State ex rel. Altman-Bates v. Pub. Emps. Ret. Bd.

• Citation: 148 Ohio St.3d 21,2016 Ohio 3100,68 N.E.3d 747
• Decision Date: 24 May 2016
• Docket Number: No. 2014–0650.,2014–0650.
• Parties: The STATE ex rel. ALTMAN–BATES et al., Appellants, v. PUBLIC EMPLOYEES RETIREMENT BOARD et al., Appellees.
• Court: United States State Supreme Court of Ohio

148 Ohio St.3d 21

68 N.E.3d 747

2016 Ohio 3100

The STATE ex rel. ALTMAN–BATES et al., Appellants,

v.PUBLIC EMPLOYEES RETIREMENT BOARD et al., Appellees.

No. 2014–0650.

Supreme Court of Ohio.

Submitted Nov. 17, 2015.

Decided May 24, 2016.

John H. Bates, Columbus, for appellant Marylou Altman–Bates.

Amy Neyerlin, pro se.

Rebecca Steele, pro se.

Melani Anderson, pro se.

Michael DeWine, Attorney General, and John J. Danish, Assistant Attorney General, for appellee Ohio Public Employees Retirement Board.

Ron O'Brien, Franklin County Prosecuting Attorney, Nick A. Soulas Jr., First Assistant Prosecuting Attorney, and Denise DePalma, Assistant Prosecuting Attorney, for appellee Franklin County Board of Commissioners.

PER CURIAM.

{¶ 1} Appellants, Marylou Altman–Bates, Amy Neyerlin, Rebecca Steele, and Melani Anderson, are attorneys employed by the Franklin County Public Defender. In this mandamus action, they seek membership and service credit in the Ohio Public Employees Retirement System ("PERS") for their years of service prior to January 1, 1999, and they challenge a decision of the Ohio Public Employees Retirement Board ("the board") denying the service credit. The Tenth District Court of Appeals refused to grant the writ.

{¶ 2} For the reasons explained below, we deny Neyerlin's motion for oral argument and grant a writ of mandamus to compel the board to award service credit to Altman–Bates, Neyerlin, and Steele. We remand the matter to the court of appeals for further proceedings in light of the analysis herein.

Summary of the issue

{¶ 3} Persons hired by the Franklin County Public Defender on or before December 31, 1984, are public employees entitled to PERS benefits. State ex rel. Mallory v. Pub. Emps. Retirement Bd., 82 Ohio St.3d 235, 241, 694 N.E.2d 1356 (1998). And effective January 1, 1999, the Franklin County Public Defender's employees have been enrolled in and considered to be members of PERS. The question presented is whether employees hired from January 1, 1985, through December 31, 1998, are entitled to service credit for their years of service prior to 1999.

History

{¶ 4} Effective in January 1976, the General Assembly enacted the Ohio Public Defender Act (R.C. Chapter 120), Am.Sub.H.B. No. 164, 136 Ohio Laws, Part I, 1868, which authorized counties to create five-member county public-defender commissions. R.C. 120.13(A). Once a county public-defender commission was created, the commission was required to appoint an individual to the office of county public defender. Former R.C. 120.14(A)(1), 136 Ohio Laws, Part I, at 1876.

{¶ 5} On January 8, 1976, the Franklin County Board of Commissioners approved a resolution creating the Franklin County Public Defender Commission ("the commission"). Later that year, the county commissioners approved a resolution to enter into a six-month agreement with the newly created commission for the representation of indigent criminal defendants.

{¶ 6} The commission appointed James Kura to the statutory office of Franklin County Public Defender in 1977. Kura hired attorneys and other employees to form the Franklin County Public Defender's Office ("the office"). Mallory, 82 Ohio St.3d at 236, 694 N.E.2d 1356. The office and its employees paid Social Security taxes on wages. Id. Kura and the commission did not consider the office to be a county agency, and therefore office employees were not treated as "public employees" for purposes of PERS. Id.

{¶ 7} Various state officials soon called into question the legality of the manner in which some county public-defender offices were operating. In 1980, the section chief of the Administrative Agencies Section of the Ohio Attorney General's office issued an informal opinion concluding that employees of county public-defender offices were county employees and should be enrolled in PERS. Mallory at 237, 694 N.E.2d 1356. And based on that opinion, the state auditor informed officials in Summit County (the only county besides Franklin County to treat such persons as private employees) that the county's public-defender office was operating illegally and was not entitled to state reimbursement for its operations. Id. at 236–237, 694 N.E.2d 1356.

{¶ 8} To address these concerns, the General Assembly enacted R.C. 120.14(F) in 1984, Am.Sub.S.B. No. 271, 140 Ohio Laws, Part I, 949, 956–957, and also made other changes to R.C. Chapter 120, including within R.C. 120.14. The new provision, R.C. 120.14(F), allowed county public-defender commissions to contract with nonprofit organizations to provide legal services for the indigent. In late 1984, private counsel hired by the commission drafted articles of incorporation for an entity to be called "Franklin County Public Defender" ("the corporation"). The articles of incorporation identified the commission as the incorporator and the sole member of the corporation, named the five then-current members of the commission as the initial trustees, and mandated that only an appointed commission member could serve as a trustee. On January 9, 1985, the commission approved the articles and appointed Kura, who at that time held the statutory office of Franklin County Public Defender, as the director of the corporation.

The Mallory litigation

{¶ 9} Diane Mallory was employed by the office as a law clerk from June 1978 until September 1980 (i.e., before the creation of the nonprofit corporation) and then as an attorney from February 1982 to January 1994. During these times, she and the commission paid Social Security taxes on her wages, and no PERS contributions were made by her or on her behalf. In September 1994, she filed a request with PERS for service credit. The PERS staff denied her claim on the grounds that she was not a "public employee," and the PERS board affirmed. Mallory, 82 Ohio St.3d at 237–238, 694 N.E.2d 1356.

{¶ 10} Holding that the board abused its discretion, we granted a writ of mandamus. Id. at 240, 694 N.E.2d 1356. We held that employees hired prior to the 1985 incorporation (referred to in the opinion as "pre–1984" office employees) were public employees, because they "were employed by a county agency (the commission) and a county officer (Franklin County Public Defender Kura) to perform a governmental function" and because the office was created pursuant to statutory authority. Id. at 241, 694 N.E.2d 1356.

{¶ 11} The board had argued that the office was a private entity with which Kura had contracted for services and thus that Mallory was not a public employee. We rejected that argument for two reasons. First, there was no evidence before us of a written or oral contract between Kura and the office. Id. at 242, 694 N.E.2d 1356. And second, if such a contract existed, it would have been invalid under R.C. 2921.42(A)(4), which prohibits a public official from having an interest in the profits or benefits of a public contract entered into by the public entity with which the official is connected. In reversing the judgment of the court of appeals, we stated:

In concluding that Kura had contracted with a private organization known as the [Franklin County Public Defender's Office], the court of appeals neglected to consider that a clear conflict of interest would have existed if Kura, acting in his official capacity as the Franklin County Public Defender, was permitted to determine the adequacy of services provided to the county by the "private agency" Kura himself directed.

Mallory at 242, 694 N.E.2d 1356.

{¶ 12} Finally, we held that Mallory was entitled under R.C. 145.01(A)(2) to continue her PERS membership after the incorporation following the 1984 amendments to R.C. 120.14. Id. at 245, 694 N.E.2d 1356. Mallory and others in her situation are sometimes referred to as "carryover employees." However, we were not called upon in Mallory to address the status of employees hired for the first time after the corporation was formed pursuant to the 1984 amendments to R.C. 120.14.

{¶ 13} In the wake of Mallory, the "Franklin County Public Defender" was declared a county agency, effective January 1, 1999. The date of hire of all employees hired after December 31, 1984, and working at that time was changed to January 1, 1999. And from that point forward, all employees were enrolled in PERS. Therefore, only those employees hired from January 1, 1985, through December 31, 1998, have been excluded from consideration as public employees, and hence not covered by PERS, at least for the period of their service before January 1, 1999.

The current litigation

{¶ 14} In February 2001, 51 current and former employees filed for PERS membership and service credit for their employment prior to 1999. In September 2003, PERS staff rejected the claims based on the assumption that this court had already ruled that post–1984 hires were not eligible for PERS coverage prior to January 1, 1999, in State ex rel. Van Dyke v. Pub. Emps. Retirement Bd., 99 Ohio St.3d 430, 2003-Ohio-4123, 793 N.E.2d 438. After an administrative hearing, the hearing examiner also concluded that the claimants were collaterally estopped from challenging the private status of the nonprofit corporation by virtue of Van Dyke. On that basis, the board denied the claims.

{¶ 15} The claimants then filed an action for a writ of mandamus in the Tenth District Court of Appeals, and that court granted a limited writ and directed the board to issue a new order adjudicating the claims on their merits. This court affirmed, holding that collateral estoppel did not apply. State ex rel. Davis v. Pub. Emps. Retirement Bd., 120 Ohio St.3d 386, 2008-Ohio-6254, 899 N.E.2d 975, ¶ 36. In Davis, we noted that the only issue in Van Dyke had been whether the sole employee bringing that case, who had worked as a staff attorney during two separate time periods, was eligible for PERS service credit during the second time period as a carryover employee. Davis at ¶ 6–9, 43. We stated in Davis that "we did not actually decide [the office's] postincorporation status in either Van Dyke or Mallory. " Da...