2008 D e c i sion s O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit 12-11-2008 

# N atl T a x p a ye rs Union v

. HHS P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de n t i al D ocke t N o . 07-3381

F o l lo w thi s a nd a dd it ion al w ork s a t : h tt p://d i g it alc ommon s .l a w . v i l l a no va . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit a t V i l l a no va U niv e r sit y S choo l of L a

w Di g it al Re posit or y

. It h as be e n a c c e pt e d for inclusion in 2008 D e c i sion s b y a n author i z e d a dmini s tr a t or of V i l l a no va U niv e r sit y S choo l of L a

w Di g it al Re posit or y

. F or mor e infor m a t ion, p le as e c on t a ct Be n j a min . C a rl s on@l a

w . v i l l a no va . e du . Re c omme nde d C it a t ion " N a tl T a xp a ye r s U nion v . H HS " (2008). 2008 D e cisio n s . P ape r 126. h tt p://d i g it alc ommon s .l a

w . v i l l a no va . e du/thir dc ir c uit_2008/126NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N o. 07- 3381 NAT I ONAL T AXP AYE RS UNI ON Pet i t i oner v. U N IT E D S T A T E S S O C IA L S E C U R IT Y A D M IN IS T R A T IO N ;

OF F I CE OF T HE I NS P E CT OR GE NE RA L R es pondent Pet i t i on for R evi ew of Fi nal D eci s i on of C om m i s s i oner of Soci al Secur i t y A dm i ni s t r at i on

( H H S- 1: 07- 43) A r gued N ovember 20, 2008

____________ B efore: F U E N T E S , H A R D IM A N , and G A R T H , C i rcui t Judg es.

( Fi l ed: D ece m ber 11, 2008) Michae l Geltner [ARG UED] Geltner & A ssociates 105 North Virg inia Avenue Suite 305 Fa lls Church, VA 22046 Counsel for Petitioner Nicholas J. Bag ley [ARG UED] Mark B . Stern United States Depa

rtment of Just ice 9 5 0 Pe nn s ylv an ia

A v e nu e , N . W. 6 0 1 D Str e e t, N . W.W e h av e jurisdicti o n p u rsua n t t o 4 2 U . S . C . § 1 3 2 0 a-7 a(e ). 1 2 Washington, DC 20530 Counsel for Respondent OPI NI ON O F THE COURT FU E N T E S, C i r cui t J udge: The Na t i ona l Ta xpay e r s Uni on ( “ NTU” ) pe t i t i ons for r e vi e w of ade c i s i on of the De partm e nt

of He a l th and Hum an Se rvi c e s De partm e nt a l Appe a l s Boar d that uphe l d a dete rm inat ion b y

an adm inis tr at ive l aw ju dg e ( “ALJ”) wh o f ou ndthat NT U m ai le d c orr e s ponde nc e that

us e d “ s oc i a l s e c ur i ty” i n am anne r that vi ol at e d Se c t i on 1140 of the So ci al Securi ty

Act, 42 U.S.C. § 1 32 0b -10. Th e App ea ls Bo ar d als o aff ir m ed the ALJ’s i m pos i t i on of ac i vi l pe na l ty of $274, 582 a ga i ns t

NTU. Be c aus e we fi nd that Se c t i on 1140( a ) ( 1) i s ne i the r

unc ons t i t ut i ona l a s - a

ppl i e d, nor

unc ons t i t ut i ona l l y ove r br oa d, and that the ALJ ’ s de c i s i on i s s upport e d by s ubs t ant i a l e vi de nc e , we de ny the pe t i t i on for r e vi e w. 1 I. Fa ct s NTU i s anot - for - pr ofi t

t a xpay e r a dvoc a c y

or gani z at i on. I n 2001, NTU s e nt thou sand s of d ir ec t m ai l pie ce s t o con sum er s t o solic it do nati on s. Th e brochures incl ud ed lang uage in large, re d, bo ld ty pe that st at ed, “ Of

fici al Nati on al Su rvey

on So ci al Se c ur i ty . ” The br oc hur e s a l s o i nc l ude d the s t at e m e nt that i t wa s “ c omm i s s i one d by

the NT U f or the Socia l Sec urity

Ad m inis tr at ion, Whit e Hou se , andCo ng re ss of the Unite dT h e D istrict C o u rt u ltim ately d ism issedN T U ’s co m

p lain t, an dth e F o u rth C ircu it 2 af f irm ed . T he s t at ut e pr ovi des for a “c i vi l m oneypenal t y not t o exce ed . . . $5, 000” for eac h 3 p iece o f m ail that co n tai n s the p roh ibit ed lang u ag e. 42 U . S . C . § 1 3 2 0 b -10 (b)(1 ). 3 St at e s . ” The Soc i a l Se c ur i ty Adm i ni s tr at i on ( “ SSA” ) r e c e i ve d ac om pl a i nt , and the I ns pe c t or Ge ne r a l of the SSA de t e rm i ne d that the m a i l i ng vi ol at e d Se c t i on 1140 of the Soc i a l Se c ur i ty

Ac t . Se c t i on 1140 pr ohi bi t s the us e of ni ne t e e n phr a s e s , i nc l udi ng

“ s oc i a l s e c ur i ty , ” i n am anne r that e i the r ( 1) the wr i t e r

knows or s houl d know, or

( 2) the re ader could rea sonably

perc ei ve as conv eying the fals e i m pres si on of

of fici al en d o rsem en t o f

th e m aterial b y

th e S S A o r th e g o v ern m en t. T h e In sp ecto r G en eral sen t a cease-an d -d esist letter to N T U , an dN T U resp o n d edw ith an ap o lo g y . S S A sub sequ en tly re ce ived an additi on al com plai nt, anddete rm ined that the bas is of

the new com

plai nt was as l i ght l y a l t e r e d ve r s i on of the s am e br oc hur e whi c h NTU m a i l e d a ft e r the c e a s e - anddesi st le tt er . The SS A Inspect or General se nt another l ette r t o N TU , dem anding that NT U p rovide writte n con firm at ion o f its inte nt to com ply with Sect ion 1 14 0 w it

hin ten d ay s. In steado f

co m p lyin g , N T U f

ileda law su it in U n itedS tates D istrict C o u rt, c l a i m i ng that

Se c t i on11 40 wa s un c on s t i t ut i on a l . W hi l e the a c t i onwa s pe nd i ng , NT U

2 m aileda th irdv ersio n o f

th e b ro ch u re, w h ich S S A also co n sid eredm islead in g an din v io latio n o f

S ectio n 1 1 4 0 . T h e S S A In sp ecto r G en eral w ro te N T U , statin g th at it p lan n edto im p o se a p en alty i n the am ount

of $274, 582, or

$. 50 pe r offe ndi ng di r e c t

m a i l pi e c e . NTU r e que s t e d a

3W e r evi ew N T U ’ s cons t i t ut i onal cl ai m s de novo. See, e. g. , C B S C or p. v. FC C , 535 4 F . 3 d 1 6 7 , 1 7 4 (3d C ir . 2 0 0 8 ). 4 h earin g in f

ro n t o f an A L J, w h o f

o u n dth at N T U v io latedb o th p ro n g s o f S ectio n 1 1 4 0 . Sp ec ific al ly , the AL J fou ndthat NT U k new that the lang uage used in the brochures woul d i nduc e r e c i pi e nt s t o r e a d i t be c aus e the l angua ge c onve y e d the fa l s e i m pr e s s i on th at th e S S A au th o rizedth e m ailin g . S im ilarly , th e A L J f o u n dth at recip ien ts co u ld re as on ably

inte rpre t t

he lang uage on the brochure as conv eying the fals e i m pres si on that the SSA authoriz ed the m ai li ng . Final ly , the AL J fou ndthat the propo se d p enal ty

was r e a s onabl e . NTU appe a l e d the ALJ ’ s de c i s i on t o the Appe a l s Boar d of the De partm e nt of He a l th and Hum an Se rvi c e s , whi c h r e fus e d t o r e vi e w the de c i s i on, the r e by a dopt i ng the ALJ’s deci si on as final. NT U p et it ions this Co urt for re view of the a gency ’s final de c i s i on. In it s pet it ion f

or re view, NTU as se rt s s ever al ar gu m ents . Fir st , NTU chal le ng es the c ons t i t

ut i ona l i ty of Se c t i on 1140, ar gui ng that i t vi ol at e s NTU’ s Fi r s t

Am e ndm e nt r i ght s a s - a

ppl i e d, and that

i t i s fa c i a l l y

ove r br oa d. Se c ond, NTU ar gue s that the m on et ar y penalty im po se d is “ cr im inal in nature ” andthat it is “e xces si ve” andproh ibit ed b y th e E ig h th A m en d m en t. F in ally , N T U u rg es th is C o u rt to ap p ly D aub ert p rin cip les to a dm i ni s tr at i ve pr oc e e di ngs and t o s tr i ke the e xpe rt t e s t i m ony

fr om the ALJpr oc e e di ng. I I . Di s c us s i on A. Fi r s t

Am e ndm e nt 45 1 . As
- Appl i e d Chal le nge NT U f ir st ar gu es that

Sect ion 1 14 0 v iolate s the Firs t Am endm ent a s- applie d beca use s uch app li cati on penali ze s the organizat ion’s s peec h w it ho ut find ing “ac tual inte nt to defraud.” In other words, a cc ording to NT U, go vernm ent m ay no t l im it spee ch unl e s s that

s pe e c h i nt e nds t o de fr aud or de c e i ve the r e a de r

or l i s t e ne r . Thi s a s s e rt i on re qu ir es li tt le anal y si s, beca use i t i s bas ed on an incorr ec t r ea ding of Vill . of S chaum

bu rg v . C itizen s f

o r a B etter E n v ’t, 4 4 4 U .S . 6 2 0 (1 9 8 0 ). C o n trary to N T U ’s assertio n s, Vi l l a ge of Sc haum

bur g a c knowl e dge d that

a“ di r e c t and s ubs t ant i a l l i m i t at i on on pr ot e c t e d a c t i vi ty” i s c ons t i t ut i ona l i f “ i t

s e rve s as uffi c i e nt l y

s tr ong, s ubor di nat i ng inte re st .” Id. at 636 . Her e, the gov er nm ent has a s ub st anti al inte re st in protec ti ng So ci al S ecu rity recip ien ts f

ro m d ecep tiv e m ailin g s. F o r m illio n s o f A m erican s, S o cial S ecu rity i s avi t a l , i f not

the i r onl y , s our c e of i nc om e . Ma i l that a ppe ar s t o be fr om

the SSA p iqu es b en ef

iciaries’ in terest an din du ces th em to readan dresp o n dacco rd in g ly . Congr e s s e na c t e d Se c t i on 1140 t o pr ot e c t s e ni or s and othe r

be ne fi c i ar i e s fr om

fr aud, and to en su re th at w h en th e S S A sen d s leg itim ate m ail to b en ef iciaries, th e recip ien ts w ill o p en it an dn o t p erceiv e it as “j u n km ail.” H OU SE C OMM . ON W AY S AN D M E AN S , 102 D C ON G ., R E P OR T ON D ECEP TI VE S O LI CI TA TI O N S 5 ( Comm . Pr i nt 1992) . Se c t i on 1140 requ ires o n ly

th at ch arities ref

rain f ro m u sin g d ecep tiv e lan g u ag e w h en so licitin g . The r e for e , Se c t i on 1140 i s c ons t i t ut i ona l a s - a

ppl i e d be c aus e i t

s e rve s a“ s tr ong, sub o rd in atin g in terest.”6 2 . Fac i al l

yOv e rbr oad S ectio n 1 1 4 0 reg u lates tw o ty p es o f co n du ct. T h e f

irst ty p e o f co n du ct relates to the i ntenti on s of the speaker. Th is pron g state s that a speaker c anno t use ninete en p h rases, in clu d in g “so cial secu rity ,” “in a m an n er w h ich su ch p erso n kn o w s o r sh o u ld know woul d c onve y

. . . the fa l s e i m

pr e s s i on that

s uc h i t e m

i s a ppr ove d, e ndor s e d or author i z e d by” SSA. 42 U. S. C. § 1320b- 10( a ) . The s e c ond ty pe of c onduc t

i s obje c t i ve with re gard to the r ea der, and p rohibits the use of the prosc ri bed p hras es “i n a m anner whi c h r e a s onabl y

c oul d be i nt e r

pr e t e d or c ons tr ue d a s c onve yi ng the fa l s e i m pr e s s i on that such it em

is approv ed, e nd orse d o r a utho ri ze d” by

SS A. Id. Both p rong s a ls o cov er c omm uni c at i ons that

c onve y the fa l s e i m

pr e s s i on that

the author

ha s “ s om e c onne c t i on wi th the SSA. ” I d. T h is C o u rt h as h eldth at it w ill strik e d o w n a reg u latio n o f sp eech o n its f

ace “if its p ro h ib itio n s are su f

f icien tly o v erb ro ad

–th at is, if

it reach es to o m

u ch ex p ressio n th at is protec te d b y

the Con st it

ution.” DeJ oh n v . Tem

ple Univ., 537 F.3d30 1, 31 4 (3dCir. 20 08 ). In other words, this Cou rt m ust find that t

he very exis te nce of the regulat ion at i s s ue “ wi l l i nhi bi t

fr e e e xpr e s s i on t o as ubs t ant i a l e xt e nt . ” I d. ( quot at i on m arks om i tt e d) ( e m pha s i s a dde d) ; s e e a l s o A s hcr oft v. Fr ee Spee ch C oal i t i on, 535 U . S. 234, 246- 44 (2002 ) ( i nv al i dati ng t he C hil d P ornog raphy P revent i on A ct as faci al l y ov erbr oad becau se t he s t at ut e r eac hed a “ s ubs t ant i al ” amount of pr ot ect ed s peec h, s uch as s peec h t hat nei t her appea l ed t o t he pr ur i ent i nt er es t nor w as pat ent l y offe ns i ve, i ncl udi ng s peec h t hat had7

se rio u s “ lit e ra ry , artistic , p o lit ica l, an d sc ien tific v a lu e ” ); Br oa dr i c k v. Okl ahom a , 413 U. S. 601, 615 ( 1973) ( “ [T]he ove r br e a dth of as t at

ut e m us t not onl y be r e a l , but s ubs t ant i a l a s we l l , judge d i n r e l at i on t o the s t at ut e ’ s pl a i nl y

l e gi t i m at e s we e p. ” ) ; 181 So uth Inc. v. Fis cher , 454 F.3d22 8, 23 5 (3dCir. 20 06 ) ( “The ov er brea dth cla im ant bears the burden o f d em on strati ng , from the t ext of the law andfrom ac tual fact , that substantia l overbre adth exis ts .” ). In Un it ed Stat es v. Wi ll iam s, 12 8 S . Ct. 18 30 (200 8), the Suprem e Cou rt im plie d that i t di s favor s fa c i a l c ha l l e nge s , pr e fe rr i ng t o r e vi e w c i r c um s t anc e s unde r whi c h the c ha l l e nge d s t at

ut e a c t ua l l y i nfr i nge s pr ot e c t e d s pe e c h. The Court not e d that

the o v erb read th d o ctrin e ten d s “to su mm o n f o rth an en d less stream

o f f an cif u l h y p o th eticals” that m ay pot e nt i a l l y

i m pl i c at e the i nfr i nge m e nt

of pr ot e c t e d s pe e c h. I d. at 1843. The C o u rt f u rth er statedth at th e “‘m ere f act th at o n e can co n ceiv e o f so m e im p erm issib le ap p licatio n s o f

a statu te is n o t su f

f icien t to ren d er it su scep tib le to an o v erb read th chal le ng e. ’” Id. at 184 4 (qu oting M em bers of City Co un ci l of L os An gele s v. Taxpay er s for Vi nc e nt , 466 U. S. 789, 800 ( 1984) ) . The Court de s c r i be d hy

pothe t i c a l s c e nar i os disc usse d at ora l argum ent, and n oted that if those s it

uati on s c am e t o p as s, the a ff ec te d part i e s c oul d br i ng an a s - a ppl i e d c ha l l e nge . I d. ; s e e a l s o W a s hi ngt on St at e Gr ange v. Wa shington Stat e Repub li can P arty , 128 S. Ct. 118 4, 11 91 (“ Faci al chal le ng es ar e d isf av o redf o r sev eral reaso n s. C laim s o f f acial in v alid ity

o f ten rest o n sp ecu latio n . . . . Faci al chal le ng es al so run con tr ar y to the fun dam enta l pri nciple of ju dici al re stra int t

hat8

c ourt s s houl d not

. . . form ul at e ar ul e of c ons t i t

ut i ona l l aw br oa de r

than i s r e qui r e d by th e p recise f

acts to w h ich it is to b e ap p lied .”). As pr e vi ous l y

di s c us s e d, the fi r s t

pr ong of Se c t i on 1140 pr ohi bi t s the us e of wor ds s uc h a s “ s oc i a l s e c ur i ty” i n am anne r that the s pe ake r

“ knows or

s houl d know wo uld con vey” the fals e i m pres si on of

go vernm ent a

pp roval or e nd orse m ent. Like other form s of publ i c de c e pt i on, fr audul e nt c har i t abl e s ol i c i t at i on i s unpr ot e c t e d s pe e c h. Il li no is v. Tele m ar

keti ng Assocs ., Inc. , 538 U.S. 60 0, 61 1-12 (200 3). Therefore, the p ro n g o f S ectio n 1 1 4 0 th at co n tain s th e “kn o w in g ” stan d ardis n o t un co n stitu tio n ally ove r br oa d. Li ke wi s e , the Fi r s t Am e ndm e nt

doe s not pr ot e c t as pe ake r

who us e s the p ro h ib itedlan g u ag e in su ch a w ay th at h e o r sh e “sh o u ldkn o w ” th at th e m essag e w ill m is le ad or decei ve the r ea der. The s e c ond part

of Se c t i on 1140 r e qui r e s c l os e r ana l y s i s be c a

us e i t doe s not r e qui r e that

the s pe ake r

“ know” or

“ s houl d know” that

the l angua ge c oul d m i s l e a d the r e a de r . Rathe r , the s e c ond pr ong of the s t at ut e pr ohi bi t s the us e of the l angua ge i n s uc h a w ay th at th e read er co u ldreaso n ab ly in terp ret as co n v eyin g g o v ern m en tal en d o rsem en t. B ecau se th is p ro n g d o es n o t h av e a scien ter requ irem en t f o r th e sp eak er, it co u ldp o ssib ly r e a c h s om e pr ot e c t e d s pe e c h. Howe ve r , i t i s whol l y unc l e ar that s uc h non- de c e pt i ve s pe e c h r e a c he s a“ s ubs t ant i a l ” am ount of pr ot e c t e d s pe e c h. NTU ha s fa i l e d t o pr ovi de any si gn ific ant e xam

ples of protec te d speec h f

al li ng un der the st at

ute andit s c ou nsel e s s e nt i a l l y

di s avowe d the ove r

br e a dth c l a i m

at or a l ar gum e nt . Gi ve n the l a c k ofA n a p p e llate c o u rt re v iew s th e q u e stio n o f w h e th e r a f

in e is c o n stitu tio n a lly 5 exce s s i ve under a de novo s t andar d. U ni t ed St at es v. B aj akaj i an, 524 U . S. 321, 337 n. 10 (19 9 8 ). 9 evidence of the se condpron g’s “ substantia l” bu rden on protec te d speec h, we findthat th e o b j ectiv e p ro n g o f

S ectio n 1 1 4 0 is n o t o v erb ro ad . We n o te th at th e F o u rth C ircu it h as also ex am in eda sim ilar f acial ch allen g e to Se c t i on 1140 i n Uni t e d Se ni or s As s ’ n, I nc . v. Soc . Se c . Adm i n. , 423 F. 3d 397, 406- 07 ( 4th Ci r . 2005) . As i n thi s c a s e , the Fourth Ci r c ui t he l d that , whi l e the obje c t i ve pr ong of S ectio n 1 1 4 0 co u ldreach so m e p ro tectedsp eech , an y su ch sp eech co n stitu ted , “at m o st, a m in u scu le p o rtio n o f

th e sp eech reach edb y

th e statu te.” Id . at 4 0 7 . Fo r these re as on s, we re

ject NT U’s faci al chal le ng e. B. Mone t ary

Fi ne 5 N T U n ex t ch allen g es th e p en alty im p o sedb y th e A L J, arg u in g th at it is crim in al in n atu re an d“ex cessiv e” in v io latio n o f th e E ig h th A m en d m en t. In My ri e v. Comm ’r , N.J . Dept. of Co rr ., this Co urt e xam ined the i ss ue of wh ether as ur c har ge at

apr i s on c omm i s s ary

wa s c i vi l or

c r i m i na l i n na t

ur e , and whe the r

the su rch arg e w as ex cessiv e. T h is C o u rt ex p lain edth at th e f irst step in su ch an in qu iry is to dete rm ine whether

the l egis lature , “ ‘i n est abli shing the penali zi ng m ec hanism , i nd ic at ed e i the r e xpr e s s l y

or i m pl i e dl y apr e fe r e nc e for

one l abe l or

the othe r . ’ ” 267 F. 3d 251, 256 (3 dC ir. 2 0 0 1 ) (qu o tin g H u d so n v . U n itedS tates, 5 2 2 U .S . 9 3 , 9 9 (1 9 9 7 )). T h is in qu iry is c l e ar , be c aus e Se c t i on 1040 e xpr e s s l y pe rm i t s a“ c i vi l m one y

pe na l ty” for

vi ol at i on of the10

statu te. 4 2 U .S .C . § 1 3 2 0 b -1 0 (b ) (em p h asis ad d ed ). U n d er M y

rie, th e C o u rt n ex t ex am in es w h eth er th e “statu to ry sch em e [ i] s so p u n itiv e eith er in p u rp o se o r ef f ect . . . as to ‘tran sf

o r[ m ] w h at w as clearly

in ten d edas a c i vi l r e m e dy

i nt o ac r i m i na l pe na l ty . ’ ” My r i e , 267 F. 3d a t

256 ( quot i ng Huds on, 522 U. S. at 99 -100 ) ( inte rnal ci tati on s om itte d). This i nq uiry re qu ir es the Cou rt

to apply the s even criteria id en tif

iedin K en n ed y

v . M en d o za-M artin ez, 3 7 2 U .S . 1 4 4 , 1 6 8 -6 9 (1 9 6 3 ). The s e c r i t e r i ai nc l ude Whether the sancti on invo lves an affirm at ive dis abil it y or re stra int, wh ether it h as h isto rically

b een reg ard edas a p u n ish m en t, w h eth er it co m es in to pl ay onl y on afi ndi ng of s c i e nt e r , whe the r i t s ope r at i on wi l l pr om ot e the tr a di t i ona l a i m s of puni s hm e nt - r e tr i but i on and de t e rr e nc e , whe the r the be havi or t o whi c h i t

a ppl i e s i s a l r e a dy

ac r i m e , whe the r

an a l t e rnat i ve pur pos e t o whi c h i t

m ay r at i ona l l y

be c onne c t e d i s a s s i gnabl e for i t , and whe the r i t a ppe ar s e xc e s s i ve i n r e l at i on t o the a l t e rnat i ve pur pos e a s s i gne d

. . . . I d. Appl yi ng the s e c r i t e r i at o NTU’ s pe na l ty of $. 50 pe r

uni t that vi ol at e d Se c t i on 1 1 4 0 , w e co n clu d e th at th e criteria d o n o t sup p o rt N T U ’s co n ten tio n th at th e p en alty is c r i m i na l i n nat

ur e . Fi r s t , NTU c onc e de s that the pe na l ty

doe s not i nvol ve an “ a ffi rm at i ve disa bili ty or re stra int. ” ( Ap p. Br. at 32.) Sec on d, the Sup re m e Cou rt has s tate d that m one t ary pe na l t i e s have not

“ hi s t or i c a l l y

be e n vi e we d a s puni s hm e nt . ” Huds on, 522 U. S. at 104. Ne xt , a s di s c us s e d i n Se c t i on I I . A. 2. , s upr a , avi ol at i on of Se c t i on 1140 do es no t nec es sari ly

re qu ir e a find ing o f sci ente r. Althou gh Sect ion 1 14 0’s m on et ar y p en alty lik ely p ro m o tes th e trad itio n al en d s o f p u n ish m en t, retrib u tio n an dd eterren ce, to11

som e degree , that a lone is no t e no ug h to chara ct er iz e t he penalty

as penal i n n at

ure, rath er th an civ il. S ee id . at 1 0 5 (“[ T ] h e m ere p resen ce o f [ d eterren ce] is in su f

f icien t to re nd er a s anct ion cri m inal , a s det er re nce m ay

se rve c ivil as wellas cr im inal go al s. ”) ( i nt e rna l c i t at i on and quot at i on m arks om i tt e d) . I n fa c t , one of the a l t e rnat i ve pur pos e s of the s anc t i on i s t o r e i m

bur s e the Soc i a l Se c ur i ty Tr us t Fund for the c os t of pol i c i ng d ecep tiv e p ractices. S T A FF O F H. R. C OMM . ON W AY S AN D M E AN S , 102 D C ON G ., R EP ORT ON D ECEP TI VE S OL I C I T AT I ON S , at 7 ( Comm . Pr i nt

1992) . I n a ddi t i on, Se c t i on 1140 i s not co n sisten t w ith crim in al b eh av io r, b ecau se a civ il p en alty reach es n eg lig en t co n du ct, whe r e a s a c t

ua l fr aud i s r e qui r e d for

ac r i m e . W i th r e gar d t o “ whe the r an a l t e rnat i ve pu rpose t o w hich it

m ay rati on al ly

be conn ec te d is a ss ignable for it ,” this Co urt has in terp retedth is in qu iry

to ask“w h eth er an asserted‘san ctio n ’ m ay b e reaso n ab ly r e gar de d a s havi ng apur

po s e othe r

than p un i s hm e nt . ” My

r i e , 26 7 F . 3dat

26 1. As previously

no te d, the l egis lati ve hist ory dem on strate s that a si de frompu nishm ent, ther e ar e the a ddi t i ona l goa l s of de t e rr e nc e , a s we l l a s fundi ng the c os t of e nfor c e m e nt

of S ectio n 1 1 4 0 . S T A FF O F H. R. C OMM . ON W AY S AN D M E AN S , 102 D C ON G ., R E P OR T ON D ECEP TI VE S OL I C I T AT I ON S , at 9 ( Comm . Pr i nt 1992) . Fi na l l y , the fi ne at i s s ue i s not “ex cessiv e in relatio n to th e altern ativ e p u rp o se assig n ed .” Wh en co m p aredto th e co st to th e g o v ern m en t to en f

o rce S ectio n 1 1 4 0 , th e $ .5 0 p er u n it f in e is n o t ex cessiv e. M o reo v er, it is f

ar less th an th e m ax im

u m f in e o f $ 5 ,0 0 0 p er v io latio n th at th e statu te p erm its.T hi s C our t w i l l defe r t o fac t det er m i nat i ons by t he age ncy“i f s uppor t ed bys ubs t ant i al 6 evi dence on t he r ecor d cons i der ed as a w hol e. ” 42 U . S. C . § 1320a- 7a( e) ( i ncor por at ed b y ref ere n ce in 4 2 U . S . C . § 1 3 2 0 b -10 (c)(1)). 12 Likewise , we find N TU ’s contenti on that the fine violate s the Ex ce ss ive Fines Cl aus e of the Ei ghth Am e ndm e nt m e r i t l e s s . To vi ol at e the Exc e s s i ve Fi ne s Cl aus e , the f i n e m u s t b e b o th “ e x c e s s i v e ” an da“ f i n e . ” T i l l m an v . L e b an o n C o u n ty C o rr . F a c i l i ty, 2 2 1 F .3 d4 1 0 , 4 2 0 (3 dC ir. 2 0 0 0 ). F o r th e reaso n s n o tedab o v e, th e p en alty at issu e is neither “ exce ss ive” no r a “fine, ” which m ore c omm on ly re fers to a penal ty

fo r a cr im inal offe ns e . I d. ( c i t i ng Br owni ng- Fe rr i s I ndus . of Vt . , I nc . v. Ke l c o Di s pos a l , I nc . , 492 U. S. 25 7, 26 5 (19 89 )) . C. Expe rt

Te s t i m ony6 NTU a s ks thi s Court

t o e ndor s e the a

ppl i c at i on of Daube rt

t o a dm i ni s tr at i ve pr oc e e di ngs and t o s tr i ke the t e s t i m ony of Pr ofe s s or

W i l l i am Arnol d, the e xpe rt

who t e s t i fi e d for

the gove rnm e nt

be for e the ALJ . Daube rt s e t s forth r

ul e s for de t e rm i ni ng wh ether e xp ert wit

ness es wh o tes ti fy

in federal tr ia ls ar e r el ia

ble andre le vant as re qu ir ed by the Fe de r a l Rul e s of Evi de nc e . Daube rt v. Me rr e l l Dow Pharm s . , I nc . , 509 U. S. 579 ( 1993) . He r e , NTU ar gue s that Pr ofe s s or

Arnol d’ s t e s t i m ony

wa s “ s l oppy

and un sc ie ntific ” andshou ld have been excluded fro m the a dm inis tr at ive heari ng un der D aub ert. H o w ev er, n eith er th e F ed eral Ru les o f E v id en ce n o r D aub ert ap p ly to a dm i ni s tr at i ve he ar i ngs . Se e , e . g. , 20 C. F. R. § 498. 217( b) ( “ [T]he ALJwi l l not be bound by the Fe de r a l Rul e s of Evi de nc e , but m ay be gui de d by

the m i n r ul i ng on the13

a dm i s s i bi l i ty

of e vi de nc e . ” ( e m

pha s i s a dde d) ) ; Bayl i s s v. Barnhart , 427 F. 3d 1211, 1218 n. 4 ( 9th Ci r . 2005) ( e xpl a i ni ng that Daube rt doe s not gove rn the a dm i s s i bi l i ty

of e vi de nc e be for e an ALJ ) . But s e e Ni am v. As hc r oft , 354 F. 3d 652, 660 ( 7th Ci r . 2004) (a pp lying the “s piri t of D aubert ” t o adm inis tr at ive proce edings). W e fi nd NTU’ s ar gum e nt s wi thout m e r i t . Not

onl y di d the ALJe xpl a i n the Pr ofe s s or ’ s e xt e ns i ve c r e de nt i a l s i n he r opi ni on, but

s he c onc e de d that

s he di d not

r e l y on hi s t e s t i m ony

i n r e a c hi ng he r

de c i s i on. Spe c i fi c a l l y , the ALJnot e d that “ m uc h of Pr ofe s s or Arnol d’ s t e s t i m ony

s i m pl y s t at e s the obvi ous . I nt e r

pr e t i ng the pl a i n m e ani ng of the l angua ge on s uc h bl at ant l y de c e pt i ve m a i l e r s doe s not r e qui r e gr e at

e xpe rt i s e . ” ( App. at 17 n.9.) Even w it

ho ut consider ing the te st im on y of Prof es sor Arnold, we findthat the r e i s s ubs t ant i a l e vi de nc e i n the r e c or d t o s upport the ALJ ’ s de t e rm i nat i on. F o r t h e f o re g o in g re a s o n s , w e w ill d e n y N T U ’s p e titio n .