Heil v. Belle Starr Saloon & Casino et al

Filing 147

ORDER denying 109 Motion for Partial Summary Judgment. Signed by Chief Judge Jeffrey L. Viken on 3/11/13. (SB)

UNITED STATES DISTRICT COURT
DISTRICT OF SOUTH DAKOTA
WESTERN DIVISION
MISTY N. HEIL,
Plaintiff,
vs.
BELLE STARR SALOON &
CASINO, INC.; ANGIE’S INC.;
Defendants,
and
THOMAS W. SHERWOOD, SR.,
d/b/a Sherwood Investments &
Trust Company, and
SHERWOOD FAMILY LIMITED
PARTNERSHIP,
Defendants/Third-Party
Plaintiffs,
vs.
JASON ORELUP,
Third-Party Defendant.

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CIV. 09-5074-JLV

ORDER
DENYING MOTION FOR
PARTIAL SUMMARY
JUDGMENT

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CHELSEA LINTON,
Plaintiff,
vs.
ANGIE'S INC.; BELLE STARR
SALOON & CASINO, INC.;
Defendants,
and
THOMAS W. SHERWOOD SR.,
d/b/a Sherwood Investments
and Trust Company, and
SHERWOOD FAMILY LIMITED
PARTNERSHIP,
Defendants/Cross
Claim Plaintiffs,
vs.
JASON ORELUP,
Defendant/Cross Claim
Defendant.

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CIV. 09-5099-JLV

INTRODUCTION
In this consolidated action, plaintiff Misty N. Heil filed an amended
complaint. (Docket 39). In that complaint Ms. Heil asserted claims under
Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et
seq., the South Dakota Human Relations Act of 1972, SDCL Chap. 2-13,
and South Dakota common law tort claims. Id. The tort claims are count
four: assault and battery; and count five: intentional infliction of emotional

2

distress (“IIED”). Id. at pp. 10-11. Defendant Sherwood Investment and
Trust Company (“SITC”) filed a motion for partial summary judgment
(“summary judgment”) as to both tort claims. (Docket 109).1 SITC asserts
the claims “are precluded by the exclusive remedy under South Dakota’s
worker’s compensation laws.” Id. at p. 1.
SITC filed a statement of undisputed material facts (“DSUMF”) in
support of its motion for summary judgment. (Docket 111). Ms. Heil filed
plaintiff’s responses to the DSUMF (“plaintiff’s responses”) and plaintiff’s
statement of material facts (“PSMF”) in opposition to the motion. (Dockets
117 & 118). For the reasons stated below, SITC’s motion for partial
summary judgment is denied.
STANDARD OF REVIEW
A party is entitled to summary judgment if the movant “shows that
there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). Once the
moving party has met its burden, the nonmoving party may not rest on the
allegations or denials in the pleadings, but rather must produce affirmative
evidence setting forth specific facts showing that a genuine issue of material
fact exists. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). Only
disputes over facts that might affect the outcome of the case under the
governing substantive law will properly preclude summary judgment. Id. at

1

Ms. Heil filed a second amended complaint which re-alleged the allegations
of the assault and battery and IIED claims. (Docket 121 at pp. 11-13). For
clarity, the court will cite to the second amended complaint.
3

248. Accordingly, “the mere existence of some alleged factual dispute
between the parties will not defeat an otherwise properly supported motion
for summary judgment; the requirement is that there be no genuine issue of
material fact.” Id. at 247-48 (emphasis in original).
If a dispute about a material fact is genuine, that is, if the evidence is
such that a reasonable jury could return a verdict for the nonmoving party,
then summary judgment is not appropriate. Id. However, the moving party
is entitled to judgment as a matter of law if the nonmoving party fails to
“make a sufficient showing on an essential element of her case with respect
to which she has the burden of proof.” Celotex Corp. v. Catrett, 477 U.S.
317, 323 (1986). In such a case, “there can be ‘no genuine issue as to any
material fact,’ since a complete failure of proof concerning an essential
element of the nonmoving party’s case necessarily renders all other facts
immaterial.” Id.
In determining whether summary judgment should issue, the facts
and inferences from those facts must be viewed in the light most favorable
to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,
475 U.S. 574, 587-88 (1986). The key inquiry is “whether the evidence
presents a sufficient disagreement to require submission to a jury or
whether it is so one-sided that one party must prevail as a matter of law.”
Anderson, 477 U.S. at 251-52.
“A dispute is genuine if the evidence is such that it could cause a
reasonable jury to return a verdict for either party; a fact is material if its

4

resolution affects the outcome of the case.” Mayer v. Countrywide Home
Loans, 647 F.3d 789, 791 (8th Cir. 2011) (citing Anderson, 477 U.S. at
252).
STATEMENT OF FACTS
The following facts and all inferences from those facts will be stated in
the light most favorable to Ms. Heil, the nonmoving party.2 Matsushita Elec.
Indus. Co., 475 U.S. at 587-88.
Ms. Heil worked as a cocktail waitress at the Belle Starr Saloon &
Casino, Inc. (“Belle Starr”). (Docket 111 at ¶ 1). She first worked at Belle
Starr from February 2007 until October 2007, and then returned in
February of 2008. Id. at ¶ 2. Thomas Sherwood, Jr. (“Tom Jr.”) owned the
stock of Belle Starr and Angie’s, Inc. (“Angie’s”). Id. at ¶ 10. Tom Sherwood,
Sr. (“Tom Sr.”) and Tom Jr. (jointly “Sherwoods”) indicated they were the
owners of Belle Starr. (Docket 117 at ¶ 1).
Jason Orelup worked as a manager at Belle Starr and supervised Ms.
Heil during both employment periods. (Docket 111 at ¶ 3). Mr. Orelup
reported to Terry Blood.3 Id. at ¶ 4. Tom Sr. was more involved in the
operation of Belle Starr than Mr. Blood. (Docket 117 at ¶ 4). Mr. Orelup
was required to call Tom Sr. before firing any employee, ordering
liquor, or getting cash for the tills. Id. at ¶ 5.

2

Plaintiff objected to only four of the DSUMF. See Docket 118. All
references will be to DSUMF, except where plaintiff’s responses require
otherwise, and to PSMF.
3

Mr. Blood lived in Denver, Colorado. (Docket 104-6 at ¶ 2).
5

Jeremy Cease owned Presidential Limousine Service which provided
limousine service to Belle Starr from 2007 to 2008. Id. at ¶ 2. Mr. Cease’s
limousine service contract was on Sherwood business letterhead. Id. at ¶ 3.
Tom Sr. provided Mr. Cease with his card and phone numbers and told Mr.
Cease to call if any problems occurred at the Belle Starr. (Docket 117 at
¶ 6).
Sherwoods came to Rapid City and went to the Belle Starr on four or
five different occasions.4 (Docket 104-4 at ¶ 9). The first time Tom Sr. came
alone to South Dakota, he and Mr. Orelup used Mr. Cease’s limousine
service to go to Deadwood. Id. at ¶ 12. During the trip, Mr. Cease observed
both Tom Sr. and Mr. Orelup grabbing and groping five or six female Belle
Starr employees in the limousine. Id.
Mr. Cease observed both Tom Sr. and Tom Jr. grabbing and groping
Belle Starr employees. (Docket 117 at ¶ 25). On one occasion, Mr. Cease
observed Sherwoods demand two female employees get into the limousine to
go to Deadwood to party. (Docket 104-4 at ¶ 14). When the employees
refused, Tom Sr. fired the women on the spot. Id. Sherwoods both observed
Mr. Orelup grab and grope female employees, but did nothing to prevent the
sexual abuse. (Docket 117 at ¶ 26).
Sherwoods had internet video access to observe the tills and other
areas in the Belle Starr. Id. at ¶ 19. Mr. Orelup told Mr. Cease the
Sherwoods would call and yell at Mr. Orelup based on what they had seen

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Sherwoods lived in Pennsylvania. (Docket 104-6 at ¶ 12).
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over the internet video feed. Id. at ¶ 20. One time after watching the video
feed Tom Sr. called and instructed Mr. Orelup to fire an employee he
observed stealing from the till. Id. at ¶ 21. One night Mr. Orelup was
loading Belle Starr liquor into a limousine when Tom Sr. called to report
that over the internet video he observed Mr. Orelup taking liquor. Id. at
¶ 22.
Sometime in 2007, Mr. Orelup used a towel to leave a welt on Ms.
Heil’s leg while she was working. (Docket 111 at ¶ 5). He also pushed her
onto a pool table. Id. at ¶ 6. Ms. Heil did not report this assault to anyone
at work nor did she go to the doctor.5 Id. at ¶ 7. She quit working at the
Belle Star in October of 2007. Id. at ¶ 8.
Christine Reib worked at the Belle Starr from September 19, 2007,
until February 7, 2008. (Docket 119-4 at 52:14-16).6 Mr. Orelup engaged
in uninvited physical contact with Ms. Reib. (Docket 117 at ¶ 38). He
groped her in the chest and crotch areas. Id. at ¶ 37. Ms. Reib complained
to Mr. Blood about Mr. Orelup sexually harassing her. Id. at ¶¶ 7 & 34.
Mr. Blood instructed Ms. Reib to gather witness statements. Id. at
¶ 7. Mr. Blood did not conduct any personal investigation or talk with any
of the employees about her complaint. Id. at ¶ 8. His investigation of Ms.
Reib’s claim was to talk with Mr. Orelup and read two written statements

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Ms. Heil reported this 2007 incident to her mother and a friend, Scarlett
Via. (Docket 118 at ¶ 7).
6

When citing to a deposition transcript, the court will first cite to the
document filed in CM/ECF and then to the page and lines of the transcript.
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provided by Mr. Orelup. Id. at ¶ 9; see also Docket 119-1 at 59:4-7. There
were no repercussions to Mr. Orelup because of Ms. Reib’s complaint, aside
from Mr. Blood reiterating the rules and warning Mr. Orelup any future
violations would result in a reprimand. (Docket 117 at ¶ 10).
The day before Ms. Reib was fired she found a list of phone numbers
on Mr. Orelup’s desk. Id. at ¶ 15. One of the numbers was for Sherwood
Enterprises. Id. She called that number and left a voice mail complaining
about Mr. Orelup sexually harassing her. Id. at ¶ 16. In her message, Ms.
Reib stated she had obtained paperwork from the State to fill out on her
claim of sexual harassment and that she would help other women fill out
the paperwork. Id. at ¶ 17.
Mr. Blood testified an employer should protect its employees from
physical, verbal, and sexual abuse and provide an environment free of
sexual harassment. Id. at ¶ 14. Mr. Blood did not inform the female
employees at Belle Starr that any claim of sexual harassment would be fully
investigated and no retaliation would result from submitting a claim. Id. at
¶ 13. Mr. Blood received three complaints about Mr. Orelup sexually
harassing female employees. Id. at ¶ 11. Neither Mr. Blood nor Tom. Jr.
investigated any of the complaints. Id. at ¶ 12.
Mr. Cease observed Mr. Orelup’s sexual behavior occurring all the
time. Id. at ¶ 34. Mr. Cease observed Mr. Orelup groping an employee, Ms.
Linton, and telling her to take off her shirt and pants. Id. at ¶ 30. Mr.
Orelup poured a bottle of liquor down her shirt so he could take her shirt

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off. Id. at ¶ 31. Mr. Crease also observed Mr. Orelup approach a female
employee and ask for sexual favors. Id. at ¶ 32. When she refused, he
shoved her to the floor in his office. Id. Mr. Orelup asked another female
employee for sexual favors several different times, groped her, and
eventually fired her for refusing him. Id. at ¶ 33. When Mr. Cease
approached Mr. Orelup to discuss his behavior, Mr. Orelup assaulted him.
Id. at ¶ 35.
Ms. Heil returned to work at the Belle Star in February of 2008.
(Docket 111 at ¶ 9). She knew Mr. Orelup would be there, but she returned
to work “[b]ecause I felt like I would be okay.” Id. She thought it would be
alright because a friend, Rhonda Graff,7 would be there to protect her and
Ms. Heil needed the money. (Docket 117 at ¶ 44).
Ms. Graff posted Mr. Blood’s Denver telephone number in the
dressing room so the female employees could make confidential complaints
to him. (Docket 104-6 at ¶ 25). Ms. Graff observed Mr. Orelup getting
drunk at work, throwing chairs, grabbing and groping and being verbally
and physically abusive toward female employees. Id. at ¶ 30; see also
Docket 117 at ¶ 24. Ms. Graff observed that if an employee played around
with Mr. Orelup and allowed him to flirt, grope and grab, and provide him
with sexual favors, the employee was then allowed to give away free drinks
and take home between $600-$700 in tips a night. (Docket 117 at ¶ 27). If

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Ms. Graff worked as a bouncer at the Belle Starr from the fall of 2006 to
April 2008. (Docket 104-6 at ¶ 1).
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an employee resisted Mr. Orelup’s conduct, the employee’s income would be
affected. Id.
Mr. Orelup grabbed Ms. Graff and thrust his crotch into her backside
when she was bent over. Id. at ¶ 28. On another occasion, he attempted to
grab Ms. Graff’s chest. Id. at ¶ 29. Ms. Graff also observed Mr. Orelup
enter the women’s dressing room. Id. at ¶ 36. After which an employee,
Ms. DeRoco, said Mr. Orelup cornered her and groped her in the dressing
room. Id. On several occasions Mr. Orelup grabbed the breasts of Sara
Tritsma, another female employee, even though she asked him to stop. Id.
at ¶ 39. Mr. Orelup also grabbed the crotch area of another employee,
Rachel Walker. Id. at ¶ 40. Three former employees called Ms. Graff to
report they had been groped more by the manager, Mr. Orelup, than by the
customers of the “gentleman’s club.” Id. at ¶ 42. Ms. Graff testified that a
number of dancers quit due to Mr. Orelup’s behavior. Id. at ¶ 41.
Ms. Graff called Mr. Blood in Denver on several occasions to report
Mr. Orelup’s conduct toward female employees. (Docket 104-6 at ¶ 2). She
left voice mails and messages with the secretary. Id. Mr. Blood never
responded to Ms. Graff’s calls. Id. Whenever an employee called Mr. Blood,
Mr. Orelup would be notified. (Docket 104-6 at ¶ 25). Mr. Orelup would
then confront the employee. Id.
Ms. Heil testified Mr. Orelup began sexually harassing her in late
February 2008. (Docket 111 at ¶ 14). In February of 2008, Sherwoods
visited the Belle Starr. Id. at ¶ 11. During this visit, Tom Jr. provided Ms.

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Heil with a card containing his cell phone number and told her if she ever
needed anything to call him. Id. at ¶ 12. Ms. Heil saved the card. Id. at
¶ 13.
On April 25, 2008, while Ms. Heil was working at the Belle Starr, Mr.
Orelup assaulted her. Id. at ¶ 15. He touched Ms. Heil twice between the
legs and attempted to touch her a third time, but she fought him off.
(Dockets 111 at ¶ 17 & 117 at ¶ 45). He also grabbed her arms and threw
or “chucked” her to the ground. (Docket 111 at ¶ 18). As a result of the
assault, Ms. Heil had tears “coming out of [her] eyes because [Orelup] hurt
[her].” Id. at ¶ 19. This assault occurred between 10 and 11 p.m. Id. at
¶ 20. Later in the evening, Mr. Orelup tackled Ms. Heil. Id. at
¶ 21. She landed on a chair, hurting her back and legs. Id. at ¶ 22. She
continued with her clean-up work, then clocked out at 2:20 a.m. and
promptly left. Id. at ¶¶ 20 & 23.
Ms. Heil reported for work the next day, April 26, 2008, and worked a
full shift. Id. at ¶ 24. She did not want to go to work, but needed money for
her daughter’s birthday. (Docket 117 at ¶ 46.) On April 28, 2008, Ms. Heil
reported the assault to the police. (Dockets 111 at ¶ 25 & 117 at ¶ 47).
A few days after Ms. Heil’s assault, Mr. Cease was in the office while
Mr. Orelup was on the phone with Tom Sr. (Docket 117 at ¶ 23). Mr.
Orelup told Mr. Cease that Tom Sr. had instructed Mr. Orelup to “get rid of
anything that I have done.” Id. About a week after the assault, Ms. Heil
reported the assault to Tom Jr. Id. at ¶ 47. Ms. Heil signed a worker’s

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compensation First Report of Injury on April 20, 2009, claiming she suffered
a work-related injury on April 25, 2008. (Docket 111 at ¶ 31).
She alleges Mr. Orelup was acting within the scope of his employment
at the time of the assault and SITC was her employer at the time of the
assault. Id. at ¶ 33. Ms. Heil alleges she suffered severe emotional distress
as a result of the assault by Mr. Orelup. Id. at ¶ 26. Ms. Heil alleges she
was depressed, taking medication, experiencing nightmares, and was
“messed [] up pretty good.” Id. at ¶ 27. She alleges her condition was
caused by Mr. Orelup’s physical assault. Id. at ¶ 28. She alleges Mr.
Orelup’s conduct was extreme and outrageous, which “intentionally and/or
recklessly” caused her severe emotional distress. Id. at ¶ 30. These
physical and emotional claims are alleged generally in the amended
complaint.8 (Docket 121 at pp. 11-13).
DISCUSSION
SITC filed its motion for partial summary judgment arguing Ms. Heil’s
assault and battery and IIED “claims are barred by the exclusive remedy
provision of the South Dakota worker’s compensation law.” (Docket 112 at
p. 4). South Dakota’s exclusive remedy provision of its worker’s
compensation law is found at SDCL § 62-3-2. That statute provides:
The rights and remedies granted to an employee subject to this
title, on account of personal injury . . . arising out of and in the
course of employment, shall exclude all other rights and remedies
of the employee . . . on account of such injury . . . against the

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Although not a fact material to the motion for summary judgment, Ms. Heil
did not sue Mr. Orelup. (Docket 111 at ¶ 32).
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employer or any employee, partner, officer, or director of the
employer, except rights and remedies arising from intentional tort.
Id. The ultimate question in resolving the summary judgment motion is
whether this exclusive remedy provision is applicable to this case because of
the exception found at the end of the statute–“except rights and remedies
arising from intentional tort.” Id.
By their nature, claims of assault and battery and IIED are
intentional torts as they require intentional conduct, as opposed to mere
negligence. “The claim of civil assault and battery can be proved if the
defendant: (a) intended to cause a harmful or offensive contact with the
person of the other or a third person, or an imminent apprehension of such
a contact; and, (b) an offensive contact with the person of the other directly
or indirectly results.” Stratmeyer v. Engberg, 649 N.W.2d 921, 925-26 (S.D.
2002) (internal bracketing and citations omitted). “[T]he victim need not
show a specific intent or design to cause the contact or to cause any
singular and intended harm. What is forbidden is the intent to bring about
the result which invades another’s interests in a manner that the law
forbids.” Id. at 926 (internal citation omitted). “The claim of intentional
infliction of emotional distress requires the following elements: (1) extreme
and outrageous conduct by the defendant; (2) that the defendant intended
to cause severe emotional distress; (3) there must be a causal connection
between the wrongful conduct and the emotional distress; and (4) severe
13

emotional distress must result.” Id. (internal quotation marks and citations
omitted).
The South Dakota Supreme Court concluded “it is not enough simply
to use the right terminology [to] invok[e] the intentional tort exception.”
Jensen v. Sport Bowl, Inc., 469 N.W.2d 370, 372 (S.D. 1991). Plaintiff
“must also allege facts that plausibly demonstrate an actual intent by the
employer to injure or a substantial certainty that injury will be the
inevitable outcome of employer’s conduct.” Id. (emphasis in original). It is
not enough that an “employer[] act[s] or fail[s] to act with a conscious
realization that injury is a probable result . . . . To establish intentional
conduct [to come within the exception to the exclusivity provision] more than
the knowledge and appreciation of risk is necessary; the known danger must
become a substantial certainty.” Id. (citing VerBouwens v. Hamm Wood
Products, 334 N.W.2d 874, 876 (S.D. 1983), overruled on other grounds,
Holscher v. Valley Queen Cheese Factory, 713 N.W.2d 555 (S.D. 2006)
(emphasis in original, brackets and ellipsis omitted). “Even when employers
act or fail to act with a conscious realization that injury is a probable result,
worker’s compensation is still the exclusive remedy for workers thereby
injured.” Harn v. Continental Lumber Co., 506 N.W.2d 91, 95 (S.D. 1993)
(citing Jensen, 469 N.W.2d at 372 and VerBouwens, 334 N.W.2d at 876)
(emphasis in original, internal quotation marks and ellipsis omitted). To

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come within the worker’s compensation intentional tort exception,
“[i]ntentional tortious conduct is when an ordinary, reasonable, prudent
person would believe an injury was substantially certain to result from his
conduct. To establish intentional conduct, more than the knowledge and
appreciation of risk is necessary; the known danger must cease to become
only a foreseeable risk which an ordinary, reasonable, prudent person
would avoid (ordinary negligence) and become a substantial certainty.” Id.
at 97.
When a corporate manager is the supervisor charged with a physical
assault against another employee, the South Dakota Supreme Court applies
a very narrow construction of the intentional tort exception to the worker’s
compensation exclusivity. “[T]o find [the corporation] vicariously liable for
the acts of its supervisor in the absence of notice, [supervisor] Goble must
have been ‘so dominant in the corporation that he could be deemed the alter
ego of the corporation under the ordinary standards governing disregard of
corporate entity.’ ” Benson v. Goble, 593 N.W.2d 402, 406 (S.D. 1999)
(citing 6 Larson, Workers’ Compensation Law § 68.22 at 13-130 (1998)). “In
the present case, Benson has failed to allege facts sufficient to establish
Goble as an alter ego personality of the corporation. Goble was merely a
supervisor. He simply was not so dominant in the corporation to be deemed
its alter ego.” Id.

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In Benson, the corporation knew “Goble had two previous sexual
harassment complaints filed against him in addition to Benson’s [physical]
assault complaint. [The corporation] also knew Goble had a
‘policemen-type’ method of supervising employees.” Id. at 407.
Notwithstanding this corporate knowledge, the court concluded “[b]ased on
this record, Benson has failed to show that [the corporation] knew or
believed that harm was substantially certain to be the consequence of
retaining Goble as a supervisor.” Id. “In the present case, viewing the
evidence and the pleadings in a light most favorable to Benson’s case, the
facts are insufficient to demonstrate with a substantial certainty that injury
would be the inevitable outcome.” Id.
The most recent South Dakota Supreme Court case to expand the
exclusivity of the worker’s compensation provision is Fryer v. Kranz, 616
N.W.2d 102 (S.D. 2000). Fryer was not a physical assault case, but rather
involved use of a dangerous product. “To show Fryer how to clean the tile,
Kranz poured the undiluted muriatic acid on the floor, saying ‘This is how
we use it.’ Kranz said he had used the product several times. He did not
warn Fryer about any dangers, although he did say the acid is ‘corrosive
and smells really bad,’ and ‘try not to breathe it.’ ” Id. at 104. When Fryer
used the muriatic acid in a non-ventilated room, she became ill and was
hospitalized for four days. Id. In her lawsuit, Ms. Fryer alleged her

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employer “intentionally caused the plaintiff to be exposed to the dangerous
situation knowing that it was probable that serious injury would result.” Id.
The Supreme Court affirmed the trial court’s grant of summary
judgment under the exclusivity of worker’s compensation but in performing
the substantial certainty analysis interjected “virtual certainty” into the
process. “To overcome Kranz’s motion for summary judgment, Fryer needed
to show that Kranz knew with virtual certainty that such exposure would
cause illness, yet still required her to work. . . . This she failed to do.” Id. at
108 (citing Harn, 596 N.W.2d at 100) (emphasis in original).
In Fryer, two Supreme Court Justices disapproved of the use of the
phrase “virtual certainty.” “ ‘Virtual certainty’ should not be used to
increase the ‘substantial certainty’ test. The majority opinion confusingly
leaves the bench and bar to wrestle with any possible implications and
reaches the wrong decision by use of such test.” Id. at 109 (Sabers, J.,
dissenting). “The term ‘virtual certainty,’ used repeatedly in the majority
writing, somehow crept into our precedent, but its lineage is obscure. . . . In
human behavior few things are ‘virtually certain’ to follow any particular
deed. The intentional tort exception should be narrowly construed, of
course, but not to the extent of requiring proof that employers must foresee
with ‘virtual certainty’ the results of their deliberate acts. . . . Substantial

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certainty is the appropriate standard.” Id. at 111 (Konenkamp, J.,
dissenting) (internal citation omitted).
In a subsequent case involving SDCL § 62-3-2, South Dakota
Supreme Court Justice Zinter stated, “[a]s Justice Konenkamp points out,
our cases have utilized a ‘substantial certainty’ standard and a ‘virtual
certainty’ standard. . . . Even if it were time to reconcile that conflict, I
would wait for a more appropriate case to do so. In this case, not only did
the Court apply the ‘substantial certainty’ standard, but McMillin has not
argued that Harn and Kranz should be reversed. Therefore, I would not
re-examine those cases until this conflict has been fully briefed and
argued.” McMillin v. Mueller, 695 N.W.2d 217, 225 (S.D. 2005).
SITC argues when plaintiff’s view of the facts in this case are
evaluated under the “substantial certainty” standard, Ms. Heil cannot
prevail on either her assault and battery or IIED claim. “Construing all
facts in a light most favorable to Heil, one could presume an employer knew
about the alleged sexual harassment of another employee (Reib), but there
is no evidence that the Belle Starr, [Tom]Jr., or even SITC was substantially
certain that Heil would be harmed.” (Docket 112 at p. 8).
This case is distinctly different from the factual settings in Benson
and Pickett v. Colonel of Spearfish, 209 F. Supp. 2d 999 (D.S.D. 2001). In
Benson, the employer sought to control the supervisor’s abusive conduct.

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“Benson reported [the] incident to the personnel manager and to Goble’s
supervisor. . . . Goble was suspended without pay for two weeks and
required to attend anger-management counseling.” Benson, 593 N.W.2d at
404. Following his suspension and upon returning to work, Goble
assaulted Benson again. Id. “Based on this record, Benson has failed to
show that [the corporation] knew or believed that harm was substantially
certain to be the consequence of retaining Goble as a supervisor.” Id. at
407.
In Pickett, the offending employee, Mr. Jones, was previously accused
of sexual harassment of two female employees. Pickett, 209 F. Supp. 2d at
1002. The owner “investigated the incidents and caused a reprimand to be
given to Jones.” Id. Later, Ms. Pickett alleged Mr. Jones sexually harassed
and eventually raped her. Id. The court concluded “there is no evidence
that either owner knew or could have known of the alleged incidents. . . .
Pickett did not follow the proper procedure to place either owner of the
Colonel on notice of any harassment . . . .” Id. at 1005. “South Dakota
state law bars these claims and this Court must abide by the state law in
which it sits. While [one of the owners] knew of the prior alleged sexual
harassment Jones had committed upon [the two other employees], neither
partner could be substantially certain that harm would come to Pickett. . . .

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The controlling law in this state is set forth in Benson and this Court finds
this action to be nearly perfectly analogous to that action, therefore, this
Court reaches the identical result.” Id.
Without restating all the facts set out above, the court finds a genuine
issue of material fact exists which precludes partial summary judgment.
Anderson, 477 U.S. at 248. Not only did SITC know of the prior sexual
harassment of Ms. Reib but, through Mr. Blood, SITC was aware of Mr.
Orelup’s sexual harassment and physical abuse of numerous other female
employees. Also, by video surveillance of the Belle Starr, Sherwoods were
privy to the daily activities of Mr. Orelup. Sherwoods were also personally
present at the Belle Starr when Mr. Orelup groped and grabbed female
employees. Yet, Sherwoods did nothing to prevent his conduct. SITC was
not in the dark about Mr. Orelup’s ongoing improper conduct.
This case also is different from Benson and Pickett in that Sherwoods
were personally engaged in conduct which a jury could view as sexual
harassment or sexual abuse. A jury could reasonably conclude Sherwoods
endorsed, condoned, and encouraged the physical and sexual abuse of their
employees by Mr. Orelup. At no time did SITC take any affirmative action to
control Mr. Orelup’s conduct. A jury reasonably could conclude Tom Sr.,
Tom Jr., and SITC knew Mr. Orelup’s physical and sexual abuse of the

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female employees went beyond being a probable risk and had “become a
substantial certainty.” Harn, 506 N.W.2d at 95.
Viewing the evidence in the light most favorable to Ms. Heil for
summary judgment purposes, a jury could find the course and pattern of
conduct at the Belle Starr was substantially certain to cause an assault or
IIED of female employees, including Ms. Heil. It is ultimately a question of
fact for the jury to determine whether the evidence satisfies the substantial
certainty standard. Only then can the court determine if Ms. Heil’s
intentional tort claims are excepted from the exclusivity provision of SDCL
§ 62-3-2.
ORDER
Based on the above discussion, it is hereby
ORDERED that defendant’s motion for partial summary judgment
(Docket 109) is denied.
Dated March 11, 2013.
BY THE COURT:
/s/ Jeffrey L. Viken
JEFFREY L. VIKEN
CHIEF JUDGE

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