Jeremy R. Durham v. Tennessee Registry of Election Finance ( 2022 )

12/02/2022
IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
October 18, 2022 Session
JEREMY R. DURHAM v. TENNESSEE REGISTRY OF ELECTION
FINANCE
Appeal from the Chancery Court for Davidson County
No. 20-0877-II Anne C. Martin, Chancellor
___________________________________
No. M2021-01455-COA-R3-CV
___________________________________
This case involves the imposition of a civil penalty by the Tennessee Registry of Election
Finance as the result of multiple violations of the Campaign Financial Disclosure Act and
the Campaign Contribution Limits Act. An appeal of the Registry’s decision was decided
by an Administrative Law Judge who generally affirmed the decision of the Registry but
significantly reduced the civil penalty. After further review by the Registry, the penalty
was largely reinstated. Upon further appeal, the Chancery Court affirmed the decision of
the Registry. We affirm.
Tenn. R. App. P. 3 Appeal as of Right; Judgment of the Chancery Court
Affirmed and Remanded
ARNOLD B. GOLDIN, J., delivered the opinion of the Court, in which J. STEVEN STAFFORD,
P.J., W.S., and KENNY ARMSTRONG, J., joined.
Peter J. Strianse, Nashville, Tennessee, for the appellant, Jeremy Ryan Durham.
Herbert H. Slatery, III, Attorney General and Reporter, Andrée Sophia Blumstein, Solicitor
General, and Janet M. Kleinfelter, Deputy Attorney General, for the appellee, Tennessee
Registry of Election Finance.
OPINION
BACKGROUND AND PROCEDURAL HISTORY
The Tennessee Registry of Election Finance (“TREF”) is a Division of the Bureau
of Ethics and Campaign Finance. TREF has statutory authority to administer and enforce
the provisions of both the Campaign Financial Disclosure Act1 (“Disclosure Act”) and the
Campaign Contribution Limits Act2 (“Contribution Act”) (collectively, the “Acts”)
pursuant to Tennessee Code Annotated section 2-10-205. Specifically, among TREF’s
enumerated duties is its ability to “[i]nvestigate any alleged violation upon sworn
complaint or upon its own motion.” Tenn. Code Ann. § 2-10-206(a)(7). TREF also has the
ability to “[a]ssess a civil penalty for any violation of the disclosure laws as provided by
this part.” Tenn. Code Ann. § 2-10-207(6). Specifically, according to the statute, “[c]ivil
penalties may be assessed for any violation of the Campaign Financial Disclosure Act . . .
and the Campaign Contribution Limits Act . . . provided, that [TREF] shall only have the
power to assess a civil penalty after notice and opportunity for hearing.” Id. As to the
Disclosure Act, when TREF imposes a civil penalty for a violation thereof, the relevant
statute, in pertinent part, provides:
“Class 2 offense” means failing to file a report required by this part within
thirty-five (35) days after service of process or receipt of notice by registered
or certified mail of an assessment or any other violation of the requirements
of this part. A Class 2 offense is punishable by a maximum civil penalty of
not more than ten thousand dollars ($10,000) or fifteen percent (15%) of the
amount in controversy, if 15% of the amount in controversy is greater than
ten thousand dollars ($10,000).
Tenn. Code Ann. § 2-10-110(a)(2). As to the Contribution Act, the relevant statute, in
pertinent part, provides:
The registry of election finance may impose a maximum civil penalty for a
violation of this part of not more than ten thousand dollars ($10,000) or one
hundred fifteen percent (115%) of the amount of all contributions made or
accepted in excess of the limitations established by this part, whichever is
greater.
Tenn. Code Ann. § 2-10-308(a).
Appellant, Jeremy Durham, is a former member of the Tennessee House of
Representatives. On June 6, 2016, the Attorney General and Reporter referred potential
violations of the Disclosure Act and the Contribution Act to TREF involving Mr. Durham.
TREF reviewed the referral at its June 8, 2016, meeting and voted unanimously to
investigate Mr. Durham’s campaign from the 2014 election cycle forward and to issue
subpoenas, if necessary, “to any financial institution involving his personal, campaign and
business activity.” Pursuant to this investigation, TREF’s staff conducted an audit on
various accounts attributed to Mr. Durham for the 2014 and 2016 election cycles. The
1
See Tenn. Code Ann. §§ 2-10-101 et seq.
2
See Tenn. Code Ann. §§ 2-10-301 et seq.
-2-
audit was completed in February of 2017 and presented to TREF prior to its February 28,
2017, meeting. The results of the audit found a combined total of approximately 300
unique statutory violations of the Disclosure Act and the Contribution Act.3 In summary,
Mr. Durham’s violations could be categorized as reporting violations, excess contribution
violations, personal use violations, and a failure to maintain records. At its meeting, TREF
voted unanimously to approve the audit and refer it to the Tennessee Ethics Commission.
TREF also voted unanimously to issue Mr. Durham a “Show Cause Notice” concerning
certain findings. TREF requested that Mr. Durham’s response to the notice be provided by
May 1, 2017. TREF also mailed Mr. Durham correspondence titled “Notice of Possible
Assessment of Civil Penalties against You” on February 28, 2017, identifying each
potential violation of the Acts. This letter also informed Mr. Durham that he had “the right
to submit sworn statements, along with any pertinent attachments, as an explanation as to
why civil penalties should not be assessed[.]”
On May 1, 2017, Mr. Durham submitted a sixty-page response to TREF’s “Show
Cause Notice,” addressing the potential violations. Attached to the response were
approximately fifty documents which were ostensibly tendered as evidence. This response
was neither sworn to nor signed by Mr. Durham. Rather, it was signed by Mr. Durham’s
counsel and contained the following disclaimer:
Although Mr. Durham provided very important facts for this Response to the
Report and Show Cause, the great majority of this document was prepared
by Mr. Durham’s campaign advisors. Thus, not every word in this Response
is directly attributable to Mr. Durham.
The “campaign advisors” remained anonymous, and the response was not sworn to by
anyone. As a result, TREF concluded that the response did not satisfy the requirements of
its rules, which provide that:
The candidate, designees of a candidate, or committee must be provided an
opportunity to submit a sworn statement to the Registry which has been
sworn to before a notary public, along with any pertinent attachments, to
show why civil penalties should not be assessed.
Tenn. Comp. R. & Regs. 0530-01-01-.11(b).
On June 7, 2017, the show cause hearing was held before TREF, and based on the
requirements of the above-quoted rule, TREF voted unanimously to disallow Mr.
Durham’s unsworn response as competent evidence for purposes of the hearing. Mr.
Durham did not personally appear at this hearing, and no other evidence was presented
outside of the sixty-page document. Ultimately, at the close of the hearing, TREF voted to
3
Each of the violations found under the Disclosure Act constituted a “Class 2 offense.”
-3-
assess civil penalties amounting to $465,500.00 against Mr. Durham resulting from
multiple violations of both the Disclosure Act and the Contribution Act. On July 11, 2017,
TREF issued an order assessing these penalties based on the audit and the related findings
in accordance with the relevant statutes.
On August 4, 2017, Mr. Durham appealed the order. At an August 9, 2017, meeting,
TREF voted to allow the appeal to proceed. Subsequently, on April 25, 2018, TREF issued
a “Notice of Hearing” to Mr. Durham, stating that a hearing pursuant to the Uniform
Administrative Procedures Act was set before an administrative law judge (“ALJ”). An
order was later entered setting the final hearing date for February 12, 2019. That order
stated in pertinent part as follows:
This hearing will be conducted pursuant to the Tennessee Uniform
Administrative Procedures Act, T.C.A. § 4-5-101 et seq., and the Uniform
Rules of Procedure for Hearing Contested Cases before State Administrative
Agencies, Rule 1360-4-1 et seq. . . . Discovery is allowed and shall be
controlled pursuant to the foregoing and the Tennessee Rules of Civil
Procedure. The presentation and admission of evidence shall be controlled
by the foregoing as well as the Tennessee Rules of Evidence.
On February 6, 2019, TREF filed a “List of Exhibits and Witnesses.” The case was later
reset for hearing on June 4, 2019, and at that hearing, TREF offered four exhibits in its
case-in-chief while no evidence was offered on behalf of Mr. Durham nor were TREF’s
witness and evidence challenged.
On November 1, 2019, the ALJ issued an “Initial Order” reducing the civil penalty
to $110,000.00. TREF met on November 13, 2019, and it voted to review the ALJ’s “Initial
Order.” That same day, TREF issued a written notice of its intent to review the ALJ’s
“Initial Order” pursuant to Tennessee Code Annotated section 4-5-315 and provided
notification that it would review three discrete issues, including whether the “Initial Order
erred, in whole or in part, by reducing the civil penalties levied against [Mr. Durham] by
[TREF].”
On December 3, 2019, TREF issued a scheduling order that required the parties to file
briefs on the issues by January 17, 2020, and it set the matter for March 27, 2020. The
Tennessee Attorney General’s Office filed its brief on behalf of TREF on January 17, 2020.
On January 24, 2020, Mr. Durham filed a “Motion to Modify Scheduling Order to Enlarge
Time to File Brief,” in which he sought an extension until February 7, 2020, to file his
brief. On January 28, 2020, TREF issued a “Revised Scheduling Order,” granting Mr.
Durham an extension until February 7, 2020, to file his brief. On or about February 10,
2020, TREF’s Executive Director received a call from Mr. Durham’s counsel, who stated
that he had not received the “Revised Scheduling Order” until on or about February 7,
2020, and requested additional time to file the brief. TREF’s Executive Director informed
-4-
Mr. Durham’s counsel that such a request needed to be submitted in writing for TREF’s
consideration. The Executive Director also memorialized this information in an email to
Mr. Durham’s counsel. However, Mr. Durham did not submit such a request in writing,
nor did he submit a brief.
Due to issues surrounding the COVID-19 pandemic, TREF issued a “Revised
Scheduling Order” on March 17, 2020, that cancelled the March 27th hearing and
continued the matter indefinitely. On May 27, 2020, TREF entered another “Revised
Scheduling Order,” setting the hearing for June 10, 2020. On June 6, 2020, Mr. Durham
sent an email to TREF’s Executive Director, stating that he had a conflict with the
scheduled hearing date. The Executive Director forwarded the email to Mr. Durham’s
counsel, informing him that a written request for a continuance would need to be submitted
to TREF for consideration. No such request was ever filed, and TREF declined to continue
the matter. Neither Mr. Durham nor his counsel appeared at the June 10th hearing.
On July 8, 2020, TREF issued a “Final Order” which reinstated the civil penalty
amount but reduced it by $5,000.00 for a total penalty amount of $460,500.00. On
September 4, 2020, Mr. Durham filed a “Petition for Judicial Review” in the Chancery
Court of Davidson County (“trial court”), seeking a review of TREF’s final order. Mr.
Durham asked that the penalty assessed against him be vacated, contending that TREF’s
“Final Order” was in violation of constitutional or statutory provisions and made upon
unlawful procedure. In an order entered November 8, 2021, the trial court rejected Mr.
Durham’s contentions and affirmed TREF’s order. Subsequent to the entry of this order,
Mr. Durham filed an appeal with this Court.
ISSUES PRESENTED4
Mr. Durham presents numerous issues for our review on appeal, which we revise
and restate as follows:
1. Whether Mr. Durham’s due process rights were violated.
2. Whether TREF’s reassessment of Mr. Durham’s civil penalty constitutes an
excessive fine under the Eighth Amendment of the United States Constitution or
Article I, Section 16 of the Tennessee Constitution.
3. Whether the trial court applied the incorrect legal standard.
4
Mr. Durham also raises an additional issue concerning the general notion that the trial court erred
in affirming TREF’s decision to reinstate his civil penalty. To the extent that he purports to raise this as an
issue separate from the other issues, he offers no discernable argument in his brief on appeal. Accordingly,
we deem this issue waived.
-5-
DISCUSSION
The matter now before us falls under the Uniform Administrative Procedures Act.
See Tenn. Code Ann. §§ 4-5-101 et seq. Pursuant to Tennessee Code Annotated section
4-5-322, “[a] person who is aggrieved by a final decision in a contested case is entitled to
judicial review under this chapter, which shall be the only available method of judicial
review.” Tenn. Code Ann. § 4-5-322(a)(1). The reviewing court “may affirm the decision
or remand the case for further proceedings.” Tenn. Code Ann. § 4-5-322(h). The court
may also
reverse or modify the decision if the rights of the petitioner have been
prejudiced because the administrative findings, inferences, conclusions or
decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority of the agency;
(3) Made upon unlawful procedure;
(4) Arbitrary or capricious or characterized by abuse of discretion or
clearly unwarranted exercise of discretion; or
(5)(A) Unsupported by evidence that is both substantial and material
in the light of the entire record.
(B) In determining the substantiality of evidence, the court shall
take into account whatever in the record fairly detracts from its weight, but
the court shall not substitute its judgment for that of the agency as to the
weight of the evidence on questions of fact.
Tenn. Code Ann. § 4-5-322(h).5 Such a review is confined to the record. Tenn. Code Ann.
§ 4-5-322(g). However, “[i]n cases of alleged irregularities in procedure before the agency,
not shown in the record, proof thereon may be taken in the court.” Tenn. Code Ann. § 4-5-
322(g). The standard of review remains the same for both the Chancery Court and the
Court of Appeals. Yokley v. State Bd. of Educ., 305 S.W.3d 523, 526 (Tenn. Ct. App. 2009).
The narrow standard of review applicable in these cases “reflects the general principle that
courts should defer to decisions of administrative agencies when they are acting within
their area of specialized knowledge, experience, and expertise.” StarLink Logistics Inc. v.
ACC, LLC, 494 S.W.3d 649, 669 (Tenn. 2016). It is not the job of this Court to substitute
its judgment concerning the weight of the evidence as it pertains to questions of fact. Tenn.
Code Ann. § 4-5-322(h)(5)(A).
Mr. Durham, as noted above, has set forth various arguments on appeal as to why
5
Subsequent to the filing of Mr. Durham’s petition for judicial review, this statute was modified,
effective May 18, 2021. This modification was applicable to matters under Tennessee Code Annotated
Title 63.
-6-
the civil penalties imposed against him by TREF were erroneous. We will address each of
his arguments in turn.
Due Process
The crux of Mr. Durham’s appeal centers on his contention that TREF and the trial
court violated his due process rights. Specifically, Mr. Durham maintains that his due
process rights were violated by TREF’s failure to accept what he purports to be his
“responsive pleading,” the “mixing of prosecutorial and advisory duties,” the alleged lack
of impartiality of the governing board, and the refusal to allow Mr. Durham to present his
arguments at a show cause hearing. We are not convinced by Mr. Durham’s arguments
that any error has occurred.
First, Mr. Durham maintains that TREF’s failure to accept his sixty-page letter
violated his due process rights. In his brief, Mr. Durham argues that, by ignoring his
“responsive pleading,” TREF violated Tennessee Code Annotated section 4-5-308(a),
which provides: “The administrative judge or hearing officer, at appropriate stages of the
proceedings, shall give all parties full opportunity to file pleadings, motions, objections
and offers of settlement.” Mr. Durham relies on this statute, stating that it “does not allow
[TREF] to reject a responsive pleading for any reason, let alone when their counsel
collaborates with other individuals or even if the contents of a responsive pleading could
implicate evidentiary concerns.” Based upon our review of the record, we find no merit in
Mr. Durham’s argument that his due process rights were violated when TREF disallowed
his letter. “[T]he fundamental requirement of due process is the opportunity to be heard
‘at a meaningful time and in a meaningful manner.’” Bailey v. Blount Cty. Bd. of Educ.,
303 S.W.3d 216, 231 (Tenn. 2010) (quoting Mathews v. Eldridge, 423 U.S. 319, 334-35
(1976)). Contrary to Mr. Durham’s argument, and applicable to the standard enumerated
above, we find that Mr. Durham was indeed afforded the opportunity to be heard in a
“meaningful time and in a meaningful manner”; however, Mr. Durham simply did not
properly avail himself of that opportunity by failing to proceed in accordance with the
applicable rules. Here, Mr. Durham was before TREF pursuant to a show cause order
concerning certain purported violations. According to TREF’s promulgated rules:
(a) The candidate, designee of a candidate, or committee shall be provided
an opportunity to personally appear before [TREF] at its next regularly
scheduled meeting to show why civil penalties should not be assessed; or
(b) The candidate, designee of a candidate, or committee must be provided
an opportunity to submit a sworn statement to [TREF] which has been
sworn to before a notary public along with any pertinent attachments, to
show why civil penalties should not be assessed.
Tenn. Comp. R. & Regs. 0530-1-01-.11(1) (emphasis added); see also Swift v. Campbell,
159 S.W.3d 565, 572 (Tenn. Ct. App. 2004) (noting that administrative rules and
-7-
regulations have the force and effect of law in Tennessee). In this case, TREF issued a
show cause notice to Mr. Durham. Mr. Durham did not personally appear before TREF
nor was the letter Mr. Durham submitted a sworn statement as plainly required by TREF’s
rules.6 Mr. Durham attempts to argue that, despite this failure to comply with the pertinent
rules, his letter should have been considered and the denial of such “essentially silenced
[his] ability to meaningfully defend himself.” We are not convinced. The rules espoused
above are clear in their requirements and therefore provided Mr. Durham with an
opportunity to be meaningfully heard before TREF.7 His failure to adhere to these rules
does not warrant a finding that his due process rights were violated. We find no error in
the exclusion of Mr. Durham’s letter.
Mr. Durham’s next argument on appeal is that TREF “inappropriately and illegally
allowed the administrative law hearing prosecutors to play critical roles in [TREF’s]
deliberations[.]” Specifically, Mr. Durham maintains that an attorney acted as a prosecutor
during his contested case hearing and then played a role in TREF’s deliberations. Relying
on Martin v. Sizemore, 78 S.W.3d 249 (Tenn. Ct. App. 2001), Mr. Durham highlights the
following statements concerning the duality of roles:
A combination of prosecutorial and adjudicative functions is the most
problematic combination for procedural due process purposes. A prosecutor,
by definition, is a partisan advocate for a particular position or point of view.
The role is inconsistent with the objectivity expected of administrative
decision-makers. Accordingly, to permit an advocate for one party to act as
the legal advisor for the decision-maker creates a substantial risk that the
advice given to the decision-maker will be skewed. However, the risk of bias
becomes intolerably high only when the prosecutor serves as the decision-
maker’s advisor in the same or a related proceeding. Thus, an administrative
agency’s staff counsel may permissibly prosecute a case before the agency
when an independent hearing officer presides over the contested case hearing
and the prosecutor plays no role in the agency’s deliberation.
Id. at 265 (internal citation omitted). In its order, the trial court found that “while [the
attorney] prosecuted the charges against [Mr. Durham] before [TREF], she did not advise
or counsel [TREF] on a position. Instead, [the attorney] merely answered questions from
the board.” The trial court also noted that “[TREF’s] board members appear cognizant of
6
In the hearing before the ALJ, the ALJ also found that Mr. Durham’s letter was not sworn to and
thus declined to admit it as an exhibit.
7
In his brief, Mr. Durham maintains that the ALJ agreed that his letter constituted a responsive
pleading and, thus, should have been considered. We disagree. In his findings, the ALJ determined that
Mr. Durham’s letter did not comply with the Rules of Evidence or an exception thereto, however, the ALJ
accepted it as a pleading only for the purpose of “giving [him] some road map to Mr. Durham’s positions.”
(emphasis added) However, we do not find this pertinent as to whether his letter constitutes a sworn
statement as required by TREF’s rules.
-8-
[the attorney’s] prosecutor role by phrasing questions as to ‘the state’s position.’” Having
carefully reviewed the record, we agree with the trial court. Contrary to Mr. Durham’s
argument, we do not find that the record supports the notion that the attorney’s responses
to TREF constituted legal advice or counsel. As such, we find no error in this regard.
Mr. Durham’s third argument relative to his due process issue concerns his
contention that TREF violated his due process because it was partial concerning his case.
The trial court determined that Mr. Durham had waived this issue because he failed to raise
it during administrative proceedings. We agree. According to Tennessee Code Annotated
section 4-5-302(a):
(a) Any administrative judge, hearing officer or agency member shall be subject to
disqualification for bias, prejudice, interest or any other cause provided in this
chapter or for any cause for which a judge may be disqualified.
(b) Any party may petition for the disqualification of an administrative judge,
hearing officer or agency member promptly after receipt of notice indicating that
the individual will serve or, if later, promptly upon discovering facts establishing
grounds for disqualification.
Tenn. Code Ann. § 4-5-302. Mr. Durham had the burden to seek a disqualification of what
he purported to be partial or biased members of TREF’s board. See Anderson Cty. v. Tenn.
State Bd. of Equalization, No. E2018-00142-COA-R3-CV, 2020 WL 762511, at *6 (Tenn.
Ct. App. Feb. 14, 2020) (holding that “parties to an administrative action have the
affirmative burden of seeking disqualification” and failure to do so warrants waiver). “It
is no less incumbent for a party to an administrative proceeding to raise issues of procedural
irregularity than it is for a party in a judicial proceeding.” McClellan v. Bd. of Regents of
State Univ., 921 S.W.2d 684, 691 (Tenn. 1996). “The administrative tribunal, like the trial
court, must be given the opportunity to correct procedural errors,” and “[a]llowing parties
to acquiesce in the procedures, but to challenge those same procedures on appeal is
inefficient and unreasonable.” Id. Here, Mr. Durham did not raise an objection concerning
partiality before TREF. Mr. Durham may not now attempt to argue any such procedural
irregularities on appeal. Additionally, when Mr. Durham raised the issue before the trial
court, there was no indication that he had learned the facts that might lead to
disqualification subsequent to the second show cause hearing, thus potentially permitting
review of that issue before the trial court. In light of the foregoing, we find his argument
waived.
Mr. Durham’s final argument involves his contention that TREF violated his due
process rights by limiting his arguments and testimony at TREF’s June 10th hearing and
during his petition for judicial review. As to the issues argued at the June 10th hearing,
Mr. Durham maintains that TREF “hand-picked” certain issues without allowing any
deviation on his part. According to Tennessee Code Annotated section 4-5-315, an agency
“upon the agency’s motion may . . . review an initial order[.]” Tenn. Code Ann. § 4-5-
-9-
315(a). Pursuant to this statute, TREF issued a notice of its intent to review the initial order
and identified three separate issues which it intended to review. Mr. Durham claims that
TREF’s limitation of its review to three specific issues impeded and limited the arguments
he could present before TREF at the hearing. Mr. Durham’s argument fails to recognize
the provisions of Tennessee Code Annotated section 4-5-315(b), which states, in pertinent
part: “A petition for appeal from an initial order shall be filed with the agency, or with any
person designated for such purpose by rule of the agency, within fifteen (15) days after
entry of the initial order.” Tenn. Code Ann. § 4-5-315(b). As such, Mr. Durham was well
within his rights to file his own petition and identify the issues of which he sought review.
He failed to do so and, therefore, we find his argument as to the June 10th hearing to be
without merit.
As to Mr. Durham’s argument insofar as it pertains to his petition for judicial review
hearing, Mr. Durham contends that the trial court had the “opportunity to correct [TREF’s]
mistakes” but did not do so and further violated his due process rights. Specifically, Mr.
Durham relies on Tennessee Code Annotated section 4-5-322(g), which provides as
follows:
The review shall be conducted by the court without a jury and shall be
confined to the record. In cases of alleged irregularities in procedure before
the agency, not shown in the record, proof thereon may be taken in the court.
Tenn. Code Ann. § 4-5-322(g). Citing this statute, Mr. Durham argues that it was
incumbent on the trial court to correct TREF’s mistakes and appears to contend that he did
not have to petition the trial court to do so. We find no merit to Mr. Durham’s argument
in this regard. Rather, the statute states that proof of alleged irregularities “may” be taken
in court. That language in and of itself does not indicate any type of mandatory action
required to be taken by the trial court. Moreover, contrary to Mr. Durham’s argument,
Tennessee Code Annotated section 4-5-322(e) provides that,
[i]f, before the date set for hearing, application is made to the court for leave
to present additional evidence, and it is shown to the satisfaction of the court
that the additional evidence is material and there were good reasons for
failure to present it in the proceeding before the agency, the court may order
that the additional evidence be taken before the agency upon conditions
determined by the court.
Tenn. Code Ann. § 4-5-322(e). Accordingly, the statutory framework provided Mr.
Durham with an avenue to petition the court to allow the presentation of additional
evidence before the agency. He failed to do so. We find no error.
- 10 -
Whether Mr. Durham’s Civil Penalty is Unconstitutionally Excessive
Mr. Durham’s next issue on appeal concerns whether his civil penalty should be set
aside as excessive under both the United States Constitution and the Tennessee
Constitution. The Eighth Amendment of the Constitution and Article I, Section 16 of the
Tennessee Constitution “both provide that excessive bail ‘shall not be required, nor
excessive fines imposed, nor cruel and unusual punishments inflicted.’” Stuart v. State
Dep’t of Safety, 963 S.W.2d 28, 34 (Tenn. 1998). Tennessee courts construe the excessive
fines clause of Article I, Section 16 “to be coextensive” with the United States Constitution.
Id. (citing State v. Harris, 844 S.W.2d 601, 603 (Tenn. 1992); State v Black, 815 S.W.2d
166, 188–89 (Tenn. 1991)). In United States v. Bajakajian, 524 U.S. 321 (1998), the
Supreme Court of the United States noted that:
This Court has had little occasion to interpret, and has never actually applied,
the Excessive Fines Clause. We have, however, explained 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.” The Excessive
Fines Clause thus “limits the government’s power to extract payments,
whether in cash or in kind, ‘as punishment for some offense.’”
Id. at 327–28 (internal citation omitted). While the gravamen of Bajakajian concerned the
matter of a civil forfeiture, we note that its analysis was predicated on the Excessive Fines
Clause. “The touchstone of the constitutional inquiry under the Excessive Fines Clause is
the principle of proportionality: The amount of the forfeiture must bear some relationship
to the gravity of the offense it is designed to punish.” Bajakajian, 524 U.S. at 334.
Accordingly, the question as to whether a penalty is disproportionate to the offense calls
for a facts-based inquiry. Id. at 336–37 n.10. The Bajakajian court set forth four separate
factors to consider when determining whether a fine is unconstitutionally excessive. Id. at
337–39. These factors include: (1) the nature of the crime and its relation to other illegal
activities; (2) whether the defendant “fit into the class of persons for whom the statute was
principally designed”; (3) “the maximum sentence and fine that could have been imposed”;
and (4) “the nature of the harm caused by the [defendant’s] conduct.” United States v.
Collado, 348 F.3d 323, 328 (2d Cir. 2003) (citing Bajakajian, 524 U.S. at 337–39).
Accordingly, we will address this issue pursuant to the factors espoused above.
First, TREF found that Mr. Durham had committed numerous violations of both the
Disclosure Act and the Contribution Act, including failing to report certain items and the
misuse of campaign funds. In total, there were approximately 300 separate violations. A
subset of these violations concerned the misuse of campaign funds in the amount of more
than $80,000.00, which is a violation of Tennessee Code Annotated section 2-10-114(b).
As to the second factor, it is clear that Mr. Durham fits into the class of individuals for
which the “statute was principally designed” as the statute was enacted in order to regulate
financing as it pertains to election campaigns in the State of Tennessee. Third, the penalty
- 11 -
assessed against Mr. Durham is within the maximum fine that could have been imposed.
As noted earlier, a violation of the Contribution Act is subject to a civil penalty of “not
more than ten thousand dollars ($10,000) or one hundred fifteen percent (115%) of the
amount of all contributions made or accepted in excess of the limitations established by
this part, whichever is greater.” Tenn. Code Ann. § 2-10-308(a). Moreover, a Class 2
offense under the Disclosure Act, which is also at issue here, is subject to “a maximum
civil penalty of not more than ten thousand dollars ($10,000) or fifteen (15%) of the amount
in controversy,” whichever is greater. Tenn. Code Ann. § 2-10-110(a)(2). Here, there were
approximately 300 violations and, pursuant to the statutes, Mr. Durham could have been
subjected to a penalty for each of these violations, the total of which was estimated to be
more than $3 million. In determining whether Mr. Durham’s civil penalty is excessive, we
note the existence of case law wherein courts have held that “there is no constitutional
violation when the forfeiture does not exceed the maximum fine allowed by statute.”
United States v. Hill, 167 F.3d 1055, 1072–73 (6th Cir. 1999) (citing United States v. Elder,
90 F.3d 1110, 1132–33 (6th Cir. 1996)). Here, Mr. Durham was assessed a civil penalty
for these violations in the amount of $460,500.00. This is well below the statutory
maximum of the penalty he could have received. Finally, as to the fourth factor, we
similarly find that this weighs against Mr. Durham. The Tennessee Supreme Court has
noted the interest in “protecting the integrity and fairness of the political process.” Bemis
Pentecostal Church v. State, 731 S.W.2d 897, 904 (Tenn. 1987). Specifically, the Supreme
Court stated that
[t]he availability of such information not only underwrites the reliability of
election results as a reflection of popular will, but it also preserves the
integrity of the system by deterring corruption and the appearance of
corruption. Disclosure assures contributors that their money has been spent
in the manner for which it was solicited or for which it was donated.
Prevention of fraudulent fund-raising or of funding of campaign activity by
front organizations is made more feasible, justifying disclosure both of
contributions and expenditures as two sides of the same coin. Records-
keeping and routine disclosure further these State interests by preserving a
paper trail by which the conversion of contributions into legitimate
expenditures may be traced.
Id. Accordingly, in light of the plethora of violations found to have been committed by
Mr. Durham, we find that the State’s interest in “protecting the integrity and fairness of the
political process” here to be not only implicated but severely contravened. Accordingly,
we do not find that the civil penalty assessed here is unconstitutionally excessive.
TREF’s Other Purported Errors
Mr. Durham’s last issue on appeal focuses on two arguments. First, he argues that,
- 12 -
although the trial court correctly identified the substantial and material evidence standard
to be controlling, it failed to correctly analyze the record. Second, Mr. Durham argues that
the trial court violated Rule 201 of the Tennessee Rules of Evidence by declining to take
judicial notice of registry policies and prior civil penalty assessments. We will address
each of these separately.
As to his first argument concerning the substantial and material evidence standard,
Mr. Durham contends that the trial court misapplied the test and therefore reached an
incorrect result. Specifically, Mr. Durham cites Martin, noting that “[t]he substantial and
material evidence standard requires a searching and careful inquiry into the record to
determine the basis for the administrative decision” and courts “review the record for such
relevant evidence as a reasonable mind might accept to support a rational conclusion and
such as to furnish a reasonably sound basis for the action under consideration.” Martin, 78
S.W.3d at 275. Mr. Durham argues that the trial court did not “engag[e] in a full analysis,”
and states that, while he failed to submit evidence, the absence of any evidence submitted
by him does not suggest that TREF’s evidence alone is sufficient to justify its positions.
We find Mr. Durham’s argument in this regard to be without merit. As noted previously,
our judicial review, as was the trial court’s, is confined to the record on appeal. Based
upon our review, we conclude that the trial court assessed the record and reviewed the
administrative agency’s decision – as noted in Martin – and determined there was
substantial and material evidence to affirm TREF’s decision. We agree and find no error.
Mr. Durham’s final argument centers on his contention that the trial court failed to
take judicial notice of certain purported evidence pursuant to Rule 201 of the Tennessee
Rules of Evidence. According to the trial court’s order, Mr. Durham requested, at oral
argument, that the court take judicial notice of certain information. However, we can find
no citation to the record in Mr. Durham’s brief on appeal which directs us to what specific
and actual information he wanted the trial court to take judicial notice of. As such, we find
this issue waived.
CONCLUSION
Based on the foregoing, the trial court’s order is affirmed.
s/ Arnold B. Goldin
ARNOLD B. GOLDIN, JUDGE
- 13 -