The HONORABLE ANDREW W. BOGUE, United States District Judge for * the District of South Dakota, sitting by designation.



## United States Court of Appeals FOR THE EIGHTH CIRCUIT

___________ No. 97-2447

___________ United States of America, *
* Plaintiff - Appellee, *
* Appeal from the United States
v. * District Court for the
* Eastern District of Missouri. James Lippert, *
* Defendant - Appellant. *

___________ Submitted: February 11, 1998 Filed: July 2, 1998

___________ Before WOLLMAN and LOKEN, Circuit Judges, and BOGUE, District Judge. *

___________ LOKEN, Circuit Judge.

In1993, James Lippert pleaded guilty to one count of knowingly and willfully soliciting and accepting kickbacks in violation of the Anti-Kickback Act of 1986, 41 U.S.C. § 54. He served an eighteen-month pri son sentence and paid a $5,000 criminal fine. In September 1994, the United States f iled this action against Lippert and others, seeking civil penalties under the Anti-Kickback Act and the False Claims Act, andThe HONORABLE E. RICHARD WEBBER, United States District Judge for 1 the Eastern District of Missouri. damages for common law fraud. The district court granted judgment in favor of the 1 government on its Anti-Kickback Act claim . Lippert appeals, arguing violations of his rights under the Double Jeopardy Clau se and the Excessive Fines Clause. Concluding the Double Jeopardy Clause does not apply to this civil penalty, and the penalty was not constitutionally excessive, we affirm.
Lipp ert was president of C.B. Forms, L.P., a company awarded a series o f contr acts to print and supply forms for the Commodity Credit Corporation (CCC), a UnitedStates government agency. In performing these contracts, Lippert procure d kickb acks from shipping subcontractors. The subcontractors submitted invoices t o C.B. Forms that included the agreed kickbacks. CB Forms paid the subcontrac tors, and the United States reimbursed CB Forms for its shipping costs . The subcontractors then paid C.B. Forms the kickbacks and in some cases paid additional kickbacks to Lippert personally. The subcontractors paid a total of $176,411.80 in kickbacks, $140,114.70
to C.B. Forms, and $36,297.10 to Lippert. The scheme was uncovered when th e government learned that one subcontractor was charging a different contractor a thirty percent lower shipping rate.

Fo llowing Lippert’s criminal conviction, the district court held a sentencin g heari ng to determine the government’s loss. A procurement officer testified that th e kickbacks allowed C.B. Forms to submit a lower bid based upon its co sts of production and then charge inflated, reimbursable shipping prices, resulting in increased tota l contract costs to the United States. The court found that the government loss wa s bet ween $200,000 and $350,000 and sentenced Lippert accordingly. See U.S.S.G

. §§ 2B4.1(b)(1), 2F1.1. The United States then bro ught this civil action against Lippert and C.B. Forms. The government dismissed its claims against C.B. Form s when it filed for bankruptcy protection, and then sought summary judgment against Lippert.The district court granted summary judgment under the Anti-Kickback Act and the False Claims Act, concluding that Lippert was collaterally estopped by his guilty plea to contest liability issues. Turning to questions of remedy, the court noted that the government“is bringing this action against Lippert as a remedial measure t o compen sate the United States for the losses incurred as a result of defendant’ s conduct.” Therefore, the court reasoned, recovery under the Anti-Kickback Act and th e False Claims Act would be duplicative. The court advised the government that it was entitled to immediate judgment as a matter of law under the Anti-Kickback Act for double the amount of the kickbacks, or $352,823.60, o r under the False Claims Act for civilpenalties totaling $50,000; alternatively, the government could try its claims for a greater recovery. The government elected judgment under the Anti-Kickback Act for $352,823.60, and this appeal followed.
In recent years, the Supreme Court has issued a series of decisions applying the Do uble Jeopardy Clause and the Excessive Fines Clause to forfeitures and civi l pe nalties. Two recent decisions have sharpened our focus -- the Double Jeopard y Clause deci sion in Hudson v. United States , 118 S. Ct. 488 (1997), issued after th e parties’ br iefs but before oral argument, and the very recent Excessive Fines Claus e decision in United States v. Bajakajian , 1998 WL 323512 (U.S. June 22, 1998). In our view, Hudson resolves the Double Jeopardy Clause issue in the government’s favor. The Excessive Fines Clause issue is perhaps more difficult after Bajakajian

.

I. The Double Jeopardy Clause Issue.
Lippert initially argued the civil penalty here at issue was a successiv e punishment that v iolates the Double Jeopardy Clause as construed in United States v. Halper , 490 U.S. 435, 449 (1989). In Halper , the Court held that the Double Jeopardy Clause protects a convicted criminal defendant from a second punishment in the form of a civil sa nction that “may not fairly be characterized as remedial” because it i s “overwhelmingly disproportionate to the damage [the defendant] has caused.” InHudson , however, the Court “disavow [ed] the method of analysis used in” Halper and returned to its previous double jeopardy rule. 118 S. Ct. at 491. Under Hudson , “[t]he Claus e protects only against the imposition of multiple criminal punishments for th e
same offense.” Determining whether a particular punishment is criminal or civil i s initial ly a question of statutory construction. If the statute is construed as intending a civil penalty, then a court must inquire “whether the statutory scheme was so punitive either in purpose or eff

ect as to transform what was clearly intended as a civil remedy into a criminal penalty.” Both inquiries require evaluation of the statute “on its face.” 118 S. Ct. at 493-494. “[O]nly the clearest proof will suffice to override legislativ e int ent and transform what has been denominated a civil remedy into a crimina l penalty.” Id. at 493, quoting United States v. Ward , 448 U.S. 242, 249 (1980).
The judgment against Lippert was imposed under the Anti-Kickback Act’s civil penalty provision, which provides:

(a)(1) The United States may, in a civil action, recover a civi l penalty from any person who knowingly engages in conduct prohibited by section 53 of this title. The amount of such civil penalty shall be --
(A ) twice the amount of each kickback involved in th e violation; and
(B) not more than $10,000 for each occurrence o f prohibited conduct.

41 U.S.C. § 55(a)( 1). Applying the foregoing Hudson principles, it is apparent this is not a criminal punishment and t herefore its imposition after a criminal conviction does not violate the Double Jeopardy Clause. On its face, the statute is clearly civil i n natur e. Section 55 is titled “civil actions,” and § 55(a)(1) uses the word “civil” three tim es. The statute’s legislative history refers to a “civil cause of action” that coul d proceed in “civil court” resulting in “civil liability” in an “amount which reasonablyrelates to the actual costs the government suffers when kickbacks occur.” H.R. Rep.

No. 99- 964, at 14-15, reprinted in 1986 U.S.C.C.A.N. 5960, 5971-72. Congress’ s intent to enact a non-criminal penalty is confirmed by comparing § 55(a)(1) with th e immediately preceding section, 41 U.S.C. § 54, which esta blished “criminal penalties” of a fine and imprisonment for anyone “who knowingly and willfully engages i n conduct prohibited by section 53.” The various Anti-Kickback Act sanctions ar e carefu lly calibrated as to their scienter requirements -- “knowingly and willfully” for the cr iminal sanctions in § 54, “knowingly” for the double civil penalty in § 55(a)(1), and absolute vicarious liability for the single civil penalty in § 55(a)(2).
Having established that Congress intended a civil remedy, we must conside r whether tha t remedy is “so punitive in purpose or effect” as to be transformed int o criminal punishment. While § 55(a)(1)(B) reflects the punitive purpose of deterrence by au thorizing a penalty of “not more than $10,000 for each occurrence,” the “mer e presence of this purpose is insuf ficient to render a sanction criminal.” Hudson , 118 S. Ct. at 496. More significantly, the penalty in § 55(a)(1)(A) of twic e the amount of each kickback is primarily remedial in purpose and not punitive in effect. There can be no doubt th at kickbacks harm government contracting agencies, and there is a broa d consensus (i) that it is difficult to prove the government’s actual contract damages from

a particular kickback scheme, and (ii) that the government must incur additiona l investigative and enforcement costs to ferret out and stop these abusive schemes. See United States v. Acme Process Equip. Co. , 385 U.S. 138, 144 (1966); H.R. Rep. No. 99-9 64, 1986 U.S.C.C.A.N. at 5972. In sum, we conclude that 41 U.S.C. § 55(a)(1) is a civil penalty, and therefore the Double Jeopardy Clause does not apply.

II. The Excessive Fines Clause Issue.
Lippe rt argues that summary judgment was improper because a civil penalty equal to ten times the kickbacks paid to him personally is an unconstitutionall y excessive fine. The Excessive Fines Clause “limits the government’s power to extractAlthough a per occurrence pe nalty was not imposed on Lippert, analysis of the 2 statutory pe nalty “on its face” seems appropriate. However, this is an open issue. In Hudson , the Supreme Court held that a statutory sanction must be analyzed on its face forDo uble Jeopardy Clause purposes because of the need to determine before tria l whether that Clause bars the government from attempting a second punishment. 118 S. Ct . at 495. The Excessive Fines Clause sweeps less broadly; it prohibits a n excessive fine from being “imposed,” an inquiry that cannot be made until a specific “fine” has been imposed. Nonetheless, facial analysis of whether a purported civi l penalt yis punishment for Excessive Fines Clause purposes is desirable because i t pay ments . . . as punishment for some offense.” Bajakajian at *5. At issue i n Bajakajian

was a criminal

forfeiture under 18 U.S.C. § 982(a)(1). By relyi ng on Austin

v. United States , 509 U.S. 602, 610 (1993), for its analysis of when a governmen t pena lty is “punishment,” the Court reaffirmed that the Excessive Fines Clause als o ap plies to civil

penalties and forfeitures that are punitive in nature. Austinheld tha t
even a remedial civil sanction is subject to the Excessive Fines Clause if it serves “in part to punish.” 509 U.S. at 610. For this proposition, Austinrelied heavily on th e now discredited Double Jeopardy Clause analysis of Halper . We infer from the citation to Austin in Bajakajian

that Halper ’s emphasis on punishment, whi le rejected as a basis forapply ing the Double Jeopardy Clause, remains appropriate for applying th e Exces sive Fines Clause. That inference is supported by the fact that the Court i n Hudson co mmented, “some of the ills at which Halper was directed are addressed by other constitutional provisions,” citing as one example the Excessive Fines Clause as applied in Austin . 118 S. Ct. at 495.
If we apply Austin ’s expansive test for identifying punishment, it seems apparent that the c ivil penalty authorized in 41 U.S.C. § 55(a)(1) is punitive because it i s intended to serve in part as pu nishment. The sanction is labeled a civil “penalty,” that penalt ymay include an amount per occurrence that is indistinguishable from a civi l “fine,” and the legislative history confirms that the penaltie s authorized “are reasonable in light of the serious harm caused the government by kickbacks and the need t o pre vent such misbehavior. ” H.R. Rep. No. 99-964, 1986 U.S.C.C.A.N. at 597 2 (emphasis added). 2ena bles Congress to legislate more knowledgeably. On balance, we conclude tha t

whether the Excessive Fines Clause applies to a type of civil penalty should be based on a facial evaluation of the statute. I f the Clause applies, a court must then determine whether the particular fine at issue is constitutionally excessive. On t he other hand, there is a strong conflicting signal from Bajakajian . Afte r concluding that the criminal forfeiture at issue was punishment, the Court turned to the quest ionwhether the forfeiture was an excessive fine. In answering that questio n affirmatively, the majority distinguished many long-standing customs fo rfeiture statutes, including statutes authorizing the “forfeiture” of monetarypenalties proportioned to the value of goods. Those forfeitures, the Court explai ned, “serv[ed] the remedial purpose of reimburs ing the Government for the losses accruing from the evasion of custom s duties,” without discussing whether they were also in part punitive. Bajakajian at *11. The fou r dissenters in Bajakajian complained that the majority “treats many fines a s ‘remed ial’ penalties even though they far exceed the harm suffered. . . . In th e majority’s universe, a fine is not a punishment even if it is much larger than the money owed. This confuses whether a fine is excessive with whether it is a punishment.” Id. at *12. If the Bajakajian

dissenters haveproperly construed the majority opinion, then civil penalties imposed under 41 U.S.C. § 55(a)(1) may not be subject to the Excessive Fines Clause at all, because like customs forfeitures they serve the remedial purpose of reimbursing the government for losses accruing from kickbacks.
The issue whether the Excessive Fines Clause applies to Anti-Kic kback Act civil penalties is important, and we are not certain how the Supreme Court will resolve it. But we need not hazard an answer in this case because we conclude that, even if the Clauseapplies, the civil penalty imposed on Lippert is not constitutionally excessive. In the first place, the district court did not impose the $10,000 per occurrence penalty -- the portion of the statute that looks most like a fine -- but only a penalty equal to two times the amount of the kickbacks. This is a time-honored form of compensatoryremedy. “[T]he Government is entitled to rough remedial justice, that is, it ma y

demand compensation accordi ng to somewhat imprecise formulas, such as . . . a fixed sum plus double damages , without being deemed to have imposed a . . . punishment.” Halper , 490 U.S. at 446; see One Lot Emerald Cut Stones v. United States , 409 U.S. 23 2, 237 (1972); Stockwell v. United States , 80 U.S. 531, 546-47 (1871); Unite d States v. Brekke , 97 F.3d 1043, 1048-49 (8th Cir. 1996), cert. denied , 117 S. Ct. 1281 (1997) (False Claims Act treble damages are “compensatory rather than punitive”).

Second, the fact that Lippert’s civil penalty was based upon kickbacks paid to C.B. Forms, as well as kickbacks paid to Lippert, does not make the penalty les s compensat ory to the government. Nor does it render the penalty grossl y disproportional to the gravity of Lippert’s offense -- he procured all the kickbacks and managed the C.B. Forms business. Finally, in the case of fines, as opposed t o forfeitures, the defendant’s ab ility to pay is a factor under the Excessive Fines Clause. See United States v. Hines , 88 F.3d 661, 664 (8th Cir. 1996 ); see also Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc. , 492 U.S. 257, 289 (1989) (O’Connor, J. , dissen ting) (after the Magna Carta, amercements, the precursors of civil fines, wer e reduced “in accordance with the party’s ability to pay”); United St ates v. Emerson , 107 F.3d 77, 80-81 (1st Cir.), cert. denied , 118 S. Ct. 61 (1997). However, Lippert did not rai se this issue in the district court, and his Presentence Report in the criminal cas e reported a net worth of $501,015.15.
For the foregoing reasons, the judgment of the district court is affirmed.
A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.