Court Opinion

ID: 3040701
Source: CourtListenerOpinion
Date Created: 2015-10-13 23:03:43.583536+00
Date Added: 2024-06-11T12:05:54.370195
License: Public Domain

FOR PUBLICATION
 UNITED STATES COURT OF APPEALS
      FOR THE NINTH CIRCUIT

ANUP ENGQUIST,                          
                  Plaintiff-Appellee,
                 v.                          No. 05-35170
OREGON DEPARTMENT OF                          D.C. No.
AGRICULTURE; JOSEPH (JEFF) HYATT;           CV 02-1637 AS
JOHN SZCZEPANSKI,
           Defendants-Appellants.
                                        

ANUP ENGQUIST,                          
                 Plaintiff-Appellant,
                                             No. 05-35263
                 v.
OREGON DEPARTMENT OF                          D.C. No.
                                            CV 02-1637 AS
AGRICULTURE; JOSEPH (JEFF) HYATT;
                                              OPINION
JOHN SZCZEPANSKI,
            Defendants-Appellees.
                                        
     Appeals from the United States District Court
               for the District of Oregon
   Donald C. Ashmanskas, Magistrate Judge, Presiding

                 Argued and Submitted
            July 27, 2006—Portland, Oregon

                   Filed February 8, 2007

   Before: Stephen Reinhardt, A. Wallace Tashima, and
             Susan P. Graber, Circuit Judges.

                 Opinion by Judge Tashima;
                 Dissent of Judge Reinhardt

                             1501
1506    ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE

                          COUNSEL

Loren W. Collins, Senior Assistant Attorney General, and
Julie A. Smith, Assistant Attorney General, Oregon Depart-
ment of Justice, Salem, Oregon, for defendants-appellants and
cross-appellees.

Stephen L. Brischetto, Portland, Oregon, for plaintiff-appellee
and cross-appellant.

                          OPINION

TASHIMA, Circuit Judge:

   Plaintiff Anup Engquist (“Engquist”) brought suit alleging
violations of federal anti-discrimination law, constitutional
law, and state tort law against her former employer, the Ore-
gon Department of Agriculture (“ODA”) and John Szczepan-
ski (“Szczepanski”) and Joseph Hyatt (“Hyatt”). A jury found
the individual defendants liable for constitutional violations of
equal protection and substantive due process, and for inten-
tional interference with contract. The jury awarded Engquist
$175,000 in compensatory damages and $250,000 in punitive
damages. Pursuant to Oregon law, $75,000 of the punitive
damages were allocated to Oregon’s Criminal Injuries Com-
       ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE   1507
pensation Account (“State Account”). Szczepanski and Hyatt
(collectively “Defendants”) appeal, contending that the con-
stitutional claims are invalid as a matter of law. Engquist
cross-appeals, contending that a jury verdict from a co-
worker’s similar trial in state court should have been given
preclusive effect, or that it should have been admitted into
evidence. She also challenges the allocation of $75,000 of the
punitive damages awarded to her to the State Account. We
have jurisdiction over the appeal and cross-appeal under 28
U.S.C. § 1291. We hold that Engquist’s constitutional claims
are invalid as a matter of law, and remand the case to the dis-
trict court to adjust Engquist’s damages and attorneys’ fees
awards in light of that holding. We affirm on Engquist’s
cross-appeal.

               FACTUAL BACKGROUND

  Engquist was hired in 1992 as an international food stan-
dards specialist for the Export Service Center (“ESC”), a lab-
oratory in the ODA. She was hired by Norma Corristan
(“Corristan”), who was the director of the ODA’s Laboratory
Services Division (“LSD”), which included the ESC. Eng-
quist’s initial responsibility was to develop a database of food
regulations for different countries, but she later focused on
marketing the ESC’s certification services and consulting
with clients.

   Hyatt had been employed by the ODA since 1990, and
worked in the LSD from 1990 to 2000 as a systems analyst.
Engquist had repeated difficulties with Hyatt, and complained
to Corristan several times that Hyatt excessively monitored
her and made false statements about her. Corristan responded
to complaints from Engquist and others about Hyatt by meet-
ing with his supervisor, and requiring him to attend diversity
and anger management training.

   In June 2001, Szczepanski, who was an Assistant Director
of the ODA, took over oversight of the ESC, and sought to fill
1508   ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE
the vacant ESC manager position. During the summer of
2001, Szczepanski told a client that he could not “control”
Engquist, and that Engquist and Corristan “would be gotten
rid of.” In the fall of 2001, Hyatt told a co-worker that he and
Szczepanski were working to “get rid of” Corristan and Eng-
quist. Hyatt drafted a plan to reorganize the ESC, and emailed
it to Szczepanski, and Szczepanski subsequently implemented
it. Engquist and Hyatt both applied for the ESC manager posi-
tion. Although Engquist had a more extensive educational
background and more experience with the customer-service
aspects of the position, Hyatt was offered the position effec-
tive October 2001. Szczepanski defended that decision by
explaining that he chose Hyatt because of Hyatt’s business
experience and work as a chemist at the ODA.

   On October 5, 2001, the Governor announced that the state
was experiencing a budget crisis and called for budget reduc-
tions. Soon afterwards, Szczepanski eliminated Corristan’s
position, allegedly because of the budget crisis. Near the end
of 2001, Hyatt told a former ODA employee, then an ESC cli-
ent, that Corristan and Engquist had run the ESC “into the
ground,” they were on their way out, and he would take over
and put it all back together. On January 31, 2002, Engquist
was informed that her position was being eliminated due to
the reorganization. Pursuant to her collective bargaining
agreement (“CBA”), Engquist was given the opportunity to
“bump” into another position. Engquist, however, was found
unqualified for the only position at her level, and thus was
unable to “bump” into it.

   Since being laid off, Engquist has applied for approxi-
mately 200 jobs, but has not been offered a full-time job. She
started her own food consulting business, doing the same type
of work she did at the ESC. This business, though, does not
pay enough to sustain her, and may be losing money. Defen-
dants’ vocational expert testified that there are very few
opportunities in Oregon for work in Engquist’s fields —
microbiology, food technology, and food science. Engquist’s
       ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE   1509
vocational expert testified that it was not probable that Eng-
quist would find employment in her occupation.

   Prior to Engquist’s trial, Corristan successfully filed suit
against Defendants in state court, and a jury awarded Corri-
stan $1.1 million in damages. That jury found that Hyatt dis-
criminated against Corristan because of her gender or
ethnicity, and that Defendants violated her equal protection
and procedural due process rights.

             PROCEDURAL BACKGROUND

   In her complaint, Enguist alleged claims under Title VII of
the Civil Rights Act of 1964 (42 U.S.C. §§ 2000e et seq.), 42
U.S.C. § 1981, equal protection, procedural and substantive
due process, and intentional interference with contract. She
sought economic, non-economic, and punitive damages, as
well as attorneys’ fees and costs. Defendants moved for sum-
mary judgment on all the claims. The district court granted
the motion as to the sexual harassment and procedural due
process claims, and denied it with respect to the remaining
claims. Defendants made a second motion for summary judg-
ment, specifically challenging Engquist’s use of the “class-of-
one” theory of equal protection. The court denied the motion,
concluding that the claim was viable.

  The district court rejected Engquist’s request that the court
give preclusive effect to the jury finding of discrimination in
Corristan’s state court lawsuit against Defendants. The district
court granted Defendants’ motion in limine to exclude from
evidence the verdict in Corristan’s state court case.

   The remaining claims proceeded to an 11-day jury trial.
After Engquist rested her case-in-chief, defendants moved for
judgment as a matter of law, again challenging the equal pro-
tection and substantive due process claims. Defendants also
asserted that they were entitled to qualified immunity on the
constitutional claims. The district court denied the motions.
1510   ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE
Defendants renewed their motions after the close of evidence,
and the court again denied them. Defendants also objected to
the jury instructions on the constitutional claims, arguing that
those claims should not have been submitted to the jury.
Those objections were overruled.

   The jury concluded that Defendants were liable for viola-
tions of equal protection and substantive due process, as well
as on the contract interference claim. The jury rejected Eng-
quist’s Title VII and § 1981 claims against all Defendants.
The jury awarded Engquist $175,000 in compensatory dam-
ages, which were not specifically tied to any particular suc-
cessful claim. The jury awarded Engquist $125,000 in
punitive damages on the equal protection claim, and $125,000
in punitive damages on the contract interference claim.

   Following the verdict, Defendants filed a motion for judg-
ment notwithstanding the verdict, which the court denied. In
addition, Engquist objected to the form of the judgment, pre-
sumably because the judgment listed the State of Oregon as
a judgment creditor, but the district court overruled her objec-
tion. The court entered judgment in favor of Engquist, which
consisted of $175,000 in compensatory damages and
$175,000 in punitive damages. The court entered judgment in
favor of the State Account in the amount of $75,000, or 60
percent of the punitive damages awarded on the state tort
claim, pursuant to Or. Rev. Stat. § 31.735. The court also
awarded Engquist $172,740 in attorneys’ fees, as well as
costs. Defendants timely filed a notice of appeal, and Eng-
quist timely filed her notice of cross-appeal.

                STANDARD OF REVIEW

   We review de novo a district court’s denial of a motion for
judgment as a matter of law. Janes v. Wal-Mart Stores Inc.,
279 F.3d 883, 886 (9th Cir. 2002). We also review constitu-
tional claims de novo. Masnauskas v. Gonzales, 432 F.3d
1067, 1069 (9th Cir. 2005). We review a jury verdict under
        ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE   1511
the substantial evidence standard. Gilbrook v. City of West-
minster, 177 F.3d 839, 856 (9th Cir. 1999). “Substantial evi-
dence” is evidence that a reasonable mind might accept as
adequate to support a conclusion. Id.

                         ANALYSIS

                    I.   Equal Protection

   This case presents several issues of first impression in this
circuit, the first of which is whether the class-of-one theory of
equal protection is applicable to public employment decisions.
The jury concluded that Defendants were liable on the equal
protection claim because Defendants “intentionally treat[ed]
the plaintiff differently than others similarly situated with
respect to the denial of her promotion, termination of her
employment, or denial of bumping rights without any rational
basis and solely for arbitrary, vindictive, or malicious rea-
sons.” Defendants contend that Engquist’s claim fails as a
matter of law, because the class-of-one theory is not applica-
ble to the claims of public employees.

   We begin by examining the Supreme Court’s articulation of
the class-of-one theory and its application by the circuit
courts. Ultimately, we hold that the class-of-one theory of
equal protection is not applicable to decisions made by public
employers.

A.   Olech and the Class of One

  [1] “The Equal Protection Clause ensures that ‘all persons
similarly situated should be treated alike.’ ” Squaw Valley
Dev. Co. v. Goldberg, 375 F.3d 936, 944 (9th Cir. 2004)
(quoting City of Cleburne v. Cleburne Living Ctr., Inc., 473
U.S. 432, 439 (1985)), rehearing denied, 395 F.3d 1062 (9th
Cir. 2005). The Supreme Court formally recognized class-of-
one equal protection actions in Village of Willowbrook v.
Olech, 528 U.S. 562 (2000) (per curiam). In Olech, a munici-
1512    ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE
pality conditioned water service for a property on the
plaintiff-owner’s granting a 33-foot easement, even though it
required only a 15-foot easement from every other property
owner. Id. at 563. In a short, per curiam opinion, the Court
allowed the plaintiff to proceed on the class-of-one theory,
recognizing claims where a “plaintiff alleges that she has been
intentionally treated differently from others similarly situated
and that there is no rational basis for the difference in treat-
ment.” Id. at 564. The Court stated that allegations of irratio-
nal and wholly arbitrary treatment, even without allegations
of improper subjective motive, were sufficient to state a claim
for relief under equal protection analysis. Id. at 565.

   In a three-paragraph concurrence, Justice Breyer expressed
concern that Olech would transform ordinary violations of
state or local law into constitutional cases. See id. at 565-66.
He nonetheless concurred in the judgment because the plain-
tiff had alleged that city officials acted with malice or ill will,
which distinguished the claim from run-of-the-mill zoning
cases. Id. at 566.

   [2] Based on Olech, we have applied the class-of-one the-
ory in the regulatory land-use context to forbid government
actions that are arbitrary, irrational, or malicious. See Squaw
Valley, 375 F.3d at 944-48; see also Valley Outdoor, Inc. v.
City of Riverside, 446 F.3d 948, 955 (9th Cir. 2006) (applying
class-of-one theory to city’s denial of billboard permits). In
Squaw Valley, the plaintiffs, who operated a ski resort,
claimed that two employees working for the state water qual-
ity authority subjected them to selective and over-zealous reg-
ulatory oversight. 375 F.3d at 938. We applied rational basis
scrutiny to review the acts of the government regulators. Id.
at 944. We held that acts that are malicious, irrational, or
plainly arbitrary do not have a rational basis. Id. In addition,
we held that in an equal protection claim based on selective
enforcement of the law, a plaintiff can show that a defen-
dant’s alleged rational basis for his acts is a pretext for an
impermissible motive. Id.
         ENGQUIST v. OREGON DEPARTMENT         OF   AGRICULTURE      1513
   [3] We reversed a grant of summary judgment in favor of
defendant Singer because, even though the defendants had set
forth a rational basis for their acts, there was evidence that
Singer acted out of animosity against the plaintiffs. Id. at 946-
47. In contrast, we sustained the grant of summary judgment
in favor of defendant Goldberg because we found no evidence
that Goldberg acted with animosity. Id. at 947-48. We have
not yet decided, however, whether the class-of-one theory
should be extended to public employment decisions.

   Other courts of appeals have chosen to apply Olech’s class-
of-one theory to public employment decisions. See, e.g., Scar-
brough v. Morgan County Bd. of Educ., 470 F.3d 250, 260-61
(6th Cir. 2006); Hill v. Borough of Kitztown, 455 F.3d 225,
239 (3d Cir.. 2006); Whiting v. Univ. of Miss., 451 F.3d 339,
348-50 (5th Cir. 2006); Neilson v. D’Angelis, 409 F.3d 100,
104 (2d Cir. 2005); Levenstein v. Salafsky, 414 F.3d 767, 775-
76 (7th Cir. 2005); Campagna v. Mass. Dep’t of Envtl. Prot.,
334 F.3d 150, 156 (1st Cir. 2003); Bartell v. Aurora Pub.
Sch., 263 F.3d 1143, 1148-49 (10th Cir. 2001). Courts, how-
ever, have “struggled to define the contours of class-of-one
cases” because, unless constrained, the class-of-one theory of
equal protection claim could provide a federal cause of action
for review of almost every executive or administrative gov-
ernment decision. Jennings v. City of Stillwater, 383 F.3d
1199, 1210-11 (10th Cir. 2004).1 Thus, although courts have
recognized class-of-one employment claims, they have almost
always ultimately concluded that the particular claim before
them was insufficient. See, e.g., Neilson, 409 F.3d at 106;
  1
    Following Justice Breyer’s lead, some courts have limited class-of-one
claims by requiring a showing of malice or animus as an element of the
claim, but other courts have refused to do so. See Jicarilla Apache Nation
v. Rio Arriba County, 440 F.3d 1202, 1209-10 (10th Cir. 2006) (recogniz-
ing split and collecting cases). Neither party in this case has argued that
malice or animus is an element of class-of-one employment claims. We
note, however, that such a requirement would be inconsistent with both
the Court’s opinion in Olech and our holding in Squaw Valley. See Olech,
528 U.S. at 565; Squaw Valley, 375 F.3d at 944.
1514     ENGQUIST v. OREGON DEPARTMENT         OF   AGRICULTURE
Bartell, 263 F.3d at 1149. Because of this understandable hes-
itancy, the Seventh Circuit recently noted that it was “not sur-
prised to have found no ‘class of one’ cases in which a public
employee has prevailed since the extreme case that kicked off
the ‘class of one’ movement more than two decades ago.”
Lauth v. McCollum, 424 F.3d 631, 633-34 (7th Cir. 2005)
(citations omitted) (collecting cases).2 Engquist’s thus-far suc-
cessful claim on this theory thus presents a unique case.

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

   Whether to apply the class-of-one theory to decisions of
public employers presents a significantly different question
than whether to apply it to legislative or regulatory acts of
government. In general, there is a distinction between the
“government acting ‘as a proprietor’ that was managing ‘its
own internal affairs’ rather than as a ‘lawmaker’ that was
attempting ‘to regulate or license.’ ” Singleton v. Cecil, 176
F.3d 419, 425 (8th Cir. 1999) (en banc) (quoting Cafeteria &
Rest. Workers Union, Local 473 v. McElroy, 367 U.S. 886,
896 (1961) (alterations omitted)). The Supreme Court has
always assumed that “the government as employer indeed has
far broader powers than does the government as sovereign.”
Waters v. Churchill, 511 U.S. 661, 671 (1994) (O’Connor, J.,
plurality opinion) (discussing difference in government ability
to restrict speech).

   [4] Because the government as employer has broader pow-
ers than the government as regulator, the scope of judicial
review is correspondingly restricted. Accordingly, the
Supreme Court has warned that “[t]he federal court is not the
appropriate forum in which to review the multitude of person-
  2
   That “extreme case” was “Ciechon v. Chicago, 686 F.2d 511 (7th Cir.
1982), where a paramedic was made a scapegoat for conduct that had
drawn the wrath of the local media, while her identically situated partner
received no disciplinary sanction at all.” Lauth, 424 F.3d at 634.
       ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE   1515
nel decisions that are made daily by public agencies,” and
therefore the Constitution cannot be interpreted to require
judicial review of every such decision. Bishop v. Wood, 426
U.S. 341, 349-50 (1976) (rejecting due process claim where
the plaintiff is fired from public employment for reasons
either false or mistaken).

   In other areas of constitutional law, the Court has limited
the rights of public employees as compared to ordinary citi-
zens. For instance, in the First Amendment context, courts
review restrictions on employees’ speech with greater defer-
ence in order to balance the government employer’s legiti-
mate interests in its mission. See Garcetti v. Ceballos, 126
S. Ct. 1951, 1960 (2006) (holding that “when public employ-
ees make statements pursuant to their official duties, the
employees are not speaking as citizens for First Amendment
purposes, and the Constitution does not insulate their commu-
nications from employer discipline”); City of San Diego v.
Roe, 543 U.S. 77, 80-82 (2004) (per curiam) (applying bal-
ancing test drawn from Pickering v. Bd. of Educ., 391 U.S.
563 (1968)). Similarly, in the Fourth Amendment context, the
government, as employer, need not obtain a warrant to search
an employee’s property because imposing such a requirement
unduly burdens government business and improperly trans-
forms everyday business incidents into constitutional matters.
O’Connor v. Ortega, 480 U.S. 709, 721-22 (1987)
(O’Connor, J., plurality opinion).

   [5] The class-of-one theory of equal protection is another
constitutional area where the rights of public employees
should not be as expansive as the rights of ordinary citizens.
The paradigmatic class-of-one case should be one in which a
public official, for some improper motive, “comes down hard
on a hapless private citizen.” Lauth, 424 F.3d at 633. This was
the type of case decided in Olech and Squaw Valley. In con-
trast, when a public employee is subjected to unequal treat-
ment at work for arbitrary reasons, the need for federal
judicial review under equal protection “is especially thin”
1516     ENGQUIST v. OREGON DEPARTMENT           OF   AGRICULTURE
given the number of other legal protections that public
employees enjoy. See id.

   A judicially-imposed constitutional proscription of arbi-
trary public employer actions would also upset long-standing
personnel practices. Although arbitrary government acts are
unreasonable in the legislative or regulatory context, employ-
ers have traditionally possessed broad discretionary authority
in the employment context. The power of employers to dis-
charge employees for reasons that may appear arbitrary,
unless constrained by contract or statute, is well-established
under the common law of at-will employment. See NLRB v.
J. Weingarten, Inc., 420 U.S. 251, 273-74 (1975) (describing
common law); Andrews v. Louisville & Nashville R.R., 406
U.S. 320, 324 (1972) (same). Applying equal protection to
forbid arbitrary or malicious firings of public employees
would completely invalidate the practice of public at-will
employment. See Singleton, 176 F.3d at 428. We decline to
effect such a significant change in employment law under the
general provisions of the Fourteenth Amendment. See Waters,
511 U.S. at 679 (“[A]n at-will government employee . . . gen-
erally has no claim based on the Constitution at all.”).3

   In addition to significantly altering traditional personnel
practices, applying the class-of-one theory to public employ-
ment would also generate a flood of new cases, requiring the
federal courts to decide whether any public employee was
fired for an arbitrary reason or a rational one. See Jennings,
383 F.3d at 1211. The theory would apply not only to dis-
charges, but also to other employment actions, such as promo-
tions, disciplinary actions, and decisions about pay, benefits
and transfers. Contrary to the Supreme Court’s admonition,
  3
    If an employee is not an at-will employee, then there is already protec-
tion against arbitrary firings, such as in civil service regulations or a CBA,
which lessens the need for constitutional protection. See Lauth, 424 F.3d
at 633. In this case, for whatever reason, there is nothing in the record to
indicate that Engquist challenged her dismissal under the applicable CBA.
         ENGQUIST v. OREGON DEPARTMENT         OF   AGRICULTURE     1517
federal courts would be required to “review the multitude of
personnel decisions that are made daily by public agencies.”
Bishop, 426 U.S. at 349.

   [6] Finally, we believe that Olech is too slender a reed on
which to base such a transformation of public employment
law. “It seems unlikely that the Supreme Court intended such
a dramatic result in its per curiam opinion in Olech.” Campa-
gna v. Mass. Dep’t of Envtl. Prot., 206 F. Supp. 2d 120, 127
(D. Mass. 2002), aff’d, 334 F.3d 150 (1st Cir. 2003). Accord-
ingly, we hold that the class-of-one theory of equal protection
is inapplicable to decisions made by public employers with
regard to their employees. We therefore reverse the judgment
in favor of Engquist on her equal protection claim.4

                  II.   Substantive Due Process

   [7] This case also presents a novel due process issue for
this circuit: what showing is required in a substantive due pro-
cess claim based on the right to pursue a particular profession.
The jury concluded that Defendants were liable on the sub-
stantive due process claim because they “subject[ed] plaintiff
to arbitrary and unreasonable government actions causing
plaintiff to be unable to pursue her profession.” Defendants
contend that, as a matter of law, they cannot be held liable
under substantive due process for violating this right. In the
alternative, they contend that Engquist did not present suffi-
cient evidence to demonstrate that their actions deprived her
of the ability to pursue her profession.5
  4
    Because we conclude that Engquist’s class-of-one claim is invalid, we
need not reach Defendants’ contention that they are entitled to qualified
immunity under Saucier v. Katz, 533 U.S. 194, 201 (2001). See Squaw
Valley, 375 F.3d at 943.
  5
    Engquist contends that Defendants have waived these arguments
because the court accepted their proposed jury instructions for the claim.
In fact, Defendants challenged the legal validity of the claim repeatedly
and proposed jury instructions only in case the court rejected their legal
1518     ENGQUIST v. OREGON DEPARTMENT          OF   AGRICULTURE
   We hold that Engquist has stated a valid claim — a claim
upon which relief can be granted — under substantive due
process by alleging that Defendants’ actions prevented her
from pursuing her profession. We conclude, however, that
Engquist’s claim fails as a matter of law because she did not
present sufficient evidence that Defendants’ actions were
responsible for her inability to pursue her profession.

A.     Nature of the Protected Right

   “The substantive component of the Due Process Clause for-
bids the government from depriving a person of life, liberty,
or property in such a way that . . . interferes with rights
implicit in the concept of ordered liberty.” Squaw Valley, 375
F.3d at 948 (internal quotation marks omitted). “A threshold
requirement to a substantive or procedural due process claim
is the plaintiff’s showing of a liberty or property interest pro-
tected by the Constitution.” Wedges/Ledges of Cal., Inc. v.
City of Phoenix, 24 F.3d 56, 62 (9th Cir. 1994). As discussed
above, most courts have rejected the claim that substantive
due process protects the right to a particular public employ-
ment position, and we have yet to decide the issue. See Nicho-
las v. Pa. State Univ., 227 F.3d 133, 142-43 (3d Cir. 2000);
Dias, 436 F.3d at 1131 n.3. Engquist, however, premised her

arguments. Therefore, Defendants have not waived these arguments. Eng-
quist also argues that some particular arguments were waived because they
were not raised below. Even assuming such waiver, however, we will con-
sider them because these arguments are intertwined with the validity of the
claim. See Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 99 (1991)
(“When an issue or claim is properly before the court, the court is not lim-
ited to the particular legal theories advanced by the parties, but rather
retains the independent power to identify and apply the proper construc-
tion of governing law.”). In addition, where an issue is purely legal, and
the other party would not be prejudiced, we can consider an issue not
raised below. See Kimes v. Stone, 84 F.3d 1121, 1126 (9th Cir. 1996).
Here the issues are purely legal and were fully briefed by Engquist; there-
fore, we exercise our discretion to consider these arguments.
        ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE   1519
claim on interference with her ability to pursue a profession
altogether.

   [8] The Supreme Court has not specified the boundaries of
the right to pursue a profession, but has identified it generally.
See Conn v. Gabbert, 526 U.S. 286, 291-92 (1999) (stating
that there is “some generalized due process right to choose
one’s field of private employment”). The Court has noted,
however, that cases recognizing the right “all deal with a
complete prohibition of the right to engage in a calling, and
not [a] sort of brief interruption.” Id. at 292. We have recog-
nized the liberty interest in pursuing an occupation of one’s
choice. See Dittman v. California, 191 F.3d 1020, 1029-30
(9th Cir. 1999). We have held that a plaintiff can make out a
substantive due process claim if she is unable to pursue an
occupation and this inability is caused by government actions
that were arbitrary and lacking a rational basis. Sagana v.
Tenorio, 384 F.3d 731, 742-43 (9th Cir. 2004), cert. denied,
543 U.S. 1149 (2005); Dittman, 191 F.3d at 1030; Wedges/
Ledges, 24 F.3d at 65. But see Zorzi v. County of Putnam, 30
F.3d 885, 895 (7th Cir. 1994) (holding that this occupational
liberty is protected only by procedural due process rights, and
not substantive due process).

   All of our cases recognizing this substantive due process
right dealt with government legislation or regulation, and not
the acts of a government as an employer, which allegedly pre-
vented the plaintiff from pursuing a specific profession. See
Sagana, 384 F.3d at 733, 743 (challenging commonwealth
law implementing temporary immigrant labor program); Ditt-
man, 191 F.3d at 1029-33 (challenging state law imposing
conditions on acupuncture licenses); Wedges/Ledges, 24 F.3d
at 65-66 (challenging city ordinance that banned new licenses
for particular arcade games); FDIC v. Henderson, 940 F.2d
465, 474 (9th Cir. 1991) (challenging state regulatory refusal
to license a new bank). As discussed above, constitutional
review of government employer decisions is more constrained
than the review of legislative or regulatory ones. See Part I.B,
1520     ENGQUIST v. OREGON DEPARTMENT             OF   AGRICULTURE
supra. Defendants thus argue that there should be no substan-
tive due process review of employment decisions, and there
is some support for that proposition. See Singleton, 176 F.3d
at 428 (holding that in the public employment context, an
employee’s occupational liberty is not protected by substan-
tive due process, but only by procedural due process).6

   [9] We decline to hold that there is no substantive due pro-
cess claim for a public employer’s violations of occupational
liberty. Rather, we limit the claim to extreme cases, such as
a “government blacklist, which when circulated or otherwise
publicized to prospective employers effectively excludes the
blacklisted individual from his occupation, much as if the
government had yanked the license of an individual in an
occupation that requires licensure.” Olivieri v. Rodriguez, 122
F.3d 406, 408 (7th Cir. 1997). Such a governmental act would
threaten the same right as a legislative action that effectively
banned a person from a profession, and thus calls for the same
level of constitutional protection. The concerns about federal
courts reviewing every public employee discharge, see Single-
ton, 176 F.3d at 428-29, are not implicated because such a
claim is colorable only in extreme cases. Nor does such a
standard, unlike the class-of-one theory, affect the vast major-
ity of public employer decisions.

   [10] As we have already recognized that the right to pursue
a chosen profession is protected by substantive due process in
the legislative context, we believe that the right should also be
  6
    In support of her claim, Engquist cites several cases that are unhelpful
because they involve procedural rather than substantive due process. See
DiMartini v. Ferrin, 889 F.2d 922, 927-29 (9th Cir. 1989), as amended by
906 F.2d 465; Brady v. Gebbie, 859 F.2d 1543, 1552-53 (9th Cir. 1988);
Merritt v. Mackey, 827 F.2d 1368, 1372 (9th Cir. 1987). These cases help
establish that the right to pursue a profession is a protected liberty interest,
but are unhelpful with respect to substantive due process protection.
Benigni v. City of Hemet, 879 F.2d 473, 478 (9th Cir. 1988), may have
involved substantive due process, but was based on abusive police con-
duct, and therefore provides little guidance.
         ENGQUIST v. OREGON DEPARTMENT         OF   AGRICULTURE      1521
protected in the public employment context. Therefore, we
hold that there is substantive due process protection against
government employer actions that foreclose access to a partic-
ular profession to the same degree as government regulation.7

B.   Sufficiency of the Evidence

   Having identified the contours of the substantive due pro-
cess right, we next turn to the question of whether Engquist’s
evidence at trial satisfied this standard. Defendants contend
that the evidence was insufficient to show that Engquist was
deprived of her right to pursue a profession. We agree.

   [11] We have not previously articulated how much interfer-
ence with someone’s job prospects constitutes a denial of the
right to pursue a profession. On this question, we find useful
the Seventh Circuit’s standard that in order to bring an occu-
pational liberty claim, a plaintiff must show that the “charac-
ter and circumstances of a public employer’s stigmatizing
conduct or statements are such as to have destroyed an
employee’s freedom to take advantage of other employment
opportunities.” Bordelon v. Chi. Sch. Reform Bd. of Trs., 233
F.3d 524, 531 (7th Cir. 2000). “It is not enough that the
employer’s stigmatizing conduct has some adverse effect on
the employee’s job prospects; instead, the employee must
show that the stigmatizing actions make it virtually impossi-
   7
     Defendants argue that Engquist’s substantive due process claim is pre-
empted by her class-of-one equal protection claim because it more specifi-
cally addresses her theory of liability. See Armendariz v. Penman, 75 F.3d
1311, 1325-26 (9th Cir. 1996) (en banc) (“Substantive due process analy-
sis has no place in contexts already addressed by explicit textual provi-
sions of constitutional protection, regardless of whether the plaintiff’s
potential claims under those amendments have merit.”); Squaw Valley,
375 F.3d at 949-50 (holding that substantive due process claims based on
government interference with property rights are preempted by the Tak-
ings Clause). Because we have held that the class-of-one theory is inappli-
cable in the employment context, see Part I, supra, Engquist’s due process
claim is not preempted.
1522     ENGQUIST v. OREGON DEPARTMENT         OF   AGRICULTURE
ble for the employee to find new employment in his chosen
field.” Id. (internal quotation marks omitted).

   [12] Under this standard, only employer actions that affect
a plaintiff’s occupational prospects to the same degree as gov-
ernment legislation are actionable under a substantive due
process theory. Thus, it comports with our cases in the legisla-
tive context. See Dittman, 191 F.3d at 1029 (holding that a
law that imposes a “ ‘complete prohibition’ on entry into a
profession . . . implicates a person’s liberty interest in pursu-
ing an occupation or profession of her choice”). The standard
also ensures that substantive due process protects the right to
pursue an entire profession, and not the right to pursue a par-
ticular job. Accordingly, we adopt the standard set forth in
Bordelon.

   [13] In this case, Engquist presented evidence that Defen-
dants made defamatory statements to two or three other peo-
ple in the industry. In addition, Engquist presented evidence
that she was having much difficulty finding a job in the same
field in Oregon, and that such difficulty would likely con-
tinue. Engquist, however, did not demonstrate that Defen-
dants’ actions caused her job-search difficulties. There was no
proof that Defendants’ defamatory comments affected oppor-
tunities with those clients, or any other possible employer.
Even under the substantial evidence standard, see Gilbrook,
177 F.3d at 856, there was no evidence that her reputation had
been publicly damaged by Defendants such that they reduced
her employment options. Instead, it appears that Engquist
works in a highly specialized field, and there simply are not
many jobs available in that field in Oregon. Because Defen-
dants did not cause this situation, their specific actions have
not made it “virtually impossible” for Engquist to find new
employment. See Bordelon, 233 F.3d at 531. Therefore, we
conclude that Engquist did not present sufficient evidence to
sustain her substantive due process claim.8 Consequently, we
  8
    Defendants argue that if there is an available substantive due process
claim, pretext is not part of the inquiry. In our substantive due process
         ENGQUIST v. OREGON DEPARTMENT          OF   AGRICULTURE      1523
reverse the judgment in favor of Engquist on her substantive
due process claim.9

       III.   Engquist’s Damages and Attorneys’ Fees

   [14] Because we reverse the judgment in favor of Engquist
on her constitutional claims, the damages award and attor-
neys’ fees award must be vacated. The compensatory dam-
ages may be unaffected because the jury also found in favor
of Engquist on the interference with contract tort claim and
did not allocate its award of compensatory damages to any
particular claim, or between claims. The punitive damages
awarded for the equal protection claim, however, cannot
stand. Additionally, the district court’s award of attorneys’
fees can no longer be based on 42 U.S.C. § 1988. See
Mateyko v. Felix, 924 F.2d 824, 828 (9th Cir. 1990) (holding
that a plaintiff who succeeds on a state claim, but on none of
her constitutional claims, is not a “prevailing party” under
§ 1988).10 Accordingly, we vacate the awards of damages and
attorneys’ fees, and remand to the district court to decide how
to adjust Engquist’s damages and attorneys’ fees awards.

decisions regarding occupational liberty, we did not question whether the
government’s proffered justification was a pretext. See, e.g., Wedges/
Ledges, 24 F.3d at 66 (“[W]e do not require that the government’s action
actually advance its stated purposes, but merely look to see whether the
government could have had a legitimate reason for acting as it did.”).
These cases all involved legislation, however, and an inquiry into pretext
may be appropriate in the employment context. Regardless, we need not
decide the issue as we have held that Engquist has not shown that she was
deprived of her right to occupational liberty. See Dittman, 191 F.3d at
1029-31 (inquiring into the justification for an action only after holding
that the plaintiff was deprived of her liberty interest).
   9
     Because we conclude that Engquist’s due process claim is invalid, we
need not reach Defendants’ contention that they are entitled to qualified
immunity. See footnote 4, supra.
   10
      We express no opinion as to whether Engquist is entitled to attorneys’
fees under Oregon law.
1524       ENGQUIST v. OREGON DEPARTMENT         OF   AGRICULTURE
     IV.    Oregon’s Punitive Damages Allocation Statute

   Pursuant to Or. Rev. Stat. § 31.735, the district court
entered judgment in favor of the State Account in an amount
equal to 60 percent of the punitive damages award. The puni-
tive damages award for the federal, i.e., equal protection
claim, was not subject to the § 31.735 allocation, but only the
punitive damages award for the state law tort claim of con-
tract interference. Engquist’s primary contention on cross-
appeal is that § 31.735 violates the Fifth Amendment’s Tak-
ings Clause and the Excessive Fines Clause of the Eighth
Amendment.11

A.     Judicial Estoppel

   Engquist’s first argument is that the doctrine of judicial
estoppel prevents the Oregon Justice Department from col-
lecting funds for the State Account because the Department,
as Defendants’ counsel, previously denied liability for puni-
tive damages. We review the district court’s decision not to
invoke judicial estoppel for an abuse of discretion. Hamilton
v. State Farm Fire & Cas. Co., 270 F.3d 778, 782 (9th Cir.
2001).

  Judicial estoppel prevents a party from taking inconsistent
positions when those inconsistencies have an adverse effect
on the judicial process. United States v. Miguel, 338 F.3d 995,
  11
     As an initial matter, Defendants contend that Engquist’s challenges
are unripe. We can readily dispense with this argument. “Ripeness analy-
sis has two prongs: the fitness of the issue for judicial review and the hard-
ship to the parties if review is withheld.” Gemtel Corp. v. Cmty. Redev.
Agency, 23 F.3d 1542, 1545 (9th Cir. 1994). A claim is fit for decision if
the issues are primarily legal, do not require further factual development,
and challenge a final action. Verizon Cal. Inc. v. Peevey, 413 F.3d 1069,
1075 (9th Cir. 2005) (Bea, J., concurring). Engquist’s challenges to the
constitutionality of § 31.735 easily satisfy both prongs of the ripeness test,
as the issues presented are purely legal and delay will cause unnecessary
hardship. We thus reject Defendants’ contention that the claims are unripe.
         ENGQUIST v. OREGON DEPARTMENT          OF   AGRICULTURE      1525
1002 n.20 (9th Cir. 2003) (“Judicial estoppel prevents a party
from taking a contrary position ‘where a party assumes a cer-
tain position in a legal proceeding, and succeeds in maintain-
ing that position.’ ” (quoting New Hampshire v. Maine, 532
U.S. 742, 749 (2001))). We reject Engquist’s contention that
the Department took inconsistent positions. By virtue of its
decision to represent Defendants, the Department necessarily
held the view that Defendants had not committed “malfea-
sance in office or willful or wanton neglect of duty.” See Or.
Rev. Stat. § 30.285 (requiring the Department to defend and
indemnify state employees, unless it deems that the employ-
ees committed “malfeasance in office”). The Department’s
views did not change during the proceedings below; rather, it
was the jury that concluded that Defendants acted with “mal-
ice” or “reckless and outrageous indifference,” such that it
found punitive damages were appropriate. See Or. Rev. Stat.
§ 31.730.

   Nor did the Department take an inconsistent position when
it sought judgment creditor status under § 31.735. The
Department did not change its position to one of agreement
with the jury determination of willfulness or malice but,
because the jury awarded punitive damages, the State
Account was automatically entitled to its statutory portion and
the Department was separately obligated under § 31.735 to
obtain judgment creditor status in order to obtain this statu-
tory portion. Accordingly, we conclude that the district court
did not abuse its discretion in rejecting Engquist’s judicial
estoppel argument.12
  12
     Engquist’s argument that the Department suffered from a conflict of
interest is equally without merit. The Department does not have a “propri-
etary interest” in the State Account because it is not allowed to retain any
of the funds for its own benefit or even charge fees to those who apply for
funds under the program. See Or. Rev. Stat. § 147.315. Nor does the statu-
tory apportionment of a portion of the punitive damages award to the State
Account increase the total amount of Defendants’ liability; rather, it
merely reduces the total amount of Engquist’s recovery. Therefore, there
1526     ENGQUIST v. OREGON DEPARTMENT          OF   AGRICULTURE
B.     Judgment in Favor of a Non-Party

   [15] Engquist next asserts that the district court erred in
entering judgment in favor of an entity that was not a party
to the proceeding. The Oregon Supreme Court and the district
court for the District of Oregon have both held that the State
of Oregon can assert its “substantive right as a judgment cred-
itor” pursuant to § 31.735.13 See DeMendoza v. Huffman, 51
P.3d 1232, 1235-36 (Or. 2002); In re Stein, 236 B.R. 34, 37
(Bankr. D. Or. 1999). Neither opinion indicates that the State
must obtain party status prior to its assertion of this right. The
statute’s express language, which invites the State to act only
“[u]pon the entry of a verdict including an award of punitive
damages,” belies any inference that the State is required to
become a party. Or. Rev. Stat. § 31.735. Additionally, Federal
Rule of Civil Procedure 69(a) “permits judgment creditors to
use any execution method consistent with the practice and
procedure of the state in which the district court sits.” Cigna
Prop. & Cas. Ins. Co. v. Polaris Pictures Corp., 159 F.3d
412, 421 (9th Cir. 1998) (internal quotation marks omitted).
Under Oregon state procedure, the State can merely be identi-
fied as a judgment creditor in the judgment and need not
intervene as a party. See DeMendoza, 51 P.3d at 1235-36; Or.
Rev. Stat. § 31.735(2). Therefore, we conclude that Oregon is
entitled to assert this substantive right without becoming a
party.

was no conflict between the Department’s representation of Defendants
and its subsequent act of seeking an award under § 31.735. See Kasza v.
Browner, 133 F.3d 1159, 1171 (9th Cir. 1998) (rejecting a plaintiff’s “con-
clusory charge of institutional ‘conflict of interest’ ” against the Depart-
ment of Justice’s representation of the defendants, and also questioning
whether a plaintiff even has standing to complain about a conflict of inter-
est on the part of the defendants’ counsel).
   13
      Section 31.735 was formerly known as § 18.540, and was discussed
as § 18.540 in the DeMendoza opinion, but the substance of the two stat-
utes is the same.
          ENGQUIST v. OREGON DEPARTMENT          OF   AGRICULTURE       1527
C.     Takings Clause Challenge14

  Section 31.735, which is called a “split-recovery” provision15
because it apportions the punitive award between the plaintiff
and the State, provides in part:

          Upon the entry of a verdict including an award of
       punitive damages, the Department of Justice shall
       become a judgment creditor as to the punitive dam-
       ages portion of the award to which the Criminal
       Injuries Compensation Account is entitled pursuant
       to paragraph (b) of this subsection, and the punitive
       damage portion of an award shall be allocated as fol-
       lows: [forty percent of the punitive damages award
       to the prevailing party and sixty percent to the com-
       pensation account].

Or. Rev. Stat. § 31.735(1).

   [16] Engquist argues that § 31.735 violates the Takings
Clause of the Fifth Amendment, which forbids the taking of
“private property . . . for public use, without just compensa-
tion.” U.S. CONST. AMEND. V.16 We use a two-step analysis to
  14
      While Engquist objected to the “form of judgment” in the district
court, it is unclear whether she specifically raised any constitutional objec-
tions to § 31.735. The district court never specifically ruled on the consti-
tutionality of the statute. Although the State could have argued that
Engquist waived the constitutional issues by not raising them below, it did
not. Its failure to raise the waiver argument in its brief to this court means
that we can reach the merits of the issue. See United States v. Doe, 53 F.3d
1081, 1082-83 (9th Cir. 1995) (holding that the government had waived
its waiver argument by failing to assert it and instead addressing the merits
of the defendant’s claim).
   15
      See, e.g., Michael J. Klaben, Note, Split-Recovery Statutes: The Inter-
play of the Takings and Excessive Fines Clauses, 80 Cornell L. Rev. 104
(1994); Scott Dodson, Note, Assessing the Practicality and Constitutional-
ity of Alaska’s Split Recovery Punitive Damages Statute, 49 Duke L.J.
1335 (2000).
   16
      The Takings Clause applies against the states through the Fourteenth
Amendment. Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S.
155, 160 (1980).
1528     ENGQUIST v. OREGON DEPARTMENT           OF   AGRICULTURE
determine whether a “taking” has occurred: first, we deter-
mine whether the subject matter is “property” within the
meaning of the Fifth Amendment and, second, we establish
whether there has been a taking of that property, for which
compensation is due.17 Konizeski v. Livermore Labs (In re
Consol. U.S. Atmospheric Testing Litig.), 820 F.2d 982, 988
(9th Cir. 1987). The dispute in this case focuses on the first
step, i.e., whether a punitive damages award constitutes prop-
erty under the Takings Clause.18

  [17] The question of whether punitive damages awards
qualify as property for purposes of the Takings Clause is a
question of first impression in the federal courts.19 Two types
of Takings Clause cases guide our analysis: cases examining
whether principal owners have a property right in interest that
accrues on funds held by the government, and cases examin-
ing whether a plaintiff has a property interest in a cause of
  17
      While there is no formulaic test for the first step, there are multiple
approaches to the second step of the analysis. One approach, usually
applied to regulatory takings, is the “ad hoc” test enunciated in Penn Cen-
tral Transp. Co. v. City of New York, 438 U.S. 104 (1978). As we are
focusing on the first step of the takings analysis, we do not engage in anal-
ysis of the Penn Central factors, even though these factors are discussed
by Engquist and several state supreme court decisions. See, e.g., Kirk v.
Denver Publ’g Co., 818 P.2d 262, 268 (Colo. 1991); see also Penn Cen-
tral, 438 U.S. at 124 (examining the economic impact of the regulation on
the claimant, the “extent to which the regulation has interfered with dis-
tinct investment-backed expectations,” and the character of the govern-
mental action).
   18
      If the punitive damages award does constitute property, it is a “taking”
to confiscate 60 percent of it, such that the second prong almost certainly
would be satisfied. See Brown v. Legal Found. of Wash., 538 U.S. 216,
235 (2003) (“Because interest earned in IOLTA accounts is the private
property of the owner of the principal, the transfer of the interest to the
Foundation here seems more akin to the occupation of a small amount of
rooftop space in Loretto . . . which was a physical taking subject to per
se rules.” (internal quotation marks and internal citations omitted) (empha-
sis added)).
   19
      Several state supreme courts, however, have decided this issue. See
Part IV.C.1, infra.
        ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE   1529
action. Both of these two species of Takings Clause cases
indicate that the relevant inquiry is the certainty of one’s
expectation in the property interest at issue. They compel us
to conclude that Engquist’s interest in her punitive damages
award is not a property right cognizable under the Takings
Clause, because punitive damages awards are necessarily con-
tingent and discretionary. Our conclusion is bolstered by our
consideration of the deterrence and punishment justifications
for punitive awards, discussed below, and is in concert with
the majority of state supreme courts who have decided the
question.

  1.   Takings Clause Cases

   Our analysis begins with the Supreme Court cases holding
that interest constitutes property for purposes of the Takings
Clause. Webb’s, 449 U.S. 155, involved a state statute that
confiscated for the state the interest accrued on interpleader
funds. In concluding that the interest was property under the
Takings Clause, the Webb’s Court emphasized that the credi-
tors at issue had “more than a unilateral expectation” in the
interest, and cited the “usual and general rule . . . that any
interest on an interpleaded and deposited fund follows the
principal.” Id. at 161-62. The Court emphasized that “earn-
ings of a fund are incidents of ownership of the fund itself and
are property just as the fund itself is property.” Id. at 164.
Similarly, in Phillips v. Washington Legal Foundation, 524
U.S. 156 (1998), the Court concluded that the interest gained
from the “Interest on Lawyers’ Trust Account” program
involved property for Takings Clause purposes. The Court’s
reasoning hinged on the “fundamental maxim of property law
that the owner of a property interest may dispose of all or part
of that interest as he sees fit.” Id. at 167.

   [18] While the interest cases do not articulate a general rule
for what is cognizable as property under the Takings Clause,
the Court’s reasoning focused on the certainty of the
principal-holder’s expectation of receiving interest. Eng-
1530    ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE
quist’s expectation that she will receive a punitive damages
award or the amount of any such award is far less certain than
the expectation of interest on principal. Simply put, punitive
damages do not follow compensatory damages, as interest fol-
lows principal. The interest in Webb’s qualified as property
because of the certainty of the creditor’s expectations that it
would receive interest, pursuant to the general maxim that
“interest follows principal.” See Webb’s, 449 U.S. at 162. In
contrast, punitive damages are “never awarded as of right, no
matter how egregious the defendant’s conduct,” in contrast to
compensatory damages, which “are mandatory; once liability
is found, the jury is required to award compensatory damages
in an amount appropriate to compensate the plaintiff for his
loss.” Smith v. Wade, 461 U.S. 30, 52 (1983). Because of the
inherently uncertain nature of punitive damages, which are a
“discretionary moral judgment” by the jury, Larez v. City of
Los Angeles, 946 F.2d 630, 648 (9th Cir. 1991) (internal quo-
tation marks omitted), a plaintiff’s interest in receipt of any
certain amount of punitive damages is too speculative to con-
stitute property under the Takings Clause.

   Another category of Takings Clause cases, which examines
whether statutory changes to causes of actions can be consid-
ered takings, similarly focuses on the certainty of expectations
of the person claiming a property interest. We have held that
“[t]here is no question that claims for compensation are prop-
erty interests that cannot be taken for public use without com-
pensation.” Causey v. Pan Am. World Airways, Inc. (In re
Aircrash In Bali, Indo. on Apr. 22, 1974), 684 F.2d 1301,
1312 (9th Cir. 1982). In that case, however, we did not dis-
cuss punitive damages. Atmospheric Testing Litigation, 820
F.2d 982, involved a Takings Clause challenge to a statute
providing that actions against the United States be the exclu-
sive remedy for tort claims against contractors for Hiroshima-
related radiation injuries. We relied on the Fifth Circuit’s
holding that “ ‘a plaintiff has no vested right in any tort claim
for damages under state law.’ ” Id. at 988 (quoting Ducharme
v. Merrill-Nat’l Labs., 574 F.2d 1307, 1309 (5th Cir. 1978)
        ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE   1531
(per curiam)). We further emphasized that the claims asserted
by the plaintiffs were “contingent by their nature” and “arise
in a field in which the law remains to be developed.” Id. at
989 (also importing the language of Penn Central’s “ad hoc”
test in noting that tort claims lack “investment-backed expec-
tations”). Because the tort claims were “contingent by their
nature,” we concluded that the statute’s requirement that
claims against the federal government be the exclusive rem-
edy did not constitute a taking. Id.; see also Duke Power Co.
v. Carolina Envtl. Study Group, Inc., 438 U.S. 59, 88 n.32
(1978) (rejecting a constitutional challenge to a statutory limi-
tation on liability for nuclear accidents, and stating the
“clearly established” principle that “[a] person has no prop-
erty, no vested interest, in any rule of the common law” and
that the “Constitution does not forbid . . . the abolition of old
[rights] recognized by the common law, to attain a permissi-
ble legislative object”).

   [19] The analysis in Atmospheric Testing Litigation, like
the Supreme Court’s interest cases, focused on the certainty
of the plaintiff’s expectation that she would receive the prop-
erty. In contrast to the principal-interest cases, the tort plain-
tiffs in Atmospheric Testing Litigation had a necessarily
“contingent” interest in their tort claims, such that the substi-
tution of a different type of remedy did not amount to an
unconstitutional taking. As described above, a plaintiff’s
interest in punitive damages is even more contingent and
uncertain than her interest in a tort cause of action, because
punitive damages are awarded only if the jury both finds that
the defendant’s behavior was malicious or reckless and
decides to invoke its discretionary moral judgment against the
defendant’s conduct. See Larez, 946 F.2d at 648 (“the purely
discretionary nature of punitive damages required not only a
finding that the conduct met the recklessness threshold” but
also that the conduct merited punitive damages in addition to
the compensatory award, which is a “discretionary moral
judgment” (internal quotation marks omitted)); see also
Honeywell v. Sterling Furniture Co., 797 P.2d 1019, 1021
1532   ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE
(Or. 1990) (“ ‘The finder of fact must determine what puni-
tive damages, if any, to award based on the proper premise of
deterring future similar misconduct by the defendant or oth-
ers.’ ” (emphasis added) (quoting State ex rel. Young v.
Crookham, 618 P.2d 1268, 1274 (Or. 1980))). We therefore
conclude that a plaintiff’s interest in a prospective punitive
damages award does not qualify as “property” under the Tak-
ings Clause.

  2.   Policy of Punitive Damages Awards

   [20] Our conclusion that a plaintiff’s interest in receipt of
a certain amount of punitive damages is not “property” under
the Takings Clause is further supported by consideration of
the purposes of punitive damages awards. Punitive damages
may be imposed to serve two policy interests: “punishing
unlawful conduct and deterring its repetition.” BMW of N.
Am., Inc. v. Gore, 517 U.S. 559, 568 (1996). A punitive dam-
ages award does not serve any compensatory goals. In the
words of the Iowa Supreme Court, “a plaintiff is a fortuitous
beneficiary of a punitive damage award simply because there
is no one else to receive it.” Shepherd Components, Inc. v.
Brice Petrides-Donohue & Assocs., 473 N.W.2d 612, 619
(Iowa 1991). As a “fortuitous beneficiary,” a tort claimant
does not possess an interest cognizable as a property right
under the Takings Clause. The Supreme Court has also
emphasized that “[i]n our federal system, States necessarily
have considerable flexibility in determining the level of puni-
tive damages that they will allow in different classes of cases
and in any particular case.” Gore, 517 U.S. at 568. Given the
broad discretion granted to the States in fashioning their puni-
tive damages schemes, we uphold the constitutionality of the
Oregon statute against Engquist’s Takings Clause challenge.

  3.   State Supreme Court Decisions

   Several state supreme courts have ruled upon the constitu-
tionality of “split-recovery” statutes, with six states (Alaska,
         ENGQUIST v. OREGON DEPARTMENT          OF   AGRICULTURE      1533
Iowa, Indiana, Georgia, Missouri, and Florida) upholding the
statutes against federal Takings Clause challenges and two
states (Utah and Colorado) holding the statutes unconstitu-
tional. See Dodson, supra, note 16, 49 Duke L.J. at 1365 n.5
(summarizing state court decisions). The state supreme courts
concluded that a plaintiff has no vested right in punitive dam-
ages, either (1) because the damages are discretionary and
non-compensatory, or (2) because the statutes operate to limit
the awards before the time of judgment, that is, before the
time when a plaintiff’s interest vests. See, e.g., Cheatham v.
Pohle, 789 N.E.2d 467, 474-75 (Ind. 2003); Evans v. State, 56
P.3d 1046, 1058 (Alaska 2002); Mack Trucks, Inc. v. Conkle,
436 S.E.2d 635, 639 (Ga. 1993); Gordon v. State, 608 So. 2d
800, 801-02 (Fla. 1992) (per curiam); Shepherd Components,
473 N.W.2d at 619; but see Smith v. Price Dev. Co., 125 P.3d
945 (Utah 2005); Kirk v. Denter Publ’g Co., 818 P.2d 262
(Colo. 1991).20 Our holding that punitive damages are not
cognizable as property under the Taking Clause is therefore
in accord with the conclusions reached by a majority of state
supreme courts who have considered the issue.

D.     Excessive Fines Clause Challenge

  [21] Engquist also contends that § 31.735 violates the
Excessive Fines Clause of the Eighth Amendment. That
amendment instructs: “Excessive bail shall not be required,
  20
     The Oregon Supreme Court likewise upheld the constitutionality of its
split-remedy statute, but decided the question only under the state consti-
tution. See DeMendoza, 51 P.3d at 1245-52. It concluded that a plaintiff
does not have a vested prejudgment interest in a punitive damages award,
but rather has at most an expectation of such an award. Id. at 1245. The
two state supreme court cases that concluded that the split-recovery
schemes violated the Takings Clause involved a different formulation of
the statute. In Smith and Kirk, the split recovery statutes at issue granted
the state an interest in the money proceeds from the judgment creditor of
the punitive award, rather than an interest in the judgment itself from the
judgment debtor.
1534     ENGQUIST v. OREGON DEPARTMENT         OF   AGRICULTURE
nor excessive fines imposed, nor cruel and unusual punish-
ments inflicted.” U.S. CONST. AMEND. VIII.21

   The Supreme Court has expressly held that punitive dam-
ages awarded to plaintiffs in civil suits do not implicate the
Excessive Fines Clause. Browning-Ferris, 492 U.S. at 263-64.
The language of its holding, however, left open a constitu-
tional challenge to a punitive award when the award serves to
benefit the State: “[w]hatever the outer confines of the
Clause’s reach may be, we now decide only that it does not
constrain an award of money damages in a civil suit when the
government neither has prosecuted the action nor has any
right to receive a share of the damages awarded.” Id. (empha-
sis added). Because the State here does receive a share of the
damages awarded,22 we must address the question left open by
the Supreme Court.

   Engquist’s contention raises a question of first impression
in the courts of appeals.23 Excessive fines challenges involve
  21
      The Supreme Court has never expressly held that the Excessive Fines
Clause applies to the States. See Browning-Ferris Indus. of Vt., Inc. v.
Kelco Disposal, Inc., 492 U.S. 257, 284 (1989) (O’Connor, J., dissenting
in part and concurring in part) (noting that the other two clauses of the
Eighth Amendment have been applied to the states and “see[ing] no rea-
son to distinguish one Clause of the Eighth Amendment from another for
purposes of incorporation,” she “would hold that the Excessive Fines
Clause also applies to the States”). Without deciding the issue, for pur-
poses of our analysis of Engquist’s contention, we assume that the Exces-
sive Fines Clause does apply to the States.
   22
      Insofar as the Department of Justice is the judgment creditor, the
“State” receives a share of the damages awarded, even though the ultimate
beneficiaries are victims of crime and there is no actual benefit to the
Department.
   23
      Two district court cases have addressed Excessive Fines challenges to
split-recovery statutes, but the analysis of neither court provides much
guidance. In Burke v. Deere & Co., 780 F. Supp. 1225, 1242 (S.D. Iowa
1991), rev’d on other grounds, 6 F.3d 497 (8th Cir. 1993), the court
focused on the fact that Iowa’s split-remedy statute gave funds not to the
state, but to a “civil reparations trust fund to be administered by the
         ENGQUIST v. OREGON DEPARTMENT           OF   AGRICULTURE      1535
a two-step inquiry: (1) whether the Excessive Fines Clause
applies, and (2) if so, whether the fine is “excessive.” United
States v. Bajakajian, 524 U.S. 321, 334 (1998) (“Because the
forfeiture of respondent’s currency constitutes punishment
and is thus a ‘fine’ within the meaning of the Excessive Fines
Clause, we now turn to the question whether it is ‘exces-
sive.’ ”).

   We reject Engquist’s Excessive Fines Clause challenge
because the Clause applies only to government acts that are
intended to punish, and the split-remedy scheme is not
intended to punish Engquist. The Bajakajian Court stated that
“at the time the Constitution was adopted, the word ‘fine’ was
understood to mean a payment to a sovereign as punishment
for some offense.” Id. at 327-28 (internal quotation marks
omitted). “The Excessive Fines Clause thus limits the govern-
ment’s power to extract payments, whether in cash or in kind,
as punishment for some offense.” Id. at 328 (internal quota-
tion marks omitted). Bajakajian ultimately concluded that the
statutory provision at issue in that case — which required cer-
tain felons to forfeit their currency at sentencing — did impli-
cate the Excessive Fines Clause because it was intended to
punish. Id. at 328.

courts.” The court decided, based on this observation alone, that the Iowa
statute “does not provide the State of Iowa with any interest in the punitive
damage award” and therefore that no “excessive fine” had been levied. Id.
The district court in McBride v. Gen. Motors Corp., 737 F. Supp. 1563,
1578 (M.D. Ga. 1990) seized upon the Court’s language in Browning-
Ferris in holding that Georgia’s split-remedy statute had “the constitu-
tional infirmity as set forth in Browning-Ferris Industries, because the
State of Georgia would have a right to receive a share of the damages
awarded and the excessive fines clause of both the state and federal consti-
tutions would be implicated.” The McBride court, however, misread
Browning-Ferris in identifying this per se “constitutional infirmity”
because the Court had merely left open the question of whether the Exces-
sive Fines Clause would apply when the government receives a share of
the award. See Browning-Ferris, 492 U.S. at 263-64.
1536     ENGQUIST v. OREGON DEPARTMENT           OF   AGRICULTURE
   [22] Because the Excessive Fines Clause applies only to
government action that constitutes “punishment for some
offense,” id., Engquist, as the plaintiff in the underlying
action, cannot succeed on her claim.24 In a somewhat analo-
gous case, the Court of Federal Claims rejected an Excessive
Fines Clause challenge brought by taxpayers who objected to
a retroactive tax on their Roth IRA. Kitt v. United States, 47
Fed. Cl. 821, 827 (Fed. Cl. 2000), aff’d, 277 F.3d 1330 (Fed.
Cir. 2002). The court decided that because the imposition of
the tax is “unrelated to the taxpayer’s culpability” and unre-
lated to the commission of any “underlying offense,” the
imposition of the tax is not “punishment” for purposes of the
Excessive Fines Clause. Id. This reasoning applies equally to
the operation of Oregon’s split-recovery statute on Engquist’s
award. No “punishment” of Engquist is involved because
operation of the statute is unrelated to Engquist’s culpability.
Accordingly, we reject Engquist’s Excessive Fines Clause
argument and affirm the judgment apportioned to the State
Account.

                    V.    The Corristan Verdict

A.     Preclusive Effect

   Engquist next contends that the district court erred in ruling
that the jury’s finding in Corristan’s state court case does not
have a preclusive effect in Engquist’s case. The district court
rejected the preclusion argument, stating that “the jurors could
find against Ms. Corristan and not necessarily — the defen-
dant with respect to your client. So I am going to deny the
motion on that ground.” We review de novo the district
   24
      Nor does it appear that a defendant could succeed on such a claim.
Because the statute does not increase a given defendant’s total liability for
punitive damages, but merely re-allocates a portion of the award that
would otherwise go to the plaintiff, a defendant is not “injured” by the
statute, and therefore, in all likelihood, would lack standing to bring a
challenge. See Smelt v. County of Orange, 447 F.3d 673, 682 (9th Cir.
2006) (summarizing standing requirements of injury, causation, and
redressibility).
       ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE   1537
court’s determination whether a prior decision has preclusive
effect. Jacobs v. CBS Broad. Inc., 291 F.3d 1173, 1176 (9th
Cir. 2002).

   The “full faith and credit” statute compels federal courts to
give collateral estoppel and res judicata effects to the judg-
ments of state courts. Se. Res. Recovery Facility Auth. v. Mon-
tenay Int’l Corp., 973 F.2d 711, 712 (9th Cir. 1992); 28
U.S.C. § 1738. Because federal courts must give the same full
faith and credit to a state court judgment as state courts would
give the judgment, the question of issue preclusion is exam-
ined under Oregon law. See id. at 712-13; see also Dias v.
Elique, 436 F.3d 1125, 1128 (9th Cir. 2006) (stating that the
relevant test in federal court is whether the state court deci-
sion “meets the state’s own criteria necessary to require a
court of that state to give preclusive effect” to the decision)
(internal quotation marks omitted).

    Under Oregon law, the previous litigation of an issue will
preclude re-litigation of the same issue if five elements are
met: 1) the issue in the two proceedings is identical; (2) the
issue was actually litigated and was essential to a final deci-
sion on the merits in the prior proceeding; (3) the party sought
to be precluded has had a full and fair opportunity to be heard
on that issue; (4) the party sought to be precluded was a party
or was in privity with a party to the prior proceeding; and (5)
the prior proceeding was the type of proceeding to which the
state court will give preclusive effect. Nelson v. Emerald Peo-
ple’s Util. Dist., 862 P.2d 1293, 1296-97 (Or. 1993). Addi-
tionally, when confronted with an assertion of non-mutual
issue preclusion, the court should “scrutinize with care any
situation where collateral estoppel is asserted by a [non-
party], to make certain no unfairness will result to the prior
litigant if the estoppel is applied.” State Farm Fire & Cas. Co.
v. Century Home Components, Inc., 550 P.2d 1185, 1188 (Or.
1976) (internal quotation marks omitted). The party asserting
estoppel has the burden of proving the elements giving rise to
it. Id.
1538    ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE
   Here, Engquist, who was not a party to the case brought by
Corristan in state court, contends that the state court judgment
and verdict from that case should “collaterally estop Mr.
Hyatt from denying liability to Ms. Engquist for discrimina-
tion based upon race and sex because the factual and legal
issues litigated in Corristan were identical to those in this
case.” Engquist’s argument fails because the issue of discrim-
ination litigated in the Corristan suit is not identical to the
issue of discrimination in Engquist’s suit.

   [23] No Oregon cases have addressed issue preclusion in
the discrimination context. Oregon courts have, however,
articulated a strict standard for the “identity of issues”
requirement and require that “the precise question was raised
and determined in the former suit.” See State v. Hunt, 985
P.2d 832, 834 (Or. Ct. App. 1999) (internal quotation marks
omitted).

   Additionally, the Eighth Circuit rejected an argument
nearly identical to Engquist’s. See Anderson v. Genuine Parts
Co., 128 F.3d 1267, 1272-73 (8th Cir. 1997). The defendant
in Anderson had demoted its two oldest salespersons, and
each of the demoted employees brought suit against the com-
pany. Id. at 1269-70. In the first suit, the jury found the defen-
dant liable for age discrimination. Id. at 1270. In a second
suit, Anderson argued that the first verdict should have pre-
clusive effect on the issue of age discrimination. Id. at 1273.
The court rejected that contention, because Anderson did not
satisfy the “identity of issues” requirement: “the jury’s finding
of age discrimination in [the first plaintiff’s] demotion would
not necessarily eliminate any nondiscriminatory reasons [the
defendant] could assert or the jury could find relating to the
separate decision to demote Anderson.” Id. The court recog-
nized the “numerous similarities” between the two cases, and
even acknowledged “the distinct possibility that [the defen-
         ENGQUIST v. OREGON DEPARTMENT           OF   AGRICULTURE       1539
dant] demoted both men for the same reason,” but found the
application of issue preclusion would be inappropriate. Id.25

   [24] We agree with the reasoning in Anderson and reject
Engquist’s issue preclusion argument because Engquist failed
to satisfy the “identity of issues” requirement.26

B.     Exclusion of the Verdict from Evidence

   The district court granted Defendants’ motion in limine to
exclude the Corristan verdict from evidence and exclude from
testimony any mention of the result in Corristan. Defendants’
motion in limine contended that the evidence from the Corri-
stan trial and verdict were “irrelevant to the instant case and
admission of this evidence would unfairly prejudice Defen-
dants and confuse the jury.” The district court did not articu-
late its reason for excluding the evidence, but merely stated
in an oral ruling that, “[w]ith respect to . . . the Corristan trial
and verdict, I’m going to grant the motion [in limine], and
that will be excluded. Now, if your reasons for referring to it
in trial are, for example, for impeachment, for prior inconsis-
tent statements, then we use the term such as ‘other proceed-
ings’ or ‘another,’ something of that nature, so as to sanitize
the reference to it.”
  25
      The Anderson court also distinguished the case before it from Mere-
dith v. Beech Aircraft Corp., 18 F.3d 890 (10th Cir. 1994), a case relied
on by Engquist. In Meredith, the court applied a jury finding from case
one — a finding that the employer had a discriminatory motive in promot-
ing a male employee — to case two, which was brought by a second
female employee. The issue was identical in the second case because it
involved the employer’s motive for promoting the male employee, an
issue which remained constant in both cases brought by the female
employees. See Anderson, 128 F.3d at 1273 (distinguishing Meredith).
   26
      In addition to the reasons articulated in the text, above, there is now
another reason why issue preclusion does not apply here. The Corristan
verdict rests in part on that jury’s finding that Corristan’s equal protection
and due process rights were violated, rights which we have concluded do
not apply in the public employment context, or which the evidence in this
case does not support were violated.
1540     ENGQUIST v. OREGON DEPARTMENT          OF   AGRICULTURE
   We review the district court’s evidentiary rulings for an
abuse of discretion. Tritchler v. County of Lake, 358 F.3d
1150, 1155 (9th Cir. 2004). When the district court fails to
make an explicit finding of Rule 403 balancing on the record,
however, we review the evidentiary determination de novo.27
United States v. Boulware, 384 F.3d 794, 808 n.5 (9th Cir.
2004), cert. denied, 126 S. Ct. 337 (2005). In order to estab-
lish reversible error, Engquist is additionally required to
establish that the error was prejudicial. Tritchler, 358 F.3d at
1155. We find prejudice only if the lower court’s error more
probably than not tainted the verdict. Mahone v. Lehman, 347
F.3d 1170, 1172 (9th Cir. 2003).

   It is unclear from the record whether the district court’s
decision to exclude the evidence was based on Federal Rules
of Evidence 401/40228 or Rule 403.29 Arguments under both
rules were raised by Defendants in support of their in limine
motion.

   [25] A state court judgment is relevant evidence and there-
fore admissible in a later federal suit so long as the judgment
has some tendency to prove a fact in issue. See Boulware, 384
F.3d at 805. The verdict in favor of Corristan explicitly found
  27
      But see McEuin v. Crown Equip. Corp., 328 F.3d 1028, 1034 (9th Cir.
2003) (reviewing the district court’s decision to exclude evidence for
abuse of discretion, rather than de novo, even though there was no explicit
reference to Rule 403, because “it seems likely that the court was con-
cerned about the prejudicial effect” of the evidence).
   28
      “ ‘Relevant evidence’ means evidence having any tendency to make
the existence of any fact that is of consequence to the determination of the
action more probable or less probable than it would be without the evi-
dence.” Fed. R. Evid. 401. “All relevant evidence is admissible. . . .” Fed.
R. Evid. 402.
   29
      “Although relevant, evidence may be excluded if its probative value
is substantially outweighed by the danger of unfair prejudice, confusion of
the issues, or misleading the jury, or by considerations of undue delay,
waste of time, or needless presentation of cumulative evidence.” Fed. R.
Evid. 403.
        ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE   1541
that Defendants “discharge[d] or discriminate[d] against [Cor-
ristan] because of her gender or ethnicity.” While the jury ver-
dict is not direct evidence of discriminatory behavior toward
Engquist, it is relevant evidence in that it has some tendency
to make the fact of discriminatory behavior by the same
Defendants more probable than without the evidence. See
Fed. R. Evid. 401 (defining relevance); see also Boulware,
384 F.3d at 805. Accordingly, the decision to exclude evi-
dence is not supported by Rule 402.

   The district court more likely relied on Rule 403 in decid-
ing to exclude the evidence. Defendants had argued that evi-
dence of the verdict would unfairly prejudice Defendants and
confuse the jury. Specifically, Defendants contended that a
jury would “likely misconstrue that evidence as proof of dis-
crimination by defendant” or “mistakenly conclude that [the
Engquist jury] should reach the same result.” In the district
court’s oral decision to exclude the evidence, the court said
the Corristan evidence could be used for impeachment pur-
poses, but the parties must use the term “ ‘other proceedings’
or ‘another,’ something of that nature, so as to sanitize the ref-
erence to it.” The court’s use of the term “sanitize” indicates
that its decision was motivated by concerns about undue or
unfair prejudice.

   Commentators agree that most courts forbid the mention of
verdicts or damage amounts obtained in former or related
cases. See 75A AM. JUR. 2d Trial § 628; D.C. Barrett, Propri-
ety and prejudicial effect of reference by counsel in civil case
to result of former trial of same case, or amount of verdict
therein, 15 A.L.R. 3d 1101 (summarizing cases). Moreover,
in a case similar to the one at bench, the Third Circuit “disap-
prove[d]” of the introduction of a prior verdict against the
same defendant, because “[a] jury is likely to give a prior ver-
dict against the same defendant more weight than it warrants.”
Coleman Motor Co. v. Chrysler Corp., 525 F.2d 1338, 1351
(3d Cir. 1975). The court specifically noted that “admission
1542    ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE
of a prior verdict creates the possibility that the jury will defer
to the earlier result.” Id.

   This conclusion runs counter to our conclusion in Boulware
that a prior state court judgment was admissible under Rule
403 balancing. See Boulware, 384 F.3d at 808. The state court
judgment in that case, however, posed much less danger of
jury confusion than in Coleman. In Boulware, the district
court excluded evidence of a prior state court civil judgment
that found the defendant’s company owned the money that the
defendant gave to his girlfriend. Id. at 802. This judgment,
had it been admitted, would have been used by the defendant
at trial to rebut the government’s argument that the defendant
personally owed tax liability on that sum of money. Id. at 808.
We held that, under the circumstances of that case, the trial
judge could have easily controlled any danger that the jury
would give undue weight to the state court judgment and also
controlled any waste of time or confusion of the issues. Id.

   [26] Engquist’s case, however, bears much greater similar-
ity to Coleman than to Boulware. In Boulware, the single
issue decided by the state court in the earlier case was a dis-
tinct civil cause of action that only related to one component
of Boulware’s criminal prosecution. Such a situation presents
a much smaller risk of prejudice or confusion of the issues;
additionally, the state court judgment was highly probative of
the defendant’s tax liability. In the instant case, as in Cole-
man, there was a substantial risk that the jury would import
the whole verdict of liability from the prior proceeding. More-
over, the testimony and evidence from the Corristan trial,
including Corristan’s own testimony, was presented to the
jury in this case; the only evidence not presented to the jury
was the Corristan verdict. The verdict itself did not possess
such additional probative value, beyond the Corristan evi-
dence, to overcome the risk of prejudice and confusion that
the verdict posed. Accordingly, we conclude that the district
court did not abuse its discretion in granting Defendants’
        ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE   1543
motion in limine to exclude the Corristan verdict from evi-
dence.

                        CONCLUSION

   We reverse the judgment on the constitutional claims
because the equal protection claim is invalid as a matter of
law, and there is insufficient evidence to support the substan-
tive due process claim. We vacate the damages and attorneys’
fees awards, and remand to the district court to determine
what portion of these awards can be supported by Engquist’s
successful state law tort verdict. The district court did not err
in awarding a portion of the punitive damages award to the
State’s Criminal Injuries Compensation Account, and thus we
affirm that portion of the judgment. Nor did the court err in
declining to give the Corristan verdict preclusive effect and
in excluding the verdict from evidence. Each party shall bear
her or his own costs on appeal.

   The judgment is REVERSED on the constitutional claims,
the damages and attorneys’ fees awards are VACATED, and
the case is REMANDED to the district court for further pro-
ceedings consistent with this opinion.

REINHARDT, Circuit Judge, dissenting:

   I dissent. Unlike the majority, I agree with the other circuits
that the class-of-one theory of equal protection is applicable
to public employment decisions. Accordingly, I would uphold
the jury’s verdict on the equal protection claim, including its
award of $175,000 in compensatory damages and $125,000 in
punitive damages. I concur in the majority’s holding as to the
takings clause issue, although for somewhat different reasons.
Thus, I would also affirm the district court’s award to Eng-
quist of an additional $50,000, consisting of forty percent of
the total $125,000 punitive damages awarded in connection
1544    ENGQUIST v. OREGON DEPARTMENT    OF   AGRICULTURE
with the state law claim. Because I would uphold the jury ver-
dict in its entirety, I would not remand the case to the district
court.

   The majority’s holding relating to the class-of-one theory
of equal protection creates inter-circuit conflict, is at odds
with the precedent of the Supreme Court and of this circuit,
and is not justified by the policy concerns raised by the major-
ity. Every other circuit to have considered this question has
applied the class-of-one theory to employment. See, e.g., Hill
v. Borough of Kutztown, 455 F.3d 225, 239 (3d Cir. 2006);
Whiting v. Univ. of S. Mississippi, 451 F.3d 339, 348-50 (5th
Cir. 2006); Scarbrough v. Morgan County Bd. of Educ., 470
F.3d 250, 260-61 (6th Cir. 2006); Neilson v. D’Angelis, 409
F.3d 100, 104 (2d Cir. 2005); Levenstein v. Salafsky, 414 F.3d
767, 775-76 (7th Cir. 2004); Campagna v. Massachusetts
Dep’t of Envtl. Prot., 334 F.3d 150, 156 (1st Cir. 2003); Bar-
tell v. Aurora Pub. Sch., 263 F.3d 1143, 1149 (10th Cir.
2001). Even before the Supreme Court articulated the class-
of-one principle in Village of Willowbrook v. Olech, 528 U.S.
562 (2000), other circuits recognized it as a straightforward
application of equal protection principles. See, e.g., Ciechon
v. City of Chicago, 686 F.2d 511, 522-23 (7th Cir. 1982).

   The majority’s position is also at odds with the approach
taken by this circuit. Until now, we have recognized that a
class-of-one equal protection claim is no different from any
other equal protection claim that does not involve a protected
class. For example, Squaw Valley Dev. Co. v. Goldberg, 375
F.3d 936 (9th Cir. 2004), which applied the class-of-one the-
ory to the differential enforcement of environmental regula-
tions on ski resorts, employed the rational basis test defined
in Armendariz v. Penman, 75 F.3d 1311 (9th Cir. 1996) (en
banc), the same test that we employ in other equal protection
cases. See also Valley Outdoor Inc. v. City of Riverside, 446
F.3d 948, 955 (9th Cir. 2006); Seariver Mar. Fin. Holdings
Inc. v. Mineta, 309 F.3d 662, 679-80 (9th Cir. 2002).
Although this circuit has not previously considered the class-
        ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE    1545
of-one theory in the employment context, nothing in our ear-
lier cases suggests that, contrary to the view of all the other
circuits to have considered the question, it is not applicable to
employment cases. Indeed, the majority does not identify a
single case in our equal protection jurisprudence or that of any
other circuit that limits equal protection rights in the context
of public employment.

   The majority’s approach is also at odds with Supreme
Court precedent. The Supreme Court has made clear that peo-
ple have a right not to be singled out by the government for
arbitrary and irrational treatment. Olech, 528 U.S. at 564. Of
course, courts must be most cautious, and apply a higher stan-
dard of review, when the government treats groups differently
on the basis of certain protected characteristics; but even
when a protected class is not involved, government actions
must be supported by a rational basis. City of Cleburn v. Cle-
burn Living Ctr., 473 U.S. 432, 448-49 (1985). Thus, we must
find that an employee’s equal protection rights are violated
when he is “intentionally treated differently from others simi-
larly situated and . . . there is no rational basis for the differ-
ence in treatment.” Olech, 528 U.S. at 564.

   The majority attempts to distinguish Olech because that
case involved a regulatory decision, rather than an employ-
ment decision. The majority argues that a distinction in treat-
ment under the equal protection clause between employment
and regulatory actions is justified because the state has greater
powers when it acts as a regulator than when it acts as an
employer. The majority is correct that there are differences
between the state’s powers in the two realms. However,
unlike in the First and Fourth Amendment contexts, upon
which the majority relies, the Court has not limited the Four-
teenth Amendment’s scope as applied to public employment.
See Washington v. Davis, 426 U.S. 229 (1976); see also
Nevada Dep’t of Human Res. v. Hibbs, 538 U.S. 721, 728-29
(2003) (applying gender-based equal protection case law from
outside the employment context to public employees). Few
1546    ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE
circuit courts have given any consideration to the idea that the
class-of-one doctrine does not apply to employment, and none
has ever so held. Furthermore, even in the First and Fourth
Amendment contexts, in which courts have concluded that
some limitations on individual rights are necessary to facili-
tate government employment, federal employees do not give
up their rights to be free from hostile, arbitrary, and malicious
treatment by the government. See Garcetti v. Ceballos, 126
S. Ct. 1951, 1958 (2006) (“[P]ublic employees do not surren-
der all their First Amendment rights by reason of their
employment.”); Nat’l Treasury Employees Union v. Von
Raab, 489 U.S. 656, 664 (1989) (“Our earlier cases have set-
tled that the Fourth Amendment protects individuals from
unreasonable searches conducted by the Government, even
when the Government acts as an employer.”).

   Although the majority acknowledges that its position is at
odds with that uniformly taken by other courts, it disregards
this conflict because it is needlessly concerned that the class-
of-one rule would eliminate at-will employment. There is no
cause for the majority’s concern. The application of class-of-
one equal protection principles is hardly fatal to at-will
employment. The rational basis test has always been used to
insulate governmental decisions from searching review that
would interfere with governmental functions, while still pro-
tecting individuals against heinous governmental conduct.
The rational basis test can play this role as successfully here
as in other equal protection cases. It is certainly not necessary,
in order to preserve the concept of at-will employment, to
hold that the government may freely treat its employees mali-
ciously and irrationally.

   The majority, nevertheless, views the requirement set forth
in Squaw Valley that government conduct not be “malicious,
irrational, or plainly arbitrary” as inherently at odds with at-
will employment. It apparently believes that arbitrary treat-
ment of public employees is a necessary and acceptable part
of public employment. I disagree. Moreover, the Squaw Val-
        ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE   1547
ley test is not as threatening to at-will employment as the
majority believes: it would not render all discharges that are
not for just cause unconstitutional. Rather, in the present con-
text as in the context of statutory interpretation, “plainly arbi-
trary” must be construed in relation to the other words in the
clause. See United States v. King, 244 F.3d 736, 740-41 (9th
Cir. 2001) (“[W]ords are to be judged by their context and . . .
words in a series are to be understood by neighboring words
in the series.” (quoting United States v. Carpenter, 933 F.2d
748, 750-51 (9th Cir. 1991))). Accordingly, actions are
“plainly arbitrary” in the sense of being violative of the equal
protection clause only if they include an element akin to irra-
tionality or malice. Thus, for example, an employer would not
violate the equal protection clause if he were to lay off every
fifth employee, even though the selection criteria might
appear rather arbitrary in the non-contextual sense of the term.
It would, in contrast, be a violation of the plainly arbitrary
provision if a supervisor were summarily to fire an employee
because the employee’s sister refused his sexual advances.

   Moreover, the experience of other circuits demonstrates
that the class-of-one theory of equal protection is not in prac-
tice fatal to at-will employment. The seven circuits that have
recognized the theory continue to have at-will employment.
The government is able to terminate employees in these cir-
cuits for no reason, or for any reason that does not violate the
equal protection clause. Nor are those circuits drowning in the
“flood” of class-of-one employment disputes feared by the
majority. Rather, as the majority notes, those circuits have set
standards for assessing class-of-one employment disputes
such that petitioners win only in extreme cases. The lack of
success of most plaintiffs in these circuits demonstrates the
ability of the courts to allow for recovery under the class-of-
one theory without constitutionalizing every employment dis-
pute.

   The courts that have considered the application of the class-
of-one theory to employment have used three, overlapping
1548     ENGQUIST v. OREGON DEPARTMENT          OF   AGRICULTURE
techniques to limit its reach. The Second Circuit, and the Sev-
enth Circuit have, in some instances, required the petitioner to
identify an identically situated individual who was not dis-
criminated against. See, e.g., Neilson, 409 F.3d at 104; Indi-
ana State Teachers Ass’n v. Bd. of Sch. Comm’s, 101 F.3d
1179, 1181-82 (7th Cir. 1996). Others require a showing of
animus or malice. See Jennings v. City of Stillwater, 383 F.3d
1199, 1211 (10th Cir. 2004) (applying this standard and col-
lecting cases). The third group applies the rational basis test,
putting the burden on the petitioner to disprove any rational
reasons brought forward by the petitioner. See, e.g., Whiting,
451 F.3d at 349; Lauth v. McCollum, 424 F.3d 631, 634 (7th
Cir. 2005).

   The best approach, that adopted by this circuit in a regula-
tory case, Squaw Valley, authored by Judge Tashima, includes
aspects of all three techniques. A plaintiff must show both
that he was treated differently than others and that there was
no rational basis for this treatment. Squaw Valley, 375 F.3d at
944 (quoting Olech, 528 U.S. at 564). A plaintiff can show
that he was treated differently either by comparing his treat-
ment to that of someone very like himself, or by showing that
the government’s treatment of him was motivated by unde-
served malice.1 See Squaw Valley, 375 F.3d at 945, 947 (find-
ing no similarly situated comparator but still finding for the
plaintiff under a class-of-one theory because the defendant
“harbor[ed] actual ‘hostility’ and ‘antagonism’ ” for the plain-
tiff). There is no need for an identically situated comparator
in cases involving malice because the government does not
ordinarily treat people maliciously, and, thus, is obviously
treating individuals unequally under such circumstances.2 Id.
   1
     This is not to say that an employer cannot act on his dislike of an
employee where that dislike has its roots in the employee’s mediocre per-
formance or lack of initiative, or in some other response to the individual
not based on malice or irrationality, even if the employee has met the
minimum requirements of the job.
   2
     Although the majority believes that requiring malice would be incon-
sistent with Olech, I do not suggest such a requirement here. I simply
assert that a showing of malice as the cause is enough to show that an indi-
vidual was subjected to differential treatment.
         ENGQUIST v. OREGON DEPARTMENT           OF   AGRICULTURE      1549
   The plaintiff can show that no rational basis exists in a
class-of-one case by showing than an “asserted rational basis
was merely a pretext for different treatment.” Squaw Valley,
375 F.3d at 945-46 (internal quotations omitted). Such pretext
may be shown by demonstrating “either: (1) the proffered
rational basis was objectively false; or (2) the defendant actu-
ally acted based on an improper motive.” Squaw Valley, 375
F.3d at 946. As to the second prong, reasons that are “mali-
cious, irrational or plainly arbitrary” cannot provide a rational
basis. Armendariz, 75 F.3d at 1326; see also Cleburn Living
Ctr., 473 U.S. at 448-49; Scarbrough, 470 F.3d at 261. Thus,
malice can in some circumstances serve as a basis for show-
ing both disparate treatment and lack of rational basis.

   Under this test, I would affirm the district court’s determi-
nation that Engquist’s equal protection rights were violated.
Engquist presented her case on the theory that Szczepanski
and Hyatt were acting out of malice. The jury agreed, finding
that Engquist’s termination was “arbitrary, vindictive or mali-
cious.” Accordingly, Engquist has demonstrated that she was
singled out to be the target of government malice and that this
malice was the cause of her termination.3

   I see no reason to abandon the test that Judge Tashima
thoughtfully endorsed for the court in Squaw Valley. I cer-
tainly would not reject it in favor of a rule that conflicts with
that adopted by every other circuit to consider this question.
Accordingly, I dissent from the majority’s reversal of the
finding of liability on the equal protection count and would
affirm both the compensatory and punitive damages in that
regard.
  3
    I note that the majority objects only to the class-of-one theory and does
not argue that, if such a standard is applicable, Engquist failed to assert
sufficient evidence to establish a violation. The State likewise focuses its
attack on the class-of-one theory and raises a sufficiency of the evidence
claim only as to Engquist’s failure to point to any individual situated iden-
tically to herself. As I note, however, an identically situated comparator
is not required in cases of malice.
1550     ENGQUIST v. OREGON DEPARTMENT          OF   AGRICULTURE
   On the takings clause question, I agree with the majority’s
holding that the punitive damages provisions of Oregon law
do not violate the takings clause. I reach this conclusion
because the plaintiff has no interest at all in punitive damages,
which exist to punish the defendant rather than to reward the
plaintiff, unless and until such interest is created by state law.4
Under its statute, Oregon chose to give the plaintiff an interest
in only forty percent of the amount that the jury assesses
against the defendant on a state claim for malicious conduct.
The plaintiff is never afforded possession of or any right to
the other sixty percent of the award, as that money is awarded
directly to the state in the court’s judgment. Under such cir-
cumstances, the majority is correct that the plaintiff has no
property right in that other sixty percent. Accordingly, I con-
cur in the majority’s holding and would leave Engquist’s forty
percent punitive damages award on the state claim unchanged.5

   In sum, I would conclude that the district court did not err
in holding that Engquist’s equal protection rights were vio-
lated and would affirm the award of general and punitive
damages on the basis of that claim.6 I would also affirm the
apportionment of the punitive damages relating to the state
law claim. Because I would uphold the general and punitive
damages on the equal protection grounds and the apportion-
ment of the punitive damages on the state law claim, I would
  4
     A different rule might apply if the state took a share of punitive dam-
ages awarded under federal law, but that is not at issue in this case.
   5
     Like the majority, I reject Engquist’s other arguments relating to the
apportionment of punitive damages.
   6
     I agree with the majority as to the substantive due process claim. How-
ever, because the damages for the substantive due process violation were
merged into the larger sums awarded for the equal protection clause viola-
tion, my conclusion as to the equal protection clause is sufficient to sup-
port the entire federal damages award. Thus, the majority’s conclusion as
to substantive due process does not affect the outcome in any manner.
   I likewise agree with the majority’s conclusions relating to the exclu-
sion of the Corristan verdict.
        ENGQUIST v. OREGON DEPARTMENT     OF   AGRICULTURE   1551
affirm the district court judgment in its entirety. I respectfully
dissent.