Argus Leader asks court to block designation of The Dakota Scout as legal newspaper

School board also picks The Dakota Scout as paper of record despite lawsuit filed against city of Sioux Falls

Content courtesy of SiouxFallsLive.com.

SIOUX FALLS – The Argus Leader is taking the City of Sioux Falls to court over a decision to end a decades-long business relationship to publish legal notices, which could influence tens of thousands of dollars in local government spending for at least a year.

The City Council voted unanimously on June 5 to move the required posting of the information to The Dakota Scout, a nearly two-year-old news operation that publishes online and through a weekly, freely-distributed newspaper. 

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That vote was the culmination of an effort by the co-founders of The Dakota Scout, both former Argus Leader reporters, to convince the State Legislature to make alterations to the law that made the organization eligible to publish legals. That law went into effect on July 1. 

During the discussion leading up to the June vote, councilors said they were inclined to make the switch because The Dakota Scout is locally owned and the rates were lower than the Argus Leader, which is part of Gannett, a publicly traded company that operates more than 200 daily news outlets.

But on Monday, lawyers representing the Argus Leader filed documents claiming that The Dakota Scout doesn’t qualify as a legal newspaper because it didn’t file the necessary paperwork with the Secretary of State’s Office. State law requires that newspapers file a sworn statement of ownership before Jan. 1, and freely-distributed newspapers submit to a circulation audit to be eligible.

The Dakota Scout did not file the ownership document on time so the court should require the city to place the legals in the Argus Leader until at least July 1, 2025, the newspaper argues. 

Jonathan Ellis and Joe Sneve, who launched The Dakota Scout in 2022, don’t dispute the fact they didn’t file the paperwork before Jan. 1. That’s because the Legislature didn’t change the law until earlier this year.

The documents in question were filed on June 27.

The point of contention then is whether The Dakota Scout must wait until next year to be eligible, thereby making the City Council’s vote invalid.

On July 1, the Secretary of State’s Office forwarded the paperwork to David Bordewyk, executive director of the South Dakota NewsMedia Association, to confirm the status of The Dakota Scout. 

“Yes, this is in compliance with the new legal newspaper law requirements implemented per (the new law). Most newspapers will continue to file their annual statements of ownership late in the year,” Bordewyk wrote in the email obtained by Sioux Falls Live. 

Both news organizations are members of the SDNA, which Bordewyk leads and lobbies on behalf of at the Legislature. He declined to comment further when contacted by Sioux Falls Live.

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Sioux Falls City Attorney Dave Pfeifle declined comment as the city had not been served the paperwork as of mid-day Monday, as did city councilors.

Ellis and Sneve said Monday they believe because the new law didn’t exist on Jan. 1, they wouldn’t qualify and couldn’t file the paperwork. 

“In an era in which conglomerate media companies continue to lay off employees, downsize operations and transfer basic functions out of state, the Legislature chose to expand the types of publications that qualify as legal newspapers of record for the communities they serve,” Ellis and Sneve said in a statement to Sioux Falls Live. “The Dakota Scout complies with these new requirements, and on July 1 became the newspaper of record for Sioux Falls. We look forward to doing the same for other local governments as we continue to serve our readers with local and state news. Gannett would be better off spending its money on hiring local reporters than filing frivolous lawsuits.”

The decision could mean an estimated $70,000 – the current annual average spent with the Argus Leader – could move to The Dakota Scout. That’s just the City of Sioux Falls. Other local governments could also make the switch. 

In fact, the Sioux Falls School Board on Monday voted unanimously, without discussion, to designate The Dakota Scout as its legal newspaper. 

The district spends between $30,000 and $40,000 a year on legal notices, said Business Manager Todd Vik, who estimates that will be about 30 percent less with The Dakota Scout.

Susan Patterson Plank, vice president of public notice strategic transformation for Gannett, who spoke to the City Council in June, declined to comment when contacted by Sioux Falls Live on Monday. 

The company’s corporate communications and public relations department forwarded a statement, attributed to an Argus Leader spokesperson.

“For decades, readers have trusted The Argus Leader for news and important information including public notices. Citizens expect this information to be where it can be seen by a broad, informed audience. We strongly encourage the Sioux Falls City Council to continue relying on The Argus Leader as the premier source for these important advertisements,” the statement reads.

The debate and legal action come as the Argus Leader, as well as Gannett-owned newspapers in Aberdeen and Watertown, are experiencing ever-shrinking circulation and criticism from local officials about coverage. While the Sioux Falls paper employs a handful of local reporters and photographers, Watertown and Aberdeen have had periods of time with no local news staff. 

That, in part, fueled the move to change the state law and allow alternative outlets for legal notice publication, such as The Dakota Scout. 

A key element was the support of the SDNA – formerly the South Dakota Newspaper Association – which began admitting a wider array of outlets, including digital-only, such as Sioux Falls Live, South Dakota Searchlight and South Dakota News Watch. 

The SDNA had previously opposed altering state law, but this year cooperated with The Dakota Scout and others to support the change. With that formidable opposition removed, which included the state’s many weekly newspapers, the law sailed through.

It’s a significant opportunity for some start-up publications to access a reliable source of revenue while fulfilling a core public mission of community journalism. 

“The part that gets lost is that it is a valuable service to the community,” said Jon Hunter, the publisher emeritus of the Madison Daily Leader and former president and board member of the SDNA. 

Hunter pointed out that the legals are still a good deal for local governments to communicate directly with citizens, versus trying to buy advertising directly. The information is printed in the paper but it’s also distributed locally through a trusted source on the internet, all for the same price.

These news outlets are getting paid for a service like any other vendor in a community. The local governments – cities, counties, school boards – are given the opportunity to speak directly to the voters.  

“Absent the truth, people will make up their own,” said Hunter, who also is a member of the South Dakota Newspaper Hall of Fame. “Go ahead and tell what you did and don’t make it a conspiracy or set yourself up for people saying that it’s all happening behind closed doors. This is your chance to set the record straight and a chance to create public trust. If you don’t do that people will create distrust.”

A hearing on the Argus Leader request has not yet been scheduled.