State ex rel. Nese v. State Teachers Retirement Bd. of Ohio

[Cite as State ex rel. Nese v. State Teachers Retirement Bd. of Ohio, 136 Ohio St. 3d 103, 2013-
Ohio-1777.]
THE STATE EX REL. NESE ET AL., APPELLANTS, v. STATE TEACHERS
RETIREMENT BOARD OF OHIO, APPELLEE; JEFFERSON COUNTY EDUCATIONAL
SERVICE CENTER GOVERNING BOARD, APPELLANT.
[Cite as State ex rel. Nese v. State Teachers Retirement Bd. of Ohio,
136 Ohio St. 3d 103, 2013-Ohio-1777.]
State Teachers Retirement System—Eligibility for membership—Virtual learning
academy—R.C. 3307.01(B)—“Teacher,” defined—Instructors providing
services to students of virtual learning academy are not ”employed in the
public schools” but rather are independent contractors—Membership in
retirement system not available to instructors who have no ongoing
contract with county, set their own hours, do not receive benefits, do not
use county facilities, and are paid on a per-pupil or per-course basis.
(No. 2012-0251—Submitted January 9, 2013—Decided May 2, 2013.)
APPEAL from the Court of Appeals for Franklin County,
No. 09AP-1161, 2011-Ohio-6764.
__________________
O’CONNOR, C.J.
{¶ 1} This is an appeal from a judgment denying the request of relators-
appellants John Nese, Donald Williams, and Catherine Miles (“the instructors”)
for writs of mandamus to compel respondent-appellee State Teachers Retirement
Board of Ohio (“STRS”) to accept employer and employee contributions to its
retirement fund and to compel respondent-appellant Jefferson County Educational
Service Center Governing Board (“Jefferson County ESC”) to make employer
contributions to the retirement system on their behalf.
SUPREME COURT OF OHIO
{¶ 2} The salient question in this appeal is not whether the instructors
were “teachers” as that term is commonly understood.1 Rather, the question
before us is whether the STRS had some evidence to support its conclusion that
the instructors were independent contractors, and not employees, of the Jefferson
County ESC and therefore were not “teachers” within the meaning of R.C.
3307.01(B)(5).
{¶ 3} Because the instructors fail to establish that the STRS abused its
discretion in determining that they were not “teachers” within the meaning of
R.C. 3307.01(B)(5), we must affirm the decision of the court of appeals, which
similarly held that the instructors had not established that the STRS abused its
discretion.
RELEVANT BACKGROUND
{¶ 4} An “education service center” (“ESC”) is a statutory creation. As
part of an educational regional service system, its purpose is to provide support to
state and local educational initiatives and to improve school effectiveness and
student achievement. R.C. 3312.01(A). An ESC provides services to school
districts and community schools by contract and by statute. R.C. 3312.01(A) and
(C); Hastings, Manoloff, Sharb, Sheeran & Jaffe, Baldwin’s Ohio School Law,
Section 4.5, 44-45 (2011-2012 Ed.).
{¶ 5} Jefferson County ESC works with administrators, teachers, and
students in seven local school districts. In 2001, school superintendents in some
of those schools were concerned over the depletion of resources in their districts
caused by the loss of students recruited to “community schools,” also known as
“charter schools,” which were authorized by the General Assembly’s enactment
of R.C. Chapter 3314 in 1997. 147 Ohio Laws, Part I, 909, 1187. See State ex
1. Nese and Williams are teachers in local school districts hired by Jefferson County to provide
instruction to students in the Virtual Learning Academy (“VLA”). Miles is a retired teacher hired
by Jefferson County to provide instruction to the students in the VLA.
2
January Term, 2013
rel. Ohio Congress of Parents & Teachers v. State Bd. of Edn., 111 Ohio St. 3d
568, 2006-Ohio-5512, 857 N.E.2d 1148, ¶ 1, 6. The superintendents believed that
it was necessary to research “online curriculum options” that could be used to
compete with charter schools, and Jefferson County ESC began looking at a
“virtual learning academy” that was being used by another district.
{¶ 6} A “virtual learning academy” or “VLA” is an “internet-based
educational delivery system designed for K-12, providing alternative educational
options for credit deficiencies, alternative programs, home schooling, home bound
instruction, and 2002 summer school programs.” A VLA is not a school; it is an
“educational option,” like “distance learning,” which involves “systematic
instruction in which the instructor and/or student participate by mail or electronic
media.” Ohio Adm.Code 3301-35-01(B)(10)(a) (including “distance learning” as
an “educational option”).
{¶ 7} After researching the market, Jefferson County ESC determined
that the best on-line curriculum was available through a California vendor,
Learning Springs. Jefferson County ESC passed a resolution to partner with
Learning Springs and then marketed its own VLA to local school districts and,
eventually, districts around the state. But as the program proved more successful
in enrolling students, concerns arose over the curriculum’s failure to fully align
with Ohio’s state academic-content standards. In 2003, Jefferson County ESC
hired teachers to rewrite the curriculum so that it would fully align with state
standards.
{¶ 8} Although we are not aware of any reported case in the state or
federal courts that addresses the specific question with which we are confronted,
we are aware that “cyber schools” and curriculum options like the VLA are
increasing in America. A number of states include virtual learning as a form of
public education. See generally Browning, Will Residency Be Relevant to Public
Education in the Twenty-First Century?, 8 Pierce L.Rev. 297, 338-339 (2010).
3
SUPREME COURT OF OHIO
Indeed, cyber schools are an increasingly popular, and rapidly growing, addition
to the education community. There were only 60 “virtual” or “cyber” charter
schools in America in 2003, but by 2009, more than 100,000 students were
enrolled in 195 virtual schools in 26 states. Brady, Umpstead & Eckles,
Unchartered Territory: The Current Legal Landscape of Public Cyber Charter
Schools, 2010 B.Y.U.Educ. & L.Rev. 191.
{¶ 9} Ohio is at the forefront of this development. “In 2003, Ohio had
only six cyber charter schools. Since 2003, Ohio has officially granted charters
for the opening of thirty-nine additional cyber charter schools.” Id. at 196, fn. 19.
As of April 2008, the VLA served 22,000 students in 180 school districts in
Ohio.2
{¶ 10} The instructors in this case were hired to instruct students in the
VLA. Each instructor can serve hundreds of students in a given year.
{¶ 11} If a school district decides to use the VLA as part of its own
curriculum, that district decides whether to use its own faculty or the VLA staff.
If the school district decides to use VLA staff, Jefferson County “matches” the
students to one of the VLA instructors. Jefferson County receives a participation
fee of $175 per student for its role and “passes through” the pay VLA instructors
receive, which is $105 per student per semester, or $210 per student for a full
(two-semester) academic year.
{¶ 12} In order to obtain that pay, VLA instructors submit a stipend form
to Jefferson County ESC when a student completes a course or the student’s
license expires. If the school district withdraws a student from a VLA course,
2. Notably, however, Jefferson County ESC has marketed its VLA curriculum to other states and
to foreign countries. Through those successful efforts, the VLA has a presence in all 50 states and
in over 14 countries.
4
January Term, 2013
Jefferson County ESC pays the instructor on a prorated basis for the number of
units of the course the student completes.
{¶ 13} As VLA instructors, Nese, Williams, and Miles did not have
contracts with Jefferson County. Rather, they signed a form provided by
Jefferson County that stated that they agreed “to be on board to take on VLA
students.” As VLA instructors, they did not receive health insurance or other
fringe benefits from Jefferson County ESC. However, most VLA instructors are
full-time teachers working in classrooms. Nese and Williams served as teachers
in local school districts and thus received health insurance and other benefits
through their traditional teaching jobs. And Miles retired as a teacher at the end
of the 2008-2009 school year and likely received those benefits through her
retirement plan.
{¶ 14} Nese, Williams, and Miles were entitled to a great deal of latitude
in their day-to-day work. For example, VLA instructors were authorized to create
their own midterm and final examinations or to use on-line lessons as the
examinations.
{¶ 15} They were also free, as were other VLA instructors, to choose
when and where they did their work. Jefferson County did not set specific times
at which they were required to instruct or deadlines by which the work had to be
completed. And although Jefferson County offered a place to work for teachers
and students who do not have access to a computer, the VLA instructors were not
required to teach there. In fact, most of the VLA instructors worked at home or at
a public library and often did so after typical school hours.
{¶ 16} Jefferson County ESC initially considered its VLA instructors to
be independent contractors rather than employees. Consequently, it did not
deduct contributions to pay into the retirement system. Eventually, however,
Jefferson County ESC decided to treat its VLA instructors as employees and
withheld contributions accordingly. Thus, for example, in 2004, Williams
5
SUPREME COURT OF OHIO
received a 1099 form from Jefferson County for his work instructing in the VLA,
but for 2005 through 2009, he received W-2 forms. Other instructors also received
1099 forms initially and subsequently received W-2s.
{¶ 17} In November 2008, the STRS determined that the VLA instructors
were independent contractors instead of employees. It refunded all contributions
made by Jefferson County ESC on the VLA instructors’ behalf. Thereafter,
Jefferson County ESC adopted a resolution specifying duties for its VLA faculty,
including the general duties of “logging into the system on a daily basis to grade
student’s work, answering student’s questions, providing feedback to students,
providing structure to students, and outlining expectations to students.” And
Nese, Williams, and Miles were given performance evaluations after the STRS’s
decision that they were independent contractors.
{¶ 18} In December 2009, Nese, Williams, and Miles filed an action in
the Tenth District Court of Appeals challenging the STRS’s decision. In their
amended complaint, Nese, Williams, and Miles sought writs of mandamus to
compel Jefferson County ESC to make the requisite employer contributions to the
retirement system for their VLA instruction and to compel the STRS to accept
employer and employee contributions based on their work for the VLA and to
include their VLA compensation in calculating their final average salary for
retirement purposes. In so doing, the VLA instructors were seeking inclusion of
their compensation as VLA instructors into the calculation of their final annual
salary for retirement purposes. The amounts are significant: the instructors allege
that the compensation from working in the VLA ranged from hundreds to tens of
thousands of dollars and reached as high as $66,324 for one instructor.
{¶ 19} On December 29, 2011, the court of appeals denied the writ. The
court held that there was some evidence to support the STRS’s finding that the
VLA instructors were independent contractors. Nese, Williams, Miles, and
Jefferson County ESC appealed to this court. We now affirm.
6
January Term, 2013
ANALYSIS
Mandamus and the Applicable Standard of Review
{¶ 20} The instructors seek extraordinary relief, mandamus, to compel the
STRS to accept retirement-system contributions for their work while instructing
for Jefferson County ESC. To be entitled to the requested relief, Nese, Williams,
and Miles must establish a clear legal right to be recognized as members of the
retirement system for their VLA work, a corresponding clear legal duty on the
part of the STRS to treat them as retirement-system members and to accept
contributions for their VLA work, and the lack of an adequate remedy in the
ordinary course of the law. State ex rel. Nation Bldg. Technical Academy v. Ohio
Dept. of Edn., 123 Ohio St. 3d 35, 2009-Ohio-4084, 913 N.E.2d 977, ¶ 11.
{¶ 21} Notably, the instructors must establish their entitlement to the writ
by clear and convincing evidence. State ex rel. Wasserman v. Fremont, 131 Ohio
St.3d 52, 2012-Ohio-27, 960 N.E.2d 449, ¶ 4. In other words, the instructors
must present evidence that
is more than a mere “preponderance of the evidence,” but not to
the extent of such certainty as is required “beyond a reasonable
doubt” in criminal cases, and [that] will produce in the mind of the
trier of facts a firm belief or conviction as to the facts sought to be
established.
State ex rel. Husted v. Brunner, 123 Ohio St. 3d 288, 2009-Ohio-5327, 915 N.E.2d
1215, ¶ 18, quoting Cross v. Ledford, 161 Ohio St. 469, 120 N.E.2d 118 (1954),
paragraph three of the syllabus.
{¶ 22} We begin our analysis with the propriety of mandamus relief in
this case.
7
SUPREME COURT OF OHIO
{¶ 23} “The General Assembly established the State Teachers Retirement
System to pay retirement allowances and other benefits to public school teachers,
and the State Teachers Retirement Board administers and manages the retirement
system.” State ex rel. Morgan v. State Teachers Retirement Bd. of Ohio, 121
Ohio St. 3d 324, 2009-Ohio-591, 904 N.E.2d 506, ¶ 19, citing R.C. 3307.03 and
3307.04. The determination of whether any person is a teacher, and thus a
member of the retirement system, is solely within the province of the retirement
board. See R.C. 3307.01(B) (“In all cases of doubt, the state teachers retirement
board shall determine whether any person is a teacher, and its decision shall be
final”).
{¶ 24} Because the retirement board’s final decision whether a person is a
teacher and thus a member of the retirement system is not appealable, Nese,
Williams, and Miles lack an adequate remedy in the ordinary course of law.
Thus, mandamus is available to the instructors if they show that the STRS abused
its discretion in making its determination. See State ex rel. Hulls v. State
Teachers Retirement Bd. of Ohio, 113 Ohio St. 3d 438, 2007-Ohio-2337, 866
N.E.2d 483, ¶ 27 (applying abuse-of-discretion standard to the retirement board’s
determination concerning disability-retirement benefits); State ex rel. Schaengold
v. Ohio Pub. Emps. Retirement Sys., 114 Ohio St. 3d 147, 2007-Ohio-3760, 870
N.E.2d 719, ¶ 8 (applying this standard to a public-employees retirement board’s
denial of service credit).
{¶ 25} “An abuse of discretion occurs when a decision is unreasonable,
arbitrary, or unconscionable.” State ex rel. Stiles v. School Emps. Retirement Sys.,
102 Ohio St. 3d 156, 2004-Ohio-2140, 807 N.E.2d 353, ¶ 13. Thus, “ ‘[a]s long as
there is sufficient evidence to support [a] retirement-system board’s decisions, we
will not disturb them.’ ” State ex rel. Marchiano v. School Emps. Retirement Sys.,
121 Ohio St. 3d 139, 2009-Ohio-307, 902 N.E.2d 953, ¶ 21, quoting State ex rel.
8
January Term, 2013
Grein v. Ohio State Hwy. Patrol Retirement Sys., 116 Ohio St. 3d 344, 2007-Ohio-
6667, 879 N.E.2d 195, ¶ 9.
{¶ 26} The quantum of evidence necessary to support the retirement-
system board’s decision is not large. As we stated in Schaengold,
[A] “clear legal right to a writ of mandamus exists when the board
is found to have abused its discretion by entering an order that is not
supported by some evidence.” [State ex rel. Schaengold v. Ohio
Pub. Emps. Retirement Sys., 10th Dist. No. 05AP-1002,] 2006-
Ohio-5093, 2006 WL 2789921, ¶ 33. See, e.g., Kinsey v. Bd. of
Trustees of Police & Firemen’s Disability & Pension Fund of Ohio
(1990), 49 Ohio St. 3d 224, 225, 551 N.E.2d 989; see, also, State ex
rel. Peyton v. Schumacher (Nov. 16, 2000), Franklin App. No.
00AP-78, 2000 WL 1715901, *1, and Gerchak v. Pub. Emps.
Retirement Bd. (Sept. 15, 1998), Franklin App. No. 98AP-325,
1998 WL 635313, *2, applying the same standard to uphold Public
Employees Retirement Board determinations that claimants were
independent contractors rather than public employees.
114 Ohio St. 3d 147, 2007-Ohio-3760, 870 N.E.2d 719, ¶ 19.
{¶ 27} A fortiori, if there is some evidence to support the board’s
determination, mandamus will not lie. State ex rel. Foley v. Vulcan Mfg. Co., 84
Ohio St. 3d 59, 60, 701 N.E.2d 993 (1998) (because there was “some evidence on
which the [Industrial Commission] could rely” in denying benefits, the court
“cannot disturb the commission’s decision”), citing State ex rel. Burley v. Coil
Packing, Inc., 31 Ohio St. 3d 18, 508 N.E.2d 936 (1987).
{¶ 28} Deference is always due in an abuse-of-discretion case. But it is
particularly important when, as here, we are presented with conflicting evidence
9
SUPREME COURT OF OHIO
on whether a worker is an employee or an independent contractor. In cases in
which a worker presents some evidence that he is an employee rather than an
independent contractor, the question becomes one of fact that should be decided
by the fact-finder. Indus. Comm. v. Laird, 126 Ohio St. 617, 186 N.E. 718
(1933), paragraph three of the syllabus. See also Bostic v. Connor, 37 Ohio St. 3d
144, 145-146, 524 N.E.2d 881 (1988) (the question whether a worker is an
employee or independent contractor becomes a jury question when the worker
presents some evidence that he is an employee). We are mindful that the STRS is
the finder of fact in this matter, as well as an adjudicator highly knowledgeable
about Ohio’s teachers, their work, and their pensions.
{¶ 29} Having set forth the applicable standards, we proceed with our
analysis of the dispositive issue in this appeal: whether some evidence supported
the STRS’s decision that Nese, Williams, and Miles were independent contractors
of Jefferson County ESC rather than employees of Jefferson County ESC.
R.C. 3307.01(B): Definition of “Teacher”
{¶ 30} Under Ohio law, public-school teachers and their employers must
make contributions to the retirement fund. R.C. 3307.26 and 3307.28. As
relevant to this case, R.C. 3307.01(B)3 defines “teacher” for purposes of
retirement-system membership as
(1) Any person paid from public funds and employed in
the public schools of the state under any type of contract described
in section 3311.77 or 3319.08 of the Revised Code in a position for
which the person is required to have a license issued pursuant to
sections 3319.22 to 3319.31 of the Revised Code;
***
3. Effective January 7, 2013, the language that was previously in subsection (B)(4) of R.C.
3307.01 now appears in subsection (B)(5). 2012 Sub.S.B. No. 342.
10
January Term, 2013
(5) Any other teacher or faculty member employed in any
school, college, university, institution, or other agency wholly
controlled and managed, and supported in whole or in part, by the
state or any political subdivision thereof, including Central state
university, Cleveland state university, and the university of Toledo.
{¶ 31} In construing statutory provisions, including R.C. 3307.01(B), our
paramount concern is the legislative intent. State Farm Mut. Auto. Ins. Co. v.
Grace, 123 Ohio St. 3d 471, 2009-Ohio-5934, 918 N.E.2d 135, ¶ 25. “An axiom
of statutory construction is that ‘[w]ords * * * that have acquired a technical or
particular meaning, whether by legislative definition or otherwise, shall be
construed accordingly.’ ” Hoffman v. State Med. Bd. of Ohio, 113 Ohio St. 3d
376, 2007-Ohio-2201, 865 N.E.2d 1259, ¶ 26, quoting R.C. 1.42.
{¶ 32} R.C. 3307.01(B)(1) and (5) require that individuals must be
employees to be “teachers”—and thus covered by the retirement system’s pension
plan. But the STRS determined that Nese, Williams, and Miles were not
“teachers,” because they were independent contractors rather than employees
when they worked as VLA instructors for Jefferson County ESC. We thus turn to
the legal tests for distinguishing an employee from an independent contractor.
Common Law: Distinguishing Employees from Independent Contractors
{¶ 33} “The chief test in determining whether one is an employee or an
independent contractor is the right to control the manner or means of performing
the work.” Bobik v. Indus. Comm., 146 Ohio St. 187, 64 N.E.2d 829 (1946),
paragraph one of the syllabus. See also Foran v. Fisher Foods, Inc., 17 Ohio
St.3d 193, 194, 478 N.E.2d 998 (1985) (holding that “one who exercises day-to-
day control over the employee will be considered as the employer”). “If such
right is in the employer, the relationship is that of employer and employee; but if
the manner or means of performing the work is left to one responsible to the
11
SUPREME COURT OF OHIO
employer for the result alone, an independent contractor relationship is created.”
Pusey v. Bator, 94 Ohio St. 3d 275, 279, 762 N.E.2d 968 (2002), citing Bobik at
paragraph two of the syllabus.
{¶ 34} In so holding, however, we have recognized that as a practical
matter, every contract for work reserves to the employer a certain degree of
control to enable him to ensure that the contract is performed according to
specifications. Gillum v. Indus. Comm., 141 Ohio St. 373, 382, 48 N.E.2d 234
(1943). Thus, we have distinguished on the continuum of control whether a
worker is an employee or an independent contractor:
“The control of the work reserved in the employer which effects a
master-servant relationship is control of the means and manner of
performance of the work, as well as of the result; an independent
contractor relationship exists where the person doing the work is
subject to the will of the employer only as to the result, but not as
to the means or manner of accomplishment. Thus, a person
employed to perform certain work is not necessarily a mere servant
because the contract provides that the work shall be subject to the
approval or satisfaction of the employer. Such a provision is not an
assumption by the employer of the right to control the person
employed as to the details or method of doing the work, but is only
a provision that the employer may see that the contract is carried
out according to the plans.” See also, 21 Ohio Jurisprudence, 626,
Section 4; Miller v. Metropolitan Life Ins. Co., 134 Ohio St. 289,
291, 16 N.E.2d 447 [(1938)]; Industrial Commission v. McAdow,
126 Ohio St. 198, 184 N.E. 759 [(1933)]; Klar v. Erie R. Co., 118
Ohio St. 612, 162 N.E. 793 [(1928)]; Hughes v. Cincinnati & S.
12
January Term, 2013
Railway Co., 39 Ohio St. 461 [(1883)]; Pickens & Plummer v.
Diecker & Bros., [21 Ohio St. 212 (1871)].
Gillum at 382-383, quoting 27 American Jurisprudence, Section 7, at 488.
{¶ 35} Our case law makes clear that in determining who has the right to
control the work, we must look at the individual facts of a case.
The factors to be considered include, but are certainly not limited
to, such indicia as who controls the details and quality of the work;
who controls the hours worked; who selects the materials, tools
and personnel used; who selects the routes travelled; the length of
employment; the type of business; the method of payment; and any
pertinent agreements or contracts.
Bostic v. Connor, 37 Ohio St. 3d at 146, 524 N.E.2d 881.
{¶ 36} We now view the evidence in the record through the lens of the
foregoing law on mandamus and employment.
The Record
{¶ 37} The record demonstrates that the instructors did not have an
employment contract with Jefferson County ESC. They did not receive health
insurance or other fringe benefits.
{¶ 38} They set their own work hours and could create their own
examinations. They did not use Jefferson County ESC’s facilities to perform their
work. They were not required to instruct a specific number of students or courses.
{¶ 39} The instructors were paid “stipends,” which were flat fees per
student. Two of them initially received 1099 forms instead of W-2 forms for tax
purposes because Jefferson County ESC originally considered them to be
independent contractors rather than employees.
13
SUPREME COURT OF OHIO
{¶ 40} We have relied on comparable factors in upholding a public
employee retirement board’s determination that persons are independent
contractors rather than public employees entitled to retirement-system
membership and benefits. See, e.g., Schaengold, 114 Ohio St. 3d 147, 2007-Ohio-
3760, 870 N.E.2d 719, ¶ 20-21 (factors included that attorney serving as a
temporary magistrate pursuant to a bilateral contract was paid a flat fee, was not
eligible for employee fringe benefits, was not controlled or supervised in
conducting hearings or in issuing decisions, and received a form 1099 for tax
purposes). Similarly, the courts of appeals have found, on similar facts, that a
person was an independent contractor rather than an employee. See, e.g., State ex
rel. Curtin v. Ohio Pub. Emps. Retirement Sys., 10th Dist. No. 09AP-801, 2011-
Ohio-2536, ¶ 28 (assistant city income tax administrator was paid a fee for
services, did not receive fringe benefits, provided many of his own supplies, and
received form 1099 for tax purposes); State ex rel. Peyton v. Schumacher, 10th
Dist. No. 00AP-78, 2000 WL 1715901, *2 (person who hauled gravel for two
townships did not maintain regular hours, did not receive fringe benefits, was paid
by the amount hauled and not an hourly wage or salary, and provided his own
truck for hauling).
{¶ 41} The instructors rely on evidence of a resolution setting forth duties
for VLA instructors and performance evaluations completed for Nese, Williams,
and Miles, all of which were drafted after the STRS decided that the instructors
were independent contractors and not employees entitled to retirement-system
membership. The instructors’ argument is not persuasive, given that the STRS
was not presented with this information prior to rendering its decisions. The
STRS could not have abused its discretion based on evidence that was never
presented to it. See Marchiano, 121 Ohio St. 3d 139, 2009-Ohio-307, 902 N.E.2d
953, ¶ 25 (applying this general rule to a determination by the School Employees
Retirement System). Notably, even the general duties for VLA instructors listed
14
January Term, 2013
in the resolution are directed to the basic rules of the work to be performed (e.g.,
logging onto the system daily to grade students’ work and answering students’
questions) rather than to subjective decisions about the quality or substance of the
work itself (e.g., directing the actual grading and answers provided by the
instructors).
{¶ 42} Finally, the instructors rely on a statement in a retirement-system
employers’ manual that “[i]f the teaching duties performed by an independent
contractor are the same as those performed by teachers under employment
contracts, then there is no difference for [retirement-system] purposes.” But even
assuming purely arguendo that we are bound to accept that statement as true, the
instructors submitted no credible evidence, much less clear and convincing
evidence, to establish that their duties were the same as those performed by other
teachers working with Jefferson County ESC under employment contracts.
{¶ 43} On the record before us, we cannot say that the STRS’s
determination was arbitrary, unreasonable, or unconscionable. At worst, the
evidence was equivocal. Reasonable minds could differ as to whether Nese,
Williams, and Miles were independent contractors or employees of Jefferson
County ESC when they acted as VLA instructors. But our role is not to review de
novo. Rather, our duty under the law of Ohio is to review only for an abuse of
discretion.
{¶ 44} In discharging that duty, we affirm the decision of the court of
appeals because the instructors have failed to present clear and convincing
evidence establishing that they were employees. The court of appeals properly
held that the STRS’s decision was supported by some evidence and that,
therefore, mandamus would not lie.
{¶ 45} Finally, we recognize that the dissent in the court of appeals
expressed concern over STRS’s
15
SUPREME COURT OF OHIO
imposing the traditional attributes of a teacher on the less than
traditional and, in light of technological advances, a likely
increasingly common approach to teaching. What constitutes
control will vary with the circumstances, and the circumstances
here are considerably different than those of the more traditional
classroom and make the factors [the STRS] cites not pertinent to
determining whether relators are employees.
2011-Ohio-6764, ¶ 16 (Bryant, J., concurring in part and dissenting in part). We
do not disagree with the view that the VLA and cyber schools present a new way
of teaching. But it is precisely for those reasons that the STRS, with its expertise
in this area, is entitled to deference. And, of course, the General Assembly is
entitled to change the definition of “teacher” in R.C. 3307.01(B)(5) to encompass
VLA instructors and other independent contractors who work in cyber schools.
Those prerogatives, however, are not judicial ones.
CONCLUSION
{¶ 46} We conclude that Nese, Williams, and Miles did not establish by
clear and convincing evidence that the STRS abused its discretion by determining
that they were not “teachers” under R.C. 3307.01(B) for purposes of their work as
instructors for the VLA operated by Jefferson County ESC. We therefore affirm
the judgment of the court of appeals.
Judgment affirmed.
LANZINGER, KENNEDY, and RINGLAND, JJ., concur.
PFEIFER, O’DONNELL, and O’NEILL, JJ., dissent.
ROBERT P. RINGLAND, J., of the Twelfth Appellate District, sitting for
FRENCH, J.
__________________
16
January Term, 2013
O’DONNELL, J., dissenting.
{¶ 47} Respectfully, I dissent.
{¶ 48} The issue in this case is whether relators John Nese, Donald
Williams, and Catherine Miles are teachers entitled to participate in the State
Teachers Retirement System (“STRS”) in connection with their employment at
the Jefferson County Educational Service Center providing teaching services
through the virtual learning academy (“VLA”). In my view, they are teachers
because they meet the statutory definition of teachers, and the appellate court
magistrate determined that the STRS had abused its discretion in concluding that
the relators were independent contractors. In addition, the appellate court
magistrate found that the Jefferson County Educational Service Center employed
Nese, Williams, and Miles to provide teaching services through the VLA.
{¶ 49} Nese, Williams, and Miles each held a license to teach from the
state of Ohio, each instructed students not only in public schools but also through
the VLA of the Jefferson County Educational Service Center, an agency
supported by the state, and each contributed to STRS for their years of service.
STRS objected to the legal conclusions of the magistrate. On its review, the
appellate court approved and adopted the magistrate’s findings, but then
disregarded them by concluding that Nese, Williams, and Miles were independent
contractors.
{¶ 50} Because Nese, Williams, and Miles qualify statutorily as teachers,
because the magistrate’s findings are supported by the record, and because the
appellate court abused its discretion by adopting the findings of the magistrate but
then denying the writ, I would reverse the decision of the appellate court and
grant the writ.
Factual Background and Procedural History
{¶ 51} Nese, Williams, and Miles taught school in Jefferson County, and
they also taught courses through the VLA of the Jefferson County Educational
17
SUPREME COURT OF OHIO
Service Center, an Internet-based educational system designed for K-12.
According to the magistrate’s decision, Nese provided teaching services through
the VLA from the 2005-2006 fiscal year through the 2007-2008 fiscal year,
Williams and Miles provided services in the program from the 2004-2005 fiscal
year through the 2007-2008 fiscal year, and contributions were submitted to
STRS by relators and the Jefferson County Educational Service Center for that
service. However, in a December 2008 letter, STRS refunded $14,771.93 in
contributions, asserting that earnings for the VLA were being returned as
unauthorized contributions.
{¶ 52} In December 2009, Nese, Williams, and Miles filed a mandamus
complaint in the Tenth District Court of Appeals seeking to compel STRS to
accept their contributions for earnings from the Jefferson County Educational
Service Center. The appellate court referred the matter to a magistrate, who
found that the Jefferson County Educational Service Center employed Nese,
Williams, and Miles to provide teaching services through the VLA, further found
that relators had received W-2 and 1099 forms from the Jefferson County
Educational Service Center, and concluded that relators’ receipt of these “does not
indicate independent contractor status.” The magistrate also noted that the
Jefferson County Educational Service Center exercises control over relators and
concluded that their status was that of employees, not independent contractors.
The magistrate also referred to an STRS employer fact sheet, which suggested
that even hiring independent contractors does not necessarily relieve the employer
of the obligation to forward contributions on earnings. The magistrate thus
concluded that Nese, Williams, and Miles fit within the statutory definition of
teacher and recommended that the writ be allowed to permit them to participate in
STRS.
{¶ 53} The appellate court, after reviewing the magistrate’s
recommendation and adopting its findings, rejected the magistrate’s legal
18
January Term, 2013
conclusions and instead concluded that STRS did not abuse its discretion in
concluding that relators are independent contractors.
{¶ 54} Relators and the Jefferson County Educational Service Center
appealed that denial to this court.
Standard of Review
{¶ 55} This court applies a standard of abuse of discretion when
reviewing an appellate court decision on a complaint seeking a writ of mandamus.
State ex rel. Hillyer v. Tuscarawas Cty. Bd. of Commrs., 70 Ohio St. 3d 94, 97,
637 N.E.2d 311 (1994) (applying abuse-of-discretion standard to appellate court’s
decision in a mandamus case). “The term ‘abuse of discretion’ means an
unreasonable, arbitrary, or unconscionable decision.” State ex rel. Pipoly v. State
Teachers Retirement Sys., 95 Ohio St. 3d 327, 2002-Ohio-2219, 767 N.E.2d 719,
¶ 14.
Relators are Teachers
{¶ 56} R.C. 3307.01(B)(5) defines the term “teacher” to include “[a]ny
other teacher or faculty member employed in any * * * other agency wholly
controlled and managed, and supported in whole or in part, by the state or any
political subdivision thereof.” Because the Jefferson County Educational Service
Center is a successor to a county school district, it receives funding from the state.
R.C. 3311.05(A); R.C. 3301.07(C). In Cline v. Martin, 94 Ohio St. 420, 426, 115
N.E. 37 (1916), we characterized boards of education of county school districts as
“agencies of the state for the organization, administration, and control of the
public school system of the state, separate and apart from * * * other subdivisions
of the state.” Thus, in conformity with this statute, educational service centers are
agencies supported in whole or in part by the state. See generally R.C. 3317.11.
{¶ 57} In addition, R.C. 3307.01(B)(5) emphasizes the capacity in which
employment occurs, in order to distinguish those employed as teachers from those
employed in other capacities, such as cooks or custodians or administrators, etc.
19
SUPREME COURT OF OHIO
This statute therefore defines teachers as those employed in the capacity of
teachers or faculty members employed in an agency supported by the state. Here,
each relator is a member of the teaching profession, has a license to teach issued
by the state of Ohio, and provided teaching services through the VLA by virtue of
employment at the Jefferson County Educational Service Center, an agency that is
supported by the state.
{¶ 58} Notably, the General Assembly does not use the term “employee”
in R.C. 3307.01(B)(5), nor does it require employment status as it has done in
other statutes relating to retirement systems. Compare R.C. 145.01(A)(3)
(“public employee” means “[a]ny person who is an employee of a public
employer, notwithstanding that the person’s compensation for that employment is
derived from funds of a person or entity other than the employer”) (emphasis
added); R.C. 5505.02 (membership in the Ohio State Highway Patrol Retirement
System “includes all state highway patrol employees, as defined in [R.C.
5505.01], and such membership is mandatory for such employees”) (emphasis
added). Although the General Assembly could have required a teacher to be an
employee in the definition of “teacher” in R.C. 3307.01(B)(5), it did not do so.
{¶ 59} Thus, in my view, relators were employed as teachers in the
Jefferson County Educational Service Center within the meaning of R.C.
3307.01(B)(5).
Employee vs. Independent Contractor
{¶ 60} STRS urges that R.C. 3307.01 permits only those employed as
teachers to participate in the retirement system, claiming that some evidence
supports its determination that Nese, Williams, and Miles were independent
contractors, not employees, and ineligible to participate in STRS.
{¶ 61} Contrary to this position, the magistrate found that the Jefferson
County Educational Service Center employed them as teachers, and that finding is
supported by competent, credible evidence: W-2 forms issued to relators for at
20
January Term, 2013
least some of their years of service and the control of the mode and manner of
instruction by the Educational Service Center. Notably, in Gillum v. Indus.
Comm., 141 Ohio St. 373, 48 N.E.2d 234 (1943), we explained that an individual
is an employee, rather than an independent contractor, when the employer has the
right to control the manner in which the individual works. Id. at paragraph two of
the syllabus.
{¶ 62} And the magistrate also noted that an STRS employer fact sheet
instructs that STRS may still require contributions from those hired as
independent contractors:
Hiring an individual to fill an STRS Ohio-covered position
through an independent contract or a temporary agency does not
necessarily relieve an employer’s obligation to make contributions
on earnings to STRS Ohio. If the individual’s duties are the same
as those performed by teachers or administrators under
employment contracts, STRS Ohio considers the individual to be
an employee and requires contributions to be remitted to STRS
Ohio.
Please note that an agreement to be an independent
contractor is not the sole indicator of a true independent contract
relationship. Primary criterion cited in Attorney General Opinions
and IRS Guidelines for distinguishing between an independent
contractor and an employee is the right of the employer to control
the “mode and manner” of the work performed.
(Emphasis added.)
{¶ 63} The magistrate’s recommendation concluded as follows: “Given
the record, the fact that relators fit within the definition of R.C. 3307.01(B)(4),
21
SUPREME COURT OF OHIO
and STRS policy regarding independent contractors, the evidence fails to support
[State Teachers Retirement Board’s] finding that relators are not members of
STRS for the employment with [Jefferson County Educational Service Center]
and teaching at the VLA.” 2011-Ohio-6764, ¶ 51.
{¶ 64} The difficulty for me with the court of appeals’ opinion is that it
adopted the factual findings of the magistrate, ¶ 13, but then disregarded those
findings in its analysis when it concluded that the STRS did not abuse its
discretion in concluding that the relators were independent contractors. The
appellate court’s conclusions contradict the findings it adopted, and because
relators did prove their entitlement to participate in STRS for at least some of
their years of service, the court of appeals abused its discretion in denying the
writ.
Conclusion
{¶ 65} Nese, Williams, and Miles satisfy the definition of teacher set forth
in R.C. 3307.01(B)(5). The Jefferson County Educational Service Center, an
agency supported by the state, employed them as teachers, they served in that
capacity for several years, they made STRS contributions during that time, and
they relied on their status as teachers for their retirement. The sudden and
unexpected refund of those contributions by STRS on its assertion that
contributions for earnings from the VLA are unauthorized is wholly unwarranted.
{¶ 66} Accordingly, I would conclude that the court of appeals abused its
discretion in adopting the findings of its magistrate but then concluding, contrary
to those findings, that STRS did not abuse its discretion in returning what it called
“unauthorized” contributions. I would therefore reverse the judgment of the court
of appeals and grant the requested writ.
PFEIFER and O’NEILL, JJ., concur in the foregoing opinion.
__________________
22
January Term, 2013
Green, Haines, Sgambati Co., L.P.A., Ira J. Mirkin, Stanley J. Okusewsky
III, and Charles W. Oldfield, for appellants John Nese, Donald Williams, and
Catherine Miles.
Pepple & Waggoner, Ltd., R. Brent Minney, and Mark J. Jackson, for
appellant Jefferson County Educational Service Center Governing Board.
Michael DeWine, Attorney General, and Allan K. Showalter and John E.
Patterson, Assistant Attorneys General, for appellee.
______________________
23