2018 Ohio 2151
Ohio2018Background
- Daily Services and I-Force were separate temporary-employment businesses owned by Ryan Mason, located on adjacent properties; each had its own BWC policy.
- In March 2009 I-Force ceased operations over a weekend; Daily Services hired many I-Force permanent staff, assumed some leases, contacted and contracted with many I-Force clients, and Mason stopped operating I-Force as of March 23, 2009.
- BWC audited Daily Services in April 2009, concluded Daily Services was I-Force’s successor-in-interest, combined experience for rate-setting, and invoiced Daily Services for I-Force’s unpaid premiums.
- Adjudicating committee and the administrator’s designee upheld successor finding under former Ohio Adm.Code 4123-17-02(C)(1); Daily Services sought a writ of mandamus claiming abuse of discretion.
- Tenth District granted the writ, holding the facts did not show a “wholly succeeds” transfer under the 2006 version of the rule; Ohio Supreme Court granted direct review.
- The Ohio Supreme Court reversed the court of appeals, holding there was some evidence to support BWC’s conclusion that Daily Services wholly succeeded I-Force for purposes of the 2006 rule and that BWC acted within its discretion to protect the fund.
Issues
| Issue | Plaintiff's Argument (Daily Services) | Defendant's Argument (BWC) | Held |
|---|---|---|---|
| Whether BWC abused discretion finding Daily Services “wholly succeeded” I-Force under former Ohio Adm.Code 4123-17-02(C)(1) | “Wholly” requires assumption of the predecessor’s entire business (customers/relationships); Daily Services did not acquire all clients or assets, so no wholesale succession | Successorship can be found where successor assumes the predecessor’s business functions and predecessor ceases to exist; evidence showed Daily Services assumed key operations and I-Force ceased | BWC did not abuse discretion; some evidence supported finding of whole succession and transfer of liabilities; writ denied |
| Whether BWC may treat a transfer as successor liability when organized to evade premiums | The plain rule controls; BWC cannot rewrite rule to impose liability absent total transfer—must use other enforcement remedies | BWC has fiduciary duty to safeguard the Workers’ Compensation Fund and may find successor liability where predecessor ceases and successor assumes operations, especially to thwart evasion | Court agreed BWC may guard the fund and deem successor-in-interest where supported by evidence of assumed operations and evasion; this supports the result |
| Relevance of 2010 amendment explicitly targeting succession entered to evade obligations | The 2010 amendment (clarifying evasion standard) postdates the 2009 facts and is not applicable; the 2006 rule’s plain language controls | BWC did not rely on the 2010 amendment; it applied the 2006 rule as written and relied on evidence of substantive takeover | Court applied the 2006 rule and found the evidence sufficient; 2010 amendment unnecessary to the result |
| Standard of review for BWC decisions on successor liability | Mandamus available when BWC abuses discretion; require absence of evidence to overturn | BWC decision should be upheld if any evidence supports it | Court reaffirmed abuse-of-discretion standard and found some evidence supported BWC’s conclusion |
Key Cases Cited
- State ex rel. Commercial Lovelace Motor Freight, Inc. v. Lancaster, 22 Ohio St.3d 191, 489 N.E.2d 288 (1986) (defines abuse-of-discretion mandamus standard)
- State ex rel. Secreto v. Indus. Comm., 80 Ohio St.3d 581, 687 N.E.2d 715 (1997) (upholding agency decision if some evidence supports it)
- State ex rel. Lake Erie Constr. Co. v. Indus. Comm., 62 Ohio St.3d 81, 578 N.E.2d 458 (1991) (successor-in-interest is a transferee of a business in whole or in part)
- State ex rel. Valley Roofing, L.L.C. v. Bur. of Workers' Comp., 122 Ohio St.3d 275, 910 N.E.2d 1018 (2009) (transfer must be voluntary)
- State ex rel. K & D Group, Inc. v. Buehrer, 135 Ohio St.3d 257, 985 N.E.2d 1270 (2013) (distinguishing management/contract arrangements from whole succession)
- State ex rel. Avalon Precision Casting Co. v. Indus. Comm., 109 Ohio St.3d 237, 846 N.E.2d 1245 (2006) (courts should not disturb adequately explained agency orders supported by some evidence)
- State ex rel. Health Care Facilities, Inc. v. Bur. of Workers' Comp., 80 Ohio St.3d 642, 687 N.E.2d 763 (1998) (agency must follow its rules and enabling statute)
- State ex rel. Harry Wolsky Stair Builder, Inc. v. Indus. Comm., 58 Ohio St.3d 222, 569 N.E.2d 900 (1991) (BWC’s fiduciary duty to safeguard the fund)