Title: Saturday v. Cleveland Bd. of Review

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
Saturday v. Cleveland Bd. of Rev., Slip Opinion No. 2015-Ohio-1625.] 
 
 
 
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. 2015-OHIO-1625 
SATURDAY ET AL., APPELLANTS, v. CLEVELAND BOARD OF REVIEW ET AL., 
APPELLEES. 
[Until this opinion appears in the Ohio Official Reports advance sheets, it 
may be cited as Saturday v. Cleveland Bd. of Rev., Slip Opinion  
No. 2015-Ohio-1625.] 
Taxation—Municipal income tax—City lacked authority to impose tax on 
nonresident professional athlete who did not accompany his team to the 
taxing jurisdiction and was working outside the city while his team played 
there—Statutes relating to taxation have no extraterritorial effect. 
(No. 2014-0292—Submitted January 14, 2015—Decided April 30, 2015.) 
APPEAL from the Board of Tax Appeals, No. 2011-4027. 
____________________ 
PFEIFER, J. 
{¶ 1} In this case, we determine whether a nonresident professional athlete 
who does not accompany his team to Ohio for a game in Cleveland must pay 
municipal income tax to Cleveland based on his team’s appearance there.  We 
SUPREME COURT OF OHIO 
 
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hold that a professional athlete whose team plays a game in Cleveland but who 
remains in his home city participating in team-mandated activities is not liable for 
Cleveland municipal income tax. 
Factual and Procedural Background 
{¶ 2} Jeffrey B. Saturday is a retired professional football player.  During 
the taxable year at issue, 2008, Saturday was a center employed by the 
Indianapolis Colts of the National Football League (“NFL”).  During the 2008 
season, the Colts played one game in Cleveland against the Browns.  Because of 
an injury, Saturday neither played in nor attended the Cleveland game; instead, he 
spent the day in Indianapolis engaging in physical rehabilitation activities at the 
Colts’ behest.  (More than 72,000 other souls attended the Colts’ dismal 10-6 
victory over the Browns.)  The Colts nevertheless withheld an amount of 
Cleveland municipal income tax from Saturday’s 2008 compensation and paid it 
to the city.  Saturday and his wife, Karen, who filed joint income-tax returns, 
contend that Cleveland had no authority to impose its tax on the income of a 
nonresident who did not work within Cleveland’s city limits during the taxable 
year. 
1. The Saturdays’ Refund Claim 
{¶ 3} On December 18, 2009, the Saturdays sought from the Central 
Collection Agency (“CCA”), Cleveland’s tax administration authority, a total 
refund of all income tax withheld and remitted to the city of Cleveland for tax 
year 2008.  (They had previously filed a Cleveland tax return for 2008 showing 
that all tax had been paid through withholding and that they were entitled to a 
small refund.) 
{¶ 4} Out of reported total municipal wages of $3,577,561.11, the Colts 
attributed $178,878 (approximately 5 percent of Saturday’s 2008 income) to 
Cleveland under CCA Regulation 8:02(E)(6), which sets forth a “games-played” 
method of computing a nonresident professional athlete’s municipal income tax 
January Term, 2015 
 
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base.  Under the games-played method, the city claims the right to tax the amount 
of a professional athlete’s annual income that is proportionate to the share of the 
team’s preseason, regular season, and postseason games that were played in 
Cleveland.  See CCA Regulation 8:02(E)(6).  For example, if a team played 20 
games in a year and one of those games was in Cleveland, Cleveland would apply 
its tax to one twentieth, or 5 percent, of each player’s annual income.  In another 
case announced today, Hillenmeyer v. Cleveland Bd. of Rev., ___ Ohio St.3d ___, 
2015-Ohio-1623, ___ N.E.3d ___, this court declares that method of computing a 
nonresident professional athlete’s income tax base unconstitutional.  Although the 
Saturdays advance some arguments that parallel those presented in Hillenmeyer, 
we decide this case on other grounds. 
{¶ 5} The Saturdays requested a refund of $3,594.  Identifying an error in 
the computation of the withholding, the CCA refunded the Saturdays a total of 
$322.  But in a final administrative ruling issued on January 25, 2011, the CCA 
denied the claim for a full refund.  The Saturdays filed an appeal to the City of 
Cleveland Board of Review by letter dated February 23, 2011. 
2. Board of Review 
{¶ 6} The board of review held a hearing on June 24, 2011.  There was no 
live testimony at the hearing.  Instead, counsel for the Saturdays and counsel for 
the Cleveland tax administrator presented documentary exhibits and arguments.  
The hearing was followed up by briefs of the parties. 
{¶ 7} On September 20, 2011, the board of review issued its decision 
upholding the denial of the Saturdays’ claims.  The board first rejected the tax 
administrator’s defenses of waiver and res judicata that were based on the 
Saturdays’ having received and accepted earlier partial refunds due to corrected 
mathematical calculations.  Next, the board held that the Saturdays failed to prove 
that the games-played method of income allocation was unreasonable, placing 
particular emphasis on the lack of live witnesses and their reliance on affidavits 
SUPREME COURT OF OHIO 
 
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and other documentation at the hearing.  Finally, the board characterized 
Saturday’s absence from the Cleveland game—and Cleveland—as a paid sick 
day, which it held Cleveland had the authority to tax because Cleveland’s 
nonresident-professional-athlete regulation expressly applied the tax to games 
from which an athlete was excused due to “illness or injury.”  See CCA 
Regulation 8:02(E)(6). 
3. Board of Tax Appeals 
{¶ 8} The Saturdays appealed to the Board of Tax Appeals (“BTA”) on 
November 17, 2011.  The parties waived a hearing there and submitted the case 
on the record and the briefs. 
{¶ 9} The BTA issued its decision on January 28, 2014, affirming the 
board of review’s determination.  BTA No. 2011-4027, 2014 WL 504226 (Jan. 
28, 2014).  The BTA first disposed of the challenge to the games-played method 
on the basis of its decision in the Hillenmeyer case.  Id. at *2.  Next, the BTA 
considered the significance of Saturday’s absence from the Cleveland game in 
2008.  Finding applicable to Saturday’s situation two passages of the CCA’s 
nonresident-professional-athlete regulation—that the tax should be withheld with 
respect to “the entire amount of compensation earned for games that occur in” 
Cleveland and that the Cleveland allocation includes compensation for games the 
athlete “was excused from playing because of injury or illness,” CCA Regulation 
8:02(E)(6)—the BTA concluded, citing its Hillenmeyer decision, that Cleveland’s 
municipal-income-tax 
ordinance 
and 
the 
nonresident-professional-athlete 
regulation do not operate in contravention of any state statute or Ohio case 
precedent and constitute a “ ‘valid exercise of the city’s municipal power to tax.’ 
”  Id. at *2-3, quoting Gesler v. Worthington Income Tax Bd. of Appeals, 138 
Ohio St.3d 76, 2013-Ohio-4986, 3 N.E.3d 1177, ¶ 22.  According to the BTA, it 
possessed “no jurisdiction to determine the constitutionality or reasonableness of 
January Term, 2015 
 
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the ordinance, including its application to athletes absent from games due to 
injury or illness.”  Id. at *3.  Thereafter, the Saturdays appealed to this court. 
4. Evidence Regarding Saturday’s Employment 
{¶ 10} The evidence the Saturdays presented in this case strongly parallels 
that presented by Hillenmeyer in his case, with the difference that Thomas 
DePaso, associate general counsel to the NFL Players’ Association and a former 
NFL player, testified by affidavit in the Saturdays’ case rather than live at the 
board of review hearing.  Just as the live testimony in Hillenmeyer referred to the 
NFL collective-bargaining agreement and the individual player contracts, so does 
DePaso’s affidavit in this case.  It discusses the phases of an NFL player’s work 
year: the three-day mandatory mini-camp; the preseason training camp; the 
regular season with its work week including meetings, practices, and games; and 
the postseason. 
{¶ 11} Other evidence included the affidavits of both Jeffrey and Karen 
Saturday, the affidavit of the Colts’ vice president of finance, Kurt Humphrey, 
and the affidavit of the Colts’ head athletic trainer, Dave Hammer.  In addition to 
supporting DePaso’s testimony concerning the duties and compensation of 
Saturday as an NFL player, these affidavits establish that Saturday suffered an 
injury during the 2008 season that rendered him inactive for four games, 
including the Cleveland game that year.  They also document Saturday’s 
treatment plan for the injury through a log that is kept in the ordinary course of 
business.  The log shows that Saturday underwent rehabilitation for calf and knee 
injuries on the weekend of November 29 and 30, 2008—the dates on which the 
Colts traveled to Cleveland and played the game there. 
{¶ 12} DePaso stated in his affidavit that NFL teams require injured 
players to follow a rehabilitation program and that players are subject to fines for 
failing to attend scheduled appointments with team physicians or trainers or for 
“material failure to follow a rehabilitation program prescribed by a Club 
SUPREME COURT OF OHIO 
 
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physician or trainer.”  Jeffrey Saturday’s affidavit asserted that during the period 
of his 2008-season injury he “attended team meetings and performed physical 
rehabilitation,” adding that “failure to perform these services to the Colts would 
have subjected me to fines.”  The Humphrey affidavit shows the travel manifest 
relating to the 2008 Cleveland game, a document kept in the ordinary course of 
business by the Colts; it shows which team members went to Cleveland for the 
game.  Saturday was not with the Colts in Cleveland that weekend. 
Law and Analysis 
{¶ 13} Under their first proposition of law, the Saturdays argue that the 
“taxation of the wages of a nonresident employee who performed no work or 
services in Cleveland is contrary to the Cleveland Codified Ordinances and Ohio 
Law.”  Cleveland counters by arguing that its municipal-income-tax ordinance 
authorizes the tax by applying it to “qualifying wages” that are “attributable to” 
Cleveland.  See Cleveland Codified Ordinances 191.0501(b)(1).  Further, 
Cleveland relies on the specific provisions of its regulation governing the 
ordinance’s application to nonresident professional athletes, placing particular 
emphasis on the inclusion in the games-played ratio of “games the athlete * * * 
was excused from playing because of injury or illness.”  CCA Regulation 
8:02(E)(6).  We conclude that Cleveland’s municipal-income-tax ordinance and 
its nonresident-professional-athlete regulation do not allow for the taxation of the 
Saturdays’ 2008 income. 
{¶ 14} Cleveland imposes a tax on “all qualifying wages, earned and/or 
received on and after January 1, 1967, by nonresidents of the City for work done 
or services performed or rendered within the City or attributable to the City.”  
Cleveland Codified Ordinances 191.0501(b)(1).  Certainly, none of Saturday’s 
work was performed in Cleveland.  Nor can his work on the day of the Cleveland 
game, or on any other day, be attributed to Cleveland, since the evidence shows 
January Term, 2015 
 
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that Saturday was in Indianapolis on game day, engaging in physical 
rehabilitation in preparation for future games. 
{¶ 15} CCA Regulation 8:02(E)(6), which describes how the tax applies to 
nonresident professional athletes, contains two potentially significant passages.  It 
reads: 
 
6.  Professional athletes. 
In the case of employees who are non-resident professional 
athletes, the deduction and withholding of personal service 
compensation shall attach to the entire amount of compensation 
earned for games that occur in the taxing community.  In the case 
of a non-resident athlete not paid specifically for the game played 
in a taxing community, the following apportionment formula must 
be used: 
The compensation earned and subject to tax is the total 
income earned during the taxable year, including incentive 
payments, signing bonuses, reporting bonuses, incentive bonuses, 
roster bonuses and other extras, multiplied by a fraction, the 
numerator of which is the number of exhibition, regular season, 
and post-season games the athlete played (or was available to play 
for his team, as for example, with substitutes), or was excused from 
playing because of injury or illness, in the taxing community 
during the taxable year, and the denominator of which is the total 
number of exhibition, regular season, and post-season games 
which the athlete was obligated to play under contract or otherwise 
during the taxable year, including games in which the athlete was 
excused from playing because of injury or illness. 
 
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(Emphasis added.) 
{¶ 16} First, the regulation extends the tax to the “entire amount of 
compensation earned for games that occur in the taxing community.”  Cleveland 
argues that NFL players are paid to play games and that Saturday’s compensation 
related to the playing of the game in Cleveland even though Saturday was not 
present for it. 
{¶ 17} But when the regulation is read in the context of the ordinance—
“for work done or services performed or rendered within the City or attributable 
to the City”—and also in light of our holding in Hillenmeyer that players such as 
Saturday are compensated for activity other than playing games, then Cleveland’s 
reading of the regulation becomes untenable.  In Hillenmeyer, this court 
determines that the “duty-days” method of calculating the amount of income that 
is subject to Cleveland municipal tax “properly includes as taxable income only 
that compensation earned in Cleveland by accounting for all the work for which 
an NFL player such as Hillenmeyer is paid, rather than merely the football games 
he plays each year.”  Hillenmeyer, ___ Ohio St.3d ___, 2015-Ohio-1623, ___ 
N.E.3d ___, at ¶ 49. 
{¶ 18} Since NFL players are contractually employed to provide services 
to their employers from the beginning of the preseason through the end of the 
postseason, including mandatory mini-camps, the official preseason training 
camp, meetings, practice sessions, and all preseason, regular season, and 
postseason games, and since they are required to undergo rehabilitation for 
injuries, Saturday’s service to his employer encompassed his rehabilitation 
activity outside Cleveland on the day of the Colts-Browns game in Cleveland in 
2008.  That is, Saturday was performing his job duties in Indianapolis on game 
day.  It follows that the language of the regulation—that the “entire amount of 
compensation earned for games that occur in the taxing community” is 
susceptible to municipal tax—must be construed more narrowly under the present 
January Term, 2015 
 
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circumstances to permit the taxation of compensation only when the player was 
actually present at the Cleveland game and earning compensation for his presence 
at that game. 
{¶ 19} The second potentially significant passage in the regulation is the 
part that describes the ratio for allocating income to Cleveland for tax purposes.  
Both in constructing the numerator and the denominator for the games-played 
calculation, the regulation includes games the athlete “was excused from playing 
because of injury or illness.”  Cleveland argues that because Saturday was 
“excused from playing” the Cleveland game, the tax applies to him under this 
provision. 
{¶ 20} This argument is unavailing for the simple reason that nothing in 
the regulation addresses the additional significant fact of Saturday’s complete 
absence from the city of Cleveland at the time of the game (and at every other 
time during the year).  Had Saturday traveled to Cleveland with the team and been 
“excused from playing,” the language of the regulation might support imposing 
the tax.  But here, Saturday was not even present at the game, and the regulation 
says nothing about what to do when the athlete is not even in the city where the 
game is being played.  Thus, the regulation is at best ambiguous as to whether the 
tax is levied on Saturday. 
{¶ 21} At least two canons of construction militate against Cleveland’s 
expansive interpretation of the city’s income-tax law, given that the record here 
shows not only that the taxpayer was not in Cleveland on game day but also that 
he was performing job duties in another city on that day.  First, it is a central tenet 
of tax jurisprudence that “a statute that imposes a tax requires strict construction 
against the state, with any doubt resolved in favor of the taxpayer.”  Columbia 
Gas Transm. Corp. v. Levin, 117 Ohio St.3d 122, 2008-Ohio-511, 882 N.E.2d 
400, ¶ 34, citing Gulf Oil Corp. v. Kosydar, 44 Ohio St.2d 208, 339 N.E.2d 820 
(1975), paragraph one of the syllabus.  See also Bowsher v. Euclid Income Tax 
SUPREME COURT OF OHIO 
 
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Bd. of Rev., 99 Ohio St.3d 330, 2003-Ohio-3886, 792 N.E.2d 181, ¶ 14 (applying 
the same principle to municipal income tax).  Second, Cleveland’s interpretation 
violates the “implied condition of all statutes relating to taxation that they have no 
extraterritorial effect.”  Schneider v. Laffoon, 4 Ohio St.2d 89, 96, 212 N.E.2d 801 
(1965).  Quite simply, Saturday’s absence from Cleveland and his performance of 
duties elsewhere on the same day raise a strong suggestion that the imposition of 
Cleveland tax would constitute extraterritorial taxation. 
{¶ 22} Therefore, we hold that neither Cleveland’s municipal-income-tax 
ordinance nor the regulation governing its application to nonresident professional 
athletes authorizes the imposition of tax on Saturday’s income under the 
circumstances of this case.  Because we dispose of this case by construing the 
ordinance and the regulation against Cleveland’s position, we need not reach the 
other statutory and constitutional issues raised by the Saturdays, nor do we need 
to address the arguments advanced by Cleveland as to why those other issues 
have been waived or are otherwise barred from our consideration. 
Conclusion 
{¶ 23} We hold that Cleveland lacked authority under its city ordinance 
and its regulations to impose a tax on Saturday’s income, given that none of the 
services for which he was compensated were performed in Cleveland during 
2008.  Accordingly, we reverse the decision of the BTA.  We also remand with 
the instruction that the Saturdays be granted a full refund of Cleveland municipal 
income tax paid for 2008, along with any amount of interest that is proper 
pursuant to statute, city charter, or local ordinance. 
 
 
 
 
 
 
 
 
Judgment reversed 
 
 
 
 
 
 
 
 
and cause remanded. 
O’CONNOR, C.J., and, O’DONNELL, LANZINGER, KENNEDY, FRENCH, and 
O’NEILL, JJ., concur. 
____________________________ 
January Term, 2015 
 
11
 
Hemenway & Barnes, L.L.P., Stephen W. Kidder, and Ryan P. McManus, 
for appellants. 
 
Barbara A. Langhenry, Cleveland Director of Law, and Linda L. 
Bickerstaff, Assistant Director of Law, for appellees. 
____________________________