Court Opinion

ID: 9568534
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:04:50.005138+00
Date Added: 2024-06-11T10:45:35.077848
License: Public Domain

HENDERSON, Justice
(dissenting).
Johnson was fired for work-connected misconduct as he did not adhere to a company directive. Johnson elected to pursue redress through administrative procedure for unemployment benefits and filed a claim for such benefits in April 1985. On May 3,1985, the South Dakota Department of Labor ruled that Johnson was ineligible for benefits because he was discharged for work-connected misconduct. It must be remembered that Johnson began the administrative procedure seeking unemployment benefits. When he lost, and when he was losing, he quit. Johnson was advised that the ruling would be final unless he filed an appeal within nine days after the mailing of *114the Department of Labor’s notification. No appeal was filed.
Johnson then instituted a lawsuit on four theories all without exhausting his administrative remedies. SDCL 1-26-30 provides in part: “A person who has exhausted all administrative remedies available within any agency ... is entitled to judicial review under this chapter.” (Emphasis supplied.) Furthermore, SDCL 1-26-30.2 expresses: “An appeal shall be allowed in the circuit court to any party in a contested case from a final decision, ruling or action of an agency.” (Emphasis supplied.) Johnson claims breach of pay in the lawsuit; in this regard, he filed for unemployment compensation arising out of the contract. It appears he would have been satisfied to collect unemployment, if the administrative proceeding was going well for him. His plea, in tort, for wrongful termination, arises out of the contract which was determined to be for “work-connected misconduct.” Fraud and breach of fiduciary duty also spring from the contract of employment and arises from the termination of Johnson’s employment. The justifiability of the termination of his employment was at issue in the administrative proceeding.1
In Weatherwax v. Hiland Potato Chip Co., 372 N.W.2d 118 (S.D.1985), Weather-wax started his civil litigation while his claim for unemployment benefits was still in the process of being decided before an administrative agency. Weatherwax instituted civil litigation while administrative proceedings were ongoing. This is very similar to the course of action Johnson pursued. Like Weatherwax, Johnson wanted to be in two worlds simultaneously. In Weatherwax, the administrative proceeding had not come to a grinding halt when Weatherwax decided to sue; yet, here the administrative proceeding came to a unilateral halt at an earlier stage because Johnson failed to file an appeal.
An expressed basis for the Weatherwax decision was that the doctrine of exhaustion of administrative remedies “permits the administrative agency to exercise its discretion, apply its expertise, and make a factual record upon which to base subsequent judicial review.” Id., at 120.2 See 5 B. Mezines, J. Stein & J. Gruff, Administrative Law § 49.01 (rev. ed. 1987). To allow a party who has initiated an administrative action to then abort that action, before the administrative process is complete, and commence a lawsuit (even one tangentially related) is unwise. Such a procedure would discourage use of agencies’ proven abilities to address problems within their statutory ambit and foster a heavy reliance on our already overburdened judicial system. In this case, the majority opinion is absolutely correct in its observation that an administrative proceeding and a judicial action differ in their underlying areas of inquiry. But, it erroneously overlooks the primary reality that both proceedings stem from a singular, inseparable factual episode and, at least, some of those *115facts, pertinent to both inquiries, will be found at either proceeding. Therefore, abandonment of an administrative claim, before completion of the administrative process, is premature, wasteful, and fundamentally faulty.
Johnson would have us believe, and the majority opinion supports him, that he can start a proceeding before an administrative body seeking money; then, when he loses, he may shift his position — totally abandoning the administrative avenue — and institute a lawsuit. What will this type of procedure avail our settled law in this state? Johnson chose an institutionalized mechanism (statutory) for unemployment adjudication, namely, the Unemployment Division of the Department of Labor of the State of South Dakota. See SDCL ch. 61-7. He, Johnson, chose a forum to settle a claim or dispute absolutely cognizable by the said administrative agency. Witness on April 16, 1985, a claim captioned “NEW CLAIM FOR BENEFITS” was filed before said Unemployment Division at Sioux Falls, South Dakota. It appears to me that the majority opinion places great emphasis on the word “cognizable.” Johnson believed that his dispute was cognizable by the Division of Unemployment within the Department of Labor because that is the market to which he took his ducks. A failure to exhaust an administrative remedy is typically illustrated by a failure to appeal within the administrative body, once a decision has been rendered. See 2 Am.Jur.2d Administrative Law § 608 (1962). See also Renegotiation Bd. v. Bannercraft Clothing Co., 415 U.S. 1, 94 S.Ct. 1028, 39 L.Ed.2d 123 (1974); Lichter v. United States, 334 U.S. 742, 68 S.Ct. 1294, 92 L.Ed. 1694 (1948); United States v. Frantz, 220 F.2d 123 (3d Cir.1955); Highway Constr. Co. v. United States, 209 F.2d 748 (6th Cir.1954); United States v. Edward Valves, Inc., 207 F.2d 329 (7th Cir.1953); B. Schwartz, Administrative Law § 172 (1976); 2 F. Cooper, State Administrative Law 572 (1965). Johnson was required to fulfill the administrative steps before he instituted tort actions. Zar v. South Dakota Bd. of Examiners, 376 N.W.2d 54, 55 (S.D.1985); Gottschalk v. Hegg, 89 S.D. 89, 228 N.W.2d 640 (1975); Mordhorst v. Egert, 88 S.D. 527, 223 N.W.2d 501 (1974); Grosz v. Corner, 73 S.D. 553, 45 N.W.2d 734 (1951).
With the advent of this decision, this state has entered into the creation of new torts, i.e., lawsuits, against employers by employees. This, notwithstanding a codification of the employment-at-will rule via SDCL 60-4-4. Said statute provides: “An employment having no specified term may be terminated at the will of either party on notice to the other, unless otherwise provided by statute.” Conversely, if a term of employment is specified, the at-will rule is not applicable. SDCL 60-4-5. From what I can glean of the record, the employment of this general manager was “at will,” for he apparently had no contract of employment, strange though it might be, and could be terminated at any time, with or without cause, at the end of any monthly pay period. The reader is reminded that Johnson, and it appears undisputed, flagrantly disobeyed the orders of his “boss” by bidding at a price less than he was authorized to do. So one ponders: Who is the entrepreneur and who owns and runs the shop? In a state which is seeking outside industry, what does this decision herald to future employers? Let there be no mistake that there is great economic overtones in this litigation and this decision. It creates the opportunity to sue employers, under various theories, where they have given a job to someone and then fired them because the employee (apparently) deliberately ignored instructions.3 Instructions that went to the heart of the financial stability of the employer’s compa*116ny. My writing attempts to look to the past but I would also have it look to the future for judges must seek, not only an understanding of economics, but the economic impact of a decision.4 We have, before us, a decision creating causes of action, carved by words, heedless to the at-will statute, immediate past precedent, and oblivious to the economic ends which it attains. Finally, it is an old axiom, firmly embedded in the history of Anglo-American law: No man may profit from his own wrong.
Therefore, primarily based upon a failure to exhaust administrative remedies, and being thereby precluded from bringing various causes of action based upon wrongful discharge, I would affirm the circuit court and hereby respectfully dissent.

. The majority opinion attempts to neatly cleave Johnson's administrative claim from his judicial assertions by noting that the lawsuit focuses on employer’s rather than Johnson’s conduct. Indeed, earlier in its text, the majority opinion expressly notes that the Department of Labor had to examine Johnson's conduct to determine if it was embraced within the statutory definition of misconduct. Consideration of Johnson’s conduct necessarily includes examination of his employer’s conduct; the two are inextricable. The bounds of logic are not exceeded by stating that an employer’s treatment of an employee is affected by an employee’s job conduct and vice versa. To seriously discuss one without the other is unrealistic.

. In Weatherwax, the plaintiff filed for unemployment insurance benefits, but his claim was denied. Weatherwax did not appeal the agency’s decision but decided to file suit in circuit court for wrongful discharge. Just as in this case, he argued that he had a separate and distinct cause of action for wrongful discharge which he could pursue independently in circuit court, notwithstanding his failure to appeal the agency’s decision. We disapproved, holding he did not exhaust all of his remedies. 372 N.W.2d at 120. There, we also held ”[h]aving chosen an administrative avenue of redress, [plaintiff] was bound to follow it.” Id. It is interesting to note that this Court is now manned by different personnel and that this author was the writer of the Weatherwax and Tombollo opinions cited by the majority. In Tombollo, we held that rather than to bring an independent circuit court action, the plaintiff’s proper procedural channel would have been to appeal the agency’s determination.

. Circuit Judge Gene Paul Kean, in his "Judgment for Defendant,” recited twice that Johnson “had given unauthorized discounts contrary to previous instructions.” How can the free enterprise system work where an employee misconducts himself in this fashion? Judge Kean referred to this behavior as "misconduct,” citing violations of SDCL §§ 61-6-14 and 61-6-14.1. This Court, of recent past, has upheld dismissals for work-related misconduct. See Kienast v. Sioux Valley Co-op, 371 N.W.2d 337 (S.D.1985): In re Bertram, 343 N.W.2d 382 (S.D.1984); In re Johnson, 338 N.W.2d 453 (S.D.1983); In re Yaroch, 333 N.W.2d 448 (S.D.1983).

. In an address delivered at the January 8, 1897 dedication of a new hall of the Boston University School of Law, Mr. Justice Holmes, then of the Supreme Judicial Court of Massachusetts, stated:
I look forward to a time when the part played by history in the explanation of dogma shall be very small, and instead of ingenious research we shall spend our energy on a study of the ends sought to be attained and the reasons for desiring them. As a step toward that ideal it seems to me that every lawyer ought to seek an understanding of economics. The present divorce between the schools of political economy and law seems to me an evidence of how much progress in philosophical study still remains to be made.
"The Path of the Law,” 10 Harv.L.Rev. 457, 474 (1897). Earlier, in his .address, Justice Holmes referred to the man of the future (in the law) as the man of statistics and the master of economics.