Emp.'s Choice Plus, Inc. v. Ohio Dept. of Job & Family Servs.Emp.'s Choice Plus, Inc. v. Ohio Dept. of Job & Family Servs.
Rendered on December 5, 2019
On brief: Graydon Head & Ritchey LLP, Steven P. Goodin, Anthony R. Robertson, and Matthew B. Lake, for appellants.
On brief: Dave Yost, Attorney General, and Eric A. Baum, for appellee Ohio Department of Job and Family Services.
APPEAL from the Franklin County Court of Common Pleas
DORRIAN, J.
{¶ 1} Appellants Employer‘s Choice Plus, Inc. (“Employer‘s Choice“), Alzey Enterprises I, Inc. (“Alzey“), Employers Risk Management Company, Inc. (“Employers Risk“), J Ross, Inc., J Ross III Management Company, Inc., J Ross IV Management Company, Inc., J Ross V Management Company, Inc., J Ross VI Management Company, Inc., J Ross VII Management, Inc., J Ross VIII, Inc., J Ross XI Corporation, J Ross XII Corporation, and J Ross XIV Corporation (collectively, the “J Ross Companies“), appeal from a judgment of the Franklin County Court of Common Pleas affirming a decision of appellee, Ohio Unemployment Compensation Commission (“commission“). For the reasons that follow, we reverse.
I. Facts and Procedural History
{¶ 2} In August 2008, appellee, Ohio Department of Job and Family Services (“ODJFS“), issued a letter advising Employer‘s Choice that pursuant to an investigation it had determined Alzey, Employers Risk, and the J Ross Companies did not meet the definition of employer set forth in
{¶ 3} The director of ODJFS issued a reconsidered decision in August 2016, modifying the determination of liability and contribution rate determination by finding
{¶ 4} Following the hearing, the commission issued a decision affirming the director‘s reconsidered decision. The commission held that Employer‘s Choice was a liable employer effective January 1, 2002, and that Alzey, Employers Risk, and the J Ross Companies did not meet the statutory definition of employer contained in
{¶ 5} The common pleas court issued a decision affirming the commission‘s decision. The court held the commission‘s conclusion that Employer‘s Choice was the only entity that met the statutory definition of employer was supported by reliable, probative evidence because the other entities were liquidated into Employer‘s Choice when the qualified subchapter S subsidiary election was made. The court further held the commission‘s conclusion that Employer‘s Choice was the successor-in-interest to the other entities was supported by reliable, probative evidence because the same individual was the sole owner, shareholder, and president of all the entities, and each one of them had the same physical address and used the same bank account for payroll purposes.
II. Assignments of Error
{¶ 6} Appellants appeal and assign the following two assignments of error for our review:
I. THE TRIAL COURT MISINTERPRETED OHIO LAW IN CONCLUDING THAT EMPLOYER‘S CHOICE PLUS, INC. WAS THE ONLY APPELLANT-EMPLOYER UNDER
R.C. 4141.01(A)(1) .II. THE TRIAL COURT MISCONSTRUED OHIO LAW IN CONCLUDING THAT EMPLOYER‘S CHOICE PLUS, INC. WAS A SUCCESSOR-IN-INTEREST TO EVERY OTHER APPELLANT UNDER
R.C. 4141.24(G)(1) .
III. Analysis
{¶ 7} Appellants appealed the commission‘s decision to the common pleas court, pursuant to
{¶ 8} On appeal from the common pleas court, our standard of review is more limited. On questions of fact, we consider whether the common pleas court abused its discretion. Valentine Contrs. at ¶ 14. “When considering appeals involving questions of successor-in-interest liability, this court has defined ‘abuse of discretion’ as connoting more than an error in judgment, but implying a decision that is without a reasonable basis and clearly wrong.” All Star Personnel, Inc. v. Unemp. Comp. Rev. Comm., 10th Dist. No. 05AP-522, 2006-Ohio-1302, ¶ 13. On questions of law, we exercise de novo review. Valentine Contrs. at ¶ 14; Slats & Nails Pallets, Inc. v. Ohio Dept. of Job & Family Servs., 10th Dist. No. 14AP-690, 2015-Ohio-1238, ¶ 8.
{¶ 9} Ohio employers must contribute to the state Unemployment Compensation Fund.
{¶ 10} In their first assignment of error, appellants assert the common pleas court erred by concluding Employer‘s Choice was the only entity that qualified as an employer pursuant to
“Employer” means * * * any individual or type of organization including any partnership, limited liability company, association, trust, estate, joint-stock company, insurance company, or corporation, whether domestic or foreign, * * * who subsequent to December 31, 1971 * * *:
(a) Had in employment at least one individual, * * * in either the current or the preceding calendar year whether or not the same individual was in employment each such day; or
(b) Except for a nonprofit organization, had paid for service in employment wages of fifteen hundred dollars or more in any calendar quarter in either the current or preceding calendar year[.]
{¶ 11} At the hearing, Cacaro testified Alzey, Employers Risk, and the J Ross Companies were incorporated in Ohio, and that during the relevant time period each of the entities had at least one employee receiving wages of $1,500 or more. The common pleas court alluded to this testimony in its findings of fact stating that “[e]ach Appellant employed at least one employee for all weeks of the years 2006 through 2008, with at least one employee earning quarterly wages of $1500.00 or more.” (Mar. 30, 2018 Decision at 4.) Based on this undisputed evidence, and applying the definition of “employer” set forth in
{¶ 12} Accordingly, we sustain appellants’ first assignment of error.
{¶ 13} In concluding that Alzey, Employers Risk, and the J Ross Companies were not employers under
{¶ 14} Under certain circumstances, an employer may be deemed to be a successor in interest of another employer for purposes of determining experience and contribution rate. In the present appeal, the director and the commission determined Employer‘s Choice was the successor in interest to Alzey, Employers Risk, and the J Ross Companies pursuant to
{¶ 15} “Generally,
If an employer transfers all of its trade or business to another employer or person, the acquiring employer or person shall be the successor in interest to the transferring employer and shall assume the resources and liabilities of such transferring employer‘s account, and continue the payment of all contributions, or payments in lieu of contributions, due under this chapter.
If an employer or person acquires substantially all, or a clearly segregable and identifiable portion of an employer‘s trade or business, then upon the director‘s approval of a properly completed application for successorship, the employer or person acquiring the trade or business, or portion thereof, shall be the successor in interest. The director by rule may prescribe procedures for effecting transfers of experience as provided for in this section.
{¶ 16} Alternatively,
If an employer transfers its trade or business, or a portion thereof, to another employer and, at the time of the transfer, both employers are under substantially common ownership, management, or control, then the unemployment experience attributable to the transferred trade or business, or portion thereof, shall be transferred to the employer to whom the business is so transferred. The director shall recalculate the rates of both employers and those rates shall be effective immediately upon the date of the transfer of the trade or business.
{¶ 17} In the present case, the key issue in determining whether Employer‘s Choice was the successor in interest to the other entities under
{¶ 18} Under federal law, “an S corporation may elect to treat an eligible subsidiary as a QSub” by filing a form prescribed by the Internal Revenue Service.
{¶ 19} The commission and the common pleas court effectively concluded the QSub election constituted a transfer of the trade or business of Alzey, Employers Risk, and the J Ross Companies to Employer‘s Choice. Following this reasoning, the commission then concluded the subsidiaries had transferred all of their trade or business to Employer‘s Choice, thus making Employer‘s Choice the successor in interest to those entities pursuant to
{¶ 20} The key issue is whether the QSub election constituted a transfer of the trade or business of the subsidiaries. The term “transfer” is not defined within
The word “transfer” is not statutorily defined with Revised Code Chapter 4141. Undefined terms must be accorded their common, everyday meaning. MP Star Financial, Inc. v. Cleveland State University, 107 Ohio St.3d 176, 2005-Ohio-6183, ¶ 8.
R.C. 4141.24(F) uses the verb form of the wordtransfer, while the Administrative Code provision uses the term in both its verb and noun forms. Black‘s Law Dictionary (8th Ed.2004) provides two possible definitions for the former: “to convey or remove from one place or one person to another; to pass or hand over from one to another, [especially] to change over the possession or control of” and “to sell or give.” (Emphasis added.) Likewise, “acquire” means “to gain possession or control of; to get or obtain.” Id. The noun “transfer” denotes “any mode of disposing of or parting with an asset or an interest in an asset, including a gift, the payment of money, release, lease, or creation of a lien or other encumbrance” or “a conveyance of property or title from one person to another.” Id. (Emphasis added.)
Jefferson Med. Assocs., L.L.C. v. Unemp. Comp. Rev. Comm., 10th Dist. No. 05AP-948, 2006-Ohio-2310, ¶ 17. The court concluded a lease fell within the common meaning of the term transfer.
{¶ 21} Focusing on the noun form of the word transfer, appellee argues that the word has a broad meaning because it includes any method or mode of disposing of or parting with an asset or an interest in an asset. But this argument confuses two different concepts. Although the method or mode of a transfer may encompass a broad range of possibilities, there still must be a conveyance of possession or control of some legal interest in property. Here, the conveyance of possession or control must be a legal interest in a trade or business. That concept is not a broad one.
{¶ 22} The primary rule in statutory construction is to give effect to the legislature‘s intention by looking at the language of the statute. State ex rel. Clay v. Cuyahoga Cty. Med. Examiner‘s Office, 152 Ohio St.3d 163, 2017-Ohio-8714, ¶ 15. When there is no ambiguity, we need only apply the statute. Id. Given the common, everyday meaning of the verb form of the word “transfer,” we do not find any ambiguity in the express statutory requirement that there be a conveyance of some trade or business from one employer to another to trigger successor-in-interest status under
{¶ 23} Appellees suggests we must consider whether the commission‘s interpretation of the federal QSub regulations and their interaction with Ohio unemployment compensation law is entitled to deference. Appellees point us to Supreme Court of Ohio‘s case law directing that courts ” ‘must give due deference to an administrative interpretation formulated by an agency that has accumulated substantial expertise, and to which the General Assembly has delegated the responsibility of implementing the legislative command.’ ” Bernard v. Unemp. Comp. Rev. Comm., 136 Ohio St.3d 264, 2013-Ohio-3121, ¶ 12, quoting Swallow v. Indus. Comm., 36 Ohio St.3d 55, 57 (1988). See also Lang v. Dir., Ohio Dept. of Job & Family Servs., 134 Ohio St.3d 296, 2012-Ohio-5366, ¶ 16 (finding that ODJFS‘s interpretation of a federal statute was reasonable and entitled to deference given the ambiguity in the federal statute) compare, e.g., Marbury v. Madison, 5 U.S. 137, 177 (1803) (“It is emphatically the province and duty of the judicial department to say what the law is.“).
{¶ 24} However, courts grant no deference to an administrative agency‘s interpretation of a statute when that interpretation conflicts with the express terms of an unambiguous statute. Lang at ¶ 12. ” ‘If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress.’ ” Id., quoting Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43 (1984). That is the case here.
{¶ 25} Under the circumstances presented in this case, we conclude the common pleas court erred by affirming the commission‘s determination that a transfer resulted from the election of QSub status for Alzey, Employers Risk, and the J Ross Companies, and that
IV. Conclusion
{¶ 26} For the foregoing reasons, appellants’ two assignments of error are sustained and the judgment of the Franklin County Court of Common Pleas is reversed, and this matter is remanded to that court for further proceedings in accordance with law, consistent with this decision.
Judgment reversed and cause remanded.
KLATT, P.J., and NELSON, J., concur.