March 25, 2019

March 25, 2019

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Supreme Court Applies Excessive Fines Clause to States

The Supreme Court today held the Eighth Amendment’s Excessive Fines Clause applies to the states. A wide variety of groups from the American Civil Liberties Union to the Chamber of Commerce of the United States supported the result.

Background

The defendant in the underlying matter was an individual who pleaded guilty in Indiana state court to dealing in a controlled substance and conspiracy to commit theft. He was sentenced to one year of home detention, five years of probation including an addiction treatment program, and fees and costs totaling $1,203. Subsequently, the State engaged a private law firm to forfeit civilly the Land Rover SUV seized at the time of arrest. The vehicle had recently been purchased for $42,000 with the proceeds of a life insurance policy. The trial court denied the requested forfeiture, observing that the purchase price of the vehicle was more than four times the maximum monetary fine of $10,000 assessable against him for his conviction. The State appealed, and the Indiana Supreme Court held the Eighth Amendment constrains only federal actions.

The Decision

The United States Supreme Court reversed and remanded in Timbs v. Indiana. In the opinion for a unanimous court, Justice Ginsburg found the protection against excessive fines “has been a constant shield throughout Anglo-American history,” as “exorbitant tolls undermine other constitutional liberties” such as political speech. Justice Thomas concurred with the result but wrote that the Privileges and Immunities Clause rather than the Due Process Clause made the fines clause applicable to states. Justice Gorsuch also concurred, writing that he did not need to resolve that question to agree with the result.

Implications

Both individuals and corporate entities will benefit from the Court’s decision. The American Civil Liberties Union, cited in the decision, raised the concern that “governments nationwide increasingly depend heavily on fines and fees as a source of general revenue.” As the Chamber of Commerce of the United States of America noted in its amicus brief, the failure of some state and local governments to apply the Eighth Amendment’s restriction drives up costs for businesses. According to the Chamber of Commerce, “state and local prosecutors have sought to extract grossly disproportionate fines from disfavored or unpopular parties – like large corporations – who presumably have the resources to pay, rather than seeking sanctions in proportion to the harms caused by their actions.” The Chamber of Commerce described instances of states retaining private counsel to pursue “aggressive claims” against corporations that led to substantial monetary recoveries (although some of these verdicts were later overturned). Additionally, businesses faced the prospect of “multiple fines by different government actors for the same conduct.” The Chamber of Commerce gave the example of a company that paid a $124 million civil penalty in South Carolina after settling with the federal government for $2.2 billion.

Similar Concerns in Justice Manual

The Court’s opinion should help individuals and companies avoid fines that are grossly disproportionate to the behavior at issue or actual financial harm caused. The U.S. Department of Justice’s Justice Manual reflects a similar concern. A new section to the Manual at 1-12.100, added less than a year ago, reminds Department attorneys involved in investigations or proceedings involving multiple Department components, or other federal, state, or local enforcement authorities, of their “ethical obligation not to use criminal enforcement authority unfairly to extract, or to attempt to extract, additional civil or administrative monetary payments.” The new provision, along with the Court’s decision in Timbs, should provide individuals and businesses some comfort.

© Copyright 2019 Squire Patton Boggs (US) LLP

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About this Author

Rebecca Worthington, Squire Patton Boggs Law Firm, Washington DC, Corporate Law Litigation Attorney
Senior Associate

Rebecca Worthington’s practice focuses on litigation, investigations and white collar criminal defense. She has experience in defending cases brought under the False Claims Act and representing clients in internal and government investigations, including matters involving economic sanctions and the Foreign Corrupt Practices Act. She has been named a Washington DC Super Lawyers – Rising Star, among the top up-and-coming lawyers, defined as 40 years of age and younger or in the practice of law for less than 10 years.

202-626-6654
Thomas E. Zeno, Squire Patton Boggs, Healthcare Fraud Lawyer, Economic Crimes Attorney
Of Counsel

Thomas Zeno has more than 25 years of experience in the US Attorney’s Office for the District of Columbia. During that time, Tom investigated and prosecuted economic crimes involving healthcare, financial institutions, credit cards, computers, identity theft and copyrighted materials. As the office’s Healthcare Fraud Coordinator for the last eight years, Tom supervised investigation strategies of agents from the Federal Bureau of Investigation, the Department of Health and Human Services, the Drug Enforcement Administration and the Medicaid Fraud Control Unit regarding healthcare offenses. He also served as the liaison with the office’s civil division on joint proceedings. In addition, Tom served for several years as the Executive Assistant US Attorney for Operations, where he helped supervise the criminal division of the office.

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