#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.

                                    ****
                  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
#27485

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


                                          -1-
#27485

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.

                                           -2-
#27485

[¶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


                                           -3-
#27485

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.


                                            -4-
#27485

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.




                                          -5-
#27485

                                 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.

                                           -6-
#27485

             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




                                           -7-
#27485

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.


                                          -8-
#27485

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.”


                                           -9-
#27485

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.

                                           -10-
#27485

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


                                          -11-
#27485

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.




                                          -12-
