The South Dakota Supreme Court has ruled in favor of a businesswoman who challenged the Department of Labor’s decision rescinding pandemic relief funds.
The court's ruling Thursday overruled a circuit court decision supporting the department's move to order business owner Darcy Bracken to pay back funds previously approved by the state.
Bracken owns the White Tail Ridge Bed and Breakfast in Hermosa. She applied for unemployment assistance in 2020 when bookings dried following the initial outbreak of COVID-19.
The Department of Labor approved her application and gave her more than $14,000 from CARES Act funding. Roughly a year later, the department reversed that decision and ordered Bracken to return the funds.
In oral arguments earlier this year, Department of Labor attorney Seth Lopour said the decision was justified because Bracken did not prove her business was "directly" impacted by the pandemic. He also argued the bed and breakfast never closed.
Bracken's attorney, Eric Schulte, argued the state ignored federal guidelines administering CARES Act funding, which specifically state a business need not close to receive funds. He also said it's clear Bracken's business was harmed by COVID-19.
The South Dakota Supreme Court ruled in Bracken's favor. There were no dissenting opinions.
The opinion pointed to the Department of Labor's own decision to initially approve Bracken's unemployment request. It noticed the department "specifically found" that Bracken’s bed and breakfast had guests before the COVID-19 pandemic began but had no guests as of May 2020.
"It is difficult to conceive how this would not constitute a 'significant diminution' of the business’s 'customary or usual services,'" the opinion stated.
The Department of Labor has not responded to a request for comment.
