STATE OF NEW MEXICO, Plaintiff, ex rel., FRANK C. FOY and SUZANNE B. FOY, qui tam Plaintiffs v. AUSTIN CAPITAL MANAGEMENT, LTD, AUSTIN CAPITAL MANAGEMENT GP CORPORATION, CHARLES W. RILEY, BRENT A. MARTIN, DAVID E. FRIEDMAN, WILL JASON ROTTINGER, VICTORY CAPITAL MANAGEMENT, INC., KEYCORP, BEREAN CAPITAL, DUDLEY BROWN, TREMONT PARTNERS, INC., TREMONT CAPITAL MANAGEMENT, INC., TREMONT GROUP HOLDINGS, INC., OPPENHEIMER FUNDS, INC., GARY BLAND, DAVID CONTARINO, BRUCE MALOTT, MEYNERS + COMPANY, MARC CORRERA, ANTHONY CORRERA, SANDIA ASSET MANAGEMENT, ALFRED JACKSON, DAVIS HAMILTON AND JACKSON, GUY RIORDAN, JUNIPER CAPITAL, EILEEN KOTECKI, DAN HEVESI, HENRY “HANK” MORRIS, JULIO RAMIREZ, PAUL CROSS, CROSSCORE MANAGEMENT, SDN INVESTORS, PSILOS GROUP, ALBERT WAXMAN, JEFFREY KRAUSS, STEPHEN KRUPA, DAVID EICHLER, DARLENE COLLINS, WETHERLY CAPITAL GROUP, DAN WEINSTEIN, VICKY SCHIFF, QUADRANGLE GROUP, ALDUS EQUITY, SAUL MEYER, MARCELLUS TAYLOR, MATTHEW O‘REILLY, RICHARD ELLMAN, DEUTSCHE BANK, DIAMOND EDGE CAPITAL, MARVIN ROSEN, CARLYLE MEZZANINE PARTNERS, CARLYLE GROUP, DB INVESTMENT MANAGERS, TOPIARY TRUST, PARK HILL GROUP, DAN PRENDERGAST, CATTERTON PARTNERS, BLACKSTONE GROUP, GOLD BRIDGE CAPITAL, DARIUS ANDERSON, KIRK ANDERSON, ARES MANAGEMENT, INROADS GROUP, CAMDEN PARTNERS, HFV, BARRETT WISSMAN, TAG, AJAX INVESTMENTS, CLAYTON DUBILIER AND RICE, INTERMEDIA, LEO HINDERY, WILLIAM R. HOWELL, CABRERA CAPITAL, MARTIN CABRERA, CRESTLINE INVESTORS, JOHN DOE #1 and JOHN DOE #3 THROUGH #50
NO. 34,013
IN THE SUPREME COURT OF THE STATE OF NEW MEXICO
June 25, 2015
MAES, Justice.
Opinion Number: ____________
Plaintiffs-Petitioners and Cross-Respondents,
v.
Defendants-Respondents and Cross-Petitioners.
ORIGINAL PROCEEDINGS ON CERTIORARI
John William Pope, District Judge
Victor R. Marshall
Albuquerque, NM
for Petitioners and Cross-Respondents
FallickLaw, Ltd.
Gregg Vance Fallick
Albuquerque, NM
Esquivel Law Firm, LLC
Martin R. Esquivel
Albuquerque, NM
Basham & Basham, P.C.
Katherine Ann Basham
Santa Fe, NM
for Respondent and Cross-Petitioner Bruce Malott
Rodey, Dickason, Sloan, Akin & Robb, P.A.
Andrew G. Shultz
Albuquerque, NM
Fried, Frank, Harris, Shriver & Jacobson, LLP
Peter L. Simmons
New York, NY
for Respondents and Cross-Petitioners Topiary Trust and DB Investment Managers, Inc.
Simone, Roberts & Weiss, P.A.
Norman F. Weiss
Albuquerque, NM
for Respondent and Cross-Petitioner David Contarino
Montgomery & Andrews, P.A.
Stephen S. Hamilton
Santa Fe, NM
for Respondent and Cross-Petitioner Gary Bland
French & Associates, P.C.
Erica Anderson
Stephen French
Albuquerque, NM
for Respondent and Cross-Petitioner Guy Riordan
OPINION
MAES, Justice.
{1} In this case, we address whether the retroactive application of the Fraud Against Taxpayers Act,
BACKGROUND
{2} This appeal concerns the second of two qui tam actions filed by former New Mexico Education Retirement Board (“ERB“) Chief Investment Officer Frank Foy and his wife Suzanne Foy (“Foys“), attacking the management of the investment portfolios of the ERB and of the New Mexico State Investment Council (“SIC“). The Foys “allege that Defendants—who include Wall Street firms and investment advisors, as well as high-ranking state officials—executed fraudulent schemes that led to the loss of hundreds of millions of dollars at the expense of the [SIC] and the [ERB].” State ex rel. Foy v. Austin Capital Mgmt., Ltd., 2013-NMCA-043, ¶ 2, 297 P.3d 357.
{3} A qui tam action is “[a]n action brought under a statute that allows a private person to sue for a penalty, part of which the government . . . will receive.” Black‘s Law Dictionary 1262 (7th ed. 1999). The Foys
{4} Three months after the complaint in Vanderbilt was unsealed, the Foys filed a complaint under FATA against Austin Capital Management and several other defendants also in the First Judicial District Court. After a series of recusals, excusals, and administrative assignments, all of the judges of the First Judicial District were excused. This Court appointed Judge John Pope to preside over the case.
{5} The Foys raised the retroactivity issue with Judge Pope, seeking a ruling that FATA is constitutional. In response, Defendants Park Hill Group, Blackstone Group, and Prendergast provided Judge Pope with a copy of Judge Pfeffer‘s previous ruling that the retroactive application of FATA is unconstitutional and asked for a similar ruling. On July 8, 2011, Judge Pope ruled that the retroactive application of FATA is unconstitutional and explicitly “adopt[ed] and incorporate[d] the reasoning and analysis” contained in Judge Pfeffer‘s earlier decision. The Court of Appeals granted leave for the Foys to file an interlocutory appeal. The Court of Appeals affirmed “the district court‘s legal conclusion that retroactive application of FATA is unconstitutional and the court‘s decision to sever the retroactive aspects from the statute.” See Foy, 2013-NMCA-043, ¶ 52. This appeal and cross-appeal follow.
DISCUSSION
I. The Attorney General‘s Prior Knowledge of Incriminating Information Does Not Bar the District Court From Proceeding in Austin Capital
{6} Before addressing the issue of the retroactivity of FATA, we first address the issue of subject matter jurisdiction raised by Cross-petitioner Bruce Malott. See Wilson v. Denver, 1998-NMSC-016, ¶ 8, 125 N.M. 308, 961 P.2d 153 (“Prior to addressing the substantive issue certified for interlocutory appeal, we raise, sua sponte, the question whether the district court had subject matter jurisdiction over these election contests.“). Malott argues that the district court lacked subject matter jurisdiction over the Foys’ second-filed FATA action, Austin Capital. Malott‘s most salient argument is that the district court was barred under FATA from hearing Austin Capital. See
{7} In determining whether a court has subject matter jurisdiction, we “ask whether [the matter before the court] falls within the general scope of authority conferred upon such court by the constitution or statute.” State v. Chavarria, 2009-NMSC-020, ¶ 11, 146 N.M. 251, 208 P.3d 896 (alteration in original, internal quotation marks and citation omitted). “The source of a district
{8} Austin Capital falls within the general scope of authority conferred upon the district court by
{9} Under FATA, a qui tam plaintiff is required to disclose to the Attorney General “substantially all material evidence and information the qui tam plaintiff possesses” at the time the complaint is filed. See
{10}
{11} As a preliminary matter, it is important to note that
{12}
{13} The “government knowledge bar” was enacted in response to the U.S. Supreme Court‘s decision in United States ex rel. Marcus v. Hess, 317 U.S. 537 (1943). See Graham Cnty. Soil & Water Conservation Dist. v. United States ex rel. Wilson, 559 U.S. 280, 294 (2010) (“This amendment erected what came to be known as a Government knowledge bar.“); see also 1 Boese, supra, § 1.02, at 1-15. In Hess, qui tam plaintiff Marcus alleged a collusive bidding scheme by electrical contractors working on Public Works Administration projects in Pennsylvania. See Hess, 317 U.S. at 539. Marcus purportedly discovered the alleged fraud by reading a criminal indictment previously filed against the defendants. See id. at 545. The Justice Department argued that Marcus had not brought any new information to the government‘s attention. See id. The U.S. Supreme Court upheld Marcus‘s award, pointing out that the statute allowed suit to be brought “by any person” without “exception or qualification.” See id. at 546. The U.S. Supreme Court has since referred to the qui tam action in Hess as a “quintessential parasitic suit.” See Graham Cnty., 559 U.S. at 294 (internal quotation marks and citation omitted).
{14} Following Hess, Congress amended the False Claims Act in 1943 to preclude qui tam actions “based upon evidence or information [already] in the possession of the United States, or any agency, officer or employee thereof, at the time such suit was brought.” See Graham Cnty., 559 U.S. at 294 (internal quotation marks and citation omitted). Therefore, “[once] the United States learned of a false claim, only the Government could assert its rights under the [False Claims Act] against the false claimant.” See id. (internal quotation marks and citation omitted). This amendment was designed to avoid more “parasitic” suits like Hess. See 1 Boese, supra, § 4.02(A), at 4-50. “The barriers set up in the 1943 Amendments led to decreased use of the qui tam provisions.” Id. § 1.02, at 1-15; see also Graham Cnty., 559 U.S. at 294 (“In the years that followed the 1943 amendment, the volume and efficacy of qui tam litigation dwindled.“).
{15} In 1986, Congress replaced the government knowledge bar with the “public disclosure bar.” See id. at 294-95. Under the public disclosure bar, “[t]he court shall dismiss an action or claim . . . if substantially the same allegations or transactions as alleged in the action or claim were publicly disclosed.” See
{16} We find the cases construing FATA‘s federal analogue, the False Claims Act, helpful in understanding the context and purpose of FATA. See Akins v. United Steel Workers of Am., 2010-NMSC-031, ¶ 15, 148 N.M. 442, 237 P.3d 744 (“In developing a body of state common law, we may look to federal law for guidance where it is persuasive and consistent with our state laws and policies.“). Although cases like Graham County, Exxon, and Praxair do not interpret the federal counterpart to
{17} These cases indicate a legislative intent to prohibit “parasitic” qui tam plaintiffs while also providing an incentive for meritorious qui tam plaintiffs to pursue their claims. This conclusion is especially true in light of the so-called “first to file” bar. See
{18} Applying these principles, we hold that the district court is not barred from hearing the case under FATA. The Foys’ second FATA action, Austin Capital, is not barred under
{19} Second, the statutory bar was designed to prohibit qui tam plaintiffs from piggybacking off the claims of a prior relator in an effort to unfairly recover a portion of the prior relator‘s damage award. Here, the Foys are the plaintiffs in both cases. It would be an absurd construction of FATA to hold that the Foys are piggybacking off their own prior claims in an effort to unfairly recover a portion of their potential damage award in Vanderbilt. Furthermore, barring Austin Capital might discourage future qui tam plaintiffs from turning up wrongdoing discovered after their case was filed. Finally, the record reflects that the Attorney General did not raise an objection to the filing of Austin Capital and authorized the Foys to proceed, stating that “the best interests of the State of New Mexico are served by uncovering, as soon as possible, all of the facts relating to the matters stated in the complaint.” Therefore, we disagree with Malott and hold that Austin Capital is not barred by being “based on evidence or information known to . . . the attorney general when the action was filed.” See
II. The Case is Not Barred by Claim Splitting
{20} Malott argues that in filing Austin Capital, the Foys are engaging in claim splitting. “It is axiomatic that piecemeal litigation is not favored by the courts.” Callaway v. Ryan, 1960-NMSC-088, ¶ 21, 67 N.M. 283, 354 P.2d 999. The rule against claim splitting “is grounded upon public policy designed to avoid a multiplicity of suits.” United Nuclear Corp. v. Fort, 1985-NMCA-049, ¶ 22, 102 N.M. 756, 700 P.2d 1005. “The rule against splitting a cause of action is an equitable one whose application is left to judicial discretion based on the factual circumstances of individual cases.” 1A C.J.S. Actions § 225 (2015).
{21} In arguing against claim splitting, Malott cites primarily to New Mexico cases pertaining to res judicata, or claim preclusion. However, “[t]he rules of res judicata are applicable only when a final judgment is rendered.” See Restatement (Second) of Judgments § 13 (1982). Because a final judgment on the merits has not been rendered in Vanderbilt, res judicata does not apply to Austin Capital. We therefore decline to dismiss Austin Capital on the basis of claim splitting.
{23} To promote judicial economy and minimize the possibility of inconsistent decisions, we hold that the Foys’ FATA complaints should be consolidated and heard in a single action. Therefore, pursuant to our power of superintending control, see
III. The Retroactive Application of FATA is Constitutional
{24} The central question before this Court is whether the retroactive application of FATA is unconstitutional.
A. FATA
{25} FATA prohibits knowingly presenting false or fraudulent claims for payment from the State and conspiring to defraud the State. See
A civil action pursuant to the Fraud Against Taxpayers Act may be brought for conduct that occurred prior to the effective date of that act, but not for conduct that occurred prior to July 1, 1987.
The statutory penalties for violating FATA include:
- three times the amount of damages sustained by the state because of the violation;
- a civil penalty of not less than five thousand dollars ($5,000) and not more than ten thousand dollars ($10,000) for each violation;
- the costs of a civil action brought to recover damages or penalties; and
- reasonable attorney fees, including the fees of the attorney general or state agency counsel.
See
B. Retroactive Laws and the Ex Post Facto Clause
{26} The United States and New Mexico Constitutions prohibit the Legislature from enacting ex post facto laws. See
{27} In this case, Defendants argue that the sanctions (money damages) authorized . . .
under FATA are penal in nature. And, therefore, imposing these sanctions for conduct that occurred prior to the effective date of FATA would be retroactive application of penal legislation, a direct violation of the Ex Post Facto Clauses.
C. The Legislature Intended FATA to Apply Retroactively
{28} To determine whether a sanction is punitive and thus violative of the Ex Post Facto Clause, we first look to the “government‘s purpose in enacting the legislation.” City of Albuquerque ex rel. Albuquerque Police Dep‘t v. One (1) 1984 White Chevy Ut., 2002-NMSC-014, ¶ 11, 132 N.M. 187, 46 P.3d 94 (internal quotation marks and citation omitted). “In assessing Legislative intent, the reviewing court looks first to the plain language of the statute, giving the words their ordinary meaning, unless the Legislature indicates a different one was intended.” Zhao v. Montoya, 2014-NMSC-025, ¶ 18, 329 P.3d 676 (internal quotation marks and citation omitted). However, “we look not only to the language used in the statute, but also to the object sought to be accomplished and the wrong to be remedied.” Starko v. Presbyterian Health Plan, Inc., 2012-NMCA-053, ¶ 20, 276 P.3d 252 (internal quotation marks and citation omitted), rev‘d on other grounds by Starko v. N.M. Human Servs. Dep‘t, 2014-NMSC-033, ¶¶ 2, 42, 333 P.3d 947.
{29} The specific legislative designation of FATA proceedings and penalties as “civil” indicates that the Legislature intended to craft a civil statute. FATA consistently uses the term “civil action” when referring to the proceedings brought under the statute. See
{30} We recognize that “in New Mexico, the fact that the Legislature . . . chose[] to label a proceeding ‘civil’ or ‘criminal’ is not dispositive of the true nature of that proceeding,” see State v. Nuñez, 2000-NMSC-013, ¶ 46, 129 N.M. 63, 2 P.3d 264, and cannot “be utilized to defeat the applicable protections of constitutional law.” See N.M. Taxation & Revenue Dep‘t v. Whitener, 1993-NMCA-161, ¶ 12, 117 N.M. 130, 869 P.2d 829 (discussing with approval the holding of United States v. Halper, 490 U.S. 435, 447-48 (1989), abrogated by Hudson v. United States, 522 U.S. 93, 95, 100-03 (1997)).
{31} Looking beyond the “civil” label to the overall purpose of the statute, we determine that the Legislature intended FATA to be remedial in nature. Consistent with other remedial statutes, FATA compensates the State for losses incurred as a result of fraud and encourages qui tam plaintiffs to bring civil actions to root out fraud. See
{32} It is clear that the Legislature intended FATA to be a civil, remedial statute. However, even when “the intention was to enact a regulatory scheme that is civil and nonpunitive, we must further examine whether the statutory scheme is so punitive either in purpose or effect as to negate the State‘s intention to deem it civil.” Smith v. Doe, 538 U.S. 84, 92 (2003) (internal quotation marks and citation omitted, internal alteration omitted).
[T]he court must determine whether the sanction established by the legislation was sufficiently punitive in its effect that, on balance, the punitive effects outweigh the remedial effect. Although a civil penalty may cause a degree of punishment for the defendant, such a subjective effect cannot override the legislation‘s primarily remedial purpose.
White Chevy, 2002-NMSC-014, ¶ 11 (internal citations omitted).
D. The Civil Remedies under FATA are Predominantly Compensatory
{33} The actual sanctions imposed under FATA include liability for the costs of a civil action and reasonable attorneys’ fees for both the State and the qui tam plaintiff; a civil penalty of between five thousand and ten thousand dollars per violation; and “three times the amount of damages sustained by the state.” See
1. Treble Damages
{34} Historically, New Mexico has followed the seven-factor test set forth in Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168 (1963), to determine whether a statute has a punitive effect. See Druktenis, 2004-NMCA-032, ¶ 30 (“[O]ur New Mexico Supreme Court referred to the Mendoza-Martinez framework as ‘the test’ in determining whether a statute is intended as punitive rather than remedial.” (quoting White Chevy, 2002-NMSC-014, ¶ 11)); see also State v. Block, 2011-NMCA-101, ¶¶ 36-46, 150 N.M. 598, 263 P.3d 940 (analyzing civil penalty under Voter Action Act); Kirby, 2003-NMCA-074, ¶¶ 27-39 (analyzing civil penalty under Securities Act). These factors are:
- whether the sanction involves an affirmative disability or restraint;
- whether it has historically been regarded as a punishment;
- whether it comes into play only on a finding of scienter;
-
whether its operation will promote the traditional aims of punishment—retribution and deterrence; - whether the behavior to which it applies is already a crime;
- whether an alternative purpose to which it may rationally be connected is assignable to it; and
- whether it appears excessive in relation to the alternative purpose assigned.
Druktenis, 2004-NMCA-032, ¶ 31. While these factors may “provide useful guideposts,” Hudson, 522 U.S. at 99, they are “neither exhaustive nor dispositive,” Smith, 538 U.S. at 97 (internal quotation marks and citation omitted).
{35} In regard to the nature of treble damages, recent United States Supreme Court opinions do not refer to the Mendoza-Martinez factors, but simply examine whether such damages are predominantly compensatory or predominantly punitive. See, e.g., PacifiCare Health Sys., Inc. v. Book, 538 U.S. 401, 405 (2003) (acknowledging that U.S. Supreme Court cases “have placed different statutory treble damages provisions on different points along the spectrum between purely compensatory and strictly punitive awards“); Cook Cnty. v. United States ex rel. Chandler, 538 U.S. 119, 129-33 (2003) (acknowledging that treble damages under the FCA have compensatory and punitive traits, but concluding that, on balance, such damages are not essentially punitive). In doing so, the Court has looked largely at the purpose of the legislation and the purpose of the treble damages. See, e.g., Agency Holding Corp. v. Malley-Duffy & Assocs., Inc., 483 U.S. 143, 151 (1987) (holding that RICO is “designed to remedy economic injury by providing for the recovery of treble damages, costs, and attorney‘s fees.“); Am. Soc‘y of Mech. Eng‘rs, Inc. v. Hydrolevel Corp., 456 U.S. 556, 575-76 (1982) (holding that an antitrust private action “was created primarily as a remedy for the victims of antitrust violations . . . ” and that “treble damages serve as a means of deterring antitrust violations and of compensating victims“); Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 485 (1977) (holding the treble damages under the Clayton Act “is designed primarily as a remedy“).
{36} Given recent U.S. Supreme Court precedent, we believe this restorative approach is more appropriate in determining the retroactive effect of FATA. Therefore, if the primary purpose of treble damages under FATA is punitive, then they should be not be applied retroactively. Cf. Ordunez, 2012-NMSC-024, ¶ 14 (“The Ex Post Facto Clause flatly prohibits retroactive application of penal legislation.” (internal quotation marks and citation omitted)). If the primary purpose of treble damages is remedial, then they should be upheld. Cf. Foy, 2013-NMCA-043, ¶ 11 (“The prohibition does not apply to penalties that are considered remedial in nature.“).
{37} The U.S. Supreme Court has passed upon the nature of treble damages under the analogous federal FCA, see
{38} In Cook County, a unanimous U.S. Supreme Court held that municipal corporations are “persons” for purposes of qui tam liability under the FCA. The municipal defendant argued that it was not subject to liability in part because the FCA imposes damages that are punitive in nature. See 538 U.S. at 129. The Court disagreed, distinguishing its earlier statements from Vermont Agency of Natural Resources: “While the tipping point between payback and punishment defies general formulation, being dependent on the workings of a particular statute and the course of particular litigation, the facts about the FCA show that the damages multiplier has compensatory traits along with the punitive.” Cook County, 538 U.S. at 130.
{39} We hold that the facts about FATA demonstrate that its treble damages feature possesses predominantly compensatory traits. Under FATA, one-third of the treble damages award is allocated to compensate the government for its loss. See
{40} Up to another thirty percent of the damage award is allocated to reward the qui tam plaintiff for exposing fraud and corruption in state government. See
The most obvious indication that the treble damages ceiling has a remedial place under this statute is its qui tam feature with its possibility of diverting as much as 30 percent of the Government‘s recovery to a private relator who began the action. In qui tam cases the rough difference between double and triple damages may well serve not to punish, but to quicken the self-interest of some private plaintiff who can spot violations and start litigating to compensate the Government, while benefiting himself as well. The treble feature thus leaves the remaining double damages to provide elements of make-whole recovery beyond mere recoupment of the fraud.
538 U.S. at 131 (citation omitted). Therefore, we hold that the qui tam provisions of FATA are compensatory.
{41} Having determined that actual damages and a potential qui tam award under FATA are compensatory, it follows that at least two-thirds of the treble damages under FATA are compensatory. See Hess, 317 U.S. at 551-52 (holding that “the chief purpose” of the earlier version of the FCA “was to provide for restitution to the government of money taken from it by fraud, and that the device of double damages plus a specific sum was chosen to make sure that the government would be made completely whole.“). However, as Cook County suggests, the remaining approximately one-third of the treble damages under FATA also serve remedial purposes by encouraging
{42} Our conclusion is further bolstered by the allocation of the remaining damages under FATA. Under FATA, half of the remaining one-third of the damage award is allocated to fund the attorney general‘s anti-corruption efforts. See
{43} Finally, when people or businesses commit fraud against the State, it deprives taxpayers of the use of funds for essential government services. The loss of use of money to fraudulent claims are the types of consequential damages not otherwise recoverable under FATA, which justify the conclusion that treble damages under FATA are predominantly compensatory. As noted by the U.S. Supreme Court in Cook County, “[t]he treble damages provision [under the FCA] was, in a way, adopted by Congress as a substitute for consequential damages.” 538 U.S. at 131 n.9. In a similar fashion, allocating a portion of the treble damages award under FATA to the general fund helps address consequential damages resulting from fraud. See
{44} In conclusion, we hold that treble damages under FATA are predominantly compensatory. As such, treble damages do not violate the ex post facto clause and may be awarded for conduct occurring prior to the effective date of FATA.
2. Civil Penalties
{45} A person who violates FATA is liable for “a civil penalty of not less than five thousand dollars ($5,000) and not more than ten thousand dollars ($10,000) for each violation.”
{46} As a general matter, “monetary assessments are traditionally a form of civil remedy.” See Kirby, 2003-NMCA-074, ¶ 31 (internal quotation marks and citation omitted). “[N]either money penalties nor debarment has historically been viewed as punishment.” Hudson, 522 U.S. at 104. However, the imposition of monetary penalties has a deterrent purpose. See State ex rel. Schwartz v. Kennedy, 1995-NMSC-069, ¶ 38, 120 N.M. 619, 904 P.2d 1044 (“[M]onetary sanctions, such as fines or forfeitures, are qualitatively different from other types of administrative sanctions because of their distinctly punitive purposes.“); see also Hudson, 522 U.S. at 105 (“Finally, we recognize that the imposition of both money penalties and debarment sanctions will deter others from emulating petitioners’ conduct, a traditional goal of criminal punishment.“). Nevertheless, “[a]lthough a civil penalty may cause a degree of punishment for the defendant, such a subjective effect cannot override the legislation‘s primarily remedial purpose.” White Chevy, 2002-NMSC-014, ¶ 11. In addition, “[deterrence] may be a valid objective of a regulatory statute,” Id. ¶ 14 (internal quotation marks and citation omitted), and “the mere presence of this purpose is insufficient to render a sanction criminal, as deterrence may serve civil as well as
{47} The U.S. Supreme Court has found that civil penalties under an earlier version of the federal FCA are compensatory. In Hess, the U.S. Supreme Court held that
“the chief purpose of the statutes here was to provide for restitution to the government of money taken from it by fraud, and that the device of double damages plus a specific [penalty] sum [$2,000 per claim] was chosen to make sure that the government would be made completely whole.”
317 U.S. at 551-52. In Vermont Agency of Natural Resources, however, the U.S. Supreme Court stated that the earlier version of the Fraud Claims Act which imposed a civil penalty of only $2,000 per claim was remedial rather than punitive, while the current version authorizing civil penalties of up to $10,000 per claim is punitive. 529 U.S. at 784-85. The Supreme Court was not clear, however, where on the given spectrum ($2,000 to $10,000) the penalty moves from remedial in effect to punitive.
{48} The New Mexico appellate courts have found civil penalties in the amount of $5,000 to be predominantly restorative. In Kirby, the New Mexico Securities Division assessed $75,000 in fines against the defendant for violations of the former New Mexico Securities Act. See 2003-NMCA-074, ¶ 5. The former Act authorized that the director of the Securities Division to “issue an order against an applicant, licensed person or other person who violates the act, imposing a civil penalty up to a maximum of five thousand dollars ($5,000) for each violation.”
{49} Turning specifically to FATA, the imposed penalty ranges from $5,000 to $10,000 per violation, leaving the exact award to the discretion of the trial judge.
CONCLUSION
{50} We hold that FATA is constitutional. The judgment of the district court is affirmed in part and reversed in part. We remand the consolidated matter to the district court for further proceedings consistent with this Opinion.
{51} IT IS SO ORDERED.
PETRA JIMENEZ MAES, Justice
WE CONCUR:
RICHARD C. BOSSON, Justice
EDWARD L. CHÁVEZ, Justice
CHARLES W. DANIELS, Justice
M. MONICA ZAMORA, Judge
Sitting by designation