State ex rel. Daily Servs., L.L.C. v. Morrison (Slip Opinion)

2018 Ohio 2151, 116 N.E.3d 112, 154 Ohio St. 3d 498
CourtOhio Supreme Court
DecidedJune 6, 2018
Docket2017-0251
StatusPublished
Cited by7 cases

This text of 2018 Ohio 2151 (State ex rel. Daily Servs., L.L.C. v. Morrison (Slip Opinion)) is published on Counsel Stack Legal Research, covering Ohio Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
State ex rel. Daily Servs., L.L.C. v. Morrison (Slip Opinion), 2018 Ohio 2151, 116 N.E.3d 112, 154 Ohio St. 3d 498 (Ohio 2018).

Opinions

Per Curiam.

*499{¶ 1} Appellant, the administrator of the Bureau of Workers' Compensation, appeals the judgment of the Tenth District Court of Appeals granting a writ of mandamus that orders the administrator to vacate the November 14, 2013 order of the administrator's designee finding that appellee, Daily Services, L.L.C., was the successor to I-Force, L.L.C., and was responsible for I-Force's rights and obligations under former Ohio Adm.Code 4123-17-02(C), 2006-2007 Ohio Monthly Record 1-79, effective July 27, 2006, and to enter an order finding that Daily Services is not the successor to I-Force.

{¶ 2} For the reasons that follow, we reverse the judgment of the court of appeals and deny the writ of mandamus.

Factual and Procedural Background

{¶ 3} Daily Services is a temporary-employment agency owned by Ryan Mason that focuses on short-term or daily staffing. Mason also owned another temporary-employment agency called I-Force that focused on long-term staffing. The businesses were located in adjacent buildings on Morse Road in Columbus. Each agency had its own workers' compensation policy.

{¶ 4} In 2008, I-Force's workers' compensation premium increased to approximately $3.5 million based on its poor claims history. I-Force did not pay its premium for the second half of 2008, which was due by February 28, 2009.

{¶ 5} During an audit of Daily Services conducted in April 2009, the bureau learned that I-Force had closed over the weekend of March 21 through 22, 2009, but that the business appeared to be continuing to operate through Daily Services. Consequently, the bureau concluded that Daily Services was the successor-in-interest to I-Force and therefore was responsible for all of I-Force's existing and future financial rights and obligations, effective March 23, 2009. In addition, the bureau combined the experience of the two companies pursuant to Ohio Adm.Code 4123-17-02(B), to establish the premium rate of Daily Services, as the successor.

{¶ 6} On June 1, 2009, Daily Services received from the bureau an invoice for more than $3.48 million for I-Force's unpaid premiums. On June 15, 2009, Daily *500Services filed a protest objecting to the bureau's determination that it was the successor to I-Force. The protest was referred *115to an adjudicating committee of the bureau for a hearing on the merits of the bureau's decision. The committee affirmed the bureau's decision to combine the experience of the two entities. Daily Services did not appeal the committee's order.

{¶ 7} The bureau held another hearing on March 20, 2013, to resolve the issue of successor liability after it was determined in related collection proceedings that the adjudicating committee had not decided the successorship issue from the 2009 protest. Two of the bureau's employees testified on its behalf: Nancy Archer, who conducted the 2009 investigation into I-Force's transfer of operations to Daily Services, and Heidi Pack, who reviewed the information from Archer and determined that Daily Services had successor liability. Daily Services presented no witnesses.

{¶ 8} Following the hearing, the adjudicating committee again denied the June 2009 protest. The committee concluded that Mason's maneuvering of I-Force's business operations to Daily Services amounted to a voluntary transfer of business operations. Thus, the committee determined that Daily Services was the successor to I-Force under former Ohio Adm.Code 4123-17-02(C)(1).

{¶ 9} Daily Services appealed. The matter was referred to the administrator's designee, who determined that the adjudicating committee used the proper legal standard and that Daily Services wholly succeeded I-Force for purposes of the transfer of I-Force's rights and obligations under the workers' compensation law, including I-Force's unpaid premiums, pursuant to former Ohio Adm.Code 4123-17-02(C)(1) ("Where one employer wholly succeeds another in the operation of a business, the bureau shall transfer the predecessor's rights and obligations under the workers' compensation law").

{¶ 10} The designee itemized the evidence set forth by the adjudicating committee, which included Daily Services' hiring of I-Force's permanent staff over the weekend of March 21-22, 2009, its assumption of I-Force's property and computer leases, its payment of I-Force's federal quarterly taxes, and its purchase of the right to use the "I-Force" name. The designee also identified evidence that Daily Services had added manual codes in preparation for acquiring I-Force's clients, had contacted I-Force's clients to have them sign new contracts with a name change only, and had ranked the profitability of I-Force's clients. And the designee noted that Mason ceased all I-Force business as of March 23, 2009.

{¶ 11} Daily Services filed a complaint for a writ of mandamus alleging that the bureau's denial of the 2009 protest was an abuse of its discretion.

{¶ 12} The magistrate assigned to the case at the court of appeals noted that former Ohio Adm.Code 4123-17-02(C)(1), in effect in 2009, did not define "wholly *501succeeds" and that case law provided little guidance on the meaning of the phrase. But, the magistrate noted, the rule was amended in 2010 to expressly provide that "an employer wholly succeeds another in the operation of a business when '[t]he succession transaction is entered into for the purpose of escaping obligations under the workers' compensation law.' " State ex rel. Daily Servs., L.L.C. v. Buehrer , 2016-Ohio-8333, 2016 WL 7427412, ¶ 66, quoting former Ohio Adm.Code 4123-17-02(C)(1)(d), 2009-2010 Ohio Monthly Record 2-3058, effective July 5, 2010. According to the magistrate, the bureau's findings would have been proper under this version of the rule but were not relevant under the version of the rule that was in effect in 2009. Thus, the magistrate concluded that *116the facts did not support a finding that Daily Services wholly succeeded I-Force.

{¶ 13} The court of appeals overruled the bureau's objections and adopted the magistrate's decision. The court acknowledged that Daily Services "orchestrated a business strategy to take over the most profitable aspects of I-Force's business" but concluded that doing so did not establish that Daily Services had "wholly succeeded" the business operations of I-Force. Id. at ¶ 12. The court of appeals therefore granted a writ of mandamus ordering the bureau to vacate the order of the administrator's designee.

{¶ 14} This matter is before this court on the direct appeal of the bureau. A cross-appeal filed by Daily Services was dismissed for failure to prosecute.

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Bluebook (online)
2018 Ohio 2151, 116 N.E.3d 112, 154 Ohio St. 3d 498, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-ex-rel-daily-servs-llc-v-morrison-slip-opinion-ohio-2018.