Engquist v. Oregon Department of Agriculture

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

ANUP ENGQUIST, 

Plaintiff-Appellee,

v. No. 05-35170

OREGON DEPARTMENT OF  D.C. No.

AGRICULTURE; JOSEPH (JEFF) HYATT; CV 02-1637 AS

JOHN SZCZEPANSKI,

Defendants-Appellants.



ANUP ENGQUIST, 

Plaintiff-Appellant,

No. 05-35263

v.

OREGON DEPARTMENT OF  D.C. No.

CV 02-1637 AS

AGRICULTURE; JOSEPH (JEFF) HYATT;

OPINION

JOHN SZCZEPANSKI,

Defendants-Appellees.



Appeals from the United States District Court

for the District of Oregon

Donald C. Ashmanskas, Magistrate Judge, Presiding

Argued and Submitted

July 27, 2006—Portland, Oregon

Filed February 8, 2007

Before: Stephen Reinhardt, A. Wallace Tashima, and

Susan P. Graber, Circuit Judges.

Opinion by Judge Tashima;

Dissent of Judge Reinhardt

1501

1506 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

COUNSEL

Loren W. Collins, Senior Assistant Attorney General, and

Julie A. Smith, Assistant Attorney General, Oregon Depart-

ment of Justice, Salem, Oregon, for defendants-appellants and

cross-appellees.

Stephen L. Brischetto, Portland, Oregon, for plaintiff-appellee

and cross-appellant.

OPINION

TASHIMA, Circuit Judge:

Plaintiff Anup Engquist (“Engquist”) brought suit alleging

violations of federal anti-discrimination law, constitutional

law, and state tort law against her former employer, the Ore-

gon Department of Agriculture (“ODA”) and John Szczepan-

ski (“Szczepanski”) and Joseph Hyatt (“Hyatt”). A jury found

the individual defendants liable for constitutional violations of

equal protection and substantive due process, and for inten-

tional interference with contract. The jury awarded Engquist

$175,000 in compensatory damages and $250,000 in punitive

damages. Pursuant to Oregon law, $75,000 of the punitive

damages were allocated to Oregon’s Criminal Injuries Com-

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1507

pensation Account (“State Account”). Szczepanski and Hyatt

(collectively “Defendants”) appeal, contending that the con-

stitutional claims are invalid as a matter of law. Engquist

cross-appeals, contending that a jury verdict from a co-

worker’s similar trial in state court should have been given

preclusive effect, or that it should have been admitted into

evidence. She also challenges the allocation of $75,000 of the

punitive damages awarded to her to the State Account. We

have jurisdiction over the appeal and cross-appeal under 28

U.S.C. § 1291. We hold that Engquist’s constitutional claims

are invalid as a matter of law, and remand the case to the dis-

trict court to adjust Engquist’s damages and attorneys’ fees

awards in light of that holding. We affirm on Engquist’s

cross-appeal.

FACTUAL BACKGROUND

Engquist was hired in 1992 as an international food stan-

dards specialist for the Export Service Center (“ESC”), a lab-

oratory in the ODA. She was hired by Norma Corristan

(“Corristan”), who was the director of the ODA’s Laboratory

Services Division (“LSD”), which included the ESC. Eng-

quist’s initial responsibility was to develop a database of food

regulations for different countries, but she later focused on

marketing the ESC’s certification services and consulting

with clients.

Hyatt had been employed by the ODA since 1990, and

worked in the LSD from 1990 to 2000 as a systems analyst.

Engquist had repeated difficulties with Hyatt, and complained

to Corristan several times that Hyatt excessively monitored

her and made false statements about her. Corristan responded

to complaints from Engquist and others about Hyatt by meet-

ing with his supervisor, and requiring him to attend diversity

and anger management training.

In June 2001, Szczepanski, who was an Assistant Director

of the ODA, took over oversight of the ESC, and sought to fill

1508 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

the vacant ESC manager position. During the summer of

2001, Szczepanski told a client that he could not “control”

Engquist, and that Engquist and Corristan “would be gotten

rid of.” In the fall of 2001, Hyatt told a co-worker that he and

Szczepanski were working to “get rid of” Corristan and Eng-

quist. Hyatt drafted a plan to reorganize the ESC, and emailed

it to Szczepanski, and Szczepanski subsequently implemented

it. Engquist and Hyatt both applied for the ESC manager posi-

tion. Although Engquist had a more extensive educational

background and more experience with the customer-service

aspects of the position, Hyatt was offered the position effec-

tive October 2001. Szczepanski defended that decision by

explaining that he chose Hyatt because of Hyatt’s business

experience and work as a chemist at the ODA.

On October 5, 2001, the Governor announced that the state

was experiencing a budget crisis and called for budget reduc-

tions. Soon afterwards, Szczepanski eliminated Corristan’s

position, allegedly because of the budget crisis. Near the end

of 2001, Hyatt told a former ODA employee, then an ESC cli-

ent, that Corristan and Engquist had run the ESC “into the

ground,” they were on their way out, and he would take over

and put it all back together. On January 31, 2002, Engquist

was informed that her position was being eliminated due to

the reorganization. Pursuant to her collective bargaining

agreement (“CBA”), Engquist was given the opportunity to

“bump” into another position. Engquist, however, was found

unqualified for the only position at her level, and thus was

unable to “bump” into it.

Since being laid off, Engquist has applied for approxi-

mately 200 jobs, but has not been offered a full-time job. She

started her own food consulting business, doing the same type

of work she did at the ESC. This business, though, does not

pay enough to sustain her, and may be losing money. Defen-

dants’ vocational expert testified that there are very few

opportunities in Oregon for work in Engquist’s fields —

microbiology, food technology, and food science. Engquist’s

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1509

vocational expert testified that it was not probable that Eng-

quist would find employment in her occupation.

Prior to Engquist’s trial, Corristan successfully filed suit

against Defendants in state court, and a jury awarded Corri-

stan $1.1 million in damages. That jury found that Hyatt dis-

criminated against Corristan because of her gender or

ethnicity, and that Defendants violated her equal protection

and procedural due process rights.

PROCEDURAL BACKGROUND

In her complaint, Enguist alleged claims under Title VII of

the Civil Rights Act of 1964 (42 U.S.C. §§ 2000e et seq.), 42

U.S.C. § 1981, equal protection, procedural and substantive

due process, and intentional interference with contract. She

sought economic, non-economic, and punitive damages, as

well as attorneys’ fees and costs. Defendants moved for sum-

mary judgment on all the claims. The district court granted

the motion as to the sexual harassment and procedural due

process claims, and denied it with respect to the remaining

claims. Defendants made a second motion for summary judg-

ment, specifically challenging Engquist’s use of the “class-of-

one” theory of equal protection. The court denied the motion,

concluding that the claim was viable.

The district court rejected Engquist’s request that the court

give preclusive effect to the jury finding of discrimination in

Corristan’s state court lawsuit against Defendants. The district

court granted Defendants’ motion in limine to exclude from

evidence the verdict in Corristan’s state court case.

The remaining claims proceeded to an 11-day jury trial.

After Engquist rested her case-in-chief, defendants moved for

judgment as a matter of law, again challenging the equal pro-

tection and substantive due process claims. Defendants also

asserted that they were entitled to qualified immunity on the

constitutional claims. The district court denied the motions.

1510 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

Defendants renewed their motions after the close of evidence,

and the court again denied them. Defendants also objected to

the jury instructions on the constitutional claims, arguing that

those claims should not have been submitted to the jury.

Those objections were overruled.

The jury concluded that Defendants were liable for viola-

tions of equal protection and substantive due process, as well

as on the contract interference claim. The jury rejected Eng-

quist’s Title VII and § 1981 claims against all Defendants.

The jury awarded Engquist $175,000 in compensatory dam-

ages, which were not specifically tied to any particular suc-

cessful claim. The jury awarded Engquist $125,000 in

punitive damages on the equal protection claim, and $125,000

in punitive damages on the contract interference claim.

Following the verdict, Defendants filed a motion for judg-

ment notwithstanding the verdict, which the court denied. In

addition, Engquist objected to the form of the judgment, pre-

sumably because the judgment listed the State of Oregon as

a judgment creditor, but the district court overruled her objec-

tion. The court entered judgment in favor of Engquist, which

consisted of $175,000 in compensatory damages and

$175,000 in punitive damages. The court entered judgment in

favor of the State Account in the amount of $75,000, or 60

percent of the punitive damages awarded on the state tort

claim, pursuant to Or. Rev. Stat. § 31.735. The court also

awarded Engquist $172,740 in attorneys’ fees, as well as

costs. Defendants timely filed a notice of appeal, and Eng-

quist timely filed her notice of cross-appeal.

STANDARD OF REVIEW

We review de novo a district court’s denial of a motion for

judgment as a matter of law. Janes v. Wal-Mart Stores Inc.,

279 F.3d 883, 886 (9th Cir. 2002). We also review constitu-

tional claims de novo. Masnauskas v. Gonzales, 432 F.3d

1067, 1069 (9th Cir. 2005). We review a jury verdict under

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1511

the substantial evidence standard. Gilbrook v. City of West-

minster, 177 F.3d 839, 856 (9th Cir. 1999). “Substantial evi-

dence” is evidence that a reasonable mind might accept as

adequate to support a conclusion. Id.

ANALYSIS

I. Equal Protection

This case presents several issues of first impression in this

circuit, the first of which is whether the class-of-one theory of

equal protection is applicable to public employment decisions.

The jury concluded that Defendants were liable on the equal

protection claim because Defendants “intentionally treat[ed]

the plaintiff differently than others similarly situated with

respect to the denial of her promotion, termination of her

employment, or denial of bumping rights without any rational

basis and solely for arbitrary, vindictive, or malicious rea-

sons.” Defendants contend that Engquist’s claim fails as a

matter of law, because the class-of-one theory is not applica-

ble to the claims of public employees.

We begin by examining the Supreme Court’s articulation of

the class-of-one theory and its application by the circuit

courts. Ultimately, we hold that the class-of-one theory of

equal protection is not applicable to decisions made by public

employers.

A. Olech and the Class of One

[1] “The Equal Protection Clause ensures that ‘all persons

similarly situated should be treated alike.’ ” Squaw Valley

Dev. Co. v. Goldberg, 375 F.3d 936, 944 (9th Cir. 2004)

(quoting City of Cleburne v. Cleburne Living Ctr., Inc., 473

U.S. 432, 439 (1985)), rehearing denied, 395 F.3d 1062 (9th

Cir. 2005). The Supreme Court formally recognized class-of-

one equal protection actions in Village of Willowbrook v.

Olech, 528 U.S. 562 (2000) (per curiam). In Olech, a munici-

1512 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

pality conditioned water service for a property on the

plaintiff-owner’s granting a 33-foot easement, even though it

required only a 15-foot easement from every other property

owner. Id. at 563. In a short, per curiam opinion, the Court

allowed the plaintiff to proceed on the class-of-one theory,

recognizing claims where a “plaintiff alleges that she has been

intentionally treated differently from others similarly situated

and that there is no rational basis for the difference in treat-

ment.” Id. at 564. The Court stated that allegations of irratio-

nal and wholly arbitrary treatment, even without allegations

of improper subjective motive, were sufficient to state a claim

for relief under equal protection analysis. Id. at 565.

In a three-paragraph concurrence, Justice Breyer expressed

concern that Olech would transform ordinary violations of

state or local law into constitutional cases. See id. at 565-66.

He nonetheless concurred in the judgment because the plain-

tiff had alleged that city officials acted with malice or ill will,

which distinguished the claim from run-of-the-mill zoning

cases. Id. at 566.

[2] Based on Olech, we have applied the class-of-one the-

ory in the regulatory land-use context to forbid government

actions that are arbitrary, irrational, or malicious. See Squaw

Valley, 375 F.3d at 944-48; see also Valley Outdoor, Inc. v.

City of Riverside, 446 F.3d 948, 955 (9th Cir. 2006) (applying

class-of-one theory to city’s denial of billboard permits). In

Squaw Valley, the plaintiffs, who operated a ski resort,

claimed that two employees working for the state water qual-

ity authority subjected them to selective and over-zealous reg-

ulatory oversight. 375 F.3d at 938. We applied rational basis

scrutiny to review the acts of the government regulators. Id.

at 944. We held that acts that are malicious, irrational, or

plainly arbitrary do not have a rational basis. Id. In addition,

we held that in an equal protection claim based on selective

enforcement of the law, a plaintiff can show that a defen-

dant’s alleged rational basis for his acts is a pretext for an

impermissible motive. Id.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1513

[3] We reversed a grant of summary judgment in favor of

defendant Singer because, even though the defendants had set

forth a rational basis for their acts, there was evidence that

Singer acted out of animosity against the plaintiffs. Id. at 946-

47. In contrast, we sustained the grant of summary judgment

in favor of defendant Goldberg because we found no evidence

that Goldberg acted with animosity. Id. at 947-48. We have

not yet decided, however, whether the class-of-one theory

should be extended to public employment decisions.

Other courts of appeals have chosen to apply Olech’s class-

of-one theory to public employment decisions. See, e.g., Scar-

brough v. Morgan County Bd. of Educ., 470 F.3d 250, 260-61

(6th Cir. 2006); Hill v. Borough of Kitztown, 455 F.3d 225,

239 (3d Cir.. 2006); Whiting v. Univ. of Miss., 451 F.3d 339,

348-50 (5th Cir. 2006); Neilson v. D’Angelis, 409 F.3d 100,

104 (2d Cir. 2005); Levenstein v. Salafsky, 414 F.3d 767, 775-

76 (7th Cir. 2005); Campagna v. Mass. Dep’t of Envtl. Prot.,

334 F.3d 150, 156 (1st Cir. 2003); Bartell v. Aurora Pub.

Sch., 263 F.3d 1143, 1148-49 (10th Cir. 2001). Courts, how-

ever, have “struggled to define the contours of class-of-one

cases” because, unless constrained, the class-of-one theory of

equal protection claim could provide a federal cause of action

for review of almost every executive or administrative gov-

ernment decision. Jennings v. City of Stillwater, 383 F.3d

1199, 1210-11 (10th Cir. 2004).1 Thus, although courts have

recognized class-of-one employment claims, they have almost

always ultimately concluded that the particular claim before

them was insufficient. See, e.g., Neilson, 409 F.3d at 106;

1

Following Justice Breyer’s lead, some courts have limited class-of-one

claims by requiring a showing of malice or animus as an element of the

claim, but other courts have refused to do so. See Jicarilla Apache Nation

v. Rio Arriba County, 440 F.3d 1202, 1209-10 (10th Cir. 2006) (recogniz-

ing split and collecting cases). Neither party in this case has argued that

malice or animus is an element of class-of-one employment claims. We

note, however, that such a requirement would be inconsistent with both

the Court’s opinion in Olech and our holding in Squaw Valley. See Olech,

528 U.S. at 565; Squaw Valley, 375 F.3d at 944.

1514 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

Bartell, 263 F.3d at 1149. Because of this understandable hes-

itancy, the Seventh Circuit recently noted that it was “not sur-

prised to have found no ‘class of one’ cases in which a public

employee has prevailed since the extreme case that kicked off

the ‘class of one’ movement more than two decades ago.”

Lauth v. McCollum, 424 F.3d 631, 633-34 (7th Cir. 2005)

(citations omitted) (collecting cases).2 Engquist’s thus-far suc-

cessful claim on this theory thus presents a unique case.

B. Applying the Class-of-One Theory to Public

Employment

Whether to apply the class-of-one theory to decisions of

public employers presents a significantly different question

than whether to apply it to legislative or regulatory acts of

government. In general, there is a distinction between the

“government acting ‘as a proprietor’ that was managing ‘its

own internal affairs’ rather than as a ‘lawmaker’ that was

attempting ‘to regulate or license.’ ” Singleton v. Cecil, 176

F.3d 419, 425 (8th Cir. 1999) (en banc) (quoting Cafeteria &

Rest. Workers Union, Local 473 v. McElroy, 367 U.S. 886,

896 (1961) (alterations omitted)). The Supreme Court has

always assumed that “the government as employer indeed has

far broader powers than does the government as sovereign.”

Waters v. Churchill, 511 U.S. 661, 671 (1994) (O’Connor, J.,

plurality opinion) (discussing difference in government ability

to restrict speech).

[4] Because the government as employer has broader pow-

ers than the government as regulator, the scope of judicial

review is correspondingly restricted. Accordingly, the

Supreme Court has warned that “[t]he federal court is not the

appropriate forum in which to review the multitude of person-

2

That “extreme case” was “Ciechon v. Chicago, 686 F.2d 511 (7th Cir.

1982), where a paramedic was made a scapegoat for conduct that had

drawn the wrath of the local media, while her identically situated partner

received no disciplinary sanction at all.” Lauth, 424 F.3d at 634.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1515

nel decisions that are made daily by public agencies,” and

therefore the Constitution cannot be interpreted to require

judicial review of every such decision. Bishop v. Wood, 426

U.S. 341, 349-50 (1976) (rejecting due process claim where

the plaintiff is fired from public employment for reasons

either false or mistaken).

In other areas of constitutional law, the Court has limited

the rights of public employees as compared to ordinary citi-

zens. For instance, in the First Amendment context, courts

review restrictions on employees’ speech with greater defer-

ence in order to balance the government employer’s legiti-

mate interests in its mission. See Garcetti v. Ceballos, 126

S. Ct. 1951, 1960 (2006) (holding that “when public employ-

ees make statements pursuant to their official duties, the

employees are not speaking as citizens for First Amendment

purposes, and the Constitution does not insulate their commu-

nications from employer discipline”); City of San Diego v.

Roe, 543 U.S. 77, 80-82 (2004) (per curiam) (applying bal-

ancing test drawn from Pickering v. Bd. of Educ., 391 U.S.

563 (1968)). Similarly, in the Fourth Amendment context, the

government, as employer, need not obtain a warrant to search

an employee’s property because imposing such a requirement

unduly burdens government business and improperly trans-

forms everyday business incidents into constitutional matters.

O’Connor v. Ortega, 480 U.S. 709, 721-22 (1987)

(O’Connor, J., plurality opinion).

[5] The class-of-one theory of equal protection is another

constitutional area where the rights of public employees

should not be as expansive as the rights of ordinary citizens.

The paradigmatic class-of-one case should be one in which a

public official, for some improper motive, “comes down hard

on a hapless private citizen.” Lauth, 424 F.3d at 633. This was

the type of case decided in Olech and Squaw Valley. In con-

trast, when a public employee is subjected to unequal treat-

ment at work for arbitrary reasons, the need for federal

judicial review under equal protection “is especially thin”

1516 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

given the number of other legal protections that public

employees enjoy. See id.

A judicially-imposed constitutional proscription of arbi-

trary public employer actions would also upset long-standing

personnel practices. Although arbitrary government acts are

unreasonable in the legislative or regulatory context, employ-

ers have traditionally possessed broad discretionary authority

in the employment context. The power of employers to dis-

charge employees for reasons that may appear arbitrary,

unless constrained by contract or statute, is well-established

under the common law of at-will employment. See NLRB v.

J. Weingarten, Inc., 420 U.S. 251, 273-74 (1975) (describing

common law); Andrews v. Louisville & Nashville R.R., 406

U.S. 320, 324 (1972) (same). Applying equal protection to

forbid arbitrary or malicious firings of public employees

would completely invalidate the practice of public at-will

employment. See Singleton, 176 F.3d at 428. We decline to

effect such a significant change in employment law under the

general provisions of the Fourteenth Amendment. See Waters,

511 U.S. at 679 (“[A]n at-will government employee . . . gen-

erally has no claim based on the Constitution at all.”).3

In addition to significantly altering traditional personnel

practices, applying the class-of-one theory to public employ-

ment would also generate a flood of new cases, requiring the

federal courts to decide whether any public employee was

fired for an arbitrary reason or a rational one. See Jennings,

383 F.3d at 1211. The theory would apply not only to dis-

charges, but also to other employment actions, such as promo-

tions, disciplinary actions, and decisions about pay, benefits

and transfers. Contrary to the Supreme Court’s admonition,

3

If an employee is not an at-will employee, then there is already protec-

tion against arbitrary firings, such as in civil service regulations or a CBA,

which lessens the need for constitutional protection. See Lauth, 424 F.3d

at 633. In this case, for whatever reason, there is nothing in the record to

indicate that Engquist challenged her dismissal under the applicable CBA.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1517

federal courts would be required to “review the multitude of

personnel decisions that are made daily by public agencies.”

Bishop, 426 U.S. at 349.

[6] Finally, we believe that Olech is too slender a reed on

which to base such a transformation of public employment

law. “It seems unlikely that the Supreme Court intended such

a dramatic result in its per curiam opinion in Olech.” Campa-

gna v. Mass. Dep’t of Envtl. Prot., 206 F. Supp. 2d 120, 127

(D. Mass. 2002), aff’d, 334 F.3d 150 (1st Cir. 2003). Accord-

ingly, we hold that the class-of-one theory of equal protection

is inapplicable to decisions made by public employers with

regard to their employees. We therefore reverse the judgment

in favor of Engquist on her equal protection claim.4

II. Substantive Due Process

[7] This case also presents a novel due process issue for

this circuit: what showing is required in a substantive due pro-

cess claim based on the right to pursue a particular profession.

The jury concluded that Defendants were liable on the sub-

stantive due process claim because they “subject[ed] plaintiff

to arbitrary and unreasonable government actions causing

plaintiff to be unable to pursue her profession.” Defendants

contend that, as a matter of law, they cannot be held liable

under substantive due process for violating this right. In the

alternative, they contend that Engquist did not present suffi-

cient evidence to demonstrate that their actions deprived her

of the ability to pursue her profession.5

4

Because we conclude that Engquist’s class-of-one claim is invalid, we

need not reach Defendants’ contention that they are entitled to qualified

immunity under Saucier v. Katz, 533 U.S. 194, 201 (2001). See Squaw

Valley, 375 F.3d at 943.

5

Engquist contends that Defendants have waived these arguments

because the court accepted their proposed jury instructions for the claim.

In fact, Defendants challenged the legal validity of the claim repeatedly

and proposed jury instructions only in case the court rejected their legal

1518 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

We hold that Engquist has stated a valid claim — a claim

upon which relief can be granted — under substantive due

process by alleging that Defendants’ actions prevented her

from pursuing her profession. We conclude, however, that

Engquist’s claim fails as a matter of law because she did not

present sufficient evidence that Defendants’ actions were

responsible for her inability to pursue her profession.

A. Nature of the Protected Right

“The substantive component of the Due Process Clause for-

bids the government from depriving a person of life, liberty,

or property in such a way that . . . interferes with rights

implicit in the concept of ordered liberty.” Squaw Valley, 375

F.3d at 948 (internal quotation marks omitted). “A threshold

requirement to a substantive or procedural due process claim

is the plaintiff’s showing of a liberty or property interest pro-

tected by the Constitution.” Wedges/Ledges of Cal., Inc. v.

City of Phoenix, 24 F.3d 56, 62 (9th Cir. 1994). As discussed

above, most courts have rejected the claim that substantive

due process protects the right to a particular public employ-

ment position, and we have yet to decide the issue. See Nicho-

las v. Pa. State Univ., 227 F.3d 133, 142-43 (3d Cir. 2000);

Dias, 436 F.3d at 1131 n.3. Engquist, however, premised her

arguments. Therefore, Defendants have not waived these arguments. Eng-

quist also argues that some particular arguments were waived because they

were not raised below. Even assuming such waiver, however, we will con-

sider them because these arguments are intertwined with the validity of the

claim. See Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 99 (1991)

(“When an issue or claim is properly before the court, the court is not lim-

ited to the particular legal theories advanced by the parties, but rather

retains the independent power to identify and apply the proper construc-

tion of governing law.”). In addition, where an issue is purely legal, and

the other party would not be prejudiced, we can consider an issue not

raised below. See Kimes v. Stone, 84 F.3d 1121, 1126 (9th Cir. 1996).

Here the issues are purely legal and were fully briefed by Engquist; there-

fore, we exercise our discretion to consider these arguments.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1519

claim on interference with her ability to pursue a profession

altogether.

[8] The Supreme Court has not specified the boundaries of

the right to pursue a profession, but has identified it generally.

See Conn v. Gabbert, 526 U.S. 286, 291-92 (1999) (stating

that there is “some generalized due process right to choose

one’s field of private employment”). The Court has noted,

however, that cases recognizing the right “all deal with a

complete prohibition of the right to engage in a calling, and

not [a] sort of brief interruption.” Id. at 292. We have recog-

nized the liberty interest in pursuing an occupation of one’s

choice. See Dittman v. California, 191 F.3d 1020, 1029-30

(9th Cir. 1999). We have held that a plaintiff can make out a

substantive due process claim if she is unable to pursue an

occupation and this inability is caused by government actions

that were arbitrary and lacking a rational basis. Sagana v.

Tenorio, 384 F.3d 731, 742-43 (9th Cir. 2004), cert. denied,

543 U.S. 1149 (2005); Dittman, 191 F.3d at 1030; Wedges/

Ledges, 24 F.3d at 65. But see Zorzi v. County of Putnam, 30

F.3d 885, 895 (7th Cir. 1994) (holding that this occupational

liberty is protected only by procedural due process rights, and

not substantive due process).

All of our cases recognizing this substantive due process

right dealt with government legislation or regulation, and not

the acts of a government as an employer, which allegedly pre-

vented the plaintiff from pursuing a specific profession. See

Sagana, 384 F.3d at 733, 743 (challenging commonwealth

law implementing temporary immigrant labor program); Ditt-

man, 191 F.3d at 1029-33 (challenging state law imposing

conditions on acupuncture licenses); Wedges/Ledges, 24 F.3d

at 65-66 (challenging city ordinance that banned new licenses

for particular arcade games); FDIC v. Henderson, 940 F.2d

465, 474 (9th Cir. 1991) (challenging state regulatory refusal

to license a new bank). As discussed above, constitutional

review of government employer decisions is more constrained

than the review of legislative or regulatory ones. See Part I.B,

1520 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

supra. Defendants thus argue that there should be no substan-

tive due process review of employment decisions, and there

is some support for that proposition. See Singleton, 176 F.3d

at 428 (holding that in the public employment context, an

employee’s occupational liberty is not protected by substan-

tive due process, but only by procedural due process).6

[9] We decline to hold that there is no substantive due pro-

cess claim for a public employer’s violations of occupational

liberty. Rather, we limit the claim to extreme cases, such as

a “government blacklist, which when circulated or otherwise

publicized to prospective employers effectively excludes the

blacklisted individual from his occupation, much as if the

government had yanked the license of an individual in an

occupation that requires licensure.” Olivieri v. Rodriguez, 122

F.3d 406, 408 (7th Cir. 1997). Such a governmental act would

threaten the same right as a legislative action that effectively

banned a person from a profession, and thus calls for the same

level of constitutional protection. The concerns about federal

courts reviewing every public employee discharge, see Single-

ton, 176 F.3d at 428-29, are not implicated because such a

claim is colorable only in extreme cases. Nor does such a

standard, unlike the class-of-one theory, affect the vast major-

ity of public employer decisions.

[10] As we have already recognized that the right to pursue

a chosen profession is protected by substantive due process in

the legislative context, we believe that the right should also be

6

In support of her claim, Engquist cites several cases that are unhelpful

because they involve procedural rather than substantive due process. See

DiMartini v. Ferrin, 889 F.2d 922, 927-29 (9th Cir. 1989), as amended by

906 F.2d 465; Brady v. Gebbie, 859 F.2d 1543, 1552-53 (9th Cir. 1988);

Merritt v. Mackey, 827 F.2d 1368, 1372 (9th Cir. 1987). These cases help

establish that the right to pursue a profession is a protected liberty interest,

but are unhelpful with respect to substantive due process protection.

Benigni v. City of Hemet, 879 F.2d 473, 478 (9th Cir. 1988), may have

involved substantive due process, but was based on abusive police con-

duct, and therefore provides little guidance.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1521

protected in the public employment context. Therefore, we

hold that there is substantive due process protection against

government employer actions that foreclose access to a partic-

ular profession to the same degree as government regulation.7

B. Sufficiency of the Evidence

Having identified the contours of the substantive due pro-

cess right, we next turn to the question of whether Engquist’s

evidence at trial satisfied this standard. Defendants contend

that the evidence was insufficient to show that Engquist was

deprived of her right to pursue a profession. We agree.

[11] We have not previously articulated how much interfer-

ence with someone’s job prospects constitutes a denial of the

right to pursue a profession. On this question, we find useful

the Seventh Circuit’s standard that in order to bring an occu-

pational liberty claim, a plaintiff must show that the “charac-

ter and circumstances of a public employer’s stigmatizing

conduct or statements are such as to have destroyed an

employee’s freedom to take advantage of other employment

opportunities.” Bordelon v. Chi. Sch. Reform Bd. of Trs., 233

F.3d 524, 531 (7th Cir. 2000). “It is not enough that the

employer’s stigmatizing conduct has some adverse effect on

the employee’s job prospects; instead, the employee must

show that the stigmatizing actions make it virtually impossi-

7

Defendants argue that Engquist’s substantive due process claim is pre-

empted by her class-of-one equal protection claim because it more specifi-

cally addresses her theory of liability. See Armendariz v. Penman, 75 F.3d

1311, 1325-26 (9th Cir. 1996) (en banc) (“Substantive due process analy-

sis has no place in contexts already addressed by explicit textual provi-

sions of constitutional protection, regardless of whether the plaintiff’s

potential claims under those amendments have merit.”); Squaw Valley,

375 F.3d at 949-50 (holding that substantive due process claims based on

government interference with property rights are preempted by the Tak-

ings Clause). Because we have held that the class-of-one theory is inappli-

cable in the employment context, see Part I, supra, Engquist’s due process

claim is not preempted.

1522 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

ble for the employee to find new employment in his chosen

field.” Id. (internal quotation marks omitted).

[12] Under this standard, only employer actions that affect

a plaintiff’s occupational prospects to the same degree as gov-

ernment legislation are actionable under a substantive due

process theory. Thus, it comports with our cases in the legisla-

tive context. See Dittman, 191 F.3d at 1029 (holding that a

law that imposes a “ ‘complete prohibition’ on entry into a

profession . . . implicates a person’s liberty interest in pursu-

ing an occupation or profession of her choice”). The standard

also ensures that substantive due process protects the right to

pursue an entire profession, and not the right to pursue a par-

ticular job. Accordingly, we adopt the standard set forth in

Bordelon.

[13] In this case, Engquist presented evidence that Defen-

dants made defamatory statements to two or three other peo-

ple in the industry. In addition, Engquist presented evidence

that she was having much difficulty finding a job in the same

field in Oregon, and that such difficulty would likely con-

tinue. Engquist, however, did not demonstrate that Defen-

dants’ actions caused her job-search difficulties. There was no

proof that Defendants’ defamatory comments affected oppor-

tunities with those clients, or any other possible employer.

Even under the substantial evidence standard, see Gilbrook,

177 F.3d at 856, there was no evidence that her reputation had

been publicly damaged by Defendants such that they reduced

her employment options. Instead, it appears that Engquist

works in a highly specialized field, and there simply are not

many jobs available in that field in Oregon. Because Defen-

dants did not cause this situation, their specific actions have

not made it “virtually impossible” for Engquist to find new

employment. See Bordelon, 233 F.3d at 531. Therefore, we

conclude that Engquist did not present sufficient evidence to

sustain her substantive due process claim.8 Consequently, we

8

Defendants argue that if there is an available substantive due process

claim, pretext is not part of the inquiry. In our substantive due process

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1523

reverse the judgment in favor of Engquist on her substantive

due process claim.9

III. Engquist’s Damages and Attorneys’ Fees

[14] Because we reverse the judgment in favor of Engquist

on her constitutional claims, the damages award and attor-

neys’ fees award must be vacated. The compensatory dam-

ages may be unaffected because the jury also found in favor

of Engquist on the interference with contract tort claim and

did not allocate its award of compensatory damages to any

particular claim, or between claims. The punitive damages

awarded for the equal protection claim, however, cannot

stand. Additionally, the district court’s award of attorneys’

fees can no longer be based on 42 U.S.C. § 1988. See

Mateyko v. Felix, 924 F.2d 824, 828 (9th Cir. 1990) (holding

that a plaintiff who succeeds on a state claim, but on none of

her constitutional claims, is not a “prevailing party” under

§ 1988).10 Accordingly, we vacate the awards of damages and

attorneys’ fees, and remand to the district court to decide how

to adjust Engquist’s damages and attorneys’ fees awards.

decisions regarding occupational liberty, we did not question whether the

government’s proffered justification was a pretext. See, e.g., Wedges/

Ledges, 24 F.3d at 66 (“[W]e do not require that the government’s action

actually advance its stated purposes, but merely look to see whether the

government could have had a legitimate reason for acting as it did.”).

These cases all involved legislation, however, and an inquiry into pretext

may be appropriate in the employment context. Regardless, we need not

decide the issue as we have held that Engquist has not shown that she was

deprived of her right to occupational liberty. See Dittman, 191 F.3d at

1029-31 (inquiring into the justification for an action only after holding

that the plaintiff was deprived of her liberty interest).

9

Because we conclude that Engquist’s due process claim is invalid, we

need not reach Defendants’ contention that they are entitled to qualified

immunity. See footnote 4, supra.

10

We express no opinion as to whether Engquist is entitled to attorneys’

fees under Oregon law.

1524 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

IV. Oregon’s Punitive Damages Allocation Statute

Pursuant to Or. Rev. Stat. § 31.735, the district court

entered judgment in favor of the State Account in an amount

equal to 60 percent of the punitive damages award. The puni-

tive damages award for the federal, i.e., equal protection

claim, was not subject to the § 31.735 allocation, but only the

punitive damages award for the state law tort claim of con-

tract interference. Engquist’s primary contention on cross-

appeal is that § 31.735 violates the Fifth Amendment’s Tak-

ings Clause and the Excessive Fines Clause of the Eighth

Amendment.11

A. Judicial Estoppel

Engquist’s first argument is that the doctrine of judicial

estoppel prevents the Oregon Justice Department from col-

lecting funds for the State Account because the Department,

as Defendants’ counsel, previously denied liability for puni-

tive damages. We review the district court’s decision not to

invoke judicial estoppel for an abuse of discretion. Hamilton

v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir.

2001).

Judicial estoppel prevents a party from taking inconsistent

positions when those inconsistencies have an adverse effect

on the judicial process. United States v. Miguel, 338 F.3d 995,

11

As an initial matter, Defendants contend that Engquist’s challenges

are unripe. We can readily dispense with this argument. “Ripeness analy-

sis has two prongs: the fitness of the issue for judicial review and the hard-

ship to the parties if review is withheld.” Gemtel Corp. v. Cmty. Redev.

Agency, 23 F.3d 1542, 1545 (9th Cir. 1994). A claim is fit for decision if

the issues are primarily legal, do not require further factual development,

and challenge a final action. Verizon Cal. Inc. v. Peevey, 413 F.3d 1069,

1075 (9th Cir. 2005) (Bea, J., concurring). Engquist’s challenges to the

constitutionality of § 31.735 easily satisfy both prongs of the ripeness test,

as the issues presented are purely legal and delay will cause unnecessary

hardship. We thus reject Defendants’ contention that the claims are unripe.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1525

1002 n.20 (9th Cir. 2003) (“Judicial estoppel prevents a party

from taking a contrary position ‘where a party assumes a cer-

tain position in a legal proceeding, and succeeds in maintain-

ing that position.’ ” (quoting New Hampshire v. Maine, 532

U.S. 742, 749 (2001))). We reject Engquist’s contention that

the Department took inconsistent positions. By virtue of its

decision to represent Defendants, the Department necessarily

held the view that Defendants had not committed “malfea-

sance in office or willful or wanton neglect of duty.” See Or.

Rev. Stat. § 30.285 (requiring the Department to defend and

indemnify state employees, unless it deems that the employ-

ees committed “malfeasance in office”). The Department’s

views did not change during the proceedings below; rather, it

was the jury that concluded that Defendants acted with “mal-

ice” or “reckless and outrageous indifference,” such that it

found punitive damages were appropriate. See Or. Rev. Stat.

§ 31.730.

Nor did the Department take an inconsistent position when

it sought judgment creditor status under § 31.735. The

Department did not change its position to one of agreement

with the jury determination of willfulness or malice but,

because the jury awarded punitive damages, the State

Account was automatically entitled to its statutory portion and

the Department was separately obligated under § 31.735 to

obtain judgment creditor status in order to obtain this statu-

tory portion. Accordingly, we conclude that the district court

did not abuse its discretion in rejecting Engquist’s judicial

estoppel argument.12

12

Engquist’s argument that the Department suffered from a conflict of

interest is equally without merit. The Department does not have a “propri-

etary interest” in the State Account because it is not allowed to retain any

of the funds for its own benefit or even charge fees to those who apply for

funds under the program. See Or. Rev. Stat. § 147.315. Nor does the statu-

tory apportionment of a portion of the punitive damages award to the State

Account increase the total amount of Defendants’ liability; rather, it

merely reduces the total amount of Engquist’s recovery. Therefore, there

1526 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

B. Judgment in Favor of a Non-Party

[15] Engquist next asserts that the district court erred in

entering judgment in favor of an entity that was not a party

to the proceeding. The Oregon Supreme Court and the district

court for the District of Oregon have both held that the State

of Oregon can assert its “substantive right as a judgment cred-

itor” pursuant to § 31.735.13 See DeMendoza v. Huffman, 51

P.3d 1232, 1235-36 (Or. 2002); In re Stein, 236 B.R. 34, 37

(Bankr. D. Or. 1999). Neither opinion indicates that the State

must obtain party status prior to its assertion of this right. The

statute’s express language, which invites the State to act only

“[u]pon the entry of a verdict including an award of punitive

damages,” belies any inference that the State is required to

become a party. Or. Rev. Stat. § 31.735. Additionally, Federal

Rule of Civil Procedure 69(a) “permits judgment creditors to

use any execution method consistent with the practice and

procedure of the state in which the district court sits.” Cigna

Prop. & Cas. Ins. Co. v. Polaris Pictures Corp., 159 F.3d

412, 421 (9th Cir. 1998) (internal quotation marks omitted).

Under Oregon state procedure, the State can merely be identi-

fied as a judgment creditor in the judgment and need not

intervene as a party. See DeMendoza, 51 P.3d at 1235-36; Or.

Rev. Stat. § 31.735(2). Therefore, we conclude that Oregon is

entitled to assert this substantive right without becoming a

party.

was no conflict between the Department’s representation of Defendants

and its subsequent act of seeking an award under § 31.735. See Kasza v.

Browner, 133 F.3d 1159, 1171 (9th Cir. 1998) (rejecting a plaintiff’s “con-

clusory charge of institutional ‘conflict of interest’ ” against the Depart-

ment of Justice’s representation of the defendants, and also questioning

whether a plaintiff even has standing to complain about a conflict of inter-

est on the part of the defendants’ counsel).

13

Section 31.735 was formerly known as § 18.540, and was discussed

as § 18.540 in the DeMendoza opinion, but the substance of the two stat-

utes is the same.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1527

C. Takings Clause Challenge14

Section 31.735, which is called a “split-recovery” provision15

because it apportions the punitive award between the plaintiff

and the State, provides in part:

Upon the entry of a verdict including an award of

punitive damages, the Department of Justice shall

become a judgment creditor as to the punitive dam-

ages portion of the award to which the Criminal

Injuries Compensation Account is entitled pursuant

to paragraph (b) of this subsection, and the punitive

damage portion of an award shall be allocated as fol-

lows: [forty percent of the punitive damages award

to the prevailing party and sixty percent to the com-

pensation account].

Or. Rev. Stat. § 31.735(1).

[16] Engquist argues that § 31.735 violates the Takings

Clause of the Fifth Amendment, which forbids the taking of

“private property . . . for public use, without just compensa-

tion.” U.S. CONST. AMEND. V.16 We use a two-step analysis to

14

While Engquist objected to the “form of judgment” in the district

court, it is unclear whether she specifically raised any constitutional objec-

tions to § 31.735. The district court never specifically ruled on the consti-

tutionality of the statute. Although the State could have argued that

Engquist waived the constitutional issues by not raising them below, it did

not. Its failure to raise the waiver argument in its brief to this court means

that we can reach the merits of the issue. See United States v. Doe, 53 F.3d

1081, 1082-83 (9th Cir. 1995) (holding that the government had waived

its waiver argument by failing to assert it and instead addressing the merits

of the defendant’s claim).

15

See, e.g., Michael J. Klaben, Note, Split-Recovery Statutes: The Inter-

play of the Takings and Excessive Fines Clauses, 80 Cornell L. Rev. 104

(1994); Scott Dodson, Note, Assessing the Practicality and Constitutional-

ity of Alaska’s Split Recovery Punitive Damages Statute, 49 Duke L.J.

1335 (2000).

16

The Takings Clause applies against the states through the Fourteenth

Amendment. Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S.

155, 160 (1980).

1528 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

determine whether a “taking” has occurred: first, we deter-

mine whether the subject matter is “property” within the

meaning of the Fifth Amendment and, second, we establish

whether there has been a taking of that property, for which

compensation is due.17 Konizeski v. Livermore Labs (In re

Consol. U.S. Atmospheric Testing Litig.), 820 F.2d 982, 988

(9th Cir. 1987). The dispute in this case focuses on the first

step, i.e., whether a punitive damages award constitutes prop-

erty under the Takings Clause.18

[17] The question of whether punitive damages awards

qualify as property for purposes of the Takings Clause is a

question of first impression in the federal courts.19 Two types

of Takings Clause cases guide our analysis: cases examining

whether principal owners have a property right in interest that

accrues on funds held by the government, and cases examin-

ing whether a plaintiff has a property interest in a cause of

17

While there is no formulaic test for the first step, there are multiple

approaches to the second step of the analysis. One approach, usually

applied to regulatory takings, is the “ad hoc” test enunciated in Penn Cen-

tral Transp. Co. v. City of New York, 438 U.S. 104 (1978). As we are

focusing on the first step of the takings analysis, we do not engage in anal-

ysis of the Penn Central factors, even though these factors are discussed

by Engquist and several state supreme court decisions. See, e.g., Kirk v.

Denver Publ’g Co., 818 P.2d 262, 268 (Colo. 1991); see also Penn Cen-

tral, 438 U.S. at 124 (examining the economic impact of the regulation on

the claimant, the “extent to which the regulation has interfered with dis-

tinct investment-backed expectations,” and the character of the govern-

mental action).

18

If the punitive damages award does constitute property, it is a “taking”

to confiscate 60 percent of it, such that the second prong almost certainly

would be satisfied. See Brown v. Legal Found. of Wash., 538 U.S. 216,

235 (2003) (“Because interest earned in IOLTA accounts is the private

property of the owner of the principal, the transfer of the interest to the

Foundation here seems more akin to the occupation of a small amount of

rooftop space in Loretto . . . which was a physical taking subject to per

se rules.” (internal quotation marks and internal citations omitted) (empha-

sis added)).

19

Several state supreme courts, however, have decided this issue. See

Part IV.C.1, infra.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1529

action. Both of these two species of Takings Clause cases

indicate that the relevant inquiry is the certainty of one’s

expectation in the property interest at issue. They compel us

to conclude that Engquist’s interest in her punitive damages

award is not a property right cognizable under the Takings

Clause, because punitive damages awards are necessarily con-

tingent and discretionary. Our conclusion is bolstered by our

consideration of the deterrence and punishment justifications

for punitive awards, discussed below, and is in concert with

the majority of state supreme courts who have decided the

question.

1. Takings Clause Cases

Our analysis begins with the Supreme Court cases holding

that interest constitutes property for purposes of the Takings

Clause. Webb’s, 449 U.S. 155, involved a state statute that

confiscated for the state the interest accrued on interpleader

funds. In concluding that the interest was property under the

Takings Clause, the Webb’s Court emphasized that the credi-

tors at issue had “more than a unilateral expectation” in the

interest, and cited the “usual and general rule . . . that any

interest on an interpleaded and deposited fund follows the

principal.” Id. at 161-62. The Court emphasized that “earn-

ings of a fund are incidents of ownership of the fund itself and

are property just as the fund itself is property.” Id. at 164.

Similarly, in Phillips v. Washington Legal Foundation, 524

U.S. 156 (1998), the Court concluded that the interest gained

from the “Interest on Lawyers’ Trust Account” program

involved property for Takings Clause purposes. The Court’s

reasoning hinged on the “fundamental maxim of property law

that the owner of a property interest may dispose of all or part

of that interest as he sees fit.” Id. at 167.

[18] While the interest cases do not articulate a general rule

for what is cognizable as property under the Takings Clause,

the Court’s reasoning focused on the certainty of the

principal-holder’s expectation of receiving interest. Eng-

1530 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

quist’s expectation that she will receive a punitive damages

award or the amount of any such award is far less certain than

the expectation of interest on principal. Simply put, punitive

damages do not follow compensatory damages, as interest fol-

lows principal. The interest in Webb’s qualified as property

because of the certainty of the creditor’s expectations that it

would receive interest, pursuant to the general maxim that

“interest follows principal.” See Webb’s, 449 U.S. at 162. In

contrast, punitive damages are “never awarded as of right, no

matter how egregious the defendant’s conduct,” in contrast to

compensatory damages, which “are mandatory; once liability

is found, the jury is required to award compensatory damages

in an amount appropriate to compensate the plaintiff for his

loss.” Smith v. Wade, 461 U.S. 30, 52 (1983). Because of the

inherently uncertain nature of punitive damages, which are a

“discretionary moral judgment” by the jury, Larez v. City of

Los Angeles, 946 F.2d 630, 648 (9th Cir. 1991) (internal quo-

tation marks omitted), a plaintiff’s interest in receipt of any

certain amount of punitive damages is too speculative to con-

stitute property under the Takings Clause.

Another category of Takings Clause cases, which examines

whether statutory changes to causes of actions can be consid-

ered takings, similarly focuses on the certainty of expectations

of the person claiming a property interest. We have held that

“[t]here is no question that claims for compensation are prop-

erty interests that cannot be taken for public use without com-

pensation.” Causey v. Pan Am. World Airways, Inc. (In re

Aircrash In Bali, Indo. on Apr. 22, 1974), 684 F.2d 1301,

1312 (9th Cir. 1982). In that case, however, we did not dis-

cuss punitive damages. Atmospheric Testing Litigation, 820

F.2d 982, involved a Takings Clause challenge to a statute

providing that actions against the United States be the exclu-

sive remedy for tort claims against contractors for Hiroshima-

related radiation injuries. We relied on the Fifth Circuit’s

holding that “ ‘a plaintiff has no vested right in any tort claim

for damages under state law.’ ” Id. at 988 (quoting Ducharme

v. Merrill-Nat’l Labs., 574 F.2d 1307, 1309 (5th Cir. 1978)

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1531

(per curiam)). We further emphasized that the claims asserted

by the plaintiffs were “contingent by their nature” and “arise

in a field in which the law remains to be developed.” Id. at

989 (also importing the language of Penn Central’s “ad hoc”

test in noting that tort claims lack “investment-backed expec-

tations”). Because the tort claims were “contingent by their

nature,” we concluded that the statute’s requirement that

claims against the federal government be the exclusive rem-

edy did not constitute a taking. Id.; see also Duke Power Co.

v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 88 n.32

(1978) (rejecting a constitutional challenge to a statutory limi-

tation on liability for nuclear accidents, and stating the

“clearly established” principle that “[a] person has no prop-

erty, no vested interest, in any rule of the common law” and

that the “Constitution does not forbid . . . the abolition of old

[rights] recognized by the common law, to attain a permissi-

ble legislative object”).

[19] The analysis in Atmospheric Testing Litigation, like

the Supreme Court’s interest cases, focused on the certainty

of the plaintiff’s expectation that she would receive the prop-

erty. In contrast to the principal-interest cases, the tort plain-

tiffs in Atmospheric Testing Litigation had a necessarily

“contingent” interest in their tort claims, such that the substi-

tution of a different type of remedy did not amount to an

unconstitutional taking. As described above, a plaintiff’s

interest in punitive damages is even more contingent and

uncertain than her interest in a tort cause of action, because

punitive damages are awarded only if the jury both finds that

the defendant’s behavior was malicious or reckless and

decides to invoke its discretionary moral judgment against the

defendant’s conduct. See Larez, 946 F.2d at 648 (“the purely

discretionary nature of punitive damages required not only a

finding that the conduct met the recklessness threshold” but

also that the conduct merited punitive damages in addition to

the compensatory award, which is a “discretionary moral

judgment” (internal quotation marks omitted)); see also

Honeywell v. Sterling Furniture Co., 797 P.2d 1019, 1021

1532 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

(Or. 1990) (“ ‘The finder of fact must determine what puni-

tive damages, if any, to award based on the proper premise of

deterring future similar misconduct by the defendant or oth-

ers.’ ” (emphasis added) (quoting State ex rel. Young v.

Crookham, 618 P.2d 1268, 1274 (Or. 1980))). We therefore

conclude that a plaintiff’s interest in a prospective punitive

damages award does not qualify as “property” under the Tak-

ings Clause.

2. Policy of Punitive Damages Awards

[20] Our conclusion that a plaintiff’s interest in receipt of

a certain amount of punitive damages is not “property” under

the Takings Clause is further supported by consideration of

the purposes of punitive damages awards. Punitive damages

may be imposed to serve two policy interests: “punishing

unlawful conduct and deterring its repetition.” BMW of N.

Am., Inc. v. Gore, 517 U.S. 559, 568 (1996). A punitive dam-

ages award does not serve any compensatory goals. In the

words of the Iowa Supreme Court, “a plaintiff is a fortuitous

beneficiary of a punitive damage award simply because there

is no one else to receive it.” Shepherd Components, Inc. v.

Brice Petrides-Donohue & Assocs., 473 N.W.2d 612, 619

(Iowa 1991). As a “fortuitous beneficiary,” a tort claimant

does not possess an interest cognizable as a property right

under the Takings Clause. The Supreme Court has also

emphasized that “[i]n our federal system, States necessarily

have considerable flexibility in determining the level of puni-

tive damages that they will allow in different classes of cases

and in any particular case.” Gore, 517 U.S. at 568. Given the

broad discretion granted to the States in fashioning their puni-

tive damages schemes, we uphold the constitutionality of the

Oregon statute against Engquist’s Takings Clause challenge.

3. State Supreme Court Decisions

Several state supreme courts have ruled upon the constitu-

tionality of “split-recovery” statutes, with six states (Alaska,

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1533

Iowa, Indiana, Georgia, Missouri, and Florida) upholding the

statutes against federal Takings Clause challenges and two

states (Utah and Colorado) holding the statutes unconstitu-

tional. See Dodson, supra, note 16, 49 Duke L.J. at 1365 n.5

(summarizing state court decisions). The state supreme courts

concluded that a plaintiff has no vested right in punitive dam-

ages, either (1) because the damages are discretionary and

non-compensatory, or (2) because the statutes operate to limit

the awards before the time of judgment, that is, before the

time when a plaintiff’s interest vests. See, e.g., Cheatham v.

Pohle, 789 N.E.2d 467, 474-75 (Ind. 2003); Evans v. State, 56

P.3d 1046, 1058 (Alaska 2002); Mack Trucks, Inc. v. Conkle,

436 S.E.2d 635, 639 (Ga. 1993); Gordon v. State, 608 So. 2d

800, 801-02 (Fla. 1992) (per curiam); Shepherd Components,

473 N.W.2d at 619; but see Smith v. Price Dev. Co., 125 P.3d

945 (Utah 2005); Kirk v. Denter Publ’g Co., 818 P.2d 262

(Colo. 1991).20 Our holding that punitive damages are not

cognizable as property under the Taking Clause is therefore

in accord with the conclusions reached by a majority of state

supreme courts who have considered the issue.

D. Excessive Fines Clause Challenge

[21] Engquist also contends that § 31.735 violates the

Excessive Fines Clause of the Eighth Amendment. That

amendment instructs: “Excessive bail shall not be required,

20

The Oregon Supreme Court likewise upheld the constitutionality of its

split-remedy statute, but decided the question only under the state consti-

tution. See DeMendoza, 51 P.3d at 1245-52. It concluded that a plaintiff

does not have a vested prejudgment interest in a punitive damages award,

but rather has at most an expectation of such an award. Id. at 1245. The

two state supreme court cases that concluded that the split-recovery

schemes violated the Takings Clause involved a different formulation of

the statute. In Smith and Kirk, the split recovery statutes at issue granted

the state an interest in the money proceeds from the judgment creditor of

the punitive award, rather than an interest in the judgment itself from the

judgment debtor.

1534 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

nor excessive fines imposed, nor cruel and unusual punish-

ments inflicted.” U.S. CONST. AMEND. VIII.21

The Supreme Court has expressly held that punitive dam-

ages awarded to plaintiffs in civil suits do not implicate the

Excessive Fines Clause. Browning-Ferris, 492 U.S. at 263-64.

The language of its holding, however, left open a constitu-

tional challenge to a punitive award when the award serves to

benefit the State: “[w]hatever the outer confines of the

Clause’s reach may be, we now decide only that it does not

constrain an award of money damages in a civil suit when the

government neither has prosecuted the action nor has any

right to receive a share of the damages awarded.” Id. (empha-

sis added). Because the State here does receive a share of the

damages awarded,22 we must address the question left open by

the Supreme Court.

Engquist’s contention raises a question of first impression

in the courts of appeals.23 Excessive fines challenges involve

21

The Supreme Court has never expressly held that the Excessive Fines

Clause applies to the States. See Browning-Ferris Indus. of Vt., Inc. v.

Kelco Disposal, Inc., 492 U.S. 257, 284 (1989) (O’Connor, J., dissenting

in part and concurring in part) (noting that the other two clauses of the

Eighth Amendment have been applied to the states and “see[ing] no rea-

son to distinguish one Clause of the Eighth Amendment from another for

purposes of incorporation,” she “would hold that the Excessive Fines

Clause also applies to the States”). Without deciding the issue, for pur-

poses of our analysis of Engquist’s contention, we assume that the Exces-

sive Fines Clause does apply to the States.

22

Insofar as the Department of Justice is the judgment creditor, the

“State” receives a share of the damages awarded, even though the ultimate

beneficiaries are victims of crime and there is no actual benefit to the

Department.

23

Two district court cases have addressed Excessive Fines challenges to

split-recovery statutes, but the analysis of neither court provides much

guidance. In Burke v. Deere & Co., 780 F. Supp. 1225, 1242 (S.D. Iowa

1991), rev’d on other grounds, 6 F.3d 497 (8th Cir. 1993), the court

focused on the fact that Iowa’s split-remedy statute gave funds not to the

state, but to a “civil reparations trust fund to be administered by the

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1535

a two-step inquiry: (1) whether the Excessive Fines Clause

applies, and (2) if so, whether the fine is “excessive.” United

States v. Bajakajian, 524 U.S. 321, 334 (1998) (“Because the

forfeiture of respondent’s currency constitutes punishment

and is thus a ‘fine’ within the meaning of the Excessive Fines

Clause, we now turn to the question whether it is ‘exces-

sive.’ ”).

We reject Engquist’s Excessive Fines Clause challenge

because the Clause applies only to government acts that are

intended to punish, and the split-remedy scheme is not

intended to punish Engquist. The Bajakajian Court stated that

“at the time the Constitution was adopted, the word ‘fine’ was

understood to mean a payment to a sovereign as punishment

for some offense.” Id. at 327-28 (internal quotation marks

omitted). “The Excessive Fines Clause thus limits the govern-

ment’s power to extract payments, whether in cash or in kind,

as punishment for some offense.” Id. at 328 (internal quota-

tion marks omitted). Bajakajian ultimately concluded that the

statutory provision at issue in that case — which required cer-

tain felons to forfeit their currency at sentencing — did impli-

cate the Excessive Fines Clause because it was intended to

punish. Id. at 328.

courts.” The court decided, based on this observation alone, that the Iowa

statute “does not provide the State of Iowa with any interest in the punitive

damage award” and therefore that no “excessive fine” had been levied. Id.

The district court in McBride v. Gen. Motors Corp., 737 F. Supp. 1563,

1578 (M.D. Ga. 1990) seized upon the Court’s language in Browning-

Ferris in holding that Georgia’s split-remedy statute had “the constitu-

tional infirmity as set forth in Browning-Ferris Industries, because the

State of Georgia would have a right to receive a share of the damages

awarded and the excessive fines clause of both the state and federal consti-

tutions would be implicated.” The McBride court, however, misread

Browning-Ferris in identifying this per se “constitutional infirmity”

because the Court had merely left open the question of whether the Exces-

sive Fines Clause would apply when the government receives a share of

the award. See Browning-Ferris, 492 U.S. at 263-64.

1536 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

[22] Because the Excessive Fines Clause applies only to

government action that constitutes “punishment for some

offense,” id., Engquist, as the plaintiff in the underlying

action, cannot succeed on her claim.24 In a somewhat analo-

gous case, the Court of Federal Claims rejected an Excessive

Fines Clause challenge brought by taxpayers who objected to

a retroactive tax on their Roth IRA. Kitt v. United States, 47

Fed. Cl. 821, 827 (Fed. Cl. 2000), aff’d, 277 F.3d 1330 (Fed.

Cir. 2002). The court decided that because the imposition of

the tax is “unrelated to the taxpayer’s culpability” and unre-

lated to the commission of any “underlying offense,” the

imposition of the tax is not “punishment” for purposes of the

Excessive Fines Clause. Id. This reasoning applies equally to

the operation of Oregon’s split-recovery statute on Engquist’s

award. No “punishment” of Engquist is involved because

operation of the statute is unrelated to Engquist’s culpability.

Accordingly, we reject Engquist’s Excessive Fines Clause

argument and affirm the judgment apportioned to the State

Account.

V. The Corristan Verdict

A. Preclusive Effect

Engquist next contends that the district court erred in ruling

that the jury’s finding in Corristan’s state court case does not

have a preclusive effect in Engquist’s case. The district court

rejected the preclusion argument, stating that “the jurors could

find against Ms. Corristan and not necessarily — the defen-

dant with respect to your client. So I am going to deny the

motion on that ground.” We review de novo the district

24

Nor does it appear that a defendant could succeed on such a claim.

Because the statute does not increase a given defendant’s total liability for

punitive damages, but merely re-allocates a portion of the award that

would otherwise go to the plaintiff, a defendant is not “injured” by the

statute, and therefore, in all likelihood, would lack standing to bring a

challenge. See Smelt v. County of Orange, 447 F.3d 673, 682 (9th Cir.

2006) (summarizing standing requirements of injury, causation, and

redressibility).

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1537

court’s determination whether a prior decision has preclusive

effect. Jacobs v. CBS Broad. Inc., 291 F.3d 1173, 1176 (9th

Cir. 2002).

The “full faith and credit” statute compels federal courts to

give collateral estoppel and res judicata effects to the judg-

ments of state courts. Se. Res. Recovery Facility Auth. v. Mon-

tenay Int’l Corp., 973 F.2d 711, 712 (9th Cir. 1992); 28

U.S.C. § 1738. Because federal courts must give the same full

faith and credit to a state court judgment as state courts would

give the judgment, the question of issue preclusion is exam-

ined under Oregon law. See id. at 712-13; see also Dias v.

Elique, 436 F.3d 1125, 1128 (9th Cir. 2006) (stating that the

relevant test in federal court is whether the state court deci-

sion “meets the state’s own criteria necessary to require a

court of that state to give preclusive effect” to the decision)

(internal quotation marks omitted).

Under Oregon law, the previous litigation of an issue will

preclude re-litigation of the same issue if five elements are

met: 1) the issue in the two proceedings is identical; (2) the

issue was actually litigated and was essential to a final deci-

sion on the merits in the prior proceeding; (3) the party sought

to be precluded has had a full and fair opportunity to be heard

on that issue; (4) the party sought to be precluded was a party

or was in privity with a party to the prior proceeding; and (5)

the prior proceeding was the type of proceeding to which the

state court will give preclusive effect. Nelson v. Emerald Peo-

ple’s Util. Dist., 862 P.2d 1293, 1296-97 (Or. 1993). Addi-

tionally, when confronted with an assertion of non-mutual

issue preclusion, the court should “scrutinize with care any

situation where collateral estoppel is asserted by a [non-

party], to make certain no unfairness will result to the prior

litigant if the estoppel is applied.” State Farm Fire & Cas. Co.

v. Century Home Components, Inc., 550 P.2d 1185, 1188 (Or.

1976) (internal quotation marks omitted). The party asserting

estoppel has the burden of proving the elements giving rise to

it. Id.

1538 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

Here, Engquist, who was not a party to the case brought by

Corristan in state court, contends that the state court judgment

and verdict from that case should “collaterally estop Mr.

Hyatt from denying liability to Ms. Engquist for discrimina-

tion based upon race and sex because the factual and legal

issues litigated in Corristan were identical to those in this

case.” Engquist’s argument fails because the issue of discrim-

ination litigated in the Corristan suit is not identical to the

issue of discrimination in Engquist’s suit.

[23] No Oregon cases have addressed issue preclusion in

the discrimination context. Oregon courts have, however,

articulated a strict standard for the “identity of issues”

requirement and require that “the precise question was raised

and determined in the former suit.” See State v. Hunt, 985

P.2d 832, 834 (Or. Ct. App. 1999) (internal quotation marks

omitted).

Additionally, the Eighth Circuit rejected an argument

nearly identical to Engquist’s. See Anderson v. Genuine Parts

Co., 128 F.3d 1267, 1272-73 (8th Cir. 1997). The defendant

in Anderson had demoted its two oldest salespersons, and

each of the demoted employees brought suit against the com-

pany. Id. at 1269-70. In the first suit, the jury found the defen-

dant liable for age discrimination. Id. at 1270. In a second

suit, Anderson argued that the first verdict should have pre-

clusive effect on the issue of age discrimination. Id. at 1273.

The court rejected that contention, because Anderson did not

satisfy the “identity of issues” requirement: “the jury’s finding

of age discrimination in [the first plaintiff’s] demotion would

not necessarily eliminate any nondiscriminatory reasons [the

defendant] could assert or the jury could find relating to the

separate decision to demote Anderson.” Id. The court recog-

nized the “numerous similarities” between the two cases, and

even acknowledged “the distinct possibility that [the defen-

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1539

dant] demoted both men for the same reason,” but found the

application of issue preclusion would be inappropriate. Id.25

[24] We agree with the reasoning in Anderson and reject

Engquist’s issue preclusion argument because Engquist failed

to satisfy the “identity of issues” requirement.26

B. Exclusion of the Verdict from Evidence

The district court granted Defendants’ motion in limine to

exclude the Corristan verdict from evidence and exclude from

testimony any mention of the result in Corristan. Defendants’

motion in limine contended that the evidence from the Corri-

stan trial and verdict were “irrelevant to the instant case and

admission of this evidence would unfairly prejudice Defen-

dants and confuse the jury.” The district court did not articu-

late its reason for excluding the evidence, but merely stated

in an oral ruling that, “[w]ith respect to . . . the Corristan trial

and verdict, I’m going to grant the motion [in limine], and

that will be excluded. Now, if your reasons for referring to it

in trial are, for example, for impeachment, for prior inconsis-

tent statements, then we use the term such as ‘other proceed-

ings’ or ‘another,’ something of that nature, so as to sanitize

the reference to it.”

25

The Anderson court also distinguished the case before it from Mere-

dith v. Beech Aircraft Corp., 18 F.3d 890 (10th Cir. 1994), a case relied

on by Engquist. In Meredith, the court applied a jury finding from case

one — a finding that the employer had a discriminatory motive in promot-

ing a male employee — to case two, which was brought by a second

female employee. The issue was identical in the second case because it

involved the employer’s motive for promoting the male employee, an

issue which remained constant in both cases brought by the female

employees. See Anderson, 128 F.3d at 1273 (distinguishing Meredith).

26

In addition to the reasons articulated in the text, above, there is now

another reason why issue preclusion does not apply here. The Corristan

verdict rests in part on that jury’s finding that Corristan’s equal protection

and due process rights were violated, rights which we have concluded do

not apply in the public employment context, or which the evidence in this

case does not support were violated.

1540 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

We review the district court’s evidentiary rulings for an

abuse of discretion. Tritchler v. County of Lake, 358 F.3d

1150, 1155 (9th Cir. 2004). When the district court fails to

make an explicit finding of Rule 403 balancing on the record,

however, we review the evidentiary determination de novo.27

United States v. Boulware, 384 F.3d 794, 808 n.5 (9th Cir.

2004), cert. denied, 126 S. Ct. 337 (2005). In order to estab-

lish reversible error, Engquist is additionally required to

establish that the error was prejudicial. Tritchler, 358 F.3d at

1155. We find prejudice only if the lower court’s error more

probably than not tainted the verdict. Mahone v. Lehman, 347

F.3d 1170, 1172 (9th Cir. 2003).

It is unclear from the record whether the district court’s

decision to exclude the evidence was based on Federal Rules

of Evidence 401/40228 or Rule 403.29 Arguments under both

rules were raised by Defendants in support of their in limine

motion.

[25] A state court judgment is relevant evidence and there-

fore admissible in a later federal suit so long as the judgment

has some tendency to prove a fact in issue. See Boulware, 384

F.3d at 805. The verdict in favor of Corristan explicitly found

27

But see McEuin v. Crown Equip. Corp., 328 F.3d 1028, 1034 (9th Cir.

2003) (reviewing the district court’s decision to exclude evidence for

abuse of discretion, rather than de novo, even though there was no explicit

reference to Rule 403, because “it seems likely that the court was con-

cerned about the prejudicial effect” of the evidence).

28

“ ‘Relevant evidence’ means evidence having any tendency to make

the existence of any fact that is of consequence to the determination of the

action more probable or less probable than it would be without the evi-

dence.” Fed. R. Evid. 401. “All relevant evidence is admissible. . . .” Fed.

R. Evid. 402.

29

“Although relevant, evidence may be excluded if its probative value

is substantially outweighed by the danger of unfair prejudice, confusion of

the issues, or misleading the jury, or by considerations of undue delay,

waste of time, or needless presentation of cumulative evidence.” Fed. R.

Evid. 403.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1541

that Defendants “discharge[d] or discriminate[d] against [Cor-

ristan] because of her gender or ethnicity.” While the jury ver-

dict is not direct evidence of discriminatory behavior toward

Engquist, it is relevant evidence in that it has some tendency

to make the fact of discriminatory behavior by the same

Defendants more probable than without the evidence. See

Fed. R. Evid. 401 (defining relevance); see also Boulware,

384 F.3d at 805. Accordingly, the decision to exclude evi-

dence is not supported by Rule 402.

The district court more likely relied on Rule 403 in decid-

ing to exclude the evidence. Defendants had argued that evi-

dence of the verdict would unfairly prejudice Defendants and

confuse the jury. Specifically, Defendants contended that a

jury would “likely misconstrue that evidence as proof of dis-

crimination by defendant” or “mistakenly conclude that [the

Engquist jury] should reach the same result.” In the district

court’s oral decision to exclude the evidence, the court said

the Corristan evidence could be used for impeachment pur-

poses, but the parties must use the term “ ‘other proceedings’

or ‘another,’ something of that nature, so as to sanitize the ref-

erence to it.” The court’s use of the term “sanitize” indicates

that its decision was motivated by concerns about undue or

unfair prejudice.

Commentators agree that most courts forbid the mention of

verdicts or damage amounts obtained in former or related

cases. See 75A AM. JUR. 2d Trial § 628; D.C. Barrett, Propri-

ety and prejudicial effect of reference by counsel in civil case

to result of former trial of same case, or amount of verdict

therein, 15 A.L.R. 3d 1101 (summarizing cases). Moreover,

in a case similar to the one at bench, the Third Circuit “disap-

prove[d]” of the introduction of a prior verdict against the

same defendant, because “[a] jury is likely to give a prior ver-

dict against the same defendant more weight than it warrants.”

Coleman Motor Co. v. Chrysler Corp., 525 F.2d 1338, 1351

(3d Cir. 1975). The court specifically noted that “admission

1542 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

of a prior verdict creates the possibility that the jury will defer

to the earlier result.” Id.

This conclusion runs counter to our conclusion in Boulware

that a prior state court judgment was admissible under Rule

403 balancing. See Boulware, 384 F.3d at 808. The state court

judgment in that case, however, posed much less danger of

jury confusion than in Coleman. In Boulware, the district

court excluded evidence of a prior state court civil judgment

that found the defendant’s company owned the money that the

defendant gave to his girlfriend. Id. at 802. This judgment,

had it been admitted, would have been used by the defendant

at trial to rebut the government’s argument that the defendant

personally owed tax liability on that sum of money. Id. at 808.

We held that, under the circumstances of that case, the trial

judge could have easily controlled any danger that the jury

would give undue weight to the state court judgment and also

controlled any waste of time or confusion of the issues. Id.

[26] Engquist’s case, however, bears much greater similar-

ity to Coleman than to Boulware. In Boulware, the single

issue decided by the state court in the earlier case was a dis-

tinct civil cause of action that only related to one component

of Boulware’s criminal prosecution. Such a situation presents

a much smaller risk of prejudice or confusion of the issues;

additionally, the state court judgment was highly probative of

the defendant’s tax liability. In the instant case, as in Cole-

man, there was a substantial risk that the jury would import

the whole verdict of liability from the prior proceeding. More-

over, the testimony and evidence from the Corristan trial,

including Corristan’s own testimony, was presented to the

jury in this case; the only evidence not presented to the jury

was the Corristan verdict. The verdict itself did not possess

such additional probative value, beyond the Corristan evi-

dence, to overcome the risk of prejudice and confusion that

the verdict posed. Accordingly, we conclude that the district

court did not abuse its discretion in granting Defendants’

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1543

motion in limine to exclude the Corristan verdict from evi-

dence.

CONCLUSION

We reverse the judgment on the constitutional claims

because the equal protection claim is invalid as a matter of

law, and there is insufficient evidence to support the substan-

tive due process claim. We vacate the damages and attorneys’

fees awards, and remand to the district court to determine

what portion of these awards can be supported by Engquist’s

successful state law tort verdict. The district court did not err

in awarding a portion of the punitive damages award to the

State’s Criminal Injuries Compensation Account, and thus we

affirm that portion of the judgment. Nor did the court err in

declining to give the Corristan verdict preclusive effect and

in excluding the verdict from evidence. Each party shall bear

her or his own costs on appeal.

The judgment is REVERSED on the constitutional claims,

the damages and attorneys’ fees awards are VACATED, and

the case is REMANDED to the district court for further pro-

ceedings consistent with this opinion.

REINHARDT, Circuit Judge, dissenting:

I dissent. Unlike the majority, I agree with the other circuits

that the class-of-one theory of equal protection is applicable

to public employment decisions. Accordingly, I would uphold

the jury’s verdict on the equal protection claim, including its

award of $175,000 in compensatory damages and $125,000 in

punitive damages. I concur in the majority’s holding as to the

takings clause issue, although for somewhat different reasons.

Thus, I would also affirm the district court’s award to Eng-

quist of an additional $50,000, consisting of forty percent of

the total $125,000 punitive damages awarded in connection

1544 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

with the state law claim. Because I would uphold the jury ver-

dict in its entirety, I would not remand the case to the district

court.

The majority’s holding relating to the class-of-one theory

of equal protection creates inter-circuit conflict, is at odds

with the precedent of the Supreme Court and of this circuit,

and is not justified by the policy concerns raised by the major-

ity. Every other circuit to have considered this question has

applied the class-of-one theory to employment. See, e.g., Hill

v. Borough of Kutztown, 455 F.3d 225, 239 (3d Cir. 2006);

Whiting v. Univ. of S. Mississippi, 451 F.3d 339, 348-50 (5th

Cir. 2006); Scarbrough v. Morgan County Bd. of Educ., 470

F.3d 250, 260-61 (6th Cir. 2006); Neilson v. D’Angelis, 409

F.3d 100, 104 (2d Cir. 2005); Levenstein v. Salafsky, 414 F.3d

767, 775-76 (7th Cir. 2004); Campagna v. Massachusetts

Dep’t of Envtl. Prot., 334 F.3d 150, 156 (1st Cir. 2003); Bar-

tell v. Aurora Pub. Sch., 263 F.3d 1143, 1149 (10th Cir.

2001). Even before the Supreme Court articulated the class-

of-one principle in Village of Willowbrook v. Olech, 528 U.S.

562 (2000), other circuits recognized it as a straightforward

application of equal protection principles. See, e.g., Ciechon

v. City of Chicago, 686 F.2d 511, 522-23 (7th Cir. 1982).

The majority’s position is also at odds with the approach

taken by this circuit. Until now, we have recognized that a

class-of-one equal protection claim is no different from any

other equal protection claim that does not involve a protected

class. For example, Squaw Valley Dev. Co. v. Goldberg, 375

F.3d 936 (9th Cir. 2004), which applied the class-of-one the-

ory to the differential enforcement of environmental regula-

tions on ski resorts, employed the rational basis test defined

in Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1996) (en

banc), the same test that we employ in other equal protection

cases. See also Valley Outdoor Inc. v. City of Riverside, 446

F.3d 948, 955 (9th Cir. 2006); Seariver Mar. Fin. Holdings

Inc. v. Mineta, 309 F.3d 662, 679-80 (9th Cir. 2002).

Although this circuit has not previously considered the class-

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1545

of-one theory in the employment context, nothing in our ear-

lier cases suggests that, contrary to the view of all the other

circuits to have considered the question, it is not applicable to

employment cases. Indeed, the majority does not identify a

single case in our equal protection jurisprudence or that of any

other circuit that limits equal protection rights in the context

of public employment.

The majority’s approach is also at odds with Supreme

Court precedent. The Supreme Court has made clear that peo-

ple have a right not to be singled out by the government for

arbitrary and irrational treatment. Olech, 528 U.S. at 564. Of

course, courts must be most cautious, and apply a higher stan-

dard of review, when the government treats groups differently

on the basis of certain protected characteristics; but even

when a protected class is not involved, government actions

must be supported by a rational basis. City of Cleburn v. Cle-

burn Living Ctr., 473 U.S. 432, 448-49 (1985). Thus, we must

find that an employee’s equal protection rights are violated

when he is “intentionally treated differently from others simi-

larly situated and . . . there is no rational basis for the differ-

ence in treatment.” Olech, 528 U.S. at 564.

The majority attempts to distinguish Olech because that

case involved a regulatory decision, rather than an employ-

ment decision. The majority argues that a distinction in treat-

ment under the equal protection clause between employment

and regulatory actions is justified because the state has greater

powers when it acts as a regulator than when it acts as an

employer. The majority is correct that there are differences

between the state’s powers in the two realms. However,

unlike in the First and Fourth Amendment contexts, upon

which the majority relies, the Court has not limited the Four-

teenth Amendment’s scope as applied to public employment.

See Washington v. Davis, 426 U.S. 229 (1976); see also

Nevada Dep’t of Human Res. v. Hibbs, 538 U.S. 721, 728-29

(2003) (applying gender-based equal protection case law from

outside the employment context to public employees). Few

1546 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

circuit courts have given any consideration to the idea that the

class-of-one doctrine does not apply to employment, and none

has ever so held. Furthermore, even in the First and Fourth

Amendment contexts, in which courts have concluded that

some limitations on individual rights are necessary to facili-

tate government employment, federal employees do not give

up their rights to be free from hostile, arbitrary, and malicious

treatment by the government. See Garcetti v. Ceballos, 126

S.Ct. 1951, 1958 (2006) (“[P]ublic employees do not surren-

der all their First Amendment rights by reason of their

employment.”); Nat’l Treasury Employees Union v. Von

Raab, 489 U.S. 656, 664 (1989) (“Our earlier cases have set-

tled that the Fourth Amendment protects individuals from

unreasonable searches conducted by the Government, even

when the Government acts as an employer.”).

Although the majority acknowledges that its position is at

odds with that uniformly taken by other courts, it disregards

this conflict because it is needlessly concerned that the class-

of-one rule would eliminate at-will employment. There is no

cause for the majority’s concern. The application of class-of-

one equal protection principles is hardly fatal to at-will

employment. The rational basis test has always been used to

insulate governmental decisions from searching review that

would interfere with governmental functions, while still pro-

tecting individuals against heinous governmental conduct.

The rational basis test can play this role as successfully here

as in other equal protection cases. It is certainly not necessary,

in order to preserve the concept of at-will employment, to

hold that the government may freely treat its employees mali-

ciously and irrationally.

The majority, nevertheless, views the requirement set forth

in Squaw Valley that government conduct not be “malicious,

irrational, or plainly arbitrary” as inherently at odds with at-

will employment. It apparently believes that arbitrary treat-

ment of public employees is a necessary and acceptable part

of public employment. I disagree. Moreover, the Squaw Val-

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1547

ley test is not as threatening to at-will employment as the

majority believes: it would not render all discharges that are

not for just cause unconstitutional. Rather, in the present con-

text as in the context of statutory interpretation, “plainly arbi-

trary” must be construed in relation to the other words in the

clause. See United States v. King, 244 F.3d 736, 740-41 (9th

Cir. 2001) (“[W]ords are to be judged by their context and . . .

words in a series are to be understood by neighboring words

in the series.” (quoting United States v. Carpenter, 933 F.2d

748, 750-51 (9th Cir. 1991))). Accordingly, actions are

“plainly arbitrary” in the sense of being violative of the equal

protection clause only if they include an element akin to irra-

tionality or malice. Thus, for example, an employer would not

violate the equal protection clause if he were to lay off every

fifth employee, even though the selection criteria might

appear rather arbitrary in the non-contextual sense of the term.

It would, in contrast, be a violation of the plainly arbitrary

provision if a supervisor were summarily to fire an employee

because the employee’s sister refused his sexual advances.

Moreover, the experience of other circuits demonstrates

that the class-of-one theory of equal protection is not in prac-

tice fatal to at-will employment. The seven circuits that have

recognized the theory continue to have at-will employment.

The government is able to terminate employees in these cir-

cuits for no reason, or for any reason that does not violate the

equal protection clause. Nor are those circuits drowning in the

“flood” of class-of-one employment disputes feared by the

majority. Rather, as the majority notes, those circuits have set

standards for assessing class-of-one employment disputes

such that petitioners win only in extreme cases. The lack of

success of most plaintiffs in these circuits demonstrates the

ability of the courts to allow for recovery under the class-of-

one theory without constitutionalizing every employment dis-

pute.

The courts that have considered the application of the class-

of-one theory to employment have used three, overlapping

1548 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

techniques to limit its reach. The Second Circuit, and the Sev-

enth Circuit have, in some instances, required the petitioner to

identify an identically situated individual who was not dis-

criminated against. See, e.g., Neilson, 409 F.3d at 104; Indi-

ana State Teachers Ass’n v. Bd. of Sch. Comm’s, 101 F.3d

1179, 1181-82 (7th Cir. 1996). Others require a showing of

animus or malice. See Jennings v. City of Stillwater, 383 F.3d

1199, 1211 (10th Cir. 2004) (applying this standard and col-

lecting cases). The third group applies the rational basis test,

putting the burden on the petitioner to disprove any rational

reasons brought forward by the petitioner. See, e.g., Whiting,

451 F.3d at 349; Lauth v. McCollum, 424 F.3d 631, 634 (7th

Cir. 2005).

The best approach, that adopted by this circuit in a regula-

tory case, Squaw Valley, authored by Judge Tashima, includes

aspects of all three techniques. A plaintiff must show both

that he was treated differently than others and that there was

no rational basis for this treatment. Squaw Valley, 375 F.3d at

944 (quoting Olech, 528 U.S. at 564). A plaintiff can show

that he was treated differently either by comparing his treat-

ment to that of someone very like himself, or by showing that

the government’s treatment of him was motivated by unde-

served malice.1 See Squaw Valley, 375 F.3d at 945, 947 (find-

ing no similarly situated comparator but still finding for the

plaintiff under a class-of-one theory because the defendant

“harbor[ed] actual ‘hostility’ and ‘antagonism’ ” for the plain-

tiff). There is no need for an identically situated comparator

in cases involving malice because the government does not

ordinarily treat people maliciously, and, thus, is obviously

treating individuals unequally under such circumstances.2 Id.

1

This is not to say that an employer cannot act on his dislike of an

employee where that dislike has its roots in the employee’s mediocre per-

formance or lack of initiative, or in some other response to the individual

not based on malice or irrationality, even if the employee has met the

minimum requirements of the job.

2

Although the majority believes that requiring malice would be incon-

sistent with Olech, I do not suggest such a requirement here. I simply

assert that a showing of malice as the cause is enough to show that an indi-

vidual was subjected to differential treatment.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1549

The plaintiff can show that no rational basis exists in a

class-of-one case by showing than an “asserted rational basis

was merely a pretext for different treatment.” Squaw Valley,

375 F.3d at 945-46 (internal quotations omitted). Such pretext

may be shown by demonstrating “either: (1) the proffered

rational basis was objectively false; or (2) the defendant actu-

ally acted based on an improper motive.” Squaw Valley, 375

F.3d at 946. As to the second prong, reasons that are “mali-

cious, irrational or plainly arbitrary” cannot provide a rational

basis. Armendariz, 75 F.3d at 1326; see also Cleburn Living

Ctr., 473 U.S. at 448-49; Scarbrough, 470 F.3d at 261. Thus,

malice can in some circumstances serve as a basis for show-

ing both disparate treatment and lack of rational basis.

Under this test, I would affirm the district court’s determi-

nation that Engquist’s equal protection rights were violated.

Engquist presented her case on the theory that Szczepanski

and Hyatt were acting out of malice. The jury agreed, finding

that Engquist’s termination was “arbitrary, vindictive or mali-

cious.” Accordingly, Engquist has demonstrated that she was

singled out to be the target of government malice and that this

malice was the cause of her termination.3

I see no reason to abandon the test that Judge Tashima

thoughtfully endorsed for the court in Squaw Valley. I cer-

tainly would not reject it in favor of a rule that conflicts with

that adopted by every other circuit to consider this question.

Accordingly, I dissent from the majority’s reversal of the

finding of liability on the equal protection count and would

affirm both the compensatory and punitive damages in that

regard.

3

I note that the majority objects only to the class-of-one theory and does

not argue that, if such a standard is applicable, Engquist failed to assert

sufficient evidence to establish a violation. The State likewise focuses its

attack on the class-of-one theory and raises a sufficiency of the evidence

claim only as to Engquist’s failure to point to any individual situated iden-

tically to herself. As I note, however, an identically situated comparator

is not required in cases of malice.

1550 ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE

On the takings clause question, I agree with the majority’s

holding that the punitive damages provisions of Oregon law

do not violate the takings clause. I reach this conclusion

because the plaintiff has no interest at all in punitive damages,

which exist to punish the defendant rather than to reward the

plaintiff, unless and until such interest is created by state law.4

Under its statute, Oregon chose to give the plaintiff an interest

in only forty percent of the amount that the jury assesses

against the defendant on a state claim for malicious conduct.

The plaintiff is never afforded possession of or any right to

the other sixty percent of the award, as that money is awarded

directly to the state in the court’s judgment. Under such cir-

cumstances, the majority is correct that the plaintiff has no

property right in that other sixty percent. Accordingly, I con-

cur in the majority’s holding and would leave Engquist’s forty

percent punitive damages award on the state claim unchanged.5

In sum, I would conclude that the district court did not err

in holding that Engquist’s equal protection rights were vio-

lated and would affirm the award of general and punitive

damages on the basis of that claim.6 I would also affirm the

apportionment of the punitive damages relating to the state

law claim. Because I would uphold the general and punitive

damages on the equal protection grounds and the apportion-

ment of the punitive damages on the state law claim, I would

4

A different rule might apply if the state took a share of punitive dam-

ages awarded under federal law, but that is not at issue in this case.

5

Like the majority, I reject Engquist’s other arguments relating to the

apportionment of punitive damages.

6

I agree with the majority as to the substantive due process claim. How-

ever, because the damages for the substantive due process violation were

merged into the larger sums awarded for the equal protection clause viola-

tion, my conclusion as to the equal protection clause is sufficient to sup-

port the entire federal damages award. Thus, the majority’s conclusion as

to substantive due process does not affect the outcome in any manner.

I likewise agree with the majority’s conclusions relating to the exclu-

sion of the Corristan verdict.

ENGQUIST v. OREGON DEPARTMENT OF AGRICULTURE 1551

affirm the district court judgment in its entirety. I respectfully

dissent.