Excessive Fine Protections Apply to Corporations, Supreme Court Holds
Dami Hospitality decision installs ‘gross proportionality’ test in Colorado to determine when a penalty is too harsh

by Doug Chartier

Corporations have been found to have free speech and due process rights like individuals do under the constitution. They also have Eighth Amendment rights like individuals, according to a new Colorado Supreme Court decision.

On June 10, the Supreme Court  ruled that corporations enjoy the Eighth Amendment’s excessive fine protections that individuals do. It unanimously held that courts should consider whether a penalty the government imposes on a corporation is grossly disproportionate to the violation.

The decision in Colorado Department of Labor and Employment v. Dami Hospitality might be a reassuring one for companies, however the Supreme Court did issue a key caveat. When dealing with per diem fines, courts will only look at whether each individual fine is grossly disproportionate, not the sum total of the penalties. Dami Hospitality, a small motel operating company, was contesting the $800,000-plus in fines the state levied after the company let its workers’ compensation insurance coverage lapse for long periods between 2006 and 2014. The company had already paid a settlement with the CDLE Division of Workers’ Compensation in 2006 over a previous lapse. But Dami had gone without the state-required insurance for two more stretches after that, including one lasting nearly four years.

To read this story and other complete articles featured in the June 17, 2019 print edition of Law Week Colorado, copies are available for purchase online.