How did the New York appellate court justify tossing the monetary penalty while upholding some liability findings?
Executive summary
1. The appellate ruling in one paragraph
A divided five‑judge panel of New York’s Appellate Division affirmed key liability findings that President Trump and his companies engaged in persistent civil fraud but struck down the roughly $500–$527 million monetary penalty as excessive and unconstitutional, with the majority concluding the penalty crossed constitutional limits while endorsing parts of the trial court’s injunctive remedies [1] [2] [3].
2. Why the court said the fine was excessive — constitutional and proportionality concerns
The central justification for tossing the monetary award was that its size was disproportionate to the harm found and likely implicated constitutional protections against unduly severe punishment; judges on the majority wrote that although harm occurred, it was “not the cataclysmic harm” that could justify a nearly half‑billion‑dollar award and flagged Eighth Amendment proportionality principles as a limiting framework [1] [4]. The majority described the $355 million judgment plus interest, which grew past $500 million, as crossing a constitutional line and labelled the monetary punishment “excessive,” a reasoning repeated across media summaries of the opinion [4] [2] [3].
3. Why liability was left intact — factual findings and consumer protection theory
Despite rejecting the monetary penalty, two or more judges endorsed the trial court’s core factual findings that misrepresentations in financial statements established liability under New York’s civil fraud and consumer‑protection theories; several appellate judges explicitly stated that the attorney general had proven the case and that the defendants were liable for persistent fraud, even while dissenting on remedy and the penalty’s magnitude [2] [5]. Media coverage emphasizes that the decision thus separates culpability from punishment: the record supported fraud findings but did not, in the majority’s view, support the extraordinary monetary sanction imposed by Judge Engoron [3] [1].
4. The fractured panel, competing legal views, and procedural posture
The opinion was sharply divided and long, with some judges agreeing that the lawsuit was justified and others contending the attorney general exceeded authority by using consumer‑protection statutes to police private lender disputes — a split that produced carefully tailored holdings and partial endorsements of colleagues’ reasoning [6] [2]. Reporters and legal observers note the appellate court’s unusual length and the way justices picked and chose among each other’s analyses to reach a pragmatic disposition: uphold liability to reflect the factual findings while trimming the remedy as unconstitutional or disproportionate, which one commentator said effectively “punted” unresolved legal questions up to the New York Court of Appeals for finality [1] [2].
5. Implications, alternative readings, and what remains unresolved
The decision leaves a clear, contested split: proponents of the ruling argue it reaffirms enforcement against financial misstatements while guarding against punitive overreach, citing the majority’s concern about constitutional limits on civil penalties [4] [3]; skeptics counter that tossing the monetary penalty undermines deterrence and creates ambiguity about the proper scope of state consumer‑protection remedies when those remedies involve large restitutionary awards [6]. Importantly, the appellate panel’s fragmentation means open legal questions remain — including whether the penalty’s structure implicates other constitutional clauses or whether higher courts will revisit the balance between proven harm and proportional monetary sanctions — a prospect the BBC reports as likely to push the matter upward for final resolution [1].