Wednesday, Dec. 2, 2015
State Board of Education et al. v. Toledo City School District Board of Education et al., Case no. 2014-1769
Tenth District Court Of Appeals (Franklin County)
State of Ohio v. Stedmund Creech, Case no. 2014-1844
Seventh District Court of Appeals (Jefferson County)
Daniel Stolz v. J & B Steel Erectors, Inc. et al., Case no. 2015-0628
U.S. District Court, Southern District of Ohio, Western Division
Were Retroactive Changes to School Funding Law Illegal?
State Board of Education et al. v. Toledo City School District Board of Education et al., Case no. 2014-1769
Tenth District Court Of Appeals (Franklin County)
ISSUE: Does the General Assembly have constitutional authority to enact a law adjusting local school funding for earlier years?
BACKGROUND:
Funding for Ohio’s public schools in fiscal years 2005 to 2007 was calculated based in part on the total number of students residing in a district. School districts were required by Ohio law to report to the state department of education their “average daily membership” (ADM), which included the number of students attending school in the district during the first week of October and the number of students entitled to attend that district but receiving their education somewhere else, such as at community, or charter, schools. The department plugged the ADM into a formula provided in a statute that determined each district’s funding.
Charter schools separately submitted monthly enrollment reports to the department. For the public school districts in Cleveland, Dayton, and Toledo, the department reviewed the data from the charter schools and decided the three districts had received funding for students not enrolled in the district. For fiscal year 2005, the department determined that Cleveland’s ADM included 575 students too many, Dayton had 688 students too many, and Toledo 561 students too many. Because the districts had already received some funding for 2005, the department reduced upcoming payments for the rest of fiscal year 2005 and for 2006 and 2007. These adjustments cut Cleveland’s funding by more than $1.8 million, Dayton’s income by more than $2.5 million, and Toledo’s basic funds by nearly $3.6 million.
Cincinnati School District Files Suit
The department also changed the ADM and reduced funding for the Cincinnati School District Board of Education, which filed a lawsuit against the department in 2007. The city argued state law required the department to use the statutorily mandated formula, which figured school funding based on the certified ADM submitted by school districts to the department. Cincinnati also claimed the community school data was often unreliable. (Dayton was also a party in this case.)
The trial court and the First District Court of Appeals both agreed with Cincinnati’s assertions. The Ohio Supreme Court had accepted the department’s appeal, but the parties settled and the department dismissed the case before it went any further.
Legislature Changes Law To Permit Adjustments to ADM
While the Cincinnati case was winding its way through the courts, the state legislature amended R.C. 3317.03 in 2007 to allow the department of education to adjust the ADM if it thought the district’s numbers weren’t an accurate count of the students. Then, in the 2009 budget bill, the General Assembly enacted an uncodified section of law stating that the 2007 amendment applied retroactively and that the state’s school districts had no legal claims to seek reimbursement of the dollars cut from their budgets.
Cleveland, Dayton, and Toledo Argue 2005 Law Requires Use of Certified ADMs
The Cleveland, Dayton, and Toledo school districts sued the department in 2011. They asked the department to pay the basic funding due each district based on the certified ADMs and the state’s formula in effect during fiscal year 2005.
The Franklin County Common Pleas Court concluded that the 2009 provision eliminating state liability for recalculating the school funds in 2005 was impermissibly retroactive under the Ohio Constitution. It also ruled that parents who had joined the suit had no standing, or right to sue, in the case.
The department appealed the decision disallowing the retroactive implementation of the law, but the Tenth District Court of Appeals affirm the trial court. The Ohio Supreme Court agreed to consider the department’s appeal on the issue of whether the later laws were applied retroactively in violation of the state constitution.
State Contends Retroactivity Clause Doesn’t Apply to School Districts
The state’s attorneys who represent the department of education and the department’s superintendent assert that the retroactivity clause of the Ohio Constitution doesn’t apply to or protect school districts. “Retroactive laws” have a special meaning in legal proceedings, they note. After a review of cases before Ohio’s 1850-1851 constitutional convention and some of the constitutional debates, they maintain that a law must take away a party’s vested rights to be considered impermissibly retroactive, and they claim that political bodies, such as school districts, don’t have vested rights.
In addition, they cite Ohio Supreme Court case law that in their view supports the interpretation that school districts have no vested rights. Detailing various cases, they contend the Court has made clear that the constitution’s prohibition on retroactive legislation applies only to retroactive laws that cause injury to individuals. They add that the Court has upheld legislation that requires political subdivisions to implement retroactive obligations. The retroactivity clause is designed to protect citizens, not the state and its agencies, they argue.
The appeals court relied on SER Bd. of Educ. of Kenton City Sch. Dist. v. State Bd. of Educ. (1963), which examined two laws related to a school district’s funding after a merger. One law guaranteed minimum funding for three years, while the other enacted the next year limited the revenue. The state’s attorneys assert that the case involved whether the presumption in the Revised Code against retroactive laws applied, not whether the constitutional bar against retroactive legislation was violated.
As far as other cases in which the Ohio Supreme Court has ruled the legislature improperly passed retroactive laws, the state’s attorneys maintain that these decisions shouldn’t be considered because the Court never analyzed the threshold question – whether the constitution’s retroactivity clause should be interpreted to apply to political subdivisions, such as school districts.
School Districts Argue Department Had To Fund Based on 2005 Law
Attorneys for the school districts counter that the districts have a substantive right to have their funding calculated according to the requirements in state law.
From their review of the cases preceding the state’s constitutional convention and consideration of the constitutional debates, they maintain that the framers created no distinction between individuals and political subdivisions when developing the retroactivity clause. Instead, the clause was intended to create a separation of powers between the legislature and the courts, they maintain. The clause states, “The general assembly shall have no power to pass retroactive laws, or laws impairing the obligation of contracts; but may, by general laws, authorize courts to carry into effect, upon such terms as shall be just and equitable, the manifest intention of parties, and officers, by curing omissions, defects, and errors, in instruments and proceedings, arising out of their want of conformity with the laws of this state.” (Emphasis added.)
The school districts’ attorneys argue the school districts aren’t challenging the law after it went into effect, but instead are asking the Court to enforce the school funding law of 2005 that the department violated. And, they assert, the legislature must believe the school districts have substantive, vested rights or else it wouldn’t have bothered to pass a law that took away the districts’ rights to pursue claims against the department.
They contend that the Ohio Supreme Court has many times applied the retroactivity clause of the constitution to political subdivisions. In Kenton, the Court ruled that school districts have substantive rights in the law that determines school funding, they maintain. The Court also held that the district had a right to the minimum funding guaranteed in the statute and that right wasn’t eliminated by the later change to the law. As they interpret the Court’s decision, the guaranteed funding was a substantive right, regardless of whether the funding was promised to a political subdivision or an individual. The same analysis applies in this case, the school districts’ attorneys argue.
They point out that the districts certified their ADM calculations according to the law, and the department accepted the ADM numbers and didn’t audit them. As a result, they assert, the districts had a vested right to have their funding determined based on the formula in the law. Regardless of whether the department thought its method of calculating funding was better, it was obligated to follow the law, they stress.
Parties Disagree Whether 2009 Law Disrupted Certainty in Funding
Even if the Court determines that school districts are permitted to make claims under the retroactivity clause, the state’s attorneys argue the 2009 law allowing the 2007 amendment to apply retroactively was constitutional. For a retroactive law to be found unconstitutional, it must infringe on the “reasonable expectation of finality in a substantive right,” they write in the brief to the Court. However, the department didn’t require repayment of any funds already allocated to the districts but instead only adjusted future funding, they maintain and conclude the law wasn’t unconstitutional. To the contrary, they contend, the law simply clarified that the department had always been authorized to change district ADMs and wasn’t limited to the numbers submitted by districts.
The school districts’ attorneys respond that part of the schools’ 2005 funding actually was taken back by the department by recouping the money through reduced payments to the districts later that fiscal year and in 2006 and 2007. The department doesn’t have the authority to illegally withhold funds that were allocated and required to be distributed under state law, they argue. They also note that the trial and appeals courts in the Cincinnati school district case ordered the department to refigure the district’s funding as required by law – which illustrates that the department did violate the law. The legislature may clarify earlier legislation, but it may not apply those clarifications retroactively if substantive rights are involved, they argue. The 2007 law affects only school funding calculated after its effective date, and the 2009 uncodified provision, “bur[ied] … in the massive budget bill,” was unconstitutional, they claim. School districts do have a right to expect finality in their funding in order to plan for and budget how to meet their statutory responsibilities, they maintain.
Friend-of-the-Court Briefs Support School Districts
Amicus curiae briefs supporting the position of the school districts have been submitted by the Ohio School Boards Association et al. and the County Commissioners Association of Ohio.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing the Ohio Department of Education, the State Board of Education, and Superintendent of Public Instruction Richard Ross from the Ohio Attorney General’s Office: Eric E. Murphy, 614.466. 8980.
Representing the Cleveland City School District Board of Education, Dayton City School District Board of Education, and Toledo City School District Board of Education: Nicholas A. Pittner, 614.227.8815
Must Ohio Courts Accept Defendant’s Stipulation to Prior Convictions?
State of Ohio v. Stedmund Creech, Case no. 2014-1844
Seventh District Court of Appeals (Jefferson County)
ISSUE: Is the state required to accept a stipulation to a defendant’s weapons disabilities?
BACKGROUND:
In 2012, Stedmud Creech was involved in a shootout in a Steubenville, Ohio. After 11 months on the run, Creech was captured and indicted on three separate counts of having a weapon “while under a disability,” which in his case meant he had a weapon when he had been convicted of or indicted for other offenses. Prior to his capture, Creech had been convicted of felonious assault with a firearm and felony possession of crack cocaine, and also had been indicted for aggravated drug trafficking near a school.
At trial, Creech argued that the state should be required to accept his stipulation to one of the three disabilities. An acceptance would have prevented the presentation of evidence to prove those crimes. The prosecutor objected, arguing the state does not have to accept a stipulation to a firearm disability for any reason.
Judicial History
After trial, Creech was convicted of all three counts for having a weapon while under a disability. At sentencing, the state elected to have Creech sentenced on the felonious assault charge, and he was sentenced to 30 months in prison.
Creech appealed to the Seventh District Court of Appeals, which held in his favor. The state appealed to the Ohio Supreme Court, which accepted the appeal
State’s Argument
Attorneys from the Jefferson County Prosecutor’s Office argue the state is not required to accept a stipulation to a defendant’s weapon disabilities. They contend the U.S. Supreme Court holding in Old Chief v. United States (1997), which held that a prosecutor must accept a defendant’s stipulation to avoid improper consideration during sentencing, is limited to only federal courts. They write in the brief to the Court, “Ohio courts have traditionally not been required to accept a defendant’s stipulation to a prior conviction for a weapons while under disability charge . . . [because Ohio] courts recognize the prior conviction as an essential element, which the state has the burden to prove beyond a reasonable doubt.”
They maintain Old Chief’s holding relies only on the federal rules of evidence and a federal statute. They write, “In reaching this decision, the [U.S.] Supreme Court asserted the principal issue is the scope of a trial judge’s discretion under [federal] rule 403.” They maintain the court did not rely on nor assert any constitutional issues that bind the states. “Appellate [d]istricts in Ohio have refused to rely upon Old Chief based on its restricted application to federal law, rendering it merely persuasive authority,” they assert.
They argue the trial court’s limiting instruction, which required the jury to only consider evidence of other crimes for the purpose of deciding whether it proved the defendant had a prior conviction, resolved any concerns regarding the issue of undue prejudice.
They conclude that Ohio’s statute is significantly different than the federal statute. They contend the federal statue covers a wide range of felonies, and Congress did not intend to distinguish between the qualifying felonies. “Thus, it is not vital the jury learn the specific name and nature of the prior conviction to find a defendant guilty of weapons while under disability in a federal court,” they write.
They argue the Ohio statute is different from the federal statute because the state statute articulates the types of felonies that qualify, explicitly limiting its coverage to offenses of violence and felony drug offenses. They write, “Ohio[’s] [statute] ... includes meaningful particularities, allowing Ohio courts to reach the opposite conclusion from Old Chief. ‘ … the language of [the statute] reflects that the General Assembly envisioned jurors learning the name and basic nature of the defendant’s prior offense.’”
Creech’s Position
Attorneys for Creech write in the brief to the Court, “A trial court must accept a defendant’s concession to a firearm disability in the absence of any explanation from the state as to how the concession would prejudice any legitimate state interest.”
They contend the state is correct that the holding in Old Chief doesn’t bind this court but they state decisions of the U.S. Supreme Court remain highly persuasive.
They assert that Ohio’s rule of evidence is more restrictive than its federal counterpart because under the federal rule a trial court may choose to exclude unfairly prejudicial evidence, but under Ohio’s rule a trial court is required to exclude unfairly prejudicial evidence. They write, “The case for requiring an Ohio prosecutor to accept a stipulation to a prior conviction is even stronger than under the federal rule at issue in Old Chief.”
They maintain Ohio’s rule balances unfair prejudice against probative value. “Once a defendant has conceded an element of an offense, evidence proving only that [the] element [is satisfied] has no probative value.”
They argue unfair prejudice comes from evidence that encourages the jury to act contrary to its instructions. They conclude, given Creech’s concession, the only effect that evidence of his criminal record would have is an improper basis for a jury decision.
A limiting instruction to the jury doesn’t change the fact that unfairly prejudicial evidence is inadmissible under Ohio’s evidence rules, they assert. They maintain permitting a jury instruction to cure error of unfair prejudice is inconsistent with the purpose of Ohio’s rule. They write, “A limiting instruction cannot be effective for evidence that’s so prejudicial that it’s likely to improperly sway the jury ....”
They conclude that a majority of high state courts that have considered the issue have adopted the Old Chief doctrine. The few states that declined to adopt Old Chief either made a fact-specific ruling or interpreted a local version of the evidence rule that gives trial courts discretion to admit unfairly prejudicial evidence.
They write, “This Court should permit defendants to completely waive the state’s burden to prove an element of an offense.” They argue there is no statute or rule that prohibits defendants from relieving the state of the burden of proving one of the elements of an offense.
- Maurice Wells
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing the State of Ohio from the Jefferson County Prosecutor’s Office: Jane Hanlin, 740.282.5323
Representing Stedmund Creech from the Office of the Ohio Public Defender: Stephen Hardwick, 614.644.1622
Can Injured Casino Construction Worker Collect Workers’ Compensation and Sue Subcontractors for Negligence
Daniel Stolz v. J & B Steel Erectors, Inc. et al., Case no. 2015-0628
U.S. District Court, Southern District of Ohio, Western Division
ISSUES:
- Are subcontractors enrolled in a general contractor’s self-insurance workers’ compensation plan entitled to immunity from work injury lawsuits by employees of other subcontractors?
- Are employees of subcontractors deemed to be co-employees when enrolled in a general contractor’s self-insurance plan and barred from suing other workers on the same job?
BACKGROUND:
Daniel Stolz was working as a concrete finisher in January 2012 on the construction of the Horseshoe Casino in Cincinnati. Stolz, an employee of Jostin Construction, Inc., fell through the floor after the metal decking gave way, and he suffered permanent injuries. Jostin was one of several subcontractors to Messer Construction Co., the general contractor on the project. Messer utilized a provision of state law, R.C. 4123.35(O) that allowed the Ohio Bureau of Workers’ Compensation to authorize the company to self-insure the workers’ comp for itself and all the subcontractors on the project. Stolz collected workers’ comp for his injuries, and then filed suit against Messer, and subcontractors D.A.G. Construction Co., J&B Steel Erectors, Triversity Construction Co., Pendleton Construction Group, and Terracon Consultants, for negligence and sought punitive damages.
Stolz and fellow Jostin workers injured in the accident first filed their actions in Hamilton County Common Pleas Court. Stolz, a Kentucky resident, then moved his case to the U.S. District Court for the Southern District of Ohio. The Hamilton County court found Messer and the subcontractors were immune from any further liability for the injuries to Stolz’s co-workers. In the Southern District, the court found Ohio law granted Messer immunity, but not the subcontractors. Recognizing the potential conflict between the common pleas court and the district court, the district court asked the Ohio Supreme Court in a certified question of law to interpret the immunity statute. The Supreme Court agreed to consider the question.
Contractors Contend All Employers Immune
Attorneys for J&B Steel explain that state lawmakers created a special provision allowing general contractors for projects that cost more than $100 million and are constructed in less than six years to self-insure the workers’ comp for the project. They note these are rare circumstances and the law was designed to ensure all project workers receive workers’ comp benefits even if a subcontractor folds. In return for Messer paying the workers’ comp premiums, the subcontractors lowered their bids to Messer. They argue the law clearly provides blanket immunity for all subcontractors under this plan, and if Stolz collects workers’ comp benefits through Messer, he is barred from suing the other subcontractors for negligence.
Attorneys for Messer contend the law provides two types of immunity. Messer enjoys “vertical immunity” because the law indicates all the employees of the subcontractors, including Jostin, are deemed to be employees of Messer for workers’ comp purposes. The law applies to Stolz in the traditional way workers’ comp applies in Ohio – the employees receive full medical care for their injuries, but in exchange relinquish their right to sue employers for damages. In addition, the attorneys contend the law provides all the subcontractors “horizontal immunity,” which prevents the employee of one contractor from suing another contractor if that worker was injured due to the negligence of workers for other contractors.
“Thus, there are no relevant facts in dispute and the question before the Court is a legal one, regarding whether Ohio’s workers’ compensation statutes create ‘horizontal’ immunity for negligence claims between enrolled subcontractors participating in a self-insured construction project and the employees of other enrolled contractors,” the Messer brief states.
Messer, J&B Steel and D.A.G. filed separate briefs, but all take issue with the federal district court’s interpretation of the how the law is written. A key portion of R.C. 4123.35(O) indicates that all contractors and subcontractors in the self-insurance program are entitled to the protections of the entire workers’ comp code “with respect to the contractor’s or subcontractor’s employees.” The attorneys point to R.C. 4123.74, which provides immunity to employers, and interpret the law to provide horizontal immunity to all subcontractors. Messer’s attorneys further argue that the law considers all the subcontractor employees to be Messer employees, and that makes all the workers co-employees. They then state R.C. 4123.741 provides immunity to all employers from negligent acts of co-employees and the subcontractors can’t be sued.
Stolz Asserts Law Protects Only Messer
Attorneys for Stolz propose that “with respect to the contractor’s or subcontractor’s employees” should be interpreted to mean that the immunity applies to Messer and limits the subcontractor’s immunity to only its own employees. In the brief, they argue the subcontractors aren’t self-insuring employers and they made no bargain with Stolz. Rather, Stolz’s attorneys propose, the law maintains the traditional workers comp protection for the direct employer, and for complex projects like a casino, the general contractor is deemed to be the direct employer. The other subcontractors should be treated as non-employers and the law has traditionally allowed negligence suits against those other than the employer who cause injuries on a worksite, they argue. “Ohio courts will ‘permit an injured individual to maintain a negligence action so long as that individual is not an employee of the defendant company for workers’ compensation purposes,’” the brief states.
Federal Court Finds Little Precedent
Attorneys from both sides presented the district court with cases from other states that have ruled on similar laws around “wrap up” workers’ comp policies that general contractors are allowed to use to cover large projects with several subcontractors. The court noted that aside from the Hamilton County Common Pleas Court’s Lancaster v. Pendleton Construction Group, LLC, et al. ruling dealing with Stolz’s co-workers, it could not find any other Ohio decisions on the case to use as precedent.
The court stated it believes the statute doesn’t provide the subcontractors immunity, but the parties could avoid extensive litigation if the Supreme Court provided its interpretation.
“A determination by the Supreme Court of Ohio would provide clarification for both courts and contractors who seek to draft, negotiate and bid future large-scale construction project contracts,” the district judge wrote.- Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing J&B Steel Erectors: Colleen Blandford, 513.381.0656
Representing Messer Construction Co: Jane Lynch, 937.224.3333
Representing D.A.G. Construction Co. and Triversity Construction Co.: Susan Salyer, 513.721.4500
Representing Pendleton Construction Group: Stephen Yeager, 513.721.4500
Representing Terracon Consultants Robert Hojnoski, 513.721.1311
Representing Daniel Stolz: Brett Goodson, 513.621.5631
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