Respondents Brief — Ashland Specialty Co., Inc., Petitioner v. Dale W. Steager, West Virginia State Tax Commissioner

No. 18-1053

In the Supreme Court of the United States

ASHLAND SPECIALTY CO. INC.,

v.

Petitioner,

DALE W. STEAGER, STATE TAX COMMISSIONER

OF WEST VIRGINIA,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF APPEALS OF WEST VIRGINIA

BRIEF IN OPPOSITION

PATRICK MORRISEY

Attorney General

OFFICE OF THE

WEST VIRGINIA

ATTORNEY GENERAL

State Capitol Complex

Building 1, Room E-26

Charleston, WV 25305

Lindsay.S.See@wvago.gov

(304) 558-2021

LINDSAY S. SEE

Solicitor General

Counsel of Record

KATHERINE A. SCHULTZ

Senior Deputy

Attorney General

CASSANDRA L. MEANS

Assistant Attorney

General

Counsel for Respondent

QUESTION PRESENTED

Whether imposing a civil penalty on a third-time

offender in a heavily regulated industry comports

with the Eighth Amendment’s Excessive Fines Clause

where the penalty is less than 0.26% of the maximum

monetary penalty authorized by statute and

proportional to the severity of the offense?

ii

TABLE OF CONTENTS

QUESTION PRESENTED.......................................... i

STATEMENT ..............................................................1

REASONS FOR DENYING THE PETITION .......... 10

I.

COURTS ARE UNITED ON THE

STANDARD FOR RESOLVING EXCESSIVE

FINES CLAUSE CHALLENGES ...................... 10

A. This Court Has Already Established The

Gross Disproportionality Standard And

The Fact-Specific Guideposts For

Applying It .................................................... 10

B. State And Federal Courts Apply

Bajakajian Consistently ............................... 12

II. THE PENALTY IS CONSTIUTIONAL

UNDER ANY STANDARD................................. 26

CONCLUSION .......................................................... 35

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Austin v. United States,

509 U.S. 602 (1993) ................................................ 17

BMW of North America, Inc. v. Gore,

517 U.S. 559 (1996) ................................................ 33

Commonwealth ex rel. Kane v.

Philip Morris USA, Inc.,

114 A.3d 37 (Pa. Commw. 2015) (en banc)............ 29

Commonwealth v. Real Prop. & Improvements

Commonly Known As 5444 Spruce St., Phila.,

832 A.2d 396 (Pa. 2003) ................................... 13, 21

Cooper Industries Inc. v. Leatherman Tool Grp., Inc.,

532 U.S. 424 (2001) .................................... 31, 32, 33

Cty. of Nassau v. Canavan,

802 N.E.2d 616 (N.Y. 2003) ....................... 13, 21, 26

Dean v. State,

736 S.E.2d 40 (W. Va. 2012) .............................. 9, 18

Hinkle v. Commonwealth,

104 S.W.3d 778 (Ky. App. 2002) ............................ 22

Howell v. State,

656 S.E.2d 511 (Ga. 2008) ............................... 13, 19

Maher v. Ret. Bd. of Quincy,

895 N.E.2d 1284 (Mass. 2008) ......................... 13, 20

McWilliams v. Dunn,

137 S. Ct. 1790 (2017) ............................................ 17

iv

TABLE OF AUTHORITIES

(continued)

Page(s)

Newell Recycling Co. v. E.P.A.,

231 F.3d 204 (5th Cir. 2000) ...................... 13, 14, 23

One Car, 1996 Dodge X-Cab Truck White in Color

5YC-T17 VIN 3B7HC13Z5TG163723 v. State,

122 S.W.3d 422 (Tex. App. 2003)........................... 22

People ex rel. Hartrich v. 2010 Harley-Davidson,

104 N.E.3d 1179 (Ill. 2018) .............................. 13, 20

People ex rel. Lockyer v. R.J. Reynolds Tobacco Co.,

124 P.3d 408 (Cal. 2005) .................................. 13, 19

State ex rel. Greitens v. Am. Tobacco Co.,

509 S.W.3d 726 (Mo. 2017) ................................ 2, 29

State Farm Mut. Auto. Ins. Co. v. Campbell,

538 U.S. 408 (2003) ................................................ 34

State v. Real Prop. at 633 E. 640 N., Orem, Utah,

994 P.2d 1254 (Utah 2000) ........................ 13, 21, 22

Timbs v. Indiana,

139 S. Ct. 682 (2019) .................................... 8, 15, 16

United States v. 817 N.E. 29th

Drive, Wilton Manors, Fla.,

175 F.3d 1304 (11th Cir. 1999) .............................. 15

United States v. $132,245.00 in U.S. Currency,

764 F.3d 1055 (9th Cir. 2014) .................... 13, 24, 25

United States v. Aleff,

772 F.3d 508 (8th Cir. 2014) .......... 13, 19, 24, 26, 32

v

TABLE OF AUTHORITIES

(continued)

Page(s)

United States v. Bajakajian,

524 U.S. 321 (1998) ........ 9, 10, 11, 12, 14, 15, 18, 19

20, 22, 23, 24, 25, 29, 31

United States v. Ely,

468 F.3d 399 (6th Cir. 2006) .................................. 24

United States v. Heldeman,

402 F.3d 220 (1st Cir. 2005) ............................ 13, 22

United States v. Jalaram, Inc.,

599 F.3d 347 (4th Cir. 2010) ............................ 13, 23

United States v. Lot Numbered

One (1) of Lavaland Annex,

256 F.3d 949 (10th Cir. 2001) ................................ 13

United States v. Malewicka,

664 F.3d 1099 (7th Cir. 2011) .......................... 13, 24

United States v. Seher,

562 F.3d 1344 (11th Cir. 2009) ........................ 13, 25

United States v. Varrone,

554 F.3d 327 (2d Cir. 2009) ................................... 24

United States v. Viloski,

814 F.3d 104 (2d Cir. 2016) ............................. 13, 23

United States v. Wagoner Cty. Real Estate,

278 F.3d 1091 (10th Cir. 2002) .............................. 25

United States v. Young,

618 F. App’x 96 (3d Cir. 2015) ......................... 13, 23

vi

TABLE OF AUTHORITIES

(continued)

Page(s)

United States v. Zakharia,

418 F. App’x 414 (6th Cir. 2011)...................... 13, 24

Vanderbilt Mortg. & Fin. v. Cole,

740 S.E.2d 562 (W. Va. 2013) ............................ 8, 16

Wilson v. Comm’r of Revenue,

656 N.W.2d 547 (Minn. 2003) .................... 13, 20, 21

Statutes

24 L.P.R. § 15009(a)….. ............................................. 31

29 Del. Code § 6088(a) ............................................... 30

30 Ill. Comp. Stat. 167/30(a) ..................................... 30

35 Pa. Stat. § 5702.307(a)………………. ..................31

Ala. Code § 6-12A-6 ............................................... 3, 30

Alaska Stat. § 43.50.485(a) ....................................... 30

Ariz. Rev. Stat. § 44-7111 ......................................... 30

Ark. Code § 26-57-1306(a)(3) .................................... 30

Cal. Rev. & Tax. Code § 30165.1(h)(1)(b) ................. 30

Colo. Rev. Stat. § 39-28-306(1).................................. 30

Conn. Gen. Stat. § 4-28p(a) ....................................... 30

D.C. Code § 7-1803.06(a)(2) ...................................... 30

Ga. Code § 10-13A-9(a).............................................. 30

Ind. Code § 24-3-5.4-21(d) ......................................... 30

vii

TABLE OF AUTHORITIES

(continued)

Page(s)

Iowa Code § 453D.6(1)............................................... 30

Kan. Stat. § 50-6a14(a) ............................................. 30

La. Stat. § 13:5076(a) ................................................ 30

Mass. Gen. Laws ch. 94F, § 5(b) ............................... 30

Mo. Stat. § 196.1032(1) ............................................. 30

Mont. Code Ann. § 16-11-509(1) ............................... 31

N.C. Gen. Stat. § 66-293(a) ....................................... 30

N.H. Rev. Stat. § 541-D:6(I) ...................................... 30

N.M. Stat. § 6-4-22(C) ............................................... 30

N.Y. Tax Law § 481(1)(d) .......................................... 30

Neb. Rev. Stat. § 69-2709(1) ..................................... 30

Nev. Rev. Stat. § 370.695(3) ...................................... 30

Ohio Rev. Code Ann. § 1346.10(B) ............................ 30

Okla. Stat. tit. 68, § 360.7(A) .................................... 30

Or. Rev. Stat. § 180.455(3)(a).................................... 30

R.I. Gen. Laws § 44-20.1-8(a).................................... 31

S.C. Code § 11-48-60(A)............................................. 31

S.D. Codified Laws § 10-50-82 .................................. 31

Tenn. Code § 67-4-2605(a) ........................................ 31

Utah Code § 59-14-608(1)(d) ..................................... 31

Va. Code § 3.2-4212(A) .............................................. 31

viii

TABLE OF AUTHORITIES

(continued)

Page(s)

Vt. Stat. tit. 33, § 1923 (a) ......................................... 31

W. Va. Code § 16-9B-1 .................................................2

W. Va. Code § 16-9D-1 .......................................... 2, 33

W. Va. Code § 16-9D-3 ............................ 3, 4, 5, 15, 28

W. Va. Code § 16-9D-8(a) .................................. 3, 7, 30

Wash. Rev. Code § 70.158.060(1) .............................. 31

Wis. Stat. § 995.12(5) ................................................ 31

Wyo. Stat. § 9-4-1208(a) ............................................ 31

BRIEF IN OPPOSITION

__________________

Respondent Dale W. Steager, State Tax

Commissioner of West Virginia (“Commissioner”),

respectfully submits that the petition for a writ of

certiorari should be denied.

STATEMENT

Ashland Specialty Co. Inc. (“Ashland”) challenges

a $159,398 penalty assessed after it violated West

Virginia’s cigarette distribution laws for the third

time in nine years, on a scale many times greater than

its previous violations, and in a context where the

State could have lost millions of dollars in Tobacco

Master Settlement Agreement (“MSA”) funds had it

turned a blind eye to Ashland’s misconduct. The

penalty was 0.26% of the maximum monetary penalty

the West Virginia Legislature authorized, and

calculated pursuant to a formula directly proportional

to the severity of Ashland’s violation. There was no

error in the state courts’ determinations that—

considering all these circumstances—the penalty

rests on solid constitutional ground.

Neither does the decision below reflect confusion

or division over the governing legal standards: This

Court has already held that Excessive Fines Clause

challenges must be evaluated under a “gross

disproportionality” framework and provided workable

guidance for applying it. The Petition points to

different wording and organization as state and

federal courts explain the factors they consider in

excessive fines challenges, but these are distinctions

without a difference—flexible expressions of the same

2

basic concepts within an inherently fact-specific

inquiry. The decision below applied settled law to

reach the right outcome; the Court should deny the

Petition.

1.

In 1998, four large tobacco product

manufacturers entered into the MSA with West

Virginia and other jurisdictions. Pet. App. 4a. The

MSA settled litigation involving health-care costs

attributable to cigarette smoking. See W. Va. Code §

16-9B-1. In 1999, the West Virginia Legislature

began requiring tobacco product manufacturers that

are not part of the MSA, yet still sell cigarettes in the

State, to make annual deposits into escrow accounts.

See id.; Pet. App. 4a. The escrow funds are held in

reserve to pay a judgment or settlement if the State

brings a claim that would have been covered by the

MSA if the manufacturer were part of that agreement.

Pet. App. 4a.

West Virginia’s failure to diligently enforce MSAimplementing statutes could lead to losing a

substantial portion of its annual payment. See, e.g.,

State ex rel. Greitens v. Am. Tobacco Co., 509 S.W.3d

726, 732-33 (Mo. 2017) (describing arbitration award

reducing Missouri’s MSA payments by over $50

million for failure to diligently enforce implementing

laws). The Legislature strengthened the escrow

statute in 2003 as part of its continuing efforts to

strengthen the MSA regime, finding that “enacting

procedural enhancements [would] help prevent

violations and aid enforcement,” and “thereby

safeguard the [MSA payment], the fiscal soundness of

the state, and the public health.” W. Va. Code § 169D-1; see also Pet. App. 5a.

3

One of the key components of the 2003 legislation

was creation of a directory of cigarette brands

authorized for sale in West Virginia. Pet. App. 5a.

The Commissioner has authority to add or remove

cigarette brands from the list, W. Va. Code § 16-9D3(b)(3), but must notify manufacturers and

distributors before doing so, id. § 16-9D-3(b)(3)(A), (B).

Nevertheless, the law is also clear that “[i]t is

unlawful for any person . . . [t]o sell, offer, or possess

for sale in this state, cigarettes of a tobacco product

manufacturer or family brand not included in the

directory.” Id. § 16-9D-3(c). Any failure by the

Commissioner to provide notice, or of a manufacturer

or distributor to receive it, is not a defense to selling

delisted cigarettes. Id. § 16-9D-3(b)(3)(C).

The Legislature also gave the Commissioner

discretion to impose a range of penalties for violations

of the Section 16-9D-3(c) regime. Together with “any

other civil or criminal remedy provided by law,” the

Commissioner may “revoke or suspend the [entity’s]

business registration certificate” and “impose a civil

penalty in an amount not to exceed the greater of five

hundred percent of the retail value of the cigarettes or

five thousand dollars” for each violation. W. Va. Code

§ 16-9D-8(a). Every pack of unlawfully sold cigarettes

constitutes a separate violation.

Id.

The

Commissioner may set a penalty within these ranges,

and may choose whether to impose the other penalties

instead or as well. Id. These penalty provisions are

substantially similar to those enacted by 40 other

States and territories. See, e.g., Ala. Code § 6-12A6(a); infra Part II & n.6.

2. Directory violations are “rare.” Pet. App. 7a.

In three audits of Ashland’s sales between 2001 and

4

2009, however, the Commissioner found Section 169D-3(c) violations each time. Pet. App. 34a-35a. First,

between January 1, 2001 and November 30, 2003,

Ashland distributed 560 packs of delisted cigarettes.

Pet. App. 6a, 16a. The Commissioner assessed a civil

penalty of $3,808 for this first series of violations,

which represented “500% of the retail value of the

delisted cigarettes.” Pet. App. 6a. Ashland did not

contest this penalty. Pet. App. 6a.

A second pattern of violations was uncovered

during an audit covering the period May 1, 2005

through February 29, 2008. That time, Ashland

distributed 620 packs of cigarettes not listed in the

directory. Pet. App. 6a. The Commissioner assessed

a penalty of $5,127; again, 500% of the retail value of

the unauthorized cigarettes.

Pet. App. 6a-7a.

Ashland did not contest this penalty, either. Pet. App.

6a-7a.

A 2012 audit revealed a third—and much more

egregious—violation: During a three-month period

between June and August 2009, Ashland distributed

12,230 packs of delisted cigarettes. See Pet. App. 6a.

This time the Commissioner assessed a $159,398

penalty. As Ashland’s counsel conceded below, this

penalty was well under the maximum statutory

penalty.

Pet. App. 13a, 16a.

Rather, the

Commissioner used the same approach of 500% of the

retail value of the illegal cigarettes; the penalty’s

higher dollar amount tracked the significantly

expanded scope of Ashland’s registry violations in

2009—over 21 times the volume of illegal

distributions discovered in the first set of violations

from 2001 through 2003. Pet. App. 6a-7a; 16a.

5

It is undisputed that the cigarettes at issue here

were not listed on the registry when Ashland

distributed them in West Virginia, and that the

Commissioner fully complied with the notice

provisions in Section 16-9D-3(b)(3)(A) and (B). Pet. 8.

There is also no question that Ashland’s misconduct

may be considered when making MSA diligentenforcement evaluations. Ashland argues that it

lacked actual knowledge of the cigarettes’ delisted

status because it failed to update the contact

information for its employee responsible for these

issues after an unexpected staffing change. Pet. 8; see

also Pet. App. 48a (discussing Ashland’s “admitted

negligence, which it attributes to staffing and

management issues”).

3.

Ashland challenged the Commissioner’s

penalty determination before the West Virginia Office

of Tax Appeals (“OTA”).

At an August 2013

evidentiary

hearing,

the

Commissioner’s

representative justified the $159,398 penalty because

Ashland kept “making the same error” after receiving

“plenty of warning” from “two previous audits.” Pet.

App. 8a. The representative also testified that the

department’s auditors “have no discretion” and the

“audit program is locked in at 500 percent.” Pet. App.

7a. He further explained that auditors nonetheless

“have the ability to come to me,” that he “ha[s] the

ability to go to [his] director and get anything—to

request something less,” and that he did not “recall

any reason to ask for a reduced rate” here. Pet. App.

7a. He also testified that deviations from 500% have

“never happened,” but that violations of the statutory

scheme “are rare,” and he has “never heard a good

explanation to go up the food chain” to seek a

reduction. Pet. App. 7a.

6

On August 18, 2014, an OTA administrative law

judge (“ALJ”) issued a decision reducing the

Commissioner’s penalty by 25%. Pet. App. 66a-83a.

Relying on testimony that the Commissioner had used

the same 500% penalty in previous cases, the ALJ

concluded that “the Tax Commissioner exercised no

discretion at all in issuing the penalty,” which the

tribunal characterized as the maximum allowable

penalty. Pet. App. 76a. The ALJ also, however, found

no error in the Commissioner’s refusal to consider

“certain mitigating factors” that Ashland had

presented in an attempt to excuse its violation, Pet.

App. 76a, and rejected Ashland’s proposed alternate

penalty of roughly $8,000, Pet. App. 79a. The ALJ

“agree[d] with the Tax Commissioner that a larger

penalty is warranted,” as “this is not the first time the

Petitioner has been audited and been found to have

sold delisted brands.” Pet. App. 79a-80a. Yet because

in the ALJ’s view “the maximum penalty should be

reserved for the worst offenders,” such as “a seller who

deliberately sells delisted brands or who engaged in

some criminal activity in connection with cigarette

sales,” Pet. App. 80a, the ALJ ultimately determined

that the appropriate penalty was 375% of the retail

price, or $119,548.50. Pet. App. 80a, 83a.

4. The Commissioner appealed OTA’s decision to

the Kanawha County Circuit Court—urging

reinstatement of the original penalty—while Ashland

appealed the decision to the Cabell County Circuit

Court—arguing for further reduction or elimination of

the penalty altogether. Pet. App. 8a & n.11. The

Cabell County Circuit Court transferred Ashland’s

appeal to the Kanawha County Circuit Court, where

both cases were decided. Pet. App. 8a & n.11.

7

On April 7, 2017, the Kanawha County Circuit

Court reversed OTA’s decision and reinstated the

original $159,398 penalty because OTA’s decision

“usurped the statutory discretion granted to the Tax

Commissioner.” Pet. App. 64a, 36a. In the circuit

court’s view, OTA was wrong on two counts: The

Commissioner did exercise discretion when setting

the penalty amount, and the penalty was not the

“maximum allowable penalty.” Pet. App. 39a. The

court emphasized that West Virginia law authorizes a

$5,000 penalty per pack as well as revocation of the

entity’s business registration certificate. Pet. App.

40a; see also W. Va. Code § 16-9D-8(a). The court

further found that the Commissioner considered all

relevant factors when setting the penalty, and that

the decision to set the penalty at 500% of retail price

instead of $5,000 per pack was itself an act of

discretion. Pet. App. 41a-42a. The court also found

Ashland’s position unpersuasive to the extent it

faulted the Commissioner for not adequately

considering the circumstances surrounding its

violation, while simultaneously urging the court to

disregard its history of noncompliance. Pet. App. 42a44a; see also Pet. App. 35a (finding that “Ashland

Specialty’s failure to have a system in place which

prevented the sale of delisted cigarettes was not

beyond its control”).

5. Ashland appealed to the Supreme Court of

Appeals of West Virginia, which affirmed the circuit

court. Pet. App. 26a. Writing for the majority, nowChief Justice Walker concluded that the original

penalty did not represent an abuse of discretion, that

there were no mitigating circumstances warranting

cancellation or reduction of the penalty, and that the

penalty did not violate the Excessive Fines Clause of

8

either the West Virginia Constitution or the Eighth

Amendment. Pet. App. 3a.

With respect to the state-law bases for the

penalty, the majority emphasized the Commissioner’s

“broad discretion” to set a penalty, including through

“revok[ing] or suspend[ing]” Ashland’s business

registration or assessing a civil penalty “of up to

$61,150,000” under the $5,000 per pack framework.

Pet. App. 14a. The decision to impose $159,398

instead was “directly correlated to the retail value of

the cigarettes that Ashland sold unlawfully,” and thus

“was both supported by substantial evidence and

based on reason.” Pet. App. 14a. The court also

deemed the argument that the Commissioner had

consistently applied a 500% of retail value penalty “a

red herring.” Pet. App. 15a. The Commissioner

exercised discretion by not imposing the true

statutory maximum penalty, and because the

approach he did use turns on a formula and not a

dollar amount, its application was “calibrated to the

severity of [Ashland’s] offenses.” Pet. App. 16a. The

court also found no error in the Commissioner’s

decision not to read a “reasonable cause” defense into

the statutory scheme, and thus not to adjust the

penalty based on Ashland’s negligent failure to

receive actual notice of registry changes. Pet. App.

19a.

The court then rejected Ashland’s argument that

the penalty violates the Excessive Fines Clause of the

West Virginia and federal Constitutions. Pet. App.

20a-24a. West Virginia has long treated the Excessive

Fines Clause as incorporated, even before this Court

confirmed as much in Timbs v. Indiana, 139 S. Ct. 682

(2019). See Vanderbilt Mortg. & Fin. v. Cole, 740

9

S.E.2d 562, 570 n.10 (W. Va. 2013). The court thus

grounded its discussion in federal constitutional law.

Specifically, the court applied the test this Court

announced in United States v. Bajakajian, 524 U.S.

321 (1998), which asks whether a civil penalty is

“grossly disproportionate to the gravity of [the]

violation.” Pet. App. 22a. The court also relied on its

prior decision in Dean v. State, 736 S.E.2d 40 (W. Va.

2012), which stemmed from the “slightly different

context” of civil forfeiture, yet provided helpful

guidance because its analysis was “derived from”

Bajakajian and “closely follow[ed] factors” federal

courts use in similar cases. Pet. App. 22a.

These Bajakajian/Dean factors include the

“amount of the forfeiture and its relationship to the

authorized penalty”; “nature and extent of the

criminal activity”; “relationship between the crime

charged and other crimes”; and “harm caused by the

charged crime.” Pet. App. 21a (quoting Dean, 736

S.E.2d at 40). After considering these factors in light

of all the circumstances, the court below concluded

that the penalty withstands constitutional scrutiny

because it “is not grossly disproportionate to the

severity of Ashland’s unlawful activity.” Pet. App.

24a.

Two Justices concurred in part and dissented in

part. Pet. App. 27a-28a. They “agree[d] with the

result in this case” because “unlawfully selling

cigarettes is, without question, deserving of a hefty

monetary penalty.” Pet. App. 27a. Nevertheless, they

expressed concern with “the appearance that the Tax

Commissioner abdicated the exercise of discretion

when calculating that monetary penalty,” and

emphasized that “[i]n the future, [he] should plainly

10

articulate why a specific penalty was chosen.” Pet.

App. 27a-28a.

6. On October 9, 2018, the Supreme Court of

Appeals denied Ashland’s rehearing petition. Pet.

App. 84a-85a. Ashland filed this timely Petition,

followed by a supplemental brief. The Court called for

this response on March 15, 2019.

REASONS FOR DENYING THE PETITION

I.

COURTS ARE UNITED ON THE STANDARD

FOR RESOLVING EXCESSIVE FINES CLAUSE

CHALLENGES.

A. This Court Has Already Established The

Gross Disproportionality Standard And The

Fact-Specific Guideposts For Applying It.

Before United States v. Bajakajian, 524 U.S. 321

(1998), this Court had “little occasion to interpret, and

ha[d] never actually applied, the Excessive Fines

Clause.” Id. at 327. When faced squarely with how to

“articulate[] a standard for determining whether a

punitive forfeiture is constitutionally excessive,”

however, the Court made clear that the forfeiture

“violates the Excessive Fines Clause if it is grossly

disproportionate to the gravity of a defendant’s

offense.” Id. at 334.

Under Ashland’s view, “[t]he Court stopped

there”—and the Court should accordingly grant

review to continue Bajakajian’s work. Pet. 1. But

Bajakajian

did

not

announce

the

gross

disproportionality standard from on high, then leave

lower courts to grope in the dark when it came time to

apply it.

Rather, it provided two general

“considerations” and several fact-specific guideposts

11

to inform the analysis. Bajakajian, 524 U.S. at 33640. First, the Court extended its teaching regarding

the Cruel and Unusual Punishments Clause to the

Excessive Fines Clause, emphasizing that “judgments

about the appropriate punishment for an offense

belong in the first instance to the legislature.” Id. at

336. The Court also cautioned that “any judicial

determination regarding the gravity of a particular

criminal offense will be imprecise.” Id. Together,

these principles militate against any idea of “strict

proportionality between the amount of a punitive

forfeiture and the gravity of a criminal offense,” and

toward the more flexible “gross disproportionality”

standard instead. Id.

Second, the Court addressed how to apply the

gross disproportionality test.

Rather than

announcing the overall standard for Excessive Fines

Clause challenges and remanding for the lower court

to apply it in the first instance, Bajakajian determined

that the specific forfeiture in question “would violate

the Excessive Fines Clause.” 524 U.S. at 337. The

Court looked at the harshness of the penalty, the

nature and severity of the offense, and the low degree

of culpability involved. Id. at 337-40. It emphasized

the weightiness of a $357,114 forfeiture where there

was “no correlation between the amount forfeited and

the harm that the Government would have suffered

had the crime gone undetected.” Id. at 339. The

forfeiture stemmed from a pure “reporting offense”

that was “unrelated to any other illegal activities,”

and the harm from the offense was “minimal.” Id. at

337-38. And finally, the fact that the “respondent

[did] not fit into the class of persons for whom the

statute was principally designed,” together with a

comparison of the $350,000 forfeiture to the maximum

12

fine of $5,000 and sentence of six months, “confirm[ed]

a minimal level of culpability.” Id. at 339.

It is thus false that Bajakajian “stopped short of

identifying specific factors lower courts should

consider in evaluating gross disproportionality.” Pet.

17. Ashland attempts to explain away this portion of

Bajakajian as “a largely case-specific inquiry,” Pet. 17,

and emphasizes that the Court did not “mandate” a

“rigid set of factors,” Pet. 17-18 (citation omitted). Yet

every gross disproportionality challenge requires

“case-specific,” fact-heavy analysis, and lack of a

checklist to guide every gross disproportionality

challenge does not make the factors the Court did rely

on any less instructive. Indeed, the fact-intensive

nature of these challenges cautions against any

“magic words” approach—which might artificially

limit courts’ consideration of the full circumstances

bearing on the gross disproportionality analysis in a

specific case. After all, where judicial determinations

are intrinsically “imprecise,” Bajakajian, 524 U.S. at

336, lack of a rigid test is an asset, not a liability. This

Court has thus already “articulate[d] consistent and

workable standards” in this sphere, Pet. 18, and there

is no need to revisit the question here.

B. State And Federal Courts Apply Bajakajian

Consistently.

There is likewise no evidence that courts struggle

to apply Bajakajian. If anything, the almost two

dozen cases Ashland cites reveal remarkable unity

among state and federal courts: Virtually all courts

use the gross disproportionality standard to resolve

various types of Excessive Fines Clause challenges,

and they apply that standard in very similar fashions.

13

1. As an initial matter, there is no meaningful

division among courts that Bajakajian controls

Excessive Fines Clause challenges.

Ashland

marshals 20 cases1 in support of its argument that

courts are divided over application of Bajakajian’s

standard. But of those cases, only five address Eighth

Amendment challenges to civil penalties.2 Seven

address criminal forfeitures,3 and eight involve civil

forfeitures.4 Ashland tries to have it both ways: It

1

Ashland also invokes two cases from state intermediate

appellate courts. This Court considers decisions from state

courts of last resort when determining whether certiorari is

appropriate. Sup. Ct. R. 10(b). Nevertheless, as discussed below

these decisions do not alter the analysis.

2 See Pet. App. 1a; United States v. Aleff, 772 F.3d 508 (8th Cir.

2014); People ex rel. Lockyer v. R.J. Reynolds Tobacco Co., 124

P.3d 408 (Cal. 2005); Wilson v. Comm’r of Revenue, 656 N.W.2d

547 (Minn. 2003); Newell Recycling Co. v. E.P.A., 231 F.3d 204

(5th Cir. 2000).

3 See United States v. Viloski, 814 F.3d 104 (2d Cir. 2016);

United States v. Young, 618 F. App’x 96 (3d Cir. 2015); United

States v. Malewicka, 664 F.3d 1099 (7th Cir. 2011); United

States v. Zakharia, 418 F. App’x 414 (6th Cir. 2011); United

States v. Jalaram, Inc., 599 F.3d 347 (4th Cir. 2010); United

States v. Seher, 562 F.3d 1344 (11th Cir. 2009); United States v.

Heldeman, 402 F.3d 220 (1st Cir. 2005).

4 See

People ex rel. Hartrich v. 2010 Harley-Davidson, 104

N.E.3d 1179 (Ill. 2018); United States v. $132,245.00 in U.S.

Currency, 764 F.3d 1055 (9th Cir. 2014); Maher v. Ret. Bd. of

Quincy, 895 N.E.2d 1284 (Mass. 2008); Howell v. State, 656

S.E.2d 511 (Ga. 2008); Cty. of Nassau v. Canavan, 802 N.E.2d

616 (N.Y. 2003); Commonwealth v. Real Prop. & Improvements

Commonly Known As 5444 Spruce St., Phila., 832 A.2d 396 (Pa.

2003); United States v. Lot Numbered One (1) of Lavaland

Annex, 256 F.3d 949 (10th Cir. 2001); State v. Real Prop. at 633

E. 640 N., Orem, Utah, 994 P.2d 1254 (Utah 2000).

14

urges the Court to consider all of these cases together

as support for a purported split in authority, while

faulting the Supreme Court of Appeals for “ignor[ing]

the deeply material differences,” Pet. 15, between civil

penalties and criminal forfeitures. Ashland cannot

credibly argue that the tests for an excessive fine

should differ, then point to purported differences in

application to lament the lack of a “national uniform

standard.” Pet. 18.

Nevertheless, Ashland’s full list of cases confirms

that there is no need for this Court’s review.

Bajakajian involved a criminal forfeiture, which

meant the Court had no occasion to hold that the gross

disproportionality standard governs non-forfeiture

cases. But even so, this question has not fostered

confusion among courts. Like the decision below, all

but one case Ashland cites applied the same test—

whether the penalty or forfeiture was “grossly

disproportional to the gravity of [the] offense,”

Bajakajian, 524 U.S. at 324—showing that courts are

overwhelmingly united on this issue.

The one exception is the Fifth Circuit’s decision in

Newell Recycling Co. v. E.P.A., 231 F.3d 204 (5th Cir.

2000).

There, the Fifth Circuit refused to

acknowledge Bajakajian’s applicability to civil

penalties, reasoning instead that “[n]o matter how

excessive (in lay terms) an administrative fine may

appear, if the fine does not exceed the limits

prescribed by the statute authorizing it, the fine does

not violate the Eighth Amendment.” Id. at 210. This

decision takes to the extreme the weight other courts

commonly afford legislative determinations. For

example, the Eleventh Circuit has explained that “if

the value of forfeited property is within the range of

15

fines prescribed by Congress, a strong presumption

arises that the forfeiture is constitutional.” United

States v. 817 N.E. 29th Drive, Wilton Manors, Fla.,

175 F.3d 1304, 1309 (11th Cir. 1999) (footnote

omitted).

Yet while most courts apply this

presumption within the Bajakajian framework, the

Fifth Circuit stands alone in deeming it conclusive

even where it may lead to grossly disproportional

results.

Newell is no reason to grant the Petition. It was

decided 19 years ago, and it remains an outlier today.

All of the other civil penalty cases discussed in the

Petition were decided after Newell, and they did not

follow its lead. Neither is this the right case to

evaluate Newell’s holding even if the Court were

inclined to do so: The parties have always agreed that

Bajakajian’s gross disproportionality test controls. As

discussed further below, Ashland raised new

arguments in its rehearing petition about the

appropriate factors when applying this standard, but

it did not argue that the state courts should have

jettisoned it altogether in the civil penalty context.

Further, the court below expressly relied on

Bajakajian. It recognized that respect for legislative

judgment is tied to the gross disproportionality test,

see Pet. App. 21a (quoting Bajakajian, 524 U.S. at

336), but ultimately applied de novo review to

determine “whether the civil penalty imposed on

Ashland is grossly disproportionate to the gravity of

its violation of West Virginia Code § 16-9D-3(c),” Pet.

App. 22a. Thus, even assuming Newell was wrongly

decided, this is the wrong case to correct it. See, e.g.,

Timbs v. Indiana, 139 S. Ct. 682, 690 (2019) (declining

to consider issue that “would lead us to address a

question neither pressed nor passed upon below”).

16

The shallowness of the split over whether

Bajakajian applies and the inadequacy of this case to

address it is particularly relevant because Ashland’s

entire argument why “this case presents an issue of

national importance,” Pet. 37 (capitalization altered),

turns on its assertion that “many courts have seen fit

to leave decision-making” regarding the amount of

punitive civil penalties “wholly up to the legislature,”

Pet. 39. The only citation supporting this claim of

“many courts,” however, is to Newell. Pet. 37.

Nevertheless, Ashland argues that this case is “a

ready vehicle” for certiorari review because the

“pertinent holding below was based on the Excessive

Fines Clause and Bajakajian.” Pet. 37. That is

precisely why this is the wrong case to address

Ashland’s concern: A case in which the court and all

parties agreed that Bajakajian controls does not

present the question whether the Eighth Amendment

allows total deference to the legislature’s judgment

instead.

This Court’s recent decision in Timbs does not

alter this calculus.

Ashland argues in its

supplemental brief (at 2-3) that Timbs addressed only

incorporation, and “did not establish standards which

state and federal courts must follow” when resolving

excessive fines challenges.

Like many States,

however, West Virginia treated the Clause as

incorporated long before Timbs. See Vanderbilt

Mortg. & Fin. v. Cole, 740 S.E.2d 562, 570 n.10 (W.

Va. 2013). Nothing about this decision, then, would

change had the court below taken it up a year later.

It is also not true that Timbs left state courts

rudderless when it comes to applying the newly

incorporated right: Bajakajian remains good law, and

17

the States that did not previously look to federal law

can do so now—just as the court below did here.

To be sure, Timbs leaves other questions

unresolved, but this is the wrong case to address

them. For instance, Timbs did not determine whether

a different standard may govern civil forfeiture

cases—particularly civil in rem forfeitures like those

at issue in Austin v. United States, 509 U.S. 602

(1993). The Court declined Indiana’s invitation to

consider overruling Austin in Timbs, and as a civil

penalties case, this is certainly not an appropriate

vehicle to revisit that question. Neither does this case

present the right opportunity to address the more

general question whether the factors informing the

Excessive Fines Clause inquiry “ought to be different

for different types of fines, penalties, or forfeitures.”

Supp’l Br. 5. Ashland urges the Court to grant review

to avoid an “‘avalanche’ of new Eighth Amendment

litigation,” Supp’l Br. 5, but this hasty approach would

be contrary to the Court’s repeated reminders that it

is “a [C]ourt of review, not of first view.” McWilliams

v. Dunn, 137 S. Ct. 1790, 1801 (2017) (citation

omitted). And in any event, Ashland is not only

asking the Court to overlook the lack of development

of these issues in other state and federal courts, but in

this case as well. Ashland has consistently agreed

that Bajakajian is the correct standard to resolve this

civil penalty case—its rehearing petition in the

Supreme Court of Appeals was the first time it urged

the court to apply different factors, and even then it

stayed within Bajakajian’s overall framework.

2. Similarly, there is no material division among

the many courts that apply Bajakajian. State and

federal courts consider the same general factors when

18

determining whether a civil penalty, civil forfeiture,

or criminal forfeiture is grossly disproportionate.

The Petition seizes on variations in phrasing and

the different ways courts organize relevant factors as

evidence of division. See, e.g., Pet. 1 (“Each court

reads Bajakajian differently, distilling from its

holding three, four, or even five factors for

determining disproportionality.”). Yet for a factspecific inquiry like gross disproportionality, it is

hardly surprising to find some variation around the

edges. The important question is whether courts

agree on the type of factors that bear on the analysis,

not whether they use identical language to describe

them. And the answer to that more fundamental

question is yes. In the two decades since Bajakajian,

courts have coalesced around three general factors: (1)

the harshness of the penalty; (2) the seriousness of the

offense; and (3) the defendant’s culpability.

Agreement around these specific factors is also no

accident—the principles flow directly from Bajakajian

itself. See 524 U.S. at 337-40; supra Part I.A.

State Courts of Last Resort

West Virginia. In the decision below, the court

applied a four-factor test from an earlier decision

involving forfeiture to this civil penalty case. Pet.

App. 21a. These “Dean factors” deliberately track the

three guideposts from Bajakajian discussed above.

See Pet. App. 22a (explaining that the Dean factors

were “derived from” Bajakajian). First, Dean and the

decision below consider the “amount of the [penalty]

and its relationship to the authorized penalty.” Pet.

App. 21a (quoting Dean v. State, 736 S.E.2d 40, 42 (W.

Va. 2012)). Second, two of the Dean factors consider

the seriousness of the offense: “the nature and extent

19

of the [violation]” and the “harm” it caused. Pet. App.

21a.

Finally, the court considered Ashland’s

culpability—both in Dean’s terminology of the

“relationship between the crime charged and other

crimes,” and through the lens of other courts that have

considered the issue “since Bajakajian,” such as the

Eighth Circuit’s explicit consideration of “the

reprehensibility of the defendant’s conduct.” Pet.

App. 21a, 22a n.39 (quoting United States v. Aleff, 772

F.3d 508, 512 (8th Cir. 2014)).

Different wording aside, the court below hewed

closely to this Court’s guidance in Bajakajian. And as

the remainder of this section illustrates, its approach

does not depart substantively from that of other state

courts of last resort or federal courts of appeals.

California. The Supreme Court of California took

a similar approach in People ex rel. Lockyer v. R.J.

Reynolds Tobacco Co., 124 P.3d 408, 421 (Cal. 2005).

There, the court considered the harshness of the

penalty in terms of the defendant’s ability to pay and

by comparing it to the penalties imposed in other

States. See id. (citing Bajakajian, 524 U.S. at 337-38).

It also looked to the harm caused and its

“relationship . . . [to] the penalty.” Id. Finally, the

court took into account “the defendant’s culpability.”

Id.

Georgia. In Howell v. State, 656 S.E.2d 511 (Ga.

2008), the Georgia Supreme Court considered the

same three factors. It reviewed the “harshness of the

penalty,” the “inherent gravity of the offense,” and

“whether the criminal activity . . . was extensive,” id.

at 512 (citation omitted).

20

Illinois. The most recent state-court decision in

the Petition is People ex rel. Hartrich v. 2010 HarleyDavidson, 104 N.E.3d 1179 (Ill. 2018). Here too, the

court considered “the harshness of the penalty” and

the “gravity of the offense.” Id. at 1184 (citation

omitted). There is also no substantive difference

between

asking

“whether

the

[unlawful]

conduct . . . was extensive,” id. (citation omitted), and

reviewing the extent of the defendant’s culpability.

Massachusetts. The portion of Maher v. Ret. Bd.

of Quincy, 895 N.E.2d 1284 (Mass. 2008) that the

Petition quotes (at 20) illustrates that the Supreme

Judicial Court of Massachusetts addresses both “the

maximum penalties authorized by the Legislature,”

id. at 1291 (citing Bajakajian, 524 U.S. at 337-39), and

the defendant’s culpability, id. (considering

“circumstances of [the defendant’s] offenses” and

relationship to “any other illegal activities”). In

addition, Maher also made clear that the court

considered whether the unlawful act was “serious in

nature,” id.—or in other words, that Massachusetts

considers the same general factors as its sister States.

Minnesota. The Supreme Court of Minnesota also

considers these factors when determining whether a

civil penalty constitutes an excessive fine. In Wilson

v. Comm’r of Revenue, 656 N.W.2d 547 (Minn. 2003),

the court compared the civil penalty with “fines

imposed for the commission of other offenses in the

same jurisdiction” and “in other jurisdictions.” Id. at

555. It also expressly considered “the gravity of the

offense.” Id. Finally, although Wilson did not

specifically mention the defendant’s culpability, the

court considered relative culpability for violations of

similar provisions when determining what weight it

21

should give to the “disparity in liability” for these

similar offenses. Id. at 556.

New York. The Court of Appeals of New York

breaks out the harshness of the penalty into multiple

sub-factors: the value of the property forfeited, the

maximum punishment that could have been imposed,

and the defendant’s economic circumstances. See Cty.

of Nassau v. Canavan, 802 N.E.2d 616, 622 (N.Y.

2003). The court also considers “the seriousness of the

offense” and the actual and potential harm “had the

defendant not been caught.” Id.

Pennsylvania.

The Supreme Court of

Pennsylvania continues the pattern.

See

Commonwealth v. Real Prop. & Improvements

Commonly Known As 5444 Spruce St., Phila., 832

A.2d 396, 402 (Pa. 2003). It considers “the penalty

imposed as compared to the maximum penalty

available,” id.—that is, the harshness of the penalty.

It considers the “harm resulting from the crime

charged,” id., or the seriousness of the offense. And it

considers “whether the violation was isolated or part

of a pattern of misbehavior,” id.—the defendant’s

culpability.

Utah. Finally, the Supreme Court of Utah looks

to the same factors. See State v. Real Prop. at 633 E.

640 N., Orem, Utah, 994 P.2d 1254, 1259 (Utah 2000).

It considers multiple sub-factors when “determin[ing]

the forfeiture’s harshness”:

Its objective and

subjective value, the hardship it imposes on the

defendant, and “the comparative punishment factor.”

Id. The court also reviews “the gravity of the

22

particular offense,”

culpability,” id.5

id.,

and

“the

defendant’s

Federal Courts of Appeals

Decisions from each of the federal courts of

appeals are consistent with those from state courts of

last resort—relying on the same three general factors

to apply Bajakajian’s gross disproportionality

standard to the specific facts before them.

First Circuit. In United States v. Heldeman, 402

F.3d 220, 223 (1st Cir. 2005), the court considered the

harshness of the penalty relative to applicable

sentencing guidelines. See id. (citing Bajakajian, 524

U.S. at 337-40). It also reviewed the offense’s

seriousness in terms of “the harm caused by the

defendant,” and asked “whether the defendant falls

into the class of persons at whom the criminal statute

was principally directed” to assess culpability. Id.

Second Circuit. Using a similar approach to the

First Circuit, the Second Circuit considers “the

maximum sentence and fine that could have been

5

The Petition also addresses two decisions from state

intermediate appellate courts. See Pet. 21-22 (citing Hinkle v.

Commonwealth, 104 S.W.3d 778 (Ky. App. 2002); One Car, 1996

Dodge X-Cab Truck White in Color 5YC-T17 VIN

3B7HC13Z5TG163723 v. State, 122 S.W.3d 422 (Tex. App.

2003)). These decisions are consistent with those from state

courts of last resort. See Hinkle, 104 S.W.3d at 782 (considering

“sentences imposed for similar crimes,” the offense’s “gravity,”

and “the effect of the forfeiture on innocent third parties”

(citation omitted)); One Car, 122 S.W.3d at 425 (considering

forfeiture’s “correlation” to damages and whether defendant was

part of “the class of offenders addressed by the forfeiture” (citing

Bajakajian, 524 U.S. at 340)).

23

imposed,” the “essence of the crime,” and “whether the

defendant fits into the class of persons for whom the

statute was principally designed.” United States v.

Viloski, 814 F.3d 104, 110 (2d Cir. 2016) (citation

omitted).

Third Circuit.

The Third Circuit’s nonprecedential decision in United States v. Young, 618

F. App’x 96 (3d Cir. 2015) follows the usual pattern.

The court phrased harshness of the forfeiture as “the

maximum fine authorized by statute and the

sentencing guidelines which are associated with the

offense or offenses,” seriousness of the offense as “the

nature of the offense or offenses,” and culpability as

“whether the defendant falls into the class of persons

for whom the statute was designed.” Id. at 97.

Fourth Circuit. The Fourth Circuit’s factors

closely mirror those that the Supreme Court of

Appeals applied here. It considers various sub-factors

organized around three themes: the “amount of the

forfeiture and its relationship to the authorized

penalty,” “the nature and extent of the criminal

activity,” and the defendant’s “level of culpability.”

United States v. Jalaram, Inc., 599 F.3d 347, 355-56

(4th Cir. 2010) (citing Bajakajian, 524 U.S. at 337-39).

Fifth Circuit. Only the Fifth Circuit does not

consider these factors. Yet as discussed above, supra

Part I.B.1., this result stems from the court’s more

fundamental holding that a fine within legislative

limits “does not violate the Eighth Amendment”—or

in other words, its refusal to evaluate gross

disproportionality. Newell, 231 F.3d at 210.

Sixth Circuit. As with the Third Circuit, the

Petition relies on a non-precedential decision from the

24

Sixth Circuit. Pet. 22 (citing United States v.

Zakharia, 418 F. App’x 414 (6th Cir. 2011)). Also like

the Third Circuit, the Sixth considers

factors

including “the potential fine under the advisory

Guidelines range, the maximum sentence and fine

that could have been imposed,” and the “nature of the

offense.” Zakharia, 418 F. App’x at 422 (citations

omitted).

The court also reviewed facts that

underscored the defendant’s culpability—including

“gravely undermin[ing] the judicial process” by lying

under oath and otherwise causing ‘significant harm,”

id.—and relied on a precedential opinion that makes

clear culpability is part of the Sixth Circuit’s more

complete statement of its test, id. (citing United

States v. Ely, 468 F.3d 399, 403 (6th Cir. 2006)).

Seventh Circuit. For its part, the Seventh Circuit

draws its test directly from Bajakajian and the Second

Circuit, using the same analysis discussed above in

Vilosky. See United States v. Malewicka, 664 F.3d

1099, 1104 (7th Cir. 2011) (citing Bajakajian, 524 U.S.

337-39; United States v. Varrone, 554 F.3d 327, 331

(2d Cir. 2009)).

Eighth Circuit. In United States v. Aleff, 772 F.3d

508 (8th Cir. 2014), the Eighth Circuit analyzed “the

sanctions in other cases for comparable misconduct,”

the “relationship between the penalty and the harm,”

and “the reprehensibility of the defendant’s conduct.”

Id. at 512 (citation omitted).

Ninth Circuit. The Ninth Circuit phrases its

consideration of the harshness of the penalty as “other

penalties that may be imposed for the violation.”

United States v. $132,245.00 in U.S. Currency, 764

F.3d 1055, 1058 (9th Cir. 2014) (citation omitted). It

describes the seriousness of the offense as “the nature

25

and extent of the crime” and “the extent of the harm

caused,” and it analyzes culpability by asking

“whether the violation was related to other illegal

activities.” Id. (citation omitted).

Tenth Circuit. The Tenth Circuit considers the

harshness of the penalty in several ways, including by

comparing the penalty to the statutory maximum

penalty and relevant sentencing guidelines. United

States v. Wagoner Cty. Real Estate, 278 F.3d 1091,

1100 (10th Cir. 2002) (citing Bajakajian, 524 U.S. at

337-38). It also views “the extent of the criminal

activity” and “the harm caused to other parties”—or

the seriousness of the offense—and “related illegal

activities.” Id.

Eleventh Circuit. Using now-familiar language,

the Eleventh Circuit analyzes “other penalties

authorized by the legislature,” “the harm caused by

the defendant,” and “whether the defendant falls into

the class of persons at whom the criminal statute was

principally directed.” United States v. Seher, 562

F.3d 1344, 1371 (11th Cir. 2009) (citation omitted).

*

*

*

The repeated refrains sounding from state and

federal appellate courts reveal common factors

informing the gross disproportionality analysis that

come straight from Bajakajian—and underscore that

“gross disproportionality” has proven to be a workable

standard. Tellingly, Ashland does not explain how the

result here would have been different had the

Supreme Court of Appeals considered “alternate”

factors from any of these other courts. Different terms

to explain courts’ rationales only matter if they lead

to different outcomes in similar cases. The variations

26

Ashland highlights do not reach that level—indeed,

most courts freely recognize that the factors they

name are not set in stone, and that listing certain

factors does not bar consideration of others in

appropriate cases. See, e.g., Aleff, 772 F.3d at 512

(“[p]roportionality is determined by a variety of

factors, including [exemplar factors]”); Canavan, 802

N.E.2d at 622 (introducing test with the phrase, “we

consider such factors as” (emphasis added)). Because

courts are neither confused nor divided over how to

apply Bajakajian, there is no need for this Court to

grant review.

II. The Penalty

Standard.

Is

Constitutional

Under

Any

With no meaningful division over the proper

application of the gross disproportionality standard in

Excessive Fines Clause cases, the Petition becomes

essentially a request for error-correction. Yet viewed

through either Bajakajian’s or Cooper Industries’

lens, the $159,398 penalty is not grossly

disproportional to Ashland’s violations of West

Virginia law. The state courts agreed that the fine

was not excessive—even the partially dissenting

justices emphasized their “agree[ment] with the

result in this case,” Pet. App. 27a-28a. (And although

the OTA ALJ disagreed with the penalty amount, he

also rejected Ashland’s arguments for a minimal or

nonexistent penalty and would have reduced the fine

by only 25%. Pet. App. 83a.) The state courts were

correct: Under all the circumstances, Ashland’s

penalty did not constitute an excessive fine.

As an initial matter, the court below was correct

that Ashland’s repeated reliance on the “automatic”

imposition of its 500% penalty is a red herring. In

27

context—as both state courts determined, Pet. App.

14a, 39a—the record makes clear that 500% was the

Commissioner’s default penalty formula, not an

irrefutable presumption.

The Commissioner’s

representative clarified that department auditors

always “have the ability to come to [him]” if they

believe a different penalty is warranted, and that he

in turn “ha[s] the ability to go to [his] director and get

anything—to request something less.” Pet. App. 7a.

It is also difficult to speculate about patterns of

behavior where violations of the directory scheme “are

rare,” Pet. App. 7a, and in any event, including the

volume of illegal sales in the penalty formula ensures

that it takes into account the relative severity of each

case.

More fundamentally, Ashland’s objection to the

process by which its penalty was set is a separate

question from whether the result of that process is a

constitutionally excessive fine. Ashland does not ask

this Court to grant review on Due Process Clause

grounds—and for good reason. The only due-process

claim Ashland pressed in the state supreme court was

a venue argument. See Br. for Pet’r 32-33 & Reply Br.

19-20, No. 17-437, Ashland Specialty Co. Inc. v.

Steager, 818 S.E.2d 827 (W. Va. 2018). Thus, even if

the Question Presented were liberally construed to

include a due-process challenge related to the

Commissioner’s procedures when assessing the

penalty, that claim would be forfeited. Concerns

about an “automatic” process are thus unfounded and

irrelevant.

By contrast, multiple factors confirm that

Ashland’s penalty was not grossly disproportional to

its offense. First, Ashland was an admitted third-time

28

offender. Ashland was on notice of its obligation to

ensure that cigarettes it distributes in the State are

listed on the directory—it paid a $3,808 penalty for

violations ending in 2003, then $5,127 for more

violations ending in 2008. Distributing over 12,000

packs of delisted cigarettes was therefore Ashland’s

third violation of West Virginia law in less than ten

years. Ashland argues (at, e.g., 34) that its violation

stemmed from excusable negligence, but West

Virginia law places the burden on the distributor to

ensure that all cigarettes are listed in the directory.

W. Va. Code § 16-9D-3(b)(3). Further, Ashland’s

pattern of violations weakens its argument because

prior violations leading to the same percentage-based

penalties should have underscored the importance of

accurate recordkeeping to ensure compliance with

state law. Instead, its two previous fines proved

insufficient deterrents.

Second, Ashland’s third series of violations was on

a significantly greater scale than its first two. The

12,230 packs Ashland unlawfully distributed between

June and August 2009 were over ten times the volume

of the first two series of improper sales combined. See

Pet. App. 6a. Even worse, the increased scale of the

third violation occurred over just three months.

Ashland distributed 560 packs over a three year audit

period from January 2001 through November 2003,

and 620 packs over a May 2005 to February 2008

audit period. This means that, even assuming the

violations in the first two audit periods were limited

to similar three-month subsets of the audit period,

Ashland went from distributing an average of 187 and

207 packs of delisted cigarettes per month during its

first two periods of noncompliance, to distributing an

average of over 4,000 packs per month during the

29

third. Particularly in light of this escalation, there

was no error in the state courts’ refusal to deem

“employee turnover and record keeping issues” a

legally relevant excuse. Pet. App. 41a.

Third, Ashland’s pattern of violations was not

harmless misconduct: As the court below emphasized,

West Virginia’s failure to ensure that non-MSAparticipating manufacturers and distributors comply

with implementing laws could endanger the State’s

MSA payments. Pet. App. 24a. This was no empty

concern. MSA-participating manufacturers have won

arbitration awards reducing their required payments

because of States’ failure to diligently enforce statutes

relating to directories like West Virginia’s. Missouri

faced an over $50 million reduction in its payments for

lack of diligent enforcement, see State ex rel. Greitens

v. Am. Tobacco Co., 509 S.W.3d 726, 732-33 (Mo.

2017), and Pennsylvania lost over $100 million even

after judicial reductions of a larger arbitration award,

see Commonwealth ex rel. Kane v. Philip Morris USA,

Inc., 114 A.3d 37, 49 (Pa. Commw. 2015) (en

banc). With an annual MSA payment of

approximately $60 million to West Virginia, the

potential harm from Ashland’s violation—negligent or

not—was real.

Fourth, Ashland’s penalty was calibrated to the

increasing severity of its violations.

Ashland

emphasizes that the Commissioner used the same

500% penalty in other similar cases, but this does not

make the penalty one-size-fits-all.

Unlike in

Bajakajian, here there is “inherent proportionality” in

applying a 500% penalty to the retail value of the

actual unlawful sales, because the scope of the

violation determines the size of the penalty. 524 U.S.

30

at 339; see also Pet. App. 16a (contrasting penalty

here to case where penalty “was not calibrated to the

severity of the . . . offenses”). Moreover, the penalty

was well under the statutory maximum: Ashland

conceded that the Commissioner could have imposed

a penalty of $5,000 per pack, or $61,150,000. Pet.

App. 13a n.17. The reality, then, is that Ashland

received a penalty less than 0.26% of the statutory

maximum. Similarly, the Commissioner did not

exercise his discretionary authority to revoke

Ashland’s business registration, W. Va. Code § 16-9D8(a), and instead allowed Ashland to continue

transacting business in West Virginia despite its

repeated violations of state law.

Finally, the 500% penalty comports with penalties

for the same offense in the overwhelming majority of

States. Over 40 jurisdictions impose substantially

similar penalties for distributing cigarettes not listed

in that jurisdiction’s directory. The Commissioner’s

Alabama counterpart, for example, may “impose a

civil penalty in an amount not to exceed the greater of

[500%] of the retail value of the cigarettes sold or

[$5,000]” for violations of Alabama’s cigarette

directory regime. See Ala. Code § 6-12A-6.6 Indeed,

6 See also Alaska Stat. § 43.50.485(a); Ariz. Rev. Stat. § 44-7111,

§ 6(a); Ark. Code § 26-57-1306(a)(3); Cal. Rev. & Tax. Code

§ 30165.1(h)(1)(b); Colo. Rev. Stat. § 39-28-306(1); Conn. Gen.

Stat. § 4-28p(a); D.C. Code § 7-1803.06(a)(2); 29 Del. Code

§ 6088(a); Ga. Code § 10-13A-9(a); Idaho Code § 39-8406(1); 30

Ill. Comp. Stat. 167/30(a); Ind. Code § 24-3-5.4-21(d); Iowa Code

§ 453D.6(1); Kan. Stat. § 50-6a14(a); La. Stat. § 13:5076(a); Md.

Code, Bus. Reg. § 16-507(a)(3); Mass. Gen. Laws ch. 94F, § 5(b);

Mo. Stat. § 196.1032(1); Neb. Rev. Stat. § 69-2709(1); Nev. Rev.

Stat. § 370.695(3); N.H. Rev. Stat. § 541-D:6(I); N.M. Stat. § 6-422(C); N.Y. Tax Law § 481(1)(d); N.C. Gen. Stat. § 66-293(a); Ohio

Rev. Code Ann. § 1346.10(B); Okla. Stat. tit. 68, § 360.7(A); Or.

31

even some of the few States that impose lesser

penalties authorize fines above $100,000. See, e.g.,

Mont. Code Ann. § 16-11-509(1) (permitting $122,540

penalty for a similar civil violation in Montana).

There are few penalties that carry this degree of

national uniformity.

Taken together, these factors confirm the state

courts’ constitutional analysis. The Supreme Court of

Appeals correctly concluded that, under Bajakajian,

there is no Eighth Amendment violation. Pet. App.

22a. The harshness of the penalty is justified by the

“correlation between the amount [penalized] and the

harm,” Bajakajian, 524 U.S. at 339, as well as the

penalty’s similarity to those authorized in the

majority of States. Similarly, the severity of the

offense and Ashland’s culpability are underscored by

Ashland’s two prior violations, the dramatically

increased volume of the violations at issue here, and

the possible reduction in MSA payment at stake.

Moreover, as a cigarette distributor Ashland is

certainly “within the class . . . for whom the statute

was properly designed.” Id. at 338.

For its part, Ashland does not argue that the

penalty is excessive under the factors Bajakajian

described, but urges the Court to grant review and

conclude that it fails under the factors set forth in

Cooper Industries Inc. v. Leatherman Tool Grp., Inc.,

532 U.S. 424 (2001). See Pet. 33 (“[u]nder the Cooper

Rev. Stat. § 180.455(3)(a); 35 Pa. Stat. § 5702.307(a); 24 L.P.R.

§ 15009(a); R.I. Gen. Laws § 44-20.1-8(a); S.C. Code § 11-4860(A); S.D. Codified Laws § 10-50-82; Tenn. Code § 67-4-2605(a);

Utah Code § 59-14-608(1)(d); Vt. Stat. tit. 33, § 1923 (a); Va. Code

§ 3.2-4212(A); Wash. Rev. Code § 70.158.060(1); Wis. Stat.

§ 995.12(5); Wyo. Stat. § 9-4-1208(a).

32

Industries test, the 500% penalty . . . is grossly

disproportionate” (emphasis added; capitalization

altered)). There are significant weaknesses to this

request. Most importantly, Ashland first argued

Cooper Industries as providing the relevant factors in

its petition for rehearing in the state supreme court.

The question was not developed at earlier stages of

the litigation, neither court below addressed it, and

the Supreme Court of Appeals denied the rehearing

petition without substantive explanation, Pet. App.

84a-85a. Neither does Ashland attempt to show

division among federal courts of appeals or state

courts of last resort on what role the Cooper

Industries framework might play in the Excessive

Fines Clause arena. Thus, even though Ashland

claims that resolving this case under Cooper

Industries would save the Court from the need to

“create from wholecloth factors for evaluating a civil

monetary penalty’s excessiveness,” Pet. 31, it is

actually asking the Court to import punitive-damages

factors developed under the Due Process Clause into

the Excessive Fines Clause framework without any

engagement from the court below or examples of other

courts adopting this approach.

Nevertheless, pushing past whether the Cooper

Industries question was properly preserved, there

would be no error under its terms, either. This result

is unsurprising, because the factors in Cooper

Industries deliberately overlap with Bajakajian:

Bajakajian was one of the cases Cooper Industries

relied on when determining the limits of permissible

punitive-damages awards, Cooper Indus., 532 U.S. at

434, and some courts have found Cooper Industries

instructive in the excessive fines context, too, see

Aleff, 772 F.3d at 512.

33

Cooper Industries teaches that when assessing a

punitive damages award, courts should consider “the

defendant’s reprehensibility or culpability; the

relationship between the penalty and the harm to the

victim caused by the defendant’s actions; and the

sanctions imposed in other cases for comparable

misconduct.” Cooper Indus., 532 U.S. at 435. The

first factor—culpability—is also part of the

Bajakajian framework and militates in favor of

constitutionality for the same reasons discussed

above. So too for the second factor. Although the

court below did not center its decision on Cooper

Industries, it considered the relationship between

Ashland’s penalty and the harm its violations posed

within the gross disproportionality analysis. Pet.

App. 24a (explaining that the Legislature enacted

West Virginia Code §§ 16-9D-1 through 10 “to prevent

violations and aid enforcement of the laws

implementing the MSA and so to ‘safeguard the

Master Settlement Agreement, the fiscal soundness of

the state, and the public health’” (citation omitted)).

Ashland resists this conclusion by faulting the

court for looking to “hypothetical harm.” Pet. 35. But

the case Ashland cites in the same section of the

Petition—BMW of North America, Inc. v. Gore, 517

U.S. 559 (1996)—teaches that potential harm is

relevant to a proportionality inquiry no less than

actual. Id. at 581 & n.34. The state court correctly

considered two sources of harm: the threat of lost MSA

funds for non-diligent enforcement of MSA-related

laws, and danger to “the public health” from selling

unauthorized cigarettes. Pet. App. 24a (quoting W.

Va. Code § 16-9D-1). Furthermore, if Ashland truly

wishes to import principles from punitive-damages

law into the excessive fines context, then the $159,398

34

certainly satisfies the second Cooper

Industries factor: It constitutes a 5-to-1 ratio between

the penalty and the harm, measured in terms of the

retail value of the illegal cigarettes, and “[s]ingle-digit

multipliers”—or ratios below 10-to-1—“are more

likely to comport with due process.” State Farm Mut.

Auto. Ins. Co. v. Campbell, 538 U.S. 408, 425 (2003).

penalty

Finally, the third factor of “sanctions imposed in

other cases for comparable misconduct” supports the

conclusion of the court below. Ashland criticizes the

Commissioner for imposing 500% penalties in other

cases as supposed evidence of a lack of discretion in

Ashland’s case. E.g., Pet. 7 n.3, 10, 12, 36. In terms

of the Cooper Industries factors, however, this critique

reveals that the sanctions imposed in comparable

cases are not only similar, but are calculated using an

identical formula.

The Supreme Court of Appeals also explained that

“the West Virginia Legislature has authorized

similar, civil penalties in the context of the retail sale

of alcohol,” Pet. App. 24a (citation omitted), which

further indicates that Ashland was not singled out for

harsh treatment, but was treated the same as all

entities selling regulated substances outside the

State’s legal frameworks. And finally, as discussed

above, Ashland’s penalty was consistent with the

penalty ranges that the overwhelming majority of

States authorize for similar registry violations.

Ashland’s misconduct was thus addressed under the

same framework as both in-state and out-of-state

offenders.

Under any approach, then, the state court

correctly determined that the $159,398 penalty was

not grossly disproportionate to Ashland’s repeated

35

violations of state law.

This case presents no

important and unresolved question of federal law, nor

even any error to correct.

CONCLUSION

The petition for a writ of certiorari should be

denied.

PATRICK MORRISEY

Attorney General

OFFICE OF THE

WEST VIRGINIA

ATTORNEY GENERAL

State Capitol Complex

Building 1, Room E-26

Charleston, WV 25305

Lindsay.S.See@wvago.gov

(304) 558-2021

LINDSAY S. SEE

Solicitor General

Counsel of Record

KATHERINE A. SCHULTZ

Senior Deputy

Attorney General

CASSANDRA L. MEANS

Assistant Attorney

General

Counsel for Respondent

May 15, 2019