The Law

Nassau County, like most counties generate revenue through property taxes and disperse the funds to municipalities and other jurisdictions within the county. Taxes are determined by property values. In retail properties, a factor used to determine value is income generated. Assessed values are sometimes disputed, and when found to be overvalued, the property taxes must be refunded. Nassau County was finding itself refunding at a rate of 100 million dollars annually. This was becoming a significant liability considering that the revenue cannot be reclaimed from the receiving jurisdictions.

To improve assessment accuracy and reduce the county’s exposure to costly tax refunds on commercial properties, owners were mandated to provide Annual Statements of Income and Expenses (ASIE). In mid‑1980’s a fine of $500 was imposed on those who did not comply. With a compliance rate only near 80 percent, in 2013, the fine was changed from a flat rate to a percentage of the property value, ranging from 0.25 to 0.75 of the property value depending on the duration of non‑compliance.

Retail Property Trust (the "Trust"), owner of the second largest mall in New York State, Roosevelt Field Mall in Garden City, was fined nearly $4.8 million for failing to comply with Nassau County's ASIE Law for 2013 and 2014. The Trust did not pursue remedies under state law but instead filed a federal lawsuit, challenging the fine on constitutional grounds, arguing violations of the Eighth Amendment's Excessive Fines Clause and the Fourteenth Amendment's Due Process Clause, as well as several state laws. The Trust also sought sanctions, alleging the County misrepresented the usefulness of ASIE data and its data security.

The court’s findings and rulings:

1. Excessive Fines Clause Applies to Business Entities
Despite Judge Wesley’s objection, a central question was whether the Eighth Amendment’s protection against excessive fines extends to corporations and business trusts. Judge Wesley argued that the court did not need to decide whether the Excessive Fines Clause applies to corporations or trusts, since the fine was not excessive. He emphasized the principle of judicial restraint, suggesting that courts should avoid unnecessary constitutional rulings.

The court held that it does, reasoning that punitive monetary sanctions can harm shareholders and beneficiaries just as they do individuals. This clarification sets an important precedent for future cases involving corporate penalties.

2. Fine Not Excessive Under the Constitution
Applying the Supreme Court’s Bajakajian factors, the court found the $4.8 million fine was not “grossly disproportional” to the Trust’s offense. Key considerations included:

• The Trust’s willful and ongoing non‑compliance
• The penalty’s design to target large commercial entities
• The fine’s alignment with statutory guidelines, scaling with property value and duration of non‑compliance
• The significant harm to public finances caused by inaccurate assessments

The court noted that similar or even higher percentage‑based fines exist in other jurisdictions, reinforcing the proportionality of Nassau County’s approach.

3. Due Process Was Satisfied
The Trust argued it was fined without adequate notice or opportunity to be heard. The court disagreed, citing Nassau County’s procedures for notifying non-compliant owners and the availability of New York’s Article 78 proceedings, which allow property owners to challenge fines before any deprivation occurs. The court concluded that these remedies provided sufficient procedural due process.

4. Substantive Due Process and Legislative Purpose
The Trust claimed the ASIE Law lacked a rational basis and was merely a revenue‑generating tool. The court rejected this, finding that the law’s goal of improving assessment accuracy was a legitimate legislative purpose. The court emphasized that legislative acts not targeting fundamental rights are presumed constitutional if any rational basis exists.

5. No Sanctions against the County
The Trust’s request for sanctions was denied, as the court found no clear evidence of bad faith or egregious misconduct by county officials regarding the usefulness of ASIE data or data security protocols.

We agree with the district court (Seybert, J.) that the penalty imposed on the Trust was not constitutionally excessive, that the Trust received adequate procedural due process, and that the ASIE Law does not violate the Trust’s substantive‑due‑process rights. We also conclude that the district court did not abuse its discretion in declining to impose sanctions on Defendants. We therefore AFFIRM the district court’s judgment in full.

(The Retail Property Trust v. Nassau County Department of Assessment et al. (United States Court of Appeals for the Second Circuit, Docket No: 25‑907))

Argued: March 2026
Decided: August 2026

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