Court Opinion

ID: 9592659
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:16:09.417998+00
Date Added: 2024-06-11T18:01:17.283389
License: Public Domain

KONENKAMP, Justice.
An employer challenges the circuit court’s jurisdiction to hear a sexual harassment case brought by a former employee before administrative remedies were exhausted. We reverse.

FACTS

In 1985, Marilyn Montgomery began dating James Hersrud, the sole shareholder and director of Big Thunder Gold Mine, Inc., a South Dakota corporation which offers tours of a gold mine in the Black Hills. After Montgomery and her children moved into his residence, she worked for him as a tour guide and then a business manager. Big Thunder needed money for capital improvements in 1987, so Montgomery, using an advance against her inheritance, purchased stock and was named as a director. She then owned forty-four percent of the corporation and Hersrud owned the remainder.
When the couple’s relationship turned sour in 1991, Montgomery continued to live at Hersrud’s business-owned residence, but moved into her daughter’s bedroom. Hers-rud demanded that she move back into his bedroom or be fired. She refused. He moved out and then demanded that she pay $6,000 in back rent for the residence and the corporate car. At a shareholders meeting on February 25, 1992, Hersrud used his majority ownership to create a third seat on Big Thunder’s board of directors and named his father to it. Then Hersrud and his father voted to fire Montgomery as manager, expel her from the residence, and take away her corporate car. She remained a minority shareholder, but Hersrud and his father continued to make other decisions designed to decrease shareholder dividends.
Montgomery filed suit in circuit court against Big Thunder for wrongful termination and against Hersrud personally for sexual harassment. She further sought dissolution of the corporation. At no time did she ever file a charge with the South Dakota Division of Human Rights (Division). Hers-rud moved for summary judgment on the sexual harassment claim because Montgomery had not exhausted her administrative remedies with the Division. The trial court denied the motion reasoning that the matter could eventually be brought in circuit court even if she had first filed a charge with the *579Division. At trial the jury awarded Montgomery $25,000 for the sexual harassment claim. She prevailed on her other claims as well. Hersrud appeals the denial of summary judgment based upon Montgomery’s failure to exhaust her administrative remedies.

DECISION

In Tombollo v. Dunn, 342 N.W.2d 23, 25 (S.D.1984), and Huck v. McCain Foods, 479 N.W.2d 167 (S.D.1991), we equated sexual harassment with sexual discrimination. We have also held that harassment claims must first be filed with the South Dakota Division of Human Rights in order to exhaust administrative remedies. Weller v. Spring Creek Resort, Inc., 477 N.W.2d 839, 840 (S.D.1991); SDCL 20-13-46. According to SDCL 20-13-29:
Any person claiming to be aggrieved by a discriminatory or unfair practice may file with the division of human rights a verified, written charge which shall state the name and address of the person or agency alleged to have committed the discriminatory or unfair practice. The charge shall set forth the facts upon which it is based, and shall contain any other information required by the division. The commission of human rights, a commissioner, a state’s attorney or the attorney general may file a charge.
Montgomery argues that use of the permissive word “may” in the first sentence indicates the Legislature did not intend that if a person had a discrimination case it had to be filed with the Division. We interpret this language to mean that a discrimination victim is not required to file a charge at all. It does not propose that a person may file either with the Division or in circuit court.
In 1991, the Legislature created an exception to the “exhaustion of administrative remedies” rule when it enacted SDCL 20-13-35.1:
No later than twenty days after the issuance of notice requiring the respondent to answer the charge, the charging party or respondent may elect to have the claims asserted in the charge decided in a civil action, in lieu of a hearing, under the provisions of this section. Upon receipt of notice of election, the division of human rights or the commission of human rights has no further jurisdiction over the parties concerning the charge filed_ [Emphasis added.]
Thus when a person files a charge alleging a discriminatory or unfair practice, the parties need not carry the administrative process to completion before starting a civil action. Yet Montgomery suggests that the statute effectively allows her to bypass the administrative process altogether. A plain reading of the statute disposes of her argument. Once a charge is filed with the Division pursuant to SDCL 20-13-29, the Division loses jurisdiction only when notified that the party has elected to file a civil action. SDCL 20-13-35.1. Consequently, a charge must first be filed with the Division and then by notice of election a party can stop the administrative process and proceed to circuit court.
Montgomery next argues that we should apply the exception to the exhaustion of remedies rule recognized in Johnson v. Kolman, 412 N.W.2d 109 (S.D.1987). This Court stated in that case, “It is well settled that exhaustion is not required when the administrative remedies are inadequate.” Id. at 112. We also noted, however, that the only dispute in that case cognizable by the administrative agency was the issue of unemployment benefits, which was not raised in the civil action. Here the sexual discrimination claim brought in Montgomery’s suit was plainly cognizable by the Division. Tombollo v. Dunn, supra. The fact that she sought compensation for pain and suffering and punitive damages, which the Division cannot award, will not render her remedies inadequate, because she still has the option to take her case to circuit court to seek those damages, but only after first bringing her charge before the Division. Hence, the “inadequate remedy” exception will not apply.
Though the trial court’s reasoning may have been pragmatic, it nonetheless allowed a party to bypass a legislatively mandated administrative process. For the Division to achieve its human rights objectives, it must receive all sexual harassment com*580plaints before such claims enter the judicial process. See SDCL 20-13-7.* Montgomery never filed a charge with the Division, so the trial court was without jurisdiction to hear the issue. As a matter of law, Hersrud was entitled to summary judgment. Werner v. Norwest Bank, 499 N.W.2d 138 (S.D.1993); Hurney v. Locke, 308 N.W.2d 764, 767 (S.D.1981). That portion of the judgment against Hersrud for sexual harassment is
Reversed.
MILLER, C.J., AMUNDSON, J., and WUEST, Retired Justice, concur.
SABERS, J., dissents.
GILBERTSON, J., not having been a member of the Court at the time this case was considered, did not participate.

 The Legislature mandated that discrimination claims first be brought before the Division apparently to allow it to exercise its expertise in these matters and so that it can monitor and rectify discriminatory practices in South Dakota.