Update: On August 22, 2019, the Supreme Court of Ohio handed down a merit decision in this case.  Read the analysis here.

On February 19, 2019, the Supreme Court of Ohio heard oral argument in Paul Cheatham IRA v. The Huntington National Bank, 2018-0184. At issue in the case is whether a sale of municipal bonds vests in the buyer all causes of action of the seller relating to the bond that arose before the transaction.

Case Background

In 1998, Lucas County, Ohio, issued municipal bonds in support of a nursing home development, to be run by Foundation for the Elderly, Inc. Foundation for the Elderly was the obligor for the bonds, and Huntington served as Trustee for the bondholders of the project. As Trustee, it was Huntington’s obligation to collect payments from the obligor and distribute them to the bondholders. In the event of default, Huntington was to act in the best interests of the bondholders.

In June of 2003, Foundation for the Elderly defaulted on the bonds, and by December 2003, Benchmark Healthcare became a substitute obligor and also defaulted. Huntington notified bondholders of both defaults and obligor substitutions. The Cheatham IRA (“Cheatham”) began purchasing the bonds in November 2003, after the default by the Foundation for the Elderly, and continued purchasing the bonds through 2007 at a fraction of their face value, even after Benchmark filed for bankruptcy.  After Benchmark failed to restructure under Chapter 11, Huntington foreclosed against Benchmark. The nursing home development was sold, giving bondholders in November of 2014 a final distribution of about $350,000 of the $6.5 million initial bond issue.

In May of 2015, Cheatham filed a class action lawsuit against Huntington on behalf of itself and other similarly-situated bondholders. Among several claims, Cheatham alleged under a breach of contract claim that Huntington did not do enough to protect bondholder interests, leading to a low final distribution. The trial court dismissed all claims except the breach of contract claim as being barred by the statute of limitations.

Cheatham then sought class certification of all current bondholders on the breach of contract claim. Cheatham took the position that under R.C. 1308.16(A) (Ohio’s version of U.C.C. 8-302) a purchaser of a security acquires all rights in the security the transferor had. Thus, when the previous bondholders sold their bonds, their right to sue for breach of contract against Huntington transferred automatically to the current bondholders. The trial court disagreed with this interpretation of R.C. 1308.16(A), and denied class certification for failure to satisfy Civ.R. 23(B)(3)’s predominance requirement. Cheatham’s individual breach of contract claim was not dismissed, but Cheatham appealed the denial of class certification.

In a unanimous decision authored by Judge Jensen, in which Judge Osowick concurred and Judge Mayle concurred and wrote separately, the Sixth District Court of Appeals reversed the trial court’s finding that Cheatham did not satisfy Civ. R. 23(B)(3)’s predominance requirement, and held that subsequent purchasers of bonds do acquire causes of action under R.C. 1308.16, including third-party claims for breach of contract.

Read the oral argument preview here.

Key Statutes and Precedent

R.C. 1308.16(A) (UCC 8-302) (“a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer.”)

R.C. 140.01(J) (“‘Bond proceedings’ means one or more ordinances, resolutions, trust agreements, indentures, and other agreements or documents, and amendments and supplements to the foregoing, or any combination thereof, authorizing or providing for the terms, including any variable interest rates, and conditions applicable to, or providing for the security of, obligations and the provisions contained in such obligations.”)

R.C. 140.06(I) (a trust agreement may provide, in the event of default, for “foreclosure, or any other legal remedy.”)

Bowman v. Parma Bd. of Education, 44 Ohio App. 3d 169 (8th Dist. 1988) (“[a]s a general rule contract claims survive the death of the plaintiff.”)

Leverso v. Southtrust Bank, 18 F.3d 1527 (11th Cir. 1994) (“the terms of the [trust agreement] govern the parties’ contractual rights . . . .”)

Bluebird Partners, L.P. v. First Fid. Bank, N.A., 85 F.3d 970 (2d Cir. 1996) (Under federal law, claims are not automatically assigned to the subsequent purchaser of a security because the law “protect[s] those who are injured . . . not those who subsequently purchase securities at the reduced price.”)

R.A. Mackie & Co. v. PetroCorp Inc., 329 F.Supp.2d 477 (S.D.N.Y. 2004) (Security holders’ rights in the security must be judged against the language in the contract between the parties; the rights “thus include the rights against the issuer under the contract embodied in the security.”)

Consolidated Edison, Inc. v. Northeast Utilities, 318 F.Supp.2d 181 (S.D.N.Y. 2004) (Section 8-302 “applies primarily to disputes over the quality of title and the competing ownership rights passed from transferor to transferee.”)

In re Activision Blizzard, Inc. Stockholder Litig., 124 A.3d 1025 (Del. Ch. 2015) (“When a share of stock is sold, the property rights associated with the shares, including any claim for breach of those rights and the ability to benefit from any recovery or other remedy, travel with the shares.”)

Huntington’s Proposition of Law Accepted for Review

Absent a valid assignment of claims, the mere sale of a municipal bond does not automatically vest in the buyer, by operation of R.C. 1308.16 (Section 8-302 of the Uniform Commercial Code), all claims and causes of action of the seller relating to the bond that arose before the transaction.

At Oral Argument

Arguing Counsel

J.Philip Calabrese, Porter Wright Morris & Arthur LLP, Columbus, for Appellant Huntington Bank

Ronald R. Parry, Strauss Troy, Cincinnati, for Appellee Paul Cheatham IRA

Huntington’s Argument

If this Court does not reverse the judgment of the Sixth District, Ohio will be alone as the only jurisdiction in the country to interpret Section 8-302 of the U.C.C to transfer the right to sue automatically. That result is contrary to the plain language of the statute, which on its face is specifically intended to promote uniformity, and to be interpreted and applied consistently with the law of other jurisdictions. It would unsettle the expectations of those participating in the securities markets, both in Ohio and nationally. In ruling as it did, the Sixth District became the first and only court in the country to hold that Section 8-302 abrogates the longstanding common law rule that requires an assignment to transfer an accrued cause of action from the seller to the buyer of a security. This potentially affects every outstanding municipal bond issue in Ohio.

Ohio has long held that a cause of action is a separate, intangible property right, and it is a personal right which belongs to the person who owns the security at the time when the cause of action accrues. The term “all rights in the security,” in R.C. 1308.16(A) has a particular technical meaning, particularly in the U.C.C. that involves the transfer of title and the ownership rights that accompany title, such as the right to vote that security, to redeem it, sell it, and the right to payments of interest and principal.

The distinction between “rights in the security” and the personal property right to bring a cause of action is crucial. Because a chose in action is a personal property right, it is not “a right in the security” that automatically transfers when the security is sold. Although this appeal does not involve the liability determination of whether Huntington properly exercised its responsibilities and obligations under the Trust Indenture, the right to bring that cause of action belongs to whoever was a bondholder in June of 2003 when that cause of action allegedly accrued.

The proposition of law Huntington asks this Court to adopt is consistent with the longstanding common law of Ohio, as well as Ohio’s law governing assignment. It allows the parties by contract to transfer the right to file a lawsuit if they want to do so. It would correct the Sixth District’s erroneous interpretation which takes away rights from the defendant. And the common law rule would leave Mr. Cheatham with a direct cause of action for the damages he allegedly incurred during the times that he actually owned the bonds, to the extent he wanted to claim any breach of contract during those periods of time.

Cheatham’s Argument

This is a breach of contract case. The contract involved here is a Trust Indenture. A Trust Indenture comes into being with a bond issue before there are any bondholders. It’s a document that’s drafted, or at least approved unilaterally, by Huntington Bank before the bonds are ever sold to the public. When the bonds are sold, the terms of the indenture are to be relied on. Huntington is asking this Court to relieve it of some of the terms it wrote into that Trust Indenture.

The terms of the Trust Indenture define the bondholders’ rights. A person who buys a bond looks to the terms of the Trust Indenture. A person who buys a bond receives the right to payment. The seller, a past bondholder, has zero rights in anything. When Huntington foreclosed in 2009, it recovered about 3 to 5 cents on the dollar, which was for about 6 years of lost principal and interest payments. That payment, or any payment recovered, would have gone to current bondholders, because that is what the Trust Indenture says. The Bank didn’t go back and pay past bondholders. When it comes time to make a payment, the Bank doesn’t want to have to go investigate who owns this bond. Some of these bond issues go on for ten or twenty years. There may have been 50 people that transferred and owned this bond. The Bank simply goes to the bond register, looks at the name on the bond register, and that’s who gets the payment.

The right to receive payment is the right to file a lawsuit. If you have no right to receive payment under the Trust Indenture, and former bondholders clearly have no right to receive payment, then they do not have the right to file a lawsuit.

Cheatham’s cause of action arises under the terms of the Trust Indenture. Once there is an event of default, the Trustee has an obligation under the terms of the Indenture, to act as a prudent person would to protect the interests of the bondholders. Prior to a default, the Bank is merely a paying agent. It processes the payments and sends them out to bondholders. After a default, then the Bank must spring into action and act as an ordinarily prudent person.

While not here on the liability issue, it is Cheatham’s position that he can prove liability. The point is that the lawsuit arises under the terms of the Trust Indenture, meaning it is “a right in the security.” While there are lawsuits that could arise that relate to the security, the right to receive principal and interest, the right to enforce the Trustee’s obligation to act as a prudent person and to protect the bondholders, is a right that is within security because it is within the bond documents that become part of the security.

What Was On Their Minds

Outwardly, very little. What follows is a recap of the very few questions asked, mostly from Justice DeWine.

Cheatham’s argument is largely based on kind of a contractual argument about the terms of the bond indenture, commented Justice DeWine. Can a bond indenture never give a subsequent purchaser those rights, or just not in this case? This was the only question asked in the opening part of Huntington’s argument.  When Cheatham’s turn came, DeWine said he was trying to understand how Cheatham’s theory works in practice. Might I call my broker, he said, buy a number of bonds, and have different rights in each one, depending on who owned them before and what injuries were done to that prior owner. Is that right? Even though I pay the same price for them? Presumably I could buy a bond, some of them might have been owned by one person who wasn’t injured, maybe because there was some reliance interest or other things, while another person was injured. So each one of these bonds just kind of carries with it different rights as it gets passed from person to person? Is this how this works?

Justice French asked if Mr. Parry was agreeing with the Sixth District majority, because it sounded like he was agreeing with the reasoning of Judge Mayle in her separate concurrence, which was that it’s not just that you recover as a matter of law, or that you hold those causes of action as a matter of law, but that you have to look at the specific indenture document. Is that what he was are arguing? I think those are two different things, she noted, then asking what his statutory analysis was.

Do the bondholders from whom Mr. Cheatham purchased the bonds, once they were in default, have any recourse here, asked Chief Justice O’Connor?  The original ones, that were hanging on, that turned out to be useless paper—do they have any recourse? Because presumably when they sold them, that’s their return?

How It Looks From The Bleachers

To Professor Emerita Bettman

This was a mostly entirely politely silent bench, so the outcome is hard to predict. Mr. Calabrese used only a little over eight minutes in his opening, and got only one question.  Mr. Parry was more expansive, but when he thought he had used his time he had more than five minutes left, and seemed momentarily at a loss for words. The Chief interjected that he didn’t have to use those minutes, but what lawyer wouldn’t? So he rallied and kept talking.

I don’t know much about this area, but I’m calling this for Huntington. If the decision of the Sixth District really is a total outlier, that is contrary to the point of the U.C.C. I think the Court is going to adopt the proposition of law proposed by Huntington, and hold that in order for a buyer to have a cause of action in these circumstances there must be an express assignment from the seller. Whether those who held the bonds in June of 2003 had a valid grievance with the Bank under the Trust Indenture is another matter, and doesn’t sound like it would necessarily be a walk in the park for the Bank.

To Student Contributor Carson Miller

Huntington likely gets the win here, but with the Justices offering little from the bench it is difficult to be confident either way. Justices DeWine and French both hinted that Cheatham’s argument sidestepped the issue before the Court and failed to address the Sixth District’s holding. Indeed, much of Cheatham’s argument was devoted to the terms of the Trust Indenture, rather than the statutory interpretation issue this case is purportedly about. Huntington’s final argument might be its most effective: the U.C.C is meant to be applied similarly across jurisdictions, and the Sixth District’s interpretation would make Ohio the only jurisdiction in the country to automatically transfer causes of action in bond sales.

This is difficult to predict, but I think Justices DeWine and French side with Huntington. How the other Justices vote is anyone’s guess. I think Huntington’s efforts to deal with the statutory issue will be well taken, and Huntington should win, but the final vote could be anywhere from unanimous to a slim majority.

 

 

 

 

 

 

 

 

 

 

 

Update: On July 17, 2019, the Supreme Court of Ohio handed down a merit decision in this case.  Read the analysis here.

Read an analysis of the oral argument here.

On March 5, 2019, the Supreme Court of Ohio will hear oral argument in the case of New Riegel Local School District Board of Education et al. v. The Buehrer Group Architecture & Engineering, Inc., et al., 2018-0213. At issue in this case is whether the statute of repose codified at R.C. 2305.131 applies to causes of action sounding both in tort and contract. Also at issue is whether stare decisis requires a court to apply precedent based on a statute later found to be unconstitutional and subsequently repealed and rewritten.

Case Background

In 2000, New Riegel Local School District (“New Riegel”) contracted to build a new K-12 school building, and entered into agreements with multiple contractors. The Buehrer Group Architecture & Engineering, Inc. (“Buehrer”) designed the building, Studer-Obringer, Inc. (“SOI”) served as the general contractor, and Charles Construction Services (“CCS”) was the roofing contractor. The contractors finished the project in 2002, and New Riegel took occupancy that December.

New Riegel eventually had issues with the facility, allegedly from condensation and moisture intrusion which the school attributed to construction and design errors. In April 2015, New Riegel filed separate complaints against Buehrer (as well as the Estate of Huber H. Buehrer, which is not a party to the appeal), SOI, and CCS, alleging breach of contract for failure to design and construct the project in a workmanlike manner. SOI subsequently filed a motion for judgment on the pleadings, claiming that New Riegel’s claims were time-barred by Ohio’s construction statute of repose, R.C. 2305.131.

Thereafter, New Riegel filed a second amended complaint to include Ohio Farmers Insurance Company (“OFIC”) as a defendant as the surety for SOI, but did not change any of its underlying claims against any of the parties. Buehrer, CCS, and OFIC then filed motions for judgment on the pleadings on the same statute of repose grounds as SOI’s motion—asserting claims against designers and builders in construction projects are barred after ten years from the project’s substantial completion. Seneca County Common Pleas Court Judge Steve Shuff granted all motions in each case, and dismissed all claims against all parties as time-barred by R.C. 2305.131. New Riegel appealed.

The Appeal(s) 

In two (here and here) separate, but nearly identical, opinions by Judge Willamowski, joined by Judges Zimmerman and Shaw, the Third District Court of Appeals unanimously reversed the trial court’s dismissal of claims against all the parties. The Third District agreed with Buehrer, SOI, CCS, and OFIC that a clear reading of R.C. 2305.131 supports the proposition that the statute applies to all causes of action to recover damages arising from construction projects. However, the court felt bound by the Supreme Court of Ohio’s 1986 decision in Kocisko v. Charles Shutrump & Sons Co., which held that the statute does not apply to actions for breach of contract. Thus, since New Riegel pled breach of contract claims against Buehrer, SOI, CCS, and OFIC, those claims could not be subject to the statute’s ten-year limitations period.

However, the Third District upheld the trial court’s dismissal of claims against the Buehrer Estate on separate grounds: that the claims against the estate were subject to Ohio’s six-month statute of limitations for claims against a decedent, and were thus properly dismissed.

Appellants Buehrer, SOI, CCS, and OFIC brought separate appeals, which were then consolidated into one case.

Votes to Accept the Case

Yes: Chief Justice O’Connor, Justices DeGenaro, DeWine, Fischer, French, Kennedy, and O’Donnell.*

*Chief Justice O’Connor and Justices DeWine and O’Donnell dissent in part and would accept the case only as to proposition of law 1.

Key Statutes and Precedent

R.C. 1.42 (“Words and phrases shall be read in context and construed according to the rules of grammar and common usage.”)

R.C. 2305.131  (Ten Year Statute of Repose) (“[N]o cause of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death that arises out of a defective and unsafe condition of an improvement to real property . . . shall accrue . . . later than ten years from the date of substantial completion of such improvement.”)

(G) (“As used in this section, ‘substantial completion’ means the date the improvement to real property is first used by the owner or tenant of the real property or when the real property is first available for use after having the improvement completed in accordance with the contract or agreement covering the improvement, including any agreed changes to the contract or agreement, whichever occurs first.”)

2003 Am.Sub. S.B. No. 80 Sec. 3(B)(1) (“In enacting section 2305.131 of the Revised Code in this act, it is the intent of the General Assembly . . .  [t]o declare that the ten-year statute of repose prescribed by section 2305.131 of the Revised Code,  is a specific provision intended to promote a greater interest than the interest underlying the general four-year statute of  limitations prescribed by section 2305.09 of the Revised Code, the general two-year statute of limitations prescribed by section 2305.10 of the Revised Code, and other general statutes of limitation prescribed by the Revised Code.”)

R.C. 2305.06 (Statute of Limitations in Contract Actions. For parties who entered into written contracts before 2012, the statute of limitations is 15 years, after that, 8 years.)

Kocisko v. Charles Shutrump & Sons Co., 21 Ohio St.3d 98 (1986) (R.C. 2305.131 only limits actions arising out of tort, and does not limit actions for breach of contract, which continue to be governed by the fifteen-year statute of limitations found in R.C. 2305.06. (syllabus))

Ruby v. Midwestern Indemn. Co., 40 Ohio St. 3d 159 (1988) (Defendants may be prejudiced as it becomes more difficult to determine fault after a significant passage of time.)

Brennaman v. R.M.I. Co., 70 Ohio St. 3d 460 (1994) (Held that the 1971 version of R.C. 2305.131 is unconstitutional.)

Thomas v. Freeman, 79 Ohio St.3d 221 (1997) (A statute that specifies one exception to a general rule is assumed to exclude all other exceptions.)

Ormet Primary Aluminum Corp. v. Employers Ins. of Wausau, 88 Ohio St.3d 292 (2000) (The statute of repose bars all claims after ten years to avoid prejudice to defendants that arises due to the passage of time.)

Corporex Dev. & Constr. Mgt., Inc. v. Shook, 2005-Ohio-5409 (Under the economic-loss rule, a plaintiff that suffers purely economic damages cannot recover in tort.)

Groch v. Gen. Motors Corp., 2008-Ohio-546 (For stare decisis to apply, the legislation must be phrased in substantially the same way as legislation previously invalidated.)

McClure v. Alexander, 2008-Ohio-1313 (2nd Dist.) (The General Assembly made its purpose clear by enacting the current version of R.C. 2305.131, which included recognition of contractors’ lack of control over property after construction is complete.)

Dillon v. Farmers Ins. of Columbus, Inc., 2015-Ohio-5407 (Courts interpreting statutes “may not . . . narrow . . . the General Assembly’s wording.”)

Antoon v. Cleveland Clinic Found., 2016-Ohio-7432 (“A true statute of repose . . . applies to vested and nonvested claims.”)

State v. Karl R. Rohrer Assocs., 2018-Ohio-65 (5th Dist.) (“It matters not whether the action is brought in tort or contract, if the resultant damages are injury to property of the type set forth in R.C. 2305.131, the statute applies.”)

Appellants’ Arguments

Buehrer Group

The previous version of R.C. 2305.131 was declared unconstitutional, and the General Assembly created the amended version in response. The Supreme Court of Ohio has reviewed the amended statute on several occasions, and has not invalidated it. The modern trend across the country—not just in Ohio—applies statutes of repose to bar claims against design professionals and construction contractors and subcontractors for all liabilities after a given period of time. A majority of jurisdictions apply statutes of repose to both tort and contract claims.

Moreover, the plain language of R.C. 2305.131 requires it to be applied “in any civil action.” And, the distinction between a statute of limitation and a statute of repose is critical; statutes of repose apply to all claims after a certain period of time, even if an injury occurs after the time limit passes.

 Kocisko does not apply to the current version of R.C. 2305.131; the Kocisko court dealt with a substantially different statute. The older version was interpreted as a statute of limitations, while the modern version is a statute of repose that does not allow causes of action to accrue against contractors. The Court should disregard the inapplicable Kocisko decision and apply the plain language of R.C. 2305.131.

General Contractor SOI

The plain language of R.C. 2305.131 unambiguously applies the statute of repose to all causes of action for damages arising out of construction projects, not just tort actions. The statute’s language (“no cause of action . . . shall accrue”) lends itself to only one reasonable interpretation: claims arising out of construction resulting in injury to property are barred after ten years from the construction’s substantial completion.

Narrowing R.C. 2305.131 to apply only to tort claims is improper since the statute’s language explicitly references both general statutes of limitation and specific issues arising in a number of claims—including contract claims. Further, the General Assembly provided for several exceptions (e.g. warranty claims, fraud), none of which include contract claims. The statute’s legislative intent—to promote a greater interest of limiting general claims in construction disputes—necessarily includes contract claims. Additionally, the statute must be applied generally to be consistent with other provisions of the Ohio Revised Code, many of which specifically exempt contract or tort claims by name; here, R.C. 2305.131 uses general language. Recent Ohio court decisions have reflected this understanding—that statutes of repose apply generally to all causes of action, regardless of form.

Ohio courts are not required to follow a previous decision when the precedent was based on a prior version of a subsequently-amended statute. R.C. 2305.131 was substantially altered subsequent to Kocisko. Previously, the statute was a single provision; the amended version uses broader language and set out specific exceptions. Thus, because the statute was substantially changed, the court’s prior decisions should not bind current interpretations of the statute.

Roofing Contractor CCS

The statute of repose limits all claims for damages arising out of improvements to real property—not just claims sounding in tort or negligence. The plain language of the statute supports this conclusion—a proposition which the Third District supported. The only reason that the Third District chose not to find the actions against CCS were time-barred was because it felt bound by the Court’s decision in Kocisko, which interpreted a different version of R.C. 2305.131.

The current version of R.C. 2305.131 expressly includes contract actions and supersedes Kocisko by expressly calling for the limitations to apply notwithstanding any prior ruling. Further, the legislative intent behind the amended statute was to bring all causes of action for damages arising out of construction projects within the reach of R.C. 2305.131. By granting such a broad limitation on actions after ten years, the legislature recognized a general policy to strike a balance between construction companies’ interest in avoiding stale litigation, (particularly when they lack control over the property), and legitimate actions for recovery. The legislature chose not to limit R.C. 2305.131 to tort actions, which it easily could have done.

Additionally, stare decisis does not apply to the amended version of R.C. 2305.131, as it is sufficiently different from its predecessor so as to require a fresh review of the statute. In order for stare decisis to apply to this case, the language of the original R.C. 2305.131 must be substantially the same as the amended version; the original version interpreted in Kocisko is completely different from the statute in place today.

Ohio Farmers Insurance Company

The Third District’s decision should be reversed because the statute is not limited to tort claims and the court was not required to follow precedent based on a prior unconstitutional version of a statute.

The statute of repose in R.C. 2305.131 applies to both tort and contract claims. This conclusion is apparent from the plain language of the statute that specifies that “no cause of action…shall accrue” and that the statute applies to “any civil action.” The statute is clear on its face; it does not contain any language limiting its application to tort claims. Despite ultimately finding the statute barred New Riegel’s claims, the Third District itself conceded that the language of the statute does not differentiate between tort claims and breach of contract claims. In Rohrer, the Fifth District also reached this conclusion holding that R.C. 2305.131 applied to breach of contract claims.

Moreover, while the statute is silent on the tort verse contract distinction, it is not silent on its application to other types of claims. Instead, it expressly states that it does not apply to fraud, express warranty, and express guarantee claims. Under the doctrine of expressio unius est exclusion alterius, a statute that specifies one exception to a general rule is assumed to exclude all other exceptions. Therefore, because R.C. 2305.131 only specified the exceptions noted above, it is assumed to exclude other exceptions not mentioned, i.e. breach of contract claims.

The Third District’s decision should also be reversed because its conclusion was based on the Kocisko case which is not controlling precedent here. In Kocisko, the Court held that the 1971 version of 2305.131 did not apply to breach of contract claims. However, the 1971 version of the statute was later declared unconstitutional and has been amended several times. The 1971 version of the statute is vastly different from the current version of the statute. For example, the 1971 version was a statute of limitations, whereas the current version is a statute of repose. Furthermore, the prior version did not specifically exempt any causes of action. Because the statutes are so different, stare decisis should not be applied to bind the court to the precedent set in the Kocisko case.

Appellee’s Argument

New Riegel

R.C. 2305.131 does not, and has never, applied to contract claims. For more than thirty years, Ohio courts have found that the operative language of the statute is identical to that of claims sounding in tort. If the legislature wanted to change this interpretation, it could have easily changed the statute’s operative language or expressly overruled Kocisko. While the statute reenacted in 2003 is longer and contains additional provisions, is still applies only to tort claims. Moreover, the statute of repose expressly supplements several statutes of limitation that all deal with tort claims—the uncodified law supplements the legislative intent to only limit tort actions.

The statute further bars actions from accruing after ten years, not commencing after ten years. Breach of contract claims accrue at the time of the breach. Here, because the alleged breach occurred immediately after completion of the project, the claim accrued within the ten-year limit of R.C. 2305.131, and was thus subject to Ohio’s then-fifteen-year statute of limitations for contract claims.

The statute does not limit claims that have already accrued within its ten-year limitation period.  And when the statute of limitations exceeds the statute of repose, the statute of repose can have no effect on a contract claim. In this case New Riegel had to bring its breach of contract claim within the then-existing 15-year statute of limitations, which it did.

Tort claims can arise from contractual relationships with architects and engineers who fail to perform in a workmanlike manner. But courts will look to the substance of the claim, regardless of how it is labeled or pled. This is strictly a breach of contract claim against the architects and contractors. The damages suffered by New Riegel were the cost to correct defective design and work, and thus are purely economic losses, subject to the economic-loss rule. A plaintiff that suffers purely economic loss stemming from another’s acts or omissions cannot recover in tort. The language of the statute is consistent with that rule.

Finally, the contractors’ second proposed proposition of law—stare decisis does not apply to cases that interpreted statutes later deemed unconstitutional—is redundant. It assumes that the operative language in the amended statute is substantially different from the previously interpreted statute, which is an incorrect assumption. If the statute is different enough from what was previously interpreted, then stare decisis does not apply by definition.

Buehrer’s Proposed Proposition of Law No. 1 

Ohio’s statute of repose, R.C. 2305.131, applies in actions sounding both in contract and tort.

Buehrer’s Proposed Proposition of Law No. 2 

A court is not required to apply stare decisis when the prior version of the statute being applied has been held unconstitutional by the Supreme Court of Ohio.

 SOI’s Proposed Proposition of Law No. 1

Ohio’s statute of repose, R.C. 2305.131, as amended by the General Assembly in 2005, applies to claims for breach of contract and bars such claims from accruing more than ten years following substantial completion of the improvement.

SOI’s Proposed Proposition of Law No. 2 

Ohio courts are not required to apply stare decisis when the precedent to be followed was based on a prior version of a subsequently amended statutory provision.

CCS’s Proposed Proposition of Law No. 1

Ohio’s statute of repose, R.C. 2305.131, applies to actions sounding both in contract and in tort. (Kocisko v. Charles Shutrump & Sons Co., 21 Ohio St.3d 98, syllabus (1986), distinguished.)

CCS’s Proposed Proposition of Law No. 2

Stare decisis is inapplicable to legislation enacted by the General Assembly merely because it is similar to previous enactments, rather, to be covered by the blanket of stare decisis, the legislation must be phrased in language that is substantially the same as previously addressed. (Stetter v. R.J. Corman Derailment Servs., L.L.C., 125 Ohio St.3d 280, 2010-Ohio-1029, ¶ 34-39 (2010); Groch v. Gen. Motors Corp., 117 Ohio St.3d 192, 2008-Ohio-546, ¶ 104 (2008); and Arbino v. Johnson & Johnson, 116 Ohio St.3d 468, 2007-Ohio-6948, ¶ 24, applied and followed.)

OFIC Proposed Proposition of Law No. 1

Ohio’s Statute of Repose, Ohio Revised Code §2305.131 applies to claims arising under written contracts in addition to claims sounding in tort and/or negligence.

OFIC Proposed Proposition of Law No. 2

This Court is not required to apply stare decisis in cases where the prior statute under which the case was decided has been held unconstitutional by the Supreme Court of Ohio and replaced by the legislature.

Amici In Support of Appellants

AIA Ohio and Ohio Society of Professional Engineers

The American Institute of Architects of Ohio (AIA Ohio) and the Ohio Society of Professional Engineers (OSPE) filed a joint brief in support of Appellant Buehrer. AIA Ohio is a society of licensed architects that promotes positive legislative and government agency rule changes for the architectural profession. OSPE is an authoritative expert in licensure, ethics, and professional practice. OSPE aims to protect public health, safety, and welfare and to promote the ethical and competent practice of engineering.

AIA Ohio and OSPE argue that since Ohio law requires architects and engineers to perform their services to public agencies by contract, if there were an exception for breach of contract claims under Ohio’s statute of repose, then the statute would have no real effect. This is because all public work has to be done be contract, so almost all claims would be breach of contract claims and none would be effectively barred by the statute. Additionally, the insurance available to architects and design professionals is often “claims-made” which does not cover the design professional after retirement. If R.C. 2305.131 does not apply to breach of contract claims, design professionals would have no way to obtain insurance coverage for the potential claims arising after retirement. They also argue that the statute applies in the same fashion to the State as it does to private parties.

AIA Ohio and OSPE also note that the Third District conceded that the statute does not provide for a breach of contract exception. They also argue that the current version of the statute has undergone many changes and is no longer the same statute as interpreted in Kocisko. Therefore, the Kocisko precedent is inapplicable here. The impact of the appellate decision would be to nullify Ohio’s current statute of repose for design professionals who perform work for public agencies.

Ohio Insurance Institute, et. al

The Ohio Insurance Institute, Ohio Manufacturers’ Association, Ohio Chamber of Commerce, Ohio Chapter of the National Federation of Independent Business, and the Surety & Fidelity Association of America filed a joint brief in support of Appellant Buehrer. These organizations argue that R.C. 2305.131 applies to both tort and breach of contract claims and that design professionals depend on a uniform interpretation of the statute. They also argue that the Third District erroneously applied stare decisis.

These organizations represent members in all areas of business relating to the construction industry in Ohio. Each of these amici have worked to support clear and predictable limits on liability exposure for their constituents.

Amici claim that the 1971 version of the statute (a statute of limitations) interpreted in Kocisko is not equivalent to the current statute (a statute of repose) because the 1971 version was completely rewritten after being declared unconstitutional. These organizations also argue that the broad terminology used in the current version along with several contract law references and the placement of the statute in the overall scheme of the legislation demonstrate the legislative intent for the statute to be applicable to contract claims. For example, the current statute uses the phrase “cause of action” instead of the specific “tort action” definition used elsewhere. Furthermore, the statute references “substantial completion” and provides that the ten-year period of repose may be extended by express contractual “warranty or guarantee” which are both specific contract law references. Finally, the overall statutory scheme has a section titled “Torts” (R.C. 2305.116), however the current R.C. 2305.131 is not located in that section. Instead it’s located in an entirely separate section titled “Other Relief.”

Subcontractor’s Association of Northeast Ohio  

The Subcontractor’s Association of Northeast Ohio (“SANEO”) is a non-profit trade association founded in 1976 to represent subcontractors, specialty trade contractors, material suppliers and allied-service providers, and filed a brief in support of the architect and contractors. SANEO argues the plain language of the statute does not distinguish between tort and contract claims, even while specifically exempting warranty claims. The reasoning and intent behind the statute applies equally to tort and contract claims: the statute supports a general policy of protecting contractors from defending stale claims after project completion and a reasonable passage of time by setting a hard date after which no more claims can accrue.

Additionally, the Kocisko decision does not apply to the current case because Kocisko dealt with a substantially different version of the statute and the decision’s reasoning was too brief to provide adequate guidance to the current dispute under the modern statute.

Associated General Contractors of Ohio and Ohio Contractors Association

Associated General Contractors of Ohio (“AGC”) and Ohio Contractors Association (“OCA”) filed a joint brief in support of appellants. AGC advocates on legislative and regulatory issues impacting builders and represents contractors in labor matters.  OCA advocates on legislative and infrastructure issues and represents its members in union labor matters.

These organizations argue that the express language in the statute clearly indicates that it applies to breach of contract claims as well as tort claims. For example, the statute states that, “no cause of action…shall accrue,” and that it applies to “any civil action.” Also, the statute explicitly lists three exceptions, none of which mention contract claims. Lastly, the legislature used the phrase “substantial completion” of the improvement “in accordance with the contract or agreement” which is a clear reference to contract law.

Additionally, they argue that all of the stated purposes for R.C. 2305.131 apply equally to breach of contract actions as well as tort actions. This is because it does not matter if the owner asserts a breach of contract claim or a tort claim. Either way the contractor lacks control to maintain the improvement after completion. Furthermore, to allow a breach of contract exemption would mean that claims could be brought indefinitely, even 20 years after substantial completion, which is an absurd result. Allowing such claims to be brought would increase costs across the entire construction industry.

Furthermore, amici challenge New Riegel’s claim that the 8-year statute of limitations for written contracts would usually bar these claims anyway. Instead, amici argue that the 8-year statute of limitation often does not apply to the State under the nullum tempus doctrine which says that time does not run against the State.

Finally, the statute should be applied to breach of contract actions because Ohio’s economic loss doctrine says that an owner that incurs economic damages may only assert a breach of contract claim against the party with which it is in privity and may not pursue a tort claim against the reasonable subcontractor. Thus, the vast majority of construction defect cases in Ohio will be breach of contract cases, not tort cases. Therefore, if R.C. 2305.131 does not apply to breach of contract claims then the statute will have no real effect in the industry.

Ohio Association of Civil Trial Attorneys  

The Ohio Association of Civil Trial Attorneys (“OACTA”) is a statewide organization consisting of attorneys and other professionals who dedicate a significant portion of their practice to the defense of civil damages and insurance claims. OACTA asserts that the Third District erroneously relied upon Kocisko to limit R.C. 2305.131’s application solely to tort claims, and the statute should be applied by its plain language: a claim for damages for an injury to real property which arises out of improvement to the property and is filed more than ten years after the date of substantial completion is completely time-barred. The theory of recovery is irrelevant; it is the nature of the claimed injury and its cause that controls.

Most states have enacted construction statutes of repose. Ohio’s amended statute is similar to those of other states, which have been passed to prevent indefinite liability for design and construction professionals. By limiting liability, legislatures sought to lower insurance costs, incentivize innovation in the construction industry, and protect contractors from unfair and stale litigation, and from indefinite liability. The Court should interpret R.C. 2305.131 to give effect to the legislative intent to shield construction professionals from all stale claims, not just claims that can be easily pleaded around.

 Amici in Support of New Riegel

The Ohio Association for Justice

The Ohio Association for Justice (“OAJ”) is a statewide association of lawyers whose mission is to preserve Constitutional rights and to protect access to the civil justice system. OAJ argues that R.C. 2035.131 is unambiguous and its plan language demonstrates that it only applies to tort claims. Specifically, OAJ points to the language in the statute that says, “no cause of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death.” OAJ argues that the causes of action listed clearly refer to tort claims as bodily injury and injury to real or personal property have been codified as torts. OAJ further contends that just because an owner has a contract with a builder or a design professional does not turn a tort claim into a breach of contract claim. The statute requires a defective and unsafe condition that causes bodily injury or injury to property. Therefore, breach of contract claims in which the breach only created a defective or unsafe condition but did not cause bodily injury or injury to property are not covered by the statute.

OAJ also argues that even though the 1971 version of the statute was declared unconstitutional and rewritten, the causes of action to which both versions of the statute apply are identical. Both versions state that the statute applies to causes of action to recover damages for bodily injury, an injury to real or personal property, or wrongful death. Both versions of the statute also require that the actions arise out of a defective and unsafe condition. The fact that the legislature did not use the phrase “tort action” is irrelevant because the words of the statute clearly described tort actions and were consistent with the definition of tort action in another section of the overall statutory scheme. Because the legislature used the same words to describe the causes of action applicable to the statute, the established meaning of those terms should not change despite other changes to the statute. It is irrelevant how the cause of action is labeled. The statute does not apply to all “garden variety” breach of contract claims. Rather, it only applies to causes of action described in the statute — a cause of action in which a defective and unsafe condition is the cause of injury.

County Commissioners Association of Ohio, et al  

The County Commissioners Association of Ohio, along with the Ohio Municipal League, the Ohio Township Association, Erie County, and the Ohio School Boards Association filed an amicus brief in support of New Riegel. These groups assert that under the statute, the defining issue is the type of injury alleged; the injury must be to real or personal property, or for a defective and unsafe condition. The condition must be defective and unsafe, and the injury must happen to the property itself. Since claims of defective workmanship are not injury to property itself, those conditions are not present here, and the statute of repose should not apply. The damages sought in this case were for faulty design, installation and workmanship, which breached the parties’ contracts. It was for a pure economic loss, which is not governed by the statute of repose. Nor is it a tort to breach a contract.  Additionally, the defect at issue here is a leaky roof—it may be defective, but it is not unsafe. As Amici colorfully notes, “the toilets won’t explode.”

Additionally, the statute of repose does not prevent a party from bringing a claim after ten years, it merely prevents a claim from accruing. Even though this claim was brought fifteen years after substantial completion, the actual injury happened within ten years, and thus the statute of repose does not bar this claim.

Further, the Court should apply stare decisis and uphold the Kocisko decision. Because that case dealt with substantially the same statute and very similar facts, the Third District should be affirmed in its application of the Kocisko decision.

Timothy Betton

Timothy Betton is a plaintiff in a pending taxpayer action for breach of contract claims against a contractor and engineering firm which contracted to provide services on behalf of Erie County.  Timothy Betton filed an amicus brief in this case because he alleges that if R.C. 2305.131 is held to apply to both tort and breach of contract actions, then his claims for breach of contract on behalf of Erie County could be dismissed as well.

Betton’s argument takes largely from OAJ’s brief. Betton also argues that though the statute does not explicitly state that it applies to tort actions, the language used in the statute unambiguously describes tort actions. Betton claims that just because a contract exists cannot transform a tort action into a breach of contract action. Moreover, Betton argues that contractors should not be absolved from liability when they breach contracts simply because they are in the construction business.

Student Contributors: Ivy Charneski and Carson Miller

 

A Stark County jury awarded Ann Wayt $800,000 in compensatory damages and $750,000 in punitive damages in a defamation action she brought against Affinity Medical Center, where she had worked as a nurse. The case got to the Supreme Court of Ohio on the issue of whether the damages cap in R.C. 2315.18 (B)(2) that applies to noneconomic loss as a result of injury or loss to person or property in tort actions also applies  to compensatory damages awarded for defamation.

Affinity Medical argued that by the plain language of the statute, the cap clearly applied. Wayt argued the cap applies only to injuries to person or property, not reputation, which as set forth in Article I, Section 16 of the Ohio Constitution, is distinct from injuries to person, and therefore the cap does not apply.

On December 7, 2018, in a 5-2 decision, the Court sided with Affinity Medical.  Read more about the details of Wayt’s case and an analysis of the merit decision here.

The case was remanded to the trial court for further proceedings. On remand, the compensatory damages were capped at $250,000, and pursuant to R.C. 2315.21, the punitive damages were capped at $500,000. Wayt was also awarded of attorney fees in the amount of $210,000.

 

Update: On June 26, 2019, the Supreme Court of Ohio handed down a merit decision in this case.  Read the analysis here.

Read the analysis of the oral argument here.

On March 5, 2019, the Supreme Court of Ohio will hear oral argument in the case Marcella King Piazza v. Cuyahoga County, et al., 2017-1649. At issue in the case is whether the immunity exception allowing civil claims against a political subdivision extends to actions brought after the employee has been terminated by the political subdivision. Second District Court of Appeals Judge Jeffrey Froelich will sit for Justice Stewart, who participated in the appellate decision while on the Eighth District Court of Appeals.

Case Background

In 2003, Marcella King Piazza (“Piazza”) began working for the Cuyahoga County auditor’s office. Piazza was later transferred to the County Board of Revision where she worked as office manager. Subsequently, in August 2010, Piazza was transferred to the Department of Justice Affairs where she worked as a victim advocate. Around the time Piazza was transferred to the Department of Justice Affairs, the Plain Dealer Publishing Company (“Plain Dealer”) began publishing a series of articles about the scandal at the Board of Revision which cost taxpayers over $400 million, claiming that an investigation was underway into the work habits, favoritism, and mismanagement of the department.

In March 2011, Piazza was terminated from employment with the county. Within two hours of Piazza’s discharge, the Plain Dealer published an online article headlined, “Cuyahoga County Executive Ed FitzGerald fires three employees tied to the boards of revision scandal.” One of those fired employees was Piazza, who had in fact never been disciplined or cited for poor work habits and had no authority over any Board member. Further articles identified Piazza by name, included her photo, and again suggested she was part of the Board of Revision corruption scandal.

In 2015, Piazza filed a complaint against Cuyahoga County (“the County”) and the Plain Dealer alleging false light invasion of privacy. The allegation stemmed from quoted statements of county executive FitzGerald which Piazza claimed were made with a reckless disregard for the truth or falsity of his statements. The County moved for summary judgment pursuant to R.C. 2744.02. The County also alleged that Piazza’s claim was time-barred. Cuyahoga County Court of Common Pleas Judge Peter Corrigan denied the County’s motion, finding the false light claim was not time-barred nor covered by immunity. The County appealed.

On appeal, the Eighth District, in an opinion authored by Judge Kathleen Keough and joined by Judge Mary Boyle, affirmed Judge Corrigan’s denial of summary judgment. According to the majority, the County is not entitled to political subdivision immunity under R.C. 2744.02 because R.C. 2744.09 precludes immunity when a civil suit involves matters related to the employment relationship. On the statute of limitations ruling, the Eighth District did not consider the County’s claim that the trial court erred in its ruling because it was not a final appealable order.

Then-Judge Melody Stewart concurred in part and dissented in part, with an opinion.  She agreed with the majority’s conclusion about the statute of limitations, but not about the false light claim. Judge Stewart interpreted the statutory use of the word “employee” as meaning a person currently employed by the relevant political subdivision. Therefore, the County should be able rightfully to claim immunity from Piazza’s suit because she was not an employee of the County when she filed suit.

Votes to Accept the Case

Yes: Chief Justice O’Connor and Justices DeWine, Kennedy, Fischer, and French.

No:  Justice O’ Donnell

Justice DeGenaro not participating.

Key Statutes and Precedent

R.C. 2744.02(C) (An order that denies a political subdivision or an employee of a political subdivision the benefit of an alleged immunity from liability as provided in this chapter or any other provision of the law is a final order.)

R.C. 2744.09(B) (Political Subdivision Immunity shall not extend to civil actions by an employee against his or her political subdivision relative to any matter that arises out of the employment relationship between the employee and the political subdivision.)

Fleming v. Ashtabula Area City Schools Board of Education, 2008-Ohio-1892 (11th Dist.) (A person need not be a current employee at the time claims were filed against a political subdivision to qualify for the political subdivision immunity exception.)

Sampson v. Cuyahoga Metropolitan Housing Authority, 2010-Ohio-3415 (Intentional tort claims can arise out of the employment relationship with respect to R.C. 2744.09(B). To succeed, a claim must show a causal connection between the tort and the employment relationship. Direct causation is not necessary; indirect causation is sufficient.)

George v. Newburgh Heights, 2012-Ohio-2065 (8th Dist.) (Totality of the circumstances review requires examining events that occurred while a person was employed by the political subdivision and after the employment relationship is terminated.)

Vacha v. City of North Ridgeville, 2013-Ohio-3020 (To determine whether a causal connection exists the court must examine the totality of the circumstances. If no connection exists, political subdivision immunity is appropriate.)

County’s Argument

R.C. 2744.09(B) was only intended to create a limited exception to political subdivision immunity. This exception clearly and unambiguously allows civil suits to be brought by an employee arising out of the employment relationship between the employee and the political subdivision. Absent any ambiguity, a court must give effect only to the statute’s plain meaning. No further construction or application is necessary. When Piazza brought her intentional tort claim for false light invasion of privacy she had not been an employee of Cuyahoga County for nearly four and a half years. Because Piazza was not an employee when she filed her complaint, and the alleged intentional tort occurred after her employment relationship had ended, the claim did not arise from her employment relationship. Therefore, the limited exception to political subdivision immunity does not apply.

The General Assembly is presumed to be aware of other statutory provisions concerning a newly enacted statute, even if they are found in separate sections of the Code. The definitions governing R.C. Chapter 2744 define “employee” in the present tense as someone authorized to act for the political subdivision within the scope of employment with the political subdivision. Piazza was an at-will employee subject to termination for no reason or any reason at all. When Piazza did not contest or challenge her removal from public service, she ceased to be an employee for all purposes of the statute. Piazza brought no claims against the county for wrongful termination, for discriminatory firing, did not assert any rights under the classified statutes of the state, or assert a claim for an intentional tort committed by Cuyahoga County during the course of employment arising out of events that occurred within the scope of the employment relationship. Because Piazza’s claim did not arise out of her employment relationship R.C. 2744.09(B) does not apply.

Piazza’s claim for false light against Cuyahoga County did not arise within her employment relationship, but arose because of newspaper articles printed about her by a publication over which the County had no control and to whom the County provided no false statement. Piazza’s real complaint lies with how the newspaper characterized her separation from employment.

Finally, this Court has already articulated that when looking at political subdivision immunity cases it is important to look at the totality of the circumstances when deciding if a causal nexus exists between the issue raised and the employment relationship. In Sampson, for example, even though Sampson brought suit after he was no longer a county employee, the intentional tort claims alleged accrued while he was an employee. And in Vacha, the Court made it clear that the causal connection between the claim and the employment relationship must be established.  The issue Piazza raised before the trial court did not arise from the scope of her employment with the County. The injury she suffered accrued and occurred entirely outside her employment with the County, and after the relationship was terminated. Piazza failed to demonstrate any causal connection between her alleged injury and the actions of the County. As such, her claim that an exception to the political subdivision immunity statute should apply is erroneous and should be dismissed.

Piazza’s Argument

As the County agrees, the statute at issue here is clear and unambiguous. Therefore, no construction is necessary, and the Court should simply apply the statute’s plain meaning. R.C. 2744.09(B) is clear and requires only a causal connection between the subject matter of the civil action and the employment relationship. The Eighth District, applying Sampson, correctly found that Piazza’s claims arose from her employment relationship and that the County was not immune.

The County’s argument that Piazza was not an “employee” within the meaning of the political subdivision immunity statute is based on improper factual assumptions outside the jurisdictional scope of this appeal. The language of R.C. 2744.09(B) does not place conditions on when an action is filed; merely that an employee’s claim arise from the employment relationship. The date a claim is filed has no bearing on whether the cause of action arose from an employment relationship. To determine whether or not a causal connection or causal relationship exists, the court looks to the factual allegations on which the claim is based and considers the totality of the circumstances surrounding it.

Piazza’s claim arises from statements made by the County to a third party about Piazza’s employment and employment termination on the day she was terminated. It should, therefore, be clear that the claim arises from the employment relationship Piazza had with the County. Employment was the only relationship between Piazza and the County, and the comments arose out of her employment because they were directly related to her work performance.

This Court has never limited the employment relationship exception for political subdivision immunity to issues arising from within the scope of employment. The only requirement imposed by this Court has consistently been that a causal connection must be established between the alleged injury and the employment relationship of the parties. The Eighth District correctly found that this threshold had been met in Piazza’s case. Accordingly, the Eighth District’s denial of summary judgement should be affirmed.

Cuyahoga County’s Proposed Propositions of Law

Proposition of Law 1

The language of Ohio Rev. Code §2744.09(B) is clear, concise, and unambiguous and in derogation of common law immunity and must be strictly constructed in keeping with the definition of employee and employment relationship as set forth in the Ohio Revised Code.

Proposition of Law 2

A former employee of a political subdivision who brings an intentional tort claim that accrues after he or she is no longer an employee of the governmental entity is not an “employee” covered under Ohio Rev. Code §2744.09(B).

Proposition of Law 3

Construing Ohio Rev. Code §2744.09 as it is written is in keeping with this Court’s decision in Sampson v. Cuyahoga Metro Hous. Auth., 131 Ohio St.3d 418 (2012) and Vacha v. City of N. Ridgeville, 136 Ohio St.3d 199 (2013) in that the intentional tort at issue in Sampson and Vacha accrued while plaintiffs were employed by the political subdivision and arose out of the employment.

Amici in Support of Piazza

The Fraternal Order of Police (“FOP”) and the Ohio Employment Lawyers Association (“OELA”) filed a brief in support of Piazza.

The FOP is an organization consisting of more than 22,000 law enforcement officers in the State of Ohio, dedicated to the representation of its membership for a multitude of purposes.

OELA is a professional organization comprised of lawyers who represent employees in labor, employment, and civil rights disputes. OELA strives to defend individuals against the tortious conduct of officials and agents of political subdivisions.

Amici reinforce Piazza’s argument that causation is the primary concern when determining whether an employment relationship existed between two parties. The General Assembly’s intent here is clear. The statutory language requires only a causal connection between the claims and the employment relationship. The General Assembly chose not to include language limiting this exception’s scope based on timing. The language used is broad and includes “any matter that arises out of the employment relationship.” If a temporal requirement were inserted it would create perverse incentives and allow employers to fire an employee simply to avoid recourse by the employee. Finally, Amici assert that claims are not limited to those occurring during the employment relationship, but rather, extends to claims arising after the relationship ends provided a causal nexus exists. This requirement sufficiently protects employers from frivolous suits while permitting employees to seek redress for relevant injuries.

Amici’s Proposed Proposition of Law

R.C. 2744.09(B) removes sovereign immunity from political subdivisions for tort claims that relate to political subdivision workplaces, even if the claims arise after the employment itself.

Student Contributor: Paul Taske

I am re-posting Attorney Bill Gallagher’s guest post on bail reform to include some additional information from him.

From Guest Blogger Bill Gallagher: The blog post I contributed on February 18, 2019 (re-posted below) was my condensation of a twenty-two page set of public comments  submitted to the Supreme Court of Ohio on September 26, 2018 as a consensus set of proposals based on work toward bail reform by the Ohio ACLU and many organizations and individuals, including myself, over many years.  I should have footnoted that the proposed reforms in my blog post are also proposed in those public comments. They are also the reforms proposed in most jurisdictions.  The Hamilton County Public Defender Office, of which I am a Commissioner, is a signatory to the letter forwarding the public comments to the Court.

Commentary:  Guest Post on the Need for Bail Reform

By Bill Gallagher

The concept of bail is to ensure the accused will show up for court once he or she is released from jail. But for many defendants, bail bonds are set unreasonably high. Unable to raise bail, they sit in jail for months until their trial date rolls around. The United States’ bail system has evolved from its origin during the Middle Ages to the current practice which keeps people incarcerated pre-trial simply because they cannot afford to pay for their freedom. Although scholars, researchers and practitioners argue the current system is unfair to the poor in particular and detrimental to society in general, few jurisdictions have taken the steps necessary to reform this antiquated system. Ohio has long been studying the issue of bail reform but has been short on action. To date there have been commissions, committees, reports and recommendations but no change in the Ohio bail process.[1]

Over the last 20 years, Ohio judges have increasingly set financial conditions for pretrial release, without taking into consideration whether they are actually needed or, more importantly, if they can afford them.[2] Jails throughout Ohio are bursting with men and women cloaked in the presumption of innocence and awaiting trial, simply because they cannot afford to pay the bail set. The Chief Justice of the Supreme Court of Ohio has urged all Ohio judges to avoid imposing excessive bail, reminding them to follow constitutional standards of fairness, especially if fees create an undue burden on poor defendants.[3] Something has to change.

The Hidden Costs of Pretrial Detention 

There are serious costs and risks associated with being detained pre-trial versus being released. Those detained are more likely to be convicted than their counterparts who are freed on bail.[4] They are less likely to see their cases dismissed. They are more likely to commit crimes in the future.[5] They are more likely to plead guilty if they are detained. They suffer an increased risk of being wrongfully convicted. They pay higher non-bail fees than those released. They generally serve longer sentences.[6] The financial costs associated with pretrial detention, increased convictions and longer sentences is borne by the public. However, these are not the only costs associated with holding presumptively innocent people in jail awaiting trial. Arrestees detained longer than 24 hours have an increased risk of failing to appear at future court dates. This is in addition to the loss of employment, housing and destabilization of the family resulting from detention exceeding 24 hours.[7]  This economic and family destabilization affects not only the person accused but the community in which he resides.

Pretrial Bail Imposed Disproportionately Against Blacks

Race also plays a role in whether a court imposes bail. The results of studies involving Ohio are alarming. Blacks represent 35% of the total jail population in Ohio, despite comprising only 12% of the state’s population.[8] Controlling for all other factors, people of color receive higher bail amounts than whites and also longer stays in pretrial detention.[9] This disparate treatment could be reduced or eliminated if bail practices and rules are reformed to require the review of objective factors.

Evidence Does Not Support Maintaining the Status Quo

Those who argue for keeping bail practices unchanged claim money bail and conditions are necessary to ensure the accused appears at all future court appearances. They also assert bail is also required to keep society safe from future offenses committed by the person. These arguments are not supported by evidence. First, secured money bail is no more effective in assuring future appearances than unsecured release.[10] Second, secured money bail is no more effective in assuring public safety than unsecured bail or non-monetary conditions. Studies have found no significant differences in the persons charged with new crimes during pretrial release.[11] On average, judges who more frequently imposed bail conditions did not have a lower arrest or the filing of new charges than judges who did not.[12] Another study shows longer pretrial detention is associated with a greater risk of new criminal offenses while awaiting trial. Those detained 2-3 days were 39% more likely to be engaged in “new criminal activity” than those released in fewer than 24 hours.[13] For those detained over a month, the risk increases to 79% greater than those released within a day.[14] These findings are consistent with the results of another study, where Kentucky significantly increased the numbers of arrestees released on non-monetary bail conditions. They saw a decrease in the number of crimes committed by those released pending trial.[15]

Suggested Reforms

The goal of any bail reform should be to create a system which maximizes appearance, release and appropriate placement, preserves public safety, protects the presumption of innocence, while decreasing the reliance on money bail as the primary release mechanism.  A system in which there is a strong presumption for release on limited or no conditions will place the burden on the prosecutors to justify why bail conditions are necessary.

There should be a presumption in favor of release and against bail conditions. As the late Chief Justice William Rehnquist noted, “[i]n our society liberty is the norm, and detention prior to trial or without trial is the carefully limited exception.” United States v Salerno, 481 U.S. 739, 755 (1987). A judicial officer should be required to use the least restrictive means to assure appearances in court and protect the public. This should include a presumption against money bail. The burden should be on the prosecutor to establish by clear and convincing evidence the accused is a flight risk defined as likely to flee the jurisdiction to avoid prosecution.

The rule should require an “ability to pay hearing”. If a judicial officer determines a financial bond is to be set, it should be set in an amount the accused can afford to post. If this is not required, then the constitutionally mandated protections outlined in Salerno (detention reserved only for those for whom the government demonstrates there are no conditions available which will assure appearance and protect the public) go unmet. If the courts are not required to consider the ability to pay, then an accused will likely remain in jail simply because she did not have the money to afford bail.

Financial conditions should only be considered when trying to assure an accused’s future appearance in court. Too often judges claim money bail helps protect the public. There is no relationship between the amount of bail and future risk of new offenses. In Ohio the law is bail cannot be forfeited for committing a crime while free on bail.  As a result there is no financial incentive for good behavior. Instead, bail is too often used to detain someone pre-trial who is a perceived, but not proven risk, based solely on the crime alleged.

Judges should be required to state the basis for their bail decisions. The rule should require a recorded explanation for why a financial condition or non-financial condition was considered the least restrictive condition necessary to reasonably assure appearance or public safety. Currently, a judge is not required to do so. Many times, courts simply accept the recommendations of a prosecutor or pretrial services employee. The absence of such findings prevents a meaningful appellate review when excessive bail is claimed by a person detained. Factual bases for the imposition of bail will ensure a bail decision is the product of individual consideration and a record exists upon which the decision can be reviewed.

Ohio must eliminate the practice of having the accused bear the costs of non-monetary conditions. Asking the person released to bear the costs of monitoring, testing, and supervision is problematic. Many times this is an expense a defendant cannot afford. The results? Staying in jail unable to avoid the financial burden of the conditions or taking on unsustainable debt, which can interfere with successful re-entry following completion of the criminal case. If the charges are dismissed or the defendant acquitted, the fees paid are not refunded. Further, if the costs are borne by the courts, their use will be limited to those cases where the need is truly evident. It also helps make sure the legally or factually innocent/acquitted are not punished in advance of a trial by having to pay or be detained for not being able to afford the conditions.

Conclusion

Bail reform will not put the public at greater risk. It will reduce jail populations. It will result in reduced costs to taxpayers. It will help ensure an accused is treated fairly and not punished pre-trial simply because the accused is poor and cannot afford the money necessary to be released. It will reduce the risk of wrongful convictions, coerced guilty pleas, and unreasonable bail decisions. It will help ensure equal treatment while increasing the public’s confidence the Ohio courts are fair.

Endnotes

[1]Ohio Sentencing Commission Ad Hoc Committee on Bail issued a report in June 2017. https://www.sc.ohio.gov/Boards/Sentencing/resources/commReports/bailPretrialSvcs.pdf Ohio Supreme Court Chief Justice O’Connor has now formed another committee to study bail.  https://www.usnews.com/news/best-states/ohio/articles/2019-01-24/ohio-chief-justice-announces-review-of-state-bail-system.

[2]https://www.prisonpolicy.org/profiles/OH.html.

[3]https://www.usnews.com/news/best-states/ohio/articles/2018-01-31/ohio-justice-urges-judges-to-avoid-excessive-fines-bail.

[4] Dobbie, W., Goldin, J., Yang, C.S., The Effects of Pretrial Detention on Conviction, Future Crime, and Employment: Evidence from Randomly Assigned Judges (2018) American Economic Review, 108(2), 201-40, available at https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.20161503

[5] See, e.g., Arpit Gupta, Christopher Hansman, Ethan Frenchman, The Heavy Cost of High Bail: Evidence from Judge Randomization, at 1, available at http://www.columbia.edu/~cjh2182/GfuptaHansmanFrenchman.pdf

[6] Stevenson, M. (2017). Distortion of Justice: How the Inability to Pay Bail Affects Case Outcomes. Available at SSRN: https://ssrn.com/abstract=2777615 or http://dx.doi.org/10.2139/ssrn.2777615.

[7] Heaton, P., Mayson, S., & Stevenson, M. (2017). The Downstream Consequences of Misdemeanor Pretrial Detention. Stanford Law Review, Vol. 69, p 711.

[8]Vera Institute, Incarceration Trends (2017) http://trends.vera.org/rates/ohio?incarceration=rate&similar=jailpopulation; U.S. Census Bureau, “Annual Estimates of the Resident Population by Sex, Age, Race, and Hispanic Origin for the United States and States,” 2015 population estimates.

[9]See, e.g., Will Dobbie, Jacob Goldin, and Crystal Yang, Racial Bias in Bail Decisions, available at  https://www.princeton.edu/~wdobbie/files/racialbias.pdf.

[10] Brooker, C. M. B., Jones, M. R., & Schnacke, T. R. (2014). The Jefferson County Bail Project: Impact Study Found Better Cost Effectiveness for Unsecured Recognizance Bonds Over Cash and Surety Bonds. Rockville, MD: Pretrial Justice Institute. see also; Jones, M. R. (2013). Unsecured Bonds: The As Effective and Most Efficient Pretrial Release Option. Rockville, MD: Pretrial Justice Institute; Lowenkamp, C. T., VanNostrand, M., & Holsinger, A. (2013). The Hidden Costs of Pretrial Detention. Houston, TX: Laura And John Arnold Foundation.

[11] See Brooke and Jones, supra.

[12] Brooker, supra.

[13] Lowenkamp, supra.

[14] Id.

[15] Heyerly, M. (2013). Pretrial Reform in Kentucky. Frankfort, KY: Pretrial Services, Administrative Office of the Courts of Kentucky Court of Justice

Please read update to this post here.

On January 23, 2019, Chief Justice Maureen O’Connor convened a task force to examine the Ohio bail system. Read about that from Court News Ohio here. In light of this initiative, I have asked prominent Cincinnati criminal defense attorney Bill Gallagher to write a guest post on the need for bail reform, which follows.

Commentary: Guest Post on the Need for Bail Reform

By Bill Gallagher

The concept of bail is to ensure the accused will show up for court once he or she is released from jail. But for many defendants, bail bonds are set unreasonably high. Unable to raise bail, they sit in jail for months until their trial date rolls around. The United States’ bail system has evolved from its origin during the Middle Ages to the current practice which keeps people incarcerated pre-trial simply because they cannot afford to pay for their freedom. Although scholars, researchers and practitioners argue the current system is unfair to the poor in particular and detrimental to society in general, few jurisdictions have taken the steps necessary to reform this antiquated system. Ohio has long been studying the issue of bail reform but has been short on action. To date there have been commissions, committees, reports and recommendations but no change in the Ohio bail process.[1]

Over the last 20 years, Ohio judges have increasingly set financial conditions for pretrial release, without taking into consideration whether they are actually needed or, more importantly, if they can afford them.[2] Jails throughout Ohio are bursting with men and women cloaked in the presumption of innocence and awaiting trial, simply because they cannot afford to pay the bail set. The Chief Justice of the Supreme Court of Ohio has urged all Ohio judges to avoid imposing excessive bail, reminding them to follow constitutional standards of fairness, especially if fees create an undue burden on poor defendants.[3] Something has to change.

The Hidden Costs of Pretrial Detention 

There are serious costs and risks associated with being detained pre-trial versus being released. Those detained are more likely to be convicted than their counterparts who are freed on bail.[4] They are less likely to see their cases dismissed. They are more likely to commit crimes in the future.[5] They are more likely to plead guilty if they are detained. They suffer an increased risk of being wrongfully convicted. They pay higher non-bail fees than those released. They generally serve longer sentences.[6] The financial costs associated with pretrial detention, increased convictions and longer sentences is borne by the public. However, these are not the only costs associated with holding presumptively innocent people in jail awaiting trial. Arrestees detained longer than 24 hours have an increased risk of failing to appear at future court dates. This is in addition to the loss of employment, housing and destabilization of the family resulting from detention exceeding 24 hours.[7]  This economic and family destabilization affects not only the person accused but the community in which he resides.

Pretrial Bail Imposed Disproportionately Against Blacks

Race also plays a role in whether a court imposes bail. The results of studies involving Ohio are alarming. Blacks represent 35% of the total jail population in Ohio, despite comprising only 12% of the state’s population.[8] Controlling for all other factors, people of color receive higher bail amounts than whites and also longer stays in pretrial detention.[9] This disparate treatment could be reduced or eliminated if bail practices and rules are reformed to require the review of objective factors.

Evidence Does Not Support Maintaining the Status Quo

Those who argue for keeping bail practices unchanged claim money bail and conditions are necessary to ensure the accused appears at all future court appearances. They also assert bail is also required to keep society safe from future offenses committed by the person. These arguments are not supported by evidence. First, secured money bail is no more effective in assuring future appearances than unsecured release.[10] Second, secured money bail is no more effective in assuring public safety than unsecured bail or non-monetary conditions. Studies have found no significant differences in the persons charged with new crimes during pretrial release.[11] On average, judges who more frequently imposed bail conditions did not have a lower arrest or the filing of new charges than judges who did not.[12] Another study shows longer pretrial detention is associated with a greater risk of new criminal offenses while awaiting trial. Those detained 2-3 days were 39% more likely to be engaged in “new criminal activity” than those released in fewer than 24 hours.[13] For those detained over a month, the risk increases to 79% greater than those released within a day.[14] These findings are consistent with the results of another study, where Kentucky significantly increased the numbers of arrestees released on non-monetary bail conditions. They saw a decrease in the number of crimes committed by those released pending trial.[15]

Suggested Reforms

The goal of any bail reform should be to create a system which maximizes appearance, release and appropriate placement, preserves public safety, protects the presumption of innocence, while decreasing the reliance on money bail as the primary release mechanism.  A system in which there is a strong presumption for release on limited or no conditions will place the burden on the prosecutors to justify why bail conditions are necessary.

There should be a presumption in favor of release and against bail conditions. As the late Chief Justice William Rehnquist noted, “[i]n our society liberty is the norm, and detention prior to trial or without trial is the carefully limited exception.” United States v Salerno, 481 U.S. 739, 755 (1987). A judicial officer should be required to use the least restrictive means to assure appearances in court and protect the public. This should include a presumption against money bail. The burden should be on the prosecutor to establish by clear and convincing evidence the accused is a flight risk defined as likely to flee the jurisdiction to avoid prosecution.

The rule should require an “ability to pay hearing”. If a judicial officer determines a financial bond is to be set, it should be set in an amount the accused can afford to post. If this is not required, then the constitutionally mandated protections outlined in Salerno (detention reserved only for those for whom the government demonstrates there are no conditions available which will assure appearance and protect the public) go unmet. If the courts are not required to consider the ability to pay, then an accused will likely remain in jail simply because she did not have the money to afford bail.

Financial conditions should only be considered when trying to assure an accused’s future appearance in court. Too often judges claim money bail helps protect the public. There is no relationship between the amount of bail and future risk of new offenses. In Ohio the law is bail cannot be forfeited for committing a crime while free on bail.  As a result there is no financial incentive for good behavior. Instead, bail is too often used to detain someone pre-trial who is a perceived, but not proven risk, based solely on the crime alleged.

Judges should be required to state the basis for their bail decisions. The rule should require a recorded explanation for why a financial condition or non-financial condition was considered the least restrictive condition necessary to reasonably assure appearance or public safety. Currently, a judge is not required to do so. Many times, courts simply accept the recommendations of a prosecutor or pretrial services employee. The absence of such findings prevents a meaningful appellate review when excessive bail is claimed by a person detained. Factual bases for the imposition of bail will ensure a bail decision is the product of individual consideration and a record exists upon which the decision can be reviewed.

Ohio must eliminate the practice of having the accused bear the costs of non-monetary conditions. Asking the person released to bear the costs of monitoring, testing, and supervision is problematic. Many times this is an expense a defendant cannot afford. The results? Staying in jail unable to avoid the financial burden of the conditions or taking on unsustainable debt, which can interfere with successful re-entry following completion of the criminal case. If the charges are dismissed or the defendant acquitted, the fees paid are not refunded. Further, if the costs are borne by the courts, their use will be limited to those cases where the need is truly evident. It also helps make sure the legally or factually innocent/acquitted are not punished in advance of a trial by having to pay or be detained for not being able to afford the conditions.

Conclusion

Bail reform will not put the public at greater risk. It will reduce jail populations. It will result in reduced costs to taxpayers. It will help ensure an accused is treated fairly and not punished pre-trial simply because the accused is poor and cannot afford the money necessary to be released. It will reduce the risk of wrongful convictions, coerced guilty pleas, and unreasonable bail decisions. It will help ensure equal treatment while increasing the public’s confidence the Ohio courts are fair.

Endnotes

[1]Ohio Sentencing Commission Ad Hoc Committee on Bail issued a report in June 2017. https://www.sc.ohio.gov/Boards/Sentencing/resources/commReports/bailPretrialSvcs.pdf Ohio Supreme Court Chief Justice O’Connor has now formed another committee to study bail.  https://www.usnews.com/news/best-states/ohio/articles/2019-01-24/ohio-chief-justice-announces-review-of-state-bail-system.

[2]https://www.prisonpolicy.org/profiles/OH.html.

[3]https://www.usnews.com/news/best-states/ohio/articles/2018-01-31/ohio-justice-urges-judges-to-avoid-excessive-fines-bail.

[4] Dobbie, W., Goldin, J., Yang, C.S., The Effects of Pretrial Detention on Conviction, Future Crime, and Employment: Evidence from Randomly Assigned Judges (2018) American Economic Review, 108(2), 201-40, available at https://pubs.aeaweb.org/doi/pdfplus/10.1257/aer.20161503

[5] See, e.g., Arpit Gupta, Christopher Hansman, Ethan Frenchman, The Heavy Cost of High Bail: Evidence from Judge Randomization, at 1, available at http://www.columbia.edu/~cjh2182/GfuptaHansmanFrenchman.pdf

[6] Stevenson, M. (2017). Distortion of Justice: How the Inability to Pay Bail Affects Case Outcomes. Available at SSRN: https://ssrn.com/abstract=2777615 or http://dx.doi.org/10.2139/ssrn.2777615.

[7] Heaton, P., Mayson, S., & Stevenson, M. (2017). The Downstream Consequences of Misdemeanor Pretrial Detention. Stanford Law Review, Vol. 69, p 711.

[8]Vera Institute, Incarceration Trends (2017) http://trends.vera.org/rates/ohio?incarceration=rate&similar=jailpopulation; U.S. Census Bureau, “Annual Estimates of the Resident Population by Sex, Age, Race, and Hispanic Origin for the United States and States,” 2015 population estimates.

[9]See, e.g., Will Dobbie, Jacob Goldin, and Crystal Yang, Racial Bias in Bail Decisions, available at  https://www.princeton.edu/~wdobbie/files/racialbias.pdf.

[10] Brooker, C. M. B., Jones, M. R., & Schnacke, T. R. (2014). The Jefferson County Bail Project: Impact Study Found Better Cost Effectiveness for Unsecured Recognizance Bonds Over Cash and Surety Bonds. Rockville, MD: Pretrial Justice Institute. see also; Jones, M. R. (2013). Unsecured Bonds: The As Effective and Most Efficient Pretrial Release Option. Rockville, MD: Pretrial Justice Institute; Lowenkamp, C. T., VanNostrand, M., & Holsinger, A. (2013). The Hidden Costs of Pretrial Detention. Houston, TX: Laura And John Arnold Foundation.

[11] See Brooke and Jones, supra.

[12] Brooker, supra.

[13] Lowenkamp, supra.

[14] Id.

[15] Heyerly, M. (2013). Pretrial Reform in Kentucky. Frankfort, KY: Pretrial Services, Administrative Office of the Courts of Kentucky Court of Justice

Update: On May 5, 2020, the Supreme Court of Ohio handed down a merit decision in this case.  Read the analysis here.

Read the analysis of this argument here. 

On February 20, 2019, the Supreme Court of Ohio will hear oral argument in State of Ohio v. Brad J. Dangler, 2017-1703. At issue is whether a trial court must inform a defendant of all penalties associated with a sex offender classification to comply with Crim.R. 11’s requirement that a defendant enter a plea knowingly and voluntarily. The case was accepted on conflict certification.

Case Background

On November 10, 2015, as part of a negotiated plea, Brad Dangler pled no contest to a sexual battery charge.  At the plea hearing, Williams County Court of Common Pleas Judge J.T. Stelzer told Dangler that he would have to register as a Tier III sex offender for life. Dangler acknowledged that he understood the explanation. At the sentencing hearing, Judge Stelzer informed Dangler that this registration required specific reporting obligations, and that these obligations would be provided to him in writing at a later point in time. But at no time did the judge inform Dangler of the community notification requirements and the residential restrictions. Dangler was sentenced to three years in prison and five years of post-release control.

Dangler appealed to the Sixth District Court of Appeals on the grounds that his plea was not voluntarily and knowingly made because the trial court failed to comply with Crim.R. 11 by not informing him of the punitive consequences of his plea—specifically, that the trial court never informed him of the community notification requirements, residence restrictions, and in-person verification requirements of Tier III registered sex offenders.

In a unanimous decision written by Judge Mark L. Pietrykowski, joined by Judges Thomas Osowik and Christine Mayle, the Sixth District reversed the trial court. The Appeals Court held that the trial court failed to substantially comply with Crim. R. 11’s requirement that Dangler be informed of the punitive consequences of his plea.

The Supreme Court then accepted the case on conflict certification.

Certified Question

“During a plea proceeding, does the failure of the sentencing court to inform a defendant of all the penalties associated with a sex offender classification imposed by R.C. Chapter 2950 constitute a complete failure to comply with Crim.R. 11 and render the plea void without the need to show prejudice resulted?”

Certified Conflict Cases

 State v. Creed, 2012-Ohio-2627 (8th Dist.) (The trial court substantially complied with Crim.R. 11 despite failing to notify the defendant that by pleading guilty he could not live within 1,000 feet of a school.)

State v. Young, 2014-Ohio-2213 (2nd Dist.) (The trial court’s reference to the correct sex-offender tier level and the need for registration constituted partial compliance, and because no prejudice was shown, the plea was valid.)

Votes to Accept the Case

Yes: Chief Justice O’Connor, Justices DeGenaro, DeWine, Kennedy, and O’Donnell*

No: Justices French and Fischer

*Chief Justice O’Connor and Justice DeWine would hold the cause for the decision in 2017-08 91, State v. Kouts.

Key Statutes and Precedent

R.C. 2950 (Ohio’s sex offender classifications and registration requirements, including duty to register, residency restrictions, and geographic notifications.)

Crim.R. 11 (A court shall not accept a guilty or no contest plea without addressing the defendant personally and determining that the plea is knowingly, intelligently, and voluntarily made.)

State v. Nero, 56 Ohio St.3d 106 (1990) (“Literal compliance with Crim. R. 11 is certainly the preferred practice, but the fact that the trial judge did not do so does not require vacation of the defendant’s guilty plea if the reviewing court determines that there was substantial compliance.”)

State v. Veney, 2008-Ohio-5200 (“Substantial compliance means that under the totality of the circumstances the defendant subjectively understands the implications of his plea and the rights he is waiving.”)

State v. Williams, 2011-Ohio-3374 (The registration requirements of R.C. 2950 are punitive, rather than remedial, measures.)

State v. Barker, 2011-Ohio-4130 (An alleged ambiguity during a Crim.R. 11 oral plea colloquy may be clarified by reference to other portions of the record, including the written plea. Syllabus paragraph 2.)

State v. Young, 2014-Ohio-2213 (2nd Dist.) (“. . . a trial court need not elaborate on every specific registration requirement before accepting a plea.”)

State v. Blankenship, 2015-Ohio-4624 (Enhanced sex-offender reporting and notification requirements are punitive in nature, but do not constitute cruel and unusual punishment in violation of the Eight Amendment.)

State’s Argument

The Supreme Court of Ohio should answer the certified question in the negative, and find that when a trial court only partially informs a defendant of some of the requirements of a sex offender classification at the time of the plea, the defendant must show prejudice to void the plea.

In order to void the plea, most Ohio courts interpret Crim.R. 11 to require a “complete failure” of the trial court to either not mention sex-offender classification at all during a plea or to actively misstate the law to a defendant. The Sixth District uses a much broader standard that requires the court to notify the defendant of all classification requirements and their consequences. In the Sixth District, a plea is void and prejudice is presumed when this stricter standard is not met.

In contrast, all other districts use a “substantial compliance” test. This test hinges on whether defendants subjectively understand that they are pleading to a sexually oriented offense that has restrictions along with it.  Crim.R. 11 is deemed to be substantially complied with when defendants are advised of sex offender classifications, and under such advisement defendants must only be strictly advised of constitutional notifications. For the remainder, substantial compliance is enough.

Additionally, the Supreme Court should revisit State v. Williams and progeny which treat sex-offender registration obligations as punitive because these cases give sex offenders greater notice and treatment in pleading than other criminal offenders. Generally, defendants are not required to be notified of collateral consequences which result from their convictions, and if the Court finds R.C. 2950 to be remedial instead of punitive, sex offenders should not be treated differently from other defendants who may have collateral consequences attached to their pleas.

Dangler’s Argument

The Court should hold that a trial court must verbally notify defendants, at the time of their pleas, of all punitive consequences of the pertinent sex offender classification in order to substantially comply with Crim R. 11.

R.C. 2950 is a punitive measure, and comes with several consequences that this Court has deemed punitive, including: (1) personal registration with the sheriff; (2) restrictions on where an offender may live; and (3) community notification. These consequences must be verbally told to the defendant at the plea hearing in order to comply with Crim.R. 11.  The trial court failed to inform Mr. Dangler of all of the punitive consequences of his classification, and thus his plea was unknowing.

The State’s proposed rule would gut Crim.R. 11’s present substantial requirement test and replace it with a total non-compliance standard. The state would find a lack of substantial compliance only if no consequences of sex offender classification are brought up during the plea hearing.

The Court should answer the certified question with a conditional yes. The defendant need not be notified of all of the penalties associated with sex offender status; only those the Court has determined to be punitive.

Student Contributor: Carson Miller

Update: On August 22, 2019, the Supreme Court of Ohio handed down a merit decision in this case.  Read the analysis here.

Read the analysis of the argument here.

On February 19, 2019, the Supreme Court of Ohio will hear oral argument in Paul Cheatham IRA v. The Huntington National Bank, 2018-0184. At issue in the case is whether a sale of municipal bonds vests in the buyer all causes of action of the seller relating to the bond that arose before the transaction.

Case Background

In 1998, Lucas County, Ohio, issued municipal bonds in support of a nursing home development, to be run by Foundation for the Elderly, Inc. Foundation for the Elderly was the obligor for the bonds, and Huntington served as Trustee for the bondholders of the project. As Trustee, it was Huntington’s obligation to collect payments from the obligor and distribute them to the bondholders. In the event of default, Huntington was to act in the best interests of the bondholders.

Sometime before June 2003, Foundation for the Elderly defaulted on the bonds, and by December 2003, Benchmark Healthcare became a substitute obligor and also defaulted. Huntington notified bondholders of both defaults and obligor substitutions. The Cheatham IRA (“Cheatham”) began purchasing the bonds in November 2003, after the default by the Foundation for the Elderly, and continued purchasing the bonds through 2007 at a fraction of their face value, even after Benchmark filed for bankruptcy.  After Benchmark failed to restructure under Chapter 11, Huntington foreclosed on the bonds, giving bondholders a final distribution of about $350,000 of the $6.5 million initial bond issue.

In May of 2015, twelve years after the initial obligor’s default, Cheatham filed a class action lawsuit against Huntington on behalf of itself and other similarly-situated bondholders. Among several claims, Cheatham alleged under a breach of contract claim that Huntington did not do enough to protect bondholder interests, leading to a low final distribution. Lucas County Common Pleas Court Judge James Bates dismissed all claims except the breach of contract claim as being barred by the statute of limitations.

Cheatham then sought class certification of all current bondholders on the breach of contract claim. Cheatham took the position that under R.C. 1308.16(A) (Ohio’s version of U.C.C. 8-302) a purchaser of a security acquires all rights in the security the transferor had. Thus, when the previous bondholders sold their bonds, their right to sue for breach of contract against Huntington transferred automatically to the current bondholders. Judge Bates disagreed with this interpretation of R.C. 1308.16(A),and denied class certification for failure to satisfy  Civ.R. 23(B)(3)’s predominance requirement. Cheatham’s individual breach of contract claim was not dismissed, but Cheatham appealed the denial of class certification.

The Appeal

In a unanimous decision  authored by Judge James P. Jensen, in which Judge Osowick concurred and Judge Mayle concurred and wrote separately, the Sixth District Court of Appeals reversed the trial court’s finding that Cheatham did not satisfy Civ. R. 23(B)(3)’s predominance requirement, and held that subsequent purchasers of bonds do acquire causes of action under R.C. 1308.16, including third-party claims for breach of contract. The appeals court noted the distinction between claims against separate companies and claims against the trustee for the bonds themselves; as a part of a bond proceeding, the transferable rights of bondholders include the right to bring claims against that trustee. Because the basis of the claim is grounded in the same instrument that is part of the contract with the bondholders, the claim is a right in the security that transfers automatically to subsequent purchasers.

Judge Mayle wrote separately to assert that the right to sue for claims that accrued prior to the transfer depends upon the specific security at issue. If the accrued claim cannot arise separately from the enforcement of the original security contract, then it should transfer with the assignment of the security. Since the Trust Indenture here is so central to the bonds at issue, and the contract itself limits legal action to the parties and bondholders, the bondholders have standing to sue for breaches of the trust agreement even if purchased after the cause of action accrued.

Votes to Accept the Case

Yes: Chief Justice O’Connor, and Justices Fischer, Kennedy, and O’Donnell.

No: Justices French, DeWine, and DeGenaro.

Key Statutes and Precedent

R.C. 1308.16(A) (UCC 8-302) (“a purchaser of a certificated or uncertificated security acquires all rights in the security that the transferor had or had power to transfer.”)

R.C. 140.01(J) (“‘Bond proceedings’ means one or more ordinances, resolutions, trust agreements, indentures, and other agreements or documents, and amendments and supplements to the foregoing, or any combination thereof, authorizing or providing for the terms, including any variable interest rates, and conditions applicable to, or providing for the security of, obligations and the provisions contained in such obligations.”)

R.C. 140.06(I) (a trust agreement may provide, in the event of default, for “foreclosure, or any other legal remedy.”)

Bowman v. Parma Bd. of Education, 44 Ohio App. 3d 169 (8th Dist. 1988) (“[a]s a general rule contract claims survive the death of the plaintiff.”)

Leverso v. Southtrust Bank, 18 F.3d 1527 (11th Cir. 1994) (“the terms of the [trust agreement] govern the parties’ contractual rights . . . .”)

Bluebird Partners, L.P. v. First Fid. Bank, N.A., 85 F.3d 970 (2d Cir. 1996) (Under federal law, claims are not automatically assigned to the subsequent purchaser of a security because the law “protect[s] those who are injured . . . not those who subsequently purchase securities at the reduced price.”)

R.A. Mackie & Co. v. PetroCorp Inc., 329 F.Supp.2d 477 (S.D.N.Y. 2004) (Security holders’ rights in the security must be judged against the language in the contract between the parties; the rights “thus include the rights against the issuer under the contract embodied in the security.”)

Consolidated Edison, Inc. v. Northeast Utilities, 318 F.Supp.2d 181 (S.D.N.Y. 2004) (Section 8-302 “applies primarily to disputes over the quality of title and the competing ownership rights passed from transferor to transferee.”)

In re Activision Blizzard, Inc. Stockholder Litig., 124 A.3d 1025 (Del. Ch. 2015) (“When a share of stock is sold, the property rights associated with the shares, including any claim for breach of those rights and the ability to benefit from any recovery or other remedy, travel with the shares.”)

Huntington’s Argument

Cheatham  conceded that if his interpretation of R.C. 1308.16 is incorrect, then class certification would be inappropriate. His interpretation is incorrect, and the trial court properly denied class certification.

Common law and Ohio law treat causes of action as personal property rights separate from the property itself. Absent a valid assignment of the cause of action, the right to sue cannot be included in the bond sale. The law treats the transfer of a security as a separate matter from the transfer of an accrued cause of action relating to that security. The Trust Indenture for the bonds at issue does not alter these background principles of Ohio law and the common law that accrued claims do not automatically transfer without an express assignment. No provision of the Trust Indenture assigns any accrued cause of action from a seller to a buyer, and it disavows any implied rights. Thus, Cheatham cannot pursue any claims that accrued before he first acquired any bonds, in November of 2003, nor may he pursue claims on behalf of a class dating from Foundation for the Elderly’s initial default in June 2003.

R.C. 1308.16, on its face, does not transfer all ownership rights in the seller’s possession. The statute does not say that a purchaser acquires all rights of the seller or all rights related to the security. Instead, it provides the purchaser acquires all rights in the security itself.

UCC Section 8-302’s history and construction do not support automatic transfer of causes of action. Originally, Section 8-302 was treated as a means to determine the transferor’s title, or ownership interest, in the security itself in the event another claimed ownership of the security. This history contradicts Cheatham’s interpretation that Section 8-302 causes the automatic transfer of accrued causes of action when a security is sold.

Looking to other states’ treatment of UCC 8-302 shows the meaning of the provision. New York specifically chose to change the common-law rule that accrued causes of action do not transfer unless expressly provided by the parties. This statute would have been superfluous if the UCC provided for automatic transfer of causes of action.  And case law interpreting federal securities law is consistent with the common law requirement that there must be an express assignment in order to transfer accrued causes of action to a purchaser.

The Sixth District is the only court to have ever concluded that R.C. 1308.16(A) automatically transfers accrued causes of action, and the statutes it relied on do not support that position. Instead of analyzing the common law, the Sixth District applied statutes that allow, but do not require, a bondholder to maintain a cause of action based on alleged pre-purchase breaches. This decision ignores longstanding Ohio law that requires evidence of a seller’s intent to transfer a cause of action to the buyer.

Cheatham’s Argument

Even if accrued causes of action do not automatically transfer upon sale of a bond under the common law, the terms of the Trust Indenture should resolve the issue. Since the trust contract here provides a cause of action to all present and future bondholders, it does not matter when or how bondholders bought the bonds. The terms of the contract make clear that actual ownership of the bond is a requirement to bring a claim for breach of the contract. It is ownership of the bonds, not the date of acquisition, that is dispositive. Therefore, the breach of contract claim is a “right in the security” under R.C. 1308.16(A). R.C. 1308.16(A) provides for the transfer of all rights in the security, not just some of those rights. The right to bring a breach of contract claim arising out of the bond’s trust contract is one of those rights.

Huntington had long term obligations to the bondholders, and the breach of contract claim is a direct claim that adheres to the bonds themselves and is transferrable. It runs with the bonds. Cheatham is not asserting a fraud claim, or another type of claim that requires personal detrimental reliance on Huntington’s actions. Instead, this is a breach of contract claim for a breach of the terms of the trust agreement, which is a property right associated with the bonds themselves.

Even if the claims do not automatically transfer with the bonds, Cheatham has suffered an injury and alone still has standing to pursue the breach of contract claim against Huntington.

Huntington’s Proposed Proposition of Law

Absent a valid assignment of claims, the mere sale of a municipal bond does not automatically vest in the buyer, by operation of R.C. 1308.16 (Section 8-302 of the Uniform Commercial Code), all claims and causes of action of the seller relating to the bond that arose before the transaction.

Cheatham’s Proposed Counter Proposition of Law

The present Holder of a bond issued under a contract containing provisions that it is executed solely for the benefit of all present and future Bondholders and only permits Bondholders to institute a lawsuit to enforce the Indenture, acquires a breach of contract claim arising not only from conduct that occurred gradually, over time, and after the Bondholder’s purchase, but also acquires a breach of contract claim arising from similar conduct that occurred prior to the Bondholder’s purchase of the bonds.

Where such provisions are contained in the governing contract, the breach of contract claim is a “right in the security” under R.C. 1308.16(A) that adheres to and travels with the bond.

Amici in Support of Huntington

The American Bankers Association (“ABA”) filed a brief in support of Huntington. The ABA is the country’s largest banking trade association, and represents banks and holding companies across the country. Ohio common law requires an express assignment of a cause of action; there must be clear evidence of the intent to transfer such a right. This common law is consistent with other states, which generally do not recognize an assignment of a litigation claim when the underlying property is transferred unless there is a clear intent to transfer the right to bring the claim.

Additionally, R.C. 1308.16 governs claims to ownership of a security, not the transferability of causes of action arising from ownership of that security. Section 8-302 of the UCC (R.C. 1308.16’s model statute) is generally held to determine only who owns the security, not what rights may transfer to a buyer after the security is sold. This is how other states have interpreted Section 8-302, and the intent of the UCC includes uniform interpretation across state lines. The ABA adopts Huntington’s proposed proposition of law.

A number of commercial law professors also filed a brief in support of Huntington. The principal drafter, Professor Larry Garvin, is Lawrence D. Stanley Professor of Law at the Ohio State University, where he teaches and writes in the fields of contracts and commercial law. Professor Garvin is a member of the American Law Institute, where he serves as an advisor to the reporters of the Restatement of Consumer Contracts.

The professors note that the UCC drafters did not intend for Section 8-302 to apply to transfers of causes of action. The UCC codified the “shelter principle,” or the rule that a buyer receives everything a seller was able to convey. Historically, this has not included causes of action, and such a transfer requires the parties to agree to transfer more than just ownership of the security.

Therefore, the Court should hold that causes of action related to a security are not automatically assigned upon transfer, but may be transferred by express agreement. This is the case in most jurisdictions, as well as federal securities law. A default rule of automatic assignment may create redundant litigation, as sellers may be forced to sue just to retain their rights, and buyers may inherit a windfall if they acquire securities with liabilities in excess of any actual harm to the buyers.

Amicus law professors offer two proposed propositions of law: (1) Revised Code Section 1308.16(A) [U.C.C. Section 8-302] does not require that claims held by the transferor of a security automatically be assigned to the transferee; and (2) as a matter of both precedent and principle, this Court should rule that choses in action related to a security are not automatically assigned to a transferee upon transfer, but may be transferred by express agreement.

Student Contributor: Carson Miller

 

 

 

Update: On December 17, 2019, the Supreme Court of Ohio handed down a merit decision in this case.  Read the analysis here.

“So we are going to throw out our ordinary rules of procedure and allow the state to play ‘gotcha’ in standing cases, but no other cases?”

Justice DeWine, to the Prosecutor

“Procedurally, when would you have the state raise it (standing) and how?”

Justice Fischer, to Defense Counsel

On January 30, 2019, the Supreme Court of Ohio heard oral argument in State of Ohio v. Justin Wintermeyer, 2017-1135. At issue in the case is whether the State may argue for the first time on appeal that a defendant lacks standing to invoke the Fourth Amendment exclusionary rule.

Case Background

Columbus Police Officer Ryan Wise responded to a report of a possible burglary at a vacant house. While investigating the scene, Officer Wise went to the backyard of the house and noticed two men walking in an abutting alleyway. Officer Wise saw one of the men, later identified as Wintermeyer, enter a house on the opposite side of the alleyway while the other man, later identified as Carlson, waited outside. Minutes later, Officer Wise saw Wintermeyer leave the house and hand something to Carlson. Officer Wise then approached the two men and shined his flashlight on them. At that point Officer Wise saw a small plastic bag in Carlson’s hand. Officer Wise then grabbed the bag from Carlson and detained the two men in the alley.

The bag later tested positive as heroin, and Wintermeyer was charged with possession. Wintermeyer filed a motion to suppress, seeking to invoke the exclusionary rule and exclude evidence of the drugs because it was obtained in violation of his Fourth Amendment rights. The trial court granted the motion. The State appealed the order, claiming that Wintermeyer lacked standing.

In a split decision authored by Judge Julia Dorrian in which Judge Timothy Horton concurred, the Tenth District Court of Appeals affirmed the order granting the motion to suppress. The Tenth District held that in failing to argue the issue of standing in the trial court, the State waived the issue. The Tenth District found that seizure of the bag violated Wintermeyer’s Fourth Amendment rights because he was the subject of an investigative detention that was not supported by reasonable suspicion, and did not fall under the plain view exception. Finally, the Tenth District found that the exclusionary rule barred admission of the evidence obtained unlawfully.

Judge Lisa Sadler dissented on the grounds that the warrantless seizure of the drugs was justified under the plain view exception to the warrant requirement.

Read the oral argument preview here.

Key Statutes and Precedent

Fourth Amendment to the United States Constitution (The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.)

Weeks v. U.S., 232 U.S.383 (1914) (The exclusionary rule bars the use of evidence secured by an unconstitutional search and seizure.)

Terry v. Ohio, 392 U.S. 1, 19 (1968) (Investigative detention may be conducted without violating the Fourth Amendment if the investigating officer reasonably suspects that the person apprehended is committing or has committed a criminal offense.)

State v. Morris, 42 Ohio St.2d 307 (1975) (The state waives its right to challenge Fourth Amendment standing on appeal when it “fails to challenge appellant’s standing to object…and instead elects to defend the reasonableness of the search.”)

Rakas v. Illinois, 439 U.S. 128 (1978) (“The proponent of a motion to suppress has the burden of establishing that his own Fourth Amendment rights were violated by the challenged search or seizure.”)

Rawlings v. Kentucky,  448 U.S. 98 (1980) (A defendant, who placed drugs in someone else’s purse, lacked standing to challenge the search of that purse.)

Steagald v. United States, 451 U.S. 204 (1981) (The government cannot challenge a defendant’s lack of standing on appeal when it has “made contrary assertions in the courts below, … acquiesced in contrary findings by those courts, or … failed to raise such questions in a timely fashion during the litigation.”)

State v. Klima, 934 S.W.2d 109 (Tex.Cr.App.1996) (When the state raises standing for the first time on appeal, it is not “rais[ing] a new issue. Rather it challenged the trial court’s holding that [defendant] met her burden of establishing that the government violated her reasonable expectation of privacy.”)

Herring v. United States, 555 U.S. 155 (2009) (To trigger the exclusionary rule, police conduct must be sufficiently deliberate so that exclusion can meaningfully deter it, and sufficiently culpable that such deterrence is worth the price paid by the justice system.)

State v. Boyd, 2013-Ohio-1067 (2nd Dist.)(The defendant has the initial burden to establish that a warrantless search occurred. The burden then shifts to the prosecution to prove the search was legal.)

United States v. Noble, 762 F.3d 509 (6th Cir.2014) (Fourth Amendment standing is a non-jurisdictional issue that can be waived or forfeited; however, the government can raise an objection to a defendant’s Fourth Amendment standing for the first time on appeal, if it can show that the defendant plainly lacked standing and that failure to recognize it would seriously affect the fairness, integrity or public reputation of judicial proceedings.)

  State’s Proposition of Law Accepted for Review

It is a defendant’s burden to establish his or her standing to invoke the Fourth Amendment exclusionary rule. The State may therefore argue on appeal a defendant’s failure to establish standing, even if it did not specifically raise the issue in the trial court.

At Oral Argument

Arguing Counsel

Seth L. Gilbert, Assistant Prosecuting Attorney, Franklin County, for Appellant State of Ohio

Dustin M. Blake, Blake Law Firm Co. LLC, Columbus, for Appellee Justin Wintermeyer

 State’s Argument

It is always the defendant’s burden to prove standing as part of the merits of a suppression hearing. Rakas makes that clear. When the record unequivocally shows that a defendant failed to meet his burden of proving Fourth Amendment standing, the state does not need to object in the trial court in order to argue this failure of proof on appeal. A failure of proof is not an error that requires an objection below, by either party. There was no forfeiture here. The way the state raises this error in this case is by appealing the trial court’s decision.

In order to meet his burden of proof on standing, Wintermeyer would have to show that the challenged search or seizure violated his own rights, not someone else’s rights, and led to the discovery of evidence. But in this case, if there was any violation of Fourth Amendment rights they were Carlson’s rights, not Wintermeyer’s, even if Wintermeyer was detained simultaneously. It was grabbing the drugs from Carlson, not the detention of Wintermeyer, that led to the discovery of the drugs. Simply put, Wintermeyer simply failed to prove standing, and the evidence does not support the trial court’s decision.

Additionally, the state did raise the standing issue in its memorandum opposing the suppression motion. That certainly should have put the defendant on notice, although the defendant already knew full well he had an obligation to prove standing. If the Court does not think the state raised the objection in its memo contra, the state would welcome plain error review in this case.

Mr. Gilbert also urged the Court to read and carefully follow the decision by the Texas Court of Criminal Appeals in Klima.

Wintermeyer’s Argument

While the state may have referenced standing in its memo contra to the suppression motion, they totally abandoned that argument, and never once referenced or argued it during the entire proceeding. And Mr. Wintermeyer definitely did have standing in this case, which was a simultaneous transaction where both individuals were detained.

The Court of Appeals did the proper analysis here. A defense lawyer serving as appellate counsel who was not trial counsel often sees issues on appeal the trial lawyer may not have seen, but if those issues weren’t raised below they are deemed waived because they weren’t previously brought up. The same should be true for the state.  And even plain error review would not change the result here. The appeals court decision should be affirmed.

What Was On Their Minds

Facts

Mr. Wintermeyer and his co-defendant were both arrested for the transfer of drugs, which by its very nature needs two people, noted Chief Justice O’Connor. Just because the transaction was completed, what was Mr. Wintermeyer doing there? How much time elapsed between leaving the house he ran into, to get these drugs, and meeting up with his co-defendant and handing him the drugs? And the officer had his eyes on him the whole time? Carlson is charged because he has the drugs in his possession. But the man who just handed him the drugs to facilitate a transfer of drugs cannot raise standing? It is one act. Here, we have two people engaged in illegal activity simultaneously.

Didn’t the facts in this particular case amount more to a plain view type of analysis than a standing issue, asked Justice Donnelly?

Isn’t the only thing in the record Carlson being searched, asked Justice Fischer?

Do we even get to the facts, asked Justice Stewart?

Waiver/Forfeiture of Standing Issue

So the state has no obligation to even raise the issue below, asked Justice Fischer?  They can just hide in the weeds until later and raise it then? The earliest it has to be raised is at the court of appeals? Can the state waive or forfeit this issue?

Wasn’t the U.S. Supreme Court very clear in Steagald that if the state didn’t raise the issue, they could forfeit it, asked Justice DeWine? (When the prosecutor disagreed, DeWine quoted from the decision). Isn’t that what happened here? The state failed to raise the questions in a timely fashion?

Is it waiver or forfeiture, asked Justice Stewart, explaining that  waiver is a known right that a party decides not to assert and forfeiture is a party didn’t bring it up at a particular time. But no court has the right to make an error of law, does it? So if the trial court made an error of law, such as the defendant failing to show standing, does that ruling have a right to stand and be shielded from a plain error analysis by a reviewing court?

Burden of Proof

What would a defendant’s proof of standing look like, asked Chief Justice O’Connor? How would he prove it? Would the state argue that wherever it is the defendant’s burden to establish a right or a defense, the state is under no obligation to raise its objection in the trial court at the suppression hearing?

If it’s always the defendant’s burden to prove standing, why is it that the state can raise the issue whenever, asked Justice Stewart? Assuming the trial court made an erroneous decision, to the detriment of the state, and in favor of the defendant, why is it that the state gets to sit on its hands and then raise it at any time? That’s not judicial economy is it? If the court rules the defendant’s favor, isn’t there a presumption of standing?

So is the state asking the Court to say that in every case the state doesn’t have to raise standing and the defense has to prove it anyway, asked Justice DeWine? Or to say in this case it is so clear there was no standing we should have a special rule? What do we do with U.S. Supreme Court cases like Rakas, where the Court said the defense has a burden once the state puts standing at issue? He then asked the state about a hypothetical suppression hearing in which drugs are seized from someone’s house. The state never argues in the trial court that it wasn’t the defendant’s house and he had no rights to live there. In the court of appeals the state finds in the record somewhere a lease to the apartment and says the defense failed to prove standing. Is that ok? (yes, said the prosecutor). Isn’t the state asking for a special rule for standing because in most cases, a party has to raise the issue before there’s a burden to have to put on evidence?

Notice

Didn’t the state raise the standing issue in its memo contra, asked Justice Donnelly? Wasn’t that enough to put the defense on notice that if there is a standing concern the defense should address it?

Was the reference to standing in the state’s memo contra not sufficient to raise the issue of standing, asked Justice French?

Why wasn’t the state’s line or two in the memo contra legally sufficient, asked Justice Fischer? It’s just pablum?

Plain Error Review

If we agree that the state forfeited the right to raise standing, should the appeals court at least have conducted a plain error analysis, asked Justice Stewart? Even if it did, is it the defense position that it could not unequivocally find lack of standing?

If this Court finds forfeiture and not waiver, don’t Justice Stewart’s questions about plain error apply, asked Justice Fischer?

Has there ever been a case where plain error has been recognized in a criminal case for the benefit of the state, asked Justice DeWine? In Ohio?

How It Looks From The Bleachers

To Professor Emerita Bettman

Like a win for Wintermeyer, although Mr. Gilbert certainly passionately stood by his position for the state. While several justices may have been persuaded that the state at least referenced a standing challenge in its memorandum opposing the motion to suppress, it sounds like the state abandoned the argument because it never pursued it in the trial court.  So a finding of forfeiture is likely (the appeals court uses the language of waiver rather than forfeiture, and I confess that I haven’t been as precise about the two terms as I should be, but the point here is the state didn’t raise the issue at the appropriate time). Justice DeWine seemed the most adamant about this and got into a couple of heated disagreements with Mr. Gilbert about U.S. Supreme Court holdings on the subject. And when I consult with lawyers about appellate briefs and arguments, I advise being careful about which out-of-state precedent to rely on—I’d never recommend the Texas Court of Criminal Appeals, as Mr. Gilbert passionately chose.

Perhaps sensing the Court was leaning his way, Mr. Blake was much quieter and vaguer than Mr. Gilbert.

Finally, Justice Stewart raised the issue of plain error review. It’s possible the state may get that, but that is always a hard sell.

Interestingly, when all is said and done over raising the issue, I think on the merits Mr. Wintermeyer did have standing here, as the Chief seemed to think as well, repeatedly emphasizing the simultaneous nature of this drug transaction and seizure, distinguishing some of the related U.S. Supreme Court cases.  What was actually in the record on this point was unclear.

To Student Contributor Ivy Charneski

The Court seemed very hesitant to accept the State’s argument that standing can be raised for the first time on appeal. I thought the Court’s reluctance was especially shown when Justice Fischer asked, “So the State can just hide in the weeds and bring it up at any time?” and later with Justice Stewart’s voicing judicial economy concerns. In fact, Justice DeWine seemed to completely disagree with the State all together. I thought there were even some tense moments with Justice DeWine and the State’s attorney going back and forth in disagreement as to the holdings of many of the key precedent cases. Ultimately, it seemed like the State’s attorney just couldn’t get on the same page as any of the Justices. He kept trying to point out to them how straightforward this case is because standing is part of the merits in a suppression hearing, and therefore it does not need an objection. However, the Justices seemed to refuse to accept the case as clear cut like the State’s attorney insisted. I think this was mainly shown in Justice DeWine’s disagreement on interpretation of a lot of the key precedent and by Chief Justice O’Connor’s insistence on distinguishing the facts to emphasize that this was a consensual transaction between both Carlson and Wintermeyer.  This idea of the consensual transaction involving two people is something that Wintermeyer’s counsel, Mr. Blake, echoed nicely in his argument.

I predict this case to go in Wintermeyer’s favor because of the reluctance the Court expressed at the idea that standing can be raised at any time. However, it did give me pause when some of the Justices brought up the fact that the State did mention standing in its memorandum contra to the suppression motion. This made me wonder, whether they even agree that the State waived its argument.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Update: On May 2, 2019, the Supreme Court of Ohio handed down a merit decision in this case.  Read the analysis here.

“So, what the state wants us to say is it is reasonable that after a police officer hears gunshots fired,to stop basically anyone in the area?”

Justice Stewart to the Prosecutor

“Are you saying that because he responded to their command ‘stop’ that’s indicia he was not engaged in any illegal activity?”

Chief Justice O’Connor to Defense Counsel

On January 29, 2019, the Supreme Court of Ohio heard oral argument in the case State of Ohio v. Jaonte D. Hairston, 2017-1505. At issue in the case is whether the reasonable suspicion standard, set forth in Terry v. Ohio, was satisfied during the search and questioning of Jaonte Hairston.

Case Background

Officer Samuel Moore and his partner, while responding to a domestic dispute, heard gunshots coming from what they believed was the nearby elementary school, which was just a few minutes drive away. It was nighttime. Upon arrival, the only person in the area was Jaonte Hairston, who was walking and talking on his cellphone. The officers got out of the cruiser with guns drawn and ordered Hairston to stop, which he did. Officer Moore questioned Hairston about the gun shots, asked Hairston if he had any weapons, and told Hairston to put his hands behind his back. The officers performed a pat-down search. Hairston told the officers he had a weapon, a semi-automatic pistol.

Hairston was later indicted and charged with violation of R.C. 2923.12, carrying a concealed weapon. Hairston filed a motion to suppress the evidence which, according to Hairston, was obtained by an unconstitutional search of his person. The trial court overruled Hairston’s motion to suppress, finding there was reasonable suspicion for the stop and pat-down search. The evidence obtained by the search was admitted. After entering a plea of no contest, Hairston was found guilty of violating R.C. 2923.12 and received a sentence of community control. Hairston appealed the denial of the suppression motion.

On appeal, the Tenth District, in a unanimous opinion, reversed the decision of the trial court. The appeals court held that the totality of the circumstances did not justify the stop or search of Hairston. Hairston did not exhibit any typical indications that would be expected of someone engaged in wrongdoing. His nervousness was not accompanied by evasive behavior, answers, or body language. Hairston cooperated fully with the officers and answered their questions truthfully. Further, none of the surrounding contextual factors support the assertion that reasonable suspicion existed. Simply being in a high-crime area is not enough to support a stop unless additional factors can be shown to demonstrate particularized suspicion of a particular individual. Because Hairston’s behavior and the surrounding circumstances were insufficient to establish reasonable suspicion, the evidence should have been suppressed. The state appealed.

Read the oral argument preview here.

Key Statutes and Precedent

 United States Constitution, Amendment IV (The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.)

R.C. 2923.12 (No person shall knowingly carry or have a concealed deadly weapon other than a handgun.)

Terry v. Ohio,  392 U.S. 1 (1968) (When police officers have a reasonable suspicion that a crime has just occurred or is about to occur they may engage in a limited search of a person to check for weapons. Any such search must be reasonable given the totality of the circumstances and need not meet the higher standard of probable cause.)

United States v. Cortez, 499 U.S. 411 (1981) (Reasonable suspicion means a suspicion particularized for a given person or persons. To satisfy the particularity requirement, two elements must be met before a stop is permitted. First, the assessment must be made on the totality of the circumstances. Second, the assessment must raise a suspicion that a particular individual is engaged in wrongdoing.)

INS v. Delgado, 466 U.S. 210 (1984) (A reasonable person is aware that the mere act of questioning does not constitute a detention for purposes of the Fourth Amendment.)

State v. Bobo, 37 Ohio St.3d 177 (1988) (The propriety of an investigative stop by a police officer must be viewed in light of the totality of the surrounding circumstances. When considering the totality of the circumstances, the officer must rely on specific and articulable facts which would lead a reasonable officer to conclude a temporary stop is necessary.)

State v. Batchili, 2007-Ohio-2204 (The reasonableness of a detention is based on the circumstances as a whole and may not be examined individually for unreasonableness. The circumstances will not be deemed unreasonable even if they are deemed to have innocent explanations after the fact.)

State’s Proposition of Law Accepted for Review

When officers are responding to very recent gunfire in an area known for criminal activity, it is reasonable for the officers to have their weapons drawn and to briefly detain the only individual seen in the area.

At Oral Argument

Arguing Counsel

Sheryl L. Prichard, Assistant Prosecuting Attorney, Franklin County, for Appellant State of Ohio

Timothy E. Pierce, Assistant Franklin County Public Defender, for Appellee Jaonte Hairston

State’s Argument

Where officers hear gunfire, and respond immediately to the vicinity where the shots came from, they act reasonably in detaining the only person they encounter. When shots are fired in a neighborhood, the public’s interest in safety far outweighs a brief detention of a person  to determine if he was involved.

The officers here heard 4-5 gunshots, coming from the west, near an elementary school. They immediately went to the scene in their cruiser, and arrived within 30-60 seconds. They had a fair sense of where these gunshots came from. They were near an elementary school, and in a neighborhood, and safety was paramount.  They got out of the cruiser with weapons drawn. Having their guns drawn after hearing shots fired was a proportionate response to the situation. They saw no other cars or people except Mr. Hairston. He was the only one in the area. The officers asked Mr. Hairston if he had heard shots. He said that he had. Officer Moore asked Mr. Hairston to place his hands behind his back, and indicated he needed to pat him down. When asked, Mr. Hairston admitted he had a gun in his pocket, which the officer retrieved.

The officers acted reasonably by inquiring and finding out whether or not Mr. Hairston had a weapon.  They did nothing more intrusive than was necessary to fulfill their duties and their duties to the public. They were making sure no one was in danger. Hearing gunshots, hearing them from that high crime area, finding only one person in the area, certainly provides reasonable suspicion that criminal activity may be afoot and that that may be the person involved.

In evaluating the legitimacy of a Terry stop, the totality of the circumstances must be examined. Here we have proximity, timing, and Mr. Hairston as the sole person in the area. Terry only requires reasonableness, not perfection or certainty. The interests of an individual and his privacy rights must be balanced against the officers’ interest in securing their safety and the safety of the public.  This was a limited and reasonable detention by officers in responding to gunshots.

Hairston’s Argument

The decision the officers made that Mr. Hairston was engaged in criminal activity was unreasonable under the circumstances. What’s found in the search cannot be the justification for the search. There was a lack of reasonable articulable suspicion for the stop. Mr. Hairston made no furtive gestures, which this Court has held to be an indicia of criminal activity. He was not fleeing. The fact that he was simply in the area of shots fired was not enough.  And the location of the gunshots was not nearly as precise as the prosecution suggests. At the motion hearing, the officer testified he had a “hunch” Mr. Hairston was engaged in criminal activity. (Justice French called Mr. Pierce out on this, noting that it was defense counsel, not the officer, who used the word “hunch”).  None of this was enough to satisfy Terry.

Mr. Pierce went into great and specific detail about the geography of the area, to suggest the shots weren’t as close to where Mr. Hairston was found walking as the state suggested.

The defense is not suggesting that the officers couldn’t investigate this. But based on the metrics of the vagaries of where the shots came from, and Mr. Hairston’s behavior, there were alternatives to a forcible seizure, such as a consensual encounter. The officers could have asked Mr. Hairston what he was doing out there, asked for his identification, asked for permission to search him. Or they could have surveilled him for awhile, as was done in Terry. This was a forcible detention with no particularized suspicion. There was no nexus between Mr. Hairston and the shots fired. There was nothing in the record that showed anything other than merely being present.

Although it is after-the-fact, it is interesting to note that when the state went looking for shell casings in the area, they found none, which substantiates the difficulty of pinpointing exactly where shots fired are coming from.

What Was On Their Minds

Reasonable Suspicion

Is it reasonable under the circumstances for police officers to stop anyone that they see in an area suspected of having recently heard shots fired, asked Justice Stewart? Aren’t they going to approach with their guns drawn when they hear shots fired? Would it matter if they heard shots in a nice residential area rather than in a high crime area?

You are down to 10 minutes and I still haven’t heard why you don’t think there was reasonable suspicion here, commented Justice French to defense counsel.

Mr. Hairston’s Conduct

So what about Mr. Hairston’s conduct made him a suspect, or would lead the police to reasonably suspect that he might be involved in the shooting, asked Justice Stewart? Was he stopped for the officers to investigate, or because he was considered a suspect? His simply being there at that place and that time made him a suspect? Were the officers’ guns drawn on him? Should that matter? Once he did stop, did the police then have a right to pat him down or ask him if he had any weapons on him? When he said he had a weapon on him, should the officers have asked whether he had a CCW permit? Or is that even relevant?

Mr. Hairston cooperated, he didn’t run away, noted Justice Fischer. How were the police to question him when he was walking away if they didn’t ask him to stop?

Did Mr. Hairston just happen to be the only human being the police saw, asked Chief Justice O’Connor? Just because Mr. Hairston stopped when two officers with weapons commanded him to stop, was that an indicia of the fact he had nothing to hide?

Terry/Justification for the Stop

Was the justification for the stop that this is a known area where a lot of bad things happen, asked Chief Justice O’Connor? Combined with the fact that Mr. Hairston didn’t seem agitated or freaked out about the shots fired? What else were the officers to have done? Start knocking on doors? Keep their weapons holstered? I don’t know if you would find a reasonable standard among officers when they are approaching a scene where more than one shot was fired, not to have their weapons out, she commented.

Justice Donnelly commented that the trial court indicated this was a close call, but seemed to think that the dispositive fact was that the officers themselves heard the gunshots and were responding to that. Would the officers have been allowed to approach this person if they were just responding to a dispatch call or report and went into the area?

If the sole person on the street had been an 80 year old woman, would the response have been the same, asked Justice Stewart? Would the police have jumped out of their cruisers with guns drawn, and ask if she heard shots in the area and if she had a gun on her? Surely the law says, simply being in the vicinity is not enough? I keep going back to the Terry requirement that there must be reasonable suspicion that the person has committed or is about to commit a crime. How is one person on the street reasonably suspected of being the perpetrator of a crime? Doesn’t Terry require a reasonable suspicion that the person they are about to detain has committed or is going to commit a crime? Is the problem the command to stop with weapons drawn? To go past an investigative stop to an immediate detention?

Totality of the Circumstances

The police are allowed to use their experience, their perceptions, all the other skills, attributes, whatever, when they are making a decision to justify a Terry stop, noted Chief Justice O’Connor. Based on all of that, is that how the component of reasonableness is found?

After the Fact

If shell casings had been found later, would that make this all ok, asked Justice Stewart?

After the fact it may have proven that the shots weren’t fired that close to the elementary school, or to where Mr. Hairston was standing, commented Chief Justice O’Connor. But the facts that the officers have to take into consideration have to be what they understood the facts to be at the time, based on the reasonableness of their perceptions, and obviously, we are looking at that against an objective standard.

Area Where Shots Fired

Didn’t Mr. Hairston point farther way when the police talked to him, asked Justice Fischer? Is that a factor?

What kind of area was it, asked Chief Justice O’Connor? Was it a big, open flat area that you could see, blocks and blocks away, or was this a neighborhood? It took the officers about a minute to get there? Enough time for someone to leave the area either on foot or by car?

They did respond to the school complex didn’t they, asked Justice French? Where the elementary school, the fields, and the high school are?

How it Looks From the Bleachers

To Professor Emerita Bettman

I went in thinking this should be a walk away win for Hairston. He was simply the only person in an area in which the police thought shots had been fired, walking down the street, talking on his cell phone, doing nothing overtly suspicious. He exhibited none of the indicia of what the Court has in the past held to be suspicious behavior.  Just being there, as Justice Stewart put it.  But after argument, I wasn’t so sure, in part because I thought the prosecutor made a more effective argument than defense counsel.

Despite rigorous questioning, especially from Justice Stewart on the particularized suspicion requirement of Terry, Ms. Pritchard effectively contextualized the proximity, timing, and urgency here, and the fact that the police are allowed to use their experience, observations, and other skills in deciding to make a Terry stop. I  thought defense counsel spent too much time waxing philosophically on the evils the Fourth Amendment is designed to protect against.  Justice French chided him that after five full minutes of argument, he still hadn’t zeroed in on why he didn’t think there was reasonable suspicion here. I also thought Mr. Pierce went into way too much detail about the geography of the area.

Still, even as I write this, I remain troubled by the lack of any particularized suspicion centering on Mr. Hairston, other than his simply being present in a what was characterized as a high crime area.   As the trial court noted, this is a very close case, and I hope the defense can pull this one out.

To Student Contributor Paul Taske

This looks like a win for Hairston. The Court was thorough in its questioning of both parties. Yet, during the State’s argument the justices appeared incredibly skeptical at nearly every point. Justice Stewart seemed highly concerned with the State’s assertion that the timing, location, and “only suspect” conditions offered by the State gave rise to reasonable suspicion under Terry. The Court also raised issues during Hairston’s argument; yet, the issues raised seemed more as if the court were trying to refine its own holding rather than challenging the fundamentals of Hairston’s argument. I think it highly likely that the Court will find the officers lacked reasonable suspicion in this case, but the underlying doctrine will remain in place.