The Eighth Amendment starts with a flash and ends with a bang, but its overlooked center deserves attention too.1 The Supreme Court recently obliged, spotlighting the Excessive Fines Clause in Timbs v. Indiana,2 where it finally held that the clause constrains the states.3 A number of flaws in excessive fines jurisprudence persist, however, including an unanswered question of whether the clause applies to corporations and an ahistorical failure to consider a defendant’s ability to pay.4 Recently, in Colorado Department of Labor & Employment v. Dami Hospitality, LLC,5 the Colorado Supreme Court tackled these two issues. It extended excessive fines protections to corporations and held that an inquiry into excessiveness must consider a corporation’s ability to pay the fine assessed.6 The court’s mandate to consider a defendant’s ability to pay helps steer excessive fines jurisprudence toward a faithful, historically rooted understanding of the clause, but lower courts will play a major role in fleshing out the doctrine.
Despite a Colorado requirement that employers maintain workers’ compensation insurance, Dami Hospitality, the owner-operator of a small Denver motel, let its insurance lapse from August 2006 through June 2007 and again from September 2010 until July 2014.7 The Colorado Division of Workers’ Compensation (DWC) applied Colorado’s statutory framework and ordered Dami pay a total of $841,200, the sum total of 1698 daily fines of $250 to $500.8 Dami, whose annual payroll totaled under $50,000, rejected a settlement offer and challenged the fine.9 It alleged, inter alia, that the fine violated the Eighth Amendment’s prohibition on excessive fines.10 The DWC ultimately concluded that the fines passed constitutional muster under a three-prong test established by a Colorado court in Associated Business Products v. Industrial Claim Appeals Office.11 The Industrial Claim Appeals Office (ICAO) affirmed,12 and Dami appealed to the Colorado Court of Appeals.13 After applying the Excessive Fines Clause to corporations,14 the court found the fine constitutionally excessive because the DWC both “failed to apply the Associated Business Products factors . . . to Dami’s specific circumstances”15 and neglected to consider Dami’s ability to pay.16 It directed the DWC recalculate Dami’s fine.17 The DWC appealed.18
The Colorado Supreme Court reversed and remanded.19 Writing for the majority, Justice Hart20 outlined a semi-novel excessive fines analysis and directed the DWC to develop a record to which this analysis could be applied.21 The court first asked whether the Excessive Fines Clause applied to corporations. The court held unanimously that it did, based on “both the purpose of the clause and the appropriateness of applying it to corporations.”22 As Justice Hart explained, the clause aims to “prevent the government from abusing its power to punish through the imposition of fines.”23 Despite the fact that the Excessive Fines Clause is sandwiched between two clauses ill-fitted to corporations,24 the court held that because the government can and does fine corporations, it must do so in compliance with the clause.25
Having extended excessive fines protections to corporations, the court next determined the meaning of “excessive.” It held that corporations must show a fine is “grossly disproportional to the gravity of the . . . offense” to win an excessive fines challenge.26 To justify applying this onerous standard, the court acknowledged both the legislature’s primacy in determining punishments and the judiciary’s inability to precisely gauge the “gravity of an offense.”27
The court declared that the gross disproportionality test must include an assessment of ability to pay.28 Though noting that the U.S. Supreme Court neither addressed the issue in United States v. Bajakajian,29 its leading excessive fines case,30 nor anywhere else,31 the Colorado Supreme Court found “persuasive evidence” in “historical precursor[s]” of the Eighth Amendment that fines exceeding a person’s ability to pay may violate the Excessive Fines Clause.32 Both the Court of Appeals and the ICAO therefore erred in applying the Associated Business Products test without an ability-to-pay assessment.33
Finally, even though it required consideration of Dami’s ability to pay, the majority held that the DWC must evaluate each daily fine, not the aggregate sum, for constitutional excessiveness.34 It justified this holding in four ways. First, the court emphasized that the Colorado statute labels each day without workers’ compensation insurance “a separate and distinct violation.”35 Second, it analogized to the criminal context, where the court typically refuses to aggregate sentences for a punishment’s proportionality analysis.36 Third, it emphasized that responsibility for the “staggeringly” high fine fell “squarely on the shoulders of Dami,” which understood its obligations and had a history of noncompliance.37 Finally, it explicated “good and practical reasons” for requiring the employer ensure compliance,38 including efficiency39 and the desire to avoid both negligent noncompliance40 and gamesmanship.41 The court found the record insufficient to conduct a proportionality analysis consistent with its decision, especially because no reviewing body had seen evidence regarding Dami’s ability to pay.42 It remanded with instructions to develop a record that would permit a complete evaluation of whether the daily fines violated the Excessive Fines Clause.43
Justice Samour concurred in part and dissented in part.44 Though agreeing with the bulk of the majority’s Eighth Amendment inquiry, he would have focused the proportionality analysis on the total fine ($841,200) rather than the daily fines ($250–$500).45 The majority’s individuated proportionality inquiry, according to Justice Samour, would “render[] the entire constitutional analysis an exercise in futility.”46 Not only did the majority’s opinion ignore “reality,”47 but its decision also opened the door to counterintuitive results by making “the total amount of the fine imposed completely inconsequential.”48
The court’s mandate to consider a defendant’s ability to pay helps steer excessive fines jurisprudence toward a faithful, historically rooted doctrine, but other courts will play a large role in fulfilling the potential of this decision. First, appellate courts following Dami’s example of historical fidelity should revise excessive fines jurisprudence to consider ability to pay separately from the proportionality analysis. Second, lower courts will bear the responsibility of developing workable standards for assessing a corporation’s ability to pay, and existing tests will provide little help. Finally, lower courts may be left to fill in doctrinal gaps left by higher courts that, like the Dami court, avoid outlining broadly applicable rules or standards for this inherently fact-specific inquiry.
The Colorado Supreme Court restored the Excessive Fines Clause to its roots by mandating an ability-to-pay inquiry.49 Though the U.S. Supreme Court has thus far ducked the ability-to-pay question,50 such assessments are deeply rooted in the Anglo-American tradition that permeates the clause. States in the early republic required ability-to-pay assessments to avoid defendant impoverishment,51 a practice consistent with the Virginia Declaration of Rights on which the clause was based.52 English jurists were similarly unequivocal, enshrining this assessment in the Magna Carta53 and then reemphasizing it during the Enlightenment54 by, among other things, explicitly including it in the English Bill of Rights.55 The Colorado Supreme Court correctly understood the Supreme Court’s approving citations to historical precedent as an invitation to explore the clause’s historical roots and reinvigorate its original meaning.56 In hewing closely to historical precedent, Dami properly breaks from modern excessive fines jurisprudence.57 Other courts would do well to follow suit.
To expand upon this success, other appellate courts seeking to effectuate the clause’s history should recalibrate excessive fines jurisprudence in a way that does not subsume ability to pay within a proportionality analysis. The Dami court fell short in this regard, seeming to consider ability to pay as a proportionality factor by querying “whether the Eighth Amendment proportionality assessment can or should include consideration of the ability of the person being fined to pay” and citing “[t]he concept of ‘proportionality’” as a justification for its ability-to-pay test.58 Similarly, the Supreme Court seemed to conflate the two principles in its sole mention of ability to pay.59 But this logical relation misreads the history. The Excessive Fines Clause incorporates two distinct principles: “(1) a proportionality principle . . . , and (2) an additional limiting principle linking the penalty imposed to the offender’s economic status and circumstances.”60 Older courts assessed a fine’s proportionality in relation to the offense and then, after finding the fine proportional, capped the fine based on ability-to-pay considerations.61 Modern courts interpreting the Excessive Fines Clause with a Dami-like fidelity to history should remove the ability-to-pay analysis from proportionality’s shadow.
Lower courts will also be charged with establishing a workable corporate ability-to-pay assessment. Because other courts have yet to explicitly extend excessive fines protections to corporations, courts may try to adapt other ability-to-pay tests for the corporate context. One potential model is the First Circuit’s excessive fines test, which requires courts to consider “whether [a] forfeiture would deprive the defendant of his or her livelihood.”62 A second option might be looking to punitive damages, where in some jurisdictions a corporate defendant’s ability to pay, often discussed in terms of its “wealth,” affects the penalty’s size and could theoretically bear on the “reasonableness” of an award.63 Finally, courts may look to familiar criminal indigency inquiries as a starting point.64 In indigency tests, which courts use to tailor judicial processes to a defendant’s financial status, courts consider a defendant’s income, assets, and existing debt.65 And courts can reduce court-ordered payments based on additional factors like a defendant’s education, employment status, employment prospects, and family circumstances.66
However, none of these tests will prove useful models for a corporate ability-to-pay inquiry. Two important corporate characteristics complicate any analysis.67 First, corporations have the unique ability to make structural alterations that affect how a fine would impact them. A corporation can flirt with illiquidity,68 in which case a fine might push it into insolvency, bankruptcy, and dissolution. Tests developed for individuals69 need not grapple with amorphous financial structures, and even punitive-damage determinations of corporate “wealth” are so easily manipulated that courts appear not to reduce damage awards for ability-to-pay considerations alone.70 Second, corporations enjoy no right to life.71 They die frequently — and society often celebrates their death as a sign of progress.72 Individual-focused tests, however, presuppose a right to life. The justifications undergirding such tests evaporate in the corporate excessive fines context, where snuffing out a defendant’s existence is an acceptable option.73 Courts will have to look beyond established precedent to assess a corporation’s ability to pay.
Finally, federal circuit courts and state supreme courts may, like Dami, decline to articulate broadly applicable rules or standards, leaving lower courts with significant discretion in corporate excessive fines cases. The Dami majority outlined an excessive fines test but based its ultimate action — reversing and remanding — on narrow justiciability concerns.74 The court recognized the fact-specific nature of ability-to-pay inquiries and responded to the difficulty of formulating a corporate ability-to-pay test.75 These same concerns will animate many corporate excessive fines challenges, likely leading to more fact-specific decisions and paving the way for significant lower court discretion.
Interesting cases lie along the path charted by Dami. Corporations, which are notoriously litigious, frequent recipients of regulatory fines, and uniquely adept at financial smoke and mirrors, will likely probe the limits of their new excessive fines protections. Academics and appellate jurists may have set the stage for the Excessive Fines Clause’s recent revival, but lower courts will write its next act.