What’s On Their Minds: 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.

“You don’t run busses in Franklin County. You don’t have bus stops, you don’t have parking lots, you don’t have any of the essentials to a bus service?” Chief Justice O’Connor to counsel for GDRTA.

“You are familiar with the term forum-shopping, are you not?” Justice Pfeifer to counsel for GDRTA.

On August 17, 2016, the Supreme Court of Ohio heard 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 term “transact business” in R.C. 4117.13(D) in order to establish 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 is located 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.  After a hearing, SERB determined that there was probable cause GDRTA was committing unfair labor practices.

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.

The Franklin County Court of Common Pleas denied GDRTA’s motion to transfer venue, and dismissed GDRTA’s appeal for lack of subject matter jurisdiction. In a per curiam decision, the Tenth District Court of Appeals affirmed the judgment of the trial court.

Read the oral argument preview of the case here.

Statute At Issue

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.”)

At Oral Argument

Arguing Counsel

Jennifer E. Edwards, Baker & Hostetler LLP, Columbus, for Appellant Greater Dayton Regional Transit Authority

Michael J. Hendershot, Chief Deputy Solicitor, Office of the Attorney General, Columbus, for Appellee State Employment Relations Board

Joseph S. Pass, Jubelirer, Pass and Intrieri PC, Pittsburgh, for Appellee Amalgamated Transit Union

GDRTA’s Argument

An appeal from a SERB unfair labor practice finding may be taken in the court of common pleas of any county where the practice occurred, or where the person filing the appeal resides or transacts business. GRDTA is a public employer that resides and transacts business in Montgomery County. But it also transacts business in Franklin County, and an appeal in that county was proper. In an illustrative two and a half year period, GRDTA had $600,000 worth of operational-essential contracts with 32 private entities in Franklin County.

The statutory phrase, “transacts business” in R.C. 4117.13(D) is not ambiguous. In erroneously finding that it was, neither the trial court nor the appeals court conducted the type of disciplined and systematic approach this court requires. The first step is always to look at the common, everyday meaning as found in the dictionary definition. If there is no reasonable interpretation from those definitions, then the court should also consider the context, structure, and grammar of the statute.  Here, neither the trial court nor the appeals court considered context, structure and grammar. And although this court has held that the National Labor Relations Act is an appropriate source of guidance for how to apply R.C. 4117, the appeals court applied the federal cases on which it relied in a way that is not supported by the actual analysis in those cases. Far more helpful is the way in which the Ohio Supreme Court has interpreted “transacts business” in R.C. 2307. 382(A)(1), Ohio’s long-arm statute.

The legislature clearly intended to give the term “transacts business” a very broad meaning. If it didn’t, it could amend the statute to narrow its reach.

Any concerns the court has about forum shopping can be addressed with a transfer of venue-a procedure with which all courts are both familiar and comfortable.

Appellees’ Argument

SERB and the Union shared their argument time.

SERB’s Argument

This case should be dismissed as improvidently accepted. What happened is such a rare occurrence that no useful general rule of law can be written, and GDRTA certainly doesn’t supply one. As far as the AG’s office can tell, since the 1980’s there hasn’t been an appeal to a county where emails or faxes must be examined to determine if a party is in the right forum. There is no confusion about this. Nothing needs to be fixed. This case is an outlier.

The court doesn’t need to reach ambiguity in this case. The plain text can be evaluated. Both phrases—“transacts business” and “transacts any business” have long existed in both American and Ohio law before the phrase was included in R.C. 4117. 13(D). The latter phrase was clearly intended to reach more broadly than the former. So it is quite significant that the legislature did not include the word “any” when it enacted this jurisdictional statute. GDRTA is asking the court to add a word to the statute that the General Assembly left out.  This court repeatedly has declined to do that. The court could write a proposition of law stating that the phrase “transacts business” is not  the phrase “transacts any business,” so it is clear that the phrase has a narrow meaning. SERB’s proposed proposition of law is even simpler and more straightforward than a physical presence requirement. (Prof’s note-it is “Jurisdiction for administrative appeals from SERB orders lies only in counties where the appealing party transacts its ordinary business.”)

The plain language of this statute is straightforward, whether the court looks at what the legislature chose, Black’s Law Dictionary, or comparable wording in other statutes. The party seeking to appeal goes either to the place where the unfair labor practice happened or the place where they are headquartered or do their business.

Union’s Argument

As a practical matter, this case has now been resolved. (Prof’s note-GDRTA’s lawyer emphatically disagreed.) The Union believes the case should be dismissed as improvidently accepted. Trying to write a rule of law could have unintended consequences, and open a Pandora’s Box. Allowing a contract of a certain value, or a fax or an email to define jurisdiction makes no sense. That is why the physical presence requirement of the Court of Appeals makes perfect sense.  If the court opens this up there will be forum shopping until the cows come home, which neither the Ohio General Assembly nor Congress (with the NLRA) intended. This has not been a problem in the past, and to tinker with this now would be a mistake.

What Was On Their Minds

“Transacts Business” versus “Transacts Any Business”

Where does GDRTA transact business, asked Justice Pfeifer? Any place it buys stuff? Hires attorneys? Accountants? Buys an insurance policy?

Is the phrase “transacts business” susceptible to more than one reasonable interpretation, asked Justice O’Neill? Does sending a fax to Franklin County constitute transacting business there?

What law should the court write here, Justice O’Donnell characteristically asked. Is there confusion about the difference between “transacting business” and “transacting any business?” Is this case an outlier?

Should the court define transacts business versus transacts any business, asked Chief Justice O’Connor? Even though the word “any” is not even in the statute? Should the court look through the lens of Ohio’s long-arm statute?

Would it be a problem if the court were to define “transacts business” and include the need for a physical presence, the way the federal interpretation does, asked Justice Lanzinger?

Nexus to Franklin County

Is there a nexus to physical presence in the definition of transacts business, asked Chief Justice O’Connor? Can’t GDRTA busses be serviced in Montgomery County?

Normally, is an appeal take in the county where the authority is transporting passengers, asked Justice O’Donnell? What about all those contracts in Franklin County?

Statutory Ambiguity

Did the lower courts say the statutory language is ambiguous, or not, asked Justice O’Neill?

Is there something that needs to be clarified here, asked Justice O’Donnell?

Unintended Consequences

Would dismissing the appeal prevent the court from the unintended consequences of using too many words to describe “transacting business” not only in these types of cases, but others, asked Justice Pfeifer, commenting that “when you start defining, you don’t know where it’s going to pop up next.”

If the court adopts a physical presence requirement, could that not have some unintended spillover to other areas of business related activities like taxation, commented Chief Justice O’Connor, noting that she was a little leery about building a case where physical presence becomes the guidepost.

Forum Shopping

In terms of the definition in this statute, could every public body in this state appeal an adverse decision from SERB anywhere they may have sent a fax in this state, asked Justice Pfeifer? What purpose would be served by such a scattergun approach to where an action can be brought? Does the General Assembly favor forum shopping?

Federal Law

Should the court look to federal law to interpret what the legislature did here, asked Justice Lanzinger? What federal cases does GDRTA rely on for such a broad reading of “transacts business?” Is there even any need to rely on federal interpretation?

Case in Controversy

Is there still a case in controversy here, asked Chief Justice O’Connor?

Does GDRTA want to continue to litigate to clear its name, asked Justice Pfeifer? (very much so, replied its counsel.)

Is the actual unfair labor practice before the court, asked Justice O’Donnell?

How it Looks From the Bleachers

To Professor Emerita Bettman

Like a win for SERB and the Union, either by way of a dismissal as improvidently accepted or with a refusal to read the word “any” into the statutory phrase “transacts business.” If the court does define “transacts business,” I think it more likely to adopt SERB’s “transacts its ordinary business” language than a physical presence requirement.

I’m more inclined than my student contributor Connie Kremer to find an improv the more likely resolution here, because of the stated fear of unintended consequences, particularly in tax cases where the court wouldn’t want a narrow interpretation of “transacts business.” It is also unlikely that the court will interpret this term through the lens of the long-arm statute as GDRTA urged. For an interesting example of how broad that reach can be, see Kauffman Racing Equip., L.L.C., v. Roberts, 2010-Ohio-2551, where the court held that an Ohio court can assert personal jurisdiction over a nonresident defendant when jurisdiction is predicated on that defendant’s publication of allegedly defamatory statements on the internet. I don’t think the court is going to want to view “transacts business” like that in this context.

Simply put, GDRTA should have appealed the SERB decision to the Montgomery County Court of Common Pleas, or perhaps to one of the neighboring counties where it actually transports passengers. But it didn’t, and its argument seemed quite strained.

To Student Contributor Connie Kremer

This looks like a win for SERB and the Union. An improvidently accepted outcome seems possible. As Mr. Pass observed, bad facts make bad law. The issue in this case is not one that needs to be clarified according to SERB and the Union; it has functioned well for decades, and to provide a definition based on this case could confuse an already settled area of law. However, while an improvidently accepted outcome would be a win for the appellees, I think the win will more likely come in the form of an interpretation of the term “transacts business” in line with SERB’s proposal.

The court seems likely to determine that there is ambiguity in the phrase. I expect that it will adopt an interpretation to the effect of “transacts business” as meaning “transacts its ordinary business.”

The justices seem hesitant to adopt a physical presence requirement, and I think such a requirement will not be read into the term. Mr. Hendershot provided the court with ammunition to find in favor of SERB without reading such a narrow definition into the term. The reading that the term should be defined not by physical presence but as “transacts its business” would alleviate the concerns of the court regarding potential use of its definition to affect other areas of the law. In providing this interpretation, I think SERB has addressed the possible concerns of the court with Appellees’ position that may otherwise have given it pause.

While Ms. Edwards’ distinction between jurisdiction and venue was well taken by Chief Justice O’Connor, it seems to have been too little, too late. Perhaps it would have carried more weight earlier in the argument when Justice Pfeifer questioned Ms. Edwards about forum shopping. It seemed that each argument offered by Ms. Edwards received a counterargument from one of the justices. While it could be a matter of playing devil’s advocate, it read more as a court intending to find against GDRTA.


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