IM 21 Withstands Latest Payday Lender Challenge, Remains on Ballot

Last updated on 2016-08-19

Miss South Dakota 1997 beat Miss South Dakota 1998 yesterday. After two days of courtroom combat between Secretary of State Shantel Krebs and her beauty queen successor, Rapid City attorney Sara Frankenstein, Judge Mark Barnett rejected the payday lenders’ lawsuit to throw Initiated Measure 21, the real 36% rate cap on payday loans, off the ballot.

Frankenstein represented the Give Us Credit ballot question committee, fronted by former Dan Lederman bailbondsman Bradley Thurginer and funded so far almost entirely by Georgia-based payday lending exec Rod Aycox, in the latest of a steady stream of nefarious efforts to stop South Dakotans from regulating their exploitative industry. Frankenstein brought to the stand Lederman bailbondsman turned GUC private dick Michael Napier and former Secretary of State’s office staffer turned GUC temp Aaron Lorenzen to recite the payday lenders’ recycled claim that several IM 21 petition circulators provided false addresses, thus invalidating all signatures they collected and leaving the petition with fewer than the 13,871 signatures necessary to qualify for the ballot. GUC offered additional arguments, filing 26,000 challenges to the original 19,232 signatures.

Stephen Lee of the Pierre Capital Journal summarizes Barnett’s bench ruling, which came just after 5 p.m. yesterday:

• Judge Barnett cited SDCL 2-1-11, which requires that petitions be “liberally construed, so that the real intention of the petitioners may not be defeated by a mere technicality.”
• Judge Barnett said, “The vast majority of the challenges have no merit.”
• Judge Barnett rejected arguments about technically incomplete voter information: “To me ‘Rapid,’ is Rapid City…. ‘Mnhh’ is Minnehaha. I’m ruling that St. and Ave. are not required.”
• Judge Barnett rejected lots of challenges based on alleged illegibility: “I saw hundreds of examples of what you claimed were illegible (signatures and addresses) when, without my glasses, I could look across the room and clearly make them out, a signatures, a date, or whatever.”

Initiated Measure 21 now goes to the ballot. Payday lenders are thus likely now to focus on the court of public opinion with what is sure to be a huge, expensive, and noisy campaign of deceptive ads.

Lee reports that Judge Barnett made an interesting recommendation to the Secretary of State and the Legislature on dealing with petition challenges:

“For future reference, the secretary of state … may want to consider figuring out whether legislators want to give them the express authority to give a random sample (to validate petition signatures.) We have 10 (measures) on the ballot this year. If all 10 had 20,000 signatures, and eight objections were raised for each (signatures) . . . that is 1.6 million objections.”

The secretary of state’s office would be obligated to check out those objections, he said, all within the short time leading up to an election.

“If you can’t random sample that, the whole system shuts down” [Stephen Lee, “Judge Rejects ‘Give Us Credit’ Court Challenge of Measure 21,” Pierre Capital Journal, 2016.08.12].

I understand Judge Barnett’s concern, although I would note that only two petition challenges went to the court this year, and only the well-funded corporate challenge from the payday lenders had the resources to throw that much spaghetti at the wall. The Secretary of State already gets to certify statewide initiative and referendum petitions using a random sample rather than rigorously reviewing every signature. The law does not allow challengers to base their challenge on extrapolation from their own random sample: they have to flag enough signatures to sink the petition. At that point, the Secretary of State and the court should be obliged to respond to the full evidence presented by the challengers.

Of course, we could relieve Judge Barnett’s fears of a system swamped by multiple challenges by adopting an electronic petitioning system that would automatically validate every signature as it is collected.