Title: State ex rel. Cleveland Prof’l Football, LLC v. Buehrer

State: ohio

Issuer: Ohio Supreme Court

Document:

[Until this opinion appears in the Ohio Official Reports advance sheets, it may be cited as 
State ex rel. Cleveland Professional Football, L.L.C. v. Buehrer, Slip Opinion No. 2014-Ohio-
3615.] 
 
 
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. 2014-OHIO-3615 
THE STATE EX REL. CLEVELAND PROFESSIONAL FOOTBALL, L.L.C., APPELLEE, 
v. BUEHRER, ADMR., APPELLANT. 
[Until this opinion appears in the Ohio Official Reports advance sheets,  
it may be cited as State ex rel. Cleveland Professional Football, L.L.C. v. 
Buehrer, Slip Opinion No. 2014-Ohio-3615.] 
Workers’ compensation—Successor in interest—Experience rating—Court of 
appeals’ judgment granting writ of mandamus affirmed. 
(No. 2013-0234—Submitted May 27, 2014—Decided August 27, 2014.) 
APPEAL from the Court of Appeals for Franklin County, No. 11AP-428,  
2012-Ohio-6020. 
____________________ 
Per Curiam. 
{¶ 1} This is a dispute over the Bureau of Workers’ Compensation’s 
decision to transfer the experience rating of an arena football team known as the 
Cleveland Gladiators from a former owner of the team to a new owner of the 
team. 
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{¶ 2} Because the bureau’s order did not consider the evidence regarding 
the employment of football players or coaches by each entity, the Tenth District 
Court of Appeals determined that the bureau had abused its discretion when it 
transferred the entire experience rating of the former owner.  We agree.  
Consequently, we affirm the judgment of the court of appeals, and we issue a writ 
of mandamus ordering the bureau to vacate its order transferring the entire 
experience rating of the former owner to the new owner and to issue a new order 
that determines the experience rating based only on the portion of the business 
that was transferred. 
Facts 
{¶ 3} Cleveland AFL, L.L.C. (“the former owner”), was an arena 
football team owned by Jim Ferraro that was part of the Arena Football League.  
In 2009, the Arena Football League suspended operations and eventually filed 
bankruptcy proceedings.  An investor group known as Arena Football One bought 
the assets of the defunct league and formed a new league. 
{¶ 4} Jim Ferraro then formed Cleveland Professional, L.L.C. (“the new 
owner”), which is affiliated with the new league.  According to Ferraro, his new 
company is different than the old one; in particular, the new owner does not 
employ the Gladiators’ players and coaches.  The players and coaches are now 
employed by the new league. 
{¶ 5} The new owner applied for workers’ compensation coverage.  On 
May 21, 2010, the bureau notified the new owner that the bureau had determined 
that it was a successor employer for workers’ compensation purposes and that it 
was responsible for the financial rights and obligations of the old owner.  The 
bureau stated that it would base the new owners’ premium rate on the experience 
of the former owner. 
{¶ 6} On July 12, 2010, the new owner filed a protest and requested that 
the bureau hold a hearing to determine whether it was a successor to the former 
January Term, 2014 
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owner for experience-rating purposes.  Following a hearing on October 6, 2010, 
an adjudicating committee of the bureau issued an order denying the protest.  The 
committee made the following findings of fact and conclusions of law: 
 
Based on the testimony at the hearing and the materials 
submitted with the protest, the Adjudication Committee DENIES 
the employer’s protest to the transfer/combination.  The 
Committee finds that the claims against Cleveland AFL LCC were 
originally allowed against a [professional employer organization 
(“PEO”)]  and would have remained so but for the fact that the 
PEO went out of business.  Under Ohio Administrative Code 
4123-17-15 those claims were then transferred to the PEO1 client-
employer, Cleveland AFL LCC.  The new employer, Cleveland 
Professional Football League, also uses a PEO to cover its players 
for purposes of workers compensation.  Thus, the business model 
used by the old and new companies is the same.  Both companies 
share the same franchise name, logo, method of covering players 
and ownership.  BWC correctly transferred and/or combined the 
predecessor’s experience and/or rights and/or obligations to the 
subsequent Employer under the Code. 
 
{¶ 7} The new owner appealed.  On February 23, 2011, the 
administrator’s designee issued a final order that affirmed the decision of the 
adjudicating committee with one correction:   
                                                 
1 A PEO is an entity that enters into an agreement with a client employer to coemploy part of the 
client’s workforce for workers’ compensation purposes.  As such, the PEO must maintain workers' 
compensation coverage, pay all workers' compensation premiums, and manage all claims, filings, 
and related procedures associated with a shared employee in compliance with Chapters 4121 and 
4123 of the Revised Code.  R.C. 4125.01(D);  Ohio Adm.Code 4123-17-15(C)(1) and (D)(7). 
 
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Based on the testimony and other evidence presented at the 
hearing, the Administrator’s Designee affirms the Adjudicating 
Committee’s findings, decision, and rationale set forth in the order.  
However, it is noted that, contrary to what is stated in the 
Adjudicating Committee order, the “players” are not covered by a 
PEO under contract with the successor employer.  It is only the 
front office staff that is covered by the PEO agreements. 
 
{¶ 8} The new owner filed a complaint for a writ of mandamus alleging 
that the bureau had abused its discretion by finding that it was a successor to the 
former owner for workers’ compensation purposes and by failing to adequately 
explain its decision in writing.  The court referred the matter to a magistrate who 
determined that the evidence supported the bureau’s conclusion that the new 
owner was a successor employer.  2012-Ohio-6020, ¶ 64.  However, the 
magistrate decided that the bureau abused its discretion when it transferred the 
entire experience of the former owner.  Id.  The magistrate recommended that the 
court issue a writ of mandamus ordering the bureau to vacate its previous order 
and issue a new order that expressly sets forth what portion of the former owner’s 
experience is being charged to the new owner and clearly explains its decision 
concerning the new owner’s obligations. 
{¶ 9} The bureau filed objections to the magistrate’s decision. 
{¶ 10} The court of appeals concluded, over the bureau’s objection, that 
the evidence supported the magistrate’s finding that the bureau had determined 
that the new owner was the successor to the former owner.  Id. at ¶ 4.  The 
appellate court also agreed with the magistrate’s analysis that if only a portion of 
the former owner’s business was transferred to the new owner, then pursuant to 
Ohio Adm.Code 4123-17-02(B)(3), the experience rating is transferred in 
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proportion to the business that was transferred.  Id. at ¶ 6.  The court granted the 
new owner’s request for a writ and directed the bureau to issue a new order 
determining the experience rating based only on the portion of the former owner’s 
business that was transferred to the new owner.  Id. at ¶ 9. 
{¶ 11} This matter is before the court on the bureau’s appeal as of right. 
Legal Analysis 
{¶ 12} The issue before us is whether the evidence supports the bureau’s 
decision to transfer the entire experience rating of the former owner or whether 
only a portion of it should be transferred for purposes of determining the premium 
rate assigned to the new owner. 
{¶ 13} The bureau uses the concept of “experience rating” to determine 
the premium rates of an employer.  State ex rel. K & D Group, Inc. v. Buehrer, 
135 Ohio St.3d 257, 2013-Ohio-734, 985 N.E.2d 1270, ¶ 9.  “In experience rating, 
the employer’s past claims history, or experience, is consulted to compute a rate 
that produces premiums sufficient to pay future claims.”  State ex rel. Crosset 
Co., Inc. v. Conrad, 87 Ohio St.3d 467, 473, 721 N.E.2d 986 (2000). 
{¶ 14} As it was required to do under R.C. 4123.32, the bureau 
established rules concerning premium “rates to be applied where one employer 
takes over the occupation or industry of another * * *, and the administrator may 
require that if any employer transfers a business in whole or in part * * *, the 
successor in interest shall assume, in proportion to the extent of the transfer, * * * 
the employer's account.”  Ohio Adm.Code 4123-17-02(B) permits the bureau to 
transfer the experience rating from a predecessor employer to a successor 
employer when there has been a transfer of business either in whole or in part.  
There is no dispute that the evidence supported the finding that the new owner 
was a successor to the former owner.  Instead, the crux of this appeal is whether 
the former owner transferred its business in whole or in part to the new owner. 
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{¶ 15} The bureau maintains that the former owner had assigned the risk 
experience of its football players to a PEO, while the new owner’s football 
players are employees of the new league; thus, neither entity had or would have 
any risk experience for its football players.  The bureau contends that the court 
should defer to the bureau’s expertise on the transfer of risk experience and that 
because the risk of both teams was equivalent, the bureau’s transfer of the entire 
experience rating was proper. 
{¶ 16} On the other hand, the new owner argues that the former owner 
had employed the coaches and players and had paid into the state fund for 
workers’ compensation coverage for those employees while the new owner’s 
coaches and players are employed by and covered by the new league.2  The new 
owner submitted a letter to the bureau dated October 12, 2010, after the hearing 
before the adjudicating committee, in which it disputed the bureau’s allegation 
that the former owner had entered into an agreement with a PEO named Pay 
Source.  The new owner submitted invoices from Pay Source demonstrating that 
Pay Source had merely processed payroll for the nonplayer employees of the 
former owner.  The new owner maintains that the bureau’s orders are not 
supported by the facts and are devoid of any serious analysis. 
{¶ 17} The appellate court correctly determined that the bureau did not 
appear to have considered the arguments or evidence regarding whether the 
football players and coaches associated with the former owner were employed by 
a PEO and whether the players and coaches associated with the new owner were 
employed by the new league.  We agree that the bureau’s failure to address the 
evidence that the former owner employed the players and the new owner did not 
or adequately explain its decision to transfer the entire experience rating to the 
new owner was an abuse of discretion. 
                                                 
2 The new owner provided evidence of a workers’ compensation claim filed by a football player in 
2010 in which the bureau determined that the employer was the new league, not the new owner.  
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{¶ 18} Therefore, we affirm the judgment of the court of appeals. 
Judgment affirmed. 
O’CONNOR, C.J., and PFEIFER, O’DONNELL, LANZINGER, KENNEDY, and 
O’NEILL, JJ., concur. 
FRENCH, J., not participating. 
___________________ 
Kelley & Ferraro, L.L.P., and Shawn M. Acton, for appellee. 
Michael DeWine, Attorney General, and John Smart, Assistant Attorney 
General, for appellant. 
______________________