Court Opinion

ID: 4271526
Source: CourtListenerOpinion
Date Created: 2018-05-01 18:59:36.838258+00
Date Added: 2024-06-11T07:49:23.408439
License: Public Domain

IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA 

                                January 2018 Term
                                _______________                              FILED
                                                                           May 1, 2018
                                  No. 17-0437                               released at 3:00 p.m.
                                                                        EDYTHE NASH GAISER, CLERK
                                _______________                         SUPREME COURT OF APPEALS
                                                                             OF WEST VIRGINIA

                       ASHLAND SPECIALTY CO. INC.,
                          Petitioner Below, Petitioner

                                         v.

    DALE W. STEAGER, STATE TAX COMMISSIONER OF WEST VIRGINIA, 

                      Respondent Below, Respondent

      ____________________________________________________________

                 Appeal from the Circuit Court of Kanawha County 

                         The Honorable Carrie L. Webster 

                           Civil Action No. 14-AA-102 

                                   AFFIRMED 

      ____________________________________________________________

                             Submitted: April 11, 2018 

                                Filed: May 1, 2018 

Floyd M. Sayre, III, Esq.                     Patrick Morrisey, Esq.
Bowles Rice LLP                               Attorney General
Martinsburg, West Virginia                    Katherine A. Schultz, Esq.
                                              Senior Deputy Attorney General
Mark A. Lloyd, Esq.                           Cassandra L. Means, Esq.
(admitted pro hac vice)                       Assistant Attorney General
Bingham Greenbaum Doll LLP                    Charleston, West Virginia
Louisville, Kentucky                          Counsel for the Respondent
Counsel for the Petitioner

JUSTICE WALKER delivered the Opinion of the Court.

JUSTICE DAVIS and JUSTICE KETCHUM dissent in part and concur in part and reserve
the right to file separate opinions dissenting in part and concurring in part.
                             SYLLABUS BY THE COURT 

              1.    “In an administrative appeal from the decision of the West Virginia

Office of Tax Appeals, this Court will review the final order of the circuit court pursuant

to the standards of review in the State Administrative Procedures Act set forth in W. Va.

Code, 29A-5-4(g) [1988]. Findings of fact of the administrative law judge will not be set

aside or vacated unless clearly wrong, and, although administrative interpretation of State

tax provisions will be afforded sound consideration, this Court will review questions of

law de novo.” Syllabus Point 1, Griffith v. ConAgra Brands, Inc., 229 W. Va. 190, 728
S.E.2d 74 (2012).

              2.    “The ‘clearly wrong’ and the ‘arbitrary and capricious’ standards of

review are deferential ones which presume an agency’s actions are valid as long as the

decision is supported by substantial evidence or by a rational basis.” Syllabus Point 3, In

re Queen, 196 W. Va. 442, 473 S.E.2d 483 (1996).

             3.      “A review of a proportionality determination made pursuant to the

Excessive Fines Clause of the West Virginia Constitution is de novo.” Syllabus Point 8,

Dean v. State, 230 W. Va. 40, 736 S.E.2d 40 (2012).

                                             i
WALKER, Justice:

              Ashland Specialty Company, Inc. (Ashland) unlawfully sold 12,230 packs of

cigarettes in West Virginia in 2009 that were not approved for sale by the Tax

Commissioner of the State of West Virginia (Commissioner).1 Acting pursuant to West

Virginia Code § 16-9D-8(a) (2016), the Commissioner penalized Ashland $159,398 for

selling those cigarettes unlawfully, a penalty equal to 500% of the cigarettes’ retail value.

The Office of Tax Appeals (OTA) then ordered that penalty reduced by twenty-five

percent.   On review, the Circuit Court of Kanawha County reversed the OTA and

reimposed the Commissioner’s original $159,398 penalty.

              Contrary to Ashland’s arguments on appeal, we find that the Commissioner’s

original penalty (1) is not an abuse of the discretion afforded the Commissioner under West

Virginia Code § 16-9D-8(a); (2) should not be cancelled or reduced due to circumstances

that Ashland argues mitigate their unlawful cigarette sales; and (3) does not violate the

Excessive Fines Clause of the West Virginia Constitution or the Eighth Amendment to the

United States Constitution. For those reasons, and as discussed more fully below, we

affirm the April 11, 2017 order of the Circuit Court of Kanawha County reversing the OTA

and reinstating the Tax Commissioner’s original $159,398 penalty.

       1
        Mark W. Matkovich was the Tax Commissioner at the commencement of this
matter. He was later replaced by Dale W. Steager.
                  I. FACTUAL AND PROCEDURAL BACKGROUND 

                 Before addressing the facts specific to Ashland’s appeal, we first briefly

review the statutes implicated by their arguments. These include West Virginia Code

§§ 16-9B-1 through 4 (2016) (“Implementing Tobacco Master Settlement Agreement”)

and §§ 16-9D-1 through 10 (2016) (“Enforcement of Statute Implementing Tobacco

Master Settlement Agreement”), related to the Tobacco Master Settlement Agreement

(MSA) and subsequent efforts by the Legislature to ensure the MSA and its related

requirements are enforced.

A.     The MSA.

                 In 1998, leading tobacco product manufacturers entered into the MSA with

the State of West Virginia.2 In pertinent part, “[t]he master settlement agreement obligates

these manufacturers, in return for a release of past, present and certain future claims against

them . . . to pay substantial sums to the State (tied in part to their volume of sales) . . . .”3

The following year, the Legislature enacted Article 9B of Chapter 16. In part, Article 9B

requires cigarette manufacturers who are not part of the MSA, but whose cigarettes are

sold in West Virginia, to make annual deposits into escrow accounts intended to pay a

       2
           W. Va. Code § 16-9B-1(e) (2016).
       3
           Id.

                                               2

judgment or settlement resulting from a claim brought against the manufacturer by the

State or a West Virginia resident.4

                In 2003, the West Virginia Legislature enacted model legislation to prevent

violations and aid enforcement of the obligations imposed by Article 9B of Chapter 16 of

the West Virginia Code.5 This legislation, codified at Article 9D of Chapter 16 of the West

Virginia Code, directs the Commissioner to create and maintain a directory of cigarette

brands approved for sale in West Virginia.6 Chapter 16, Article 9D also charges the

Commissioner with adding or removing manufacturers from the list as appropriate,7 but

not without first notifying the manufacturer and distributors of the manufacturer’s affected

brand or brands.8 However, a manufacturer or distributor’s failure to receive notice from

the Commissioner of changes to the directory, or even the Commissioner’s failure to

       4
           W. Va. Code §§ 16-9B-1(f) and 3(b)(2)(A) (2016).
       5
           W. Va. Code §§ 16-9D-1 through 10 (2016).
       6
           W. Va. Code § 16-9D-3(b), which states in full:

                The commissioner shall develop and publish on the Tax
                Division’s website a directory listing all tobacco product
                manufacturers that have provided current and accurate
                certifications conforming to the requirements of subsection (a)
                of this section and all brand families that are listed in the
                certifications, except as provided in subdivisions (1) and (2) of
                this subsection.
       7
           W. Va. Code § 16-9D-3(b)(3).
       8
           Id. § 16-9D-3(b)(3)(A) and (B).

                                               3

provide such notice, does not excuse a party from their obligations under Article 9D of

Chapter 16 of the West Virginia Code.9

                It is unlawful to sell, offer, or possess for sale in West Virginia a brand of

cigarettes that is not included in the Commissioner’s list.10 Pursuant to West Virginia Code

§ 16-9D-8(a), the Commissioner may impose a wide range of penalties upon a party that

sells a brand of cigarettes in West Virginia when that brand does not appear on the

Commissioner’s list—that is, when the brand is “delisted.”

B.     Ashland’s Violations of § 16-9D-3(c).

                Ashland is a Kentucky corporation that distributes cigarettes to convenience

stores in West Virginia and other states. It is undisputed that between June and September

2009, Ashland sold 12,210 packs of delisted GP and GP Galaxy Pro brand cigarettes and

20 packs of delisted Berley brand cigarettes in violation of West Virginia Code

§ 16-9D-3(c). The Commissioner identified these illegal sales during a 2012 audit. In

August 2012, pursuant to his authority under § 16-9D-8(a), the Commissioner assessed a

$159,398 penalty upon Ashland, a penalty equal to 500% of the retail value of the 12,230

packs of delisted cigarettes.

       9
           W. Va. Code § 16-9D-3(b)(3)(C). 

       10
            Id. § 16-9D-3(c)(2). The statute contains two exceptions that do not apply here. 

                                               4

              The Commissioner previously assessed a $3,808 penalty upon Ashland for

selling 56 cartons of delisted cigarettes from 2001 to 2003. Ashland had also paid a $5,127

penalty for selling 62 cartons of delisted cigarettes from 2005 to 2008. Like the penalty

imposed by the Commissioner in 2012, these penalties equated to 500% of the retail value

of the delisted cigarettes. Ashland did not contest these smaller penalties.

C.     Review before the OTA.

              Ashland timely petitioned the OTA to review the Commissioner’s August

2012 penalty assessment. The administrative law judge (ALJ) conducted an evidentiary

hearing in August 2013. Testimony offered at the hearing by a representative of the West

Virginia State Tax Department indicated that the Commissioner consistently imposes a

500%-of-retail-value penalty for violations of West Virginia Code § 16-9D-3(c).

Specifically, the Commissioner’s representative testified:

                     Yes. My auditors have no discretion. I mean they have
              the ability to come to me. I have the ability to go to my director
              and get anything—to request something less. It’s never
              happened. I mean we—in my recollection, they’ve all been
              500 percent that we’ve done. And these are rare. There’s not
              many of them. . . .

                      I’ve never gone up the food chain for any—. I’ve never
              heard a good explanation to go up the food chain. Our audit
              program is locked in at 500 percent. I mean I don’t—. Like I
              said, these were rare. I don’t recall any reason to ask for a
              reduced rate.

              When asked to justify the 500%-of-retail-value penalty imposed by the

Commissioner in this case, the representative explained that Ashland had “two previous

                                              5

audits, that they’ve been forewarned, and—they’re still continuing to do so, I don’t really

see any need to reduce it. I mean, they’ve had plenty of warning and they keep making the

same error.”

               In August 2014, the ALJ issued a written order finding the Commissioner’s

$159,398 penalty to be “erroneous, unlawful, void, or otherwise invalid[.]” The ALJ

reasoned that “the Tax Commissioner exercised no discretion at all in issuing the penalty”

to Ashland because the evidence demonstrated that the Commissioner invariably assessed

the 500%-of-retail-value penalty for the sale of delisted cigarettes. Additionally, the ALJ

concluded that the $159,398 penalty was too harsh because “[c]ommon sense tells us that

the maximum penalty should be reserved for the worst offenders, for example, a seller who

deliberately sells delisted brands or who engages in some criminal activity in connection

with cigarette sales.” Consequently, the ALJ reduced the penalty by 25% to $119,548.50.

D.    Review before the Circuit Court of Kanawha County.

               Both the Commissioner and Ashland appealed the OTA’s reduction of the

Commissioner’s original penalty, and briefing on the matter proceeded before the Circuit

Court of Kanawha County.11 On April 11, 2017, the circuit court entered an order reversing

the order of the OTA and reinstating the Commissioner’s original penalty. The circuit

      11
          Ashland appealed to the Circuit Court of Cabell County, and the Commissioner
appealed to the Circuit Court of Kanawha County. The Circuit Court of Cabell County
transferred Ashland’s appeal to the Circuit Court of Kanawha County.

                                            6

court found, among other things, that:       (1) the OTA erred in concluding that the

Commissioner exercised no judgment, when the $159,398 penalty imposed was not the

maximum permitted by West Virginia Code § 16-9D-8(a); (2) the OTA erred in concluding

that the Commissioner abused his discretion by imposing the same, proportional penalty

on all violators of § 16-9D-3(c); and (3) the $159,398 penalty did not violate the Excessive

Fines Clause of the West Virginia Constitution or the Eighth Amendment to the United

States Constitution. Ashland now appeals from that order.

                                II.    Standard of Review

              Ashland’s arguments implicate several standards of review. We set out each

below within the analysis of the corresponding assignment of error.

                                      III.   Analysis

              Ashland attacks the circuit court’s order on several fronts. First, it argues

that the circuit court erred by reinstating the Commissioner’s original $159,398 penalty.

Ashland contends that the OTA correctly concluded that the Commissioner’s consistent

application of a 500%-of-retail-value penalty is, itself, an abuse of discretion, and that by

reinstating the Commissioner’s original judgment, the circuit court substituted its judgment

for that of the OTA. Ashland also argues that the circuit court should have further reduced,

or completely forgiven, the reduced penalty ordered by the OTA due to circumstances that

Ashland contends mitigate its violation of West Virginia Code § 16-9D-3(c). Ashland next

argues that the Commissioner’s original penalty violates the Excessive Fines Clause of the

                                             7

West Virginia Constitution and the Eighth Amendment to the United States Constitution.

It also challenges the Circuit Court of Kanawha County as the appropriate venue for the

proceedings below. We address each of Ashland’s arguments in turn.

A.    Reinstatement of the Commissioner’s original penalty.

                 Ashland first argues that the circuit court abused its discretion by reversing

the decision of the OTA and reinstating the Commissioner’s original $159,398 penalty. In

Syllabus Point 1 of Griffith v. ConAgra Brands, Inc.,12 this Court confirmed the standard

of review applicable to appeals such as Ashland’s:

                        In an administrative appeal from the decision of the
                 West Virginia Office of Tax Appeals, this Court will review
                 the final order of the circuit court pursuant to the standards of
                 review in the State Administrative Procedures Act set forth in
                 W. Va. Code, 29A-5-4(g) [1988]. Findings of fact of the
                 administrative law judge will not be set aside or vacated unless
                 clearly wrong, and, although administrative interpretation of
                 State tax provisions will be afforded sound consideration, this
                 Court will review questions of law de novo.[13]

                 West Virginia Code § 29A-5-4(g) (2015) provides:

                        The court may affirm the order or decision of the agency
                 or remand the case for further proceedings. It shall reverse,
                 vacate or modify the order or decision of the agency if the
                 substantial rights of the petitioner or petitioners have been
                 prejudiced because the administrative findings, inferences,
                 conclusions, decision or order are:

      12
           229 W. Va. 190, 728 S.E.2d 74 (2012).
      13
           Id.

                                                8

               (1) In violation of constitutional or statutory provisions; or

               ...

               (5) Clearly wrong in view of the reliable, probative and
               substantial evidence on the whole record; or

               (6) Arbitrary or capricious or characterized by abuse of
               discretion or clearly unwarranted exercise of discretion.

“The ‘clearly wrong’ and the ‘arbitrary and capricious’ standards of review are deferential

ones which presume an agency’s actions are valid as long as the decision is supported by

substantial evidence or by a rational basis.”14 With this standard in mind, we analyze

Ashland’s argument that the circuit court erroneously reinstated the Commissioner’s

original $159,398 penalty.

               The Tax Commissioner penalized Ashland’s sale of delisted cigarettes under

West Virginia Code § 16-9D-8(a). That subsection states:

                       (a) Revocation of business registration certificate and
               civil money penalty. — In addition to or in lieu of any other
               civil or criminal remedy provided by law, upon a determination
               that a distributor, stamping agent or any other person has
               violated subsection (c), section three [§16-9D-3] of this article,
               or any rule adopted pursuant thereto, the commissioner may
               revoke or suspend the business registration certificate of the
               distributor, stamping agent or other person in the manner
               provided by article twelve [§§ 11-12-1 et seq.], chapter eleven
               of this code. Each stamp affixed and each sale or offer to sell
               cigarettes in violation of [§ 16-9D-3(c)] constitutes a separate
               violation. The commissioner may also impose a civil penalty
               in an amount not to exceed the greater of five hundred percent
               of the retail value of the cigarettes or five thousand dollars
               upon a determination of violation of [§ 16-9D-3(c)] or any

      14
           Syl. Pt. 3, In re Queen, 196 W. Va. 442, 473 S.E.2d 483 (1996).

                                               9

                rules adopted pursuant thereto. The penalty shall be imposed
                and collected in the manner that tax is assessed and collected
                under article ten [§§ 11-10-1 et seq.], chapter eleven of this
                code. The amount of penalty collected shall be deposited in the
                tobacco control special fund created in section nine [§ 16-9D-
                9] of this article.[15]

                The parties agree that this subsection provides the Commissioner with broad

discretion16 to select a penalty for Ashland’s unlawful sale of 12,230 packs of delisted

cigarettes in 2009. For example, the Commissioner could have revoked or suspended

Ashland’s West Virginia business registration. And, he could have imposed a civil penalty

on Ashland of up to $61,150,000, that is, $5,000 per violation, assuming that Ashland sold

each delisted pack of cigarettes individually.17 And, of course, the Commissioner could

have imposed the exact penalty that he actually did in this case: a civil penalty equivalent

to 500% of the delisted cigarettes’ retail value.

                Based on the plain language of West Virginia Code § 16-9D-8(a), we

conclude that the circuit court did not err by reinstating the Commissioner’s original

       15
            W. Va. Code § 16-9D-8(a) (emphasis added).
       16
        See State v. Hedrick, 204 W. Va. 547, 552, 514 S.E.2d 397, 402 (1999) (“The
word ‘may’ generally signifies permission and connotes discretion.”).
       17
          In its briefing, Ashland asserted that the Commissioner’s original $159,398
penalty was the maximum civil penalty that could be imposed under West Virginia Code
§ 16-9D-8(a). However, in response to the Court’s inquiry during oral argument,
Ashland’s counsel conceded that the maximum penalty permitted by § 16-9D-8(a) was, in
fact, over $61 million, as the Commissioner argued. In this sense, the OTA’s finding that
the Commissioner imposed the maximum penalty on Ashland is clearly wrong.

                                              10 

$159,398 penalty. First, and most importantly, the Commissioner imposed a penalty that

is expressly provided for in § 16-9D-8(a). Thus, the Commissioner did not violate that

subsection; he strictly complied with it.18 Nor was the Commissioner’s original $159,398

penalty arbitrary or capricious.19 There is no dispute that Ashland sold 12,230 packs of

delisted cigarettes in 2009. Ashland, therefore, violated § 16-9D-3(c) and was subject to

any of the penalties set forth in § 16-9D-8(a). The Commissioner imposed a penalty that

directly correlated to the retail value of the cigarettes that Ashland sold unlawfully.

Consequently, the Commissioner’s original $159,398 penalty was both supported by

substantial evidence and based on reason and, therefore, was neither arbitrary nor

capricious.20 For those same reasons, we reject Ashland’s assertion that the circuit court

simply substituted its own judgment for that of the OTA when it reinstated the

Commissioner’s original penalty.

                Ashland’s primary argument in opposition—that the Commissioner’s

consistent application of a 500%-of-retail-value penalty is, itself, an abuse of the discretion

afforded him by West Virginia Code § 16-9D-8(a)—is a red herring, albeit an intriguing

       18
          See W. Va. Code § 29A-5-4(g)(1) (court shall reverse, vacate or modify the
decision of the agency because the administrative decision violates statutory provisions).
       19
            Id. § 29A-5-4(g)(6).
       20
            See Syl. Pt. 3, In re Queen, 196 W. Va. at 442, 473 S.E.2d at 483.

                                              11 

one. Unfortunately, we find the authority relied upon by the OTA to justify adoption of

Ashland’s argument, Brunson v. Pierce County,21 unpersuasive.

                  In Brunson, a Washington county imposed one-year suspensions on the

licenses of three women who violated various county ordinances governing erotic

dancing.22 In setting the one-year suspensions, the responsible county official considered

the seriousness of the offense, but not the dancers’ personal situations or criminal

histories.23 The official testified that she could not think of a situation where a penalty less

than a one-year suspension—the maximum penalty permitted—would be appropriate.24 A

Washington intermediate appellate court reversed the one-year suspensions because the

county official did not consider the dancers’ individual circumstances and so failed to

exercise the discretion granted to her by the applicable county ordinance.25

                  We are not inclined to follow Brunson for several reasons. First, it is not

binding on this Court, and the case has not been cited outside of Washington. Second, it

arises from a factual scenario drastically different than that presented here. The three

       21
            205 P.3d 963 (Wash. App. Div. 2 2009).
       22
            Id. at 965.
       23
            Id.
       24
            Id. at 965, 967.
       25
            Id. at 967.

                                               12 

dancers penalized by the county official in Brunson (who testified regarding the specific

hardships the suspensions would create for their families26) are not comparable to a multi-

state distributor of convenience store items, such as Ashland. Moreover, the penalty at

issue in Brunson was not calibrated to the severity of the dancers’ offenses. In this case,

the penalty imposed by the Commissioner each time Ashland violated West Virginia Code

§ 16-9D-3(c) reflected the retail value of the cigarettes sold illegally. So, when Ashland

sold 560 packs of delisted cigarettes between January 2001 and November 2003, it paid a

$3,808 penalty. And, six years later, when Ashland sold many more packs of delisted

cigarettes (12,230), the Commissioner imposed a much larger penalty upon it ($159,398).

Thus, unlike in Brunson, the rubric applied by the Commissioner in this case reflects a

factual circumstance explicitly recognized in § 16-9D-3(c): the retail value of the cigarettes

unlawfully sold by Ashland.

                 Finally, the county official in Brunson applied the maximum penalty

permitted by the relevant county ordinance. That is not the case, here. As Ashland

admitted during oral argument, West Virginia Code § 16-9D-8(a) enables the

Commissioner to impose a civil penalty up to $61,150,000 in this case and to suspend

Ashland’s business registration. The Commissioner exercised neither option. In light of

       26
            Id. at 965.

                                             13 

those distinctions, the circuit court did not err by finding that the OTA’s reliance on

Brunson was misplaced and declining to apply the reasoning of that case in this instance.

                  The West Virginia authority relied upon by Ashland, footnote 6 of our

decision in Gentry v. Magnum,27 is also distinguishable. In Gentry, we stated: “In general,

an abuse of discretion occurs when a material factor deserving significant weight is

ignored, when an improper factor is relied upon, or when all proper and no improper factors

are assessed but the circuit court makes a serious mistake in weighing them.”28 We offered

the commentary in that footnote in the course of reviewing a circuit court’s decision as to

the admissibility of certain testimony under the West Virginia Rules of Evidence.29 While

this Court has cited that dicta from Gentry on several occasions, we have not cited it in the

context of a review of an administrative decision.30 And this makes sense. Ashland’s

       27
            Gentry v. Mangum, 195 W. Va. 512, 520 n.6, 466 S.E.2d 171, 179 n.6 (1995).
       28
            Id.
       29
            Id. at 520, 466 S.E.2d at 179.
       30
          State v. Greeson, App. No. 16-0497, 2017 WL 2210145, at *3 (W. Va. May 19,
2017) (reviewing circuit court’s exclusion of certain evidence at trial for abuse of
discretion); Rife v. Shields, App. No. 15-0975, 2016 WL 6819045, at *3 (W. Va. Nov. 18,
2016) (reviewing judgment entered pursuant to West Virginia Rule of Civil Procedure
60(b) for abuse of discretion); Melody A. v. Todd A., App. No. 14-1112, 2016 WL 3410340,
at *3 (W. Va. June 14, 2016) (reviewing circuit court’s custody decision for abuse of
discretion); Prima Mktg., LLC v. Hensley, App. No. 14-0275, 2015 WL 869265, at *2 (W.
Va. Feb. 27, 2015) (reviewing denial of motion to set aside entry of default judgment for
abuse of discretion); State v. Bowling, 232 W. Va. 529, 550, 753 S.E.2d 27, 48 (2013)
(reviewing circuit court’s admission of certain testimony for abuse of discretion); State ex
rel. Thrasher Eng’g, Inc. v. Fox, 218 W. Va. 134, 139 n.2, 624 S.E.2d 481, 486 n.2 (2005)
(reviewing circuit court’s determination of whether to permit the filing of a third-party

                                             14 

appeal is subject to review under West Virginia Code § 29A-5-4(g) and its interpretive case

law, such as In re Queen. Those authorities sufficiently guide this Court’s review without

resort to the Gentry dicta cited by Ashland. We decline Ashland’s entreaty to rely on

footnote 6 of Gentry, now, to reject the circuit court’s reinstatement of the Commissioner’s

original $159,398 penalty, in light of our conclusion that that penalty was supported by

substantial evidence and based on reason.

              We likewise find unpersuasive Ashland’s argument that the circuit court

should have further reduced the discounted penalty ordered by the OTA, or forgiven it

altogether. As explained above, in West Virginia Code § 16-9D-8(a), the Legislature

granted discretion to the Commissioner to impose a range of penalties for the sale of

delisted cigarettes. The Legislature did not dictate to the Commissioner what factors it

should or should not consider in selecting a penalty under § 16-9D-8(a). Nor did the

Legislature instruct the Commissioner to reduce or abate a penalty if the offending party

complaint for abuse of discretion); Shafer v. Kings Tire Serv., Inc., 215 W. Va. 169, 177,
597 S.E.2d 302, 310 (2004) (reviewing circuit court’s decision to award attorneys’ fees for
abuse of discretion); State ex rel. Leung v. Sanders, 213 W. Va. 569, 575, 584 S.E.2d 203,
209 (2003) (reviewing for abuse of discretion circuit court’s determination of whether to
permit the filing of a third-party complaint); State v. Calloway, 207 W. Va. 43, 47, 528
S.E.2d 490, 494 (1999) (reviewing circuit court’s evidentiary rulings for abuse of
discretion); State ex rel. Kahle v. Risovich, 205 W. Va. 317, 322–23, 518 S.E.2d 74, 79–
80 (1999) (reviewing circuit court’s grant of new trial for abuse of discretion); and State v.
Hedrick, 204 W. Va. 547, 552–53, 514 S.E.2d 397, 402–03 (1999) (reviewing for abuse of
discretion circuit court’s decision on whether to remit a previously forfeited bail bond).

                                             15 

demonstrated “reasonable cause,” as it has done in other statutes cited by Ashland.31 There

is no equivalent “reasonable cause” exception in §§ 16-9D-3(c) or 16-9D-8(a), and we will

not read one into those statutes.32 Even if we could read such an exception into those

statutes, it would not make sense to do so. The Legislature has already stated that the

Commissioner’s failure to provide notice to distributors of the delisting of a brand of

cigarettes does not excuse a violation of § 16-9D-3(c).33 This legislative statement cuts

strongly against a gloss on either §§ 16-9D-3(c) or 16-9D-8(a) that includes the “reasonable

cause” exception advocated by Ashland.

                In sum, we conclude that the circuit court did not err in reversing the order

of the OTA and reinstating the Commissioner’s original $159,398 penalty against Ashland

for the sale of 12,230 packs of delisted cigarettes, in violation of West Virginia Code

§ 16-9D-3(c).

       31
           See, e.g., W. Va. Code § 11-10-18(a)(1) (2013) (imposing penalty where party
fails to file tax return, unless “it is shown that such failure is due to reasonable cause and
not due to willful neglect”).
       32
        See W. Va. Consol. Pub. Ret. Bd. v. Wood, 233 W. Va. 222, 230, 757 S.E.2d 752,
760 (2014) (“Courts must presume that a legislature says in a statute what it means and
means in a statute what it says there.”) (internal quotation and alteration omitted).
       33
            See W. Va. Code § 16-9D-3(b)(3)(C).

                                              16 

B. 	   The Excessive Fines Clause of the West Virginia Constitution and the Eighth
       Amendment to the United States Constitution.

                As it did before the circuit court, Ashland argues that the Commissioner’s

$159,398 penalty violates both the Excessive Fines Clause of the West Virginia

Constitution and the Eighth Amendment to the United States Constitution. The circuit

court held that the penalty was not excessive under either the state or federal constitutions.

“A review of a proportionality determination made pursuant to the Excessive Fines Clause

of the West Virginia Constitution is de novo.”34 Following a de novo review, we find that

the penalty imposed by the Commissioner was not grossly disproportionate to the gravity

of Ashland’s offense, and so affirm the circuit court.

                This Court recently analyzed a civil forfeiture under the Excessive Fines

Clause of the West Virginia Constitution and the Eighth Amendment to the United States

Constitution. Civil forfeiture is a slightly different context than the civil penalty at issue

in this case, but our analysis and decision in Dean v. State is instructive, nevertheless.35

       34
            Syl. Pt. 8, Dean v. State, 230 W. Va. 40, 736 S.E.2d 40 (2012).
       35
           Neither party disputes that the $159,398 penalty implicates the Eighth
Amendment. Nevertheless, we do observe that, “[c]ivil fines serving remedial purposes
do not fall within the reach of the Eighth Amendment. However, if a civil sanction can
only be explained as serving in part to punish, then the fine is subject to the Eighth
Amendment.” Korangy v. U.S. F.D.A., 498 F.3d 272, 277 (4th Cir. 2007) (internal
quotation omitted). Assuming that the $159,398 penalty is at least partially punitive and
thus subject to the Eighth Amendment, we would still affirm the circuit court’s order
because we find that the penalty is not grossly disproportionate to the gravity of Ashland’s
offense.

                                              17 

                Following the United States Supreme Court’s decision in United States v.

Bajakajian,36 this Court identified in Dean several factors to determine whether the amount

of a forfeiture of real property pursuant to West Virginia Code § 60A-7-703(a)(8) (2014)

was grossly disproportionate to the gravity of the defendant’s offenses, and therefore

excessive. As we explained in Dean:

                Factors to be considered in assessing whether the amount of
                the forfeiture is grossly disproportionate to the gravity of an
                offense, include: (1) the amount of the forfeiture and its
                relationship to the authorized penalty; (2) the nature and extent
                of the criminal activity; (3) the relationship between the crime
                charged and other crimes; and (4) the harm caused by the
                charged crime.[37]

The factors set forth by this Court in Dean presuppose that “judgments about the

appropriate punishment for an offense belong in the first instance to the legislature.”38

                We enunciated the Dean factors in the context of a civil forfeiture, rather than

a civil penalty. However, the Dean factors, which themselves are derived from the United

States Supreme Court’s decision in Bajakajian, closely follow factors considered by

federal courts since Bajakajian to determine whether a punitive, civil penalty is grossly

disproportionate to the gravity of a party’s violation.39 Therefore, we apply the Dean

       36
            524 U.S. 321 (1998). 

       37
            Syl. Pt. 7, in part, Dean, 230 W. Va. at 40, 736 S.E.2d at 40. 

       38
            Bajakajian, 524 U.S. at 336. 

       39
          See U.S. Sec. & Exch. Comm’n v. Brookstreet Sec. Corp., 664 F. App’x 654, 656 

(9th Cir. 2016) (“This court generally considers four factors when weighing the gravity of
a violation: (1) the nature and extent of the violation, (2) whether the violation was related

                                               18 

factors, here, to determine whether the civil penalty imposed on Ashland is grossly

disproportionate to the gravity of its violation of West Virginia Code § 16-9D-3(c), and,

therefore, whether the civil penalty violates article III, section 5 of the West Virginia

Constitution and the Eighth Amendment to the United States Constitution.

              The first factor, the amount of the penalty and its relationship to the

authorized penalty, cuts in the Commissioner’s favor. As both parties acknowledge, the

maximum penalty authorized by the Legislature for Ashland’s violation of West Virginia

Code § 16-9D-3(c) is $61,150,000—a penalty roughly 383 times larger than the one

actually imposed by the Commissioner.40 Additionally, the Commissioner could have also

suspended or revoked Ashland’s business registration, an option that the Commissioner

did not exercise.

              The second factor, the nature and extent of the criminal activity, also weighs

in the Commissioner’s favor. Prior to 2012, the Commissioner had fined Ashland twice

for selling delisted cigarettes in violation of West Virginia Code § 16-9D-3(c). Obviously,

to other illegal activities, (3) the penalties that may be imposed for the violation, and (4)
the extent of the harm caused.”); United States v. Aleff, 772 F.3d 508, 512 (8th Cir. 2014)
(assessing proportionality of a civil penalty under “variety of factors, including the
reprehensibility of the defendant’s conduct; the relationship between the penalty and the
harm to the victim; and the sanctions in other cases for comparable misconduct”).
       40
          The Fifth Circuit Court of Appeals has gone so far as to hold that “[n]o matter
how excessive (in lay terms) an administrative fine may appear, if the fine does not exceed
the limits prescribed by the statute authorizing it, the fine does not violate the Eighth
Amendment.” Newell Recycling Co., Inc. v. U.S. E.P.A., 231 F.3d 204, 210 (5th Cir. 2000).

                                             19 

Ashland was aware of its obligation not to sell delisted cigarettes and its obligation to

remain apprised of changes to the Commissioner’s directory of approved brands.41

Moreover, it was aware of the potential civil penalties it could face for future violations.

Federal courts have also affirmed administrative penalties similar in size to the $159,398

penalty imposed by the Commissioner, in this case.42

                The third and fourth factors also mitigate in favor of the conclusion that the

penalty imposed by the Commissioner is not grossly disproportionate to Ashland’s

violation. With regard to the third factor—the relationship between Ashland’s violation of

West Virginia Code § 16-9D-3(c) and other violations—the West Virginia Legislature has

authorized similar, civil penalties in the context of the retail sale of alcohol.43 As to the

fourth factor, that is, the harm caused by Ashland’s violation of § 16-9D-3(c), we do not

agree with Ashland that the sole victim of its sale of delisted cigarettes is the State. The

Legislature enacted §§ 16-9D-1 through 10 to prevent violations and aid enforcement of

the laws implementing the MSA and so to “safeguard the Master Settlement Agreement,

       41
            See W. Va. Code § 16-9D-3(b)(3)(C).
       42
         See Salisbury v. United States, 368 Fed. App’x 310 (2010) ($152,500 civil penalty
imposed on lobster fisherman for violation of the Magnuson-Stevens Act was not
excessive).
       43
           See W. Va. Code § 60-3A-26 (2014) (authorizing West Virginia Alcohol
Beverage Control Commissioner to impose a civil penalty of up to $1,000 per violation of
statutes or rules controlling the sale of alcohol by retail liquor licensees).

                                              20 

the fiscal soundness of the state, and the public health.”44 Thus, contrary to Ashland’s

arguments, we find credible the Commissioner’s position that Ashland’s violation of

§ 16-9D-3(c) threatens public harm.

                In sum, our analysis of the Dean factors demonstrates that the $159,398

penalty imposed is not grossly disproportionate to the severity of Ashland’s unlawful

activity, that is, the sale of 12,230 packs of delisted cigarettes in violation of West Virginia

Code § 16-9D-3(c).       Accordingly, the circuit court did not err in holding that the

Commissioner’s original $159,398 penalty does not violate the Excessive Fines Clause of

the West Virginia Constitution or the Eighth Amendment to the United States Constitution.

C.     Venue.

                Finally, Ashland argues that under West Virginia Code § 11-10A-19(c)(3)

(2013), the appropriate venue for its administrative appeal was the Circuit Court of Cabell

County and not the Circuit Court of Kanawha County. We readily dispose of this argument

on the grounds of waiver.

                “[T]the inadequacy of appellate relief in matters involving ‘a substantial

legal issue regarding venue’ may require the resolution of such issues through the exercise

       44
            W. Va. Code § 16-9D-1.

                                              21 

of original jurisdiction.”45 In this case, Ashland did not pursue a writ of prohibition

challenging the Circuit Court of Kanawha County as the venue for its appeal of the OTA’s

decision. Rather, it fully briefed the matter before the Circuit Court of Kanawha County

without objecting to venue46 and only raises the issue now, before this Court. On these

facts, we find that Ashland has waived its objection to venue in the Circuit Court of

Kanawha County47 and that any error with regard to venue that may have occurred in the

proceedings, below, is harmless.

                                   IV.   CONCLUSION

             For the foregoing reasons, the April 11, 2017 order of the Circuit Court of

Kanawha County is affirmed.

                                                                                Affirmed.

      45
         State ex rel. Air-Squid Ventures, Inc. v. Hummel, 236 W. Va. 142, 145, 778 S.E.2d
591, 594 (2015) (quoting State ex rel. Riffle v. Ranson, 195 W.Va. 121, 464 S.E.2d 763
(1995)).
      46
         In footnote 1 of “Ashland Specialty’s Brief in Reply to State Tax Commissioner’s
Response to Ashland Specialty’s Merit Brief,” Ashland acknowledged that it had filed its
appeal to the OTA’s decision with the Circuit Court of Cabell County, and that its appeal
was subsequently transferred to the Circuit Court of Kanawha County. Ashland did not,
however, object or otherwise argue that the Circuit Court of Kanawha County was an
improper venue for the matter.
      47
          See Hansbarger v. Cook, 177 W. Va. 152, 157, 351 S.E.2d 65, 70–71 (1986)
(concluding that party waived venue defense where he did not argue venue in a motion to
dismiss, or raise the issue in his answer or in any other responsive pleading).

                                           22