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State of South Dakota v. William C. Klager

March 30, 2011

STATE OF SOUTH DAKOTA,
PLAINTIFF AND APPELLEE,
v.
WILLIAM C. KLAGER, JR.,
DEFENDANT AND APPELLANT.



APPEAL FROM THE CIRCUIT COURT OF THE FIFTH JUDICIAL CIRCUIT BROWN COUNTY, SOUTH DAKOTA HONORABLE JACK R. VON WALD Judge

The opinion of the court was delivered by: Zinter, Justice (on reassignment).

ARGUED NOVEMBER 16, 2010

REASSIGNED FEBRUARY 1, 2011

[¶1.] For more than eighty-five years, South Dakota has regulated the business of taxidermy. The regulatory scheme has consistently required licensure, recordkeeping, and the production of statutorily enumerated records during normal business hours. A licensed taxidermist was convicted of refusing to produce the required records, a violation of SDCL 41-6-33.*fn1 He challenged his conviction alleging that the production requirement*fn2 violated his Fourth Amendment right to be free from unreasonable searches. Both the magistrate court and the circuit court concluded that under the holding in New York v. Burger , 482 U.S. 691, 107 S. Ct. 2636, 96 L. Ed. 2d 601 (1987), there was no Fourth Amendment violation. We affirm.

Facts and Procedural History

[¶2.] William Klager Jr. operated a taxidermy business in Stratford, South Dakota, called "The Taxidermy Man." He obtained the license necessary to conduct that business from the South Dakota Game, Fish and Parks Commission in accordance with SDCL 41-6-33. On March 4, 2009, during normal business hours, a Game Fish and Parks Wildlife Conservation Officer stopped at Klager's business to inspect the records required to be kept and produced as a condition of Klager's licensure. A sign on the door of Klager's home indicated he was in his workshop at the end of the driveway. The conservation officer drove to the workshop and walked into the business premises. The officer introduced himself to Klager and requested to see Klager's taxidermy records. Klager refused.

[¶3.] Klager was charged with refusing to produce the statutorily required business records, a violation of SDCL 41-6-33. Klager moved to dismiss on the ground that production of the records violated his Fourth Amendment rights.*fn3 The magistrate court denied the motion and found Klager guilty of the class 2 misdemeanor. Klager received a thirty-day suspended jail sentence and a $151 fine. On appeal, the circuit court affirmed. Like the magistrate court, the circuit court concluded that the statutorily required production was constitutional. [¶4.] On appeal to this Court, Klager contends that under Burger, taxidermists are not engaged in closely regulated businesses, and SDCL 41-6-33 does not contain equivalent guarantees of a warrant to satisfy the Fourth Amendment's exception for warrantless regulatory inspections. We review such challenges under the Fourth Amendment de novo. State v. Bowker , 2008 S.D. 61, ¶ 17, 754 N.W.2d 56, 62.

Decision

[¶5.] Since 1925, SDCL 41-6-33 and its predecessors*fn4 have regulated the business of taxidermy. These laws have consistently required taxidermists to be licensed, to keep specifically enumerated records of their customers and their specimens, and to make those records available for inspection during normal business hours. Id. The Department of Game, Fish and Parks (the Department) has also enacted administrative rules further regulating taxidermy businesses. See infra ¶¶ 16-17. The Department provides each licensee with a summary of the statutory and administrative regulations each year when taxidermists are licensed.

The summary also includes a number of the federal laws that further regulate taxidermy businesses, including the additional requirement of federal licensure by the United States Fish and Wildlife Service.

[¶6.] The record reflects that Department wildlife conservation officers are provided "a general knowledge base" on how to conduct the inspections authorized under this regulatory scheme. This includes the "items" and "areas" of inspection. Although officers do not have a set schedule for conducting inspections, the Department's program administrator testified that there are approximately 200 licensed taxidermists in South Dakota, and the Department "average[s] around 100 inspections a year of taxidermists." When asked whether there were taxidermists that would not have been inspected for years, the program administrator testified: "On a given year I would say that is, is true. When you take it out over a number of years, I can't say that that would be a true statement."

[¶7.] Unannounced inspections are conducted at the licensee's place of business during normal business hours. The inspections are unannounced because poachers are known to take illegally harvested wildlife to taxidermists for mounting, and the specimens can easily be destroyed or secreted. The inspections are intended to: protect wildlife, including wildlife under federal protection; ensure that taxidermists are in possession of only those specimens they are legally authorized to possess; ensure that specimens in the taxidermist's possession have been legally harvested; and prevent "overbagging" and illegal possession of game by taxidermists' customers.

[¶8.] In this case, there is no dispute that at the time the conservation officer requested to see Klager's records, Klager was licensed and engaged full-time in the taxidermy business. Further, Klager does not contend that the officer's physical entry into his business premises during normal business hours violated his Fourth Amendment right to privacy. Finally, the officer conducted no search or inspection of Klager's premises to look for the records. He simply requested that Klager produce the records that SDCL 41-6-33 requires taxidermists to keep and produce. Klager refused.

[¶9.] Klager refused even though he had given his written consent to produce the records without a warrant. In his license application immediately preceding this incident, Klager waived his Fourth Amendment rights and consented to make the records available for inspection by Department representatives any time during normal business hours.*fn5 Klager's written consent stated:

I will keep a record of all specimens received for mounting and preserving. These records and specimens shall be made available for inspection by any authorized representative of the South Dakota Department of Game Fish and Parks during normal business hours.

[¶10.] Klager had also received the printout of the South Dakota laws requiring the keeping and producing of records, and he conceded that he was very familiar with the laws and rules governing taxidermists. Klager even disclosed that: he was "quite extensively" involved in the development of the taxidermy regulation statute; he helped write the statutory amendments and regulations in 2003; he was aware that a taxidermist's records were required to be made available for inspection by any representative of the Department during normal business hours; and he had testified on behalf of the South Dakota Taxidermist's Association (as their vice-president) encouraging frequent inspections. [¶11.] "An individual must have a reasonable expectation of privacy in the place searched or the article seized before the Fourth Amendment will apply." State v. Thunder , 2010 S.D. 3, ¶ 16, 777 N.W.2d 373, 378. An expectation of privacy "is determined by a two-prong test: (1) whether the defendant has exhibited an actual subjective expectation of privacy and (2) whether society is willing to honor this expectation as being reasonable." State v. Lowther , 434 N.W.2d 747, 754 (S.D. 1989) (citing Katz v. United States, 389 U.S. 347, 361, 88 S. Ct. 507, 516, 19 L. Ed. 2d 576 (Harlan, J., concurring)). Considering Klager's licensure, his knowledge of the records production requirement, his public advocacy for frequent inspections, and his express written consent to this inspection, he had no actual subjective expectation of privacy in the records. Because Klager cannot satisfy the subjective expectation of privacy prong, his conviction must be affirmed on this ground alone. The parties, however, briefed the second prong, and we have elected to also address the question whether the records inspection authorized by SDCL 41-6-33 is objectively reasonable.

[¶12.] The Supreme Court has long held that a warrant is required for a search to be considered reasonable under the Fourth Amendment. See, e.g., See v. City of Seattle, 387 U.S. 541, 543, 87 S. Ct. 1737, 1739, 18 L. Ed. 2d 943 (1967). However, in the business context the Court has relaxed the warrant clause of the Fourth Amendment to account for the exigencies of administrative inspections "designed to enforce regulatory statutes." Burger , 482 U.S. at 700, 107 S. Ct. at 2642. This is because "[a]n expectation of privacy in commercial premises . . . is different from, and indeed less than, a similar expectation in an individual's home." Id.

The Court has gone so far as to hold that "[c]ertain industries have such a history of government oversight that no reasonable expectation of privacy . . . could exist for a proprietor over the stock of such an enterprise." Id.

(quoting Marshall v. Barlow's, Inc., 436 U.S. 307, 313, 98 S. Ct. 1816, 1821, 56 L. Ed. 2d 305 (1978) (internal citation omitted)). "'When a dealer chooses to engage in [a] pervasively regulated business and to accept a . . . license, he does so with the knowledge that his business records . . . will be subject to effective inspection.'" Id. at 701, 107 S. Ct. at 2643 (quoting Biswell, 406 U.S. at 316, 92 S. Ct. at 1596). So significant is the necessity for effective inspection that in such "pervasively regulated" industries, the Court has dispensed with the need for a warrant at all. Biswell, 406 U.S. at 316-17, 92 S. Ct. at 1596-97 (permitting warrantless inspections in the gun selling industry). See also Burger, 482 U.S. at 703-704, 107 S. Ct. at 2644-45 (same in the vehicle-dismantling and automobile junkyard industry); Donovan v. Dewey, 452 U.S. 594, 602-05, 101 S. Ct. 2534, 2539-41, 69 L. Ed. 2d 262 (1981) (same in coal mines); Colonnade Catering Corp. v. United States, 397 U.S. 72, 76-77, 90 S. Ct. 774, 777, 25 L. Ed. 2d 60 (1970) (same in the liquor industry). The Court explained: "The greater latitude to conduct warrantless inspections of commercial property reflects the fact that the expectation of privacy that the owner of commercial property enjoys in such property differs significantly from the sanctity accorded an individual's home, and that his privacy interest may, in certain circumstances, be adequately protected by regulatory schemes authorizing warrantless inspections." Donovan, 452 U.S. at 598-99, 101 S. Ct. at 2538.*fn6 [¶13.] To find a warrantless administrative inspection reasonable under the Supreme Court's regulated business framework, the business must be closely regulated and the statute must satisfy three criteria. Burger , 482 U.S. at 702, 107 S. Ct. at 2644. Closely regulated industry status is an important threshold test because, as previously noted, "[c]ertain industries have such a history of government oversight that no reasonable expectation of privacy could exist for a proprietor over the stock of such an enterprise." Id. at 700, 107 S. Ct. at 2642. Moreover, "[t]he businessman in a regulated industry in effect consents to the restrictions placed upon him." Marshall , 436 U.S. at 313, 98 S. Ct. at 1821 (quoting Almeida-Sanchez v. United States, 413 U.S. 266, 271, 93 S. Ct. 2535, 2538, 37 L. Ed. 2d 596 (1973)). Finally, closely regulated industry status is an important consideration in cases like this because it often informs the question whether the

statutory language satisfies Burger's third criterion by providing a constitutionally adequate substitute for a warrant. See, e.g., State v. Rechtenbach , 2002 S.D. 96, ¶¶ 12, 17-20, 650 N.W.2d 290, 293-95 (relying on the fact that the defendant was engaged in a "closely regulated industry" to conclude that two much less specific statutes satisfied Burger's third criterion).

[¶14.] A closely regulated business is one in which the regulation "is sufficiently pervasive and defined that the owner of such facility cannot help but be aware that he 'will be subject to effective inspection.'" Donovan, 452 U.S. at 603, 101 S. Ct. at 2540 (quoting Biswell , 406 U.S. at 316, 92 S. Ct. at 1596). The duration of a regulatory scheme is an "important factor" in determining whether an industry is closely regulated. Burger , 482 U.S. at 701, 107 S. Ct. at 2643. If the statutory provisions regulating the business are extensive and have been in effect for a substantial period of time, courts will find that the business is closely regulated. Id. at 704-07, 107 S. Ct. at 2644-46. Burger instructs that a regulatory scheme is deemed "extensive" and the business is "closely regulated" if the regulations require acquisition of a license; maintenance of records that are open to inspection; assessment of civil fines, loss of license or a criminal penalty for regulatory violations; and, there is similarly extensive regulation in other states.

Id.

at 704-05, 107 S. Ct. at 2644-45. South Dakota's taxidermy regulatory provisions meet these requirements. [¶15.] SDCL 41-6-33, in effect for over eighty-five years, makes it a criminal offense to preserve or mount birds, animals, or fish that a person does not own (the business of taxidermy) unless that person has been licensed by the Game, Fish and Parks Commission. Licensure authorizes the possession of such birds, animals and fish at the taxidermist's place of business for the sole purpose of preserving or mounting. Id

. Such specimens or parts thereof may be transported only to a licensee for preserving and mounting and for return to the owner. Id

. And as is particularly relevant here, the statute directs how and when taxidermists will be inspected. The statute informs the licensee that he or she must keep specifically enumerated records of customers' specimens and make those records and specimens available for inspection by Department representatives any time*fn7 during normal business hours.

Each licensee shall keep a written record of all birds, animals, and fish received by the licensee. The record shall include the name and address of each specimen's owner, the number and species, and the dates of receipt and delivery of each specimen. The record and customers' specimens shall be made available for inspection by any representative of the Department of Game, Fish and Parks during normal business hours.

SDCL 41-6-33. A review of reported decisions reflects that this type of regulation of taxidermy is not uncommon in other states. See People v. Taylor , 138 Ill.2d 204, 214-15, 561 N.E.2d 667, 672 (1990). See also infra note 10.

[¶16.] Administrative rules impose further regulatory detail. ARSD 41:09:11:02 sets the license fee at $15. This minimal fee is significant. As the Illinois Supreme Court explained, a minimal fee (in that case $25) "demonstrates that police regulation, rather than revenue raising, was the motive behind the

General Assembly's enactment of the licensing procedure." Taylor , 138 Ill.2d at 215, 561 N.E.2d at 672 (discussing the regulation of taxidermy). [¶17.] The administrative rules also define terms, set forth requirements for tagging and receipt of specimens, set forth requirements for transferring specimens, and provide for civil license revocation for violations of the statute or rules. ARSD §§ 41:09:11:04 to :06. With respect to records, the administrative rules require that the records specified in SDCL 41-6-33 be kept separately for each customer. ARSD 41:09:11:03. That regulation also requires that the records be kept for five years, a timeframe within the Department's horizon for performing taxidermy inspections. See supra ¶ 6.*fn8

[¶18.] Burger makes clear that the relevant inquiry examines the "nature of the regulatory statute," 482 U.S. at 703, 107 S. Ct. at 2644, and the "duration of [this] particular regulatory scheme." Id. at 705, 107 S. Ct. at 2645. South Dakota's regulatory statute contains the same regulatory components as the New York statute that satisfied Burger's requirements for a closely regulated industry.*fn9 Considering South Dakota's eighty-five year history of statutorily required licensure, recordkeeping, and records production, taxidermists must certainly be aware that their specimens and records are subject to governmental oversight and inspection. See Burger , 482 U.S. at 703-04, 107 S. Ct. at 2644; Donovan, 452 U.S. at 603, 101 S. Ct. at 2540. Indeed, the only two reported cases applying Burger to taxidermy statutes*fn10 like SDCL 41-6-33 have stated that taxidermy is a closely

regulated business. See United States v. Johnson, 994 F.2d 740, 742 (10th Cir. 1993) (stating that "[defendant], as the owner of a closely regulated business [a taxidermy shop], was subject to regulatory inspections") (citing Burger, 482 U.S. at 699-701, 107 S. Ct. at 2642-43); Showers v. Spangler , 957 F.Supp. 584, 591 n.5 (M.D. Pa. 1997) (stating "that the closely regulated industry exception does apply to taxidermists as a general matter"), rev'd on other grounds , 182 F.3d 165 (3rd Cir. 1999). In accordance with Burger , we conclude that Klager was operating a closely regulated business.

[¶19.] Because owners of closely regulated businesses have "a reduced expectation of privacy," Burger,

482 U.S. at 707, 107 S. Ct. at 2646, a warrantless inspection is deemed reasonable within the meaning of the Fourth Amendment if three criteria are met. First, there must be a substantial government interest that informs the regulatory scheme pursuant to which the inspection is made. Id.

at

702, 107 S. Ct. at 2644. Second, the warrantless inspection must be necessary to further the regulatory scheme. Id.

Third, "the statute's inspection program, in terms of the certainty and regularity of its application, [must] provid[e] a constitutionally adequate substitute for a warrant." Id. at 703, 107 S. Ct. at 2644.

[¶20.] Burger's

first criterion is satisfied. We have long recognized that wildlife is the property of the State.

At common law, wild game was deemed to be the property of the sovereign or state and not of the private real property owner. State v. Pollock , 42 S.D. 360, 365, 175 N.W.2d 557, 558 (1919). . . . This common law doctrine was reinforced in 1899 by the passage of what is now SDCL 41-1-2, which provides in part, that "any game bird, game animal, or game fish . . . shall always and under all circumstances be and remain the property of the state[.]"

Reis v. Miller , 1996 S.D. 75, ¶ 29, 550 N.W.2d 78, 84 (Gilbertson, J., concurring). Therefore, we have held that "[t]he citizens of this state have an interest in the management of wildlife so that it can be effectively conserved." State v. Halverson , 277 N.W.2d 723, 724 (S.D. 1979). See also SDCL title 41 (containing the statutes that manage, protect and conserve wildlife resources); State v. Morrison , 341 N.W.2d 635, 637 (S.D. 1983); State v. Pollock , 42 S.D. 360, 175 N.W. 557 (1919). [¶21.] With respect to the second criterion, at oral argument, Klager conceded that warrantless inspections are necessary to further taxidermy regulation. He must concede the point as the record reflects that because of illegal harvesting, trafficking, and possession of wildlife, unannounced inspections are crucial to effective enforcement of the regulatory scheme. [¶22.] Klager, however, argues that the third criterion has not been satisfied. Klager contends that SDCL 41-6-33 has insufficient standards limiting the officer's discretion in the frequency and procedures of inspections. This argument fails to recognize that Burger

approved enforcement of an analytically identical New York statute that contained the same standards (or lack of standards) as SDCL 41-6-33. See Burger, 482 U.S. at 694, 711, 107 S. Ct. at 2639, 2648.

[¶23.] To satisfy the third Burger criterion, "the regulatory statute must perform the two basic functions of a warrant": i.e., (1), it "must advise the owner of the commercial premises that the search is being made pursuant to the law and has a properly defined scope"; and (2), it "must limit the discretion of the inspecting officers." Id.

at 703, 107 S. Ct. at 2644. To fulfill the first function, "the statute must be 'sufficiently comprehensive and defined that the owner of commercial property cannot help but be aware that his property will be subject to periodic inspections undertaken for specific purposes.'" Id.

(quoting Donovan , 452 U.S. at 600, 101 S. Ct. at 2539). To fulfill the second function, the statute must be "carefully limited in time, place, and scope." Id.

(quoting Biswell , 406 U.S. at 315, 92 S. Ct. at 1596).

[¶24.] Burger held that both functions of a warrant are satisfied by statutory language containing the standards found in SDCL 41-6-33. The Supreme Court began its analysis by identifying the provisions of the New York vehicle-dismantler statute that were "pertinent" to the Fourth Amendment inquiry. Burger , 482 U.S. at 694 n.1, 107 S. Ct. at 2639 n.1. Like SDCL 41-6-33, the pertinent provisions of the New York statute only required licensure, recordkeeping, and production of enumerated records during normal business hours. The New York statute provided:

Every person required to be registered pursuant to this section shall maintain a record of all motor vehicles, trailers, and major component parts thereof. . . . Such records shall be maintained in a manner and form prescribed by the commissioner. . . . Upon request of an agent of the commissioner or of any police officer and during his regular and usual business hours, a vehicle dismantler shall produce such records and permit said agent or police officer to examine them and any vehicles or parts of vehicles which are subject to the record keeping requirements of this section and which are on the premises.

Burger , 482 U.S. at 694 n.1, 107 S. Ct. at 2639 n.1 (citing N.Y. Veh. & Traf. Law § 415-a5 (McKinney 1986)). Although the New York statute was silent on the frequency and procedure of inspections, Burger concluded that it satisfied both warrant requirements making such statutory language a "constitutionally adequate substitute for a warrant." Id.

at 711, 107 S. Ct. at 2648. [¶25.] With respect to the first warrant requirement, Burger explained that such statutory language "informs [the business owner] that inspections will be made on a regular basis"*fn11 and provides notice "that the inspections to which [the licensee] is subject do not constitute discretionary acts by a government official but are conducted pursuant to statute." Id.

The Court concluded that such language satisfied the first warrant requirement because it "sets forth the scope of the inspection," "places the operator on notice as to how to comply with the statute," and "notifies the operator who is authorized to conduct an inspection." Id . SDCL 41-6-33 satisfies these requirements because it contains the same pertinent provisions: they set forth the scope of the inspection (the inspection of records and specimens during normal business hours), notify the taxidermist how to comply with the statute, and notify the taxidermist who is authorized to conduct the inspection.*fn12 There is no dispute that Klager had such knowledge. He helped the Department write the regulations and the latest version of the statute. [¶26.] With respect to the second warrant requirement, Burger concluded that the New York statute adequately limited the discretion of the inspecting officers. Although there were no frequency of inspection standards, the New York statute adequately limited the discretion of the inspecting officers because:

[T]he "time, place, and scope" of the inspection is limited to place appropriate restraints upon the discretion of the inspecting officers. The officers are allowed to conduct an inspection only "during [the] regular and usual business hours." The inspections can be made only of vehicle-dismantling and related industries. And the permissible scope of these searches is narrowly defined: the inspectors may examine the records, as well as "any vehicles or ...


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