Court Opinion

ID: 9592661
Source: CourtListenerOpinion
Date Created: 2023-08-22 00:16:09.422914+00
Date Added: 2024-06-11T18:01:17.284932
License: Public Domain

SABERS, Justice
(dissenting).
The trial court entered judgments based in part on jury verdicts in favor of Montgomery and against the Defendant and his corporation for wrongful termination of $26,500; sexual harassment of $25,000, and for dissolution of the corporation. I would affirm the trial court.
The majority opinion reverses the trial court principally for the reason that under SDCL 20-13-7 the Division must allegedly receive all sexual harassment complaints before such claims enter the judicial process, otherwise the Division cannot achieve its human rights objectives. What would prohibit the Division from dealing with the matter during or after the lawsuit? At any rate, this reason is insufficient to reverse this case under these circumstances.
The exhaustion of remedies rule does not apply where an administrative agency cannot fashion an adequate remedy with respect to the claim in issue. Here, the administrative remedies available to Montgomery were inadequate where the Commission was not empowered to award her compensation for pain and suffering and mental anguish or award her punitive damages. Therefore, Montgomery was entitled to seek relief from the circuit court.
In Johnson v. Kolman, 412 N.W.2d 109 (S.D.1987), the plaintiff employee sued his former employer for breach of contract, wrongful termination, breach of severance agreement, fraud, and breach of fiduciary duty.
In reversing the trial court, we remarked that “a party must exhaust all available administrative remedies only if the agency actually has authority to deal with the particular question raised.” Id. at 112 (emphasis in original). In that case, the only dispute cognizable by the Department of Labor was whether or not the employee was eligible for unemployment insurance benefits. On the other hand, the employee’s lawsuit did not involve the issue of unemployment compensation. Instead, it involved issues of breach of contract, wrongful termination, breach of severance agreement, fraud, and breach of fiduciary duty, all of which were claims the Department of Labor had no authority to determine. Therefore, the exhaustion doctrine could not be used to bar Johnson’s suit.
In Johnson, we stated:
Even if part of the wrongful termination of employment issue is cognizable by the Department of Labor, the facts of the case bring it within one of the exceptions to the exhaustion doctrine. It is well settled that exhaustion is not required when the administrative remedies are inadequate.
Id. at 112 (emphasis added) (citations omitted). We went on to point out that had the employee been awarded unemployment compensation by the Department of Labor, those amounts would have been insufficient in adequately compensating the employee with respect to the claims he was asserting in his lawsuit. In other words, “an award of unemployment benefits would not provide any remedy for his claims of breach of employment contract and severance contract, fraud, and breach of fiduciary duty.”* Id. at 113.
*581Here, the statutory scheme provided by the legislature under SDCL ch. 20-13 does not provide adequate relief for the types of claims brought by Montgomery. More specifically, SDCL 20-13-42 (Supp.) provides that in the event the commissioner finds that the person named in the charge has engaged in a discriminatory or unfair practice, the Commission may take such affirmative action, “including hiring, reinstatement, or upgrading of employees, with or without back pay; ... [or] compensation incidental to the violation, other than pain and suffering, punitive, or consequential damages ...” (Emphasis added.) Here, Montgomery sued for damages for pain and suffering and mental anguish, as well as punitive damages. Since the Commission was not empowered to award her those damages, she should not be required to file with the Commission in the first instance.
I would affirm the judgment of the trial court on the basis of Johnson, 412 N.W.2d 109 — the settled law exception to the exhaustion doctrine. In these circumstances, it makes little sense to vacate the jury verdict of $25,000 and require Montgomery to begin again at square one.

 The Supreme Court of Iowa has recognized the same exception in Myers v. Caple, 258 N.W.2d 301 (Ia.1977), and Lakota Consol. Ind. Sch. v. Buffalo Center, 334 N.W.2d 704 (Ia.1983).