2019 CO 47
Colo.2019Background
- Dami Hospitality, LLC (small motel owner) repeatedly allowed required workers' compensation insurance to lapse over multiple periods between 2005 and 2014.
- Colorado law imposes a per‑day fine of $250–$500 for each day an employer is noncompliant; Dami was assessed 1,698 days of second/subsequent violations, totaling $841,200.
- Dami received notice in 2014 and tendered proof of coverage after notice; it did not request an evidentiary hearing to develop its financial or other defenses.
- The Division of Workers' Compensation (DWC) upheld the statutory per‑diem fines and declined to rule on constitutionality; ICAO affirmed the DWC on all but Excessive Fines grounds.
- The Colorado Court of Appeals set aside the aggregated per‑diem assessment using a different multi‑factor test and remanded; the Colorado Supreme Court granted review.
- The Supreme Court reversed the court of appeals, holding the Eighth Amendment protects corporations from excessive fines and setting the applicable proportionality standard, then remanded for development of an evidentiary record as needed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do Eighth Amendment Excessive Fines protections apply to corporations? | Dami argued corporations should be protected from excessive punitive fines. | DWC argued the clause should be limited to natural persons (by reference to other Eighth Amendment clauses). | Yes — Clause applies to corporations because its purpose (limiting punitive monetary sanctions) is appropriate for corporate entities. |
| What is the proper constitutional standard for civil/regulatory fines? | Dami argued the assessed fines were excessive under the Eighth Amendment. | DWC and lower bodies applied a multi‑factor, punitive‑damages style test (Associated Business Products). | Use the Supreme Court’s "gross disproportionality" test from Bajakajian to assess excessiveness. |
| Should ability to pay be considered in proportionality analysis? | Dami contended inability to pay and risk of bankruptcy are relevant. | DWC did not adequately consider Dami’s financial capacity. | Ability to pay is a relevant factor in the gross‑disproportionality analysis. |
| Should proportionality be assessed per‑day or on the aggregate fine? | Dami (and concurring judge) argued the challenged action was the $841,200 aggregate fine and review should focus on the total. | DWC and majority argued statute treats each day as a separate violation and fines are per‑diem, so analysis must address each daily fine. | Majority: analyze proportionality with respect to each individual per‑diem fine (not only the aggregate); concurrence would have reviewed the aggregate. |
Key Cases Cited
- United States v. Bajakajian, 524 U.S. 321 (gross disproportionality test for excessive fines)
- Austin v. United States, 509 U.S. 602 (Excessive Fines Clause can apply to punitive civil fines)
- Timbs v. Indiana, 139 S. Ct. 682 (Excessive Fines Clause incorporated against the states)
- Solem v. Helm, 463 U.S. 277 (framework considering intra‑ and interjurisdictional sentencing comparisons)
- Browning‑Ferris Indus. v. Kelco Disposal, Inc., 492 U.S. 257 (historical references and principle that corporations can be subject to monetary penalties)
- Cooper Indus. v. Leatherman Tool Group, 532 U.S. 424 (discussion of punitive damages proportionality principles)