[Cite as Ohio Council 8 v. Marion, 2016-Ohio-1144.]
IN THE COURT OF APPEALS OF OHIO
THIRD APPELLATE DISTRICT
MARION COUNTY
OHIO COUNCIL 8, ET AL.,
PLAINTIFFS-APPELLEES, CASE NO. 9-15-31
v.
CITY OF MARION, OPINION
DEFENDANT-APPELLANT.
Appeal from Marion County Common Pleas Court
Trial Court No. 15-CV-0007
Judgment Reversed and Cause Remanded
Date of Decision: March 21, 2016
APPEARANCES:
Mark D. Russell for Appellant
Michael D. Batchelder for Appellees
Case No. 9-15-31
ROGERS, J.
{¶1} Defendant-Appellant, the city of Marion (“the City”), appeals the
judgment of the Court of Common Pleas of Marion County, which denied its
motion for summary judgment and granted Plaintiffs-Appellees’, Ohio Council 8
and Local 1158 (“Appellees”), motion for summary judgment. For the reasons
that follow, we reverse the ruling of the trial court.
{¶2} On January 6, 2015, the Appellees filed an application and motion to
compel arbitration in the Court of Common Pleas of Marion County. The
Appellees named the City as the defendant. In their motion, the Appellees alleged
that they entered into a collective bargaining agreement (“CBA”) with the City.
The CBA contained a four-step procedure to follow in the event of a grievance.
The Appellees stated that the City breached the CBA when it imposed a
“Healthcare Fee” on all bargaining unit employees. The Appellees alleged that
they followed all the procedures and were entitled to have this dispute decided
through arbitration. The Appellees attached several exhibits to their motion,
including a copy of the CBA.
{¶3} Appellees filed a motion for summary judgment on February 10,
2015. The City filed a motion to dismiss on February 10, 2015. On February 19,
2015, the City filed its motion contra to the Appellees’ motion for summary
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judgment as well as its memorandum in support of its motion to dismiss.
Appellees filed their response to the City’s motion to dismiss on March 2, 2015.
{¶4} The trial court denied both Appellees’ motion for summary judgment
and the City’s motion to dismiss on March 18, 2015. The trial court granted both
parties leave to file any other dispositive motions until June 5, 2015.
{¶5} On June 5, 2015, the Appellees filed their second motion for summary
judgment. Attached to the Appellees’ motion were joint stipulations filed by both
parties. Two of the parties’ joint stipulations were
6. Whether or not the monies charged to the employee are a health
care fee or a tax is a material fact.
***
10. It is not disputed the power to levy taxes is with the Federal,
State and Local governments and the [CBA] does not provide
employees any benefit related in any way to the reallocation,
pick up or any shifting of paying applicable taxes from the
employee to the employer.
(Docket No. 15 Ex. A., p. 1-2). In their motion, the Appellees argued that their
grievance with the City was subject to arbitration because a reasonable
interpretation of the CBA was that the “Healthcare Fee” fell under the City’s
responsibility pursuant to Article 18 of the CBA.
{¶6} The City filed its motion contra to the Appellees’ motion for summary
judgment on June 18, 2015. In its motion, the City argued that the grievance was
not subject to arbitration because the “Healthcare Fee” was a tax. Additionally,
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the City argued that the Appellees’ grievance did not meet the CBA’s definition of
“grievance.”
{¶7} On July 22, 2015, the trial court granted the Appellees’ motion for
summary judgment. In its decision, the court found that the arbitration agreement
in the CBA was generally broad. After reviewing the language of the CBA, the
court concluded that the Appellees had filed a grievance, followed the necessary
procedures, and were entitled to have their grievance decided through arbitration.
{¶8} The City filed this timely appeal, presenting the following
assignments of error for our review.
Assignment of Error No. I
THE TRIAL COURT ERROR [SIC] IN GRANTING
APPELLEES [SIC] MOTION FOR SUMMARY JUDGMENT
BY ERRANTLY FINDING THE CONTRACTUAL
ARBITRATION CLAUSE APPLIES WHEN ONE SIDE
SIMPLY “ALLEGES” THERE HAS BEEN A BREACH,
MISSAPPLICATION [SIC], OR MISINTERPRETATION OF
THE COLLECTIVE BARGAINING AGREEMENT.
Assignment of Error No. II
THE TRIAL COURT ERRED IN GRANTING APPELLEE’S
[SIC] MOTION FOR SUMMARY JUDGMENT BY FINDING
THE PARTY’S [SIC] COLLECTIVE BARGAINING
AGREEMENT CONTAINED A PROVISION WHICH
APPLIED TO THE FEDERAL GOVERNMENT’S
IMPOSITION OF THE AFFORDABLE CARE ACT’S
MANDATED COSTS CREATED UNDER 45 CFR PART 153.
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{¶9} Due to the nature of the City’s assignments of error, we elect to
address them together.
Assignments of Error Nos. I & II
{¶10} In its first and second assignments of error, the City argues that the
trial court erred when it granted summary judgment in favor of the Appellees. We
agree.
{¶11} An appellate court reviews a summary judgment order de
novo. Hillyer v. State Farm Mut. Auto. Ins. Co., 131 Ohio App.3d 172, 175 (8th
Dist.1999). However, a reviewing court will not reverse an otherwise correct
judgment merely because the lower court utilized different or erroneous reasons as
the basis for its determination. Diamond Wine & Spirits, Inc. v. Dayton
Heidelberg Distrib. Co., Inc., 148 Ohio App.3d 596, 2002-Ohio-3932, ¶ 25 (3d
Dist.), citing State ex rel. Cassels v. Dayton City School Dist. Bd. of Edn., 69 Ohio
St.3d 217, 222 (1994). Summary judgment is appropriate when, looking at the
evidence as a whole: (1) there is no genuine issue as to any material fact, and (2)
the moving party is entitled to judgment as a matter of law. Civ.R. 56(C). In
conducting this analysis the court must determine “that reasonable minds can
come to but one conclusion and that conclusion is adverse to the party against
whom the motion for summary judgment is made, [the nonmoving] party being
entitled to have the evidence or stipulation construed most strongly in the
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[nonmoving] party’s favor.” Id. If any doubts exist, the issue must be resolved in
favor of the nonmoving party. Murphy v. City of Reynoldsburg, 65 Ohio St.3d
356, 358-359 (1992).
{¶12} The party moving for summary judgment has the initial burden of
producing some evidence which demonstrates the lack of a genuine issue of
material fact. Dresher v. Burt, 75 Ohio St.3d 280, 292 (1996). In doing so, the
moving party is not required to produce any affirmative evidence, but must
identify those portions of the record which affirmatively support his argument. Id.
at 292. The nonmoving party must then rebut with specific facts showing the
existence of a genuine triable issue; he may not rest on the mere allegations or
denials of his pleadings. Id.; Civ.R. 56(E).
{¶13} Arbitration is encouraged as a method of settling disputes. See
Williams v. Aetna Fin. Co., 83 Ohio St.3d 464 (1998).
A presumption favoring arbitration arises when the claim in dispute
falls within the scope of the arbitration provision. An arbitration
clause in a contract is generally viewed as an expression that the
parties agree to arbitrate disagreements within the scope of the
arbitration clause, and, with limited exceptions, an arbitration clause
is to be upheld just as any other provision in a contract should be
respected.
Id. at 471. In this case, we must determine whether the CBA “ ‘creates a duty for
the parties to arbitrate the particular grievance,’ ” which is a question for the trial
court, and not the arbitrator. LeROI Internatl., Inc. v. Gardner Denver Mach.,
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Case No. 9-15-31
Inc., 3d Dist. Shelby No. 17-03-20, 2004-Ohio-4163, ¶ 18, citing Council of
Smaller Ents. v. Gates, McDonald & Co., 80 Ohio St.3d 661, 666 (1998).
“However, while the general policy is to favor arbitration, that policy should be
denied effect when ‘it may be said with positive assurance that the arbitration
clause is not susceptible of an interpretation that covers the asserted dispute.’ ”
Barhorst, Inc. v. Hanson Pipe & Prods. Ohio, Inc., 169 Ohio App.3d 778, 2006-
Ohio-6858, ¶ 9 (3d Dist.), quoting Gibbons-Grable Co. v. Gilbane Bldg. Co., 34
Ohio App.3d 170, 173 (8th Dist.1986).
{¶14} The United States Supreme Court summarized four general
principles when considering the scope of an arbitration clause. See Gates at 665-
666, quoting AT & T Technologies, Inc. v. Communications Workers of Am., 475
U.S. 643, 648-650, 106 S.Ct. 1415, 89 L.Ed.2d 648 (1986).
The first principle is that ‘arbitration is a matter of contract and a
party cannot be required to submit to arbitration any dispute which
he has not agreed so to submit. * * * This axiom recognizes the fact
that arbitrators derive their authority to resolve disputes only because
the parties have agreed to submit such grievances to arbitration.’
The second principle is that ‘the question of arbitrability-whether
a[n] * * * agreement creates a duty for the parties to arbitrate the
particular grievance-is undeniably an issue for judicial
determination. Unless the parties clearly and unmistakably provide
otherwise, the question of whether the parties agreed to arbitrate is to
be decided by the court, not the arbitrator.’
The third rule is, ‘in deciding whether the parties have agreed to
submit a particular grievance to arbitration, a court is not to rule on
the potential merits of the underlying claims.’
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The fourth principle is that ‘where the contract contains an
arbitration clause, there is a presumption of arbitrability in the sense
that [a]n order to arbitrate the particular grievance should not be
denied unless it may be said with positive assurance that the
arbitration clause is not susceptible of an interpretation that covers
the asserted dispute. Doubts should be resolved in favor of
coverage.’
(Quotations omitted.) (Citations omitted.) Gates at 665-666, quoting AT & T
Technologies at 648-650.
{¶15} “When an appellate court reviews a trial court’s decision to stay
judicial proceedings pursuant to the parties’ agreement to enter into arbitration, we
accept the trial court’s ‘findings of fact that are not “clearly erroneous,” ’ but we
review questions of law de novo.” (Citation omitted.) Barhorst at ¶ 10, quoting
LeROI at ¶ 6, citing Lear v. Rusk Inds., Inc., 3d Dist. Hancock No. 5-02-26, 2002-
Ohio-6599, ¶ 8. “In interpreting an arbitration clause, courts must apply the
fundamental principles of Ohio contract law.” LeROI at ¶ 7, citing Benjamin v.
Pipoly, 155 Ohio App.3d 171, 2003-Ohio-5666, ¶ 31-34. Words in a contract
must “be given their ordinary meaning unless manifest absurdity results, or unless
some other meaning is clearly evidenced from the face or overall contents of the
instrument.” Alexander v. Buckeye Pipe Line Co., 53 Ohio St.2d 241 (1978),
paragraph two of the syllabus, superseded by statute on other grounds as stated in
Great Invest. Properties, L.L.C. v. Bentley, 3d Dist. Marion No. 9-09-36, 2010-
Ohio-981, ¶ 14. “If a contract is clear and unambiguous, then its interpretation is a
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matter of law and there is no issue of fact to be determined.” Inland Refuse
Transfer Co. v. Browning-Ferris Industries of Ohio, Inc., 15 Ohio St.3d 321, 322
(1984).
{¶16} In its first assignment of error, the City argues that the trial court
erred by finding that the arbitration clause is triggered when the Appellees make
an allegation that there has been a breach, misapplication, or misinterpretation of
the CBA. Upon review of the CBA, the trial court did not err in its finding.
{¶17} In Article 7 of the CBA, entitled Grievance and Arbitration
Procedure, the parties agreed to what would trigger arbitration. Section 1(A)
states, “The term ‘grievance’ means that the [Appellees are] alleging there has
been a breach, misapplication, or misinterpretation of this Agreement.”
(Emphasis added.) (Docket No. 1 Ex. A, p. 9). Thus, the plain language of the
CBA states that all Appellees had to do was allege that a breach, misapplication,
or misinterpretation had occurred.
{¶18} The City suggests that the plain language of the CBA requires that
there actually be a breach, misapplication, or misinterpretation of the CBA before
going to arbitration. In addition to the reasoning stated supra, if we were to accept
the City’s interpretation, then the Appellees would never get to arbitrate anything
because a trial court would decide the ultimate issue as to whether there was a
breach, misapplication, or misinterpretation. Therefore, the trial court did not err
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by finding that the Appellees’ grievance constituted a “grievance” under the
CBA’s definition.
{¶19} Accordingly, the City’s first assignment of error is overruled.
{¶20} In its second assignment of error, the City argues that the trial court
erred by finding that there was a reasonable interpretation of the arbitration clause
that covered the dispute. We agree.
{¶21} This case turns on the issue of whether or not the “Healthcare Fee” is
categorized as a tax. In the joint stipulations, both parties agree that whether the
“Healthcare Fee” is a fee or a tax is a material fact. Further, both parties agree that
the CBA does not cover taxes. Specifically, the CBA “does not provide
employees any benefit related in any way to the reallocation, pick up or any
shifting of paying applicable taxes from the employee to the employer.” (Docket
No. 15 Ex. A, p. 2). Thus, if the “Healthcare Fee” is categorized as a tax, then
there is no interpretation of the CBA that would cover the Appellees’ claim.
{¶22} Specifically, the “Healthcare Fee” is a payment made by either health
insurance issuers or group health plans to fund the transitional reinsurance
program, which is part of the Patient Protection and Affordable Care Act of 2010
(“ACA”). 42 U.S.C. 18061(b)(1)(A). The ACA provides that the revenues
generated from these payments are estimated to be $25 billion. State of Ohio, et
al. v. United States, et al., S.D.Ohio No. 2:15-cv-321, 2016 WL 51226, *3 (Jan. 5,
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2016) (“State of Ohio”), appeal filed on Feb. 4, 2016. $20 billion directly funds
the reinsurance program, while the remaining $5 billion is deposited into the
general fund of the United States Treasury. Id.
{¶23} In State of Ohio, which is the only case that has dealt substantively
with the reinsurance program, there was no dispute about whether the payment
required under the reinsurance program was a tax. Rather, the issue in State of
Ohio was whether the reinsurance program portion of the ACA applied to
government-operated group health plans. Id. at *2. The district court found in the
affirmative. Id. at *36. Importantly, “the State conceded that the Transitional
Reinsurance Program imposes a nondiscriminatory tax.” Id. at *34. Although this
opinion is not binding upon this court, it is nonetheless heavily persuasive on the
issue.
{¶24} Black’s Law Dictionary defines a “tax” as “[a] charge, usu.
monetary, imposed by the government on persons, entities, transactions, or
property to yield public revenue.” Black’s Law Dictionary 1685 (10th Ed.2014).
It is also defined as “a usu. pecuniary charge imposed by legislative or other
public authority upon persons or property for public purposes.” Webster’s Third
New International Dictionary 2345 (2002).
{¶25} Given the definition of a “tax,” there is no other possible conclusion
to draw other than the payment required under the reinsurance program is a tax.
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The payments are imposed by the federal government, are required to be paid by
two types of entities (issuers and group health plans), and are used to generate
public revenue (fund the reinsurance program and deposit funds into the federal
treasury).
{¶26} Since the “Healthcare Fee” is a tax, the next question is whether this
type of tax is covered under the CBA. This seemingly difficult question is
actually easy in this case. Pursuant to their joint stipulations, both parties agree
that the CBA does not cover disputes involving taxes. Thus, there was no genuine
issue of material fact, however the Appellees were not entitled to judgment on the
issue of arbitration as a matter of law. Thus, the trial court erred by granting the
Appellees’ motion for summary judgment and denying the City’s motion contra.
{¶27} Accordingly, we sustain the City’s second assignment of error.
{¶28} Having found error prejudicial to the appellant, in some of the
particulars assigned and argued, we reverse the judgment of the trial court and
remand the matter for proceedings consistent with this opinion.
Judgment Reversed and
Cause Remanded
PRESTON and WILLAMOWSKI, J.J., concur.
/jlr
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