Oral Argument Previews for Tuesday, May 19, 2015

Tuesday, May 19, 2015

In the Matter of the Application of Columbus Southern Power Company for Authority to Establish a Standard Service Offer … in the Form of an Electric Security Plan. In The Matter of the Application of Columbus Southern Power Company and Ohio Power Company for Approval of Certain Accounting Authority, Case no. 2013-0521
Public Utilities Commission of Ohio

Board of Health of Cuyahoga County v. Lipson O’Shea Legal Group, Case no. 2014-0223
Eighth District Court of Appeals (Cuyahoga County)

State of Ohio v. C.K., Case no. 2014-0735
Eighth District Court of Appeals (Cuyahoga County)

Disciplinary Counsel v. Steven J. Terry, Case no. 2014-2157
Cuyahoga County

Was PUCO’s Approval of Electric Plan Proper?

ISSUES:
Appeal:

Was AEP-Ohio’s modified electric service plan (ESP) approved by the Public Utilities Commission of Ohio (PUCO) more favorable than a market-rate offer?
Was the PUCO’s adoption of a retail stability rider, capacity shopping tax, generation recovery rider, and pool termination rider for AEP lawful and reasonable?
Did the PUCO-approved frozen standard-service-offer rates discriminate against non-shopping customers?
Did the PUCO’s order improperly allow for the recovery of generation transition revenue or its equivalent?
Was the PUCO’s approval of the transfer of AEP-Ohio’s generating assets to an affiliate proper, and did the transfer create any improper subsidies by allowing revenue to pass through AEP to the affiliate?
Did the PUCO properly consider AEP’s corporate separation plan?

Cross-Appeal:

Was the PUCO’s imposition of an annual 12 percent excessive earnings test on AEP during the ESP’s term unreasonable and unlawful?
Should AEP have had the right to withdraw from the modified ESP approved by the PUCO?
Did the PUCO err by extending the state compensation mechanism to standard-service offer auctions and non-shopping customers?

BACKGROUND:
State law requires electric utilities to create a standard service offer (SSO) for consumers. The SSO is the default generation price charged to consumers when they don’t shop for a competitive supplier for generation of their electricity.

In January 2011, AEP-Ohio (Columbus Southern Power Company and Ohio Power Company) requested approval by the Public Utilities Commission of Ohio (PUCO) of an electric service plan (ESP), including an SSO. Following a February 2012 rehearing, AEP modified its proposed plan for June 1, 2012, through May 31, 2015, and refiled its application with the commission. In August 2012, the PUCO approved the company’s ESP with some changes.

Along the way, the PUCO also considered an AEP request for compensation to sell “capacity,” or the ability to generate electricity at peak times, to retail electricity providers. The commission decided in July 2012 that AEP could collect payment from the providers based on a discounted rate set by auction and could defer any additional costs to be collected later.

The approved ESP included three unavoidable (non-bypassable) riders – a retail stability rider (RSR), to recover costs for providing rate stability to customers during the plan’s term; a generation resource rider, for expenses related to a proposed solar facility; and a pool termination rider, to compensate for losses that occurred when a group of AEP companies ended a revenue sharing agreement.

The commission decided that AEP could collect $508 million through the RSR. Customers would pay a $3.50/MWh monthly charge until May 31, 2014, and $4/MWh from June 1, 2014, to May 31, 2015. AEP had to allocate $1 of these charges for its recovery of the deferred capacity costs.

Several parties, including Kroger Company, Industrial Energy Users-Ohio (IEU), Ohio Consumers’ Counsel (OCC), and Ohio Energy Group, filed appeals of the PUCO’s decision to the Ohio Supreme Court.

Groups Oppose PUCO’s Ruling
Attorneys for Kroger argue that the RSR is discriminatory to some of AEP’s customers. For “high-load-factor customers,” such as Kroger, energy use is high in relation to its demand. The RSR will charge customers based on their energy usage rather than demand, which will result in unfairly higher costs for these customers, they contend. Low-load-factor customers are therefore being subsidized by the high-load customers, they assert.

Attorneys for IEU maintain that the PUCO should never have approved the electric company’s ESP because the plan wasn’t more favorable than a market-rate offer, which establishes pricing based on the market. Under the approved ESP, though, AEP’s customers were deprived of choice in the market, they assert. In addition, they claim that the approved riders aren’t legally permitted to be included as part of an ESP. They also argue that the transfer of AEP’s generating assets to an affiliate was improper and creates illegal subsidies.

The OCC’s attorneys challenge the commission’s authority to collect the capacity charge and the RSR. Customers shouldn’t have to pay above-market electricity prices through the RSR when the market is offering lower rates, they assert. Nor should retail customers have to pay AEP for the capacity costs it deferred based on the discount given to retail electricity providers, they maintain.

Ohio Energy Group’s attorneys also contest the deferred capacity costs. In their view, the PUCO is allowing AEP to collect the 35-month discount given to retail electricity providers, or “power marketers,” from retail consumers. The estimated amount of that discount has been as high as $833 million. They contend that charging customers for the discount given to the marketers is prohibited by law because the marketers owe AEP the deferred charges. Based on the $1 fee included in the ESP for this capacity charge, retail customers will pay $48 million a year to AEP.

Electric Company’s Responses
Attorneys for AEP respond that the RSR is allowed by state law and the case record supports the PUCO’s decision. They note that the commission stated that the RSR fosters competition, allows customers to seek out competitive rates, and will encourage the transition to a fully competitive electricity market.

They point out that the approved ESP froze certain rates for customers. The RSR, they assert, provided financial stability to the company while the customers in exchange benefited from stable prices and certainty about their service.

AEP’s affiliate, Genco (or GenResources), provided generation service to the company to support the standard service offer, so it was reasonable for some revenues to pass through AEP to the affiliate, they maintain.

PUCO’s Positions
The PUCO’s attorneys argue that the commission must consider more than just a strict price comparison between ESP rates and market-rate offers. When considering multiple factors, the approved ESP was more favorable than the market-rate offer, they maintain. In addition, they assert that this ESP will help AEP to move to competitive electricity pricing.

They assert that the RSR froze certain costs at their current rate during the plan’s term, and that freeze allowed customers to shop for better rates or return to this stable rate. Including the deferred capacity costs in the rider was authorized by statute, they argue. These deferred costs must be recovered through customer rates, they maintain.

They contend that all AEP customers benefit from the rider and that it wasn’t discriminatory. The capacity service that AEP supplies to the electric service providers differs from services the company offers to customers. When services are different, then price discrepancies charged to the recipients are permitted and not discriminatory. In addition, they note that the commission determined that basing the RSR on demand, as Kroger suggested, rather than energy use would unduly burden smaller commercial and industrial customers. The way the commission assessed the RSR properly spread the costs among all customers, they argue.

They explain that the PUCO investigated AEP’s proposed change to the capacity charge and properly determined that the charge balanced letting AEP recover its deferred costs while fostering retail competition.

They also point out that the contract between AEP and its affiliate was subject to federal, not PUCO, approval. AEP’s corporate separation plan involving the affiliate was fully considered by the commission, which set specific conditions to prevent AEP from gaining a competitive advantage through the transfer, they argue.

Electric Company Also Appeals
AEP filed a cross-appeal in this case, presenting three questions for the court (beginning on p. 42). The commission and the appellants responded in multiple, separate briefs.

Division of Oral Argument Time
The Ohio Supreme Court has ordered that the Kroger Company, IEU, OCC, and Ohio Energy Group shall argue first and have 10 minutes for their presentation. Ohio Power Company will then be permitted 10 minutes for arguments. The PUCO and IEU will argue third, and they have been allotted 10 minutes.

Additional Brief
An amicus curiae brief supporting the PUCO’s position has been submitted by the Dayton Power and Light Company.

- Kathleen Maloney

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Contacts
Representing Industrial Energy Users-Ohio: Samuel Randazzo, 614.469.8000

Representing the Kroger Co.: Mark Yurick, 614.221.2838

Representing the Ohio Consumers’ Counsel: Maureen Grady, 614.466.9567

Representing the Ohio Energy Group: Michael Kurtz, 513.421.2255

Representing AEP-Ohio (Ohio Power Company and Columbus Southern Power Company): Steven Nourse, 614.716.1608

Representing the Public Utilities Commission of Ohio from the Ohio Attorney General’s Office: Werner Margard, 614.995.5532

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Are Health Board Documents Related to Lead Poisoning Public Records?

Board of Health of Cuyahoga County v. Lipson O’Shea Legal Group, Case no. 2014-0223
Eighth District Court of Appeals (Cuyahoga County)

ISSUE: Is information collected by a health board or the state health department that identifies or could be used to identify an individual exempt from disclosure under the state Public Records Act unless the individual consents to the release?

BACKGROUND:
Lipson O’Shea Legal Group in Rocky River sent a public records request in January 2012 to the Cuyahoga County Board of Health. The law firm requested information gathered by the board from 2008 through 2011 about homes where minors were found to have elevated amounts of lead in their blood.

State law explains that health providers must report high lead levels (above 10 micrograms per deciliter) in children under the age of 6 to the appropriate board of health for investigation.

The health board’s investigation results in records that include questionnaires conducted with parents or guardians and containing names, birth dates, addresses, schools, siblings, and blood test results of the children with elevated lead levels, along with the parents’ or guardians’ contact information. The records also comprise lead risk assessment reports with the child’s address and the property owner’s address; notification letters to the parents or guardians and to the property owner; lead clearance reports; documents identifying the property’s owner; and an investigative chronology.

According to the health board’s brief, in the late ’90s Cleveland had one of the highest rates of lead poisoning in the country. Through federal grants for eliminating lead poisoning in children, the health board noted it has seen the county’s lead poisoning rates decline by 53 percent since 2000.

Case History
In June 2012, the health board asked the local court to decide whether the records requested by the law firm contained “protected health information,” exempting them from release as a public record. A sample of the requested documents was provided under seal to the court. Nine months later, the trial court ruled the records were confidential and couldn’t be released.

Lipson appealed to the Eighth District Court of Appeals. The court determined that some of the records didn’t include protected health information. While the court found that the child data forms couldn’t be disclosed, it determined that property addresses and the owners’ names and addresses, if not the parent’s or guardian’s, had to be released with any personal identifying information related to the child hidden. The health board appealed the decision to the Ohio Supreme Court, which agreed to consider the issue.

Protected Health Information
“Protected health information” is defined in R.C. 3701.17(A)(2) as “information … that describes an individual’s past, present, or future physical or mental health status or condition, receipt of treatment or care, or purchase of health products, if either of the following applies:

(a) The information reveals the identity of the individual who is the subject of the information.

(b) The information could be used to reveal the identity of the individual who is the subject of the information, either by using the information alone or with other information that is available to predictable recipients of the information.”

Cuyahoga County’s View
Attorneys for the health board argue that residential information, even if not current, could be used to identify the children with lead poisoning. Release of that information would violate the statute, they maintain. They contend a few online searches using a property’s address would produce the parent’s or guardian’s name, or those with the information could visit the house or, if the family had moved, talk to neighbors to track down the affected child and family.

“The mere fact that the record does not specifically identify the person who is the subject of the information is immaterial if that information could still be used to reveal that individual's identity,” they write in the brief to the court.

“The scope of the statutory confidentiality of protected health information embodied in R.C. 3701.17 is quite broad,” they maintain. “To encourage reporting of health problems to governmental agencies tasked with preventing outbreaks, the General Assembly explicitly protected certain [health board] records from disclosure pursuant to public records requests.

They also assert that the Ohio Supreme Court has excluded the release of records containing sensitive information about children. The case, State ex rel. McCleary v. Roberts (2000), concerned the requested disclosure of personal information about children using public swimming pools. The court ruled that “[p]ersonal information of private citizens, obtained by a ‘public office,’ reduced to writing and placed in record form and used by the public office in implementing some lawful regulatory policy, is not a ‘public record.’”

Law Firm’s Position
Attorneys from Lipson O’Shea Legal Group stress that the Public Records Act is designed to ensure open government and to make government accountable to the citizens. When there is protected information in a public record, the government agency still has a duty to release the record with the protected information redacted, they argue.

While the health board believes the records are exempt from release because the disclosure would violate the statute, the law firm counters that many of the documents – the notification letters, the risk assessment reports, correspondence with landlords, and clearance reports – don’t contain any health data and only identify the property owner, often a landlord.

They cite State ex rel. Cincinnati Enquirer v. Daniels (2006), which dealt with whether lead investigation reports are public records or contained health information protected under the federal Health Insurance Portability and Accountability Act (HIPAA). In the decision, the Ohio Supreme Court noted that McCleary involved dissimilar facts because the data gathered for pool identification cards “did not document the operation” of a public office and, therefore, wasn’t a public record. The Daniels court concluded that lead risk assessment reports and lead citations didn’t contain any protected health information, so they had to be released.

Once it is determined that a record contains no information that “describes an individual’s past, present, or future physical or mental health status or condition,” the analysis ends and the record must be provided, the law firm concludes.

- Kathleen Maloney

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Contacts
Representing Cuyahoga County Board of Health from the Cuyahoga County Prosecutor’s Office: Brian Gutkoski, 216.443.7860

Representing Lipson O’Shea Legal Group: Michael O’Shea, 440.356.2700

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Is Man Convicted for Killing Attacker in His Home Eligible for Wrongful Imprisonment Compensation?

State of Ohio v. C.K., Case no. 2014-0735
Eighth District Court of Appeals (Cuyahoga County)

ISSUES:

In Ohio’s wrongful imprisonment statute, do the words “can be brought” regarding a future criminal proceeding simply mean “be able to,” or does it also imply the case is “factually supportable?”
Does exoneration of a murder charge under Ohio’s “castle doctrine” make it impossible to retry a suspect for murder thereby making the individual eligible to claim compensation for wrongful imprisonment?

BACKGROUND:
In 2009, C.K. was a 53-year-old electrical engineer and former part-time professor that had been recently laid off from his job. He’s a U.S. Air Force veteran and a licensed concealed weapon permit holder, and he kept a licensed handgun in his home. He began renting a bedroom in his house to tenants, including Valerie McNaughton. She had asked C.K.’s permission to allow Andre Coleman to live there as well but after episodes of violent behavior, C.K. evicted Coleman.

In September 2009, Coleman, McNaughton, and two others were smoking crack cocaine at a nearby hotel, and when they ran out, McNaughton returned to C.K.’s home. Coleman followed, demanding money from McNaughton, and C.K. repeatedly attempted to get Coleman to leave. At one point Coleman re-entered the home, threw McNaughton to the floor, and began attacking her. C.K. drew his weapon and indicated Coleman began to bring what appeared to be a gun from behind his head when C.K. shot him twice. When on the ground, Coleman twitched and C.K. shot him four more times.

The Cuyahoga County prosecutor charged C.K. with one count of murder and two counts of firearm specifications, and a jury convicted him in August 2010. He was sentenced to 18 years to life in prison. On appeal, the Eighth District Court of Appeals in August 2011 reversed C.K.’s conviction, ruling the verdict was against the manifest weight of the evidence because the jury did not properly consider Ohio’s “castle doctrine,” which had been strengthened by the Ohio General Assembly in 2008. The new law required no duty to retreat before a home owner could use deadly force against an intruder if the person felt threat of great bodily harm or death. The appellate court indicated it could not dismiss the charges against C.K. but needed to remand the case to the trial court for further proceedings. At that time, the prosecutor dismissed the case without prejudice but took no further action. The prosecutor’s office appealed the decision to the Ohio Supreme Court, which agreed to hear the case.

State’s Argument: Too Early to Claim Wrongful Imprisonment
With the dismissal of the charge, C.K. filed a civil wrongful imprisonment claim in 2012 under R.C. 2743.48 for the time he spent incarcerated while appealing his conviction. Additionally, C.K. sought and received the right to have his criminal conviction sealed to prevent his name from being made public in court records. . It argued that the law requires no further criminal proceedings can be brought before one is eligible for compensation, and since it dismissed the charges against C.K. without prejudice, the state could still charge him in the future. The state noted that C.K. admits killing Coleman and he remains a suspect in the case of Coleman’s death. A Cuyahoga County Common Pleas court sided with the prosecution. C.K. appealed, and the Eighth District reversed the trial court declaring the trial court too narrowly interpreted the law. The prosecutor’s office appealed the decision the Ohio Supreme Court, which agreed to hear the case.

To prevail in a wrongful imprisonment claim, C.K. must prove five elements including R.C. 2743.48(A)(4) which states if a conviction is vacated, dismissed, or reversed on appeal, “the prosecuting attorney in the case cannot or will not seek any further appeal of right or upon leave of court, and no criminal proceeding is pending, can be brought, or will be brought by any prosecuting attorney….”

The trial court concluded further proceedings can be brought and granted summary judgment to the prosecutor. The Eighth District ruled the trial court’s interpretation was too narrow and that the General Assembly meant “can be brought” to be only criminal proceedings that are factually supportable and legally permissible. Since the appellate court previously ruled the castle doctrine prevented the conviction of C.K. for murder, it required the trial court to hear more evidence to determine if C.K. met all the elements to succeed in a wrongful imprisonment claim.

The state argues that the Eighth District cannot depart from the plain reading of the statute or add more words to change the definition of “can be brought.” “It is well established that, if the meaning of a statute is unambiguous and definite, courts must apply the statute as written,” the state maintains in its brief to the court, citing State ex. Rel. Savarese v. Buckeye Local School Dist. Bd. of Ed. (1996).

Citing two dictionaries, the state notes that “can” is defined as to “be able to” or to “have the opportunity or possibility to” act. Prosecutors argue that the only way an individual can claim wrongful imprisonment is after it is clear no further proceeding can be brought. “The General Assembly did not intend to provide monetary compensation to those individuals who may be factually guilty of the crimes of which they were charged, but the State has yet proven that guilt,” according to the state’s brief.

In addition, the state argues it may be able to overcome a castle doctrine defense by C.K. because he shot Coleman four more times after he was down on the ground and no longer a threat. In addition, C.K. could be charged with other crimes surrounding the murder.

C.K.’s Argument: Prosecutor Could Forever Bar Eligibility
Since there is no statute of limitations for a murder charge and with the limitations on judicial authority, the prosecutor could forever block C.K.’s wrongful imprisonment claim even if it cannot win a conviction against him, C.K.’s attorneys argue in briefs filed with the court. Countering the state’s arguments, C.K.’s attorneys note that both the criminal case remanded by the Eighth District and the request to seal the record were presented before Judge David T. Matia. During the consideration to conceal the record, prosecutors told Judge Matia the office had no plan to reindict C.K., and Judge Matia concluded a new trial would be futile because C.K. was incapable of being convicted. However, Judge Matia determined he was without the legal authority to dismiss the charges against C.K. because the prosecutor had dismissed them without prejudice.

Because prosecutors “can” always bring criminal proceedings, the wrongful imprisonment statute would be meaningless unless the “can be brought” language implied that the future proceedings are both factually supportable and legally permissible as the Eighth District stated, C.K.’s attorneys claim. The Eighth District’s finding follows a 2013 ruling by the Tenth District Court of Appeals in Lefever v. State, a case the Supreme Court refused to hear. In Lefever, the Tenth District ruled against a wrongful imprisonment claim because the prosecutor’s office made several public arguments that it intended to try to recharge the suspect and was actively preserving evidence and looking for scientific advances to help analyze evidence before the statute of limitations ran out. “C.K.’s case is the polar opposite: C.K. has produced evidence that the state will not re-prosecute him – conclusive, unrebutted evidence, including the state’s admission that it has no intention to reindict C.K,” the brief states.

Friend-of-the-Court Brief
An amicus curiae brief supporting the state’s position has been submitted by the Ohio Prosecuting Attorneys Association.

- Dan Trevas

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Contacts
Representing the State of Ohio from the Cuyahoga County Prosecutor’s Office: Brian R. Gutkoski, 216.443.7860

Representing C.K.: Nicholas A. Dicello 216.696.3232

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Attorney Discipline

Disciplinary Counsel v. Steven J. Terry, Case no. 2014-2157
Cuyahoga County

The Board of Commissioners on Grievances & Discipline (now known as the Board of Professional Conduct) has recommended that attorney and former judge Steven J. Terry be disbarred from the practice of law in Ohio. In its report to the Ohio Supreme Court, the disciplinary board concluded that Terry abused his judicial position when he committed and was later convicted of felony counts of conspiracy to commit mail fraud and honest services mail fraud, violating the Code of Judicial Conduct, Rules of Professional Conduct, and the Rules for the Government of the Bar of Ohio.

The board’s panel reviewing the case found that although Terry had no prior disciplinary history and had good character and reputation in the community, he was part of a political corruption scandal when he did a judicial favor for a public official who gave him money during his election campaign.

Attorneys for Terry contend that the panel recommended an indefinite suspension instead of disbarment, which would allow Terry to ask for reinstatement of his law license after he serves out his prison sentence and other needed requirements. They are asking the justices to implement the lesser sanction.

Background
Terry was appointed to the Cuyahoga County Common Pleas bench in April 2007, and in November 2008, he was elected to retain the position.

Former Cuyahoga County Auditor Frank P. Russo gave substantial financial support to Terry’s 2008 election campaign. In May 2008, Russo asked Terry to deny American Home Bank’s motion for summary judgment in a foreclosure case. Terry then had a magistrate assigned to the American Home Bank case deny the motion without providing any explanation but indicating Terry had reviewed the case file. In July 2008, Terry signed an entry approving the magistrate’s decision.

In June 2011, Terry was convicted in federal court on three counts involving mail fraud and honest services mail fraud by conspiring to defraud the bank. He was later sentenced to 63 months in prison. After his felony conviction, the Ohio Supreme Court in October 2011 suspended Terry’s law license for an interim period. Terry’s currently incarcerated at the McDowell Federal Correctional Institution in West Virginia.

Attorney’s Objections
Terry has filed objections to the board’s report and recommendations. Attorneys for Terry point out the board’s hearing panel only recommended an indefinite suspension, in which Terry could again potentially restore his law license after he completes his prison sentence and fulfills other requirements needed to apply for reinstatement.

The attorneys argue that Terry should not be disbarred, which is permanent, because he had no prior disciplinary record and that he cooperated throughout the disciplinary process. The attorneys also claim that Terry was only involved in one incident of misconduct as opposed to a pattern of misconduct. Terry’s attorneys state the Ohio Supreme Court in other cases has ruled the attorney discipline system is to “protect the public and not punish the attorney.”

Terry’s attorneys ask the justices to follow the hearing panel’s recommendations.

Answer from Disciplinary Counsel
The disciplinary counsel, who filed the complaint in this case, contends that while Terry had no prior misconduct, the severity of the violations committed supersedes the hearing panel’s findings.

Counsel asserts that Terry has yet to take full responsibility for trading political favors and that Terry’s misconduct happened while performing official duties as a judge. The disciplinary counsel also states the Supreme Court has previously disbarred a judge who didn’t have a felony conviction. Counsel requests that the Supreme Court disbar Terry.

- Jenna Gant

Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.

Contacts
Representing the Office of the Disciplinary Counsel: Scott Drexel, 614.461.0256

Representing Steven J. Terry: Richard Koblentz: 216.621.3012

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These informal previews are prepared by the Supreme Court's Office of Public Information to provide the news media and other interested persons with a brief overview of the legal issues and arguments advanced by the parties in upcoming cases scheduled for oral argument. The previews are not part of the case record, and are not considered by the Court during its deliberations.

Parties interested in receiving additional information are encouraged to review the case file available in the Supreme Court Clerk's Office (614.387.9530), or to contact counsel of record.