Schneider v. Cuyahoga Cty. Bd. of Commrs.

[Cite as Schneider v. Cuyahoga Cty. Bd. of Commrs., 2013-Ohio-1900.]
Court of Appeals of Ohio
EIGHTH APPELLATE DISTRICT
COUNTY OF CUYAHOGA
JOURNAL ENTRY AND OPINION
No. 98936
WILLIAM D. SCHNEIDER, ET AL.
PLAINTIFFS-APPELLANTS
vs.
CUYAHOGA COUNTY BOARD OF
COUNTY COMMISSIONERS, ET AL.
DEFENDANTS-APPELLEES
JUDGMENT:
REVERSED AND REMANDED
Civil Appeal from the
Cuyahoga County Court of Common Pleas
Case No. CV-717610
BEFORE: Stewart, A.J., Rocco, J., and Keough, J.
RELEASED AND JOURNALIZED: May 9, 2013
ATTORNEY FOR APPELLANTS
Avery S. Friedman
Avery Friedman & Associates
701 The City Club Building
850 Euclid Avenue
Cleveland, OH 44114
ATTORNEYS FOR APPELLEES
Timothy J. McGinty
Cuyahoga County Prosecutor
BY: Dale F. Pelsozy
Assistant County Prosecutor
The Justice Center
1200 Ontario Street, 8th Floor
Cleveland, OH 44113
MELODY J. STEWART, A.J.:
{¶1} For a one-year period running from January 2009 to January 2010, the
Cuyahoga County Board of Commissioners offered to its employees a countywide early
retirement incentive plan (“plan”), but specifically excluded employees of the sanitary
engineering division from participating in the plan. The union representing the sanitary
engineering employees brought a taxpayer action against the county alleging that the
sanitary engineers were unlawfully excluded from the early retirement plan. In State ex
rel. Teamsters Local Union No. 436 v. Bd. of Cty. Commr., 132 Ohio St.3d 47,
2012-Ohio-1861, 969 N.E.2d 224, the Ohio Supreme Court held that the union lacked
standing to bring a taxpayer action because it sought a remedy solely for its own benefit
and that it failed to exhaust its administrative remedies by taking no further action after
the county administrator denied its grievance. At the same time Teamsters Local Union
No. 436 was pending, a group of sanitary engineers led by plaintiff William Schneider
asked the court to enjoin the commissioners from implementing the early retirement plan.
The commissioners sought dismissal of the complaint because the plaintiffs failed to
exhaust their administrative remedies by appealing from an adverse ruling on arbitration
as allowed by law. The court stayed the matter pending the resolution of Teamsters
Local Union No. 436, and upon the issuance of that opinion with its holding relating to
the exhaustion of administration remedies, dismissed the complaint.
{¶2} We review a Civ.R. 12(B)(6) motion to dismiss a complaint to determine
whether it sets forth any facts establishing a viable claim for relief. LeRoy v. Allen,
Yurasek & Merklin, 114 Ohio St.3d 323, 2007-Ohio-3608, 872 N.E.2d 254, ¶ 14. We do
so by accepting as true all material allegations of the complaint and making all reasonable
inferences in favor of the nonmoving party. Fahnbulleh v. Strahan, 73 Ohio St.3d 666,
667, 1995-Ohio-295, 653 N.E.2d 1186.
{¶3} Plaintiffs’ amended complaint alleged that the 13 plaintiffs were county
employees and worked in the Sanitary Engineers Division. They alleged that only an
“employing unit” could offer an early retirement plan and that the entire county
constituted an employing unit as defined by R.C. 145.297(A)(1). They further alleged
that before adopting the plan, the county obtained an opinion from the prosecuting
attorney that it would be impermissible for the county to “discriminate” in the
implementation of the plan that was made available to some, but not all departments and
divisions with the county. The employees alleged that the county implemented a plan
that excluded only the sanitary engineers, notwithstanding the prosecuting attorney’s legal
opinion. The employees alleged that they attempted to enroll in the plan but were not
allowed to participate. They also alleged that had they not been “turned away,” they
would have been eligible to participate in the plan. They asked the court to declare the
plan a violation of R.C. 145.297(C), and sought a restoration of their rights under the plan
along with monetary damages.
{¶4} The procedural basis for dismissal was that the employees failed to exhaust
their administrative remedies by appealing from an adverse decision rendered by the
former county administrator on their grievance. R.C. 145.297(B) requires that “[e]very
retirement incentive plan shall include provisions for the timely and impartial resolution
of grievances and disputes arising under the plan.” In Teamsters Local Union No. 436,
the Supreme Court noted that “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.” Id.
at ¶ 21.
{¶5} A failure to exhaust administrative remedies is an affirmative defense to an
action. See Jones v. Chagrin Falls, 77 Ohio St.3d 456, 462, 1997-Ohio-253, 674 N.E.2d
1388. Because affirmative defenses typically require reference to materials outside the
complaint, they are not amenable to disposition by means of a Civ.R. 12(B)(6) motion to
dismiss and better suited to disposition by summary judgment. State ex rel. Freeman v.
Morris, 62 Ohio St.3d 107, 109, 579 N.E.2d 702 (1991).
{¶6} Using these standards of review, we must conclude that dismissal of the
complaint was improper. The complaint made no allegations of any kind from which the
court could find that the employees failed to exhaust their administrative remedies. The
only facts going to administrative remedies were offered in the county’s motion to
dismiss. That motion relied on facts that were beyond the four corners of the complaint
— the motion to dismiss contained exhibits memorializing the adoption of the plan; the
Ohio Public Employees Retirement System’s (“OPERS”) approval of the plan; a letter
from the employees asking for reconsideration of their exclusion from the plan; a letter
from the former county administrator addressed to Schneider that denied the grievance;
and a deposition transcript of an OPERS supervisor who approved the county’s early
retirement incentive plan and who gave his opinion that the sanitary engineers were
lawfully excluded from participating in the plan. None of this evidence should have
been considered for purposes of the motion to dismiss because it required review beyond
the four corners of the complaint and the court did not convert the motion to dismiss into
a motion for summary judgment.
{¶7} Nevertheless, a court can take judicial notice of appropriate matters when
ruling on a Civ.R. 12(B)(6) motion to dismiss without converting it to a motion for
summary judgment. State ex rel. Scott v. Cleveland, 112 Ohio St.3d 324,
2006-Ohio-6573, 859 N.E.2d 923, ¶ 26. For example, the courts may take judicial notice
of judgments rendered by other courts, when considering a motion to dismiss for failure
to state a claim without having to convert it to a motion for summary judgment. State ex
rel. Neff v. Corrigan, 75 Ohio St.3d 12, 15-16, 1996-Ohio-231, 661 N.E.2d 170.
{¶8} In its recitation of the facts in Teamsters Local Union No. 436, the Supreme
Court stated:
A few days before passage of the resolution [approving the early retirement
incentive plan], 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 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.
Id. at ¶ 4.
{¶9} It appears that the non-union employees who filed the grievance referred to in
Teamsters Local Union No. 436 are plaintiffs in this appeal. The letter issued by the
former county administrator was addressed to William Schneider, the named plaintiff in
this case. And without question, plaintiff Kevin Lesh is the same person named in
Teamsters Local Union No. 436 as one of the union members-sanitary engineers who
attended the grievance hearing but failed to exhaust available administrative remedies.
As the Supreme Court stated in its opinion, none of these employees, whether union or
non-union, sought further review after receiving an adverse decision on their grievance.
The court could properly take judicial notice of these facts, especially when the
employees in this appeal make no argument that the court erred by considering factual
matter beyond the four corners of the complaint before dismissing the action.
{¶10} The danger in dismissing a complaint under Civ.R. 12(B)(6) on grounds that
a party has failed to exhaust administrative remedies is that a party who allegedly failed to
exhaust administrative remedies is entitled to show that further administrative appeals
would have been in vain. See Nemazee v. Mt. Sinai Med. Ctr., 56 Ohio St.3d 109,
114-115, 564 N.E.2d 477 (1990). The employees claim that unlike the union plaintiffs in
Teamsters Local Union No. 436, they could have mustered evidence to prove why further
administrative appeals would have been unavailing.
{¶11} The decision in Teamsters Local Union No. 436 is more emphatic on the
issue of whether the union in that case exhausted its administrative remedies than
suggested by the employees:
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.
Id. at ¶ 24.
{¶12} Although this language suggests that the Supreme Court thought it unlikely
that both the union members and the other employees would be able to prove that an
administrative appeal would have been a vain act, the fact remains that they were not
offered the opportunity to do so. Importantly, Teamsters Local Union No. 436 was a
case that went to trial before the court. See State ex rel. Teamsters Local Union No. 436
v. Cuyahoga Cty. Commrs., 8th Dist. No. 94703, 2011-Ohio-820, ¶ 6. This case,
however, was terminated by a Civ.R. 12(B)(6) motion to dismiss, made before the
employees had the chance to offer any evidence to show why they did not pursue an
administrative appeal from the county administrator’s decision upholding the terms of the
early retirement plan. And it bears noting that the employees were not required to
“anticipate and attempt to plead around defenses.” United States v. N. Trust Co., 372
F.3d 886, 888 (7th Cir.2004). Any attempt to resolve the issue of exhaustion of
administrative remedies solely on the basis of the complaint was premature.
{¶13} The complaint set forth a viable claim for relief. To resolve the issue of
exhaustion of administrative remedies, the court had to go beyond the four corners of the
complaint. By doing so, it did not allow the employees to show why further
administrative appeals would have been in vain. We therefore sustain the assignment of
error.
{¶14} This cause is reversed and remanded to the trial court for further
proceedings consistent with this opinion.
It is ordered that appellants recover from appellees their costs herein taxed.
The court finds there were reasonable grounds for this appeal.
It is ordered that a special mandate issue out of this court directing the Cuyahoga
County Court of Common Pleas to carry this judgment into execution. A certified
copy of this entry shall constitute the mandate pursuant to Rule 27 of the Rules of
Appellate Procedure.
MELODY J. STEWART, ADMINISTRATIVE JUDGE
KENNETH A. ROCCO, J., and
KATHLEEN ANN KEOUGH, J., CONCUR