prohibit their continued operation.
[¶25.] As Justice Zinter recognized in his special writing in Schulte, “[p]ublic
questions often have substantial political overtones.” 2004 S.D. 102, ¶ 26, 687
N.W.2d at 501 (Zinter, J., concurring) (quoting Gormley v. Lan, 438 A.2d 519, 525-
26 (N.J. 1981)). Likewise, “there can be substantial dispute as to what the true
purpose of an amendment is; indeed there may be many ‘true purposes.’” Gormley,
438 A.2d at 525. It is simply not for this Court or the circuit court to require the
Attorney General to include every practical or possible effect of each initiated
measure. “We cannot be concerned with what the Attorney General should have
said or could have said or might have said or what is implied or suggested by what
he did say. Rather we must focus on the language chosen[.]” Schulte, 2004 S.D.
102, ¶ 18, 687 N.W.2d at 500. From our review of the Attorney General’s ballot
explanation, the Attorney General did not abuse his discretion, and the explanation
is adequate under SDCL 12-13-25.1.
[¶26.] Affirmed.
[¶27.] GILBERTSON, Chief Justice, and ZINTER, SEVERSON, and KERN,
Justices, concur.
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