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Wednesday, March 21, 2012

State of Ohio v. Jason Williams, Case no. 2011-0619
Eighth District Court of Appeals (Cuyahoga County)

In the Matter of the Application of Columbus Southern Power Company and Ohio Power Company for Administration of the Significantly Excessive Earnings Test under Section 4928.143(F), Revised Code, and Rule 4901:1-35-10, Ohio Administrative Code, Case no. 2011-0751
Appeal from order of the Public Utilities Commission of Ohio

Allen Stockberger, et al., Knox County Commissioners v. James L. Henry, Knox County Engineer, Case no. 2011-0859
Fifth District Court of Appeals (Knox County)

Cincinnati Bar Association v. Curtis D. Britt, Case no. 2011-2043
Hamilton County

Cincinnati Bar Association v. Kathleen S. Hardy, Case no. 2012-0029
Hamilton County


Must Trial Court's Finding That Two Crimes Are Not 'Allied Offenses' Be Reviewed Under Abuse of Discretion Standard?

Under Case Law Interpreting Ohio Multiple Count Statute

State of Ohio v. Jason Williams, Case no. 2011-0619
Eighth District Court of Appeals (Cuyahoga County)

ISSUE:  Pursuant to the Supreme Court of Ohio’s holding in State v. Johnson (2010)  that trial courts must consider the actual conduct of the defendant in determining whether two offenses committed by a defendant through the same actions are subject to merger as “allied offenses of similar import,” when a trial court rules that two crimes should not be merged, must a court of appeals affirm that ruling unless it finds that the trial court abused its discretion?

BACKGROUND: In general, when a court of appeals reviews a trial court’s decision, the standard of review to be applied depends on the type(s) of error(s) alleged by the appellant (person seeking review of the lower court’s decision). 

In reviewing disputed questions of fact, appeals courts are required to apply a deferential “abuse of discretion” standard that requires that the lower court’s ruling be upheld unless the reviewing court  finds that the lower court’s ruling was “unreasonable, arbitrary or unconscionable.” In reviewing disputed questions of law, however, appellate courts are to apply a non-deferential “de novo” standard under which the court of appeals conducts its own independent analysis of the applicable statutes and/or case law, and may reverse the lower court’s decision based on the appellate panel’s contrary interpretation of the law.

In this case, Jason Williams of Cleveland was charged with two counts of rape, three counts of gross sexual imposition and one count of kidnapping based on a single incident in which he sexually assaulted  a nine-year-old girl.  Williams was found guilty on all six counts.  The trial court found that each of the rape and gross sexual imposition charges was based on a separate act of illegal conduct, and therefore those counts should not be merged for sentencing purposes.  The court also held that the kidnapping count, based on Williams’ coerced walking of the victim a few yards to a location where his actions could not be observed, did not merge with any of the other counts. Williams received separate sentences for each of his convictions, but because all sentences were imposed concurrently (to be served at the same time) his overall sentence was equivalent to the sentence for a single conviction for child rape, a term of from 25 years to life in prison.

Williams appealed, asserting among other claims that the trial court erred in holding that the kidnapping conviction was not an “allied offense” that should have been merged with his rape convictions. The Eighth District Court of appeals upheld his convictions, but after reviewing the facts considered by the trial court, held that the rape and kidnapping charges were allied offenses of similar import, and remanded the case with a directive to merge those counts.

The state sought and was granted Supreme Court review of the Eighth District’s decision.

Attorneys for the state assert that, in light of the Supreme Court’s 2010 holding in State v. Johnson that trial courts must consider the facts of each individual case in determining whether multiple convictions should be merged, the Eighth District erred by applying what amounted to a “de novo” review of the facts in this case when it should have applied an abuse of discretion standard.  Under that standard, they argue, the trial court’s finding of no merger should have been affirmed absent a finding  that the trial judge’s ruling was “unreasonable, arbitrary or unconscionable.”

Attorneys for Williams respond that the question of whether multiple crimes are “allied offenses” subject to merger is a mixed question of law and fact, and therefore not subject to an abuse of discretion review standard notwithstanding this court’s decision in Johnson. They argue that the Eighth District’s ruling correctly followed a number of prior appellate decisions holding that when a defendant’s act of moving a victim a short distance was for the sole purpose of committing rape, and restraining the victim was part of a single, continuous course of conduct, the conduct that constituted kidnapping was  an integral part of  the rape offense and the two charges are allied offenses that must be merged for sentencing under R.C. 2941.25.

Contacts
Kristen L. Sobieski, 216.698.2226, for the state and Cuyahoga County prosecutor's office.

Jonathan N. Garver, 216.391.1112, for Jason Williams.

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Did Public Utilities Commission Follow Law When Calculating AEP Companies' 'Excessive Earnings'?

Customer Groups Argue Improper Earnings Comparison Reduced Refunds

In the Matter of the Application of Columbus Southern Power Company and Ohio Power Company for Administration of the Significantly Excessive Earnings Test under Section 4928.143(F), Revised Code, and Rule 4901:1-35-10, Ohio Administrative Code, Case no. 2011-0751
Appeal from order of the Public Utilities Commission of Ohio

ISSUE: In calculating whether the electric service rates that Columbus Southern Power Company (CSP) and Ohio Power Company (OP) charged their customers in 2009 resulted in “significantly excessive earnings” that must be refunded to ratepayers, did the Public Utilities Commission of Ohio (PUCO) act contrary to law in conducting a required comparison of those companies’ earnings on equity against the earnings of other utilities and comparable businesses?

BACKGROUND: A provision of Ohio’s regulatory scheme for electric power utilities adopted in 2008, R.C. 4928.143, requires the PUCO to conduct an annual “Significantly Excessive Earnings Test” (SEET) of each electric distribution utility serving Ohio customers that sets its service rates through an annually adjusted rate plan called an Electric Security Plan (ESP). The first year for which the SEET requirement was applicable was 2009.

For each company setting rates through an ESP, the SEET statute requires that the PUCO compare the “return on common equity of the electric distribution utility” during the preceding year against “the return on common equity that was earned during the same period by publicly traded companies, including other utilities, that face comparable business and financial risk.” If this comparison shows that a regulated utility earned a profit that was “significantly excessive” in comparison with the earnings of other comparable businesses, the law requires the PUCO to establish the amount of earnings that was “significantly excessive,” and  order the power company to refund that amount to its customers through pro-rata reductions in their future electric bills.

In September 2010, CSP and OP, two electric distribution utilities owned by American Electric Power Co., filed reports with the PUCO detailing the equitable value of their assets and the rate of return on those assets they earned in 2009. The commission conducted a SEET analysis comparing those reported earnings against the earnings on equity of comparable businesses during the same time period. Following a multi-day hearing at which the utilities and several energy user groups presented conflicting testimony, the PUCO issued a report finding that OP did not have any significantly excessive earnings for 2009, but that CSP did have significantly excessive earnings. The commission set the amount of those excessive earnings at $42.682 million, and ordered CSP to refund that amount to its ratepayers through pro-rata reductions in their future electric service bills.

Two organizations representing electric utility customers, the Ohio Energy Group and Industrial Energy Users – Ohio, filed objections to the PUCO order and requested a rehearing. They were subsequently joined in seeking a rehearing by the Office of The Ohio Consumers’ Counsel, the agency of state government charged with protecting the interests of residential energy consumers. The appellants disputed the figures used by the PUCO in calculating the amount of return on equity OP and CSP had earned during 2009. While they advanced different arguments, all of the customer appellants argued that the PUCO had improperly compared only part of the utility companies’ 2009 earnings against all of the earnings of comparable companies,  and said that “apples to oranges” comparison had resulted in a significant reduction in the amount of excessive earnings the utilities should have been ordered to rebate to customers.

OP and CSP cross-appealed, asking the PUCO to reconsider its holding that CSP had received any significantly excessive earnings that must be refunded. The commission denied all parties’ requests for rehearing and affirmed its original order. The parties have exercised their right to appeal the commission’s rulings to the Supreme Court.

Attorneys for the Ohio Energy Group and Ohio Consumers’ Counsel argue that in arriving at its conclusion that OP did not have any significantly excessive earnings for 2009, and in setting the amount of CSP’s excessive earnings subject to refund, the PUCO did not follow R.C. 2948.143 because it subtracted the portion of the companies’ 2009 earnings that was derived from “off-system” sales of excess power outside of Ohio from their total earnings before comparing those earnings to the total earnings of comparable businesses. 

They assert that this exclusion of revenue is unlawful because nothing in R.C. 4928.143 authorizes the PUCO to make any subtraction from a utility’s total earnings on equity as reported to the Federal Energy Regulatory Commission prior to conducting the required SEET comparison with the full earnings of comparable businesses. They also contend that excluding OP and CSP’s off-system revenues from that comparison was clearly unreasonable because, in approving the rates OP and CSP charged their Ohio customers in 2009, the PUCO allowed the utilities to include all of their capital equipment costs and operating expenses incurred in generating and transmitting the electricity that they sold to off-system buyers. The appellants urge the court to order the PUCO to recalculate OP and CSP’s excessive earnings for 2009 based on the companies’ total earnings as reported in their filings with the Federal Energy Regulatory Commission, which they claim would result in an additional refund to OP and CSP customers of more than $22 million.

In responding to the claims of the customer appellants, attorneys for the utility companies urge the court to affirm the PUCO’s action in excluding from its calculation of OP and CSP’s excessive earnings for 2009  revenues the companies received through wholesale transactions in which they sold excess power to out-of-state utilities.  They argue that the PUCO rightly concluded that the Ohio SEET statute cannot be applied to such transactions because the wholesale interstate market in electric power is subject to the exclusive regulation of the Federal Energy Regulatory Commission.  They also contend that, properly read, the SEET statute requires the PUCO to calculate a power company’s “significantly excess profits” for a year based solely on the profits the company realized from specific rate adjustments that were included in its ESP for that year, rather than the total earnings of the company from all of its business activities, including those not covered by the ESP.

With regard to its cross-claim, CSP asks the court to invalidate the PUCO’s ruling requiring the company to refund more than $42 million of its 2009 earnings to its customers through future rate cuts.  They argue that the provisions of R.C. 2948.143 imposing the SEET test and requiring utilities to make rebates of “significantly excessive earnings” are unconstitutionally vague and therefore unenforceable  because they do allow a regulated utility to understand or predict what return on its investments will be regarded “significantly excess” earnings, or what kinds of non-utility businesses will be considered “comparable” to an electric company.

Contacts
Steven T. Nourse, 614.716.1608, for American Electric Power Co. and Columbus Southern Power Co.

Samuel C. Randazzo, 614.469.8000, for Industrial Energy Users − Ohio.

Maureen R. Grady, 614.466.9567, for the Office of Consumers Counsel.

Thomas W. McNamee, 614.466.4396, for the Public Utilities Commission of Ohio.

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Is Engineer's Share of County Self-Insurance Cost a 'Highway Purpose' for Which Motor Vehicle, Gas Taxes May Be Spent?

Allen Stockberger, et al., Knox County Commissioners v. James L. Henry, Knox County Engineer, Case no. 2011-0859
Fifth District Court of Appeals (Knox County)

ISSUE:  Does a provision of the Ohio Constitution requiring that revenues from state motor vehicle and gasoline taxes may be used only for “highway purposes” bar  a county engineer from transferring vehicle tax revenues from his office account to the county’s general fund to reimburse the county for its cost of obtaining self-insurance coverage for the engineer’s office?

BACKGROUND: Section 5(a), Article XII of the Ohio Constitution restricts the use of revenues generated by the state’s motor vehicle licensing and gasoline taxes (referred to jointly as MVGT) to cover the costs of “construction, reconstruction, maintenance and repair of public highways and bridges,” or to pay for traffic law enforcement and certain other “statutory highway purposes.” MVGT taxes collected by the state are distributed to the county engineers in the 88 counties on a pro-rata basis, and serve as the counties’ primary funding source for local road construction, repair and maintenance projects.

Knox County is one of 62 Ohio counties that self-insure through contributions to the County Risk Sharing Authority CORSA, a pool that provides coverage to each of its member counties for their potential exposure to claims for general liability, motor vehicle liability, errors and omissions, damage to county property, and liability arising from the operations of the county sheriff’s office and county-run correctional facilities. Each county’s annual “premium” for this coverage is calculated by CORSA according to an actuarial formula based on claims submitted over the preceding five-year period and a forward-looking estimate of potential loss exposure.

In this case, CORSA calculated Knox County’s self-insurance premium for 2007-2008 as $217,510, and sent an invoice for that amount to the county commissioners. The commissioners paid the premium from the county’s general revenue fund. The commissioners, one of whom was commissioner Allen Stockberger, subsequently sent an invoice to the office of county engineer James Henry, indicating that the engineer’s “share” of the county’s CORSA premium for the biennium was $19,789, and requesting  a transfer of that amount from the engineer’s account to the general fund.

Henry refused to authorize a transfer of the requested amount from his office’s account, asserting that to do so would violate the constitutional prohibition against using MVGT revenues for a non-highway purpose.

The commissioners filed suit in the Knox County Court of Common Pleas, asking the court to issue a declaratory judgment that the portion of the county’s CORSA premium that procured coverage for the engineer’s office was an expenditure for a “highway purpose” that could be reimbursed from MVGT funds. They also requested an injunction ordering Henry to reimburse the general fund from his account for his office’s allocated share of the CORSA premium. The trial court held that the cost of procuring self-insurance that covered the operations of the county engineer’s office was directly connected to a “highway purpose,” and therefore the engineer was not barred from using MVGT funds in his account to reimburse the county for that cost.  The court declined, however, to issue an injunction ordering the engineer to transfer the requested amount to the general fund.

Both parties  appealed the portions of the trial court’s decision that were unfavorable to them.  On review, the Fifth District Court of Appeals reversed the trial court’s holding that the commissioners’ payments to CORSA on behalf of the engineer’s office could be reimbursed from MVGT funds.  The court of appeals noted that the formula used by CORSA to allocate the amount of self-insurance cost attributable to the engineer’s office was based on risk assessments that considered all property, duties and operations of the engineer’s office, which included waste disposal facilities and maintenance of sanitary sewers, storm sewers, ditches and sidewalks.  The Fifth District concluded that because these non-highway related risks were included in the CORSA premium calculation, and the engineer’s contributions would be used by CORSA to pay claims arising from other Knox County offices even if there were no engineer-related claims during the 2007-2008 coverage period, there was not a sufficiently direct relationship between CORSA’s charges and the engineer’s highway-related operations for that expense to be payable from MVGT revenues. 

The commissioners sought and were granted Supreme Court review on the specific question of whether the evidence they had presented to the trial court was sufficient to establish that the portion of the CORSA premium apportioned to the engineer’s office was directly linked to a “highway purpose.”

Attorneys for the county commissioners argue that their witnesses showed that the self-insurance payment made by the county to CORSA on behalf of the engineer’s office procured coverage for potential damages arising from the engineer’s road construction, repair and maintenance operations during the coverage period, and that showing was all that is required to establish that the payment was an expenditure for a “highway purpose” that was reimbursable from MVGT funds.

Attorneys for the engineer’s office point to an earlier Supreme Court of Ohio decision in which the Court examined an identical dispute between the Knox County commissioners and engineer, and held that CORSA payments were not reimbursable from MVGT revenues unless the commissioners showed a direct link between the amount paid on behalf of the engineer and the engineer’s highway related activities. In the current case, they assert,  the commissioners presented testimony by CORSA about its formula for allocating self-insurance costs to the engineer’s office, but that testimony showed that monies paid to CORSA on behalf of the engineer’s office were not directly linked to a highway purpose because those funds could be expended to cover losses completely unrelated to road construction, repairs or maintenance  ... including losses attributable to other county agencies that are unrelated to any of the engineer’s operations.

Contacts
Gerhardt A. Gosnell II, 614.460.1600, for Allen Stockberger and Knox County Board of Commissioners.

Luther L. Liggett Jr., 614.229.4423, for Knox County Engineer James Henry.

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Attorney Discipline

Cincinnati Bar Association v. Curtis D. Britt, Case no. 2011-2043
Hamilton County

The Board of Commissioners on Grievances & Discipline has recommended that attorney Curtis T. Britt of Florence, Kentucky, who operated multiple law offices in the Greater Cincinnati area between 2008 and 2010, be indefinitely suspended from the practice of law for neglecting the cases of more than 40 clients who were referred to him by a bankruptcy services website, and for converting the fee advances he received from those clients to his own use without performing the promised legal services.

The board also found that Britt violated the state’s Rules of Professional Conduct by charging an excessive fee, failing to withhold income taxes or unemployment insurance premiums for employees of his practice, failing to use a dedicated trust account to segregate unearned client fee advances from his own funds, and aiding in the unauthorized practice of law by failing to supervise a non-attorney employee who performed intake interviews with prospective clients.

Attorneys for the Cincinnati Bar Association, which investigated the client grievances filed against Britt and prosecuted the complaint against him before the disciplinary board, have objected to the board’s recommendation of an indefinite suspension. They argue that permanent disbarment is the appropriate sanction for Britt’s misconduct in light of his multiple rule violations, misappropriation of funds, and the harm he caused to dozens of vulnerable clients who were already in financial crisis when they came to him for assistance.

Attorneys for Britt urge the court to adopt the board’s recommended sanction of an indefinite suspension conditioned on his payment of restitution to the clients who were harmed by his actions. They point out that he has closed his law offices, obtained employment as a non-attorney, and is making regular monthly payments to another bankruptcy lawyer to assist the clients whose cases he neglected.

Contacts
Dimity V. Orlet, 513.699.1401, for the Cincinnati Bar Association.

George D. Jonson, 513.241.4722, for Curtis Britt.

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Attorney Discipline

Cincinnati Bar Association v. Kathleen S. Hardy, Case no. 2012-0029
Hamilton County

Cincinnati attorney Kathleen S. Hardy has been  ordered to appear before the court to show cause why she should not be found in contempt for failure to comply with an order of the Board of Commissioners on Grievances & Discipline.

Contacts
Jon Hoffheimer, 513.421.7666, for the Cincinnati Bar Association.

Kathleen S. Hardy, 513.253.9699.

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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.