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Wednesday, September 12, 2012

In the Matter of the Complaint of the City of Reynoldsburg, Ohio v. Columbus Southern Power Company, Case no. 2011-1274
Appeal from ruling of Public Utilities Commission

Disciplinary Counsel v. Timothy Andrew Shimko, Case no. 2012-1002
Cuyahoga County

Cleveland Metropolitan Bar Association v. James W. Westfall, Jr., Case no. 2012-1003
Cuyahoga County


Is a Public Utility Tariff a ‘General Law’ That Preempts a City’s Home Rule Power to Regulate Public Rights of Way?

In the Matter of the Complaint of the City of Reynoldsburg, Ohio v. Columbus Southern Power Company, Case no. 2011-1274
Appeal from ruling of Public Utilities Commission

ISSUE:  Is a provision included in a utility company tariff (rate and service schedule) that has been approved by the Public Utilities Commission of Ohio (PUCO) equivalent to a “general law” of the state that preempts the home rule authority of a municipality to enact a conflicting local ordinance that regulates the use of  public rights-of-way within the municipality?

BACKGROUND: In May 2005, the Reynoldsburg City Council adopted a citywide “Right-of Way Ordinance” regulating the future use of the rights of way along its public streets.  The ordinance stated that, after its effective date, “no person may use, occupy, construct, own or operate structures or facilities in, under or over any city-owned rights of way or any public property within the city” unless that person obtained a right-of-way permit from the city and conformed to the requirements of the ordinance. 

One provision of the ordinance authorized the city safety/service director to designate the rights-of-way along certain public roadways in the city as “underground only” areas in which new utility equipment must be constructed underground and existing above-ground utility structures such as electric lines must be relocated into below-ground ductwork that the city would construct.  The ordinance specified that, if a utility wished to continue to locate its service lines within the public right of way in a designated underground-only area, the removal of above-ground structures and relocation of service lines into the underground duct must be accomplished at the sole cost of the utility company.

In July 2005, the city informed Columbus Southern Power Company (CSP), the electric distribution utility serving Reynoldsburg homes and businesses, that the city service director had designated a segment of East Main Street running through downtown Reynoldsburg as a target area for revitalization and new business development, and accordingly had designated the right-of-way along that stretch of Main Street as an underground-only utility zone.  The notification letter indicated that the city anticipated completion of the underground ductwork into which electric lines must be relocated by October 2005, and that pursuant to the city’s new right-of-way ordinance, CSP would be solely responsible for covering the costs of the relocation. 

CSP responded that it was prepared to relocate its power lines, but would not absorb the costs of the relocation process because of a provision included in a CSP tariff (schedule of rates and service conditions) that was approved by the PUCO in 1992.  They pointed to Paragraph 17 of the tariff, which specified that if a municipality or public authority required CSP to move its existing above-ground equipment underground, the company must comply with such an order only if all costs of the relocation were  borne by the municipality or other local zoning authority requiring that action. 

In order to facilitate timely completion of the Main Street project, Reynoldsburg entered into an agreement with CSP under which the city  agreed to provide up-front payment for the costs of relocating the company’s power lines, and CSP agreed to abide by the outcome of a lawsuit that the city would initiate to determine whether CSP was or was not legally required to comply with the city’s 2005 right-of-way ordinance.

Reynoldsburg filed suit in the Franklin County Court of Common Pleas, seeking a declaratory judgment that CSP was obliged to comply with the city’s right-of-way ordinance and reimburse the city for the costs of moving its power lines underground.  CSP filed a motion to dismiss the city’s complaint, asserting that the dispute was subject to the exclusive jurisdiction of the PUCO. The common pleas court denied the motion to dismiss.  CSP then filed an original action in the Supreme Court, seeking a writ of prohibition to prevent the common pleas court from exercising jurisdiction over the declaratory judgment case.  In March 2008, the Supreme Court issued a decision granting the requested writ and holding that the controversy between the parties involved utility rates and services, and therefore must be decided by the PUCO.

Reynoldsburg refiled its suit in the form of a complaint asking the PUCO to amend or revoke Paragraph 17 of CSP’s 1992 tariff because enforcement of that provision was unjust, unreasonable or unlawful in light of the city’s 2005 right-of-way ordinance. The city also argued that giving the tariff precedence over the city’s ordinance would be unconstitutional because Article XVIII, Section 4 of the Ohio Constitution specifically recognizes the “home rule” authority of municipalities to exercise their powers of local self-government and to enact and enforce local ordinances that are not in conflict with the general laws of the state. 

In a decision announced in April 2011, the PUCO ruled that enforcement of Paragraph 17 of CSP’s 1992 tariff was not unjust, unreasonable or unlawful under the circumstances of this case, and declined to amend or revoke the tariff. The PUCO held that it lacked jurisdiction to adjudicate Reynoldsburg’s constitutional claims under the “home rule” amendment, and suggested that the appropriate way for  those legal questions to be resolved would be for the city to exercise its right to appeal the PUCO’s ruling to the Supreme Court, which it has done.

Attorneys for Reynoldsburg assert that Ohio courts have long recognized that control over public streets and roads within a municipality, and the public rights of way adjacent to those roads, is one of the inherent powers of local self-government that cities may exercise without interference by the state.  They argue that private companies like CSP have no inherent “right” to use public rights of way for their profit-seeking enterprises, but are merely tenants who are permitted to use public property under terms and conditions that may be set, and changed over time, by local governments exercising their home rule authority under the state constitution.

In this case, they contend, the PUCO has turned that relationship on its head by effectively ruling that a private utility company can permanently strip a city of its authority to control or regulate the future use of its public rights of way simply by inserting language in a PUCO tariff that purports to bar the city from ever changing the terms or conditions under which it permits the utility company to occupy city property. They argue that the only “general laws” of the state that take precedence over a municipal ordinance under the home rule amendment are statutes and regulations adopted by the General Assembly. They point out that the 1992 CSP tariff that conflicts with Reynoldsburg’s right-of-way ordinance in this case was written by the utility company itself, and adopted by the PUCO with little or none of the public debate or disclosure that are required before a legislative proposal can assume the force of a law.

Attorneys for CSP and the PUCO respond that the 1992 tariff and its provision allowing CSP to pass on its costs of moving electric lines underground to a municipality were actions taken by the PUCO pursuant to a general law of the state: Title 49 of the Ohio Revised Code, which grants the PUCO exclusive jurisdiction over setting utility rates and determining which costs and expenses utility companies will be allowed to pass along to their customers.  They argue that Reynoldsburg’s right-of-way ordinance does not fall within the city’s home rule authority because requiring CSP to assume the costs of relocating its downtown Reynoldsburg power lines would not only impact Reynoldsburg residents, but all of CSP’s customers, whose current and future rates would have to be adjusted to compensate for the company’s increased expenditures.

They also assert that a ruling in favor of Reynoldsburg in this case would allow municipalities all over CSP’s service area to adopt similar local ordinance requiring the relocation of power lines within their borders and passing the costs of those projects on to all the company’s customers. That outcome, they say, would violate the legislature’s clear intent in drafting R.C. Title 49, which was to give the PUCO exclusive statewide authority to set rates and determine which costs and operating expenses utility companies may pass along to which users.

Contacts
Mark S. Yurick, 614.221.4000, for the City of Reynoldsburg.

Matthew J. Satterwhite, 614.716.1915, for Columbus Southern Power Co.

Thomas G. Lindgren, 614.466.4395, for the Public Utilities Commission of Ohio.

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Attorney Discipline

Disciplinary Counsel v. Timothy Andrew Shimko, Case no. 2012-1002
Cuyahoga County

The Board of Commissioners on Grievances & Discipline has recommended that the court suspend the license of Cleveland attorney Timothy A. Shimko for six months for violations of the state disciplinary rule that prohibits an attorney from making statements that impugn the integrity of a judicial officer that he knows to be false or with reckless disregard as to their truth or falsity, and for engaging in conduct that adversely reflects on the attorney’s fitness to practice law.

The board found that during and after a Crawford County trial in which visiting judge Richard Markus made evidential and procedural rulings unfavorable to Shimko’s client, and ultimately vacated a jury verdict in favor of Shimko’s client partially based on a finding of misconduct by Shimko during the trial, Shimko made unsupported allegations in statements to the court, appellate briefs and other written documents that Markus was “personally invested in the outcome of the case,” was “motivated by his own agenda,” had “deliberately misrepresented” the trial record and had “fabricated” or “contrived” the judicial findings on which Markus based his decision to vacate the jury’s verdict and order a new trial.

Shimko has filed objections to the board’s findings and recommended sanction.  He asserts that his statements were truthful expressions of his sincere belief that Markus’ adverse rulings in the Crawford County case were based on a personal bias against Shimko and his client arising from Shimko’s attempt to have Markus disqualified from hearing the case at its outset. He contends that the trial record provides a reasonable, factual basis for his assertions that Markus’ conduct during the trial and ultimate decision in the case were based on his bias, and justifies Shimko’s contentions on behalf of his client that Markus’ decision should be overturned on appeal or alternatively that Markus should be disqualified from presiding at a retrial.  If the court should find that his statements went beyond acceptable limits of zealous advocacy, Shimko urges the court to impose no more than a stayed license suspension as the appropriate sanction.

The Office of Disciplinary Counsel, which prosecuted the complaint against Shimko before the board, urges the court to adopt the board’s recommendation of an actual suspension from practice.  Counsel asserts that there is a significant difference between fact-based arguments that a judge’s statements or rulings during a trial showed bias by departing from accepted standards or failing to follow the law or procedural rules, and allegations such as those cited by the board in which Shimko asserted without supporting evidence his subjective “belief” that the judge acted with a dishonest intention to favor one party over another, and/or to punish Shimko for trial tactics of which the judge disapproved.

Contacts
Jonathan E. Coughlan, 614.461.0256, for the Office of Disciplinary Counsel.

Richard C. Alkire, 216.674.0550, for Timothy A. Shimko.

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Attorney Discipline

Cleveland Metropolitan Bar Association v. James W. Westfall, Jr., Case no. 2012-1003
Cuyahoga County

The Board of Commissioners on Grievances & Discipline has recommended that Cleveland attorney James W. Westfall Jr. be suspended from the practice of law for two years for multiple violations of the Rules of Professional Conduct.

The board based its recommendation on findings that during 2009, 2010, and part of 2011,Westfall withheld federal income tax, Social Security and Medicare taxes from the wages of his law firm  employees but failed to remit those taxes to the government and instead used the employees’ funds to operate his business. The board also found that in four separate cases Westfall refused to refund unearned legal fees and court costs he had collected in advance from bankruptcy clients after he withdrew from their cases without ever filing bankruptcy petitions on their behalf.

The board also found that Westfall’s marketing materials falsely indicated that his multi-location bankruptcy firm employed multiple attorneys when he was the only lawyer actually working for the firm, and that Westfall failed to cooperate with disciplinary authorities investigating his payment of employee payroll taxes by denying the existence or availability of missing financial records until the bar association issued  a subpoena to his accountant.

Westfall has filed objections to the board’s findings and recommended sanction. Among other claims, he asserts that he expressed willingness to submit his clients’ fee disputes for resolution by a voluntary arbitration program operated by the bar association, but was foreclosed from doing so by the association’s filing of a formal complaint against him with the disciplinary board.  He admits falling behind in his submission of employee taxes to the IRS, but points out that he had been making timely payments for recent tax periods and is working with tax authorities to make up past-year arrearages. 

Westfall also objects to the board’s finding that his energetic defense against the charges brought against him and denial of intentional rule violations constitutes a refusal to acknowledge the wrongfulness of his actions, and asks the court to overrule the board’s conclusion that his sanction should be enhanced based on that “aggravating” factor.

Attorneys for the Cleveland Metropolitan Bar Association, which prosecuted the complaint against Westfall before the disciplinary board, urge the court to affirm the board’s findings and impose its recommended sanction.  They point to prior disciplinary cases in which courts have held that an attorney’s failure to remit employee withholding taxes to the government, and diversion of those funds to cover his firm’s operating expenses, represents a serious breach of the attorney’s crucial professional duty to respect and properly handle the funds of others.

Contacts
Gregory J. Phillips, 216.583.7268, for Cleveland Metropolitan Bar Association.

James W. Westfall Jr., pro se, 216.589.0475

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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.