discussing meaning of “double dipping” as applied to public employees
How later courts described this case
- discussing meaning of “double dipping” as applied to public employees
Written by the judges who cited it.
The opinion
[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as
Sherman v. Ohio Pub. Emps. Retirement Sys., Slip Opinion No. 2020-Ohio-4960.]
NOTICE
This slip opinion is subject to formal revision before it is published in an
advance sheet of the Ohio Official Reports. Readers are requested to
promptly notify the Reporter of Decisions, Supreme Court of Ohio, 65
South Front Street, Columbus, Ohio 43215, of any typographical or other
formal errors in the opinion, in order that corrections may be made before
the opinion is published.
SLIP OPINION NO. 2020-OHIO-4960
SHERMAN, APPELLEE, v. OHIO PUBLIC EMPLOYEES RETIREMENT SYSTEM,
APPELLANT.
[Until this opinion appears in the Ohio Official Reports advance sheets, it
may be cited as Sherman v. Ohio Pub. Emps. Retirement Sys., Slip Opinion
No. 2020-Ohio-4960.]
Ohio Public Employees Retirement System (“OPERS”)—R.C. 145.38(B)(1)—R.C.
145.384—Reduction of health-insurance subsidy for a retiree reemployed
by a state employer—Equal-protection claim—Civ.R. 12(B)(6) motion to
dismiss—Retiree alleged sufficient facts to negate OPERS’s argument that
subsidy reductions for all OPERS-covered reemployed retirees are
rational—OPERS’s claim that it would incur additional costs in identifying
retirees reemployed by an employer other than a state is not a sufficient
rational basis requiring dismissal of retiree’s complaint.
(No. 2019-0373—Submitted February 26, 2020—Decided October 22, 2020.)
APPEAL from the Court of Appeals for Franklin County,
No. 18AP-181, 2019-Ohio-278.
SUPREME COURT OF OHIO
________________
O’CONNOR, C.J.
{¶ 1} This case involves a subsidy to offset part of the cost of health
insurance that appellant, Ohio Public Employees Retirement System (“OPERS”),
provides to retirees receiving an OPERS pension. OPERS reduces the subsidy of
any retiree who is reemployed by a public employer that is a member of the OPERS
network. Appellee, Jeffrey P. Sherman, filed this class-action suit against OPERS
arguing that such subsidy reductions violate the Equal Protection Clause of the
Ohio Constitution, Article I, Section 2. The trial court dismissed the action as
permitted by Civ.R. 12(B)(6), holding that Sherman failed to state a claim upon
which relief could be granted. The Tenth District Court of Appeals reversed and
remanded for further proceedings. We hold that the court of appeals correctly
determined that Sherman has stated a claim under Civ.R. 12(B)(6). We therefore
affirm.
I. Relevant Background
{¶ 2} OPERS is the largest of Ohio’s five public retirement systems.1
Employees of over 3,500 public employers across the state are members of OPERS.
R.C. 145.03. See https://www.opers.org/members/employer-search/ (accessed
Aug. 12, 2020) [https://perma.cc/CVL2-TQWF]. Employees participating in
OPERS are eligible for retirement, disability, and survivor benefits. OPERS also
offers its retirees health insurance, R.C. 145.58(B), including medical, prescription-
drug, vision, and dental plans.
{¶ 3} Sherman alleged in his complaint that he was previously employed by
the Ohio Department of Taxation, a public employer within the OPERS network.
1. Ohio’s other public retirement systems are the Highway Patrol Retirement System, the Police and
Fire Pension Fund, the School Employees Retirement System, and the State Teachers Retirement
System. See https://ohio.gov/wps/portal/gov/site/government/resources/public-retirement-systems
(accessed Aug. 12, 2020) [https://perma.cc/3P5Z-SJVU].
2
January Term, 2020
He retired from his position with Department of Taxation in May 2009 and began
receiving his pension from OPERS along with a subsidy to offset the cost of his
coverage under an OPERS-provided health-insurance plan. In May 2010, the
Regional Income Tax Agency (“RITA”), which is also a public employer within
the OPERS network, hired Sherman for a part-time position.
{¶ 4} Sherman continues to receive his pension while he is reemployed,
subject to certain requirements not relevant here. R.C. 145.38(B). But he does not
accrue new or additional pension benefits while employed by RITA; although he
and RITA contribute to OPERS, those funds will be returned to Sherman as either
a lump sum or in an annuity. See R.C. 145.38(B)(1) and (D)(1) (permitting an
OPERS retiree to be reemployed with a public employer and requiring both the
retiree and the employer to contribute to OPERS but stating that the retiree is not a
member of OPERS upon reemployment); R.C. 145.384(B)(2) (describing the
refund of a reemployed retiree’s contributions).
{¶ 5} In July 2017, Sherman filed suit against OPERS, asserting a claim
under the Equal Protection Clause of the Ohio Constitution. Sherman asserts that
in reducing the subsidy for the health-insurance premium, OPERS treats retirees
like him, who are reemployed in an OPERS-covered position, differently from
similarly situated employees.
{¶ 6} Specifically, Sherman alleges that he is similarly situated to OPERS
retirees who are reemployed by an employer that is not part of the OPERS network.
When a retiree is reemployed in an OPERS-covered position, the subsidy is
reduced, but when a retiree is reemployed in a non-OPERS-covered position, the
subsidy is not reduced. Sherman alleges that there is no rational basis for treating
him differently from similarly situated employees and that OPERS’s reduction of
his subsidy violates his rights under Ohio’s Equal Protection Clause.
{¶ 7} Sherman alleges that OPERS withheld $74 per month from his health-
insurance subsidy each month between January 1, 2016, and the filing of this suit
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SUPREME COURT OF OHIO
in July 2017. If he had received the full subsidy to which he was entitled in 2016,
he would have had to pay only $32.54 per month for his health insurance. But
OPERS’s withholding of $74 from his monthly subsidy caused him to pay $106.54
per month instead. Similarly, if he had received the full subsidy in 2017, he would
have had to pay $118 per month for his premiums, but OPERS’s withholding of
$74 from his monthly subsidy caused him to pay $192 per month instead.
{¶ 8} Sherman is also pursuing this claim on behalf of the following class:
“All OPERS retirees for whom OPERS withheld a portion of their health-insurance
premium monies from January 1, 2016, to the present due to their re-employment
in an OPERS-covered position.” He seeks an order declaring that OPERS’s
reduction of the subsidy based solely on whether a retiree is reemployed in an
OPERS-covered position is unconstitutional. He also seeks restitution in the form
of an order that OPERS disgorge all monthly premium subsidies that have been
unlawfully withheld from him and the rest of the class.
{¶ 9} The trial court dismissed Sherman’s complaint for failure to state a
claim upon which relief can be granted under Civ.R. 12(B)(6). It held that Sherman
had failed to allege that a group of OPERS retirees existed who were similarly
situated to him but were treated differently. It found that the group identified by
Sherman as receiving different treatment—retirees reemployed in non-OPERS-
covered positions—is not, in fact, similarly situated to him, because Sherman and
the class are “double dipping,” that is, they are receiving both a public pension and
a taxpayer-supported salary, but retirees reemployed in non-OPERS-covered
positions are not receiving both benefits. The trial court also held that Sherman had
failed to allege that there was no rational basis for OPERS’s reduction of the
subsidy. It accepted OPERS’s arguments that reducing the subsidy for retirees who
are reemployed with employers in the OPERS network is intended “to discourage
double-dipping to protect the public fisc” and that the state has a legitimate interest
in pursuing such a cost-saving measure.
4
January Term, 2020
{¶ 10} The Tenth District Court of Appeals reversed. It held that Sherman
and the class are similarly situated to OPERS retirees who are reemployed in non-
OPERS positions. 2019-Ohio-278, 129 N.E.3d 974, ¶ 22. It first noted that Ohio
does not have a policy against double dipping nor does it prohibit retirees from
receiving their pension while reemployed in public positions, id. at ¶ 20; instead,
retirees receiving an OPERS pension are expressly allowed to be reemployed by a
public employer, R.C. 145.38(B)(1). It then held that OPERS retirees who are
reemployed in OPERS-covered positions are similarly situated with regard to
retirees who are reemployed in non-OPERS-covered positions in all relevant
respects because both groups receive only a single stream of benefits from OPERS:
a pension. Id. at ¶ 21. The fact that retirees reemployed in an OPERS-covered
position also receive a taxpayer-supported salary and benefits is not a relevant
distinction because the salary and benefits are paid by the new employer, not
OPERS, and would be paid by the new employer regardless of whether the
employee is an OPERS retiree. Id. In other words, the salary and benefits would
still be paid if the position had been filled by a person who has not yet retired.
{¶ 11} The Tenth District also rejected the trial court’s holding that
Sherman failed to allege that there was no rational basis for distinguishing between
OPERS retirees reemployed in an OPERS-covered position and those in a non-
OPERS-covered position. It held that although preserving public money can be a
legitimate purpose, “ ‘when preserving state money is accomplished by treating an
individual in an arbitrary manner, it is not a rational reason to classify.’ ” 2019-
Ohio-278, 129 N.E.3d 974, at ¶ 27, quoting Adamsky v. Buckeye Local School Dist.,
73 Ohio St.3d 360, 362, 653 N.E.2d 212 (1995). Here, the state “did not provide
enough information” in its motion to dismiss to explain how reducing the health-
insurance subsidy it provides to retirees reemployed in an OPERS-covered position
is rationally related to its goal of preserving public money. Id. at ¶ 29. Without
5
SUPREME COURT OF OHIO
that, Sherman could not attempt to meet his obligation of negating every
conceivable basis for OPERS’s action. Id. at ¶ 30.
{¶ 12} OPERS appealed to this court, raising one proposition of law:
“Ohio’s Equal Protection Clause does not demand that OPERS treat retirees
employed in OPERS-covered positions the same as all other reemployed retirees.”
We granted the state’s request for discretionary review. 155 Ohio St.3d 1467,
2019-Ohio-2100, 122 N.E.3d 1302.
II. Analysis
{¶ 13} We review de novo a decision granting a motion to dismiss under
Civ.R. 12(B)(6). Perrysburg Twp. v. Rossford, 103 Ohio St.3d 79, 2004-Ohio-
4362, 814 N.E.2d 44, ¶ 5.
A. Background Law
{¶ 14} Ohio’s Equal Protection Clause is contained in Article 1, Section 2
of the Ohio Constitution. It provides:
All political power is inherent in the people. Government is
instituted for their equal protection and benefit, and they have the
right to alter, reform, or abolish the same, whenever they may deem
it necessary; and no special privileges or immunities shall ever be
granted, that may not be altered, revoked, or repealed by the General
Assembly.
As a general matter, this provision requires that the government treat all similarly
situated persons alike. See McCrone v. Bank One Corp., 107 Ohio St.3d 272, 2005-
Ohio-6505, 839 N.E.2d 1, ¶ 6. But not all claims brought under this clause are
judged in the same way. When a claim involves a fundamental right or a suspect
class, the government’s action is subject to a higher level of scrutiny. See Adamsky,
73 Ohio St.3d at 362, 653 N.E.2d 212. But when no such right or class is involved,
6
January Term, 2020
the government’s action is subject to rational-basis review; it will be upheld “if it
is rationally related to a legitimate government interest,” State v. Williams, 126
Ohio St.3d 65, 2010-Ohio-2453, 930 N.E.2d 770, ¶ 39, citing Eppley v. Tri-Valley
Local School Dist. Bd. of Edn., 122 Ohio St.3d 56, 2009-Ohio-1970, 908 N.E.2d
401, ¶ 15. The parties agree that this case does not implicate a right deemed to be
fundamental or involve a suspect classification, and that the rational-basis test
therefore applies in this case.
{¶ 15} The basic framework for the rational-basis test is well established:
“ ‘[A] State does not violate the Equal Protection Clause merely
because the classifications made by its laws are imperfect. If the
classification has some “reasonable basis,” it does not offend the
Constitution simply because the classification “is not made with
mathematical nicety or because in practice it results in some
inequality.” Lindsley v. Natural Carbonic Gas Co. [1911], 220 U.S.
61, 78 [31 S.Ct. 337, 55 L.Ed. 369].’ ” State ex rel. Nyitray v. Indus.
Comm. (1983), 2 Ohio St.3d 173, 179, 2 OBR 715, 443 N.E.2d 962
(Krupansky, J., dissenting), quoting Dandridge v. Williams (1970),
397 U.S. 471, 485, 90 S.Ct. 1153, 25 L.Ed.2d 491.
The rational-basis test involves a two-step analysis. We
must first identify a valid state interest. Second, we must determine
whether the method or means by which the state has chosen to
advance that interest is rational. A statute will not be held to violate
the Equal Protection Clause, and this court will not invalidate a plan
of classification adopted by the General Assembly, unless it is
clearly arbitrary and unreasonable. Thus, provided that the statute
is rationally related to a legitimate government interest, it will be
upheld.
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SUPREME COURT OF OHIO
(Citations omitted and brackets sic.) McCrone at ¶ 8-9.
{¶ 16} Importantly, however, “[u]nder the rational-basis standard, a state
has no obligation to produce evidence to sustain the rationality of a * * *
classification.” Columbia Gas Transm. Corp. v. Levin, 117 Ohio St.3d 122, 2008-
Ohio-511, 882 N.E.2d 400, ¶ 91. A state action may be based on “ ‘rational
speculation unsupported by evidence or empirical data.’ ” State v. Thompson, 95
Ohio St.3d 264, 2002-Ohio-2124, 767 N.E.2d 251, ¶ 27, quoting Fed.
Communications Comm. v. Beach Communications, Inc., 508 U.S. 307, 315, 113
S.Ct. 2096, 124 L.Ed.2d 211 (1993). The plaintiff “bears the burden to negate every
conceivable basis that might support the [action].” Columbia Gas Transm. at ¶ 20.
{¶ 17} The present appeal arises from an order granting a motion to dismiss
for failure to state a claim under Civ.R. 12(B)(6). In reviewing whether Sherman
has stated a claim under Ohio’s Equal Protection Clause, we must accept as true all
factual allegations in the complaint. Ohio Bur. of Workers’ Comp. v. McKinley,
130 Ohio St.3d 156, 2011-Ohio-4432, 956 N.E.2d 814, ¶ 12. “[T]hose allegations
and any reasonable inferences drawn from them must be construed in the
nonmoving party’s favor.” Id. To grant the motion, “it must appear beyond doubt
that the plaintiff can prove no set of facts in support of the claim that would entitle
the plaintiff to the relief sought.” Id.
{¶ 18} When an equal-protection claim analyzed under the rational-basis
test is reviewed on a motion to dismiss for failure to state a claim, it is important to
remember that the motion-to-dismiss standard “is procedural, and simply allows
the plaintiff to progress beyond the pleadings and obtain discovery, while the
rational basis standard is the substantive burden that the plaintiff will ultimately
have to meet to prevail on an equal protection claim.” Wroblewski v. Washburn,
8
January Term, 2020
965 F.2d 452, 459-460 (7th Cir.1992).2 We agree with the Wroblewski court that
“[w]hile we * * * must take as true all of the complaint’s allegations and reasonable
inferences that follow, we apply the resulting ‘facts’ in light of the deferential
rational basis standard.” Id. at 460; see also Giarratano v. Johnson, 521 F.3d 298,
303-304 (4th Cir.2008) (applying Wroblewski).
B. Whether Sherman Stated a Claim
{¶ 19} As noted above, the appellate court held that Sherman stated a claim
under Ohio’s Equal Protection Clause. Our review is therefore focused on the same
question: did Sherman allege facts that, if accepted as true, would entitle him to
relief?
1. OPERS’s Arguments
{¶ 20} OPERS argues that the state has a valid interest in responsibly
managing OPERS funds and it rationally furthers that interest by reducing the
subsidy it provides to retirees reemployed in OPERS-covered positions. It first
asserts that the state may lawfully distinguish retirees who are reemployed from
those who are not, reducing the subsidy only for the former, because it can
rationally assume that reemployed retirees do not need the subsidy as much as those
who are not reemployed. It then argues that distinguishing retirees reemployed in
an OPERS-covered position from those reemployed elsewhere is rational for two
reasons.
{¶ 21} First, OPERS asserts that if the subsidies of all reemployed retirees,
rather than those for retirees reemployed in OPERS-covered positions, are reduced,
OPERS would incur additional costs and administrative burdens in identifying the
retirees reemployed in non-OPERS-covered positions. Specifically, OPERS claims
2. Although Wroblewski refers to the Equal Protection Clause of the Fourteenth Amendment to the
United States Constitution, the parties take the position that the federal Equal Protection Clause is
the functional equivalent of the Equal Protection Clause in the Ohio Constitution in the context of
this case.
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SUPREME COURT OF OHIO
that it has two ways of easily finding out when a retiree is reemployed in an OPERS-
covered position: an employer participating in OPERS must inform OPERS when
it employs a retiree receiving an OPERS pension or OPERS will find out that a
retiree is reemployed in an OPERS-covered position in managing the retiree’s
contributions under R.C. 145.38(B)(1) and 145.384. But OPERS claims it does not
have an easy way to identify retirees reemployed in other positions. Neither private
employers nor public employers in other pension funds are required to notify
OPERS when reemploying a retiree, and OPERS will not find out that the retiree is
reemployed in the ordinary course of business, because it will not manage any
contributions from those retirees. As a result, OPERS argues, identifying retirees
reemployed in non-OPERS-covered positions “would require developing an
entirely new system, if it could be done at all.” Furthermore, undertaking such
efforts would impose additional costs on OPERS that “might easily outrun
whatever money the system would save.”3
{¶ 22} Second, OPERS contends that retirees reemployed in OPERS-
covered positions impose additional costs and burdens on OPERS that other
reemployed retirees do not. OPERS incurs costs associated with providing
pensions. But retirees who are reemployed in an OPERS-covered position earn an
additional benefit from OPERS funded by new contributions by the retiree and the
retiree’s new employer. According to OPERS, it must “separately track and
account for reemployed retirees” and “[d]oing so necessarily imposes additional
administrative burdens and generates additional costs for OPERS.” Because of
these costs and burdens, OPERS concludes, withholding part of these retirees’
3. With respect to public employers that are not in the OPERS network, OPERS acknowledges that
their retirement systems are required to notify OPERS when those employers employ an OPERS
retiree. But it claims that this requirement matters little because no penalty is imposed on those
retirement systems if they fail to comply, even though employers in the OPERS network are
penalized if they fail to report to OPERS that they have employed an OPERS retiree.
10
January Term, 2020
health-insurance subsidies is a rational way for OPERS to preserve the long-term
health of its funds.
2. Sherman’s Arguments
{¶ 23} Sherman responds by arguing that OPERS arbitrarily assumes that
reemployed retirees have less of a need for the subsidy without taking into account
the retiree’s actual income. Sherman also argues that OPERS could easily identify
retirees who become reemployed either in the private sector or with a public
employer that is not in the OPERS network. The public-employee pension plans
other than OPERS are already required to notify OPERS when they employ an
OPERS retiree. OPERS also already requests other information from its retirees
and could easily ask its retirees whether they are reemployed.
{¶ 24} Sherman reiterates the Tenth District’s holding that retirees
reemployed in OPERS-covered positions do not cause OPERS to incur more costs
than it would otherwise. An employer would still need to fill an open position.
And OPERS would incur costs associated with tracking and providing that
employee’s pension benefits. Sherman argues that OPERS has not provided a
rational basis for assuming that the administrative cost of overseeing a reemployed
retiree’s contribution is greater than the cost of overseeing the pension benefits of
a nonretired employee who fills the same position.
3. Sherman Has Stated a Claim for Relief
{¶ 25} The dispute before us is whether Sherman’s allegations are sufficient
to state a claim in light of the justifications provided by OPERS for its reduction of
Sherman’s subsidy. In our view, they are. We therefore agree with Sherman that
his complaint states a claim under the Equal Protection Clause of the Ohio
Constitution.
{¶ 26} First, we hold that Sherman has alleged sufficient facts to negate
OPERS’s argument that its subsidy reductions for all OPERS-covered reemployed
retirees are rational because OPERS would incur additional costs if it had to identify
11
SUPREME COURT OF OHIO
all reemployed retirees. Sherman alleged that “OPERS requires OPERS retirees
who are reemployed in an OPERS-covered position to complete and return” a form
providing OPERS with notice of the retiree’s reemployment. He then alleges that
“[i]t is administratively feasible for OPERS to require individuals re-employed in
a non OPERS-covered position to complete a similar form.” In particular, Sherman
points out that “OPERS * * * regularly corresponds with and requests information
from OPERS retirees. These communications from OPERS include everything
from asking retirees to select insurance coverage to asking them for their Medicare
ID number. OPERS could also ask retirees if they are re-employed in a non
OPERS-covered position.” Consequently, “OPERS’[s] failure to request current
employment information from all OPERS retirees is not a rational basis for its
disparate treatment of re-employed OPERS retirees.” (Emphasis sic.) Assuming
that these allegations are true, they are sufficient to negate OPERS’s proffered
justification that if it was even possible to identify retirees reemployed in non-
OPERS-covered positions, an entirely new system would need to be developed.
{¶ 27} Furthermore, although OPERS argues that identifying retirees
reemployed in non-OPERS-covered positions would impose additional costs on it,
it does not claim that those costs would exceed the savings OPERS realizes by
reducing the subsidies of those retirees. It argues only that those costs “might”
exceed the savings. Accepting Sherman’s allegations as true, we conclude they are
sufficient to survive a motion to dismiss for failure to state a claim based on this
argument by OPERS.
{¶ 28} Second, we reject OPERS’s argument that Sherman’s complaint
should be dismissed because OPERS incurs costs when its retirees are reemployed
in OPERS-covered positions that it does not incur when its retirees are reemployed
in non-OPERS-covered positions. On this point, it must be remembered that the
key question at this stage is whether, in light of the justification offered by OPERS,
it “appear[s] beyond doubt that [Sherman] can prove no set of facts in support of
12
January Term, 2020
the claim that would entitle [him] to the relief sought,” McKinley, 130 Ohio St.3d
156, 2011-Ohio-4432, 956 N.E.2d 814, at ¶ 12. OPERS’s “additional costs”
justification fails to require dismissal of Sherman’s complaint because, even if true,
it does not necessarily follow that Sherman can prove no set of facts that would
entitle him to relief.
{¶ 29} As the Tenth District pointed out, if an employer in the OPERS
network does not hire an OPERS retiree, the position will still need to be filled, and
OPERS will incur costs associated with administering that employee’s pension.
We do not know whether the costs OPERS incurs administering an employee’s
pension equals or exceeds the costs OPERS incurs administering a retiree’s
contributions. No evidence on this matter is before us at this stage of the litigation.
{¶ 30} Notably, OPERS does not compare the costs associated with
administering a retiree’s contributions and the costs associated with administering
an employee’s pension. Nor does it assert that such a comparison is irrelevant. And
given that the information needed to calculate those costs and assess their relevance
is entirely within OPERS’s possession, we decline to make any assumptions on the
matter ourselves.4 As a result, we cannot say that it appears beyond doubt that
Sherman can prove no set of facts to support his claim. McKinley at ¶ 12. Instead,
accepting Sherman’s allegations as true and construing all reasonable inferences in
his favor, id., his complaint is sufficient to state a claim upon which relief can be
granted. We therefore decline to hold that OPERS’s claim of additional costs is a
sufficient rational basis requiring dismissal of Sherman’s complaint.
{¶ 31} As a result, we reject OPERS’s argument that Sherman has failed to
state a claim under the Equal Protection Clause of the Ohio Constitution.
4. We express no opinion on what discovery will show in this matter, nor do we suggest that any
particular conclusion relating to the merits will be required based on the results of discovery. We
leave it to the trial court to address these matters in the first instance.
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SUPREME COURT OF OHIO
III. Conclusion
{¶ 32} For these reasons, we affirm the judgment of the Tenth District Court
of Appeals.
Judgment affirmed.
FRENCH, DONNELLY, and STEWART, JJ., concur.
FISCHER, J., concurs in judgment only, with an opinion.
DEWINE, J., dissents, with an opinion joined by KENNEDY, J.
_________________
FISCHER, J., concurring in judgment only.
{¶ 33} While I agree with the conclusion reached by the majority, I
respectfully concur in judgment only, because I cannot unreservedly approve of the
application of the federal rational-basis analysis to an equal-protection claim made
under the Ohio Constitution, Article I, Section 2.
{¶ 34} I agree with the portion of the dissenting opinion noting that the
language of the equal-protection provision of the Ohio Constitution differs
significantly from the language of the Equal Protection Clause of the Fourteenth
Amendment to the United States Constitution and that it may be appropriate in a
future case for this court to reconsider its precedent treating the two provisions as
functional equivalents. I wholeheartedly agree that when we are presented with a
case questioning this interpretation of the Ohio equal-protection provision, and that
question is fully briefed by the adverse parties, this court should revisit that
precedent.
{¶ 35} The Ohio Equal Protection Clause provides, “All political power is
inherent in the people. Government is instituted for their equal protection and
benefit, and they have the right to alter, reform, or abolish the same * * *.” Article
I, Section 2, Ohio Constitution.
{¶ 36} The federal Equal Protection Clause, by way of contrast, provides
that “[n]o State shall * * * deny to any person within its jurisdiction the equal
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January Term, 2020
protection of the laws.” Fourteenth Amendment to the U.S. Constitution, Section
1.
{¶ 37} I have recently set forth my position regarding the need to reexamine
the Ohio equal-protection provision. See Stolz v. J & B Steel Erectors, Inc., 155
Ohio St.3d 567, 2018-Ohio-5088, 122 N.E.3d 1228, ¶ 28-44 (Fischer, J.,
concurring). This case—in which the parties focus on the Ohio equal-protection
provision, yet ask this court to apply an analysis based on only its federal
counterpart—emphasizes the points I raised in Stolz. Among those points is my
concern that we avoid any upward delegation of our authority and duty to interpret
the Ohio Constitution, placing us in a position in which we might blindly accept
any further developments in federal law. Id. at ¶ 42 (Fischer, J., concurring).
{¶ 38} Given my continuing concern that we avoid any pitfalls that may
arise from perhaps erroneously treating the two provisions as functionally
equivalent, I respectfully concur in judgment only.
_________________
DEWINE, J., dissenting.
{¶ 39} The Ohio Public Employee Pension System (“OPERS”) provides a
subsidy to retirees to help pay for their health insurance. But it reduces the amount
of the subsidy for employees who “double dip”—that is, workers who are rehired
in the OPERS system after retirement, thus drawing both a state salary and a state
pension. No doubt, many people would find the policy eminently reasonable. Yet
the majority concludes that the plaintiff’s challenge to the practice states a claim
for a violation of the Ohio Constitution. I disagree.
Both Parties Ask Us to Apply Rational-Basis Review
{¶ 40} Jeffrey Sherman’s lawsuit alleges that OPERS’s policy violates the
Equal Protection and Benefit Clause of the Ohio Constitution, Article I, Section 2.
The language of this provision differs in significant respects from the language of
the Equal Protection Clause of the Fourteenth Amendment to the United States
15
SUPREME COURT OF OHIO
Constitution, and the two clauses have unique histories.5 See generally Stolz v. J &
B Steel Erectors, Inc., 155 Ohio St.3d 567, 2018-Ohio-5088, 122 N.E.3d 1228,
¶ 28-44 (Fischer, J., concurring). Nonetheless, in line with our precedent, both
parties would have us apply the rational-basis standard developed by federal courts
for federal constitutional claims in this case. The majority, too, presumes that
rational-basis review applies. Because the parties have not advanced any
arguments for a different standard of review, and the majority premises its holding
on rational-basis review, I will analyze this case under that standard.
Judicial Review of Government Benefit-Allocation Decisions
{¶ 41} Both the federal and state equal-protection provisions have long
been understood as primarily protecting against government classifications that
target individuals based on suspect characteristics or the exercise of fundamental
rights. Valvoline Instant Oil Change, Inc. v. Tracy, 78 Ohio St.3d 53, 55, 676
N.E.2d 114 (1997). Thus, under our modern jurisprudence, classifications in those
categories will be closely examined by the judiciary. Id.
5. Enacted as part of the 1851 Constitution, the Ohio provision provides:
All political power is inherent in the people. Government is instituted for their
equal protection and benefit, and they have the right to alter, reform, or abolish
the same, whenever they may deem it necessary; and no special privileges or
immunities shall ever be granted, that may not be altered, revoked, or repealed by
the General Assembly.
Despite the different language and history of the federal guarantee, since 1895, this court has
recognized that this provision provides an individual right to equal protection under the law. See
State ex rel. Schwartz v. Ferris, 53 Ohio St. 314, 336-337, 41 N.E. 579 (1895). And for decades,
this court has treated the two provisions as functional equivalents. See, e.g., Kinney v. Kaiser
Aluminum & Chem. Corp., 41 Ohio St.2d 120, 123, 322 N.E.2d 880 (1975), citing Porter v. Oberlin,
1 Ohio St.2d 143, 205 N.E.2d 363 (1965); Beatty v. Akron City Hosp., 67 Ohio St.2d 483, 491, 424
N.E.2d 586 (1981); Am. Assn. of Univ. Professors, Cent. State Univ. Chapter v. Cent. State Univ.,
87 Ohio St.3d 55, 60, 717 N.E.2d 286 (1999). At some point in the future, it may be appropriate for
this court to consider revisiting its precedent and decoupling our interpretation of the Ohio provision
from the United States Supreme Court’s interpretation of the federal guarantee. But without
adversarial briefing on the topic, this case makes for a poor vehicle in which to take up the issue.
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{¶ 42} In contrast, “judicial restraint” is the modus operandi when it comes
to classifications stemming from social and economic regulations. Fed.
Communications Comm. v. Beach Communications, Inc., 508 U.S. 307, 313, 113
S.Ct. 2096, 124 L.Ed.2d 211 (1993). The government has “wide latitude” in
enacting such laws, Cleburne v. Cleburne Living Ctr., 473 U.S. 432, 440, 105 S.Ct.
3249, 87 L.Ed.2d 313 (1985), and a “strong presumption of validity” attaches to
laws in this area, Beach Communications at 314. A court will uphold a
classification if there is “ ‘any reasonably conceivable state of facts that could
provide a rational basis for the classification.’ ” Am. Assn. of Univ. Professors,
Cent. State. Univ. Chapter v. Cent. State Univ., 87 Ohio St.3d 55, 58, 717 N.E.2d
286 (1999), quoting Beach Communications at 313. Only when a classification is
found to be wholly arbitrary will it violate rational-basis review. Pickaway Cty.
Skilled Gaming, L.L.C. v. Cordray, 127 Ohio St.3d 104, 2010-Ohio-4908, 936
N.E.2d 944, ¶ 41, citing New Orleans v. Dukes, 427 U.S. 297, 304, 96 S.Ct. 2513,
49 L.Ed.2d 511 (1976). The guiding principle is that “even improvident decisions
will eventually be rectified by the democratic process.” Vance v. Bradley, 440 U.S.
93, 97, 99 S.Ct. 939, 59 L.Ed.2d 171 (1979).
{¶ 43} The limitations on judicial review “have added force” when it comes
to classifications that draw lines with regard to who receives government benefits.
Beach Communications at 315. The process of defining who will receive a
government benefit “ ‘inevitably requires that some persons who have an almost
equally strong claim to favored treatment be placed on different sides of the
line.’ ” Id., quoting Mathews v. Diaz, 426 U.S. 67, 83-84, 96 S.Ct. 1883, 48 L.Ed.2d
478 (1976).
{¶ 44} Thus, when the government allocates benefits, there will almost
always be a strong argument that some group of individuals got too little and
another got too much. See Beach Communications at 315-316. Citizens of some
states benefit from far higher federal-government spending per capita than others.
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The Council of State Governments, Federal Spending in the States (May 2017),
http://knowledgecenter.csg.org/kc/system/files/2017_CFFR_Report_3.pdf
(accessed Sept. 17, 2020) [https://perma.cc/KDU8-ZQRK]. Farmers who plant
corn receive higher subsidies than those who grow wheat. Environmental Working
Group, Farm Subsidy Database (2018), https://farm.ewg.org/
region.php?fips=00000&progcode=total&yr=2018 (accessed Sept. 20, 2020)
[https://perma.cc/2S7K-FMCL]. Homeowners are subsidized more than renters.
See generally Schwartz, Housing Policy in the United States (2d Ed.2010). The
same goes for tax policy. Like your cup of coffee with sugar (and no milk)?—you
are subject to the Ohio sales tax. See Ohio Department of Taxation, ST 2004-01–
Food Definition (Revised May 2015), https://tax.ohio.gov/static/sales_and_use/
information_releases/st200401.pdf, 3-4 (accessed Sept. 17, 2020)
[https://perma.cc/79NW-MZ38]. But order it black—pay no tax. Id.
{¶ 45} Just because someone can make a compelling case that a particular
government policy can lead to outcomes that seem unfair doesn’t mean that there
is an equal-protection problem. When allocating limited resources, the government
has to draw the line somewhere. As long as the classifications are not invidious or
wholly arbitrary, courts will not “second-guess” the government’s policy decisions
when it comes to allocating public funds among potential recipients. Dandridge v.
Williams, 397 U.S. 471, 487, 90 S.Ct. 1153, 25 L.Ed.2d 491 (1970); Arbino v.
Johnson & Johnson, 116 Ohio St.3d 468, 2007-Ohio-6948, 880 N.E.2d 420, ¶ 71.
{¶ 46} The United States Supreme Court has elaborated on this point:
[C]ourts are compelled under rational-basis review to accept a
legislature’s generalizations even when there is an imperfect fit
between means and ends. A classification does not fail rational-
basis review because it “ ‘is not made with mathematical nicety or
because in practice it results in some inequality.’ ” Dandridge v.
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January Term, 2020
Williams, supra, at 485, quoting Lindsley v. Natural Carbonic Gas
Co., 220 U.S. 61, 78, 31 S.Ct. 337, 340, 55 L.Ed. 369 (1911). “The
problems of government are practical ones and may justify, if they
do not require, rough accommodations—illogical, it may be, and
unscientific.” Metropolis Theatre Co. v. Chicago, 228 U.S. 61, 69-
70, 33 S.Ct. 441, 443, 57 L.Ed. 730 (1913).
Heller v. Doe, 509 U.S. 312, 321, 113 S.Ct. 2637, 125 L.Ed.2d 257 (1993). We
have adopted the Heller court’s standard. See Am. Assn. of Univ. Professors, 87
Ohio St.3d at 58, 717 N.E.2d 286, citing Heller; McCrone v. Bank One Corp., 107
Ohio St.3d 272, 2005-Ohio-6505, 839 N.E.2d 1, ¶ 32, citing Metropolis Theater.
{¶ 47} Thus, to uphold a classification under rational-basis review, all that
is needed is a rationale that seems plausible. Beach Communications, 508 U.S. at
313-314, 113 S.Ct. 2096, 124 L.Ed.2d 211, citing Fritz, 449 U.S. at 179, 101 S.Ct
453, 66 L.Ed.2d 368; State v. Batista, 151 Ohio St.3d 584, 2017-Ohio-8304, 91
N.E.3d 724, ¶ 26. The government doesn’t even need to place any evidence in the
record establishing the rationale for the classification. Heller at 319; Pickaway Cty.
Skilled Gaming, 127 Ohio St.3d 104, 2010-Ohio-4908, 936 N.E.2d 944, at ¶ 20.
And the lawmakers who made the classification don’t have to “ ‘actually articulate
at any time the purpose or rationale supporting its classification.’ ” Heller at 320,
quoting Nordlinger v. Hahn, 505 U.S. 1, 15, 112 S.Ct. 2326, 120 L.Ed.2d 1 (1992).
{¶ 48} Heller’s standard of presumed rationality applies in the context of a
motion to dismiss for failure to state a claim. In re Detroit, 841 F.3d 684, 701 (6th
Cir.2016); see also Gregory v. Ashcroft, 501 U.S. 452, 111 S.Ct. 2395, 115 L.Ed.2d
410 (1991) (applying rational-basis review at the pleading stage); State v. Williams,
88 Ohio St.3d 513, 728 N.E.2d 342 (2000) (same). A court accepts as true a
plaintiff’s factual allegations, but the court must “apply the resulting ‘facts’ in light
of the deferential rational basis standard.” Wroblewski v. Washburn, 965 F.2d 452,
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460 (7th Cir.1992); see also Giarratano v. Johnson, 521 F.3d 298, 303-304 (4th
Cir.2008); In re Detroit at 701-702. Thus, in order “[t]o survive a motion to
dismiss* * *, a plaintiff must allege facts sufficient to overcome the presumption
of rationality that applies to government classifications.” Id.; see also Giarratano
at 304; In re Detroit at 701-702. What this means is that a plaintiff cannot simply
point to a government policy that seems irrational; rather, the complaint must
contain “facts rebutting the likely non-discriminatory reasons” for a particular
policy. In re Detroit at 702.
{¶ 49} Here, the state has set forth an obvious rationale for the reduction of
the subsidy for employees who double dip: to conserve OPERS resources. And
one might conceive of other plausible reasons. As it suggested in the trial court,
the government might simply want to discourage retired employees from double
dipping. After all, it is a practice that rankles many citizens. Toledo Blade, No
more double-dipping (Dec. 22, 2018), https://www.toledoblade.com/
opinion/editorials/2018/12/22/no-more-double-dipping/stories/ (accessed Sept. 20,
2020) [https://perma.cc/8N4L-MERT]. The court of appeals rejected this rationale
on the basis that double dipping is not illegal, but there need not be a law
establishing a state policy for a purported rationale to satisfy rational-basis review.
See Fritz at 179. Nevertheless, because the state advanced the money-saving
rationale in its brief and the majority finds that rationale unsatisfactory, I will focus
on that.
{¶ 50} Sherman doesn’t deny that OPERS has a legitimate government
interest in preserving its funds. But he complains that OPERS has drawn a line in
the wrong place. In his view, it is impermissibly discriminatory to allow some
retired employees who go back to work to receive the full subsidy but not others.
{¶ 51} To succeed on his claim, Sherman must allege facts showing that
there is no “reasonably conceivable state of facts,” Am. Assn. of Univ. Professors,
87 Ohio St.3d at 58, 717 N.E.2d 286, that could provide a rational basis to justify
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January Term, 2020
the distinction that OPERS has made. See, e.g., Giarratano, 521 F.3d at 303-304.
But nothing in Sherman’s complaint supports the assertion that there is no
meaningful difference between retirees who are reemployed in OPERS-covered
positions and those who are not. And from OPERS’s perspective, there is a critical
difference: one group continues to accrue benefits through OPERS, while the other
does not.
{¶ 52} By statute, a public-sector retiree may be reemployed in the OPERS
system. R.C. 145.38(B)(1). When that happens, the retiree must make
contributions to OPERS, but he is not considered a member of OPERS and does
not accrue additional pension benefits. See id.; R.C. 145.38(D)(1). Rather, the
retiree either accrues a different type of benefit—an annuity—and his contributions
fund the annuity, R.C. 145.384(B)(2), or the retiree may elect to receive a lump-
sum payment in the amount of his contributions plus interest, R.C. 145.384(H).
{¶ 53} Thus, while OPERS is required by statute to track and maintain the
contributions of a retiree who is reemployed within the OPERS system, the same
is not true with respect to retirees who get new jobs that are not covered by OPERS.
Sherman’s complaint contains no allegations that this difference, which is readily
apparent from the applicable statutory provisions, does not provide a rational basis
for the classification.
{¶ 54} Rather, Sherman’s complaint addresses only one possible
justification for the classification: the administrative difficulty associated with
figuring out when retirees become reemployed in positions outside of the OPERS
system. This, Sherman contends, was OPERS’s initial explanation for the different
treatment. In response to that explanation, Sherman sets forth various methods
through which OPERS could, in his view, collect reemployment information from
retirees who have not reentered the OPERS system.
{¶ 55} But under rational-basis review, the question is not whether an
alternative method is feasible—it’s whether the existing classification is rational.
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See Armour v. Indianapolis, 566 U.S. 673, 685, 132 S.Ct. 2073, 182 L.Ed.2d 998
(2012). It may well be true that OPERS could find a way to track the employment
status of retirees who have not been rehired in the OPERS system, but it does not
follow that OPERS’s decision to differentiate retirees that have reentered the
OPERS system from those who have not is wholly arbitrary. Remember, under
rational-basis review, the state can permissibly draw lines that distinguish between
people “who have an almost equally strong claim to favored treatment.” Beach
Communications, 508 U.S. at 315, 113 S.Ct. 2096, 124 L.Ed.2d 211, quoting Diaz,
426 U.S. at 83, 96 S.Ct. 1883, 48 L.Ed.2d 478. The Constitution does not require
the government “to draw the perfect line nor even to draw a line superior to some
other line it might have drawn.” Armour at 685. It merely requires a rational line.
Id.
The Majority’s Flawed Application of Rational-Basis Review
{¶ 56} The majority purports to apply rational-basis review, but in reality,
it goes far beyond the limits of such review. It concludes that Sherman has stated
a claim because he might be able to develop evidence showing that OPERS could
save even more money by reducing the subsidy for all employees who go back to
work, not just those who go back to work for an OPERS employer. In essence, the
majority says that dismissal is improper because more fact-finding is needed.
{¶ 57} The majority identifies two areas in which it believes discovery and
judicial fact-finding might help Sherman demonstrate the irrationality of the
classification. First, it suggests that additional fact-finding might show that it
would be administratively feasible for OPERS to identify retirees who take jobs
outside of the OPERS system and it may prove to be the case that OPERS would
save enough by reducing the subsidy to these employees to offset the costs of
identifying and tracking such employees. Second, it says:
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January Term, 2020
[I]f an employer in the OPERS network does not hire an OPERS
retiree, the position will still need to be filled, and OPERS will incur
costs associated with administering that employee’s pension. We
do not know whether the costs OPERS incurs administering an
employee’s pension equals or exceeds the costs OPERS incurs
administering a retiree’s contributions. No evidence on this matter
is before us at this stage of the litigation.
(Emphasis added.) Majority opinion at ¶ 29.
{¶ 58} This goes well beyond the contours of rational-basis review. Under
rational-basis review, a policy “choice is not subject to courtroom fact-finding and
may be based on rational speculation unsupported by evidence or empirical data.”
Beach Communications, 508 U.S. at 315, 113 S.Ct. 2096, 124 L.Ed.2d 211. Yet
the majority demands both empirical data and courtroom fact-finding. It ignores
the plausible explanation set forth by OPERS and instead insists that OPERS prove
that its classification is not just reasonable but is the most economically efficient
choice.
{¶ 59} Rational-basis review is supposed to mean that the judiciary will not
“ ‘sit as a superlegislature to judge the wisdom or desirability of legislative policy
determinations made in areas that neither affect fundamental rights nor proceed
along suspect lines.’ ” Heller, 509 U.S. at 319, 113 S.Ct. 2637, 125 L.Ed.2d 257,
quoting Dukes, 427 U.S. at 303, 96 S.Ct. 2513, 49 L.Ed.2d 511. But that is precisely
the role the majority appropriates for itself today.
{¶ 60} Whatever the majority chooses to call what it is doing—it is not
rational-basis review. Or at least it is not rational-basis review as that term has been
used in our jurisprudence or in the jurisprudence of the United States Supreme
Court.
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{¶ 61} One wonders where we go from here. If the court continues in this
vein, what other classifications might violate the Ohio Constitution? Presumably,
almost any government act that draws a line or divvies up a benefit will be fair
game for a lawsuit. Under the majority’s logic, as long as someone—with the
benefit of hindsight—can convince a judge that there might have been a better place
to draw the line, there has been an equal-protection violation. Principles of “judicial
restraint”—once thought to be the hallmark of rational-basis review—are out the
door. See Beach Communications at 314.
Conclusion
{¶ 62} I don’t believe that Article I, Section 2 of the Ohio Constitution was
intended as a license for judicial nitpicking and Monday-morning quarterbacking
of decisions by policymakers allocating government benefits, at least when those
decisions do not involve fundamental rights or suspect classifications. Nor do I
believe that what the majority applies in this case is anything close to rational-basis
review as that term has been understood in our jurisprudence. So I dissent.
KENNEDY, J., concurs in the foregoing opinion.
_________________
Dworken & Bernstein Co., L.P.A., Nicole T. Fiorelli, Patrick J. Perotti, and
Frank A. Bartela, for appellee.
Dave Yost, Attorney General, Benjamin M. Flowers, Solicitor General,
Michael J. Hendershot, Chief Deputy Solicitor General, and Samuel C. Peterson,
Deputy Solicitor General, for appellant.
_________________
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