Case Information
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16 Rossborough Mfg. Nos. 96-3149/3150/3151/3152/ Co., et al. v. Trimble, 3153/3154/3155/3156/3259 et al. are unable to discern any from this record. [3]
This is not a case in which "contractual rights have arisen or vested rights have been acquired under [a] prior decision" of the Ohio Supreme Court, Peerless Elec. Co. v. Bowers,
CONCLUSION
For the foregoing reasons, we affirm the dismissal of each of the complaints.
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
ROSSBOROUGH
MANUFACTURING CO. (96-3152); JOHN ROBERTS, Intervenor (96-3155); PATTY ELSER, Intervenor (96-3149); NORMA J. CRINER, Administratrix of the Estate of Scott D. Schaffer, Intervenor (96-3156); WILEY ORGANICS, INC., Intervenor (96-3150); TRIPLE A IN THE U.S.A., INC. (96-3259); RYKON SPECIALIZED PLATING, INC. (96-3259); FRANK StUMP, Intervenor (96-3153); WILLIAM Y. MOORE, Intervenor (96-3154); JAMES PEET, Intervenor (96-3151),
Plaintiffs-Appellants, v.
J. WESLEY TrIMBLE;
J. KENNETH BLACKWELL;
All Tools, Inc.; J.L. Foti
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2 Rossborough Mfg. Nos. 96-3149/3150/3151/3152/ Co., et al. v. Trimble, 3153/3154/3155/3156/3259 et al.
Construction Co.; L-MOR, Inc., doing business as Darling Fire &; Safety; William Pfeiffer, Chief Executive Officer and Administrator of Ohio Bureau of Workers' Compensation; JAMES CONRAD; JOSEPH DETERS, Defendants-Appellees.
Appeal from the United States District Court for the Northern District of Ohio at Cleveland. No. 92-01916; 95-01084-Donald C. Nugent, District Judge.
Argued: February 1, 2002 Decided and Filed: August 26, 2002 Before: SUHRHEINRICH, SILER, and BATCHELDER, Circuit Judges.
COUNSEL
ARGUED: John D. Maddox, ARTER &; HADDEN, Washington, D.C., for Appellants. Elise W. Porter, OFFICE OF THE ATTORNEY GENERAL OF OHIO, Columbus, Ohio, for Appellees. ON BRIEF: Paul W. Newendorp, WEINER, SUIT &; COURY, Warren, Ohio, Joseph C. Winner, MCFADDEN, WINNER &; SAVAGE, Columbus, Ohio, Scott E. Stewart, Cleveland, Ohio, John D. Maddox, ARTER &; HADDEN, Washington, D.C., Irene C. Keyse-
Nos. 96-3149/3150/3151/3152/ Rossborough Mfg. 15 3153/3154/3155/3156/3259 Co., et al. v. Trimble, et al.
protection; it creates no office; it is, in legal contemplation, as inoperative as though it had never been passed.
) (quoting Norton v. Shelby County,
D. Additional Constitutional Claims
The plaintiffs also assert violations of the Fifth Amendment's prohibition against the taking of private property for public use without providing just compensation, and the Fourteenth Amendment's protection against deprivations of life, liberty, or property without due process of law. These alleged violations depend on the denial of contract, property, or substantive rights that were wholly derived from the Intentional Tort Act. The plaintiffs have provided no basis other than the Intentional Tort Act for their claimed contract, property, or other substantive rights, and we
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[1]f it did not give effect to that act, either expressly or by implication, this court is without jurisdiction to review its decision, for the reason that the provisions of the Constitution of the United States for the protection of contract rights are directed only against the impairment of them by constitutions or laws adopted or passed subsequent to the date of the contract from which such rights spring, and do not reach decisions of courts construing constitutions or laws which were in effect when the contract was entered into.
Id. at 277. The Court concluded that the state court had given the repeal no effect, but had determined-without regard to the repeal-that the 1907 legislation was unconstitutional and void under the state's constitution. Id. at 278. Accordingly, the Court held, because "the prohibition of the Constitution against the impairing of contracts by state legislation does not reach errors committed by state courts when passing upon the validity and effect of a contract under a constitution or laws existing when it is made," the case presented no federal question over which the Court had jurisdiction. Id. at 280.
Long Sault makes it clear that the contracts clause of the Constitution protects the obligations of contracts from being impaired by legislation; it does not protect those obligations from the judgments of courts. Id. at 280; accord Barrows v. Jackson,
The rule in Ohio has long been that when a statute is held to have been unconstitutional as of its enactment, that statute is void ab initio. City of Middletown v. Ferguson,
Nos. 96-3149/3150/3151/3152/ Rossborough Mfg. 3153/3154/3155/3156/3259 Co., et al. v. Trimble, et al.
Walker, ARTER &; HADDEN, Cleveland, Ohio, Mark F. Kruse, MCINTYRE, KAHN, KRUSE &; GILLOMBARDO, Cleveland, Ohio, Gregory K. Pratt, PRATT &; SINGER, Middletown, Ohio, Mark E. Barbour, JEFFRIES, KUBE, FORREST &; MONTELEONE, Cleveland, Ohio, Elizabeth A. Raies, TZANGAS, PLAKAS, MANNOS &; RECUPERO, Canton, Ohio, Michael P. Harvey, MICHAEL P. HARVEY COMPANY, Rocky River, Ohio, for Appellants. Elise W. Porter, OFFICE OF THE ATTORNEY GENERAL, Columbus, Ohio, for Appellees.
OPINION
ALICE M. BATCHELDER, Circuit Judge. The plaintiffs appeal the district court's order dismissing for failure to state a claim and for lack of jurisdiction their complaint demanding reimbursement from the now-defunct Intentional Tort Fund, created by the Intentional Tort Act, Section 4121.80 of the Ohio Revised Code, which was declared unconstitutional and void ab initio by the Ohio Supreme Court in Brady v. SafetyKleen Corp.,
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BACKGROUND
A. History of Suits for Work-Related Injury in Ohio
In 1924, Article II, Section 35 of the Ohio Constitution was amended to provide:
For the purpose of providing compensation to workmen and their dependents, for death, injuries or occupational disease, occasioned in the course of such workmen's employment, laws may be passed establishing a state fund to be created by compulsory contribution thereto by employers, and administered by the state, determining the terms and conditions upon which payment shall be made therefrom. Such compensation shall be in lieu of all other rights to compensation, or damages, for such death, injuries, or occupational disease, and any employer who pays premiums or compensation provided by law, passed in accordance herewith, shall not be liable to respond in damages at common law or by statute for such death, injuries or occupational disease.
Following this amendment, the Ohio General Assembly created the State Insurance Fund for payment of compensation for injuries covered under the workers' compensation system. All Ohio employers were required to pay premiums for coverage by the State Insurance Fund or to make arrangements to self-insure the compensation due their employees for injuries arising out of and in the course of employment.
In 1982, the Ohio Supreme Court decided Blankenship v. Cincinnati Milacron Chem., Inc.,
Nos. 96-3149/3150/3151/3152/ Rossborough Mfg. 13 3153/3154/3155/3156/3259 Co., et al. v. Trimble, et al.
C. Impairment of the Obligation of Contract
The threshold issue in this case is whether-assuming for purposes of this discussion the existence of the contractual rights the plaintiffs claim-the actions of the state defendants violated the contracts clause of the United States Constitution. We conclude that they did not. We begin with the language of the clause itself, and the principles established in Long Sault Dev. Co. v. Call,
Article I, Section 10 of the Constitution prohibits the states from engaging in several specific kinds of activities. In particular, that section decrees that "No State shall . . . pass any . . . Law impairing the Obligation of Contracts." U.S. CONST., Art. I, Section 10. In Long Sault, the Supreme Court expressly held that the contracts clause applied to state legislation, but not to decisions of state courts. In that case, the Court examined its jurisdiction to review a decision of the highest state court invalidating a 1907 New York statute that had incorporated Long Sault Development Company and granted it certain rights to the use of the waters and beds of the St. Lawrence River. Long Sault,
Long Sault appealed to the United States Supreme Court, which undertook a de novo review of the state court proceedings to determine what effect, if any, the state court gave to the 1913 repeal in reaching its decision, because
*5 Specifically, if "the judgment sought would expend itself on the public treasury or domain," it is a suit against the state. Id. at 101-02, n.11.
There is an exception to this rule, however-a suit challenging the constitutionality of a state official's action is not one against the State. Ex Parte Young,
In the case at hand, the plaintiffs explicitly demand prospective injunctive relief and a declaratory judgment; implicitly, they seek reimbursement that the claim should be paid out of the Fund. While it may be argued that the explicit demand for injunctive relief and a declaratory judgment is merely a cover for the implicit request for money, we conclude that the Ex Parte Young exception applies. The plaintiffs challenge the constitutionality of the Treasurer's and Administrator's administration of the Fund. Were we to find that the actions of those officials are unconstitutional, and to issue an injunction preventing the continued unconstitutional administration of the Fund, the plaintiffs would not need a judgment against the state awarding them money damages because the injunction would lead to the lawful administration of the Fund and reimbursement for the plaintiffs. Accordingly, we hold that the Treasurer and Administrator are not entitled to Eleventh Amendment immunity.
Nos. 96-3149/3150/3151/3152/ Rossborough Mfg. 3153/3154/3155/3156/3259 Co., et al. v. Trimble, et al. effective on August 22, 1986. The Intentional Tort Act declared the immunity from common law suit established in Article II, Section 35 of the Ohio Constitution an essential aspect of the Ohio Workers' Compensation System and explained that the System was intended to remove from the common law tort system all disputes between employers and employees except as expressly provided by the Act. ORC § 4121.80(B).
The Intentional Tort Act restored to employers the complete, state-controlled coverage of employee claims for workplace injury in two ways. First, it created the Intentional Tort Fund [hereinafter "Fund"] to complement the State Insurance Fund's monopoly of insurance coverage for workers' compensation claims. The Act required that employers participate in the Fund to cover their risk of loss from employee claims for workplace injury not covered by the workers' compensation system, ORC § 4121.80(D), and that the Ohio Workers' Compensation Administrator pay all damages, defense attorney fees, and costs out of the assets of the Fund, ORC § 4121.80(E).
Second, the Intentional Tort Act regulated and limited employee claims of injuries resulting from the intentional acts of employers. Each such claim was required to be submitted to a judge of the Ohio Court of Common Pleas who would determine liability for damages, that is, whether the employer committed an intentional act that caused the injury. ORC § 4121.80(D). If the Common Pleas Court found the employer liable, the Industrial Commission of Ohio would then determine the amount of damages and make an award, which could not exceed . Id. The Intentional Tort Act did not contain any provision for settlement of these claims.
From 1982 until the Intentional Tort Act was enacted in 1986, Ohio employers, including the original plaintiff in this action, Rossborough Manufacturing Company [hereinafter
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6 Rossborough Mfg. 3153/3154/3155/3156/3259 Co., et al. v. Trimble, et al. "Rossborough"], could and did obtain commercial insurance policies or endorsements, called "stop-gap" insurance, for the purpose of covering the new risk of loss from employee claims for workplace injuries created by Blankenship. From August 22, 1986, onward, Ohio employers, including Rossborough, were required to purchase their insurance coverage for the post-Blankenship employee claims for workplace injury from the Intentional Tort Fund.
On January 31, 1991, the Ohio Court of Appeals explicitly recognized that the Intentional Tort Act did not mention settlement agreements. Chrysler Motors Corp. v. Mayfield, No. 89AP-1203,
The Intentional Tort Act remained good law until August 27, 1991, when the Ohio Supreme Court held the Act unconstitutional in toto because it exceeded the scope of legislative authority granted to the Ohio General Assembly under the Ohio Constitution. Brady v. Safety-Kleen Corp.,
Nos. 96-3149/3150/3151/3152/ Rossborough Mfg. 3153/3154/3155/3156/3259 Co., et al. v. Trimble, et al. judgment under Rule 59(e). Those motions were denied, and the plaintiffs timely appealed, challenging only the dismissal of their federal claims.
ANALYSIS
A. Standard of Review
We review de novo a district court's dismissal of a complaint for failure to state a claim under Rule 12(b)(6), Bower v. Fed. Express Corp.,
B. Eleventh Amendment Immunity
As a threshold matter, we must determine whether the Treasurer and the Administrator are entitled to Eleventh Amendment immunity. The Eleventh Amendment provides that "
he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. CONST. amend. XI. An unconsenting state is immune from suits brought in federal courts by citizens of that state as well as citizens of another state, and suits against state officials are barred when "the state is the real, substantial party in interest." Pennhurst State Sch. &; Hosp. v. Halderman,
*7 12(b)(6), holding that under Ohio law an unconstitutional statute, whether state or federal, is in reality no law, that its unconstitutionality dates from the time of the law's enactment, and the statute is therefore inoperative, as if it had never been passed. The district court further held that a contract resting on an unconstitutional statute creates no obligation that could be impaired by subsequent legislation. The district court acknowledged an exception to this principle: where a legislative act has been held to be constitutional, particularly by the Ohio Supreme Court, a subsequent judicial decision holding the act unconstitutional may be limited to prospective operation only. Accordingly, the court said, rights acquired under a statute adjudged by a court to be constitutional are valid legal rights that are protected by the constitution, not by judicial decision. But the court held that this exception did not apply to the Intentional Tort Act because that statute had never been adjudged to be constitutional, and it is the general rule that anyone assuming the validity of legislation does so at his own peril. Moreover, the court pointed out, the Ohio Supreme Court's Mayfield decision made it clear that Brady's invalidation of the Intentional Tort Act applied retroactively.
Because the unconstitutional Intentional Tort Act created no enforceable interest or property right in Rossborough, the district court concluded, the counts in Rossborough's complaint alleging contracts clause and due process violations and an unconstitutional taking failed to state claims upon which relief may be granted. Because Rossborough's constitutional claims failed, the court held, its claim also failed. Since no federal claims remained, the district court chose not to exercise jurisdiction over the state law claims.
After the Triple A and Rykon complaints were dismissed on the same grounds as the Rossborough claims had been dismissed, all of the plaintiffs moved to vacate the dismissals under Rule 60(a) or, alternatively, to alter or amend the
Nos. 96-3149/3150/3151/3152/ Rossborough Mfg. 3153/3154/3155/3156/3259 Co., et al. v. Trimble, et al. amount received or receivable under the Ohio Constitution, id. at .
In response to Brady, the Ohio General Assembly enacted an uncodified law, S.B. 192, 119th Gen. Assem., Reg. Sess. (Ohio 1992) (enacted) [hereinafter "S.B. 192"], which was signed by the Governor on June 30, 1992, and became effective on September 29, 1992. S.B. formally repealed the unconstitutional Intentional Tort Act. Section 5 of S.B. 192 required the transfer of the Fund's assets into a new Intentional Tort Disbursement Fund that was to be in the custody of the State Treasurer but not part of the state treasury, and was to be used solely to "pay attorney's fees . . . to attorneys for services provided on behalf of an employer under former section 4121 of the Revised Code for attorney's fees filed on or before October 27, 1991," up to a total amount not to exceed ; to pay for the costs of administration of the Fund in an amount not to exceed ; and from the moneys remaining, to prorate a credit to the administrative assessment of employers that had paid into the Intentional Tort Fund, reducing such credit for amounts paid out either in awards or attorney's fees pursuant to the prior section 4121.80. As of February 20, 1992, the Fund had total assets of .
The Brady decision and the enactment of S.B. 192 were followed by an Ohio Supreme Court per curiam decision on September 2, 1992, holding that Brady's invalidation of the Intentional Tort Act in its entirety had negated any right of employers to reimbursement from the intentional tort fund for moneys paid out in settlement of claims and attorney fees. Chrysler Motors Corp. v. Mayfield,
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B. Time Line of Events for the Present Action
In January 1991, Rossborough was sued for damages in state court pursuant to ORC § 4121.80, by a worker who had been injured and by the estates of two workers who had been killed in an explosion at its Ohio manufacturing plant one year earlier. No determination of liability was made by the state court. In September 1992, shortly before the effective date of S.B. 192, Rossborough brought this action in federal court against J. Wesley Trimble, Administrator of the Ohio Bureau of Workers' Compensation, and Mary Ellen Withrow, Treasurer of the State of Ohio, in their official capacities, [12] seeking a judgment declaring that S.B. 192 violated various of Rossborough's constitutional rights and requiring that payment be made from the Intentional Tort Disbursement Fund of any damages, attorneys fees, and costs resulting from the state court actions. In an order stipulated to by the parties, the district court stayed the transfer of the moneys in that Fund, pending resolution of this litigation.
Rossborough's complaint alleged six separate counts. First, Rossborough claimed that the Intentional Tort Act had vested in Ohio employers contractual rights to indemnification by the Fund for damages, attorney's fees, and costs related to workplace injuries; that in reliance on the Intentional Tort Act, Rossborough had paid premiums into the Intentional Tort Fund and now had vested contractual rights to reimbursement from that Fund; and that S.B. 192 violates Article I, Section 10, Clause 1 (the contracts clause) of the United States Constitution because it impairs Rossborough's vested contractual rights to reimbursement from that Fund. The second count claimed that Rossborough had paid its premiums into the Intentional Tort Fund as required by Ohio law, and the denial of its claims for reimbursement from that Fund violated the due process clause of the Fourteenth Amendment. In the third count, Rossborough claimed that S.B. 192 and the state defendants' denial of its claims for reimbursement from the Fund deprived it of property without compensation, in violation of the Fifth and Fourteenth Amendments. Rossborough's fourth count asserted a § 1983 claim against the state defendants' actions for the alleged constitutional violations. The fifth count demanded that the assets of the Fund be placed in a constructive trust to indemnify Rossborough. Count six asserted statutory rights under the Intentional Tort Act.
On September 29, 1995, the district court granted the state defendants' motion to dismiss pursuant to Rules 12(b)(1) and
NOTES
Notes
As the district court pointed out, the plaintiffs might have a claim for reimbursement of the premiums paid into the Intentional Tort Fund, but that claim would arise entirely because the Intentional Tort Act was adjudged unconstitutional, and presents no federal question.
In December 1992 and January 1993, after the Brady decision, after S.B. 192 became effective, and after the Mayfield decision, Rossborough settled the state court lawsuits arising out of the 1990 explosion and paid the plaintiffs the agreed amounts. Rossborough then sought reimbursement from the Fund and, unsuccessful in that effort, amended the complaint in this action to include the fact of settlement of the state lawsuits and the state defendants' failure to reimburse.
Sandra H. Devery, William Pfeiffer, and C. James Conrad succeeded Trimble. J. Kenneth Blackwell and Joseph T. Deters succeeded Withrow.
Also named as defendants in this action are several corporate entities, which Rossborough sues both individually and as representatives of a certified class of private employers seeking, in a state court action, to have the assets of the Intentional Tort Fund transferred to the Workers' Compensation Fund. Further, there are also several additional plaintiffs who were permitted to intervene in the instant action; each of them asserts claims against the Intentional Tort Fund. Finally, plaintiffs Triple A and Rykon sued the state defendants in separate actions, raising claims essentially similar to those raised by Rossborough; the Triple A and Rykon actions were consolidated with Rossborough's action in the district court and dismissed, and have been consolidated with Rossborough's appeal for briefing and argument. Because our disposition of this action with regard to Rossborough is dispositive of the claims of all plaintiffs against all defendants, it is not necessary for us to describe in any detail the claims of the intervenor plaintiffs or Triple A and Rykon, or Rossborough's claims against the corporate defendants.
