State Ex Rel. Teamsters Local Union No. 436 v. Board of County Commissioners , 132 Ohio St. 3d 47 ( 2012 )


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  • [Cite as State ex rel. Teamsters Local Union No. 436 v. Cuyahoga Cty. Bd. of Commrs., 
    132 Ohio St.3d 47
    , 
    2012-Ohio-1861
    .]
    THE STATE EX REL. TEAMSTERS LOCAL UNION NO. 436 ET AL., APPELLEES, v.
    BOARD OF COUNTY COMMISSIONERS, CUYAHOGA COUNTY, OHIO, APPELLANT.
    [Cite as State ex rel. Teamsters Local Union No. 436 v. Cuyahoga Cty. Bd. of
    Commrs., 
    132 Ohio St.3d 47
    , 
    2012-Ohio-1861
    .]
    Appeals from decisions of political subdivisions—R.C. Chapter 2506—Exclusion
    of one department from public employer’s early-retirement plan—
    Taxpayer’s action—Standing—Declaratory judgment—Exhaustion of
    administrative remedies.
    (No. 2011-0569—Submitted December 6, 2011—Decided May 1, 2012.)
    APPEAL from the Court of Appeals for Cuyahoga County, No. 94703,
    
    194 Ohio App.3d 258
    , 
    2011-Ohio-820
    .
    __________________
    MCGEE BROWN, J.
    {¶ 1} Appellant, the Board of County Commissioners of Cuyahoga
    County, appeals from a declaratory judgment in favor of appellees, Teamsters
    Local Union No. 436 and union member Kevin Lesh (collectively, “the union”),
    holding that the commissioners’ Employee Retirement Incentive Plan (“ERIP”)
    was in violation of R.C. 145.297.1
    1. R.C. 145.297(B) provides:
    An employing unit may establish a retirement incentive plan for its eligible
    employees. In the case of a county or county agency, decisions on whether to
    establish a retirement incentive plan for any employees other than employees of
    a board of alcohol, drug addiction, and mental health services or county board of
    developmental disabilities and on the terms of the plan shall be made by the
    board of county commissioners.
    R.C. 145.297(A) provides:
    As used in this section, “employing unit” means:
    SUPREME COURT OF OHIO
    {¶ 2} For the reasons set forth, we reverse the judgment of the court of
    appeals.
    Background
    {¶ 3} On November 6, 2008, the commissioners passed a resolution
    establishing an early-retirement incentive program, enrollment for which would
    be open from January 15, 2009, to January 14, 2010. The resolution made the
    plan available to all employees of the commissioners, except for the Sanitary
    Engineering Division.
    {¶ 4} The union represents a bargaining unit of employees who work for
    the Sanitary Engineering Division of the commissioners.                       Pursuant to R.C.
    6117.01(C), the commissioners supervise the Sanitary Engineering Division, set
    the compensation of its employees, and approve collective-bargaining agreements
    with the union. A few days before passage of the resolution, some employees of
    the Sanitary Engineering Division, none of whom were union members and none
    of whom are parties to this appeal, had filed a grievance on behalf of all Sanitary
    Engineering Division employees regarding eligibility for the retirement plan. The
    county administrator, James McCafferty, held a hearing on the grievance on
    January 9, 2009. Approximately 15 Sanitary Engineering Division employees, at
    least four of whom were union members, attended the hearing and were given an
    (1) A municipal corporation, agency of a municipal corporation designated
    by the legislative authority, park district, conservancy district, sanitary district,
    health district, township, department of a township designated by the board of
    township trustees, metropolitan housing authority, public library, county law
    library, union cemetery, joint hospital, or other political subdivision or unit of
    local government.
    ***
    (3)(a) With respect to employees of a board of alcohol, drug addiction, and
    mental health services, that board.
    (b) With respect to employees of a county board of developmental
    disabilities, that board.
    (c) With respect to other county employees, the county or any county
    agency designated by the board of county commissioners.
    (4) In the case of an employee whose employing unit is in question, the
    employing unit is the unit through whose payroll the employee is paid.
    2
    January Term, 2012
    opportunity to be heard.     On January 20, 2009, the administrator issued a
    decision, determining that the Sanitary Engineering Division employees were not
    permitted to participate in the retirement plan. The administrator mailed the
    decision to each employee who had attended the hearing, including the four
    identified union members, Kevin Lesh, Jerry Tharp, Richard Dryer, and Thomas
    Spracale.   None of the employees attempted to appeal the administrator’s
    decision.
    {¶ 5} Almost one year later, on December 22, 2009, the union sent a
    taxpayer demand letter to the Cuyahoga County prosecutor. The union urged the
    prosecutor to file an action to compel the commissioners to extend the retirement
    plan to the Sanitary Engineering Division employees, or to recover the funds used
    for the retirement plan due to its allegedly unlawful exclusion of the Sanitary
    Engineering Division. The prosecutor declined to initiate the requested action.
    {¶ 6} On December 30, 2009, the union filed a taxpayer action against
    the commissioners, on behalf of all union-member Sanitary Engineering Division
    employees, seeking injunctive and declaratory relief.     Specifically, the union
    sought a declaration that the commissioners violated R.C. 145.297 when they
    authorized the ERIP for all board employees excluding the Sanitary Engineering
    Division and sought an order compelling the commissioners to include the
    Sanitary Engineering Division in the ERIP. The union sought similar relief in a
    separate cause of action for declaratory judgment and in a request for a writ of
    mandamus in its January 7, 2010 amended complaint. In addition to denying the
    merits of the union’s claims, the commissioners asserted that the union did not
    have standing to bring its taxpayer action and that it was otherwise barred from
    requesting equitable remedies because the Sanitary Engineering Division
    employees had failed to exhaust their administrative remedies.
    {¶ 7} Noting that the union had brought the present action mere days
    before the ERIP was due to terminate, the trial court denied the union’s request
    3
    SUPREME COURT OF OHIO
    for injunctive relief and its action in mandamus, in an entry issued on January 22,
    2010. However, the trial court did grant the union’s prayer for declaratory relief
    and held that the commissioners’ failure to include the Sanitary Engineering
    Division as part of the “employing unit” that was eligible for the ERIP did not
    comply with the definition of “employing unit” in R.C. 145.297 and that the
    commissioners were therefore in violation of the statute.
    {¶ 8} The commissioners appealed to the Eighth District Court of
    Appeals, which, in a split decision, affirmed the trial court’s judgment. State ex
    rel. Teamsters Local Union No. 436 v. Cuyahoga Cty. Bd. of Commrs., 
    194 Ohio App.3d 258
    , 
    2011-Ohio-820
    , 
    955 N.E.2d 1020
     (Cooney, J., dissenting). We
    accepted discretionary jurisdiction to hear the commissioners’ appeal. 
    128 Ohio St.3d 1556
    , 
    2011-Ohio-2905
    , 
    949 N.E.2d 43
    .
    Analysis
    {¶ 9} The commissioners raise three propositions of law: first, that the
    commissioners had the budgetary discretion to exclude one or more of its
    subordinate divisions from participating in the ERIP; second, that the union-
    represented Sanitary Engineering Division employees did not have standing to
    initiate a taxpayer suit, because they did not seek to vindicate a public right; and
    third, that the Sanitary Engineering Division employees were required to exhaust
    the available administrative remedies prior to filing the action. Because our
    resolution of the issues of taxpayer standing and exhaustion of administrative
    remedies is dispositive, we will address them first.
    Taxpayer Standing
    {¶ 10} Before a court may consider the merits of a party’s legal claim, the
    party seeking relief must establish that he or she has standing to bring the claim.
    State ex rel. Ohio Academy of Trial Lawyers v. Sheward, 
    86 Ohio St.3d 451
    , 469,
    
    715 N.E.2d 1062
     (1999). The issue of standing determines “whether a litigant is
    4
    January Term, 2012
    entitled to have a court determine the merits of the issues presented.” Ohio
    Contrs. Assn. v. Bicking, 
    71 Ohio St.3d 318
    , 320, 
    643 N.E.2d 1088
     (1994).
    Whether a party has established standing to bring an action before the court is a
    question of law, which we review de novo. Cuyahoga Cty. Bd. of Commrs. v.
    State, 
    112 Ohio St.3d 59
    , 
    2006-Ohio-6499
    , 
    858 N.E.2d 330
    , ¶ 23.
    {¶ 11} An analysis of standing in a statutory taxpayer action against a
    county entity must begin with R.C. 309.12, which allows a county prosecutor to
    initiate legal action to restrain the contemplated misapplication of county funds or
    completion of illegal contracts or to recover funds or damages from illegal
    contracts that have been executed or funds that have been misapplied.           If a
    taxpayer presents a written request to the county prosecutor to take action
    pursuant to R.C. 309.12 and is denied assistance from the county prosecutor, the
    taxpayer may initiate his own action on behalf of the county. R.C. 309.13. In
    addition to the satisfaction of the foregoing formal requirement, the taxpayer must
    also demonstrate that the remedy sought will benefit the public in order to have
    standing. State ex rel. White v. Cleveland, 
    34 Ohio St.2d 37
    , 
    295 N.E.2d 665
    (1973).
    {¶ 12} “ ‘ “There are serious objections against allowing mere interlopers
    to meddle with the affairs of the state, and it is not usually allowed unless under
    circumstances when the public injury by its refusal will be serious.” ’ (Emphasis
    added.)” State ex rel. Academy of Trial Lawyers v. Sheward, 86 Ohio St.3d at
    472, 
    715 N.E.2d 1062
    , quoting State ex rel. Trauger v. Nash, 
    66 Ohio St. 612
    ,
    616, 
    64 N.E. 558
     (1902), quoting People ex rel. Ayres v. Bd. of State Auds., 
    42 Mich. 422
    , 429, 
    4 N.W. 274
     (1888). Accordingly, only “when the issues sought
    to be litigated are of great importance and interest to the public [may they] be
    resolved in a form of action that involves no rights or obligations peculiar to
    named parties.” Sheward at 471. Conversely, when a remedy being pursued is
    one that is merely for the individual taxpayer’s benefit, the taxpayer cannot claim
    5
    SUPREME COURT OF OHIO
    that he is vindicating a public right, and he will not have standing to pursue a
    taxpayer action. State ex rel. Caspar v. Dayton, 
    53 Ohio St.3d 16
    , 20, 
    558 N.E.2d 49
     (1990).
    {¶ 13} In Caspar, police officers alleged that the city of Dayton was in
    violation of R.C. 9.44 by not recognizing the officers’ prior public service when
    computing the amount of each officer’s supplemental vacation leave. Id. at 16.
    The police officers sought a writ of mandamus to compel the city to correct its
    computation process and provide additional leave benefits. This court held that
    the goal of compelling fringe benefits for the police officers’ own benefit did not
    constitute the goal of enforcing a public right and that the police officers’ right to
    vacation pay did not constitute a public right for purposes of a statutory taxpayer
    action. Id. at 20.
    {¶ 14} Since Caspar, our state’s appellate courts have generally
    concluded that taxpayers were not attempting to benefit the public in similar
    circumstances. E.g., Cleveland ex rel. O'Malley v. White, 
    148 Ohio App.3d 564
    ,
    
    2002-Ohio-3633
    , 
    774 N.E.2d 337
    , ¶ 42-47 (8th Dist.) (holding that electricians’
    union lacked taxpayer standing to enjoin the city from using nonelectricians to
    perform certain work, because public safety was not a true concern and the union
    was merely protecting its members’ interests in keeping the work for themselves);
    Assn. of Cleveland Fire Fighters, Local 93 v. Cleveland, 
    156 Ohio App.3d 368
    ,
    
    2004-Ohio-994
    , 
    806 N.E.2d 170
    , ¶ 16 (8th Dist.) (holding that firefighters’ union
    lacked taxpayer standing to compel back pay and wage differentiation between
    different ranks of officers because the allegation of a public benefit was a pretext
    for seeking a private benefit); Cincinnati ex rel. Radford v. Cincinnati, 1st Dist.
    No. C-030749, 
    2004-Ohio-3501
    , 
    2004 WL 1486072
    , ¶ 12-13 (holding that
    retirement-system trustees lacked taxpayer standing because their goal was not to
    enforce a public right but was merely to benefit the retirement system and its
    members); Home Builders Assn. of Dayton & Miami Valley v. Lebanon, 
    167 Ohio 6
    January Term, 2012
    App.3d 247, 
    2006-Ohio-595
    , 
    854 N.E.2d 1097
    , ¶ 54 (12th Dist.) (holding that
    homebuilders lacked standing in a taxpayer action seeking a declaration of
    unconstitutionality of a city ordinance requiring telecommunications connection
    fees, because the action was primarily to enforce the homebuilders’ private
    interests, not a public right).
    {¶ 15} This court distinguished Caspar in a subsequent decision, State ex
    rel. Fisher v. Cleveland, 
    109 Ohio St.3d 33
    , 
    2006-Ohio-1827
    , 
    845 N.E.2d 500
    .
    The relators in Fisher sought to enjoin the city from requiring municipal
    employees to submit copies of their tax returns in order to prove that they satisfied
    the city’s residency requirement. Although the relators’ taxpayer action in Fisher
    was similar to Caspar in that the controversy arose from a public-employment
    relationship, we reached a different conclusion and held that the relators did have
    standing to pursue the action. 
    Id.
     at paragraph one of the syllabus. Specifically,
    the city’s actions constituted an unnecessary violation of privacy and therefore an
    abuse of its corporate powers, which is an appropriate target for a statutory
    municipal taxpayer action. 
    Id.
     at paragraph three of the syllabus. This court
    made it clear that we were not suggesting that citizens always have taxpayer
    standing to challenge the terms of public employment when we expressly
    distinguished Caspar. Id. at ¶ 12-18. Moreover, our decision in Fisher was
    supported by factors that are not present in the case at hand.
    {¶ 16} Unlike the relators in Fisher, the union here has failed to allege
    any concrete taxpayer interest that is threatened by the county’s ERIP resolution.
    Instead, the union merely alleges that the existence of a statutorily noncompliant
    county resolution constitutes an injury in and of itself.        Although it is well
    established that taxpayers “may judicially contest the validity of any official act
    which directly affects prejudicially their rights as taxpayers by increasing the
    burden of taxes or otherwise,” taxpayers cannot contest official acts “merely upon
    the ground that they are unauthorized and invalid.” Pierce v. Hagans, 
    79 Ohio St. 7
    SUPREME COURT OF OHIO
    9, 22, 
    86 N.E. 519
     (1908). Thus, without more than the bare claim that the county
    has failed to comply with R.C. 145.297, the union cannot establish taxpayer
    standing.
    {¶ 17} Although a county’s failure to comply with a statute would
    certainly not benefit the public, allowing constant judicial intervention into
    government affairs for matters that do not involve a clear public right would also
    not benefit the public. As in Caspar, there is no vindication of public rights or
    conferral of public benefits to be found in the union’s attempt to obtain retirement
    benefits for a small number of employees. Therefore, we hold that the union
    lacked taxpayer standing to challenge the board’s ERIP resolution, and the courts
    below erred in failing to dismiss the union’s taxpayer action for that reason.
    Exhaustion of Administrative Remedies
    {¶ 18} Because we hold that the union did not have standing to pursue its
    taxpayer action, the issue of exhaustion of administrative remedies is moot as to
    the taxpayer action. However, to the extent that the union’s complaint sought
    relief that was separate from the taxpayer cause of action, we examine whether
    the union and the Sanitary Engineering Division employees were required to
    exhaust administrative remedies prior to initiating a declaratory-judgment action.
    {¶ 19} It is a “long-settled rule of judicial administration that no one is
    entitled to judicial relief for a supposed or threatened injury until the prescribed
    administrative remedy has been exhausted.” Myers v. Bethlehem Shipbuilding
    Corp., 
    303 U.S. 41
    , 50-51, 
    58 S.Ct. 459
    , 
    82 L.Ed. 638
     (1938). Thus, a “party
    must exhaust the available avenues of administrative relief through administrative
    appeal” before seeking separate judicial intervention. Noernberg v. Brook Park,
    
    63 Ohio St.2d 26
    , 29, 
    406 N.E.2d 1095
     (1980). “Exhaustion is generally required
    as a matter of preventing premature interference with agency processes, so that
    the agency may function efficiently and so that it may have an opportunity to
    correct its own errors, to afford the parties and the courts the benefit of its
    8
    January Term, 2012
    experience and expertise, and to compile a record which is adequate for judicial
    review.” Weinberger v. Salfi, 
    422 U.S. 749
    , 765, 
    95 S.Ct. 2457
    , 
    45 L.Ed.2d 522
    (1975).     Where a party fails to exhaust available administrative remedies,
    allowing declaratory relief would serve “only to circumvent an adverse decision
    of an administrative agency and to bypass the legislative scheme.” Fairview Gen.
    Hosp. v. Fletcher, 
    63 Ohio St.3d 146
    , 152, 
    586 N.E.2d 80
     (1992).
    {¶ 20} We first look to what administrative remedies were available to the
    union-represented Sanitary Engineering Division employees. When a board of
    county commissioners adopts regulations that allow parties to request review from
    an administrative authority, the decision of that authority constitutes a final order
    that is appealable, under R.C. 2506.01, to an applicable court of common pleas.
    R.C. 307.56. Pursuant to R.C. 145.297(B), “[e]very retirement incentive plan
    shall include provisions for the timely and impartial resolution of grievances and
    disputes arising under the plan.”
    {¶ 21} The ERIP in question complied with the above statutory
    requirements by providing:       “Any employee determined to be ineligible to
    participate in this early retirement incentive plan may file a grievance * * *. Such
    grievances shall be heard and decided by the Cuyahoga County Administrator
    * * *.    The decision of the Cuyahoga County Administrator shall be final.”
    Although the ERIP was made available only to employees in an “Employing
    Unit” defined to exclude the Sanitary Engineering Division, the ERIP did not
    define “Employee” to exclude any division’s employees, and thus the grievance
    process was made available to all employees under the board’s supervision.
    Accordingly, the Sanitary Engineering Division employees were required to file a
    grievance with the administrator and to file an R.C. 2506.01 administrative appeal
    from the administrator’s decision, in order to exhaust their administrative
    remedies.
    9
    SUPREME COURT OF OHIO
    {¶ 22} Although none of the union-represented employees was named in
    the grievance that was filed on behalf of all of the Sanitary Engineering Division
    employees, some of the union-represented employees availed themselves of the
    grievance process by participating in the hearing with the administrator. After the
    administrator issued a final order denying the grievance, none of the Sanitary
    Engineering Division employees filed an administrative appeal. Accordingly, the
    employees failed to exhaust all of their administrative remedies.
    {¶ 23} It is well settled that “[a] person entitled under R.C. Chapter 2506
    to appeal [an administrative order] is not entitled to a declaratory judgment where
    failure to exhaust administrative remedies is asserted and maintained.”
    Schomaeker v. First Natl. Bank of Ottawa, 
    66 Ohio St.2d 304
    , 
    421 N.E.2d 530
    (1981), paragraph three of the syllabus. Under this general rule, the union was
    not entitled to pursue its action for declaratory judgment, because it filed the
    action almost one year after the final order of the administrator without first
    attempting a timely R.C. 2506.01 appeal from the order. However, in line with
    the Eighth District’s holding below, the union asserts that an exception to the
    general rule applies and that the Sanitary Engineering Division employees were
    not required to exhaust their administrative remedies, because continuing to
    participate in the grievance process would have been futile.
    {¶ 24} It is true that parties need not pursue their administrative remedies
    if doing so would be futile or a vain act. Driscoll v. Austintown Assoc., 
    42 Ohio St.2d 263
    , 275, 
    328 N.E.2d 395
     (1975). However,
    a “vain act” occurs when an administrative body lacks the
    authority to grant the relief sought; a vain act does not entail the
    petitioner’s probability of receiving the remedy. The focus is on
    the power of the administrative body to afford the requested relief,
    and not on the happenstance of the relief being granted.
    10
    January Term, 2012
    (Emphasis sic.) Nemazee v. Mt. Sinai Med. Ctr., 
    56 Ohio St.3d 109
    , 115, 
    564 N.E.2d 477
     (1990). Neither the decision below nor the appellees explain why it
    would have been impossible to obtain relief through an administrative appeal,
    apart from merely stating that the Sanitary Engineering Division employees were
    excluded from participating in the ERIP. As noted above, the board’s ERIP made
    the grievance process available to the employees, and union-represented
    employees were given an opportunity to be heard during the grievance hearing.
    Nothing would have prevented the union from attacking the validity of the ERIP
    in an administrative appeal. Therefore, we hold that the Sanitary Engineering
    Division employees’ continued participation in the grievance process would not
    have been a vain act, and we reverse the Eighth District’s decision allowing the
    union to pursue the declaratory-judgment action without exhausting the available
    administrative remedies.
    Conclusion
    {¶ 25} We hold that the union lacked standing to bring a taxpayer action
    against the commissioners and that to the extent that the union had standing in its
    own right, the union failed to exhaust its administrative remedies. Therefore, the
    issue of whether the commissioners’ ERIP was in violation of R.C. 145.297 is
    moot. Accordingly, we reverse the decision of the Eighth District Court of
    Appeals.
    Judgment reversed.
    O’CONNOR, C.J., and LUNDBERG STRATTON, O’DONNELL, LANZINGER,
    and CUPP, JJ., concur.
    PFEIFER, J., concurs in judgment only.
    __________________
    Mangano Law Offices Co., L.P.A., Basil W. Mangano, and Joseph J.
    Guarino III, for appellee.
    11
    SUPREME COURT OF OHIO
    William D. Mason, Cuyahoga County Prosecuting Attorney, and Dale
    Pelsozy, Assistant Prosecuting Attorney, for appellant.
    ______________________
    12
    

Document Info

Docket Number: 2011-0569

Citation Numbers: 2012 Ohio 1861, 132 Ohio St. 3d 47

Judges: Brown, Cupp, Lanzinger, Lundberg, O'Connor, O'Donnell, Pfeifer, Stratton

Filed Date: 5/1/2012

Precedential Status: Precedential

Modified Date: 8/31/2023

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