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Andrea Barnes, Executrix of the Estate of Natalie Barnes, et al. v. University Hospitals of Cleveland et al., Case no. 2007-0140
8th District Court of Appeals (Cuyahoga County)
Cherita Rankin et al. v. C.C.D.C.F.S., et al., Case no. 2007-0306
8th District Court of Appeals (Cuyahoga County)
Marc Glassman, Inc. v. William W. Wilkins [Richard A. Levin], Tax Commissioner, Case no. 2007-0328
8th District Court of Appeals (Cuyahoga County)
Hon. Dusty Rhodes, Hamilton County Auditor v. Hamilton County Board of Revision et al., Case no. 2007-0615
State Board of Tax Appeals
Andrea Barnes, Executrix of the Estate of Natalie Barnes, et al. v. University Hospitals of Cleveland et al., Case no. 2007-0140
8th District Court of Appeals (Cuyahoga County)
ISSUES:
BACKGROUND: This case involves a civil lawsuit filed against University Hospitals of Cleveland and MedLink, a provider of home health care services, by surviving family members of a mentally handicapped and epileptic patient, Natalie Barnes. Barnes suffered a coronary embolism that ultimately resulted in her death when she dislodged a catheter from her abdomen while undergoing kidney dialysis treatment at University Hospital. Because of Barnes’ disabilities and a known tendency to pull at or attempt to move the catheter during her dialysis treatments, the MedLink aides who transported Barnes to the hospital for dialysis were required to remain at her bedside and observe her at all times during the procedure. On the date she suffered the embolism, Barnes was being attended by a new MedLink employee, Endia Hill. Hill left Barnes unattended in the dialysis treatment area for an extended period, and was in another part of the building when Barnes dislodged the catheter, causing her fatal injury. It was later determined at trial that Hill did not meet the stated minimum educational standard for hiring by MedLink as a home health aide, and that Hill had admitted on her employment application that she had a prior felony assault conviction, which made it illegal for her to be employed by MedLink to care for disabled patients.
Barnes’ family filed suit against the hospital and MedLink seeking damages for wrongful death and survivorship claims. The parties exercised their option to try the case to a jury under the supervision of a “private judge” to be paid by the parties, and agreed to have retired Cuyahoga County Common Pleas Court Judge Robert T. Glickman preside. At the conclusion of the trial, the jury found in favor of the plaintiffs and awarded damages of $100,000 on the survivorship claim and $3 million on the wrongful death claim, plus an additional award of $3 million in punitive damages based on a finding that MedLink had acted with actual malice. University Hospitals paid its share of the damages, set by the jury at 10 percent, and is no longer a party in the case.
MedLink filed motions with the trial court seeking reduction or vacation of the punitive damage award and asking for a hearing on those motions. Judge Glickman denied the motions without an evidentiary hearing. In his opinion, Glickman held that the jury’s punitive damage award was not “grossly excessive” under the standard applied by the U.S. Supreme Court in State Farm Mutual Automobile Insurance Co. v. Campbell (2003).
MedLink appealed the trial court’s judgment, asserting among other claims that Glickman had failed to review the punitive damage award according to three specific standards set forth in the U.S. Supreme Court’s 1996 decision in BMW of North America v. Gore. MedLink also asserted that the trial court’s decision should be set aside in its entirety because Glickman did not meet the statutory qualifications to serve as a private judge The 8th District Court of Appeals affirmed Glickman’s eligibility to hear the case, and upheld his ruling that the punitive damage award was not excessive. MedLink appealed the 8th District’s decision, asserting five assignments of error. The Supreme Court has agreed to hear arguments only on the two legal issues identified above.
Attorneys for MedLink argue that Judge Glickman’s review of the jury’s punitive damage award was fatally defective because he failed to analyze that award according the three specific criteria set forth in Gore, which requires punitive damages to be proportional to the “reprehensibility” of the defendant’s conduct; to be reasonably related to the actual harm inflicted on the plaintiff; and to be proportional to any “civil or criminal penalties” that could be imposed for comparable misconduct. With regard to Glickman’s eligibility to preside over the case, they assert that defense counsel were unaware until after the trial was completed that Glickman had been defeated at the polls after serving an earlier appointed term on the bench, and that his subsequent retirement after being appointed to another unexpired term on the bench by Governor Bob Taft did not qualify him as a “voluntarily retired judge” because that status is restricted to judges who retire after being elected to the bench at least once.
Attorneys for the Barnes family point out that the State Farm decision cited by Judge Glickman in his ruling on the punitive damage award was decided by the U.S. Supreme Court seven years after Gore, and included application of the Gore criteria plus additional issues not addressed in Gore. They argue that the facts of the case and Glickman’s opinion addressing the amount of punitive damages implicitly held that the $3 million figure set by the jury was proportional to MedLink’s misconduct in knowingly entrusting a high-risk patient to a new, unqualified employee with an admitted criminal record, and also was proportional to the actual suffering of Natalie during the last minutes of her life and of her family based on her wrongful death at the age of 24.
With regard to Glickman’s qualifications, they contend that the applicable statute, R.C. 2701.10, grants eligibility to serve as a private judge to any “voluntarily retired judge” (i.e. one who was not voted out of office), and to any other judge, elected or appointed, whose retirement took place while actively serving on the bench and did not follow an unsuccessful bid to be elected or reelected to that judicial office.
Contacts
James M. Roper, 614.221.2121, for
MedLink of Ohio.
Paul W. Flowers, 216.344.9393, for Representing Robert Barnes (father and executor of Natalie Barnes).
Cherita Rankin et al. v. C.C.D.C.F.S., et al., Case no. 2007-0306
8th District Court of Appeals (Cuyahoga County)
ISSUE: Does the common law doctrine that a “special relationship” between a government agency or official and a party may create an individual duty to that party supersede the general immunity of county children service agencies and their employees from civil liability arising from the performance of their governmental functions?
BACKGROUND: In this case the Supreme Court is asked to review the applicability of Ohio’s “sovereign immunity” statute, R.C. Chapter 2744, to a case in which a mother seeks to recover money damages from the Cuyahoga County Department of Children and Family Services (CCDCFS), and from the department’s director and one of its employees, for failing to protect her three-year-old daughter from being sexually molested by the child’s father during a supervised visitation at a CCDCFS facility.
Cherita Rankin of Cleveland filed suit against CCDCFS, department director James McCafferty and social worker Gina Zazzara in the Cuyahoga County Court of Common Pleas. Rankin’s claims were based on a July 2003 incident in which Rankin’s daughter, identified by the initials D.M., was sexually assaulted by her father, Andre Martin, during a supervised visit at the department’s Hunter Social Services Center. Martin was allowed to take his daughter to the bathroom without supervision where she was molested, and shortly thereafter was again sexually fondled by Martin while she sat on his lap with a jacket over her legs in a visitation room while department employees observing the visit failed to notice or intervene. Martin was subsequently convicted of criminal offenses arising from the incident.
The department, McCafferty and Zazzara filed motions for summary judgment dismissing Rankin’s claims against them. The trial court granted summary judgment, holding that, even if Rankin could show that the department or its employees acted negligently, they were exempt under the sovereign immunity statute from civil liability for acts or omissions occurring in the performance of their governmental duties. Rankin appealed. The 8th District Court of Appeals reversed the trial court, reinstated Rankin’s claims and remanded the case for further proceedings. The court of appeals ruled that summary judgment based on sovereign immunity was not appropriate because the general immunity conferred on the defendants by R.C. Chapter 2744 could be superseded in this case by case law holding that when a government agency or official has a “special relationship” with an injured party, the agency or official may be found to owe an individual duty to that party that renders them civilly liable. Based on its determination that a trial court could find that CCDCFS and its employees owed a special duty to protect D.M. as a dependent child, the 8th District held that a material issue of fact remained in doubt, and therefore summary judgment should not have been granted.
CCDCFS and the individual defendants now ask the Supreme Court to overturn the 8th District’s ruling and reinstate the trial court’s summary judgment in their favor. They argue that the legislature has established the unequivocal public policy, codified in R.C. 2744.02(A), that a government agency “is not liable in damages in a civil action for injury, death or loss ... caused by any act or omission of the political subdivision or its employee... in connection with a governmental or proprietary function,” except under five specific circumstances that are set forth in R.C. 2744.02(B). They assert that none of the five statutory exceptions to general immunity was even alleged by Rankin to be applicable to her claims. They urge the Court to rule that, having found that CCDCFS and its employees were clearly “engaged in a governmental function” when D.M. was injured, and that Rankin had not alleged any of the statutory exceptions to sovereign immunity, the 8th District should have ended its review at that point rather than further analyzing the case under a common law “special relationship” test that they say is inapplicable –but that could not supersede the plain language of the law even if it were applicable.
Attorneys for Rankin point out that, prior to the day D.M was assaulted, CCDCFS and Zazzara had been advised that Martin was suspected of sexual abuse of his daughter and had been specifically warned that he should not be permitted to take her into the bathroom unattended. They also note that the juvenile court order declaring D.M. a dependent child and allowing Martin visitation with his daughter required mandatory supervision of those visits by CCDCFS, in whose facility they took place. They assert that, under the egregious facts of this case, the 8th District properly held that the department and its employees were not entitled to summary release from all liability under the blanket of sovereign immunity, and that the defendants should be required to defend at trial their failure to comply with a court order to protect a child with whom they had a special legal relationship and a special duty to defend from the identified threat of sexual abuse by her father.
Contacts
Shawn M. Mallamad, 216.443.7799, for
the Cuyahoga County Department of Children & Family Services.
Joel Levin, 216.928.0600, for Cherita and Estella Rankin (mother and grandmother of minor child D.M.).
Marc Glassman, Inc. v. William W. Wilkins [Richard A. Levin], Tax Commissioner, Case no. 2007-0328
8th District Court of Appeals (Cuyahoga County)
ISSUE: Does a computerized third-party service used by pharmacies to electronically check with a customer’s insurance company and verify coverage before filling a prescription qualify as an “electronic information service” that is subject to Ohio use tax?
BACKGROUND: Marc Glassman , Inc. operates several pharmacies in the Cleveland area. Glassman’s pharmacies use a computerized service provided by a third party contractor, National Data Corporation (NDC), that instantly transmits the identification information of a customer seeking to fill a prescription to the customer’s insurance provider, obtains an electronic verification from the insurance company’s computer of the customer’s eligibility and coverage limits, and transmits that information back to the pharmacy.
The state tax commissioner assessed liability against Glassman for failure to pay Ohio business use tax on the amounts it had paid to NDC, ruling that the service NDC provides meets the legal definition of an “electronic information service” that is subject to state use tax. Glassman appealed to the State Board of Tax Appeals (BTA), which affirmed the decision of the commissioner. Glassman exercised his right to appeal to the 8th District Court of Appeals, which reversed the rulings of the commissioner and BTA. The court of appeals held that because the NDC service does not enable client businesses to directly access or conduct their own searches of insurance company databases, it does not qualify as a taxable electronic information service.
Attorneys for the tax commissioner now ask the Supreme Court to reverse the 8th District and reinstate the ruling of the BTA. They point to the statutory definition of an electronic information service, which includes “providing access to computer equipment ... for the purpose of ... examining or acquiring data stored in or accessible to the computer equipment.” They argue that the service provided by NDC fits the legal definition because its purpose is to allow businesses like Glassman’s to access and retrieve data (information about the status and conditions of a customer’s insurance coverage) that is stored in insurance company computers. They argue that nothing in the definition of a taxable information service requires that it give users direct access to the specific computer on which needed information is stored, or that it provide customers with the ability to search for or retrieve large amounts of data. All the law requires for such a service to be taxable, they assert, is that it provide access to computer equipment for the purpose of acquiring some information stored there.
Attorneys for Glassman and for several statewide business associations that have filed amicus curiae (friend of the court) briefs in the case urge the Court to affirm the ruling of the 8th District. They contend that the commissioner’s interpretation of state tax law in this case represents a major departure from current practice and prior rulings dealing with simple computerized verification services offered by NDC and similar contractors to tens of thousands of Ohio businesses. In support of their position, they point to a 1992 commissioner’s opinion holding that a third-party service retrieving and delivering specific customer-requested motor vehicle reports via computer was not subject to use tax. They also cite the BTA’s 1995 decision in PNC Bank N.A. v. Tracy, which held that a computerized credit card verification service that allows merchants to electronically verify the current validity of a customer’s account without accessing underlying data files was not taxable. They suggest that, if affirmed by the Court, the legal interpretation advanced by the tax commissioner in this case could allow expansion of the use tax to tens of millions of credit card verifications and similar computerized transactions each year that have not previously been considered taxable.
Contacts
David W. Hilkert, 330.376.5300, for
Marc Glassman Inc.
Elise Porter, 614.466.2872, for State Tax Commissioner Richard A. Levin.
Hon. Dusty Rhodes, Hamilton County Auditor v. Hamilton County Board of Revision et al., Case no. 2007-0615
State Board of Tax Appeals
ISSUE: When a property was developed to suit a single, specialized corporate tenant which signed a long-term lease contract, and the property is later resold by the developer to an investor subject to the tenant’s lease commitment, does a county auditor overvalue the property for tax purposes by setting the resale price as the true market value?
BACKGROUND: A recent line of cases decided by the Supreme Court has established the general principle that the price paid for a piece of property in a recent arm’s-length sale should be presumed to be the true value of that property for tax purposes, unless a party contesting that valuation can show that the sale price did not reflect the property’s real market value.
In this case, the Court is asked to determine whether the Hamilton County Auditor and State Board of Tax Appeals (BTA) erred in adopting the recent $4.3 million sale price of a parcel of property occupied by a Walgreen’s store as its true tax value, despite the facts that the structure includes non-standard features built specifically to suit Walgreen’s needs, and that the sale price included a 60-year contractual commitment by Walgreen’s to continue its tenancy in the building.
Attorneys for Walgreen’s urge the Court to reverse the BTA and reinstate a significantly lower valuation of $1.95 million that was adopted by the Hamilton County Board of Revision after Walgreen’s disputed the county auditor’s original valuation based on the sale price. They argue that the Board of Revision properly found that the sale price overstated the real market value of the property because it reflected the future value of a long-term lease commitment by a reliable and credit-worthy corporate tenant, and because special features built into the structure uniquely enhanced its value-in-use to Walgreen’s, but would not convey comparable value to alternative occupants if the property were placed on the open market.
Attorneys for the Hamilton County Auditor urge the Court to follow its 2005 ruling in Berea City Schools v. Cuyahoga Cty. Bd. of Revision and other recent decisions holding that the recent purchase price paid by a willing buyer in an arm’s length sale should be adopted as the true tax value of a property even when the sale price reflects long-term lease commitments by tenants and/or includes the buyer’s receipt of advantageous financial terms not intrinsic to the land or structures being acquired.
Contacts
Nicholas Ray, 614.442.8885, for
property owners MA Richter Villa Ltd. and Vigran Bros. Villa Ltd.
Thomas Scheve, 513.946.3049, for Hamilton County Auditor Dusty Rhodes.
These summaries are prepared by the Office of Public Information solely to help news reporters determine if they want to cover the arguments. The summaries are not part of the case record and are not considered by the Court at any point 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.