Opinion ID: 3033210
Heading Depth: 2
Heading Rank: 2

Heading: Monetary Fine5

Text: NTU next challenges the penalty imposed by the ALJ, arguing that it is criminal in nature and “excessive” in violation of the Eighth Amendment. In Myrie v. Comm’r, N.J. Dept. of Corr., this Court examined the issue of whether a surcharge at a prison commissary was civil or criminal in nature, and whether the surcharge was excessive. This Court explained that the first step in such an inquiry is to determine whether the legislature, “‘in establishing the penalizing mechanism, indicated either expressly or impliedly a preference for one label or the other.’” 267 F.3d 251, 256 (3d Cir. 2001) (quoting Hudson v. United States, 522 U.S. 93, 99 (1997)). This inquiry is clear, because Section 1040 expressly permits a “civil money penalty” for violation of the 5 An appellate court reviews the question of whether a fine is constitutionally excessive under a de novo standard. United States v. Bajakajian, 524 U.S. 321, 337 n.10 (1998). 9 statute. 42 U.S.C. § 1320b-10(b) (emphasis added). Under Myrie, the Court next examines whether the “statutory scheme [i]s so punitive either in purpose or effect . . . as to ‘transfor[m] what was clearly intended as a civil remedy into a criminal penalty.’” Myrie, 267 F.3d at 256 (quoting Hudson, 522 U.S. at 99-100) (internal citations omitted). This inquiry requires the Court to apply the seven criteria identified in Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168-69 (1963). These criteria include Whether the sanction involves an affirmative disability or restraint, whether it has historically been regarded as a punishment, whether it comes into play only on a finding of scienter, whether its operation will promote the traditional aims of punishment-retribution and deterrence, whether the behavior to which it applies is already a crime, whether an alternative purpose to which it may rationally be connected is assignable for it, and whether it appears excessive in relation to the alternative purpose assigned .... Id. Applying these criteria to NTU’s penalty of $.50 per unit that violated Section 1140, we conclude that the criteria do not support NTU’s contention that the penalty is criminal in nature. First, NTU concedes that the penalty does not involve an “affirmative disability or restraint.” (App. Br. at 32.) Second, the Supreme Court has stated that monetary penalties have not “historically been viewed as punishment.” Hudson, 522 U.S. at 104. Next, as discussed in Section II.A.2., supra, a violation of Section 1140 does not necessarily require a finding of scienter. Although Section 1140’s monetary penalty likely promotes the traditional ends of punishment, retribution and deterrence, to 10 some degree, that alone is not enough to characterize the penalty as penal in nature, rather than civil. See id. at 105 (“[T]he mere presence of [deterrence] is insufficient to render a sanction criminal, as deterrence may serve civil as well as criminal goals.”) (internal citation and quotation marks omitted). In fact, one of the alternative purposes of the sanction is to reimburse the Social Security Trust Fund for the cost of policing deceptive practices. STAFF OF H.R. COMM. ON WAYS AND MEANS, 102D CONG., REPORT ON DECEPTIVE SOLICITATIONS, at 7 (Comm. Print 1992). In addition, Section 1140 is not consistent with criminal behavior, because a civil penalty reaches negligent conduct, whereas actual fraud is required for a crime. With regard to “whether an alternative purpose to which it may rationally be connected is assignable for it,” this Court has interpreted this inquiry to ask “whether an asserted ‘sanction’ may be reasonably regarded as having a purpose other than punishment.” Myrie, 267 F.3d at 261. As previously noted, the legislative history demonstrates that aside from punishment, there are the additional goals of deterrence, as well as funding the cost of enforcement of Section 1140. STAFF OF H.R. COMM. ON WAYS AND MEANS, 102D CONG., REPORT ON DECEPTIVE SOLICITATIONS, at 9 (Comm. Print 1992). Finally, the fine at issue is not “excessive in relation to the alternative purpose assigned.” When compared to the cost to the government to enforce Section 1140, the $.50 per unit fine is not excessive. Moreover, it is far less than the maximum fine of $5,000 per violation that the statute permits. 11 Likewise, we find NTU’s contention that the fine violates the Excessive Fines Clause of the Eighth Amendment meritless. To violate the Excessive Fines Clause, the fine must be both “excessive” and a “fine.” Tillman v. Lebanon County Corr. Facility, 221 F.3d 410, 420 (3d Cir. 2000). For the reasons noted above, the penalty at issue is neither “excessive” nor a “fine,” which more commonly refers to a penalty for a criminal offense. Id. (citing Browning-Ferris Indus. of Vt., Inc. v. Kelco Disposal, Inc., 492 U.S. 257, 265 (1989)).