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Tuesday, Nov. 15, 2011

State of Ohio ex rel. Akron Paint & Varnish, Inc. v. Guiseppe Gullotta and Industrial Commission of Ohio, Case no. 2010-0636
10th District Court of Appeals (Franklin County)

State of Ohio v. Mario Harris, Case nos. 2011-0008 and 2011-0010
8th District Court of Appeals (Cuyahoga County)

Acordia of Ohio, LLC v. Michael Fishel, Janice Freytag, Mark Taber, Shelia Diefenbach, Neace Lukens Insurance Agency, LLC, Neace & Associates Insurance Agency of Ohio, Inc., and Joseph T. Lukens, Case no. 2011-0163
1st District Court of Appeals (Hamilton County)

Kenneth M. Schwering et al. v. TRW Vehicle Safety Systems, Inc., et al., Case no. 2011-0438
U.S. District Court, Southern District of Ohio

Industrial Commission, Worker Challenge Court Ruling Voiding Award of Temporary Total Disability Benefits

Employer Disputes New Benefit Awarded After Employee's Resignation

State of Ohio ex rel. Akron Paint & Varnish, Inc. v. Guiseppe Gullotta and Industrial Commission of Ohio, Case no. 2010-0636
10th District Court of Appeals (Franklin County)

ISSUE: In this case an injured worker whose claim for continuing temporary total disability (TTD) benefits was denied after he voluntarily resigned from a light-duty position to which his employer had re-assigned him, later filed a second claim for TTD  that was based on a new allowed medical condition. The new TTD claim was approved by the Industrial Commission, but that ruling was reversed on appeal by the 10th District Court of Appeals based on an alleged failure by the commission to properly establish continuing jurisdiction over the claimant’s earlier, denied claim.  The injured worker and the Industrial Commission now ask the Supreme Court to overturn the 10th District’s ruling and reinstate the worker’s TTD benefits based on his second allowed condition.

BACKGROUND: After he suffered a low back injury (lumbar sprain) while employed by Akron Paint & Varnish in January 2007, Guiseppe Gullotta applied for and was granted state workers’ compensation benefits until he returned to work at Akron Paint in a light-duty position in late February.  After several weeks in the light-duty job, Gullotta reported to his employer that his duties in that position were causing him increased pain. After rejecting accommodations offered by the employer, Gullotta resigned from the light-duty job effective April 16, 2007. In August 2007 he applied for TTD benefits for the period from April 24 through Nov. 4, 2007, as a continuation of the earlier award for his lumbar sprain condition.

While that claim was pending, in November 2007 Gullotta submitted medical reports supporting a new allowed condition of  hypertrophy of two bones in his lumbar area that had been aggravated by the January 2007 lumbar sprain. The hypertrophy condition was allowed (approved as a basis for granting future benefits) by the Industrial Commission, and Akron Paint did not appeal it. In July 2008 a state hearing officer denied Gullotta’s claim for TTD benefits for the period between his April resignation and Nov. 4, 2007 based on his original injury, but approved benefits beginning Nov. 5, 2007 and continuing through May 16, 2008 (and thereafter if supported by medical evidence) based on Gullotta’s newly allowed hypertrophy condition.

After unsuccessfully pursing an administrative appeal of the hearing officer’s July 2008 ruling, Akron Paint filed a mandamus action in the 10th District Court of Appeals seeking reversal of Gullotta’s new award of benefits, and requested a writ ordering the Industrial Commission to deny any award of workers’ compensation  to Gullotta for any period after the date of his resignation from the light-duty job in April 2007. The court of appeals granted the writ, holding that the commission had erred in awarding Gullotta new benefits in July 2008 because it had not established a legally valid basis to reassert jurisdiction over his case following his voluntary resignation from employment with Akron Paint.  Gullotta and the Industrial Commission have exercised their right to seek Supreme Court review of the 10th District’s decision.

Attorneys for Gullotta and the commission argue that the 10th District misapplied the applicable statutes by finding that Gullotta’s resignation from the light-duty job to which he was assigned based on his lumbar sprain injury disqualified him from seeking future TTD benefits based on a subsequently allowed new condition (spinal hypertrophy) that prevented him from resuming the duties of the position he held prior to his January 2007 injury. Because the July 2008 decision awarding Gullotta future benefits was not a revision or continuation on the commission’s previous award, but was rather a new award based on a newly allowed medical condition, they assert, the commission was not required to revisit or “reassert jurisdiction” over his previously disposed claim, and the 10th District erred in voiding Gullotta’s new award based on the commission’s failure to follow the requirements for reopening a closed case.

Attorneys for Akron Paint & Varnish cite prior court decisions holding that a claimant forfeits his or eligibility for future TTD benefits where an employer has made a good-faith offer of alternative employment that is within the medically certified capabilities of an injured worker and the worker refuses to accept or quits that employment.  In this case, they say, the 10th District acted correctly in applying those precedents to find that after Gullotta voluntarily left the light-duty work assignment his employer offered, and his benefits were terminated based on that action, the Industrial Commission had not established a valid legal basis to reassert jurisdiction over his case and make a new award of TTD benefits.

Gerald H. Waterman, 614.466.6696, for the Industrial Commission of Ohio.

Ross R. Fulton, 614.224.3838, for Guiseppe Gullotta.

Richard L. Williger, 330.848.9393, for Akron Paint & Varnish Inc.

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Must Trial Court's Sentencing Entry Note Forfeiture Requirement In Order to Be 'Final, Appealable Order?'

State of Ohio v. Mario Harris, Case nos. 2011-0008 and 2011-0010
8th District Court of Appeals (Cuyahoga County)


BACKGROUND: Mario Harris of Cleveland was convicted of multiple criminal offenses and specifications and received separate sentences in two different court cases. 

In the first case he was convicted on one count of drug trafficking, for which the applicable criminal statute requires that, in addition to other penalties imposed by the court, the defendant’s driver license must also be suspended for a minimum of  six months up to a maximum of five years. In pronouncing sentence, however, the trial judge failed to impose a driver license suspension.

In the second case, Harris entered guilty pleas to counts of drug trafficking and possession of a firearm while under disability, and to firearm, schoolyard and forfeiture specifications. The court’s judgment entry specified that Harris must forfeit to the state property recovered by police including cash, cell phones, and a Smith and Wesson revolver. In a separate journal entry recording Harris’ sentence, the trial court imposed prison terms totaling five years but failed to impose the mandatory driver license suspension for the drug trafficking conviction or to note the property forfeiture requirement set forth in its judgment entry.

Harris appealed his sentences from both cases, asserting that because they failed to include a sanction required by statute (the mandatory driver license suspension), his sentences in both cases were void as a matter of law and he was therefore entitled to a complete new sentencing hearing in each case.  On review, the 8th District Court of Appeals agreed that Harris’ was entitled to a full resentencing hearing in the first case.  In the second case, the 8th District observed that by making one journal entry to record Harris’ conviction and forfeiture requirement, but failing to include the forfeiture requirement in its separate sentencing entry, the trial court had not produced a single document that included all the required elements of a final appealable order. Accordingly, the court of appeals held that it did not have jurisdiction to consider Harris’ appeal in that case, and remanded it to the trial court for the issuance of a single entry that enumerated Harris’ offenses, his guilty pleas, the sentence actually imposed by the court for each count and specification, and included the judge’s signature and the court’s date stamp.

The state, represented by the Cuyahoga County prosecutor’s office, sought and was granted Supreme Court review of the 8th District’s rulings.  In separate assignments of error:

  1. They urge the Court to reverse the 8th District’s holding that the omission of one required element in a sentence renders that sentence void and therefore requires a full resentencing of the offender.  Instead, they urge the Court to follow a pair of its recent (2010) decisions, State v. Joseph and State v. Fischer in which it held that when a remand for resentencing is necessary to correct a non-structural defect, the trial court need not revisit the portions of the original sentence that were lawfully imposed, but must address only the portion of the original sentence that was omitted or imposed contrary to law.
  2. The state also argues that the 8th District erred in holding that a requirement of forfeiture included in a judgment of conviction is part of the defendant’s “sentence,” and therefore must be set forth in the trial court’s journal entry of conviction in order for that entry to constitute a final, appealable order.  They point out that the provisions of law authorizing forfeitures are not part of the state’s criminal sentencing statutes. They assert that a trial court’s finding that forfeiture is appropriate in a given case is not the same as convicting the defendant of a criminal  offense, and therefore does not fall within the definition of a “sentence” that must be included in a judgment of conviction in order to render that judgment final and appealable.

Counsel for Harris point out that R.C. 2981.04, the provision of state law that authorizes courts to order forfeiture of property by a criminal defendant, specifically refers to forfeiture “in addition to any other sentence.”  They also assert that forfeiture falls within the definition of a “sentence,” in R.C. 2929.01(EE) which is: “the sanction or combination of sanctions imposed by the sentencing court on an offender who is convicted of or pleads guilty to an offense.”  As a penalty imposed by the trial court on Harris based on his convictions, they contend, the forfeiture of his property was part of  the “sentence” imposed by the trial court, and the absence of complete and accurate information recording that sentence in the trial court’s judgment entry renders that entry fatally defective and requires a full resentencing.

Matthew Meyer, 216.443.7800, for the state and Cuyahoga County prosecutor's office.

Sarah G. LoPresti, 614.728.8865, for Mario Harris.

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Under Ohio Law, What is Impact of Merger on Employee No-Compete Contracts With 'Disappearing' Companies?

Does Employee 'Cease to Be Employed' by Company When It Is Merged Out of Existence?

Acordia of Ohio, LLC v. Michael Fishel, Janice Freytag, Mark Taber, Shelia Diefenbach, Neace Lukens Insurance Agency, LLC, Neace & Associates Insurance Agency of Ohio, Inc., and Joseph T. Lukens, Case no. 2011-0163
1st District Court of Appeals (Hamilton County)

ISSUE:  When an employee has a “no-compete” agreement with his employer binding for two years “following the termination of employment with the company for any reason,” does a later merger of the employer with another company terminate the employment relationship between the employee and the original employer, and therefore start the running of the two-year no-compete period?

BACKGROUND: Defendants Michael Fishel, Janice Freytag, Mark Taber and Sheila Diefenbach were hired at different times between 1993 and 2000 by a Cincinnati insurance agency that gradually became part of larger and larger corporate “family” of agencies by means of successive mergers. As of April 2001, the business entity resulting from those mergers and the employer of the four defendants was Acordia of Ohio, Inc. 

At the time of their hiring, as a non-negotiable condition of employment, each of the defendants was required to sign a boilerplate non-compete agreement that barred them from soliciting or providing insurance services to any person or business entity that was or became a client of their employer during the period of their employment “for a period of two years following termination of employment with the company for any reason.”

In May 2001 Acordia of Ohio was purchased by Wells Fargo. All of its former employees, including Fishel, Freytag. Taber and Diefenbach, were required to sign a number of forms acknowledging their status as new hires of Wells Fargo. These included an Acquisition Employment Application that stated in part that “Wells Fargo’s employment policies, including the application process, supersede any prior forms, applications, policies or programs of the acquired company.” The Wells Fargo paperwork did not include a no-compete agreement between employees and the company. In December 2001, Accordia of Ohio, Inc. ceased to exist  and the Cincinnati agency and the defendants became part of a Wells Fargo-affiliated corporate entity known  as Acordia of Ohio L.L.C.  

In August 2005, the four defendants resigned from their jobs with Acordia of Ohio L.L.C. and began working for Neace Lukens, a competing insurance agency.  Within a short time after their change of employment, they solicited the business of a number of clients with whom they had dealings during their employment with Acordia. Acordia filed suit against the defendants in the Hamilton County Court of Common Pleas, and moved for a preliminary injunction barring them from soliciting or providing insurance services to current or former Acordia customers until August 2007, two years after their 2005 resignations, pursuant to the non-compete agreements they had signed when originally hired.

After hearing several days of testimony, the trial court refused to issue the requested injunction, holding that the purchase or merger of Acordia of Ohio Inc. and its predecessors into successor companies had terminated the employment relationships between the defendants and the original employers with whom they had entered into no-compete agreements.  Because more than two years had passed since each defendant’s original employment relationship had ended, the court found that their no-compete agreements had expired.

The trial court subsequently entered summary judgment in favor of the defendants and dismissed  all of Acordia’s claims against them.  On review, the 1st District Court of Appeals affirmed the trial court’s judgment.  Acordia then sought and was granted Supreme Court review on the question of whether the lower courts erred in finding that the defendants’ no-compete agreements had expired.

Attorneys for Acordia argue that under the Ohio statutes that govern corporate mergers, the assets and contractual rights of a company being acquired are automatically passed on to the acquiring or surviving company by operation of law. In this case, they assert, the defendants signed agreements that they would not compete with companies that were later acquired by Acordia of Ohio L.L.C. for two years after the termination of their employment, and those agreements were passed along to each of their successor employers just like other assets and contractual rights of the acquired companies.  They say the forms completed by the defendants pursuant to the Wells Fargo merger were mandatory under federal laws governing the banking industry, and did not waive any of the acquiring company’s rights with regard to pre-existing agreements between the defendants and predecessor employers.

Attorneys for the defendants point to specific language in  R.C. 1701.82(A)(1) stating that, when a merger of two or more companies leaves only a single “surviving” company, “the separate existence of each constituent entity other than the surviving entity in a merger shall cease.”  Because a company that no longer exists as a legal entity cannot continue to be the “employer” of an employee, they argue, the trial court and the 1st District were correct in holding that the employment relationship between each of the defendants and his or her original employer terminated at the time those companies were merged out of existence, thus triggering the two-year no-compete period.

They also assert that the plain language of the no-compete contracts signed by each of the four defendants identifies only the specific company by which that employee was hired as a party to the agreement, and includes no language extending that company’s rights under the no-compete agreement to any successor, assignee or  subsequent employer.

James F. McCarthy III, 513.721.4532, for Acordia of Ohio L.L.C.

Mark E. Lutz, 513.621.3440, for Michael Fishel and other defendants.

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May Plaintiff Unilaterally Dismiss Civil Suit 'Without Prejudice' After Trial Has Commenced?

In Case Where Mistrial Is Declared

Kenneth M. Schwering et al. v. TRW Vehicle Safety Systems, Inc., et al., Case no. 2011-0438
U.S. District Court, Southern District of Ohio

ISSUE:  After a trial has commenced in a civil lawsuit, does Ohio Civil Rule 41(A)(1)(a) permit the plaintiff to unilaterally dismiss his or her claims “without prejudice” (i.e., without the dismissal operating as a judgment on the merits against the plaintiff) when the court proceeding that was commenced resulted in a mistrial?

BACKGROUND:  Beverly Schwering of Cincinnati was killed in a 2002 traffic accident during which the 2001 Ford Explorer she was driving on I-74 collided with another vehicle and rolled over repeatedly.  Mrs. Schwering, who was wearing a seatbelt at the time of the crash, was ejected from  the vehicle after the force of the crash caused the back of her seat to separate from the lower portion of the seat.

Her husband, Kenneth Schwering, who was a passenger in the vehicle and suffered head injuries in the crash, filed suit against the manufacturer of the vehicle, Ford Motor Company, and the designer of the seatbelt system installed in the vehicle, TRW Vehicle Safety Systems, in the Hamilton County Court of Common Pleas.  His complaint alleged that the passenger side seatback, seat position slider bar and safety restraint system in the Explorer were unreasonably dangerous as designed and operationally defective, creating an unsafe condition that contributed to or proximately caused his wife’s death and his own injuries.

After extensive discovery, depositions of factual and expert witnesses and rulings by the trial judge on numerous pretrial motions over a period of 5 ½ years, a jury was empanelled and a trial commenced on May 28, 2009.  After nearly a week of testimony, Steven Meyer, a safety restraint expert witness called by Schwering testified that he had installed and tested an alternative vehicle seat and seatbelt system used in other Ford products in a 2001 Explorer like the Schwerings’ vehicle, and stated his opinion that the alternate system would have prevented Mrs. Schwering’s injuries. Attorneys for Ford and TRW moved to strike that testimony, asserting that the plaintiff had not disclosed such testing to the defendants during discovery, preventing them or the court from reviewing the reliability of his testing methods or results prior to his testimony before the jury. They also asserted that the expert had deceived the defendants and the court by denying any recollection of having performed such testing on a vehicle like the Schwerings’ Explorer during earlier depositions or when he was questioned on that specific point during voir dire one day before his trial testimony.

The trial judge granted the defense motion to strike and instructed the jury to disregard Meyer’s previous testimony. The court also initially also told jurors that no further testimony from Meyer would be admitted based on his failure to comport himself as an expert witness rather than an advocate for the plaintiff, but later modified that position to allow limited future testimony by Meyer.  Ford moved for a mistrial on the basis that the jury could not be relied on to disregard Meyer’s improper testimony.  Counsel for Schwering also moved for a mistrial, on the basis that the court’s exclusion of all or most of the proffered testimony by its primary seatbelt expert prevented Schwering from receiving a fair trial. 

The court granted a mistrial, and immediately scheduled preliminary proceedings for a retrial of the case with the same judge. During new pretrial proceedings, the judge indicated that because Meyer’s testimony in the previous trial about his testing of an alternative restraint system had been excluded as improper, that same evidence would also be excluded from the retrial. While pretrial arrangements for the second trial were proceeding, counsel for Schwering filed a motion with the clerk of the common pleas court purporting to unilaterally dismiss his claims against Ford and TRW “without prejudice” under Civil Rule 41(A)1)(a), meaning that a new complaint asserting the same claims against the same defendants could be filed within one year of the date of dismissal. 

In September of 2010 Schwering filed a complaint in  the U.S. District Court for the Southern District of Ohio asserting the same product liability claims against Ford and TRW that he had asserted in his previous state court action.  Ford and TRW moved the federal court to dismiss all claims on the basis that Schwering’s voluntary dismissal of his state court action did not meet the requirements for a dismissal “without prejudice” under Ohio Civil Rule 41(A)(1)(a), and therefore that dismissal operated as a judgment on the merits in favor of the defendants, which would bar the federal court from re-litigating those same claims. 

Finding that the disposition of the motions to dismiss hinged on the proper interpretation of an Ohio rule of civil procedure, the federal court stayed its proceedings and submitted the following certified question of state law to the Supreme Court of Ohio: “Where a jury has been empanelled and sworn and the trial has commenced for purposes of Ohio Civ.R. 41(A)(1)(a), and the trial court subsequently declares a mistrial, does Rule 41(A)(1)(a) allow the plaintiff to unilaterally voluntarily dismiss his or her claims without prejudice?”

Both sides acknowledge that there are no previous Supreme Court of Ohio  decisions addressing the question posed by the federal court.

Attorneys for Ford and TRW argue that the plain language of Civ.R. 41(A)(1)(a) allows the plaintiff in a civil action only one way to unilaterally dismiss a complaint without prejudice, which is by filing a notice of dismissal with the court “before the commencement of trial.” They point out that Rule 41 provides two additional ways that a complaint can be dismissed without prejudice after a trial has commenced: by obtaining the written consent of all the other parties in the case, or by obtaining the consent of the court to a dismissal, subject to terms and conditions imposed by the court. But since neither Ford nor TRW stipulated to a dismissal without prejudice, and Schwering never sought the court’s consent to a dismissal under court-imposed conditions for a second trial, they say, Schwering’s dismissal after trial was commenced was “with prejudice” and therefore bars relitigation of the same claims in federal court.

Attorneys for Schwering argue that a trial that results in a mistrial is a legal “nullity” that has no effect on the underlying dispute, and therefore the mistrial declared by the trial court in this case did not bar Schwering from asserting the right conferred by Civ.R. 41 (A)(1) on a plaintiff to unilaterally dismiss his civil complaint once without prejudice.

Gary M. Glass, 513.352.6765, for Ford Motor Company.

Damond R. Mace, 216.479.8764, for TRW Safety Systems Inc.

Arthur H. Schlemmer, 513.721.1350, for Kenneth Schwering.

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These informal previews are prepared by the Supreme Court's Office of Public Information to provide the news media and other interested persons with a brief overview of the legal issues and arguments advanced by the parties in upcoming cases scheduled for oral argument. The previews are not part of the case record, and are not considered by the Court during its deliberations.

Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.