Susan Grashoff v. David J. Adams

In the

United States Court of Appeals

for the Seventh Circuit

____________________

No. 20-2739

SUSAN GRASHOFF,

Plaintiff-Appellant,

v.

DAVID J. ADAMS,

Commissioner of the Indiana

Department of Workforce Development,

Defendant-Appellee.

____________________

Appeal from the United States District Court for the

Northern District of Indiana, Fort Wayne Division.

No. 1:19-CV-00276-HAB — Holly A. Brady, Judge.

____________________

ARGUED MAY 13, 2021 — DECIDED APRIL 18, 2023

____________________

Before SYKES, Chief Judge, and SCUDDER and KIRSCH,

Circuit Judges.

Commissioner David Adams has been substituted for former Commis-

sioner Frederick D. Payne, who resigned from office. See FED. R. APP.

P. 43(c)(2).

2 No. 20-2739

SYKES, Chief Judge. Indiana provides weekly unemploy-

ment benefits to claimants who meet certain qualifications.

People working part-time jobs qualify, but they must accu-

rately report their income so the Indiana Department of

Workforce Development can reduce the weekly payout

accordingly. A claimant who knowingly fails to disclose

earnings on a weekly application must repay all benefits

received for that week and is subject to a civil penalty of 25%

of that forfeited amount.

Susan Grashoff violated the reporting requirement by

omitting her part-time income on 24 weekly applications.

After an investigation, the Department determined that she

knowingly violated the law and assessed a forfeiture and

penalty totaling $11,190—the sum of all benefits she received

for each of the 24 weeks, see IND. CODE § 22-4-13-1.1(a), plus

the 25% penalty, see id. § 22-4-13-1.1(b). An administrative

law judge affirmed the sanction, see id. § 22-4-13-1.1(c), and

Grashoff did not seek state judicial review.

Instead, she filed this federal suit under 42 U.S.C. § 1983

alleging that the sanction violates the Eighth Amendment’s

Excessive Fines Clause. Ruling on cross-motions for sum-

mary judgment, the district court rejected the claim. The

judge first addressed whether the forfeiture of benefits is

properly classified as remedial or punitive. That’s the first

question in all excessive-fines cases: purely remedial sanc-

tions are not subject to Eighth Amendment review. Grashoff

argued that the forfeiture falls on the punitive side of the

line because she remained eligible for some benefits during

the 24-week period despite her part-time income. The judge

rejected that argument and classified the entire forfeiture as

remedial.

No. 20-2739 3

That left the 25% penalty, which everyone agreed is a

punitive sanction subject to Eighth Amendment scrutiny.

Applying the framework established in United States v.

Bajakajian, 524 U.S. 321 (1998), the judge concluded that a

25% penalty is not grossly disproportionate to the serious-

ness of the reporting offense and thus is not unconstitution-

ally excessive.

Grashoff challenges both aspects of the decision below.

We don’t need to decide whether the judge correctly drew

the remedial/punitive line. Grashoff concedes that at least

part of the forfeiture—the difference between the benefits

she received and the smaller amount she would have re-

ceived had she reported her income—is purely remedial.

The remaining forfeiture amount, even when considered

together with the 25% penalty, is not a grossly dispropor-

tionate sanction for Grashoff’s 24 knowing violations of the

law.

Grashoff also contends that the Eighth Amendment in-

quiry must consider the sanctioned person’s ability to pay.

We can leave that legal question for another day. Grashoff

has sufficient assets to pay this civil sanction.

I. Background

A. Statutory Background

Indiana’s unemployment compensation system is admin-

istered by the state Department of Workforce Development

and funded primarily by employer contributions. IND. CODE

§§ 22-4-26-1, 22-4-10-1. Unemployed and “partially unem-

ployed” claimants are eligible to receive benefits. Id. §§ 22-4-

3-1 to -2. But income earned from part-time work is

4 No. 20-2739

“[d]eductible income” and reduces the claimant’s benefit

amount in a given week. Id. § 22-4-5-1.

The Department needs to know a claimant’s exact income

to ensure eligibility for benefits and to calculate the correct

amount of the weekly benefit. When claimants underreport

their income, they receive more money than they should and

undermine the financial integrity of the fund. Indiana law

directs the Department to determine and recover overpay-

ments. Id. § 22-4-13-1.

The statutory scheme includes a provision addressing a

claimant’s “knowing” failure to disclose income that “would

disqualify the individual for benefits” or “reduce the indi-

vidual’s benefits.” § 22-4-13-1.1(a). 1 A knowing failure

results in two civil consequences. First, the claimant forfeits

“any benefits … that might otherwise be payable to the

individual for any week in which the failure to disclose or

falsification caused benefits to be paid improperly.” Id. In

other words, a knowing failure to report income during a

weekly benefit period leads to the forfeiture of all benefits

paid during that period. This money goes back into the

unemployment fund.

Second, a knowing failure to report income is subject to a

civil penalty. For a first-time violator, the penalty is 25% of

the “benefit overpayment.” § 22-4-13-1.1(b). The penalty

jumps to 50% for the second violation and to 100% for each

subsequent one. Id. The state deposits most of the money

from these civil penalties into a fund for employment and

1 The Indiana legislature adopted some immaterial amendments to

§ 22-4-13-1.1 while this case has been pending. We use the version that

was in effect at the time Grashoff applied for benefits.

No. 20-2739 5

training services, but 15% goes to the unemployment fund

itself. Id. § 22-4-13-1.1(d). A claimant who knowingly vio-

lates the reporting requirement may also face criminal

penalties. See id. § 22-4-34-4 (class C misdemeanor to know-

ingly violate the statutes concerning the unemployment-

compensation system “except as otherwise provided”); see

also id. § 35-43-5-7(a)(1), (b)(1) (level 6 felony to “knowingly

or intentionally … obtain[] public relief or assistance by

means of … [a] false or misleading oral or written state-

ment … or other fraudulent means” when the “amount of

public relief or assistance involved” is more than $750 but

less than $50,000) (repealed July 1, 2021). 2

B. Grashoff’s Applications for Benefits

For decades Susan Grashoff worked at McDonald’s, in-

cluding as an assistant manager. Throughout her career she

has also taught swimming lessons at her local YMCA, and

she resumed that part-time work in 2010 to supplement her

income from McDonald’s. In late 2016 she lost her job at

McDonald’s. She applied for and received unemployment

benefits starting in December of that year. She submitted

24 weekly claims from then until May 2017, and the

Department paid her $373 for each of those weeks.

Grashoff continued to work at the YMCA during this pe-

riod, earning a total of $2,828.75 from swimming lessons. But

2 Though this provision has been repealed, Indiana criminal law still

covers similar conduct. A person who knowingly makes a false or

misleading statement with the intent to obtain a “government[] or

employment benefit to which the person is not entitled” commits a level

6 felony if the “pecuniary loss” is at least $750 but less than $50,000. IND.

CODE § 35-43-5-4(a)(1), (b)(2).

6 No. 20-2739

she never disclosed this income to the Department when she

submitted claims for benefits, so her payments were not

reduced as they should have been. She failed to do so de-

spite repeated warnings and instructions. For example, the

online application includes a notice titled “IMPORTANT

UNEMPLOYMENT INSURANCE INFORMATION,” which

reads in relevant part:

I understand that I must report all earnings

from employment or self-employment regard-

less of source, including … part-time employ-

ment … .

….

I am aware that if I knowingly make any false

statements or fail to provide required infor-

mation, this could be considered as fraudulent

behavior. If detected, this would require re-

payment of my unemployment benefits, will

cause penalty and interest to be added to the

overpaid amount, … and may lead to civil

and/or criminal prosecution.

In addition, the application form requires claimants to

certify that they have “reported any and all work, earnings,

and self-employment activity for th[e] week” and “that all

answers and information given in th[e] application for

benefits are true and accurate.” The online application form

also contains a link to the Claimant Handbook, which claim-

ants are required to read. The Handbook explains that a

claimant “commit[s] fraud” by “[k]nowingly fail[ing] to

report any earnings.”

No. 20-2739 7

Grashoff did not follow these requirements, nor did she

heed the repeated warnings. She checked “no” on each of

the 24 weekly forms when asked whether she had worked

that week. Moreover, she reported none of her YMCA

earnings during this period, despite certifying each time that

she had reported “any and all work[] [and] earnings … for

th[e] week” and that “all answers and information given …

[were] true and accurate.” Grashoff received a total of $8,952

in benefits from her 24 claims. That amount would have

been $6,123.25 had she complied with the law and truthfully

reported her YMCA income.

The Department eventually discovered Grashoff’s failure

to disclose her earnings. After an investigation, the Depart-

ment notified her that she forfeited and owed repayment of

the full amount of $8,952 in benefits pursuant to sec-

tion 1.1(a). The Department tacked on $2,238 under sec-

tion 1.1(b), the provision authorizing a 25% penalty for first-

time knowing violations of the reporting requirement. That

brought the total sanction to $11,190.

Grashoff requested an administrative review. An ALJ

agreed with the Department’s determination that Grashoff

had knowingly failed to report the income from her part-

time job. Specifically, the ALJ found that Grashoff was

“responsible for the falsely answered questions about her

earnings” and had “fail[ed] to truthfully answer a direct and

simple question about whether or not she was working.”

The ALJ thus affirmed Grashoff’s liability for “all benefits

received” and the “civil penalties assessed.” 3

3 Grashoff was not criminally charged.

8 No. 20-2739

Grashoff did not seek further review under state law. She

instead sued in federal court seeking declaratory and injunc-

tive relief under § 1983. She alleged that the forfeiture and

penalty provisions in sections 1.1(a) and (b) violate the

Eighth Amendment’s Excessive Fines Clause—both facially

and as applied to her. (She no longer pursues her facial

challenge, so we say no more about it.)

The case proceeded to cross-motions for summary judg-

ment, and the judge entered judgment for the Department.

She first held that section 1.1(a)—the forfeiture/repayment

provision—is remedial rather than punitive and thus

“avoids Eighth Amendment scrutiny.” She then turned to

the 25% penalty in section 1.1(b), which everyone agreed is a

punitive sanction. The judge held that a penalty of 25% of

the total forfeiture amount is not an excessive sanction for

knowing violations of the reporting requirement. To reach

that conclusion, the judge considered the factors outlined in

Bajakajian and found that each one weighed against

Grashoff.

II. Analysis

The Eighth Amendment prohibits the imposition of “ex-

cessive fines.” U.S. CONST. amend. VIII. The Excessive Fines

Clause applies to the states, see Timbs v. Indiana, 139 S. Ct.

682, 687 (2019), and we review de novo the judge’s determi-

nation that the sanction imposed here does not violate it, see

United States v. Bernitt, 392 F.3d 873, 880 (7th Cir. 2004) (citing

Bajakajian, 524 U.S. at 336); Towers v. City of Chicago, 173 F.3d

619, 625 (7th Cir. 1999).

The analysis under the Excessive Fines Clause proceeds

in two steps. The first is a threshold determination: Is the

No. 20-2739 9

sanction punitive or purely remedial? Because the Eighth

Amendment “limits the government’s power to extract

payments … as punishment for some offense,” Austin v.

United States, 509 U.S. 602, 609–10 (1993) (quotation marks

omitted), only punitive sanctions fall within its scope; purely

remedial sanctions are not subject to Eighth Amendment

scrutiny, see Towers, 173 F.3d at 624.

The inquiry does not depend on whether the sanction

arises in the civil or criminal context; “civil sanctions can

constitute punishment, and therefore are subject to the

limitations of the Excessive Fines Clause, if they serve, at

least in part, retributive or deterrent purposes.” Id.; see also

Pimentel v. City of Los Angeles, 974 F.3d 917, 921–22 (9th Cir.

2020) (explaining that the Ninth Circuit has applied the

Excessive Fines Clause to “civil penalties imposed by federal

law” and that Timbs “affirmatively opens the door for Eighth

Amendment challenges to fines imposed by state and local

authorities”).

If the sanction is punitive, the next step is to determine

whether it is “grossly disproportional to the gravity of

[the] … offense.” Bajakajian, 524 U.S. at 334. “The touchstone

of the constitutional inquiry … is the principle of propor-

tionality: The amount of the [fine] must bear some relation-

ship to the gravity of the offense that it is designed to

punish.” Id. But proportionality review is conducted with

two important background principles in mind: “judgments

about the appropriate punishment for an offense belong in

the first instance to the legislature,” and judicial determina-

tions of the seriousness of any particular offense “will be

inherently imprecise.” Id. at 336.

10 No. 20-2739

In Bajakajian the Supreme Court identified several factors

that may help guide the proportionality determination. Id. at

337–39. We have distilled the Court’s instructions into four

general areas of inquiry. The first looks to the “essence of the

[offense] and its relation to other criminal activity.” United

States v. Malewicka, 664 F.3d 1099, 1104 (7th Cir. 2011). The

second asks whether the sanctioned person “fit[s] into the

class of persons for whom the statute was principally de-

signed.” Id. The third considers the “maximum sentence and

fine that could have been imposed” for like conduct. Id. As

the Court explained in Bajakajian, legislative judgments

about maximum sentences and fines for comparable offenses

are “relevant evidence” when assessing the gravity of the

offense. 524 U.S. at 339 n.14. The final factor is “the nature of

the harm caused by the … conduct” that led to the sanction.

Malewicka, 664 F.3d at 1104.

The Bajakajian factors come from a case about criminal

forfeiture—that is, a punishment tied to a conviction for a

crime—and most claims under the Excessive Fines Clause

arise in that context. See Pimentel, 974 F.3d at 921. But the

same basic framework applies here.

A. Punitive or Remedial?

As we’ve noted, it’s undisputed that the 25% penalty un-

der section 1.1(b) is punitive; it punishes claimants who

knowingly fail to disclose their income. The parties also

agree that of the $8,952 in forfeited benefits that Grashoff

was ordered to repay, roughly $2,829—the amount that

would have been deducted from her benefit payments had

she reported her income as required—qualifies as a purely

remedial recoupment of a benefits overpayment. So that part

No. 20-2739 11

of the forfeiture raises no Eighth Amendment concerns.

Grashoff concedes as much. 4

The parties disagree, however, on how to classify the bal-

ance of the forfeiture—the $6,123 in benefits that Grashoff

would have received if, counterfactually, she had disclosed

her YMCA income as required. The Department argues that

this part of the forfeiture also qualifies as remedial because a

claimant who knowingly fails to disclose income becomes

ineligible for any benefits for that week by operation of

section 1.1(a). In other words, Grashoff was not eligible to

receive a single dollar during each of the 24 weeks for which

she knowingly failed to report her YMCA earnings. On the

Department’s reasoning, the entire forfeiture is remedial

because it recoups all wrongfully obtained benefits.

Grashoff sees things differently. She argues that a forfei-

ture of all benefits received is punitive because it strips her of

benefits to which she would have been entitled had she

complied with the law. That is, the Department would have

paid out a reduced benefit of $6,123 if she had disclosed her

income, so the only cost to the fund is the money she re-

ceived above that amount—the $2,829 that would have been

deducted based on her YMCA earnings. The rest of the

forfeiture, she argues, serves only to punish misconduct and

deter fraud.

4 Grashoff conceded this point in her opening brief. She tried to walk

back the concession in her reply brief by suggesting that the entire

forfeiture should be reviewed for excessiveness. That’s too late to raise

new arguments. See Wonsey v. City of Chicago, 940 F.3d 394, 398 (7th Cir.

2019) (“[A]rguments raised for the first time in a reply brief are

waived.”).

12 No. 20-2739

There’s no need for us to resolve this dispute. Assuming

for the sake of argument that Grashoff is right about how to

draw the remedial/punitive line, the total sanction subject to

Eighth Amendment scrutiny is $8,361: the penalty imposed

under section 1.1(b) ($2,238) plus the portion of the total

section 1.1(a) forfeiture that Grashoff insists is punitive

($6,123). And as we will explain, that sanction—$8,361—is

not grossly disproportionate to Grashoff’s offense.

B. Proportionality Analysis

The first Bajakajian factor—the “essence” of the underly-

ing offense and its relation to other unlawful activities—

weighs against Grashoff. Although the sanction at issue here

is civil rather than criminal, the underlying violation of the

law is significant. Grashoff knowingly failed to disclose her

income on 24 applications for public benefits, and each time

she falsely certified that she had reported her earnings and

given truthful answers on her applications. Put another way,

on 24 occasions Grashoff knowingly withheld information

about her income to obtain a higher benefit from a limited

fund meant to support economically vulnerable people in

Indiana. This case is far afield from Bajakajian, where the

essence of the offense—a single failure to report the trans-

portation of more than $10,000 outside the United States—

suggested that the forfeiture of over $357,000 was unconsti-

tutional. Bajakajian, 524 U.S. at 325, 337–38.

Grashoff disagrees, characterizing her offense as a “single

administrative violation” that resulted from her mistaken

understanding of the reporting requirements. That flatly

contradicts the ALJ’s findings that Grashoff knowingly and

repeatedly violated the reporting requirement. Grashoff tries

to lump her 24 violations into one, but the “gravity of [her]

No. 20-2739 13

offenses does not diminish because [she] repeatedly commit-

ted the same offense.” Korangy v. FDA, 498 F.3d 272, 278 (4th

Cir. 2007). To the extent that Grashoff contends that she did

not knowingly fail to report her earnings, the ALJ found

otherwise. Grashoff did not seek judicial review of that

determination, and she cannot use federal excessive-fines

litigation to collaterally attack the ALJ’s factual findings.

The second Bajakajian factor asks whether the sanctioned

person fits within the “class of persons for whom the statute

was principally designed.” Malewicka, 664 F.3d at 1104.

Grashoff clearly does. Section 22-4-13-1.1 generally protects

the integrity and viability of Indiana’s unemployment fund

by recouping improperly paid benefits and punishing

claimants who receive more than their proper share through

their own fraud. Grashoff suggests that the benefits scheme

is meant to help people like her, so applying § 22-4-13-1.1

against her is contrary to the overall statutory purpose. But

the general purpose of providing benefits to unemployed

people does not place Grashoff outside the intended scope of

§ 22-4-13-1.1, which is an antifraud provision that protects

the fund’s ability to pay benefits to legitimate claimants.

Grashoff repeatedly and knowingly failed to disclose income

that would have reduced her benefits, so she is squarely

within the class of persons for whom this statute was princi-

pally designed. See Bajakajian, 524 U.S. at 336 (“[J]udgments

about the appropriate punishment for an offense belong in

the first instance to the legislature.”).

The third factor “considers the maximum fine and sen-

tence that could have been imposed.” Malewicka, 664 F.3d at

1106. Grashoff was not criminally prosecuted, so she con-

tends that it is improper to consider any criminal penalties

14 No. 20-2739

that might have been imposed. This argument misunder-

stands the relevance of this Bajakajian factor. The point is not

to suggest that Grashoff would have been convicted if she

had been criminally prosecuted. Rather, penalties for similar

conduct are relevant evidence of legislative judgments about

the seriousness of the offense. Bajakajian, 524 U.S. at 339 n.14.

Indiana’s criminal penalties for conduct similar to

Grashoff’s demonstrate that the state takes this kind of

public-benefits fraud seriously. A person commits a class C

misdemeanor if he knowingly violates the statutes concern-

ing the unemployment-compensation system, and “[e]ach

day a violation continues constitutes a separate offense.”

§ 22-4-34-4. A class C misdemeanor is punishable by a fine of

up to $500 and imprisonment of up to 60 days, so stacking

these offenses could lead to significant criminal liability. IND.

CODE § 35-50-3-4. Further, at the time of Grashoff’s 24 viola-

tions, it was a level 6 felony to “knowingly … obtain[] public

relief or assistance by means of … [a] false or misleading oral

or written statement[] … or other fraudulent means” when

the public relief involved was over $750. Id. § 35-43-5-7(a)(1),

(b)(1) (repealed July 1, 2021). 5 Level 6 felonies carry a maxi-

mum prison term of 30 months and a fine of up to $10,000.

Id. § 35-50-2-7(b).

Indiana is not alone in viewing unemployment fraud as a

serious offense. For example, Alaska penalizes unemploy-

ment-benefit claimants who knowingly make a material

5 As described supra note 2, the Indiana legislature repealed this provi-

sion while this case has been pending, but the state’s criminal laws still

proscribe and punish this kind of public-benefits fraud. See § 35-43-5-

4(a)(1), (b)(2).

No. 20-2739 15

false statement with the intent to defraud by rendering them

ineligible for benefits for the weeks in which they made the

false statements. ALASKA STAT. ANN. § 23.20.387. The claim-

ant is also disqualified from receiving benefits for between 6

and 52 weeks, id., and is liable for the benefits improperly

paid and a penalty of 50% of such benefits, id. § 23.20.390(a),

(f). If a Minnesota claimant receives an overpayment of

benefits by making a false statement or representation, he

must repay the money to which he was not entitled and pay

a 40% penalty on that amount. MINN. STAT. ANN. § 268.18,

subd. 1(a), subd. 2(a). He also may lose eligibility for unem-

ployment benefits for up to two years, id. § 268.183(a), and is

subject to criminal penalties of up to five years in prison and

a $10,000 fine if he obtains overpayments between $1,000

and $5,000 by “intentional concealment of a material fact,”

id. §§ 268.182, subd.1(a); 609.52, subd. 3(3)(a).

In New Hampshire the knowing failure to disclose a ma-

terial fact to increase unemployment benefits by more than

$1,000 is a class A felony, which is punishable by up to

15 years in prison and a maximum fine of $4,000. N.H. REV.

STAT. ANN. §§ 282-A:161(I); 651:2(II)(a), (IV)(a). Additionally,

all benefits received for that week must be repaid, plus a

20% penalty. Id. § 282-A:163(II). A Colorado claimant who

receives an overpayment of unemployment benefits because

of his “false representation or willful failure to disclose a

material fact … shall pay … the overpayment plus a [65%]

monetary penalty.” COLO. REV. STAT. ANN. § 8-81-101(4)(a)(II).

And in Arizona each knowing failure to disclose a material

fact to increase unemployment benefits is a class 6 felony,

which carries up to a $150,000 fine and a maximum

18-month prison sentence. ARIZ. REV. STAT. ANN. §§ 23-785,

13-801, 13-702(D).

16 No. 20-2739

These legislative judgments about punishments for un-

employment fraud provide clues about the nature and

gravity of Grashoff’s offense. Like other states, Indiana has

deemed unemployment fraud to be a serious offense. The

civil sanction imposed here reflects that judgment, which

“belong[s] in the first instance to the legislature.” See

Bajakajian, 524 U.S. at 336.

The fourth factor directs us to consider the harm caused

by Grashoff’s conduct. Towers, 173 F.3d at 625; see also

Malewicka, 664 F.3d at 1104. Her knowing nondisclosures led

to monetary harm to the unemployment fund in the form of

overpaid unemployment benefits. If unchecked and unde-

terred, this conduct would threaten the viability of this

government-administered fund designed to help financially

vulnerable unemployed people in Indiana.

Moreover, the harm from Grashoff’s conduct goes be-

yond the overpayment of benefits. See U.S. ex rel. Bunk v.

Gosselin World Wide Moving, N.V., 741 F.3d 390, 409 (4th Cir.

2013) (“For purposes of our Eighth Amendment analysis, …

the concept of harm need not be confined strictly to the

economic realm.”); Yates v. Pinellas Hematology & Oncology,

P.A., 21 F.4th 1288, 1316 (11th Cir. 2021) (“Fraud harms the

United States in ways untethered to the value of any ulti-

mate payment.”). Fraud like hers complicates the admin-

istration of the fund. The Department must spend time and

resources investigating fraud and, when detected, remedy-

ing it. Put differently, when some claimants don’t comply

with the baseline requirement to honestly report their in-

come, it becomes harder to administer the fund and compli-

cates the distribution of benefits to all claimants. See Yates,

21 F.4th at 1316 (“Fraud imposes costs … in the form of the

No. 20-2739 17

expense of the constant Treasury vigil [it] necessitate[s].”

(alterations in original) (quotation marks omitted)); United

States v. Aguasvivas-Castillo, 668 F.3d 7, 17 (1st Cir. 2012)

(considering this Bajakajian factor and noting that food-

stamp fraud “introduce[s] waste into the program”).

Fraud also undermines the integrity of the fund and the

public’s faith in the state’s ability to administer it efficiently

and fairly. As other courts have noted when reviewing fines

imposed under the False Claims Act, fraud “erodes the

public confidence in the [g]overnment’s ability to manage”

the defrauded program. United States v. Eghbal, 548 F.3d 1281,

1285 (9th Cir. 2008); see also Gosselin World Wide Moving,

741 F.3d at 409 (noting that the “prevalence of defense

contractor scams … shakes the public’s faith in the govern-

ment’s competence”); Yates, 21 F.4th at 1316 (“[W]hen the

[government] is defrauded, [it] has been damaged to the

extent that such corruption causes a diminution of the

public’s confidence … .” (quotation marks omitted)). The

same is true when claimants defraud the state’s unemploy-

ment fund by underreporting income. These nonmonetary

harms, “although not readily quantifiable, [are] certainly real

and a legitimate subject of the [state’s] concern.” Towers,

173 F.3d at 625.

In sum, all the Bajakajian factors weigh against Grashoff.

A sanction of $8,361 is not grossly disproportionate to the

gravity of the offense that triggered it—here, unemployment

fraud in the form of 24 knowing violations of the require-

ment to disclose income. Although the Excessive Fines

Clause provides a constitutional limit, deference to legisla-

tive judgments about appropriate punishments is one of the

guiding principles that the Supreme Court has identified. See

18 No. 20-2739

Bajakajian, 524 U.S. at 336, 339 n.14. In fixing the amount of

the sanction for this type of fraud, Indiana’s legislature “was

entitled to take into consideration that the [statutory penal-

ty] must perform a deterrent function.” Towers, 173 F.3d at

626; see also Disc. Inn, Inc. v. City of Chicago, 803 F.3d 317, 320

(7th Cir. 2015) (finding no Excessive Fines Clause violation

and noting that difficulties in detecting violations of the

ordinance justified a higher fine for deterrence purposes).

Additionally, the sanction increased in proportion to the

number of fraudulent applications Grashoff submitted; had

she committed less fraud and received fewer benefits for

which she was ineligible, she would owe the Department

less. The “articulable correlation” between the penalty and

the harm that was lacking in Bajakajian is present here. See

524 U.S. at 340–41.

We recognize that $8,361 is not a small sum. But even if

Indiana could recoup overpayments and effectively deter

unemployment fraud with a lesser sanction, the Excessive

Fines Clause does not require the state legislature to adopt

an antifraud statute that penalizes claimants no more than

necessary. Because this sanction is not grossly dispropor-

tionate to the gravity of Grashoff’s offense, it is not unconsti-

tutionally excessive.

C. Consideration of Individual Financial Circumstances

Grashoff also argues that the Eighth Amendment inquiry

must consider her personal financial circumstances—

essentially, her ability to pay. She contends that a sanction is

more likely to be excessive if the sanctioned person has

No. 20-2739 19

limited means with which to pay it. 6 Grashoff points to the

Clause’s historical roots in the Magna Carta, which “required

that economic sanctions … not be so large as to deprive [an

offender] of his livelihood.” Timbs, 139 S. Ct. at 687–88

(second alteration in original) (quotation marks omitted).

The Supreme Court has declined to address whether the

sanctioned person’s financial condition is relevant to the

excessiveness inquiry. See id. at 688; Bajakajian, 524 U.S. at 340

n.15. So do we. Grashoff does not contest the Department’s

evidence that as of 2020, she had more than $500,000 in a

retirement account—including about $12,000 in “Cash,

Money Funds, [and] Bank Deposits”—and significant equity

in her home. At the same time, she had relatively few liabili-

ties: no credit-card balances, about $22,000 remaining on her

mortgage, and a $12,000 obligation to her mother. Even if her

personal circumstances are a relevant factor in the constitu-

tional analysis, she has the ability to pay this sanction.

AFFIRMED

6 We note that even for courts that consider financial circumstances, it is

not clear that a person’s present ability to pay is relevant. See United

States v. Viloski, 814 F.3d 104, 112 (2d Cir. 2016) (noting that “asking

whether a forfeiture would destroy a defendant’s future livelihood is

different from considering as a discrete factor a defendant’s present

personal circumstances” because “hostility to livelihood-destroying fines

is deeply rooted in our constitutional tradition[] [but] consideration of

personal circumstances is not”); United States v. Fogg, 666 F.3d 13, 19 (1st

Cir. 2011) (describing the district court’s error in assessing whether the

defendant “had the means to satisfy the judgment” rather than inquiring

into whether his “post-incarceration livelihood would be imperiled by

the forfeiture”).