State ex rel. Ohio Civil Serv. Emps. Ass'n v. State

• Decision Date: 11 February 2016
• Docket Number: No. 2014–0319.,2014–0319.
• Citation: State ex rel. Ohio Civil Serv. Emps. Ass'n v. State, 146 Ohio St.3d 315, 56 N.E.3d 913 (Ohio 2016)
• Parties: The STATE ex rel. OHIO CIVIL SERVICE EMPLOYEES ASSOCIATION et al., Appellees and Cross–Appellants, v. The STATE of Ohio et al., Appellants and Cross–Appellees.
• Court: Ohio Supreme Court

146 Ohio St.3d 315

56 N.E.3d 913

The STATE ex rel. OHIO CIVIL SERVICE EMPLOYEES ASSOCIATION et al., Appellees and Cross–Appellants

v.The STATE of Ohio et al., Appellants and Cross–Appellees.

No. 2014–0319.

Supreme Court of Ohio.

Submitted May 20, 2015.

Decided Feb. 11, 2016.

James E. Melle, for appellees and cross-appellants, Ohio Civil Service Employees Association, David Combs, Clair Crawford, Lori Leach Douce, Margo Hall, Sheila Herron, Daniel Karcher, Rebecca Sayers, Angela Schuster, Troy Tackett, Kathy Tinker, Lisa Zimmerman, and ProgressOhio.org.

Taft Stettinius & Hollister, L.L.P., Charles R. Saxbe, James D. Abrams, and Celia M. Kilgard, Columbus, for appelleesCorrections Corporation of America and CCA Western Properties, Inc.

Michael DeWine, Attorney General, and Eric E. Murphy, State Solicitor, for appellants and cross-appelleesstate of Ohio, GovernorJohn R. Kasich, Attorney GeneralMichael DeWine, Secretary of StateJon Husted, Auditor of State David Yost, Ohio Department of Rehabilitation and Correction and its director, Gary C. Mohr, Ohio Department of Administrative Services and its director, Robert Blair, TreasurerJosh Mandel, and the Office of Budget and Management and its director, Timothy S. Keen.

Sutter O'Connell, Adam Martin, and Kevin W. Kita, Cleveland, for appellant and cross-appelleeManagement & Training Corporation.

American Federation of State, County and Municipal Employees, AFL–CIO, and Nicholas A. Serrano, urging affirmance in part and reversal in part for amicus curiae AFSCME International.

Buckley King, L.P.A., Robert J. Walter, Thomas I. Blackburn, Columbus, and Diem N. Kaelber, urging affirmance in part and reversal in part for amici curiaeOhio Association of Public School Employees/AFSCME Local 4, AFL–CIO, Fraternal Order of Police of Ohio, Inc., and American Federation of State, County, and Municipal Employees Ohio Council 8.

FRENCH, J.

{¶ 1} This appeal asks whether 2011 Am.Sub.H.B. No. 153(“H.B. 153”), the budget bill for the 2012–2013 biennium, violates the Ohio Constitution.Specifically, we consider whether H.B. 153 violates the one-subject rule in Article II, Section 15(D) of the Ohio Constitution or the prohibition against state financial involvement with private enterprise in Article VIII, Section 4 of the Ohio Constitution.We must also decide whether a court of common pleas, or only the State Employment Relations Board(“SERB”), has jurisdiction to determine whether employees of privately owned or operated prisons are public employees, as defined by R.C. 4117.01(C).We hold that H.B. 153 is constitutional and that SERB has exclusive jurisdiction to determine public-employee status under R.C. 4117.01(C).

Background

{¶ 2} In H.B. 153, the General Assembly appropriated operating funds to the state government and its programs for the biennium beginning July 1, 2011, and ending June 30, 2013.The title of the bill states that it provides “authorization and conditions for the operation of programs, including reforms for the efficient and effective operation of state and local government.”We are specifically concerned here with provisions in H.B. 153 that deal with the operation, management, and sale of state correctional facilities.

{¶ 3} Both before and after the enactment of H.B. 153, R.C. 9.06(A)(1) permitted state and local governments to contract for the private operation and management of correctional facilities.Those contracts are subject to numerous conditions, the most salient of which is that “the contractor shall convincingly demonstrate to the public entity that it can operate the facility with the inmate capacity required by the public entity and provide the services required in this section and realize at least a five per cent savings over the projected cost to the public entity of providing these same services * * *.”R.C. 9.06(A)(4). Section 753.10 of H.B. 153 modified prior law governing contracts for the private operation and management of a state correctional institution in several ways.As relevant here, section 753.10 identified five correctional facilities—Lake Erie Correctional Facility, Grafton Correctional Institution, North Coast Correctional Treatment Facility, North Central Correctional Institution, and North Central Correctional Institution Camp—and authorized the Director of Administrative Services and the Director of Rehabilitation and Correction to contract for the operation, management, and sale of those facilities.H.B. 153, section 753.10(B)(1), (C)(1) and (2), (D)(1) and (2), (E)(1) and (2), (F)(1) and (2), and (G)(1) and (2).H.B. 153 also added subsection (J) to R.C. 9.06.The new subsection sets out conditions that apply if a private contractor executes a contract not only to operate and manage a correctional facility, but also to purchase that facility from the public entity.Collectively, we refer to these portions of H.B. 153 as the “prison-privatization provisions.”

{¶ 4} Two private companies took advantage of the prison-privatization opportunity.Respondent-appelleeManagement & Training Corporation(“MTC”) signed a contract for the operation and management of North Central Correctional Institution (renamed North Central Correctional Complex).And respondent-appelleeCorrections Corporation of America (“Corrections Corporation”) purchased Lake Erie Correctional Facility¹ and signed a related operation and management contract.

{¶ 5}Appellees and cross-appellants are the Ohio Civil Service Employees Association, the labor union representing Ohio's public employees; ProgressOhio.org; and numerous former employees of North Central Correctional Complex, Lake Erie Correctional Facility, and Marion Correctional Institution.²We refer to appellees and cross-appellants collectively as “OCSEA.”

{¶ 6} OCSEA filed this action in the Franklin County Court of Common Pleas.In its amended complaint, OCSEA named as defendants-respondentsMTC, Corrections Corporation, CCA Western Properties, Inc., and the following government entities, officials, and agencies: the state of Ohio; Governor John R. Kasich; Attorney GeneralMike DeWine; Secretary of State Jon Husted; Auditor of State David Yost; the Department of Rehabilitation and Correction(“DRC”) and its director, Gary C. Mohr; the Department of Administrative Services(“DAS”) and its director, Robert Blair; Ashtabula County TreasurerDawn M. Cragon; Ashtabula County AuditorRoger A. Corlett; Ashtabula County RecorderJudith A. Barta(now retired); State Treasurer Josh Mandel; and the Office of Budget and Management and its director, Timothy S. Keen.We refer to the government defendants-respondents collectively as the “staterespondents.”

{¶ 7} OCSEA's amended complaint raised several claims.As relevant here, it alleged the following: (1)H.B. 153, in its entirety, violates the one-subject rule contained in Article II, Section 15(D) of the Ohio Constitution, (2) even if the bill is not found to be unconstitutional in its entirety, the prison-privatization provisions in H.B. 153 violate the one-subject rule, and (3) the prison-privatization provisions in H.B. 153 violate Article VIII, Section 4 of the Ohio Constitution, which prohibits the joinder of public and private property rights.OCSEA requested relief in the form of, inter alia, a declaration that H.B. 153 is unconstitutional in its entirety and that any contracts entered into under its provisions are and void, as well as a writ of mandamus ordering the reinstatement of the individual plaintiffs to their positions with full back pay and benefits.In the alternative, it sought a declaratory judgment that MTC employees who work at North Central Correctional Complex are public employees, as defined by R.C. 4117.01(C), and are entitled to the corresponding public-employee benefits.

{¶ 8}The staterespondents filed a motion to dismiss OCSEA's amended complaint pursuant to Civ.R. 12(B)(6), for failure to state a claim on which relief can be granted, and Civ.R. 12(B)(1), for lack of subject-matter jurisdiction.The trial court dismissed OCSEA's complaint in its entirety.The trial court held that it lacked jurisdiction to determine individual employee rights, including whether the named employees were public employees under R.C. 4117.01(C).The court further held that it had jurisdiction over the constitutional challenges to H.B. 153, but that OCSEA failed to state a claim that H.B. 153 was unconstitutional.

{¶ 9} The Tenth District Court of Appeals reversed the dismissal of OCSEA's one-subject-rule claim and ordered the trial court to hold an evidentiary hearing on remand to determine whether H.B. 153 has only one subject and, if not, to sever any offending provisions.2013-Ohio-4505, 2 N.E.3d 304, ¶ 24.But the Tenth District affirmed the dismissal of OCSEA's claim that H.B. 153 violates the prohibition against joint public-private property ventures in Article VIII, Section 4 of the Ohio Constitution and OCSEA's claim for a declaration that the individuals working at North Central Correctional Complex are public employees.

{¶ 10}The staterespondents and MTC filed discretionary appeals in this court, and OCSEA filed a cross-appeal.We accepted jurisdiction.139 Ohio St.3d 1428, 2014-Ohio-2725, 11 N.E.3d 284.

{¶ 11}The parties assert seven propositions of law, which we distill to the following issues: (1) whether the prison-privatization provisions of H.B. 153 or H.B. 153 in its entirety violate the one-subject rule, (2) whether a provision in the contract for the sale of Lake Erie Correctional Facility that requires the state to pay an annual ownership fee constitutes a subsidy that violates Article VIII, Section 4 of the Ohio Constitution, and (3) whether the courts of common pleas can determine public-employee status under R.C. 4117.01(C).

Analysis

{¶ 12} To begin our analysis, we look to the applicable standards of review.We review dismissals pursuant to Civ.R. 12(B)(6) de novo.Perrysburg Twp. v. Rossford,103 Ohio St.3d 79, 2004-Ohio-4...