If Timely Injunctive Relief Was Sought and Bid Rejection Later Found Improper
Meccon, Inc. v. Univ. of Akron, Slip Opinion No. 2010-Ohio-3297.
Franklin App. No. 08AP-727, 182 Ohio App.3d 85, 2009-Ohio-1700. Judgment of the court of appeals affirmed, and cause remanded to the Court of Claims.
Pfeifer, Lundberg Stratton, O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.
Brown, C.J., not participating.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-3297.pdf
View oral argument video of this case.
(July 21, 2010) The Supreme Court of Ohio ruled today that when a rejected bidder establishes that a public authority violated state competitive-bidding laws in awarding a public-improvement contract, that bidder may recover reasonable bid-preparation costs as damages if the bidder promptly sought, but was denied, an injunction to suspend work on the project pending resolution of the bid dispute, and it is later determined that the bidder was wrongfully rejected and injunctive relief is no longer available.
The Court’s 6-0 decision, authored by Justice Robert R. Cupp, affirmed a ruling by the 10th District Court of Appeals.
In April 2008 the University of Akron invited bids for various phases of construction work on its football stadium. Meccon, Inc. submitted a bid for the heating, ventilation and air conditioning (HVAC) portion of the contract. In June 2008 the university awarded the HVAC contract and other portions of the project to another bidder, S.A. Communale. Meccon subsequently filed suit in the Ohio Court of Claims, alleging that the university had violated provisions of the state’s competitive bidding law and the terms of its own project bid proposal in making its contract awards to S.A. Communale. In its complaint, Meccon sought a temporary restraining order and temporary and permanent injunctions preventing work on the project from going forward, and also asserted claims for money damages to compensate Meccon for the costs of preparing its bid and other damages resulting from the university’s failure to award the HVAC contract to Meccon.
The university moved to dismiss the entire action on the basis that the Court of Claims did not have subject matter jurisdiction to hear the case. The Court of Claims granted the motion to dismiss, ruling that a disappointed bidder on a public improvement contract may obtain only injunctive relief (as opposed to money damages), and the Court of Claims has jurisdiction to hear only cases in which a plaintiff’s complaint includes a justiciable claim for money damages against the state.
Meccon appealed the order dismissing its complaint. On review, the 10th District Court of Appeals reversed and remanded the case to the Court of Claims for further proceedings. In its decision, the 10th District concluded that a disappointed bidder can recover from the state for its bid-preparation costs, and that because such costs are monetary damages, the Court of Claims did have subject-matter jurisdiction to hear all of Meccon’s claims.
The university sought and was granted Supreme Court review of the 10th District’s ruling.
Writing for a unanimous Court in today’s decision, Justice Cupp rejected the university’s contention that the Supreme Court of Ohio’s 2006 decision in Cementech Inc. v. Fairlawn precludes disappointed bidders on public improvement projects from recovering any money damages. He wrote: “In Cementech, a public authority solicited bids for a public project. In the process of awarding the contract, the public authority unlawfully rejected Cementech’s bid. The trial court awarded to Cementech bid-preparation costs but denied lost profits. Cementech appealed the trial court’s order limiting damages to the bid-preparation costs. The appellate court reversed and allowed the lost profits. In reversing the appellate court, this court held: ‘When a municipality violates competitive-bidding laws in awarding a competitively bid project, the rejected bidder cannot recover its lost profits as damages.’”
“The issue of whether bid-preparation costs could be recovered by a wrongfully rejected bidder was not answered in Cementech. Upon consideration of the arguments in this case on the availability of reasonable bid-preparation costs as damages, we decline to extend the holding in Cementech to this circumstance. We reach this conclusion because the reasons articulated in Cementech for denying recovery of lost profits as damages do not carry over to the circumstances in which bid-preparation costs are sought after denial of a timely application for injunctive relief. A significant distinguishing factor in those circumstances is the lack of any other remedy for a public authority’s wrongful conduct.”
“If, for instance, a rejected bidder alleges that a public authority failed to comply with competitive-bidding laws and promptly seeks injunctive relief to delay the public-improvement project pending resolution of the dispute, denial of the requested injunctive relief means that determination of the allegation of wrongful conduct by the public authority will not take place until much later in the litigation. Under our precedent, once the public-improvement work commences or is completed, the rejected bidder will not be able to perform the public contract even if the bidder demonstrates that its bid was wrongfully rejected. In such circumstances, the wrongfully rejected bidder is left with no remedy for the public authority’s unlawful conduct, and injunctive relief will no longer serve to deter the public authority’s unlawful conduct. Thus, we hold that when a rejected bidder establishes that a public authority violated state competitive-bidding laws in awarding a public-improvement contract, that bidder may recover reasonable bid-preparation costs as damages if that bidder promptly sought, but was denied, injunctive relief and it is later determined that the bidder was wrongfully rejected and injunctive relief is no longer available.”
Because neither the Court of Claims nor the 10th District Court of Appeals reached the disputed issue of whether Meccon’s attempt to obtain injunctive relief was filed in a “timely” manner, and that question could determine whether or not Meccon met the requirements to later seek recovery of its bid preparation costs, the Court remanded the case to the Court of Claims to address the timeliness issue.
Justice Cupp’s opinion was joined by Justices Paul E. Pfeifer, Evelyn Lundberg Stratton, Maureen O’Connor, Terrence O’Donnell and Judith Ann Lanzinger. Chief Justice Eric Brown did not participate in the Court’s deliberations or decision in this case.
Contacts
Benjamin C. Mizer, 614.466.8980, for the University of Akron.
Peter D. Welin, 614.469.3200, for Meccon, Inc.
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions. In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."
Showing posts with label Justice Robert Cupp. Show all posts
Showing posts with label Justice Robert Cupp. Show all posts
Saturday, July 24, 2010
Tuesday, June 22, 2010
Denial of Maternity Leave Based on Minimum Service Requirement Is Not Direct Evidence of Sex Discrimination
When No Employee is Eligible for Leave During First Year of Employment
McFee v. Nursing Care Mgt. of Am., Inc., Slip Opinion No. 2010-Ohio-2744.
Licking App. No. 08CA3000, 181 Ohio App.3d 632, 2009-Ohio-1107. Judgment of the court of appeals reversed, and judgment of the trial court reinstated.
Lundberg Stratton, O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.
Pfeifer, J., dissents.
Brown, C.J., not participating.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-2744.pdf
(June 22, 2010) The Supreme Court of Ohio ruled today that where a company employment policy imposes a minimum length of service requirement before any employee is eligible for leave, and does not grant an exception from the minimum service requirement for maternity leave, that policy is not direct evidence of sex discrimination under the state’s civil rights statutes.
The Court’s 5-1 decision, authored by Justice Robert R. Cupp, reversed a ruling by the 5th District Court of Appeals.
The case involved nursing home worker Tiffany McFee, who applied for but was denied maternity leave after approximately eight months of employment at the Pataskala Oaks Care Center. At the time she was hired, McFee received an employee handbook stating that all company employees were required to complete one year of employment before they would be eligible for any leave of any kind. After missing work because of medical issues related to her pregnancy and subsequent childbirth, McFee was terminated from her position based on her absence from work without leave.
McFee filed a complaint with the Ohio Civil Rights Commission, claiming that her termination constituted unlawful sex discrimination on the basis of pregnancy. An administrative law judge recommended that the complaint be dismissed. Nevertheless, the Civil Rights Commission rejected that recommendation and found instead that Pataskala Oaks’ policy constituted unlawful sex discrimination. Pataskala Oaks appealed. On review, the Licking County Common Pleas Court held that Pataskala Oaks’ leave policy did not violate the antidiscrimination laws of Ohio and reversed the decision of the Civil Rights Commission.
OCRC then appealed the common pleas court’s ruling to the 5th District Court of Appeals, which reversed the trial court and reinstated McFee’s claim. The court of appeals held that the antidiscrimination laws of Ohio expressly require that employers provide employees with a reasonable period of maternity leave. Because Pataskala Oaks’ leave policy did not provide maternity leave for employees with less than one year of service, the court of appeals held that the policy violated the sex-discrimination laws. The court also held that the policy was direct evidence of discrimination and, therefore, McFee did not have the burden to offer other evidence of sex discrimination. Pataskala Oaks sought and was granted Supreme Court review of the 5th District’s ruling.
In today’s decision, Justice Cupp wrote: “R.C. 4112.02(A) provides that pregnant employees must be treated the same for employment-related purposes as employees who are not pregnant but who are similar in their ability or inability to work. ... The second sentence of R.C. 4112.01(B) directs that pregnant women ‘shall be treated the same for all employment-related purposes ... as other persons not so affected but similar in their ability or inability to work.’ ... The phrase ‘treated the same’ in R.C. 4112.01(B) ensures that pregnant employees will receive the same consideration as other employees ‘not so affected but similar in their ability or inability to work.’ Thus, the statute does not provide greater protections for pregnant employees than nonpregnant employees. Other courts that have considered this issue have also applied this interpretation of R.C. 4112.01(B). ... As stated by the Tenth District Court of Appeals (in Priest v. TFH-EB, Inc., 1998), ‘Ohio courts implicitly ... and expressly ... recognize that an employer need not accommodate pregnant women to the extent that such accommodation amounts to preferential treatment. Accordingly, to prevail on her pregnancy discrimination claim, plaintiff must show that defendant treated her differently because of her pregnancy.’”
“Pataskala Oaks’ length-of-service requirements treat all employees the same. Every employee must reach 12 months of employment before becoming eligible for leave. In this sense, the policy is ‘pregnancy-blind.’ ... Thus, a pregnant employee may be terminated for unauthorized absence just as any other employee who has not yet met the minimum-length-of-service requirement but takes leave based upon a similar inability to work. Unless there is other evidence of discrimination or pretext, R.C. Chapter 4112 does not prohibit termination of an employee affected by pregnancy under these circumstances. ... (A)n employer may maintain a uniform minimum-length-of-service leave policy consistent with Ohio law. Pataskala Oaks’ policy is ‘pregnancy-blind’ in that it does not treat employees affected by pregnancy differently from employees ‘not so affected but similar in their ability or inability to work.’ ... An employment policy that imposes a uniform minimum-length-of-service requirement for leave eligibility with no exception for maternity leave is not direct evidence of sex discrimination under R.C. Chapter 4112. ... The parties agree that McFee was terminated because she took leave from work even though she was not eligible for leave under Pataskala Oaks’ policy. McFee has not alleged any other basis for a finding of discrimination, nor has she produced independent evidence that the proffered basis for the termination was a pretext for discrimination. Accordingly, McFee has failed to make a prima facie case of sex discrimination. The trial court properly dismissed the case.”
The majority opinion was joined by Justices Evelyn Lundberg Stratton, Maureen O’Connor, Terrence O’Donnell and Judith Ann Lanzinger.
Justice Paul E. Pfeifer entered a dissenting opinion in which he wrote: “The facts of this case are such that an ordinary citizen would think, ‘There ought to be a law against that.’ Until today, there was. R.C. 4112.02(A) makes it unlawful for any employer ‘to discharge without just cause’ an employee because of his or her sex. R.C. 4112.01(B) makes clear that the prohibition in R.C. 4112.02(A) includes discrimination and discharge on the basis of pregnancy and pregnancy-related illness ... McFee provided a doctor’s note to Pataskala Oaks indicating that she had a pregnancy-related illness, pregnancy-related swelling, that rendered her unable to continue her job duties until six weeks after she gave birth. Pataskala Oaks says that it did not fire McFee because she was ill, but because she missed work because she was ill. What did the General Assembly mean when it protected women from discharge based upon pregnancy-related illness? Did it intend women not to treat their illness, but instead to go to work ill? That they should follow their doctor’s advice for bed rest by bringing their beds to their place of employment? Does not the word ‘illness’ connote missed work time?”
“The Civil Rights Commission was perfectly in line with R.C. 4112.01(B) when it promulgated Ohio Adm.Code 4112-5-05(G), establishing what constitutes pregnancy discrimination ... McFee is protected under Ohio Adm.Code 4112-5-05(G)(2): ‘Where termination of employment of an employee who is temporarily disabled due to pregnancy or a related medical condition is caused by an employment policy under which insufficient or no maternity leave is available, such termination shall constitute unlawful sex discrimination.’ Pursuant to the Pataskala Oaks employment policy, there was no maternity leave available to McFee. Therefore, her termination constituted direct evidence of unlawful sex discrimination.”
Justice Pfeifer concluded by noting the practicalities of the case: “It should be noted that McFee was not asking to be paid for her time off, and the law does not require her to be paid. The ironic postscript to this whole matter is that Pataskala Oaks called McFee three weeks after firing her and offered her a job. The burden of allowing McFee unpaid leave to deal with the medical effects of her pregnancy had turned out to be not such a burden. Now, as McFee’s child likely is graduating from kindergarten, Pataskala Oaks is finally emerging from litigation. It fought the statutorily mandated decency contained in R.C. 4112.01(B) and 4112.02(A) and won. Who is better for it?”
Chief Justice Eric Brown did not participate in the court’s deliberations or decision in this case.
Contacts
Benjamin C. Mizer, 614.466.8980, for the Ohio Civil Rights Commission.
Jan E. Hensel, 614.227.4267, for Nursing Care Mgt. of America d.b.a. Pataskala Oaks Care Center.
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions. In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."
McFee v. Nursing Care Mgt. of Am., Inc., Slip Opinion No. 2010-Ohio-2744.
Licking App. No. 08CA3000, 181 Ohio App.3d 632, 2009-Ohio-1107. Judgment of the court of appeals reversed, and judgment of the trial court reinstated.
Lundberg Stratton, O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.
Pfeifer, J., dissents.
Brown, C.J., not participating.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2010/2010-Ohio-2744.pdf
(June 22, 2010) The Supreme Court of Ohio ruled today that where a company employment policy imposes a minimum length of service requirement before any employee is eligible for leave, and does not grant an exception from the minimum service requirement for maternity leave, that policy is not direct evidence of sex discrimination under the state’s civil rights statutes.
The Court’s 5-1 decision, authored by Justice Robert R. Cupp, reversed a ruling by the 5th District Court of Appeals.
The case involved nursing home worker Tiffany McFee, who applied for but was denied maternity leave after approximately eight months of employment at the Pataskala Oaks Care Center. At the time she was hired, McFee received an employee handbook stating that all company employees were required to complete one year of employment before they would be eligible for any leave of any kind. After missing work because of medical issues related to her pregnancy and subsequent childbirth, McFee was terminated from her position based on her absence from work without leave.
McFee filed a complaint with the Ohio Civil Rights Commission, claiming that her termination constituted unlawful sex discrimination on the basis of pregnancy. An administrative law judge recommended that the complaint be dismissed. Nevertheless, the Civil Rights Commission rejected that recommendation and found instead that Pataskala Oaks’ policy constituted unlawful sex discrimination. Pataskala Oaks appealed. On review, the Licking County Common Pleas Court held that Pataskala Oaks’ leave policy did not violate the antidiscrimination laws of Ohio and reversed the decision of the Civil Rights Commission.
OCRC then appealed the common pleas court’s ruling to the 5th District Court of Appeals, which reversed the trial court and reinstated McFee’s claim. The court of appeals held that the antidiscrimination laws of Ohio expressly require that employers provide employees with a reasonable period of maternity leave. Because Pataskala Oaks’ leave policy did not provide maternity leave for employees with less than one year of service, the court of appeals held that the policy violated the sex-discrimination laws. The court also held that the policy was direct evidence of discrimination and, therefore, McFee did not have the burden to offer other evidence of sex discrimination. Pataskala Oaks sought and was granted Supreme Court review of the 5th District’s ruling.
In today’s decision, Justice Cupp wrote: “R.C. 4112.02(A) provides that pregnant employees must be treated the same for employment-related purposes as employees who are not pregnant but who are similar in their ability or inability to work. ... The second sentence of R.C. 4112.01(B) directs that pregnant women ‘shall be treated the same for all employment-related purposes ... as other persons not so affected but similar in their ability or inability to work.’ ... The phrase ‘treated the same’ in R.C. 4112.01(B) ensures that pregnant employees will receive the same consideration as other employees ‘not so affected but similar in their ability or inability to work.’ Thus, the statute does not provide greater protections for pregnant employees than nonpregnant employees. Other courts that have considered this issue have also applied this interpretation of R.C. 4112.01(B). ... As stated by the Tenth District Court of Appeals (in Priest v. TFH-EB, Inc., 1998), ‘Ohio courts implicitly ... and expressly ... recognize that an employer need not accommodate pregnant women to the extent that such accommodation amounts to preferential treatment. Accordingly, to prevail on her pregnancy discrimination claim, plaintiff must show that defendant treated her differently because of her pregnancy.’”
“Pataskala Oaks’ length-of-service requirements treat all employees the same. Every employee must reach 12 months of employment before becoming eligible for leave. In this sense, the policy is ‘pregnancy-blind.’ ... Thus, a pregnant employee may be terminated for unauthorized absence just as any other employee who has not yet met the minimum-length-of-service requirement but takes leave based upon a similar inability to work. Unless there is other evidence of discrimination or pretext, R.C. Chapter 4112 does not prohibit termination of an employee affected by pregnancy under these circumstances. ... (A)n employer may maintain a uniform minimum-length-of-service leave policy consistent with Ohio law. Pataskala Oaks’ policy is ‘pregnancy-blind’ in that it does not treat employees affected by pregnancy differently from employees ‘not so affected but similar in their ability or inability to work.’ ... An employment policy that imposes a uniform minimum-length-of-service requirement for leave eligibility with no exception for maternity leave is not direct evidence of sex discrimination under R.C. Chapter 4112. ... The parties agree that McFee was terminated because she took leave from work even though she was not eligible for leave under Pataskala Oaks’ policy. McFee has not alleged any other basis for a finding of discrimination, nor has she produced independent evidence that the proffered basis for the termination was a pretext for discrimination. Accordingly, McFee has failed to make a prima facie case of sex discrimination. The trial court properly dismissed the case.”
The majority opinion was joined by Justices Evelyn Lundberg Stratton, Maureen O’Connor, Terrence O’Donnell and Judith Ann Lanzinger.
Justice Paul E. Pfeifer entered a dissenting opinion in which he wrote: “The facts of this case are such that an ordinary citizen would think, ‘There ought to be a law against that.’ Until today, there was. R.C. 4112.02(A) makes it unlawful for any employer ‘to discharge without just cause’ an employee because of his or her sex. R.C. 4112.01(B) makes clear that the prohibition in R.C. 4112.02(A) includes discrimination and discharge on the basis of pregnancy and pregnancy-related illness ... McFee provided a doctor’s note to Pataskala Oaks indicating that she had a pregnancy-related illness, pregnancy-related swelling, that rendered her unable to continue her job duties until six weeks after she gave birth. Pataskala Oaks says that it did not fire McFee because she was ill, but because she missed work because she was ill. What did the General Assembly mean when it protected women from discharge based upon pregnancy-related illness? Did it intend women not to treat their illness, but instead to go to work ill? That they should follow their doctor’s advice for bed rest by bringing their beds to their place of employment? Does not the word ‘illness’ connote missed work time?”
“The Civil Rights Commission was perfectly in line with R.C. 4112.01(B) when it promulgated Ohio Adm.Code 4112-5-05(G), establishing what constitutes pregnancy discrimination ... McFee is protected under Ohio Adm.Code 4112-5-05(G)(2): ‘Where termination of employment of an employee who is temporarily disabled due to pregnancy or a related medical condition is caused by an employment policy under which insufficient or no maternity leave is available, such termination shall constitute unlawful sex discrimination.’ Pursuant to the Pataskala Oaks employment policy, there was no maternity leave available to McFee. Therefore, her termination constituted direct evidence of unlawful sex discrimination.”
Justice Pfeifer concluded by noting the practicalities of the case: “It should be noted that McFee was not asking to be paid for her time off, and the law does not require her to be paid. The ironic postscript to this whole matter is that Pataskala Oaks called McFee three weeks after firing her and offered her a job. The burden of allowing McFee unpaid leave to deal with the medical effects of her pregnancy had turned out to be not such a burden. Now, as McFee’s child likely is graduating from kindergarten, Pataskala Oaks is finally emerging from litigation. It fought the statutorily mandated decency contained in R.C. 4112.01(B) and 4112.02(A) and won. Who is better for it?”
Chief Justice Eric Brown did not participate in the court’s deliberations or decision in this case.
Contacts
Benjamin C. Mizer, 614.466.8980, for the Ohio Civil Rights Commission.
Jan E. Hensel, 614.227.4267, for Nursing Care Mgt. of America d.b.a. Pataskala Oaks Care Center.
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions. In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."
Tuesday, December 29, 2009
Ohio Supreme Court Upholds PUCO Order Authorizing Columbia Gas to Repair Customer-Owned Service Lines
2008-1507. Util. Serv. Partners, Inc. v. Pub. Util. Comm., Slip Opinion No. 2009-Ohio-6764.
Public Utilities Commission, No. 07-478-GA-UNC. Order affirmed.
Moyer, C.J., and Pfeifer, Lundberg Stratton, O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2009/2009-Ohio-6764.pdf
(Dec. 29, 2009) The Supreme Court of Ohio ruled today that the Public Utilities Commission of Ohio (PUCO) did not exceed its authority or substantially impair the contract rights of a private firm selling service warranties by issuing a 2008 order that gave Columbia Gas of Ohio exclusive authority to repair or replace customer-owned natural gas service lines that run from the curb to its customers’ gas meters in Columbia’s 22-county service area.
The court’s 7-0 decision was written by Justice Robert R. Cupp.
In response to four “catastrophic” residential explosions that resulted from natural gas line leaks, the PUCO undertook a three-year study to determine how widespread the threat of future explosions was and what remedial action was necessary to protect the public.
In April 2008, the PUCO approved a stipulated agreement between Columbia Gas of Ohio and several utility user groups and issued an order authorizing Columbia to: 1) inspect the “riser” (the final, above-ground connector linking an underground gas line to the gas meter) in all buildings in Columbia’s 22-county service area, and whenever it found a certain type of potentially dangerous plastic riser fitting to replace that fitting with a metal riser; 2) assume exclusive responsibility for repairing or replacing any hazardous underground service lines running from the street to its customers’ homes or business structures; and 3) add a surcharge to the monthly bills of all Columbia Gas customers to recover the company’s costs of replacing defective risers and repairing service lines.
Objections to the stipulated agreement were filed by Utility Service Partners Inc., (USP) a company that sells service line warranties to individual home and business owners that include repairing or replacing defective gas lines. Among its objections, USP argued that the proposed commission order would interfere with service contracts already in force between USP and more than 100,000 of Columbia’s customers under which those customers made monthly payments to USP in exchange for USP’s promise to make any needed repairs on the customer’s gas lines. The commission overruled USP’s objections and issued a final order on April 9, 2008, authorizing Columbia to go forward with both its riser inspection and replacement program and with assumption of exclusive authority to perform or contract for the performance of all needed repairs or replacements of customer-owned outside service lines in the company’s service area.
After its request for a rehearing was denied by the commission, USP exercised its right to appeal the PUCO’s order directly to the Supreme Court. In today’s decision, the Court rejected each of USP’s assignments of error and affirmed the commission’s order as a reasonable and lawful exercise of its statutory authority.
With regard to USP’s claim that the commission lacked statutory authority to grant Columbia exclusive authority to maintain and repair customer-owned service lines, Justice Cupp wrote: “In issuing the order, the commission relied on R.C. 4905.06. That section gives the commission general supervisory authority over utilities; among other things, it provides the commission with the ‘power to inspect’ public utilities, which ‘includes the power to prescribe any rule or order that the commission finds necessary for protection of the public safety.’
“Thus, if the order was related to the ‘protection of the public safety,’ the commission acted within its powers. We find that the order is related to the protection of the public safety. The commission expressly acted ‘to improve the level of public safety,’ and the terms of its order were rationally related to that end. Service lines carry natural gas, and natural gas is dangerous unless it is handled properly. It is noxious, flammable, invisible, and naturally odorless. Exposure to natural gas is potentially lethal to persons and destructive of property. ... Thus, the order, in seeking to improve the regulation of pipelines that prevent the escape of a dangerous substance, had a clear tie to public safety. And the order gave Columbia responsibility only over ‘hazardous’ service lines, eliminating any argument that the commission exceeded the bounds of the safety power. We conclude that the commission acted with statutory authority.”
In also rejecting USP’s claim that the PUCO order “substantially impaired” the company’s contractual relations with its 100,000 existing service warranty customers, Justice Cupp noted that USP had failed to introduce probative evidence of the claimed impairment because it failed to place a copy of its customer service contract in the case record. However, even if sufficient evidence of contract impairment had been provided, he wrote, the US. Supreme Court’s decision in Energy Reserves Group Inc. v. Kansas Power & Light Co. provides that a law or regulation enacted as an exercise of a governmental agency’s police power is not unconstitutional if the agency can show “ a significant and legitimate public purpose behind the regulation,” and show that the adjustment of interests between affected parties is “reasonable” in light of the public purpose justifying the regulation.
In this case, Justice Cupp wrote: “(T)he commission’s order represented an exercise of police power. At a minimum, the police power includes actions taken to protect public safety. ... The commission expressly stated that its order was ‘an effort to improve the level of public safety,’ and the commission reasonably and with ample support in its record determined that making Columbia responsible for service lines would protect the public safety. ... (T)he evidence (also) showed that the decentralized, unregulated, and incomplete repair regime that had grown up in Ohio did not adequately protect public safety. The order rationally responded to this situation by consolidating a diffuse system and placing repair responsibility into the hands of the party the commission determined to be the best qualified to exercise it: a pervasively regulated, thoroughly supervised, pipeline-expert natural gas company. ... Finding that USP satisfies none of inquiries set forth in Energy Reserves, we must reject its Contract Clause challenge.”
Contacts
M. Howard Petricoff, 614.464.5414, for Utility Service Partners Inc.
Anne L. Hammerstein, 614.644.8669, for the Public Utilities Commission of Ohio.
Kathleen M. Trafford, 614.227.1915, for Columbia Gas of Ohio.
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions. In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."
Public Utilities Commission, No. 07-478-GA-UNC. Order affirmed.
Moyer, C.J., and Pfeifer, Lundberg Stratton, O'Connor, O'Donnell, Lanzinger, and Cupp, JJ., concur.
Opinion: http://www.supremecourt.ohio.gov/rod/docs/pdf/0/2009/2009-Ohio-6764.pdf
(Dec. 29, 2009) The Supreme Court of Ohio ruled today that the Public Utilities Commission of Ohio (PUCO) did not exceed its authority or substantially impair the contract rights of a private firm selling service warranties by issuing a 2008 order that gave Columbia Gas of Ohio exclusive authority to repair or replace customer-owned natural gas service lines that run from the curb to its customers’ gas meters in Columbia’s 22-county service area.
The court’s 7-0 decision was written by Justice Robert R. Cupp.
In response to four “catastrophic” residential explosions that resulted from natural gas line leaks, the PUCO undertook a three-year study to determine how widespread the threat of future explosions was and what remedial action was necessary to protect the public.
In April 2008, the PUCO approved a stipulated agreement between Columbia Gas of Ohio and several utility user groups and issued an order authorizing Columbia to: 1) inspect the “riser” (the final, above-ground connector linking an underground gas line to the gas meter) in all buildings in Columbia’s 22-county service area, and whenever it found a certain type of potentially dangerous plastic riser fitting to replace that fitting with a metal riser; 2) assume exclusive responsibility for repairing or replacing any hazardous underground service lines running from the street to its customers’ homes or business structures; and 3) add a surcharge to the monthly bills of all Columbia Gas customers to recover the company’s costs of replacing defective risers and repairing service lines.
Objections to the stipulated agreement were filed by Utility Service Partners Inc., (USP) a company that sells service line warranties to individual home and business owners that include repairing or replacing defective gas lines. Among its objections, USP argued that the proposed commission order would interfere with service contracts already in force between USP and more than 100,000 of Columbia’s customers under which those customers made monthly payments to USP in exchange for USP’s promise to make any needed repairs on the customer’s gas lines. The commission overruled USP’s objections and issued a final order on April 9, 2008, authorizing Columbia to go forward with both its riser inspection and replacement program and with assumption of exclusive authority to perform or contract for the performance of all needed repairs or replacements of customer-owned outside service lines in the company’s service area.
After its request for a rehearing was denied by the commission, USP exercised its right to appeal the PUCO’s order directly to the Supreme Court. In today’s decision, the Court rejected each of USP’s assignments of error and affirmed the commission’s order as a reasonable and lawful exercise of its statutory authority.
With regard to USP’s claim that the commission lacked statutory authority to grant Columbia exclusive authority to maintain and repair customer-owned service lines, Justice Cupp wrote: “In issuing the order, the commission relied on R.C. 4905.06. That section gives the commission general supervisory authority over utilities; among other things, it provides the commission with the ‘power to inspect’ public utilities, which ‘includes the power to prescribe any rule or order that the commission finds necessary for protection of the public safety.’
“Thus, if the order was related to the ‘protection of the public safety,’ the commission acted within its powers. We find that the order is related to the protection of the public safety. The commission expressly acted ‘to improve the level of public safety,’ and the terms of its order were rationally related to that end. Service lines carry natural gas, and natural gas is dangerous unless it is handled properly. It is noxious, flammable, invisible, and naturally odorless. Exposure to natural gas is potentially lethal to persons and destructive of property. ... Thus, the order, in seeking to improve the regulation of pipelines that prevent the escape of a dangerous substance, had a clear tie to public safety. And the order gave Columbia responsibility only over ‘hazardous’ service lines, eliminating any argument that the commission exceeded the bounds of the safety power. We conclude that the commission acted with statutory authority.”
In also rejecting USP’s claim that the PUCO order “substantially impaired” the company’s contractual relations with its 100,000 existing service warranty customers, Justice Cupp noted that USP had failed to introduce probative evidence of the claimed impairment because it failed to place a copy of its customer service contract in the case record. However, even if sufficient evidence of contract impairment had been provided, he wrote, the US. Supreme Court’s decision in Energy Reserves Group Inc. v. Kansas Power & Light Co. provides that a law or regulation enacted as an exercise of a governmental agency’s police power is not unconstitutional if the agency can show “ a significant and legitimate public purpose behind the regulation,” and show that the adjustment of interests between affected parties is “reasonable” in light of the public purpose justifying the regulation.
In this case, Justice Cupp wrote: “(T)he commission’s order represented an exercise of police power. At a minimum, the police power includes actions taken to protect public safety. ... The commission expressly stated that its order was ‘an effort to improve the level of public safety,’ and the commission reasonably and with ample support in its record determined that making Columbia responsible for service lines would protect the public safety. ... (T)he evidence (also) showed that the decentralized, unregulated, and incomplete repair regime that had grown up in Ohio did not adequately protect public safety. The order rationally responded to this situation by consolidating a diffuse system and placing repair responsibility into the hands of the party the commission determined to be the best qualified to exercise it: a pervasively regulated, thoroughly supervised, pipeline-expert natural gas company. ... Finding that USP satisfies none of inquiries set forth in Energy Reserves, we must reject its Contract Clause challenge.”
Contacts
M. Howard Petricoff, 614.464.5414, for Utility Service Partners Inc.
Anne L. Hammerstein, 614.644.8669, for the Public Utilities Commission of Ohio.
Kathleen M. Trafford, 614.227.1915, for Columbia Gas of Ohio.
Please note: Opinion summaries are prepared by the Office of Public Information for the general public and news media. Opinion summaries are not prepared for every opinion released by the Court, but only for those cases considered noteworthy or of great public interest. Opinion summaries are not to be considered as official headnotes or syllabi of Court opinions. The full text of this and other Court opinions from 1992 to the present are available online from the Reporter of Decisions. In the Full Text search box, enter the eight-digit case number at the top of this summary and click "Submit."
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