2020 Ohio 3005
Ohio Ct. App.2020Background
- In 2017 the Ohio General Assembly amended R.C. 3309.374 (H.B. 49, later amended by Am.Sub.S.B. 8) to change COLA treatment for School Employees Retirement System (SERS) retirees, authorizing the SERS Board to ‘‘may annually’’ increase pensions by the CPI (capped at 2.5%) and specifying no increase if CPI did not rise.
- On October 9, 2017 the SERS Board voted to suspend COLA increases for three years beginning January 1, 2018.
- OAPSE sued for declaratory relief challenging the freeze on six grounds: that SERS exceeded statutory authority; that the statutes unlawfully delegated legislative power; that H.B. 49 and S.B. 8 violated Ohio’s one-subject rule; and claims for equal protection and fraud.
- Defendants (SERS, the Ohio Attorney General, and SERS’s actuary Cavanaugh Macdonald) moved to dismiss under Civ.R. 12(B)(6). The trial court dismissed all claims, concluding (among other things) that the statute unambiguously gave the Board discretion to not increase COLAs, and that the constitutional challenges implicated the General Assembly (not SERS) so no justiciable controversy existed with the named defendants.
- OAPSE appealed three assignments of error arguing (1) statutory authority did not permit a three-year COLA freeze; (2) the trial court erred by dismissing constitutional claims for failure to name the State when the AG and SERS were named; and (3) dismissal under Civ.R. 12(B)(6) was improper for the constitutional claims. The court of appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether R.C. 3309.374 authorizes SERS to freeze COLAs for three consecutive years | R.C. 3309.374 does not permit a multi-year COLA freeze; ‘‘annually’’ requires an annual entitlement or review | Statute uses discretionary term "may," so Board may choose annually to increase or not; "annually" limits timing of increases but does not mandate an increase each year | Statute is unambiguous; "may" grants the Board discretion to increase or not each year—a multi-year freeze is authorized; assignment overruled |
| Whether OAPSE’s constitutional challenges to H.B. 49 and S.B. 8 were properly before the court without naming the State/General Assembly | Naming the Attorney General and SERS sufficed; state is not a necessary party | The challenged acts are legislative; the real controversy, if any, is with the General Assembly (the State), not SERS or the AG; no justiciable dispute between OAPSE and named defendants | No actual controversy existed between OAPSE and the named defendants on constitutional claims; dismissal was proper on justiciability grounds (court did not decide whether the State is a necessary party) |
| Whether the constitutional claims should have survived a Civ.R. 12(B)(6) dismissal and reached the merits on appeal | The merits of the constitutional challenges should be decided on the record | Trial court permissibly dismissed on jurisdictional/justiciability grounds; appellate court will not reach merits where necessity to decide does not arise | Appellate court declined to reach merits; affirmed dismissal because constitutional questions were not ripe/justiciable before these defendants |
Key Cases Cited
- O'Brien v. Univ. Community Tenants Union, Inc., 42 Ohio St.2d 242 (1975) (12(B)(6) standard; dismissal appropriate only if plaintiff can prove no set of facts entitling recovery)
- Mid-American Fire & Casualty Co. v. Heasley, 113 Ohio St.3d 133 (2007) (declaratory-judgment actions require an actual controversy; courts must avoid advisory opinions)
- Blakemore v. Blakemore, 5 Ohio St.3d 217 (1983) (definition of abuse of discretion)
- Volbers-Klarich v. Middletown Mgmt., 125 Ohio St.3d 494 (2010) (Civ.R. 12(B)(6) tests complaint sufficiency)
- State ex rel. Fuqua v. Alexander, 79 Ohio St.3d 206 (1997) (court may not rely on allegations or evidence outside the complaint in ruling on 12(B)(6))
- Corron v. Corron, 40 Ohio St.3d 75 (1988) (declaratory judgment limited to actual controversies; courts avoid advisory opinions)