Colorado Department of Labor and Employment, Division of Workers' Compensation, Petitioner
v.
Dami Hospitality, LLC; and Industrial Claim Appeals Office. Respondents
Certiorari to the Colorado Court of Appeals Colorado Court of
Appeals Case No. 16CA249
Attorneys for Petitioner: Philip J. Weiser, Attorney General
John T. Lee, Senior Assistant Attorney General Emmy A.
Langley, Assistant Solicitor General Denver, Colorado
Attorneys for Respondent Dami Hospitality, LLC: Law Offices
of Daniel T. Goodwin Daniel T. Goodwin Paige Orgel
Broomfield, Colorado
Attorney for Amici Curiae Cato Institute and Independence
Institute: David B. Kopel Denver, Colorado
No
appearance on behalf of Industrial Claim Appeals Office.
OPINION
HART,
JUSTICE.
¶1
This case requires us to consider whether the Eighth
Amendment's prohibition on the government imposition of
"excessive fines" applies to fines levied on
corporations.[1]We conclude that the purpose of the
Excessive Fines Clause is to prevent the government from
abusing its power to punish by imposing fines, and nothing in
that purpose or in the text of the Eighth Amendment limits
its reach to fines imposed on individuals. We further
conclude that the proper test to assess the constitutionality
of government fines under the Eighth Amendment is that set
forth by the United States Supreme Court in United States
v. Bajakajian, 524 U.S. 321, 334 (1998), which requires
an assessment of whether the fine is grossly disproportional
to the offense for which it is imposed. We thus reverse the
court of appeals' ruling and remand to that court for
return to the Division of Workers' Compensation with
instructions to, as appropriate and necessary, develop an
evidentiary record sufficient to determine whether the
$250-$500 fine that a business was required to pay for each
day that it was out of compliance with Colorado's
workers' compensation law is proportional to the harm or
risk of harm caused by each day of noncompliance.
I.
Facts and Procedural History
¶2
Dami Hospitality, LLC ("Dami") is the
owner-operator of a Denver motel located on Peoria Street.
Dami employs between four and ten people at any given time.
As an employer of three or more persons, Dami is required by
statute to maintain workers' compensation insurance.
See § 8-43-409, C.R.S. (2018).
¶3
Dami allowed its workers' compensation coverage to lapse
on or about July 1, 2005. Upon receiving notification of the
lapse from the Division of Workers' Compensation
("DWC"), Dami conceded the violation and paid a
corresponding settlement in June 2006.
¶4
Approximately two months later, Dami again allowed its
workers' compensation coverage to lapse. This time, Dami
went without coverage from August 10, 2006, through June 8,
2007.
¶5
From June 9, 2007, to September 11, 2010, Dami carried the
proper insurance, but the company's workers'
compensation coverage again lapsed on September 12, 2010.
Dami was without such insurance from that time until July 9,
2014.
¶6
On February 19, 2014, the DWC discovered that Dami had
allowed its workers' compensation insurance to lapse for
these periods of time and issued a notice to Dami regarding
this. That written correspondence was dispatched to
Dami's Peoria Street address, which was the address on
file with the Colorado Secretary of State for both the
limited liability company and its registered agent, Soon Pak.
The DWC notice advised Dami that it had twenty days to return
an enclosed compliance questionnaire and to submit documents
either establishing that it had maintained coverage during
the relevant periods or demonstrating an exemption from the
coverage requirement. It also specified that Dami could
"request a prehearing conference on the issue of
default."
¶7
After Dami failed to respond to the notice of subsequent
violation, the DWC mailed a second notice to Dami on June 25,
2014, this time sending it to an East Dartmouth Place
address.[2] For the second time, Dami was given twenty
days to return the same compliance questionnaire and to
submit documents either establishing coverage during the
relevant periods or demonstrating an exemption from the
coverage requirement. The DWC also specified, again, that
Dami could request a prehearing conference on the issue of
default.
¶8
On July 11, 2014, the DWC received a faxed certificate of
workers' compensation insurance for Dami effective from
July 10, 2014, through July 10, 2015. Dami did not offer any
other documentation or any explanation for the extended
periods of noncompliance.
¶9
Having received no claim of exemption or proof of coverage
for the second and third periods of noncompliance, and no
request for a prehearing conference, the DWC concluded its
legally mandated investigation into Dami's noncompliance
on October 29, 2014. The applicable statutory framework
provides that the DWC shall:
For every day that the employer fails or has failed to insure
or to keep the insurance required by articles 40 to 47 of
this title in force, allows or has allowed the insurance to
lapse, or fails or has failed to effect a renewal of such
coverage: impose a fine of: (I) Not more than two hundred
fifty dollars for an initial violation; or (II) Not less than
two hundred fifty dollars or more than five hundred dollars
for a second and subsequent violation.
§ 8-43-409(1)(b), C.R.S. (2018). In implementing this
provision, the DWC promulgated Rule 3-6(D), 7 CCR 1101-3,
which provides that:
For the Director's finding of an employer's second
and all subsequent defaults in its insurance obligations,
daily fines from $250/day up to $500/day for each day of
default will be assessed in accordance with the following
schedule of fines until the employer complies with the
requirements of the Workers' Compensation Act regarding
insurance or until further order of the Director:
Class VII 1-20 Days $250/Day
Class VIII 21-25 Days $260/Day
Class IX 26-30 Days $280/Day
Class X 31-35 Days $300/Day
Class XI 36-40 Days ...