Oral Argument Preview: Interpreting the Meaning of “Transacts Business” under R.C. 4117.13(D). Greater Dayton Regional Transit Authority v. State Employment Relations Board et al.

Update: On November 2, 2016, the Supreme Court of Ohio dismissed the case as improvidently allowed.

Read the analysis of the oral argument in this case here.

On August 17, 2016, the Supreme Court of Ohio will hear oral argument in the case of Greater Dayton Regional Transit Authority v. State Employment Relations Board et al., 2015-1205.  At issue in this case is the interpretation of the statutory term “transact business” in order to establish subject matter jurisdiction in a court of common pleas over an appeal from a State Employment Relations Board unfair labor practice adjudication.

Case Background

Appellant, Greater Dayton Regional Transit Authority (“GDRTA”), is a mass transit provider. GDRTA resides in Montgomery County. Its operators and maintenance employees are members of Appellee Amalgamated Transit Union (“Union”). The Union filed a complaint with Appellee, State Employment Relations Board (“SERB”), alleging unfair labor practices, which took place in Montgomery County, related to the processing of Union grievances.  Subsequently SERB issued a complaint and notice of hearing after determining that there was probable cause GDRTA was committing unfair labor practices.

The hearing took place on December 5, 2013. On April 3, 2014, a SERB ALJ issued a recommendation that SERB find that GDRTA violated R.C. 4117.11(A)(1))(5) and (6). SERB adopted this recommendation on June 5, 2014.

GDRTA appealed SERB’s order to the Franklin County Court of Common Pleas. The Union and SERB filed a motion to dismiss for lack of subject-matter jurisdiction under R.C. 4117.13(D) because GDRTA failed to appeal in a county in which it transacts business. GDRTA argued that it “transacts business” in Franklin County because it has contracts with entities within the county, its employees travel to Franklin County to conduct business, and its employees frequently communicate with entities located within Franklin County.

On September 28, 2014, the Franklin County Court of Common Pleas dismissed GDRTA’s appeal for lack of subject matter jurisdiction, finding that “transacts business” was ambiguous under R.C. 4117.13(D) because it failed to specify whether it meant any business, the majority of its business, business related to its main purpose, or business related only to the alleged unfair labor practice.

Because R.C. 4117.13(D) is based on 29 U.S.C. 160(f), the trial court relied on federal court cases, concluding that it did not have jurisdiction because GDRTA had no physical facilities or employees located in Franklin County. Merely purchasing goods, making telephone calls, having sales representatives and employees who traveled there was insufficient. The trial court granted SERB’s motion to dismiss and denied GDRTA’s motion to transfer venue to Montgomery County. GDRTA appealed.

In a per curiam decision, the Tenth District Court of Appeals affirmed the judgment of the Franklin County Court of Common Pleas, and GDRTA appealed to the Supreme Court of Ohio.

Votes to Accept the Case

Yes: Chief Justice O’Connor, and Justices Kennedy, French and O’Neill.

No: Justices Pfeifer, O’Donnell, and Lanzinger.

Key Precedent

R.C. 4117.11(A)(1) (“It is an unfair labor practice for a public employer, its agents, or representatives to: Interfere with, restrain, or coerce employees in the exercise of the rights guaranteed in Chapter 4117 of the Revised Code or an employee organization in the selection of its representative for the purposes of collective bargaining or the adjustment of grievances.”)

R.C. 4117.11(A)(5) (“It is an unfair labor practice for a public employer, its agents, or representatives to: Refuse to bargain collectively with the representative of his employees recognized as the exclusive representative or certified pursuant to Chapter 4117. of the Revised Code.”)

R.C. 4117.11(A)(6) (“It is an unfair labor practice for a public employer, its agents, or representatives to: Establish a pattern or practice of repeated failures to timely process grievances and requests for arbitration of grievances.”)

R.C. 4117.13(D) (“Any person aggrieved by any final order of the board . . . may appeal to the court of common pleas of any county where the unfair labor practice in question was alleged to have been engaged in, or where the person resides or transacts business.”)

29 U.S.C. 160(f) (“Any person aggrieved by a final order of the Board… may obtain a review of such order in any United States court of appeals in the circuit wherein the unfair labor practice in question was alleged to have been engaged in or wherein such person resides or transacts business…”)

Risner v. Ohio Dept. of Natural Resources, Ohio Div. of Wildlife, 2015-Ohio-3731 (“[i]n reviewing a statute, a court cannot pick out one sentence and disassociate it from the context, but must look to the four corners of the enactment to determine the intent of the enacting body.”)(Internally citing to State v. Wilson, 77 Ohio St.3d 334, 336, 673 N.E.2d 1347 (1997))

Kentucky Oaks Mall Co. v. Mitchell’s Formal Wear, Inc., 53 Ohio St. 3d 73 (1990) (R.C. 2307.382(A)(1) and Civ. R. 4.3(A)(1) are very broadly worded and permit jurisdiction over nonresident defendants who are transacting any business in Ohio. “Transact” defined as carrying on or prosecution of complete, incomplete, or in-process business negotiations and contracting.)

Davlan Engineering, Inc. v. NLRB, 718 F.2d 102, 103 (4th Cir. 1983) (Davlan did not transact business in the 4th Circuit, having “neither any permanent physical facility nor any employees situated here.”)

Bally’s Park Place, Inc. v. NLRB, 546 F.3d 318, 321 (5th Cir. 2008) (It was significant but not necessarily dispositive that Bally’s did not maintain a physical presence in the Fifth Circuit. Bally’s did not demonstrate that it transacts business in the circuit because to do so requires more than individuals within the circuit “connecting with Bally’s through the commonplace and universal reach of modern technology.”)

U.S. Elec. Motors v. N.L.R.B., 722 F.2d 315, 319 (6th Cir. 1983) (The Board did not challenge the statement that the company transacted business in the circuit, so the statement was accepted as true. However, while the court held that it had jurisdiction, it noted that venue would have been more appropriate in the Eighth Circuit and that it would have transferred venue had the Board so requested.)

S.L. Industries v. N.L.R.B., 673 F.2d 1 (1st Cir. 1982) (Venue was improper because “[w]hether a defendant has transacted business is largely a factual question to be determined in each case. In making this determination, courts look for tangible manifestations of doing business,” and there were no tangible manifestations that the company transacted business in the circuit.)

S.Community, Inc. v. State Emp. Relations Bd., 38 Ohio St.3d 224, 228 (1988) (The procedure involving an appeal from a final order of SERB in an unfair labor practice case is governed exclusively by R.C. 4117.13(D).)

State Emp. Relations Bd. v. Adena Local School Dist. Bd. of Edn., 66 Ohio St.3d 485, 496 (1993) (R.C. 4117’s treatment of unfair labor practices cases is modeled to a large extent on federal statutes empowering the NLRB to resolve the unfair labor practices in its jurisdiction. Therefore, the NLRB’s experience can be instructive.)

State Emp. Relations Bd. v. Miami Univ., 71 Ohio St.3d 351 (1994) (The NLRB’s experience in unfair labor practices can be instructive, but is not conclusive.)

GDRTA’s Argument

The Ohio Public Employees’ Collective Bargaining Act (“Act”) prohibits unfair labor practices in public employment. R.C. 4117.02 provides for SERB to adjudicate charges of unfair labor practices; however, SERB does not have the final say in such cases. R.C. 4117.13(D) allows an aggrieved party to appeal to courts of common pleas in any county where the alleged unfair labor practice was committed or where the party resides or transacts business. “Transacts business” is not defined in the statute.

The Tenth District read ambiguity into R.C. 4117.13(D) where none exits. The appeals court should have conducted an objective, thorough analysis within the four corners of the Act before finding the term “transacts business” to be ambiguous. The Tenth District improperly would require a permanent physical presence in any county in which a party sought review of a SERB adjudication. To require a permanent physical presence cuts against the language of the statute and is not settled in federal law as the appeals court claims.

By way of illustration, from 2012-2014, GDRTA conducted $600,000 business in Franklin County, contracting with 32 businesses, averaging approximately 1.7 business transactions in the county per week. Its employees regularly travel there for business. The trial court recognized this as conducting business in Franklin County, yet still declared R.C. 4117.13(D)’s “transacts business” to be ambiguous. That phrase is not ambiguous.

The requirement of a permanent physical presence to bestow jurisdiction is incorrect. It has no basis in the statutory language of R.C. 4117.13(D) or the National Labor Relations Act, nor is it adequately supported by federal case law.

Basic dictionary definitions establish that GDRTA transacts business in Franklin County and is thus entitled to pursue an appeal of a SERB adjudication in the Franklin County Court of Common Pleas. Had R.C. 4117.13(D) been intended to limit jurisdiction, it would have incorporated language similar to that of R.C. 4117.02(O), which states that, for matters of public or great general interest, SERB can “certify its final order directly to the court of appeals having jurisdiction over the area in which the principal office of the public employer directly affected by the application or interpretation is located.” Had the General Assembly intended to similarly limit jurisdiction under R.C. 4117.13(D) to the court in which the employer “principally transacts business” or “transacts its principal business,” it could have done so.

The “transacts business” language in R.C. 4117.13(D) is unambiguous, and a requirement of permanent physical presence is unsupportable. GDRTA undeniably transacts business in Franklin County, given the common, everyday use of that term and the undisputed facts of this case.

SERB’s Argument

Jurisdiction over appeals from SERB exists in limited counties, not any county in which the employer buys or sells a good or service. Jurisdiction is tied to the counties in which the employer conducts its business, not wherever in the state it performed a commercial act. Reading the statutory term “transacts business” to include any county in which there is commercial activity could allow an employer to drag an employee across the state for labor disputes clearly occurring in another county.

The absence of the term “transacts any business” is indicative of the General Assembly’s intent to limit jurisdiction to counties in which the employer conducts its regular business.

When writing R.C. 4117.13(D), the General Assembly would have been aware of the National Labor Relations Act, which uses the same language in its venue statute. Federal circuit courts had interpreted “transacts business” to mean something more than engages in any business.

GDRTA’s reading of the statute “invites pointless, fact intensive collateral litigation in appeals that instead should focus on whether a party has committed an unfair labor practice” and sanctions forum shopping.

GDRTA’s business is public transportation in the counties around Dayton. As such, the case should be dismissed as improvidently granted, or the opinion below should be affirmed.

Union’s Argument

GDRTA’s reading of R.C. 4117.13(D) renders it meaningless, as an employer would be able to appeal to nearly any district in the state. None of GDRTA’s routes serve Franklin County; it does not “transact business” there.

In properly finding the term “transacting business” ambiguous, the Court of Appeals used traditional tools of statutory construction to ascertain its meaning. Since the statute at issue was modeled verbatim after its federal counterpart, the Tenth District properly relied on federal case law interpreting Section 160 (f) of the National Labor Relations Act, and properly rejected GDRTA’s argument that federal case law should not be used in interpreting Chapter 4117.

Under GDRTA’s interpretation, nearly any employer could establish that it transacts business in every county in Ohio because business is conducted through web access, electronic mail, social media platforms, and teleconferencing. This result cuts against the purpose of the statute.

Finally, GDRTA never argued in the appeals court that the physical presence requirement made by the trial court was incorrect, so that argument should be deemed waived. Simply put, GDRTA appealed to the wrong court, and is now desperately trying to fix that error.

GDRTA’s Proposed Proposition of Law

R.C. 4117.13(d)’s Phrase “Transacts Business” Is Not Ambiguous And Must Be Given Its Common, Everyday Meaning.

SERB’s Proposed Counter Proposition of Law

Jurisdiction for administrative appeals from SERB orders lies only in counties where the appealing party transacts its ordinary business.

Amici in Support of GDRTA

Amicus Ohio Public Transit Association (“OPTA”) is a “non-profit professional association providing resources and support to public and private transit agencies throughout Ohio.” OPTA argues that a physical presence requirement is not supported by federal case law, and that requiring a physical presence in a particular county ignores the business realities of regional transit authorities.

Amicus Ohio Public Employer Labor Relations Association, (“OHPELRA”) is “Ohio’s largest organization of human resources and labor relations professionals representing public sector employers.”  OHPERLA argues that, had the General Assembly intended to restrict jurisdiction over SERB appeals, it would have included more restrictive language. The legislative intent was to allow for a broad array of forums in which to appeal SERB unfair labor practice determinations.

Alternatively, if the Court affirms the Tenth District decision, it should hold that the geographic restrictions set forth in R.C. 4171.13(D) are only limitations on venue, not on subject matter jurisdiction.

The court of appeals’ interpretation inconveniences the proceedings. SERB is a necessary party to any appeal and sits in Columbus, which is in Franklin County.

Student Contributor: Connie Kremer

 

 

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