On Feb. 5, a team that included Taft Cleveland partner Michael Zbiegien and Columbus partner Jim Abrams achieved a victory at the Ohio Supreme Court resulting in the reversal of a $4.5 million judgment the City of Cleveland had obtained against Taft client the Ohio Bureau of Workers’ Compensation (BWC). Beyond this case, the decision drastically narrows the types of suits for monetary relief that can be brought in the Courts of Common Pleas against the State of Ohio and its agencies by adopting a more robust distinction between suits at law and equity.
In 2013, Cleveland sued the BWC challenging its group rating program for public employers, and the City of Parma filed a companion class action on behalf of all other public employers in the state. Cleveland and Parma claimed that, due to inequities in the group rating program, the premiums for non-group-rated employers like themselves were inflated. These cases were filed after a class of private employers won a suit challenging the BWC’s nearly identical group rating program for private employers, a suit the BWC eventually agreed to pay more than $400 million to settle after losing intermediate appeals on class certification and the merits. (Taft did not represent the BWC in the private employer suit.)
Like the private employers before them, Cleveland and Parma did not sue the BWC in Ohio’s Court of Claims, which has exclusive jurisdiction over suits against the state for legal damages, but in the Court of Common Pleas based on an Ohio Supreme Court decision known as Santos that allows plaintiffs to sue the state in the Court of Common Pleas for monetary relief if it can be classified as “equitable restitution.”
Fighting an uphill battle due to the adverse precedent from the private employer suit, Taft’s team—which, in addition to Zbiegien and Abrams, included Columbus partner David Butler, Cleveland partner David Wallace and Cleveland associate Cary Snyder—worked to position the case for review by the Supreme Court. The Cleveland case went to trial in January 2017, and the court relied almost entirely on the opinions and rationale from the private employer suit to enter a $4.5 million judgment in Cleveland’s favor, which the Eighth District Court of Appeals subsequently affirmed.
The Supreme Court then agreed to accept jurisdiction over the case. Although not overruling Santos, the Court expressly adopted a new limitation on its effect: for monetary relief to be considered equitable restitution, it must be seeking to recover specifically identified assets rather than from the defendant’s general assets. Because the premium payments were placed in the BWC’s general fund and paid as compensation to injured workers or refunds to employers, the Court held that the money allegedly overpaid is no longer in the BWC’s possession and cannot be recovered in a suit of equity. As a result, the Court reversed the judgment in favor of Cleveland and remanded the case with instructions for it to be dismissed for lack of subject-matter jurisdiction.
The class certification decision in the Parma case is currently on appeal to the Eighth District Court of Appeals, which stayed the matter pending the Supreme Court’s ruling in the Cleveland case.
Zbiegien has represented clients before the Ohio Supreme Court, Ohio appellate courts, Ohio state and federal trial courts, the U.S. Court of Appeals for the Sixth and Federal Circuits and the U.S. Court of Federal Claims. He represents companies in class actions, including matters related to consumer and employment issues. Abrams represents clients in all aspects of civil litigation, with a concentration in commercial matters. Before joining the legal field, Abrams held leadership roles at both publicly traded and privately held businesses, allowing him to bring a real-world perspective to client matters.