Title: Sherman v. Ohio Public Employees Retirement System

State: ohio

Issuer: Ohio Supreme Court

Document:

[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 
 
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________________ 
 
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].  
January Term, 2020 
 
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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 
SUPREME COURT OF OHIO 
 
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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. 
January Term, 2020 
 
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{¶ 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 
SUPREME COURT OF OHIO 
 
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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, 
January Term, 2020 
 
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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. 
SUPREME COURT OF OHIO 
 
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(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, 
January Term, 2020 
 
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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. 
SUPREME COURT OF OHIO 
 
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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.   
January Term, 2020 
 
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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 
SUPREME COURT OF OHIO 
 
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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 
January Term, 2020 
 
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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.   
SUPREME COURT OF OHIO 
 
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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 
January Term, 2020 
 
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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 
SUPREME COURT OF OHIO 
 
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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. 
January Term, 2020 
 
17 
{¶ 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.  
SUPREME COURT OF OHIO 
 
18 
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. 
January Term, 2020 
 
19 
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, 
SUPREME COURT OF OHIO 
 
20 
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 
January Term, 2020 
 
21 
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.  
SUPREME COURT OF OHIO 
 
22 
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:  
 
January Term, 2020 
 
23 
[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. 
SUPREME COURT OF OHIO 
 
24 
{¶ 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. 
_________________