The opinion
[Cite as Buckeye Inst. v. Kilgore, 2021-Ohio-4196.]
IN THE COURT OF APPEALS OF OHIO
TENTH APPELLATE DISTRICT
The Buckeye Institute et al., :
Plaintiffs-Appellants, : No. 21AP-193
(C.P.C. No. 20CV-4301)
v. :
(ACCELERATED CALENDAR)
Megan Kilgore et al., :
Defendants-Appellees. :
DECISION
Rendered on November 30, 2021
On brief: Wegman Hessler and Jay R. Carson, and Robert
Alt, for appellants The Buckeye Institute, Greg R. Lawson, Rea
S. Hederman, and Joe Nichols. Argued: Jay R. Carson.
On brief: Ice Miller LLP and Diane M. Menache and Daniel
M. Anderson, for appellee Megan Kilgore, Columbus City
Auditor, and Allison D. Daniel and Julie M. Pfieffer, for
appellee Attorney General, Dave Yost.
Argued: Diane M. Menache.
APPEAL from the Franklin County Court of Common Pleas
SADLER, J.
{¶ 1} Plaintiffs-appellants, The Buckeye Institute, Greg R. Lawson, Rea S.
Hederman, and Joe Nichols, appeal from a judgment of the Franklin County Court of
Common Pleas dismissing appellants' complaint for declaratory and injunctive relief
concerning Section 29 of Ohio House Bill 197 ("H.B. 197"), an emergency, temporary tax
measure enacted by the 133rd Ohio General Assembly in response to the COVID-19
pandemic. Because the General Assembly acted within its authority in enacting Section 29
of H.B. 197 and Section 29 is not "clearly incompatible" with due process clause tax
No. 21AP-193 2
limitations, the trial court did not err in dismissing appellants' action seeking a declaration
that Section 29 of H.B. 197 is unconstitutional and void. We affirm the judgment of the
Franklin County Court of Common Pleas.
I. FACTS AND PROCEDURAL HISTORY
{¶ 2} On March 9, 2020, in response to the public health threat posed to Ohio
residents by the COVID-19 virus, Ohio Governor Mike DeWine declared a state of
emergency and authorized the Ohio Department of Health to issue "guidelines for private
businesses regarding appropriate work and travel restrictions, if necessary[.]" (Compl. at
¶ 32, citing March 9, 2020 Executive Order 2020-01D at 3.) A little over a week later, the
Director of Health issued an order that required, subject to certain exceptions, "all
individuals currently living within the State of Ohio * * * to stay at home or at their place of
residence[.]" (Compl. at ¶ 33, citing March 22, 2020 ODH Stay at Home Order at ¶ 1.) The
Stay at Home Order allowed nonessential businesses to continue operating to the extent
that the continued operation consisted "exclusively of employees or contractors performing
activities at their own residences (i.e., working from home)." (Compl. at ¶ 34, citing Stay at
Home Order at ¶ 2.)
{¶ 3} On March 27, 2020, the governor signed into law H.B. 197, an act enacted by
the General Assembly aimed at addressing various aspects of the public health crisis.
Relevant to this appeal, Section 29 of H.B. 197 provided:
[D]uring the period of the emergency declared by Executive
Order 2020-01D, issued on March 9, 2020, and for thirty days
after the conclusion of that period, any day on which an
employee performs personal services at a location, including
the employee's home, to which the employee is required to
report for employment duties because of the declaration shall
be deemed to be a day performing personal services at the
employee's principal place of work.
(Compl. at ¶ 41, citing Section 29 of H.B. 197.)
{¶ 4} On July 2, 2020, appellants filed a complaint against appellees Columbus
City Auditor Megan Kilgore and Ohio Attorney General Dave Yost challenging the validity
of Section 29 of H.B. 197. Appellants explained that the Buckeye Institute's office is located
in downtown Columbus, but the "bulk of work performed * * * is not tied to any physical
location and can be conducted remotely[,]" and that it "uses a cloud-based computing
No. 21AP-193 3
system for all of its email and document sharing needs." (Compl. at ¶ 13.) To comply with
the Stay at Home Order, appellants Hederman, Nichols, and Lawson began working from
their Westerville, Powell, and Newark Township homes on March 18, 2020 (Id. at ¶ 35.);
they conducted their work "through a personal computer with a home internet connection."
(Id. at ¶ 15, 17, 19.) Hederman and Nichols returned to work at the Columbus office on June
7, 2020 while appellant Lawson "continues to work from home, and anticipates that he will
do so for the foreseeable future." (Id. at ¶ 37-38.)
{¶ 5} Consistent with Section 29 of H.B. 197, the Buckeye Institute "continued its
withholding from [Hederman, Nichols, and Lawson's] paychecks for payment of municipal
income taxes to the City of Columbus" during the period when those employees worked
exclusively from their homes. (Id. at ¶ 42.) Because the municipal income taxes in the cities
or townships they reside in are lower than the 2 1/2% income tax rate imposed by the City
of Columbus, appellants assert in their complaint that they were "subject[ed] * * * to higher
municipal income taxes" and that "municipalities in which they actually performed the
work" were "deprived of tax revenues." (Id. at ¶ 7.)
{¶ 6} As to why Section 29 should be deemed invalid, appellants asserted two
theories: (1) the City's "taxing of nonresidents on income earned outside of the City of
Columbus"—its "exercise in extraterritorial jurisdiction"—is unconstitutional under the due
process clause of the U.S. Constitution; and (2) "[t]he Ohio Constitution does not authorize
the General Assembly to expand the taxing power of municipalities beyond established
limits." (Id. at ¶ 5, 50, 53.) Therefore, appellants sought, pursuant to R.C. 2721.03, a
declaration that "Sec. 29 of [H.B.] 197, and all actions taken by the City of Columbus in
reliance upon it to be unconstitutional and therefore void." (Id., Count One at ¶ 55 and
Prayer for Relief at 15.) The appellants also asked the trial court to "enjoin[] the collection
of municipal income taxes from nonresidents on income earned outside of the City of
Columbus and a refund of all withholding or payments already collected on such income."
(Id., Count Two at ¶ 57-62 and Prayer for Relief at 15.)
{¶ 7} Appellees moved to dismiss appellants' claims with prejudice for failure to
state a claim upon which relief can be granted pursuant to Civ. R. 12(B)(6). The City argued
that the General Assembly had the power to "manage the interplay among different
municipalities imposing tax" and had done so prior to H.B. 197, that the federal due process
No. 21AP-193 4
clause does not limit the ability of a state to determine intrastate tax policy over its
residents, and that federal due process does not require physical presence to be satisfied so
long as a "minimal connection" exists. (Appellant Kilgore's Mot. to Dismiss at 5, 11.)
{¶ 8} Appellants opposed the motions to dismiss arguing that under Hillenmeyer
v. Cleveland Bd. or Rev., 144 Ohio St.3d 165, 2015-Ohio-1623 and Willacy v. Cleveland Bd.
of Income Tax Rev., 159 Ohio St.3d 383, 2020-Ohio-314, the due process clause prohibits
"extraterritorial" municipal taxation—in other words municipalities are prohibited from
taxing "the income of nonresidents for work performed outside of the [municipality]"
(Sept. 9, 2020 Brief in Opp. to [Appellant Kilgore's] Mot. to Dismiss at 1, 7; Sept. 30, 2020
Memo. in Opp. to [Appellant Yost] Mot. to Dismiss at 4.)
{¶ 9} The trial court granted appellees' motion to dismiss. In its discussion of the
case, the trial court first noted that the Ohio General Assembly "has temporally and
geographically regulated municipal taxes as part of a statewide coordinated framework
even before the exigent circumstances of the COVID-19 pandemic" and cited to the "20-day
rule" codified in R.C. 718.011 as an example. (Trial Court Decision at 5.) The trial court then
discussed the "presumption of constitutionally" and "legislative regularity" enjoyed by the
General Assembly in enacting legislation and its "broad powers of intrastate taxation." (Id.
at 6.)
{¶ 10} "Against this backdrop," the trial court found appellants' cited cases—
Hillenmeyer and Willacy—inapposite to the case presented. (Id. at 7.) Specifically, the trial
court found "[n]either Hillenmeyer nor Willacy address the Ohio General Assembly's
longstanding power to tax Ohio residents wholly within Ohio's borders, or to set
appropriate coordinating limitations between Ohio municipalities for an efficient,
organized and coordinated intrastate taxing schema." (Id. at 8.) Instead, the trial court
emphasized that:
[h]ere, the municipal tax is an annual tax based on the principle
place of employment as declared at the beginning of the year.
Regardless of where Plaintiffs perform their work, the income
they receive comes from the fact that the work they perform
benefits their employer who is located in Columbus. The Court
finds the General Assembly enjoys the authority to establish
municipal income allocation rules among Ohio taxing
authorities in order to efficiently and uniformly coordinate
intrastate taxation of Ohio residents. As a general principle,
No. 21AP-193 5
Ohio courts have interpreted the Ohio Constitution to allow the
General Assembly to regulate municipal taxation where
necessary to police taxation among municipalities. Cincinnati
Imaging Venture v. City of Cincinnati, 116 Ohio App.3d 1, 2,
686 N.E.2d 528 (1st Dist.l996). The Home Rule Amendment to
the Ohio Constitution provides the power to impose municipal
taxes, expressly subject to the limits and the control of the
General Assembly. See Oh. Const. Art. XVIII, § 13; Cincinnati
Imaging Venture, supra.
(Trial Court Decision at 8.)
The trial court was unpersuaded by appellants' position that Section 29 impermissibly
expands municipal taxing authority, but instead found "Section 29 * * * is an express
limitation on municipal latitude in taxation; providing uniform rules regulating the
circumstances in which municipalities can and cannot tax" in line with the recent Supreme
Court of Ohio reasoning in Athens v. McClain, 163 Ohio St.3d 61, 2020-Ohio-5146. (Trial
Court Decision at 9.) Therefore, the trial court concluded that the General Assembly acted
within its authority by enacting Section 29 of H.B. 197, "thereby legislatively limiting,
coordinating and regulating municipal taxing authorities in their respective treatment of
employees working remotely under the exigent circumstance of the COVID-19 pandemic."
(Id. at 9.)
{¶ 11} Appellants filed a timely notice of appeal.
II. ASSIGNMENT OF ERROR
{¶ 12} Appellants submit three assignments of error for our review:
ASSIGNMENT OF ERROR NO. 1: The trial court erred by
failing to apply the well-established due process requirements
governing nonresident municipal income tax first set forth by
the Ohio Supreme Court in Angell v. Toledo, 153 Ohio St. 179,
191 N.E.2d 250 (1950) and most recently articulated in
Hillenmeyer v. Cleveland Bd. of Rev. (2015), 144 Ohio St.3d
165, 2015-Ohio-1623, 41 N.E.3d 1164 (2015) and Willacy v.
Cleveland Bd. of Income Tax Rev. (2020), 159 Ohio St. 3d 383,
2020-Ohio-314, 151 N.E.3d 561.
ASSIGNMENT OF ERROR NO. 2: The trial court erred in
relying on Ohio's Twenty Day Rule, codified at R.C. 718.011, to
find that Ohio law recognizes the legislature's authority to allow
municipalities to engage in extraterritorial taxation.
No. 21AP-193 6
ASSIGNMENT OF ERROR NO. 3: The trial court erred by
holding that Sec. 29 of H.B. 197 was a limitation on municipal
taxing power and thus authorized under the Ohio Constitution.
III. STANDARD OF REVIEW
{¶ 13} "A motion to dismiss for failure to state a claim upon which relief can be
granted tests the sufficiency of the complaint." Volbers-Klarich v. Middletown Mgt., 125
Ohio St.3d 494, 2010-Ohio-2057, ¶ 11. "In reviewing a motion to dismiss for failure to state
a claim upon which relief can be granted, we accept as true all factual allegations in the
complaint." Lunsford v. Sterilite of Ohio, L.L.C., 162 Ohio St.3d 231, 2020-Ohio-4193, ¶ 22,
citing Mitchell v. Lawson Milk Co., 40 Ohio St.3d 190, 192 (1988). "A complaint should
not be dismissed unless it appears 'beyond doubt from the complaint that the plaintiff can
prove no set of facts entitling him to recovery.' " Lunsford, quoting O'Brien v. Univ.
Community Tenants Union, Inc., 42 Ohio St.2d 242, (1975), syllabus.
{¶ 14} An appellate court generally reviews a judgment granting a Civ.R. 12(B)(6)
motion to dismiss de novo. T & M Machines, LLC v. Yost, 10th Dist. No. 19AP-124, 2020-
Ohio-551, ¶ 11; Menorah Park Ctr. for Senior Living v. Rolston, 164 Ohio St.3d 400, 2020-
Ohio-6658, ¶ 12. Questions of law raised in a declaratory judgment action are likewise
reviewed de novo on appeal. One Energy Ents., LLC v. Ohio DOT, 10th Dist. No. 17AP-
829, 2019-Ohio-359, ¶ 27-28, quoting Arnott v. Arnott, 132 Ohio St.3d 401, 2012-Ohio-
3208, ¶ 13 (" 'once a trial court determines that a matter is appropriate for declaratory
judgment, its holdings regarding questions of law are reviewed on a de novo basis.' ")
IV. ANALYSIS
{¶ 15} Appellants bring an action for declaratory judgment under R.C. 2721.03,
which states in relevant part: "any person whose rights, status, or other legal relations are
affected by a constitutional provision, [or] statute, * * * may have determined any question
of construction or validity arising under the * * * constitutional provision, [or] statute * * *
and obtain a declaration of rights, status, or other legal relations under it." "A declaratory
judgment action is a civil action and provides a remedy in addition to other legal and
equitable remedies available." T & M Machines at ¶ 15, citing Victory Academy of Toledo
v. Zelman, 10th Dist. No. 07AP-1067, 2008-Ohio-3561, ¶ 8, citing Aust v. Ohio State Dental
Bd., 136 Ohio App.3d 677, 681 (10th Dist.2000). "The essential elements for declaratory
relief are: (1) a real controversy exists between the parties, (2) the controversy is justiciable
No. 21AP-193 7
in character, and (3) speedy relief is necessary to preserve the rights of the parties." T & M
Machines at ¶ 16, citing Aust at 681.
{¶ 16} The parties do not dispute that a real controversy exists between them and
the controversy is justiciable in character. Instead, the parties address the merits of the trial
court's determination that the General Assembly acted within its state constitutional
authority to enact Section 29 of H.B. 197 and that the law does not violate due process limits
on jurisdiction to tax. Following independent review of the issues before us, we conclude
appellants' assignments of error lack merit and dismissal of the declaratory action is
warranted.
A. Judicial review of legislative enactments excludes policy and
presumes validity
{¶ 17} We note initially that judicial review of a legislative enactment does not
include judgment on policy. "The Constitutional Convention did not vest the courts with
power over questions of legislative policy." State ex rel. Durbin v. Smith, 102 Ohio St. 591,
595 (1921). See Bd. of Trustees of the Tobacco Use Prevention & Control Found. v. Boyce,
127 Ohio St.3d 511, 2010-Ohio-6207, ¶ 30 ("It is not for us to judge the wisdom of the
General Assembly but to determine whether the exercise of its power comports with or
violates the Ohio Constitution.")
{¶ 18} Furthermore, statutes have a strong presumption of constitutionality;
"before a court may declare it unconstitutional it must appear beyond a reasonable doubt
that the legislation and constitutional provisions are clearly incompatible." State ex rel.
Dickman v. Defenbacher, 164 Ohio St. 142, (1955), paragraph one of the syllabus. See also
R.C. 1.47(A) ("In enacting a statute, it is presumed that * * * [c]ompliance with the
constitutions of the state and of the United States is intended"; Libertarian Party of Ohio
v. Husted, 10th Dist. No. 16AP-496, 2017-Ohio-7737, ¶ 31 (2016) (noting the state
Constitution is primarily a limitation on legislative power of the General Assembly rather
than a grant of power, and therefore the General Assembly may pass any law unless it is
specifically prohibited by the state or federal Constitutions.) In determining whether a state
tax law comports with rights secured by the federal constitution, "every presumption" in
favor of upholding the state tax law "is indulged, and only clear and demonstrated
usurpation of power will authorize judicial interference with legislative action." Green v.
Frazier, 253 U.S. 233, 239 (1920).
No. 21AP-193 8
B. The trial court did not err in finding the General Assembly had
authority to enact Section 29 of H.B. 197 under the Ohio Constitution
{¶ 19} For clarity of discussion, we will address the assignments of error out of
order. In their third assignment of error, appellants contend the trial court erred by holding
Section 29 of H.B. 197 was a limitation on municipal taxing power and thus authorized
under the Ohio Constitution. Appellants argue that in enacting Section 29 of H.B. 197, the
General Assembly impermissibly expanded, rather than limited, municipalities imposition
of taxes to nonresidents working outside of its borders. We disagree.
{¶ 20} Viewed at a high level, a state "has sovereign power unembarrassed by any
restriction except those that emerge from the [Federal] Constitution" in enacting legislation
concerning taxation of residents within its borders. Greenough v. Tax Assessors of
Newport, 331 U.S. 486, 490 (1947). The sovereign power of the state extends to the "mode,
form, and extent" of taxation of residents within the state's jurisdiction as well as to how "to
structure [the state] tax system[.]" N. Carolina Dept. of Revenue v. Kimberley Rice
Kaestner 1992 Family Trust, ___U.S.___, 139 S.Ct. 2213, 2226 (2019) ("States have broad
discretion to structure their tax systems"); Shaffer v. Carter, 252 U.S. 37, 51-52 (1920)
("The rights of the several States to exercise the widest liberty with respect to the imposition
of internal taxes always has been recognized in the decisions of this court. * * * the State
has, speaking generally, the freedom of a sovereign both as to objects and methods. * * *
Unless restrained by provisions of the Federal Constitution, the power of the State as to the
mode, form, and extent of taxation is unlimited, where the subjects to which it applies are
within her jurisdiction[.]")
{¶ 21} As explained by the Supreme Court of Ohio, under the Ohio Constitution,
"the General Assembly may pass legislation that 'limits' or 'restricts' the power of
municipalities to tax." City of Athens v. McClain, 163 Ohio St.3d 61, 2020-Ohio-5146, ¶ 20-
23, citing Article XVIII, Section 3 of the Ohio Constitution (providing that "[m]unicipalities
shall have authority to exercise all powers of local self-government and to adopt and enforce
within their limits such local police, sanitary and other similar regulations, as are not in
conflict with general laws"); Article XVIII, Section 13 of the Ohio Constitution (conferring
on the General Assembly the authority to pass laws to "limit the power of municipalities to
levy taxes and incur debts for local purposes"); and Article XVIII, Section 6 of the Ohio
Constitution (providing that the General Assembly has the authority to "restrict
No. 21AP-193 9
[municipalities'] power of taxation, assessment, borrowing money, contracting debts and
loaning their credit, so as to prevent the abuse of such power.").
{¶ 22} As examples of the General Assembly's exercise of its power to limit
municipal income taxation, the Athens court listed the enactment of R.C. Chapter 718,
which "mandated a uniform tax rate, required municipalities to get voter approval before
they could impose a higher rate, and immunized certain income from municipal taxation";
later expansions of R.C. Chapter 718 "to make municipal taxation more uniform, with the
goal of making it easier for taxpayers to comply"; and enactment of 2014 Sub.H.B. No. 5,
"which established greater statewide uniformity of municipal income taxes by explicitly
preempting municipalities from imposing an income tax unless they adopted, by ordinance
or resolution, the provisions of R.C. Chapter 718 and levied the tax in accordance with those
provisions, R.C. 715.013 and 718.04(A)." Id. at ¶ 4-6.
{¶ 23} Specific to the enactment at issue in that case, the Athens court concluded,
"the General Assembly's power to limit the levy of municipal taxes includes the power to
limit administration of a validly enacted tax" and also includes the power to impose
centralized administration of municipal taxes. (Emphasis added.) Athens at ¶ 45-49. In
its analysis, the court differentiated a case that predated enactments giving preemptive
effect to R.C. Chapter 718:
The enactment of H.B. 5 and H.B. 49 converted the affirmative
requirements of R.C. Chapter 718 into adjuncts of the broader
preemption of municipal income taxes. After H.B. 5, a
municipality that is able to enforce its ordinance at all has
incorporated the prescribed provisions of state law. And once
R.C. Chapter 718 has been explicitly incorporated into a
municipality's tax code, any other provision of the
municipality's ordinance at odds with it would be an internal
conflict within municipal law.
Id. at ¶ 49.
The Athens court concluded: "the General Assembly's authority to limit the power of
municipalities to tax allows it to broadly preempt municipal income taxes and to require
that such taxes be imposed in strict accordance with the terms dictated by legislation passed
by the General Assembly." Id. at ¶ 51. "[B]ecause Article XVIII Section 13 permits the
General Assembly to limit the municipalities' power to levy taxes, the General Assembly can
No. 21AP-193 10
require municipalities to enact legislation that accomplishes this aim." Id., citing City of
Athens v. Testa, 10th Dist. No. 18AP-144, 2019-Ohio-277, ¶ 51.
{¶ 24} In this case, the trial court found that Section 29 of H.B. 197 was a proper
exercise of the General Assembly's power to limit the levy of municipal taxes under Article
XVIII, Section 13 of the Ohio Constitution. Section 29 of H.B. 197 states:
[n]otwithstanding [R.C. 718.011], and for the purposes of
Chapter 718. of the Revised Code, during the period of the
emergency * * *, any day on which an employee performs
personal services at a location, including the employee's home,
to which the employee is required to report for employment
duties because of the declaration shall be deemed to be a day
performing personal services at the employee's principal place
of work.
(Section 29 of H.B. 197.)
In other words, Section 29 of H.B. 197 temporarily treats, for purposes of the municipal tax
code, work performed at home, or other locations the employee is required to report for
employment duties due to the pandemic, as a day at the employee's "principal place of
work."1
{¶ 25} Appellants argue, essentially, that municipalities have no ability to impose
income tax on nonresidents for work performed outside of its borders, and the General
Assembly cannot give municipalities that ability through legislation. The First District
Court of Appeals recently rejected this argument in Time Warner Cable, Inc. v. City of
Cincinnati, 1st Dist. C-190375, 2020-Ohio-4207.
{¶ 26} In Time Warner Cable, a company sought to file a consolidated tax return in
the City of Cincinnati, and the City objected on the basis that the affiliate group could only
encompass entities "actually doing business in Cincinnati." Id. at ¶ 3. The parties debated
whether a city ordinance or a (former) state statute would control. The BTA sided with the
1 R.C. 718.011(A)(7) defines "principal place of work," as "the fixed location to which an employee is required
to report for employment duties on a regular and ordinary basis," or, if inapplicable, "the worksite location in
this state to which the employee is required to report for employment duties on a regular and ordinary basis,"
or, if inapplicable, "the location in this state at which the employee spends the greatest number of days in a
calendar year performing services for or on behalf of the employee's employer." R.C. 718.011(A). The location
where an employee spends a day is further defined and includes accommodations, for example, for partial
days (allotted to the municipality where the employee performed services for more time) and for travel time
(considered to be time spent at the principal place of business). Employers generally have a duty to withhold
municipal income tax on qualifying wages paid to an employee, unless (subject to some exceptions) the
employee performed twenty or fewer days of such services in the municipal corporation. R.C. 718.03 and
718.011(B).
No. 21AP-193 11
company, and the City appealed. The First District court reviewed municipal tax power
under the Home Rule Amendment and the General Assembly's authority to limit that
power. It concluded the General Assembly took "clear and affirmative measures to limit
the City's authority to impose the income tax in the manner it sought[,]" and, citing to
Athens, found the General Assembly's exercise of authority was appropriate. Id. at ¶ 14.
The court then rejected the City's contention that the statute unlawfully forces it to exercise
extraterritorial power by taxing beyond its borders, holding instead, "a municipality may
act extraterritorially where granted such authority by statute." Id. at ¶ 17, citing Springfield
v. All Am. Food Specialists, Inc., 85 Ohio App.3d 464, 469, (2d Dist.1993), Prudential Co-
op. Realty Co. v. City of Youngstown, 118 Ohio St. 204, 211-212, 6 Ohio Law Abs. 175
(1928); Tatco Dev., Ltd. v. City of Oakwood, 2d Dist. No. 18387 (Jan. 12, 2001).
{¶ 27} In addition to this persuasive authority, the nature of the law at issue here
raises novel issues of the General Assembly's authority to temporarily structure municipal
income tax to mitigate the economic impact of a health crisis on the state. As stated by the
trial court, "the exigent circumstance of the COVID-19 pandemic" gave rise to Section 29 of
H.B. 197. (Trial Court Decision at 9.) Specifically, the General Assembly "declared [H.B.
197] to be an emergency measure necessary for the immediate preservation of the public
peace, health, and safety" in order "to continue essential operation of various facets of state
government, maintain the continuity of the state tax code, and respond to the declared
pandemic and global health emergency related to COVID-19." (H.B. 197 of the 133rd
General Assembly, Sec. 40.)
{¶ 28} Article II, Section 1d of the Ohio Constitution, provides that the General
Assembly may pass "emergency laws necessary for the immediate preservation of the public
peace, health or safety" and such laws "shall go into immediate effect * * * [and] not be
subject to the referendum"). "The manner and form in which this particular provision of
the constitution was adopted make it clear that the question of preservation of the public
peace, health or safety, together with the reasons for the necessity of passing such
emergency law, were confided to the legislative discretion." State ex rel. Durbin v. Smith,
102 Ohio St. 591, 597 (1921). See also Am. Fin. Servs. Assn. v. City of Cleveland, 112 Ohio
St.3d 170, 2006-Ohio-6043, ¶ 30, citing State ex rel. Hackley v. Edmonds, 150 Ohio St.
203, 212 (1948) ("As we explained more than 50 years ago, the Home Rule Amendment
No. 21AP-193 12
was designed to give the 'broadest possible powers of self-government in connection with
all matters which are strictly local,' but the framers of the amendment did not want to
'impinge upon matters which are of a state-wide nature or interest.' ") Thus, while "with
respect to municipal taxation, immunity from state law is the rule" subject only to the
General Assembly's authority to limit or restrict the municipality's power to tax, this case
also involves the General Assembly's authority to legislate in response to a state-wide
emergency for the general welfare of all Ohio citizens. City of Athens at ¶ 23.
{¶ 29} Having reviewed the law at issue against the state constitutional authority
concerns raised by appellant, we do not find Section 29 of H.B. 197 is "clearly incompatible"
with the General Assembly's authority to pass laws to limit the power of municipalities to
levy taxes and to address the COVID-19 pandemic. Dickman. See also State ex rel.
Jackman v. Court of Common Pleas, 9 Ohio St.2d 159, 162 (1967) ("The legislative power
of the state is vested in the General Assembly, and whatever limitation is placed upon the
exercise of that plenary grant of power must be found in clear prohibition by the
Constitution.")
{¶ 30} Therefore, for all the reasons above, we find appellants' position that the
General Assembly lacked authority under the Ohio Constitution to enact Section 29 of H.B.
197 lacks merit.
{¶ 31} Accordingly, we overrule appellants' third assignment of error.
C. The trial court did not err in rejecting appellants' arguments based
on Angell, Hillenmeyer, and Willacy
{¶ 32} Appellants contend the General Assembly's power to enact Section 29 of H.B.
197 is immaterial if the acts of the General Assembly fail to comport with due process.
Appellants argue that the due process clause of the U.S. Constitution allows a municipality
to tax the income of nonresidents only where there is a "fiscal connection between the
income and the work conducted by the taxpayer in the municipal jurisdiction," and that the
Supreme Court of Ohio, as expressed in Angell, 153 Ohio St. 179, Hillenmeyer, 2015-Ohio-
1623, and Willacy, 2020-Ohio-314, interprets this requirement to mean "local taxation of
a nonresident's compensation for services must be based on the location of the taxpayer
when the services were performed." (Appellants' Brief at 1, quoting Hillenmeyer at ¶ 42.)
Therefore, appellants contend the trial court erred by "failing to apply the well-established
due process requirements governing nonresident municipal income tax" set forth by the
No. 21AP-193 13
Ohio Supreme Court. (Appellants' Brief at v.) For the following reasons, appellants'
assignment of error lacks merit.
{¶ 33} Initially, we note that Angell, Hillenmeyer, and Willacy all concern the
question of whether City tax laws violate due process. In other words, none of those cases
answer the direct question brought here: whether an emergency measure enacted by the
General Assembly violates due process clause limitations on tax. Angell, Hillenmeyer, and
Willacy are not directly on point, and the assignment of error as stated lacks merit for this
reason alone. Huntington Nat'l Bank v. Burda, 10th Dist. No. 08AP-658, 2009-Ohio-1752,
¶ 21, citing App.R. 12(A)(1)(b) (stating that "a court of appeals shall * * * [d]etermine the
appeal on its merits on the assignments of error set forth in the briefs") and Williams v.
Barrick, 10th Dist. No. 08AP-133, 2008-Ohio-4592, ¶ 28 (holding that appellate courts
"rule[ ] on assignments of error only, and will not address mere arguments.").
{¶ 34} Furthermore, because circumstances exist under which the act would be
valid, appellants' facial challenge to Section 29 fails. We note that although appellants
provide some information about the individual plaintiffs in their complaint—they worked
(or work) from home outside of the City of Columbus where their employer is based and
use a "cloud-based" computing system, for example—appellants seek a declaration that
Section 29 of H.B. 197 "and all actions taken by the City of Columbus in reliance upon it [is]
* * * unconstitutional and therefore void." (Compl. at ¶ 13, 56.) In their memorandum in
opposition to appellees' motion to dismiss, appellants did not argue that the individual
plaintiffs' particular working circumstances, and lack of contacts with the City of Columbus,
demonstrated that Section 29 violated due process as applied to them, but rather argued
due process requires local taxation based on the physical location of the taxpayer when the
services were performed without exception. (Memo. in Opp. to [Appellant Kilgore's] Mot.
to Dismiss at 1-15; Brief in Opp. to [Appellant Yost] Mot. to Dismiss at 1-5.) Likewise,
appellants in their appellate brief base this assignment of error on the black-and-white
premise that the Supreme Court of Ohio has determined, under principles of due process,
that municipal taxation of nonresidents' income can only be based on the physical location
of the taxpayer when the services were performed. (Appellant's Brief at 8-23.) Appellants
confirmed at oral argument that they assert only a facial challenge to Section 29 of H.B. 197.
No. 21AP-193 14
{¶ 35} "A party asserting a facial challenge to a statute must prove beyond a
reasonable doubt 'that no set of circumstances exists under which the act would be valid.' "
Ohio Renal Assn. v. Kidney Dialysis Patient Protection Amendment Commt., 154 Ohio
St.3d 86, 2018-Ohio-3220, ¶ 26, quoting Wymsylo v. Bartec, Inc., 132 Ohio St.3d 167,
2012-Ohio-2187, ¶ 21. Nat'l Endowment for the Arts v. Finley, 524 U.S. 569 (1998)
(internal quotation omitted) ("Facial invalidation is, manifestly, strong medicine that has
been employed by the Court sparingly and only as a last resort.")
{¶ 36} Here, it is not difficult to identify circumstances where operation of Section
29 did not affect employees or employers at all: even under the emergency declaration
some employees, such as those in "Essential Businesses and Operations," continued to
report to work at their normal place of employment or, perhaps, worked from home in the
same municipality as their employer. (Compl. at ¶ 33, citing Stay at Home Order at ¶ 1-2.)
Because there are possible circumstances where Section 29 of H.B. 197 is valid, we reject
the facial challenge. See Corrigan v. Testa, 149 Ohio St.3d 18, 2016-Ohio-2805, ¶ 69
(rejecting facial challenge where "there is at least a possibility that the statute could be
applied" in a way that is valid.).
{¶ 37} Finally, because appellants' due process arguments do not overcome the
presumption of validity enjoyed by laws enacted by the General Assembly, we find the
assigned error lacks merit. Generally, "federal due process is satisfied if there is a rational
relationship between a statute and its purpose." Desenco, Inc. v. City of Akron, 84 Ohio
St.3d 535, 545 (1999) citing Martinez v. California, 444 U.S. 277, 283 (1980).
{¶ 38} Appellants do not dispute that there is a rational relationship between
Section 29 of R.C. 149 and its purpose, but essentially assert that the due process clause
completely prohibits a municipality from taxing an employee working beyond its borders
and Section 29 violates that prohibition. Appellants cite to Ohio Supreme Court text
(Hillenmeyer and Willacy) for this proposition. However, an expanded review of both Ohio
and federal tax law cases shows that due process is generally not suitable for a bright-line
test, but instead employs a "flexible" standard focused on whether a taxpayer receives
benefits and protections from the taxing government body. U.S. Supreme Court in N.
Carolina Dept. of Revenue v. Kimberley Rice Kaestner 1992 Family Trust, ___U.S.___,
139 S.Ct. 2213, 2220 (2019), quoting International Shoe at 319
No. 21AP-193 15
{¶ 39} The "boundary" between taxation and "merely unjustified 'confiscation' "
"turns on the '[t]he simple but controlling question * * * whether the state has given
anything for which it can ask return.' " N. Carolina Dept. of Revenue at 2220 quoting
Wisconsin v. J. C. Penney Co., 311 U.S. 435, 444 (1940). "Ultimately, only those who derive
'benefits and protection' from associating with a State should have obligations to the State
in question." Id. at 319. See also Angell v. Toledo, 153 Ohio St. 179, 185 (1950), citing
Wisconsin v. J. C. Penney Co., 311 U.S. 435 (1940) ("[T]he test of whether a tax law violates
the due process clause is whether it bears some fiscal relation to the protections,
opportunities, and benefits given by the state, or, in other words, whether the state has
given anything for which it can ask a return.")
{¶ 40} The cases primarily relied on by appellants, Hillenmeyer and Willacy,
establish that in order for a municipality to have jurisdiction to tax a nonresident: (1) there
must be a "definite link, some minimum connection, between a [municipality] and the
person, property or transaction it [Ohio] seeks to tax"; and (2) "the income attributed to the
[municipality] for tax purposes must be rationally related to 'values connected with the
taxing municipality.' " Hillenmeyer at ¶ 40, citing Moorman Mfg. Co. v. Bair, 437 U.S. 267,
272-273 (1978) and Quill Corp. v. North Dakota, 504 U.S. 298, 306 (1992); Willacy at ¶
22, citing Miller Bros. Co. v. Maryland, 347 U.S. 340 (1954) and Moorman Mfg. Co.
{¶ 41} Under the first prong, "[t]o determine whether a State has the requisite
'minimum connection' with the object of its tax," the U.S. Supreme Court "borrows from
the familiar test of International Shoe Co. v. Washington, 326 U. S. 310 (1945)."
N. Carolina Dept. of Revenue at 2220. Under this test, "[a] State has the power to impose
a tax only when the taxed entity has 'certain minimum contacts' with the State such that the
tax 'does not offend traditional notions of fair play and substantial justice.' " (Internal
quotations omitted.) Id., International Shoe Co. at 316. The first prong is established
"when a state or locality imposes taxes on income arising from work performed within the
jurisdiction." Willacy at ¶ 23, citing Hillenmeyer at ¶ 42. See also Willacy at ¶ 26, citing
Hillenmeyer at ¶ 43 (clarifying that Hillenmeyer's statement that "local taxation of a
nonresident's compensation for services must be based on the location of the taxpayer when
the services were performed" is relevant to concluding a taxpayer has a minimum
connection with a taxing municipality under this first prong.)
No. 21AP-193 16
{¶ 42} The second prong of the due-process test "requires a determination of the
extent to which the nonresident's income 'is fairly attributable either to property located in
the state or to events or transactions which, occurring there, are subject to state regulation
and which are within the protection of the state and entitled to the numerous other benefits
which it confers.' " Willacy at ¶ 24, citing Internatl. Harvester Co. v. Wisconsin Dept. of
Taxation, 322 U.S. 435, 441-442 (1944). Under this prong, Willacy does cite to
Hillenmeyer for the general proposition that "[nonbusiness] [c]ompensation must be
allocated to the place where the employee performed the work." Willacy at ¶ 26 citing
Hillenmeyer at ¶ 45. However, the test that Willacy sets forth is not so rigid: in cases in
which the taxpayer has income from multiple jurisdictions, "the taxing jurisdiction can
reach only the portion of the income that is reasonably associated with activity in that
jurisdiction." (Emphasis added.) Willacy at ¶ 24, citing Hillenmeyer at ¶ 46.
{¶ 43} Neither Willacy nor Hillenmeyer (or any other authority cited by appellants)
involved the issue of whether, from the perspective of due process limits on government
taxation, remote work of an employee could be reasonably associated with the activity of an
employer's office to support imposition of a municipal tax, particularly in the context of a
public health crisis. Arguably, the reasoning stated by the Angell court to uphold a City
municipal tax on a nonresident could still apply: "[t]he municipality certainly does afford
protection against fire, theft, et cetera, to the place of business of plaintiff's employer and
the operation thereof without which plaintiff's employer could not as readily run its
business and employ help. In other words, the city * ** does afford to plaintiff not only a
place to work but a place to work protected by the municipal government[.]" Angell at 185.
{¶ 44} Here, having independently reviewed the legislation and the due process
concerns raised by appellants, we cannot say Section 29 of H.B. 197 clearly violates the limit
the due process clause places on a municipality's jurisdiction to tax. Desenco at 538 (1999)
("In reviewing a statute, a court, if possible, will uphold its constitutionality. * * * All
reasonable doubts as to the constitutionality of a statute must be resolved in its favor.")
Therefore, for all of the reasons stated above, we find the trial court did not err in rejecting
appellants' arguments based on Angell, Hillenmeyer, and Willacy and the associated tax-
related due process considerations.
{¶ 45} Accordingly, appellants' first assignment of error is overruled.
No. 21AP-193 17
D. The trial court did not rely on the Twenty Day Rule in dismissing
appellants' complaint
{¶ 46} Appellants also contend that the trial court erred in relying on Ohio's "Twenty
Day Rule," codified at R.C. 718.011, to find that Ohio law recognizes the legislature's
authority to allow municipalities to engage in extraterritorial taxation. (Appellant's Brief at
v.) Appellants define this issue as, "[c]an the 20-Day Rule establish the constitutionality of
extraterritorial municipal taxation?" (Appellant's Brief at 1.)
{¶ 47} The premise of appellants' assigned error is unfounded. The trial court
discussed the Twenty Day Rule "[i]nitially" and as a "note[] that Section 29 of HB 197 is not
unprecedented." (Trial Court Decision at 5.) "Against this backdrop," which also included
discussion about the presumption of constitutionality for Ohio's statutes and the General
Assembly's broad power of intrastate taxation, the trial court then commenced its analysis
of appellants' due process challenge. (Trial Court Decision at 7.) A court does not err by
discussing the larger legislative scheme in considering the constitutionality of a statutory
provision. See e.g. Athens at ¶ 52, fn 4 (noting statutes that imposed centralized
administration of municipal taxes that had never been challenged in court). Moreover, the
trial court in this case did not rely on the existence of the Twenty Day Rule to find the
Section 29 constitutional. The trial court based its decision to grant the motion to dismiss
on: Hillenmeyer and Willacy not controlling the outcome here; the nature of the annual
municipal tax and the income benefitting their employer in Columbus; and the General
Assembly's authority to establish municipal income allocation rules and limit municipal
latitude in taxation.
{¶ 48} Accordingly, appellants' second assignment of error lacks merit.
V. CONCLUSION
{¶ 49} Considering all of the above, we find appellants have not demonstrated that
the Franklin County Court of Common Pleas erred in holding that the Ohio General
Assembly acted within its state constitutional authority in enacting Section 29 of H.B. 197
or in rejecting appellants' constitutional due process clause challenge. We further disagree
with appellants' premise that the trial court relied on the Twenty Day Rule, and, regardless,
find such reliance would not require reversal since the trial court judgment was supported
by alternative legal authority.
No. 21AP-193 18
{¶ 50} Having overruled appellants' three assignments of error, we affirm the
judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
JAMISON and NELSON, JJ., concur.
NELSON, J., retired, of the Tenth Appellate District, assigned
to active duty under the authority of the Ohio Constitution,
Article IV, Section 6(C).
_____________
No. 21AP-193 19
NELSON, J., concurring in judgment.
{¶ 51} I join in the judgment of the court. I suppose I perhaps could imagine state
or federal constitutional arguments against allowing Ohio's General Assembly to do what it
(temporarily) did here, but I am not persuaded by the particular arguments that appellants
have put forward.
{¶ 52} Indeed, a close reading of appellants' brief reveals that the only specific bar
they cite to the state law at issue is the due process clause of the federal Constitution's
Fourteenth Amendment (prohibiting States from depriving people of life, liberty, or
property without due process of law), maybe joined with the related due process clause of
the federal Constitution's Fifth Amendment. See, e.g., Appellants' Brief at 10 ("this case
turns" on a question involving "the due process limitations on taxing nonresidents' income
arising from the U.S. Constitution's Fifth and Fourteenth Amendments"); 8 (relying on
"the Ohio Supreme Court's long line of decisions applying the U.S. Constitution's Due
Process Clause to municipal taxation"); 13 (urging, with capitalizations and bolding
adjusted, that "state sovereignty must yield to the U.S. Constitution"); 23 (assessing cases
including Hillenmeyer and Willacy, and concluding that "because the due process rights at
issue flow from the Fifth and Fourteenth Amendments, no measure of State sovereignty
can abrogate or curtail them"); 27 ("As with the State sovereignty argument, because acts
of the General Assembly must still comport with due process, if Angell, Hillenmeyer,
Willacy, et al. apply, then whether [the state law in question] expands or limits municipal
taxes is immaterial"; noting, too, that Article XVIII, Section 13 of the Ohio Constitution
gives the General Assembly power to limit municipal taxation, and pointing to no state
constitutional provision that precludes what the legislature did). Compare Angell at 181
(while "an act of Congress is not valid unless the federal Constitution authorizes it * * * *,
the General Assembly of Ohio may enact any law which is not prohibited by the
Constitution").
{¶ 53} Appellants' argument, then, boils down to a contention that the federal due
process clause controls whether the Ohio legislature can determine that Ohio employees
may be taxed by the municipality that is a person's "principal place of work" rather than by
the municipality in which he or she performs her work during the limited "period of
No. 21AP-193 20
emergency." I remain unconvinced (at least based on the reasons submitted) that the cited
provisions of our federal charter control that level of state legislative detail.
{¶ 54} As presented to us, appellants' argument hinges on authorities informed by
principles involving taxation of interstate businesses and citizens of different states: it
seems to me to depend on drawing a virtually exact analogy between the federal system as
involving the separate states that formed and make up the union, on the one hand, and a
state governmental structure providing for various municipalities, on the other. Compare,
e.g., Appellants' Brief at 20 (discussing Hillenmeyer application of "principle" from Shaffer
v. Carter, 252 U.S. 37, 49 (1920), involving State taxation of a non-resident). I wouldn't
buy such a one-to-one analogy for these purposes; I do not believe, for example, that it
would be an appropriate reading of precedent to replace the word "State" wherever it
appears in the relevant case law with "municipality" and then simply say that the same
outcome must obtain with regard to non-residents. But to my eye, that is essentially what
appellants do when they fail to reckon with the State-enacted authorization here other than
through generalized and unsupported statements to the effect that the State cannot
authorize the sort of municipal taxation at issue. Compare, e.g., Appellants' Brief at 17 (case
law "borrowing from the interstate context in no way limits the Due Process principles to
interstate challenges—as Angell's intrastate application [upholding a purely municipal
ordinance, I note, and not challenging any state law] makes perfectly clear").
{¶ 55} That approach using what I understand as an implicit federal/state analogy
doesn't follow, at all, in part for the reason Angell explains: our national Constitution
enumerates and limits federal powers and ensures a critical check by way of the vertical
separation of powers, while Ohio's state system of government is rather differently
designed. See also, e.g., Natl. Fedn. of Indep. Business v. Sebelius, 567 U.S. 519, 533, 535
(2012) ("In our federal system, the National Government possesses only limited powers;
the States and the people retain the remainder"; "[t]he same does not apply to the States,
because the [federal] Constitution is not the source of their power"; absent restriction,
"state governments do not need constitutional authorization to act"). Thus, the federal
Constitution is structured in significant part to protect the balance that separate states with
their own governmental authorities, processes, and determinations can provide, whereas
Ohio's Constitution, even while providing for municipal home rule authority, does not
No. 21AP-193 21
similarly limit the general powers of the State to a specified list (or prevent the State from
working through its General Assembly to limit the power of municipalities to levy taxes, see
Ohio Constitution, Article XVIII, Section 13). By simply citing to what I view as largely
inapposite case law, appellants do not convince me the federal due process clause limits in
the way they suggest how Ohio's legislature chooses to define the State's relationship to and
among its municipalities with regard to taxation of income from an employee's principal
place of work.
{¶ 56} Because I do not find that appellants have advanced an argument that would
warrant our nullifying the duly enacted Ohio law at issue, I concur in the judgment of the
court.
NELSON, J., retired, of the Tenth Appellate District, assigned
to active duty under the authority of the Ohio Constitution,
Article IV, Section 6(C).
___________________