IN THE SUPREME COURT OF OHIO

JEFFREY B. SATURDAY and KAREN R.SATURDAY,

Appellants,V.

CITY OF CLEVELAND BOARD OFREVIEW and NASSIM LYNCH,CLEVELAND TAX ADMINISTRATOR

Appellees.

CASE NO.^. ^

On Appeal from the Ohio Board of TaxAppeals

Board of Tax Appeals Case No. 2011-4027

7Y(^`^^

NOTICE OF APPEAL OF APPELLANTS JEFFREY B. SATURDAYAND KAREN R. SATURDAY

Stephen W. Kidder (Counsel of Record)PHV No. 3032-2014HEMENWAY & BARNES LLP60 State StreetBoston, MA 02109Telephone: 617.227.7940Facsimil e: 617.227.0781skidder@hembar.com

Barbara A. Langhenry (0038838)Linda L. Bickerstaff (0052101)City of Cleveland Department of Law205 West St. Clair AvenueCleveland, OH 44113Telephone: 216.664.4406Facsimile: 216.420.8299Ibickerstaff@city. cleveland.oh.us

Richard C. Farrin (0022850)ZAINO HALL & FARRIN LLC41 S. High Street, Suite 3600Columbus, OH 43215Telephone: 614.326.1120Facsimile: 614. 754.63 6 8rfarrin@zhftaxlaw.com

COU'14zSEL FOR APPELLANTSJEFFREY B. SATURDAY andKAREN R. SATURDAY

COUNSEL FOR APPELLEESCITY OF CLEVELAND BOARD OFREVIEW and NASSIM LYNCH,CLEVELAND TAX ADIVIINISTKATOR

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943732

Appellants Jeffrey B. Saturday and Karen R. Saturday hereby given notice of their appeal

as of right, pursuant to R.C. 5717.04, to the Supreme Court of Ohio from a Decision and Order

("Decision") of the Ohio Board of Tax Appeals (the "BTA") in the case of.3effrey B. Saturday et

al. v. City of Cleveland Board of Review et al., BTA No. 2011-4027, entered upon the BTA's

journal of proceedings on January 28, 2014. A true and accurate copy of the Decision being

appealed is attached hereto and incorporated herein by reference.

The errors in the Decision of which the Appellants complain are:

1. The BTA acted unreasonably and unlawfully by determining that the Ohio Revised Code

and Cleveland City Ordinance permit the City of Cleveland to tax the income of Mr.

Saturday, a nonresident who did not travel to nor perform any services in Cleveland

during the tax year and, in fact, performed services for his employer, the Indianapolis

Colts, in Indianapolis on the days during which. the Colts were in Cleveland in 2008 to

play a football game.

2. The BTA acted unreasonably and unlawfiilly by failing to apply Ohio precedent holding

that a municipality cannot tax a nonresident on income earned for work perforzned

outside of the municipality. See TfonKaenel v. City of IVew 1'hiladelphia, Tuscarawas

App. No. CA00-04-0041, 2001 WL 81700 (Jan. 3, 2001); Ioliver v. City ofMiddletown;

Butler App. No. CA99-08-147, 2000 WL 895261, at *5 (June 30, 2000); Miley v. City of

Cambridge, Guernsey App. No. 96 CA 44, 1997 Ohio App. LEXIS 3243 (June 25, 1997).

3. The BTA acted utlreasonably and unlawfully by upholding the City of Cleveland's

taxation of tlie income of Mr. Saturdav, a nonresident who did not travel to nor perform

any services in Cleveland during the tax year, in violation of the Commerce Clause of the

943732

United States Constitution, the Due Process Clauses of the United States and Ohio

Constitutions, and Article XVIII of the Ohio Constitution.

4. The BTA acted unreasonably and unlawfully in determining that the City of Cleveland

had authority to tax Mr. Saturday for a "sick day" for a day on which his employer, the

Indianapolis Colts, traveled to Cleveland to play in a football game, but on which Mr.

Saturday remained in Indianapolis to participate in rehabilitation.

5. The BTA acted unreasonably and unlawfully by failing to address Appellants' argument

that the City of Cleveland Board of Review erroneously cllaracterized the days on which

Mr. Saturday did not travel to Cleveland, Ohio to play in the game between the

Indianapolis Colts and the Cleveland Browns,lVovember 29 and 30, 2008, as sick days

rather than days during which Mr. Saturday was injured and remained in Indianapolis

where he underwent rehabilitation, as required by his employer, the Indianapolis Colts.

6. The BTA acted unreasonably and unlawfully by failing to hold that the City of Cleveland

Board of Review erroneously characterized the days on which Mr. Saturday did not travel

to Cleveland, Ohio to play in the game between the Indianapolis Colts and the Cleveland

Browns, November 29 and 30, 2008, as sick days rather than days during which Mr.

Saturday was injured and remained in Indianapolis where he underwent rehabilitation, as

required by his employer, the Indianapolis Colts.

7. The BTA acted unreasonably and unlawfully in determining that the City of Cleveland

had the authority to tax the income of Mr. Saturday, a nonresident who did not travel to

nor perform any services in Cleveland during the tax year, based solely on the activities

of Mr. Saturday's employer in Cleveland during the tax year.

943732 2

8. The BTA acted unreasonably and unlawfully in determining that, despite the factual

differences between the Saturday's case and the case of Hunter T. Hilleiuneyer (Ilunter

T. Hillenineyer v. City of Cleveland Board of Review et al., BTA No. 2009-3688 (Jan. 14,

2014), Appellants' argument that Cleveland had no authority to tax a nonresident who

never traveled to nor performed any services in Cleveland was somehow based on

Appellants' distinct argument that the City of Cleveland's method of allocating income

on the basis of gaines played is unlawful.

9. The BTA acted unreasonably and unlawfully by determining that the City of Cleveland's

method of allocating Appellants' income on the basis of games played, rather than on the

basis of total days worked, does not violate the provisions of the Ohio Revised Code and

the provisions of the Cleveland City Ordinance, despite the fact that such allocation on

the basis of games played resulted in Cleveland imposing its tax on Appellants' income

that was not earned for work done or services performed in Cleveland.

10. The BTA acted unreasonably and unlawfully by failing to address Appellants' argument

that the City of Cleveland's regulation providing a games-played allocation method, CCA

Art. 8:02(E)(6), is contrary to the Cleveland City Ordinance, Clev. Ord. § 191.0501(b)(1),

and is therefore invalid.

11. The BTA acted unreasonably and unlawfully by failing to hold that the City of

Cleveland's regulation providing for a ganies-played allocation method, CCA Art.

8:02(E)(6), is contrary to the Cleveland City Ordinance, Clev. Ord. § 191.0501(b)(1), and

is tlierefore invalid.

12. The BTA erred to the extent that it found that the Cleveland City Ordinance contained the

games-played allocation method for professional athletes. Clev. Ord. § 191.0501(b)(1)

943732

subjects to Cleveland's income tax wages earned or received by nonresidents "for work

done or services performed or rendered within the City or attributable to the City." The

ordinance does not specify any allocation method for wages earned by professional

athletes. The games-played allocation mtllod for wages of professional atllletes is

contained only in the City's regulations, CCA Art. 8:02(E)(6).

13. The BTA acted unreasonably and unlawfully by determining that the Ohio Supreme

Court's decision in Hiime v. Lirnbach, 61 Ohio St. 3d 387, 575 N.E.2d 150 (1991), did

not prohibit the use of the games-played method of allocation despite the fact that the

Court in Ifurne specifically concluded that, where a professional athlete's contract

compensated him for all his services from preseason training through the regular season

and the playoffs, the taxing authority was required to allocate the taxpayer's income

based on all of the services he rendered.

14. The BTA acted unreasonably and unlawfully by affirming the decision of the City of

Cleveland Board of Review, which had affirmed the Cleveland Tax Administrator's use

of a games-played method for allocating Appellants' income, because allocating

Appellants' income on the basis of games played results in the unfair apportiorunent to

Cleveland of income earned by Appellants for services performed elsewhere, in violation

of the Commerce Clause and the Due ProcessClause of the United States Constitution.

15. The BTA acted unreasonably and unlawfully by affirming the decision of the City of

Cleveland Board of Review, because Mr. Saturday and other professional athletes are

specifically singled out and excluded from the protection afforded by R.C. 718.011,

which prohibits the collection of municipal income taxes from nonresident individuals

who perforrn personal services within the municipality on twelve or fewer days during a

943732 4

calendar year, in violation of the Equal Protection Clauses of the United States

Constitution and the Ohio Constitution.

16. The BTA acted unreasonably and unlawfully by refusing to decide whether Cleveland's

method of allocating Appellants' income on the basis of games played, rather than on the

basis of total days worked, constitutes a fair or reasonable method of apportionment.

Dated: Respectf y subniitted,

Y c^^tephen k. Kidder (Counsel of Record)

PHV No. 3032-2014HEMENWAY & BARNES LLP60 State StreetBoston, MA 02109Telephone: 617.227.7940F acsimil e: 617. 22 7. 07 81skidder@hembar.com

Richard C. Farrin (0022850)ZAINO HALL & FARRIN LLC41 S. High Street, Suite 3600Columbus, OH 43215Telephone: 614.326.1120Facsimi l e: 614. 754.63 68rfarrin L,zhft ax l aw. com

COUNSEL FOR APPELLANTS JEFFREYB. SATURDAY and KAREN R.SATURDAY

943732 5

CERTIFICATE OF SERVICE

I hereby certify that a copy of this Notice of Appeal was sent by certified mail, return

receipt requested, to counsel for all parties to the proceedings before the Ohio Board of Tax;;.

Appeals on thisi1 Xy of February, 2014.

Barbara A. Langhenry (0038838)Linda L. Bickerstaff (0052101)City of Cleveland Department of Law205 West St. Clair AvenueCleveland, OH 44113

COLINSEI. FOR APPELLEESCITY OF CLEVELAND BOARDOF REVIEW and NASSIM LYNCH,CLEVELAND TAX ADMINISTRATOR

Richard C. Farnn (00 '?850)

943732 6

OHIO BOARD OF TAX APPEALS

.ieffreyr B. Saturday and Karen B. Saturday,

Appellants,

vs.

City of Cleveland Board of I2evieNv andNassim Lyncli. Cleveland 'CaxAdn"llnistrator,

Appellees.

APPEARANCES:

CASE NO. 20I1-4027

(Mt.7NICIPAL INCOME TAX)

DECISION AND ORDER

T'or the Appellants - Hen7enway &[-3arnes LLI'Stephen W. Kidder60 State StreetI3ostoa; Massachusetts 02 1 09-1 89

For the Appellees

Entered JAN ^ ^ 20N

Zaino HaI1& pai-rin LLCRichard C. Farrin45 S. I-Iigh Street, Suite 3600Columbus, Ohio 43215

- Barbara A. LanghenryCity of Cleveland Director of LawLinda L. BickerstaffAssistant Director of LawC'ity of Cleveland Department of Law205 W. St. Clair AvenueCleveland, Ohio 441 ( 3

M. `GVilliainson, Mr. Johrendt, and Mr. Harbarger concur.

Appellatit5 appeal from a decision of the City of Cleveland Board of

Review, i.e. municipal board of appeal ("M,BOA''),1 in w hich the MBOA denied

appellants' request for refund of incolxie tax paid to the city of Cleveland for tax year

20EI8. We proceed to consider the matter upon the notice of appeal, the transcript.

' R.C. 718.11 requires the legislative authority of each tnunicipal corporation ttiat imposes a tax onincome to maintain a board to hear appeals. R.C. 5717.011 refers to this body as a "municipal hoardof appeal.'' Therefore, althotagh the city of Cleveland's board identifies itself as the "City ofCleveland Board of Review," for purposesof consistency, weshall refer to Cleveland's board as themunicipal board of appeal, i.e. "MBOA."

certified by the MBOA, and the parties' briefs. The pai-tieswaived the opportunity to

present evidence at a hearing before this board.

During the period at issue, Mr. Saturday was a professional football

player for the Indianapolis Colts. In tax year 2008, the city of Cleveland taxed a

portion of Mr. Saturday's income based on a regular season game played: between the

Colts and the Clevelai7d Browns on Novezxiber 30, 2008.2 Appellants filed a request

for refund of taxes paid, arguing that, because Mr. Saturday did not play in the

Novefriber 30, 2008 game and did not travel to Cleveland that day with the teatn, no

portion of his income was taxable to the city of Cleveland. Insread; because Mr.

Saturday was injured, he reinained in Indianapolis and participated in rehabilitation

activities. `I'he tax administrator for the city of Cleveland denied appeltants" request

#'or refund, and the denial was affirmed by the MBOA. In its decision, the MBOA

found that appellants failed to meet their burden of proof that the "ganaes-playecl"

allocation used by the city of Cleveland is unreasonable, and that Mr. Saturday's

absence from the November 30, 2008 game was properly treated as a"sick day" and

therefore taxable.

Appellants tllereafter filed the present appeal, stating the following

speci-fications of error: (1) the MBOA erroneously characterized November 29 and 30

as "sick days," even though Mr. Saturday participated in rehabilitation exercises in

Ind.ianapolis on those days; (2) the city had no authority to tax Mr. Saturday's incorne

where he "did not travel to orperforxn any services in Cleveland in 2008," in violation

of the Ohio and U.S. constitutions; (3) "Cleveland's use of a galnes-played forinula

results in Cleveland imposing a tax on income that is not earned for work done or

services performed in Cleveland, in violation of both the Ohio Revised Code and the

City Ordinance;" (4) the MBOA erroneously concluded that appellants failed to supply

facts showing that the games-played allocation metliod is unreasonable; (5) the MBOA,

errotieously found that appellants failed to present sufficient evidence because it was

^ As we explained in flidletxmever v. City of L,'IevelcrndBci_ oj'Revievi, (Jan. 14, 2014). BTA ?vo. 2009-3688,unreported, the city of Cleveland taxes professional athletes under the "games-played" rnetttod,which "apportions incoine to a jurisdiction based upon the number of games played in a particularjurisdiction as conipared to the total nut-nber of games piayed;" Id. at fn. 2.

2

presented by affidavit rather than by live testiznony at the hearing; and (6) "the

exclusion of professional athletes fronl the protection afforded by R.C. 718.()I1 ***

violates the Equal Protection clauses of the Utiited States and Ohio Constitutions,"

Notice of Appeal.

This board recently addressed nearly identical arguments with regard to

the reasonableness and constitutiozaality of the "games-played" allocation niethod used

by the city of C'leveland, in Hillenmeyer v. City of Cleveland .l3d of 'Review (Jan. 14.

2014), F3TA No, 2009-3688, unreported. Therein, we stated:

"At the outset of our review herein, we acknowledgeappellant's constitutional claims, but make no finding inrelation thereto. Although the Ohio Sixpreine Court hasauthorized this board to accept evidence on constitutionalpoints, it has clearly stated that we have no jurisdiction todecide constitutional claims. Cleveland Geczr Co. v.Lirrzbach (1988), 35 Ohio St.3d 229; 11lfCITelecommunications Corp. v,. Litaabach (1994), 68 OhioSt.3d 195, 198.

"l urthc r; we tstid that the Cleveland ot-dinant.e:s underconsideration do not opera.te in contravetition of any statestatute regarding munic;ipal income taxes or Ohio case

precedent. As such, C:Ieveland's method f6rapportionment of j1on-resident athletes'incoine `is a validexercise of the city's municipal power to tax.' Gesler v,C'itv of' Worthington IncUrne Tax Ecl, af Appeals, SlipOpinion No. 2013-C)hio-4986, 1(22.

"Finally, the Board of Tax Appeals has no express orimplied equity jurisdiction and therefore cannot render adeterinination whether the Cleveland ordinancesconstitute a fair or reasonable rnethod by which toapportion appellant's income for the subject vears.C,^vlumbus ^S'outhey`n Lzcmber Co. v. Peck (1953), 159yOhioSt. 564." Id. at 4-5. (Footnotes oznitted. )

Accordingly, we find our decision in Hillenmeyer applicable to this matter, as it relates

to the city of Cleveland's authority to tax individuals under the "°gam^;s-ptayed'"

allocation inet:hod.

3

'I'he present case presents a different factual scenario than Hillennieyer.

tJnlike the taxpayer in that matter, Mr. Saturday was never physically present in

Cleveland and was taxed as if he had taken a"sick day" for the November 30, 2008,

game. The city o1'Cleveland imposes an incoane tax "[o]n all qualifying wages, earned

or received *** by nonresidents of the City for work done or services performed or

rendered witliin the City or attributable to the City. ***." Codified ()rdinalice

191.050I(b)(I). Central Collection Agency3 ("CCA") Article 8.02(E)(6) is

specifically applicable to nonresident professional athletes, and states, in pertinent

part:.

"6. *** In the case of employees whc, are non-residentprofessional athletes, the deduction and withholding ofpersona( service compensation shall attach to the entireamount of conapensation erzrnedfor games that occur inthe taxing ecanzrnunit,y. In the case of a non-residentathlete not paid specifically for the game played in ataxing community, the following apportionment forinulamust be used:

"The cornpensation earnecl and sub;ect to tax is the totalincome earned during the taxable year, includingincentive payments, Signing bonuses, reporting bonuses,incentive bonuses, roster botluses and other extras,multiplied by a fraction, the numerator of which is thenumber of exhibition, regular season, and post-seasongames the athlete played ***, or was excused frotnplaying becaiase of injury or zllness, in the taxingcommunity during the taxable year, and the denominatorof which is the total number of exhibition, regular season,and post-season games which the athlete was obligated toplay under contract or otherwise during the taxable year,inclucling ganies ira which the athdete was excusecl frUrnplaying because ol`itju3y or illness." (Eatiphasis added.)

3 As we explained in Hillenmetler, supra, quoting the city's briet; "` ft]he Central Collection Agency isxri entity created by Cleveland Codified Ordinance ('C„C7.') 191.2311 that collects and distributesincome taxes for its rnember communities. In accordance with C O. 191.2303, the Agency isgovei-ned by a set of Rules and Regulations approved by the boards of incorneta-x review of eacliniember cofnmunity. 7`he Rules and Regulations along with the income tax ordinances govern incometax inatterswithin the various member communities. 'i"he city of Cleveland is a menlber comniunityof the agency whose board of review adopted and incorporated the Agency's Rules and Regrilationsinto its Incotne Tax Ordirrance.'Appellees'initialBrief at 2." Id. at fn. 3.

4

As we stated in Hilletijneyer, this board has Yto jurisdiction to deternline

the constitutionality or reasonableness of the ordinance, including its application to

athletes absent from. gana.es due to injury or illness. Our jurisdiction is timitedto a

detertnination of whether the MBOA's decision was proper under state law. In doing

so, we note that "[w]hen cases are appealed from a municipal board of review to the

BTA, the burden of proof is on the appellant to establish a right to ttie relief requested.

C.C. Alcan Alumint,rna Corp: v. Lirnbach (1989), 42 Ohio St.3d 121." Mczrioiav. MaNiotz

1^3d: of Rev. (Aug. 10, 2007). BTA No. 2005-`I'- 1464, unreported, at 3.

I.3espite the factual difference between this case and Hilleniiae-ved°, supra,

i.e., that the taxpayer at issue in that case was physically present in Clevelatid for

games, we find appellartts' argument is based on their arguments regarding the

,'gaxnes-p[ayed" allocatiori method provided for in the city's ordinance and related

rules aiid regulations. As we did in Hillenrraever, we find that the ordinaticedoes not

operate in contravention of any state statute or Ohio case precedent and "is a valid

exercise of the city's municipal power to tax.'`4 Cre>.slcu- v. City of GVQi-thiiigton Income

Tax Bd. of*Appeals, Slip Opinion No. 2013-Ohio-4986, !j22.

Accordizigly, tiie decision of the MBOA, affirming the actions of tlle `I'ax

Administrator, is hereby affirmed.

I hereby certify the foregoing to be a trcIe atidcomplete copy of the act.ioii taken bv theBoard of Tax Appeals of t}ze State of Ohic)and entered tipori its journal this day, withrespect to the captioned matter.

<A..1. t_rroeber, Board Secretaiy

As srach, we niake no Finciint;sregarding the srtfticiency of appellants' evidenie before the MBOAregai-dingIV1r. Saturday's aetivitieson tile dates in questio ► i.

5

PROOF OF FILING

I hereby certify tl^at a copy of the foregoing notice of appeal was filed. t^vitli the Ohio Board ofTax Appeals on this" ay of February, 2014.

ichard C. Farrin (0022850)