Temple-Inland, Inc. v. Cook, 192 F. Supp. 3d 527

Temple-Inland, a Delaware-incorporated manufacturer with principal operations outside Delaware, was audited by Delaware for alleged failures to report and escheat unclaimed property covering 1986–2007; the audit used statistical estimation for years where the company lacked records.
Delaware requires holders to report abandoned property and may hold funds in trust indefinitely; the state relies heavily on unclaimed property revenue and historically had limited enforcement and no record-retention statute.
The auditors (contractor Kelmar) used a ratio/extrapolation method: a base-period sample (years with records) produced a ratio estimator applied to reach-back years, but included items with out-of-state payee addresses and prior filings to other states in the base liability, inflating Delaware’s asserted deficiency.
Plaintiff protested administratively; the independent reviewer reduced the assessment substantially but the Secretary of Finance adopted a remaining liability (~$1.39M), and Temple-Inland sued in federal court alleging violations of substantive due process, the Takings Clause, and the Ex Post Facto Clause.
Delaware later amended §1155 to allow estimation (reasonableness standard) and, after this litigation began, limited audit reachbacks to 22 years; the audit here reached back 22 years.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Pullman abstention	Federal court should decide; statute unambiguous so no abstention	Ask federal court to abstain until state court interprets §1155 as ambiguous	Abstention denied — §1155 not ambiguous and Pullman not warranted
Substantive due process (executive action)	Audit conduct (22-year reachback, loophole use of statute of limitations, lack of notice on record retention, retroactive estimation, flawed sampling, multiple liability) shocks the conscience	Audit authorized by statute (§1155); estimation reasonable tool; no conscience-shocking conduct	Summary judgment for plaintiff on substantive due process claim — court finds defendants’ combined actions shock the conscience (remedy deferred)
Takings Clause	Estimation risked taking property that belonged to holder; if estimation swept non-abandoned property, Takings claim valid	No property interest in abandoned funds; a reasonable estimation is not a taking	Takings claim denied on summary judgment — unresolved factual dispute whether estimation was reasonable; triable issue remains
Ex Post Facto Clause	Retroactive application and punitive effect of §1155 could be punitive/cosmetic criminal punishment	§1155 is civil, remedial, not criminal punishment	Summary judgment for defendants on ex post facto claim — §1155 is civil, not a disguised criminal penalty

Texas v. New Jersey, 379 U.S. 674 (establishes priority rules for state escheat of unclaimed property)
Delaware v. New York, 507 U.S. 490 (interpreting the primary/secondary rules from Texas v. New Jersey)
Railroad Comm’n v. Pullman Co., 312 U.S. 496 (Pullman abstention doctrine)
Smith v. Doe, 538 U.S. 84 (civil vs. criminal inquiry for ex post facto analysis)
Kennedy v. Mendoza-Martinez, 372 U.S. 144 (factors for determining whether a civil sanction is punitive)
Usery v. Turner Elkhorn Mining Co., 428 U.S. 1 (retroactivity and burden-shifting analysis)
Hudson v. United States, 522 U.S. 93 (monetary penalties are not affirmative restraints for Mendoza-Martinez analysis)
Phillips v. Washington Legal Foundation, 524 U.S. 156 (takings doctrine applied to monetary interest in identifiable funds)