Case Name: Robert C. HANEY, Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellee
Court: North Dakota Supreme Court
Jurisdiction: North Dakota
Decision Date: 1994-06-15
Citations: 518 N.W.2d 195
Docket Number: Civ. No. 930324
Parties: Robert C. HANEY, Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellee.
Judges: VANDE WALLE, C.J., and NEUMANN, JJ., concur.
Reporter: North Western Reporter 2d
Volume: 518
Pages: 195–214

Head Matter:
Robert C. HANEY, Appellant, v. NORTH DAKOTA WORKERS COMPENSATION BUREAU, Appellee.
Civ. No. 930324.
Supreme Court of North Dakota.
June 15, 1994.
Mark G. Schneider, of Schneider, Schneider & Schneider, Fargo, for appellant.
Ken R. Sorenson, Asst. Atty. Gen., North Dakota Workers Compensation Bureau, Bismarck, for appellee.

Opinion:
SANDSTROM, Justice.
In this case we address the constitutionality of the agricultural exemption from workers compensation coverage. A farm worker appeals from a district court judgment affirming a North Dakota Workers Compensation Bureau order denying benefits. We conclude the agricultural exemption in the workers compensation law does not violate the equal protection guarantee of the North Dakota Constitution and affirm.
I
Robert C. Haney, a farm laborer, injured his back while cleaning grain storage facilities for Grindberg Farms. Haney applied for workers compensation benefits. The bureau initially concluded it did not have jurisdiction and dismissed Haney's claim. After a formal hearing held at Haney's request, the bureau found Haney injured his back while performing agricultural-related activities for his employer, Grindberg Farms. The bureau concluded N.D.C.C. § 65-01-02(21)(a) [now § 65-01-02(22)(a) ] "exempts agricultural employees from hazardous employment within the meaning of the North Dakota Workers Compensation Act"; Grindberg Farms did not have workers compensation coverage for agricultural employees; and the bureau "lacks jurisdiction over this matter and therefore the claimant is not entitled to the receipt of workers compensation benefits." The district court affirmed the bureau's denial of benefits. Haney appeals the bureau's decision.
II
Section 65-01-01, N.D.C.C., sets forth the legislative purpose behind North Dakota's Workers' Compensation program:
"65-01-01. Purposes of compensation law—Police power. The state of North Dakota, exercising its police and sovereign powers, declares that the prosperity of the state depends in a large measure upon the well-being of its wage workers, and, hence, for workers injured in hazardous employments, and for their families and dependents, sure and certain relief is hereby provided regardless of questions of fault and to the exclusion of every other remedy, proceeding, or compensation, except as otherwise provided in this title, and to that end, all civil actions and civil claims for relief for such personal injuries and all jurisdiction of the courts of the state over such causes are abolished except as is otherwise provided in this title."
N.D.C.C. § 65-01-02(22)(a) defines "hazardous employment" as:
"[A]ny employment in which one or more employees are employed regularly in the same business or in or about the establishment except:
" 'a. Agricultural or domestic service.' "
Haney contends the agricultural exclusion in N.D.C.C. § 65-01-02(22)(a) violates the equal protection guarantee afforded him by Art. I, § 21, N.D. Constitution, which provides:
"No special privileges or immunities shall ever be granted which may not be altered, revoked or repealed by the legislative assembly; nor shall any citizen or class of citizens be granted privileges or immunities which upon the same terms shall not be granted to all citizens."
Haney relies on Benson v. North Dakota Workmen's Compensation Bureau, 283 N.W.2d 96 (N.D.1979). In Benson, a majority of three concluded the agricultural exclusion violated the equal protection guarantee of Art. I, § 20 [now 21] N.D. Const. The agricultural exclusion was not nullified by the ruling in Benson because an insufficient number of justices concurred in the result. Section 88, N.D. Const, [now Art. VI, § 4, N.D. Const.], requires the concurrence of four justices of this Court to declare a statute unconstitutional. Benson at 108. See also Bismarck Public School District # 1 v. State, 511 N.W.2d 247, 250 (N.D.1994).
Ill
A
"[A]n Act of the legislature is presumed to be correct and valid, and any doubt as to its constitutionality must, where possible, be resolved in favor of its validity." Southern Valley Grain Dealers Ass'n v. Board of County Comm'rs, 257 N.W.2d 425, 434 (N.D.1977). "A statute enjoys a conclusive presumption of constitutionality unless it is clearly shown that it contravenes the state or federal constitution." Richter v. Jones, 378 N.W.2d 209, 211 (N.D.1985). " 'The justice, wisdom, necessity, utility and expediency of legislation are questions for legislative, and not for judicial determination.' " Manikowske v. North Dakota Workmen's Compensation Bureau, 338 N.W.2d 823, 825 (N.D.1983), quoting Asbury Hospital v. Cass County, 72 N.D. 359, 7 N.W.2d 438, 442 Syllabus ¶ 11 (1943).
Article I, § 21, N.D. Const., has long been "viewed as our state constitutional guarantee of equal protection under the law." Matter of Adoption of KAS., 499 N.W.2d 558, 563 (N.D.1993). Under Art. I, § 21, N.D. Const., not all legislative classifications are unlawful. We review the lawfulness of legislative classifications under three separate standards of review. "The standard used in a particular case depends upon the challenged statutory classification and the right allegedly infringed." Kadrmas v. Dickinson Public Schools, 402 N.W.2d 897, 902 (N.D.1987), aff'd 487 U.S. 450, 108 S.Ct. 2481, 101 L.Ed.2d 399 (1988).
In Gange v. Clerk of Burleigh County District Court, 429 N.W.2d 429, 433 (N.D.1988), this Court outlined the standards of judicial scrutiny for equal protection claims under our state constitution:
"We apply strict scrutiny to an inherently suspect classification or infringement of a fundamental right and strike down the challenged statutory classification 'unless it is shown that the statute promotes a compelling governmental interest and that the distinctions drawn by the law are necessary to further its purpose.' State ex rel. Olson v. Maxwell, 259 N.W.2d 621, 627 (N.D.1977). When an 'important substantive right' is involved, we apply an intermediate standard of review which requires a '"close correspondence between statutory classification and legislative goals." ' Hanson v. Williams County, 389 N.W.2d 319, 323, 325 (N.D.1986) [quoting Ameson v. Olson, 270 N.W.2d 125, 133 (N.D.1978) ]. When no suspect class, fundamental right, or important substantive right is involved, we apply a rational basis standard and sustain the legislative classification unless it is patently arbitrary and bears no rational relationship to a legitimate governmental purpose. See State v. Knoefler, 279 N.W.2d 658, 662 (N.D.1979)."
Because no inherently suspect or fundamental interest classifications warranting strict scrutiny are involved in this case, we must choose between the rational basis standard and the intermediate standard. There is no bright line test for choosing one test over the other. Hanson v. Williams County, 889 N.W.2d 319 (N.D.1986).
B
This Court has generally applied the intermediate level of scrutiny to classifications which have completely prevented a class of injured persons from maintaining a Court action to recover for their injuries. Kavadas v. Lorenzen, 448 N.W.2d 219, 222-223 (N.D.1989). The rational basis test is usually applied to statutory classifications which involve economic or social matters and do not deprive a class of plaintiffs from access to the courts. Kavadas.
In Benson, 283 N.W.2d at 99, a majority of this Court concluded the agricultural exclusion affected an important substantive right and adopted the intermediate or close correspondence level of review:
"Although we are not concerned in this ease with a limitation on actions for common-law tort remedies, we are concerned with the complete exclusion of a legislatively created remedy for personal injury to one class of employees. Our concern here closely resembles those concerns addressed in cases using the intermediate close-correspondence test (Herman v. Magnuson, [277 N.W.2d 445 (N.D.1979) ]; Ameson v. Olson, [270 N.W.2d 125 (N.D.1978) ]; Johnson v. Hassett, [217 N.W.2d 771 (N.D.1974) ]), rather than those cases in which we have applied the traditional rational-basis test. Tharaldson v. Unsatisfied Judgment Fund, [225 N.W.2d 39 (N.D.1974)]. The complete exclusion of agricultural employees from workmen's compensation not only deprives the farm worker of a convenient remedy, it also limits his remedy to a common-law tort action in which the farm worker must prove all elements of a tort before he can recover. Employees covered by workmen's compensation in other similar occupations do not have to make this showing.
"To determine whether the exclusion of agricultural employees from workmen's compensation violates equal protection considerations in this case, there must be a close correspondence between the statutory exclusion and the legislative goals to be accomplished by that exclusion."
The Benson majority examined the stated legislative goal of Workers Compensation, to provide sure and certain relief for workers injured in hazardous employment, and concluded "[t]he exclusion of agricultural employees from the benefits of the Workmen's Compensation Act is unreasonable and contrary to the expressed purpose of the Act." Benson at 107. The Benson majority recognized only the stated legislative goal of providing sure and certain relief and ignored any other goals the legislature may have had. The Court said the agricultural exclusion was designed to benefit only employers and not employees:
"The North Dakota Legislature explicitly expressed the purpose of the Act but the exclusion of agricultural services has no correspondence to that expressed purpose. The legislature made no attempt to express any purpose for the exclusion.
"The record in this case contains a considerable amount of material relating to the subject of the agricultural exclusion and, together with numerous writings (see e.g., IB Larson, Workmen's Compensation Law, Farm Labor, § 53), compels the conclusion that the purpose for the exclusion of agricultural services was not for the benefit of the employees but for the employers."
Benson, 283 N.W.2d at 103. The Benson majority concluded:
"Because of the exclusion, the Act withholds from agricultural employees the sure and certain relief awarded to other wage earners. There is no correspondence between the purpose of the Act and the agricultural classification. There are no proper and justifiable distinctions between agricultural employees and nonagricultural employees in relation to the risk of injury from employment."
Benson. The Court held the agricultural exclusion is unconstitutional.
C
Disagreeing -with the foregoing bases of the majority opinion in Benson, we overrule the Benson decision.
We disagree with the Benson majority's conclusion that the rights involved in analyzing the agricultural exclusion "closely resembles those concerns addressed in cases using the intermediate close-correspondence test (Herman v. Magnuson, supra; Ameson v. Olson, supra; Johnson v. Hassett, supra), rather than those cases in which we have applied the traditional rational-basis test. Tharaldson v. Unsatisfied Judgment Fund, supra."
Herman v. Magnuson, 277 N.W.2d 445 (N.D.1979), and Johnson v. Hassett, 217 N.W.2d 771 (N.D.1974), cited in Benson, were eases in which this Court applied the intermediate level of scrutiny to classifications which prevented certain classes of injured persons from suing for damages. Bellemare v. Gateway Builders, Inc., 420 N.W.2d 733 (N.D.1988), Hanson v. Williams County, and Patch v. Sebelius, 320 N.W.2d 511 (N.D.1982), are other cases in which this Court applied the intermediate level of scrutiny to classifications which prevented certain classes of injured persons from suing for damages. Arneson v. Olson, 270 N.W.2d 125 (N.D.1978), cited in Benson, was a case in which this Court applied the intermediate level of scrutiny in ruling that a $300,000 limitation on recoveries in medical malpractice cases was a denial of equal protection. This Court has also applied the intermediate level of scrutiny to classifications with state constitutional underpinnings, such as homestead rights, Mund v. Rambough, 432 N.W.2d 50 (N.D.1988); and to classifications involving a defendant's wealth and interests in presenting a defense in criminal prosecutions, State v. Fischer, 349 N.W.2d 16 (N.D.1984); State v. Carpenter, 301 N.W.2d 106 (N.D.1980).
Tharaldson v. Unsatisfied Judgment Fund, 225 N.W.2d 39 (N.D.1974), cited by the Benson majority as a case not closely resembling the concern in Benson, was a case in which this Court applied the rational basis test to a statute limiting recovery from the unsatisfied judgment fund to $5,000 if the wrongdoer could not be identified, while permitting a $10,000 recovery from the fund in other cases. This Court has applied the rational basis test to a number of other statutory classifications involving economic or social matters. See Mauch v. Manufacturers Sales & Service, Inc., 345 N.W.2d 338 (N.D.1984) (comparative negligence provisions of N.D.C.C. § 9-10-07); Law v. Maercklein, 292 N.W.2d 86 (N.D.1980) (statutory classification allowing only residents to participate in the Unsatisfied Judgment Fund); Kadrmas v. Dickinson Public Schools (statutory classification between reorganized and non-reorganized school districts, with only non-reorganized school districts being authorized to charge patrons for transportation to and from schools); Kavadas v. Lorenzen (statutory classification allowing a person injured by two or more tortfeasors acting in concert to recover under joint and several liability, while denying joint and several recovery to a person injured by two or more tortfeasors not acting in concert); and Lee v. Job Service North Dakota, 440 N.W.2d 518 (N.D.1989) (statutory classification for unemployment compensation benefits classifying full-time students differently than workers who are not full-time students).
The workers compensation law creates a fund from a tax on covered employers and provides for the distribution of economic benefits from the tax to injured employees of the taxpaying employers. Workers compensation benefits, like unemployment compensation benefits, "fall within 'the field of social welfare and economics.' " Lee at 519, quoting Idaho Dept. of Employment v. Smith, 434 U.S. 100, 101, 98 S.Ct. 327, 328, 54 L.Ed.2d 324, 327 (1977). See also Otto v. Hahn, 209 Neb. 114, 306 N.W.2d 587, 592 (1981), in which the workers compensation act was treated as being "in the area of economics and social welfare." The agricultural exclusion from workers compensation coverage is "an issue with economic implications" (Kavadas v. Lorenzen, 448 N.W.2d at 223) that does not preclude anyone from suing for damages.
The concerns involved in excluding agricultural service from workers compensation much more closely resemble those in cases in which we have applied the rational basis test to classifications contained in economic and social legislation, than those in cases in which we have applied the close correspondence test. In our view, as in Kadrmas v. Dickinson Public Schools, 402 N.W.2d at 902, "the challenged statute in this case is purely economic legislation which neither involves a suspect classification nor a fundamental or important substantive right which would require the strict scrutiny or intermediate standard of review." The challenged statute also does not involve any classifications with state constitutional underpinnings, wealth, or the vital interests involved in presenting a defense in a criminal prosecution, which might warrant a heightened level of review. This Court has " 'consistently deferred to legislative determinations concerning the desirability of statutory classifications affecting the regulation of economic activity and the distribution of economic benefits.'" Lee v. Job Service North Dakota, 440 N.W.2d at 519, quoting Idaho Dept, of Employment v. Smith. We conclude the rational basis test is the appropriate standard of review to apply in assessing the validity of the agricultural exclusion from mandatory workers compensation coverage in light of the equal protection guarantee of Art. I, § 21, N.D. Const.
D
In urging the intermediate level of scrutiny, Haney relies, in addition to Benson, on this Court's decision in Lee v. Job Service North Dakota, 440 N.W.2d at 519, which applied the rational basis test to a classification relating to unemployment compensation benefits, and distinguished workers compensation benefits:
"Unemployment benefits are a matter of legislative grace. Section 52-01-06, N.D.C.C. Accord, Dow Chemical Co. v. Curtis, 431 Mich. 471, 430 N.W.2d 645 (1988). They may be contrasted to and differentiated from workers compensation benefits, for which injured workers give up the right to sue for damages arising out of a work-rélated injury in exchange for 'sure and certain relief . regardless of questions of fault' (§ 65-01-01, N.D.C.C.)."
From that language,. Haney argues:
"The obvious import of the distinction made in Lee, supra, is that important substantive rights are implicated by legislative schemes which exclude certain classes of employees from eligibility for workers' compensation. Since 'important substantive rights' are the touchstone of the applicability of the intermediate standard of review [citation omitted] the fate of the agricultural exclusion statute must be determined under the intermediate scrutiny standard."
Haney's reliance on Lee is misplaced. The important substantive right involved in the workers compensation scheme is the right to sue for damages, which injured workers were required to give up in exchange for sure and certain relief, regardless of questions of fault. Here, the statute in issue does not deny injured agricultural employees the important substantive right to sue their employers for damages arising out of work-related injuries; rather, the statute preserves that right for agricultural employees by excluding agricultural service from mandatory workers compensation coverage. We note that the value of the exchange of the right to sue for the right to sure and certain relief is not as great as it once was to employees. In 1973, the legislature adopted the doctrine of comparative negligence ameliorating the harsh effects of the defenses of contributory negligence and assumption of risk. See S.L.1973, Ch. 78; Wentz v. Deseth, 221 N.W.2d 101, 104-05 (N.D.1974). The subject is now governed by N.D.C.C. § 32-03.2-02, which provides in part:
"Contributory fault does not bar recovery in an action by any person to recover damages for death or injury to person or property unless the fault was as great as the combined fault of all other persons who contribute to the injury, but any damages allowed must be diminished in proportion to the amount of contributing fault attributable to the person recovering."
Prior to the change in the law in 1973, any contributory negligence on the part of the person suing for damages was a complete bar to recovery of any damages. Mauch v. Manufacturers Sales & Service, Inc.; Renner v. Murray, 136 N.W.2d 794 (N.D.1965); Sher lock v. Minneapolis, St. P. & S.S.M. Ry. Co., 24 N.D. 40, 138 N.W. 976 (1912). Regardless of its value to employers or employees, a legislative decision to extend workers compensation coverage to any group is "a matter of legislative grace" (Lee v. Job Service North Dakota, 440 N.W.2d at 519). Because the legislature created the remedy of workers compensation benefits, it can impose reasonable limits on it. See Herman v. Magnuson, 277 N.W.2d at 451.
IV
The rational basis test is a relaxed standard of review. As we summarized in Lee v. Job Service North Dakota, 440 N.W.2d at 519-20:
"Under the rational basis standard of review, a.legislative classification will be sustained unless it is patently arbitrary and bears no rational relationship to a legitimate government interest. Hanson v. Williams County, supra, 389 N.W.2d at 323. 'A classification does not deny equal protection "if any state of facts reasonably can be conceived that would sustain it." ' Grand Forks-Traill Water Users, Inc. v. Hjelle, 413 N.W.2d 344, 348 (N.D.1987) [quoting Signal Oil & Gas Co. v. Williams County, 206 N.W.2d 75, 83 (N.D.1973)]. 'Through what precise points in a field of many competing pressures a legislature might most suitably have drawn its lines is not a question for judicial re-examination.' Syllabus ¶ 6, State v. Gamble Skogmo, Inc., supra [144 N.W.2d 749 (N.D.1966)]. A classification with a reasonable basis does not violate the equal protection clause merely 'because in practice it results in some inequality.' Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 491, 97 S.Ct. 1898, 1909, 52 L.Ed.2d 513, 528 (1977) [quoting Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 78, 31 S.Ct. 337, 340, 55 L.Ed. 369, 377 (1911) ]."
Reform may take one step at a time. Snyder's Drug Stores, Inc. v. North Dakota State Bd. of Pharmacy, 219 N.W.2d 140, 148 (N.D.1974); State v. Gamble Skogmo, Inc., 144 N.W.2d 749, 760 (N.D.1966). "[A] court need not know the special reasons, motives, or policies of a State legislature in adopting a particular classification, so long as the policy is one within the power of the legislature to pursue, and so long as the classification bears a reasonable relation to those reasons, motives, or policies." Signal Oil & Gas Co. v. Williams County, 206 N.W.2d 75, 83 (N.D.1973). "[T]he Equal Protection Clause does not demand for purposes of rational-basis review that a legislature or governing deci-sionmaker actually articulate at any time the purpose or rationale supporting its classification." Nordlinger v. Hahn, — U.S. -, -, 112 S.Ct. 2326, 2334, 120 L.Ed.2d 1, 15-16 (1992). "While a governmental decision-maker need not have articulated a purpose for a classification, for purposes of judicial review there must be an identifiable purpose that may conceivably or reasonably have been that of the governmental decisionmaker." NL Industries, Inc. v. North Dakota State Tax Comm'r, 498 N.W.2d 141, 149 (N.D.1993).
To determine if the legislative classification in issue here bears a rational relationship to a legitimate government interest, we must now examine the purpose or purposes underlying the legislature's adoption of the workers compensation act with an exclusion for agricultural service. As we have already noted, the Benson majority recognized only the specifically stated legislative goal of providing "for workers injured in hazardous employments . sure and certain relief . regardless of questions of fault and to the exclusion of every other remedy, proceeding, or compensation" (N.D.C.C. § 65-01-01) and ignored any other purposes the legislature may have had, noting that it "made no attempt to express any purpose for the exclusion." Benson at 103.
Agricultural employers and employees are excluded from mandatory coverage of the workers compensation law because agricultural service is not classified as hazardous employment. N.D.C.C. § 65-01-02(22)(a). We know agricultural work is hazardous. See Benson. We recognize, as did the court in Otto v. Hahn, 306 N.W.2d at 590, that agriculture was excluded from workers compensation coverage for a different reason:
"It becomes apparent that farm laborers were excluded from the act not because farming is nonhazardous but because the Legislature chose not to extend the coverage of the act to that class for a possibly political or social reason."
Unarticulated legislative purposes may be considered in an equal protection analysis of a statutory classification. Nord-linger v. Hahn; NL Industries, Inc.; Signal Oil & Gas Co. v. Williams County. In light of the agricultural exclusion, it is clear to us the legislature had a two-part purpose in mind, one part articulated and one part unar-ticulated, in enacting the workers compensation law. The legislature sought to provide "for workers injured in hazardous employments . sure and certain relief . regardless of questions of fault," N.D.C.C. § 65-01-01 (the articulated part of the legislature's purpose), without adversely affecting the financial health of agricultural employers and employees, who comprise the most important sector of the North Dakota economy (the unarticulated part of the legislature's purpose). With regard to the Benson majority's conclusion "that the purpose for the exclusion of agricultural services was not for the benefit of the employees but for the employers" (288 N.W.2d at 108), we can conceive of purposes the legislature may have had in mind to benefit both agricultural employers and agricultural employees. The legislature may have intended to benefit agricultural employers by exempting them from the expense of workers compensation premiums and the expense and inconvenience of the additional recordkeeping that workers compensation coverage would entail. The legislature may have intended to benefit agricultural employees by retarding the mechanization of agriculture, thereby preserving agricultural job opportunities that would be lost if coverage of agriculture hastened the mechanization of the industry. Each of the foregoing "is an identifiable purpose that may conceivably or may reasonably have been the purpose of the" legislature. NL Industries, Inc. v. North Dakota State Tax Comm'r, 498 N.W.2d at 149. "The [Legislature] 'may have conceived of [those] or other good purposes, 'and that is a sufficient basis .for sustaining' the [Legislature's] action." NL Industries, Inc., quoting Snyder's Drug Stores, Inc. v. North Dakota State Bd. of Pharmacy, 219 N.W.2d at 151.
We conclude there is a rational relationship between the statutory classification and the legitimate government interests in providing sure and certain relief without questions of fault to workers injured in hazardous employments without adversely affecting the financial health of agricultural employers and employees, to the benefit of both. There have been a number of recent cases from other states upholding statutes against the same or similar constitutional challenges as those in this case. See Collins v. Day, 604 N.E.2d 647 (Ind.App.1992); Ross v. Ross, 308 N.W.2d 50 (Iowa 1981); Fitzpatrick v. Crestfield Farms, Inc., 582 S.W.2d 44 (Ky.App.1978); Eastway v. Eisenga, 420 Mich. 410, 362 N.W.2d 684 (1984); State ex rel. Hammond v. Hager, 160 Mont. 391, 503 P.2d 52 (1972); Otto v. Hahn, 306 N.W.2d at 591-92; Cueto v. Stahmann Farms, Inc., 94 N.M. 223, 608 P.2d 535 (N.M.App.1980); Baskin v. State ex rel. Workers' Compensation Div., 722 P.2d 151 (Wyo.1986). Other than Benson, Haney has not drawn our attention to, nor have we found, any decision by any state's highest court or by any federal court holding a state's exclusion of agricultural employers or employees from workers compensation coverage is an unconstitutional denial of equal protection.
The agricultural exclusion in the workers compensation act does not violate the equal protection guarantee of Art. I, § 21, N.D. Const.
Affirmed.
VANDE WALLE, C.J., and NEUMANN, JJ., concur.
RALPH J. ERICKSTAD, Surrogate Judge, sitting in place of LEVINE, J., disqualified.