August 2, 1990

Mr. Howell W. Todd
Executive Director
South Dakota Board of Regents
207 E. Capitol
Pierre, SD 57501

OFFICIAL OPINION NO. 90-31

Open meeting law and legal strategy

Dear Mr. Todd:

You have requested my opinion on the application of South Dakota's open meeting law to actions of the Board of Regents regarding ongoing litigation situations. You present the following facts:

FACTS:

The Board of Regents occasionally discusses the parameters for settlement of proposed or pending litigation which may require the Board to give directions to its legal representatives about the basis on which it would be willing to settle the disputes. If the matter involves representation by the PEPL Fund, the control of the controversy passes to the PEPL board.

The statute [SDCL 1-25-2] clearly indicates that any official action resulting from consultations taking place in executive session must be taken in an open official meeting. I take it for granted that an official action would be required to bind the Board to any settlement.

Based upon those facts, you have asked the following questions:

QUESTIONS:

1. Is action required in open meeting which identifies the details of the settlement?

If the answer [to Question 1] is 'no,' would there still be certain elements in settlement documents that should be identified? For example, if the dispute involved a personnel action, and if it were deemed permissible not to publish the factual basis for the stipulation, would it still be necessary to disclose any sums paid in settlement of the claim and to identify the party receiving the same?

If the answer [to Question 1] is 'yes,' that would seem to preclude the delegation of authority to settle a dispute on stipulated terms. If the scope of the authority could only be defined through action in open session detailing permissible settlement grounds, the negotiating posture would be disclosed beforehand, thereby destroying the tactical advantage that the statute generally seems to protect. To avoid that result, it would seem necessary to grant only limited authority to negotiate for a settlement to be recommended for subsequent approval.

If the answer [to Question 1] is generally 'yes,' would there still be an exception for confidential or secret matters within the context of SDCL 1-27-3?

2. Does the open meeting law require official action in an open meeting to reject a proposed settlement?

If the answer [to Question 2] is 'yes,' must the details of the settlement offer be disclosed in an open official meeting?

3. Rule 1.4 of the Rules of Professional Conduct for attorneys recognizes that under certain circumstances, an attorney may act for a client without prior consultation where practical exigency demands it, e.g. a settlement offer made on the eve of a trial which demands a response within a time frame that does not permit a meeting of the public board to consider the offer. It is also permissible for an attorney to reject a settlement offer without consultation if prior discussions with the client have made it clear that the proposal would be unacceptable.

If your answers to Question 1 and Question 2 are 'yes,' please comment on an attorney's responsibility under Rule 1.4. It would appear that an attorney representing a public entity subject to 1-25-2 would not be able to act without prior approval since the attorney's action would determine the public entity's action independent of official action. Is that your understanding?

As you note, discussion of this matter turns upon SDCL 1-25-2. The statute provides:

Executive or closed meetings may be held for the sole purposes of:

(1) Discussing the qualifications, competence, performance, character or fitness of any public officer or employee or prospective public officer or employee. The term 'employee' does not include any independent contractor;
(2) Discussing the expulsion, suspension, discipline, assignment of or the educational program of a student;
(3) Consulting with legal counsel or reviewing communications from legal counsel about proposed or pending litigation or contractual matters;
(4) Preparing for contract negotiations or negotiating with employees or employee representatives;
(5) Discussing marketing or pricing strategies by a board or commission of a business owned by the state or any of its political subdivisions, when public discussion may be harmful to the competitive position of the business.

However, any official action concerning such matters shall be made at an open official meeting. An executive or closed meeting shall be held only upon a majority vote of the members of such body present and voting, and discussion during the closed meeting is restricted to the purposes specified in the closure motion. Nothing in 1-25-1 or this section may be construed to prevent an executive or closed meeting if the federal or state Constitution or the federal or state statutes require or permit it. A violation of this section is a Class 2 misdemeanor.

Review of the statute reveals that subsection (3) specifically allows a closed meeting to be held for the purpose of consulting with legal counsel. Nevertheless, the first sentence of the final paragraph of the statute makes it clear that official actions concerning matters addressed in executive session must be taken "at an open official meeting."

IN RE QUESTION NO. 1:

You ask whether the official action taken in the open meeting would have to identify the details of a settlement. While it is true that the public has a right to have its business conducted in public, it does not necessarily follow that the public is entitled to know the details of a particular settlement or determination in a lawsuit where disclosure may work to the public's detriment. SDCL 1-25-2 was substantially rewritten in 1987. One of the results of this "rewriting" was to insert subdivisions (1) through (5) into the statute. Prior to that amendment, the statute simply indicated that closed meetings could be held for the purpose of considering student, employee and personnel matters. Even under the prior statute, which did not mention consultation with legal counsel at all, my predecessor held in Official Opinion 79-48 that the attorney client privilege found in SDCL ch. 19-13, standing alone, provided an adequate basis for allowing a meeting of a public board to be closed. In my opinion, the legislative recognition of the existence of an attorney client privilege between public entity boards and their attorneys implies that the extent of this privilege should be drawn from both SDCL chs. 19-13 and 1-25.

SDCL 19-13-2(1) defines "client" as a "person, public officer, or corporation, association, or other organization or entity, either public or private . . .." Clearly, the Board of Regents, like any other governing board, can be a "client." SDCL 19-13-2(5), in turn, defines a confidential communication.

(5) A communication is 'confidential' if not intended to be disclosed to third persons other than those to whom disclosure is made in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication.

SDCL 19-13-3 provides:

A client has a privilege to refuse to disclose and to prevent any other person from disclosing confidential communications made for the purpose of facilitating the rendition of professional legal services to the client

(1) between himself or his representative and his lawyer or his lawyer's representative,
(2) between his lawyer and the lawyer's representative,
(3) by him or his representative or his lawyer or a representative of the lawyer to a lawyer or a representative of a lawyer representing another party in a pending action and concerning a matter of common interest therein,
(4) between representatives of the client or between the client and a representative of the client, or
(5) among lawyers and their representatives representing the same client.

A reading of the plain words of the statute reveals that the "client," here the Board of Regents, has a privilege to refuse to disclose and to prevent disclosure of confidential communications made for the purpose of facilitating the rendition of professional legal services.

Our task is to construe SDCL chs. 1-25 and 19-13. In general, the statutes are to be read in harmony with one another in order to give effect to all parts of the law. In addition, words within a statute are to be given their plain and ordinary meaning unless some other intention is obviously apparent. See Meyerink v. Northwest Public Service, 391 N.W.2d 180 (S.D. 1987); In re AT&T, 405 N.W.2d 24 (S.D. 1987).

Your question calls into play the open meeting law and the law of confidential communication, commonly known as lawyer client privilege. I believe that both can be given effect by restricting the information contained in board resolutions or motions made in open session to general terms and by reference to privileged communication in the resolution. For example, if the board and attorney discuss possible settlement options in executive session and establish upper or lower limits of settlement, it is my opinion that the board could adopt a resolution or motion stating that the board's attorney is authorized to settle, or not settle, a particular suit "according to the terms discussed with the board." The reference to the controversy need not disclose the identities of the parties unless, through court filing, the litigation is already a matter of public record. Where a matter is not yet in the public record, the reference should indicate whether generally the matter relates to employment, student affairs, regulatory relations, contractual matters or some other relevant category. For the protection of all concerned, the attorney will ordinarily follow up the conversation with a written, confidential communication setting out the details of the discussion.

The effect of a motion or resolution of this sort would be to authorize the attorney to settle a case but not "tip his or her hand." The elliptical or veiled reference to the precise terms gives effect to the confidential communication statute, which specifically gives the board the privilege to refuse to disclose confidential communications, while honoring the open meeting law to the extent that the public is generally aware that a matter justifying privileged communications with legal counsel has arisen.

The example presented in your Question 1(a) relates to a personnel action in which it was agreed not to disclose the factual basis for the stipulation of settlement. If the agreement stipulates nondisclosure of the factual basis, it would be sufficient for the board to adopt, at an open meeting, a motion or resolution to the effect that the board approves the settlement of "personnel lawsuit No. XX-X pursuant to the terms of settlement on file with the court." If the court order provides that those records are sealed, then there would be no access to the factual basis. At the same time, the board would have given notice that the settlement had taken place.

In view of the foregoing discussion, Question 1(c) does not need to be addressed, since the board can maintain confidentiality for matters that even go beyond the public records exceptions found in SDCL 1-27-3.

IN RE QUESTION NO. 2:

The rejection of a proposed settlement could be treated in the same manner as discussed above. Once again, the details of an offer need not be disclosed in an open official meeting. (Of course, if the opposing party makes the offer public, it is not confidential in any case.) Finally, on many occasions it may not be necessary for there to be any action taken by the board. For example, if the board has hired an attorney to handle a case, has given the attorney a clear understanding of what the board wishes to accomplish, and if the attorney presents a proposed settlement offer and informs the board that on its behalf he or she intends to reject the proposal unless some contrary direction is given by the board, there would be no cause for a motion of any sort. A similar result would occur were the attorney to inform the board that he or she intended to file an appeal of an unfavorable outcome.

IN RE QUESTION NO. 3:

Based upon the foregoing discussion, it does not appear that an ethical question involving Rule 1.4 of the Rules of Professional Conduct for attorneys would be implicated. I am of the opinion that the board is as free as any other client to give specific direction to its attorney in executive session and then make only general references to it in the resolution or motion taken in public.

Respectfully submitted,

ROGER A. TELLINGHUISEN
ATTORNEY GENERAL

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