Relates to the undertaking required during the pendency of a stay of enforcement of a judgment against a participating or non-participating manufacturer under the master settlement agreement.
TITLE OF BILL: An act to amend the civil practice law and rules, in relation to the undertaking required during the pendency of a stay of enforcement of a judgment against a participating or non-participating manufacturer under the master settlement agreement
PURPOSE: The purpose of this bill is to safeguard the flow of funds under the tobacco master settlement agreement ("MSA") to the state and local governments by limiting the bond that MSA signatories and their successors and affiliates and nonparticipating manufacturers must post to stay the execution of a judgment during appeal to two-hundred fifty million dollars of which 30 percent must be posted in cash, regardless of the value of the judgment.
SUMMARY OF PROVISIONS: This bill would provide that the maximum aggregate undertaking required staying the execution of a judgment involving a signatory, a successor to a signatory, or an affiliate of a signatory to the MSA or a nonparticipating manufacturer shall not exceed $250 million of which 30 percent must be in cash. This bill also would provide that a court may require a higher bond in an amount not to exceed the total amount of the judgment if the appellee demonstrates by preponderance of the evidence that a defendant is improperly dissipating assets outside the ordinary course of business in order to avoid Payment of a judgment.
For purposes of this bill, the term "master settlement agreement" shall mean the settlement agreement (and related documents) entered into on November 23, 1999 by the state and leading United States tobacco product manufacturers, as defined in Section 1399-00 of the Public Health Codes.
JUSTIFICATION: The Tobacco Master Settlement Agreement is vitally important to New York State, its local governments and other states. It delivers hundreds of millions of dollars in revenues to the state and its localities annually, and it will continue to do so for years to come. In 2012 alone, New York State, New York City and other New York Counties received approximately $740,000,000 under the MSA and total payments to date under the MSA to New York State, New York City and other New York Counties are approaching $11 billion. However, the tobacco companies that make payments to the state pursuant to the MSA are involved in extensive litigation, which on occasion produces verdicts in the hundreds of millions or billions of dollars.
Many of these large verdicts are reduced or overturned on appeal. But if such a verdict were entered against the tobacco companies in New York, the only way the companies could prevent a plaintiff from collecting on the judgment during the appeal would be to post an undertaking equal to the full amount of the judgment. If the companies could not afford to post an undertaking in this amount, they would be unable to protect their assets and hence their ability to make their MSA payments to the states during the appeal. Thirty-eight states have recognized the possibility that a large undertaking may cause the tobacco companies to be unable to meet their obligations to the states under the MSA, and these states have passed legislation that limits the size of the required undertaking in cases involving large judgments. In addition, five other states do not require a defendant
to post an undertaking at all during an appeal, and two states' Supreme Courts have amended their court rules to limit the maximum amount of an undertaking so 90% of the states currently limit the undertaking requirement. Some states have passed legislation that applies to all litigants, while other states have passed legislation that applies only to MSA signatories, successors, and affiliates.
The undertaking limits in most of these states range from $1 -million to $250 million. By limiting the amount of the undertaking that defendants must pest to stay the execution of the judgment during appeal, such legislation guarantees that New York State, New York City and other New York Counties will continue to receive their MSA payments while the MSA signatories, affiliates, successors and nonparticipating manufacturers appeal such a judgment.
This bill would impose a $250 million limit on the undertaking that MSA signatories, affiliates, successors and nonparticipating manufacturers must post to stay the execution of a judgment in New York and require that at least 30 percent of the bond be posted in cash. This undertaking limit would not in any way affect the outcome of the appeal or the ultimate ability of the plaintiff to prevail in the appeal. Plaintiffs are protected by the provision in the bill allowing for a higher bond amount up to the full value of the judgment if the court determines that the appellant is dissipating assets to avoid paying a judgment on appeal. This same provision is included in nearly all of the laws passed in thirty-eight other states that place a maximum amount on the size of the undertaking that must be posted in order to stay execution of judgment during an appeal. This legislation thus would not injure plaintiffs in any way, but would merely ensure that the tobacco companies are able fully to utilize their constitutional right to appeal, while protecting the interest of the state in the continued receipt of its MSA funds during the course of appeal.
LEGISLATIVE HISTORY:; New bill
FISCAL IMPLICATIONS: No fiscal impact protects revenues of the state and counties.
This act shall take effect on the thirtieth day after it shall have become a law, and shall apply to any cause of action pending on or filed on or after such effective date.
STATE OF NEW YORK ________________________________________________________________________ 3852 2013-2014 Regular Sessions IN SENATE February 22, 2013 ___________Introduced by Sen. DeFRANCISCO -- read twice and ordered printed, and when printed to be committed to the Committee on Judiciary AN ACT to amend the civil practice law and rules, in relation to the undertaking required during the pendency of a stay of enforcement of a judgment against a participating or non-participating manufacturer under the master settlement agreement THE PEOPLE OF THE STATE OF NEW YORK, REPRESENTED IN SENATE AND ASSEM- BLY, DO ENACT AS FOLLOWS: Section 1. This act shall be known and may be cited as "state and local government master settlement agreement proceeds safeguard act." S 2. Legislative intent. New York state, New York city and county governments throughout the state are the recipients of hundreds of millions of dollars each year under the master settlement agreement. The total of all master settlement payments to these governments over the years has so far exceeded eleven billion dollars. These funds are vital- ly important and any disruption in these payments would put the recipi- ents at financial risk. The legislature hereby finds that it is in the public interest to enact the "state and local government master settle- ment agreement proceeds safeguard act" in order to continue the flow of these funds to the state and local governments which depend on this revenue during the appeal of a judgment against master settlement agree- ment signatories, affiliates, successors and non-participating manufac- turers. S 3. The civil practice law and rules is amended by adding a new section 5519-a to read as follows: S 5519-A. STAY OF ENFORCEMENT FOR MASTER SETTLEMENT AGREEMENT PARTIC- IPATING OR NON-PARTICIPATING MANUFACTURERS OR THEIR SUCCESSORS OR AFFIL- IATES. (A) IN CIVIL LITIGATION UNDER ANY LEGAL THEORY INVOLVING A PARTICIPATING MANUFACTURER OR NON-PARTICIPATING MANUFACTURER, AS THOSE TERMS ARE DEFINED IN THE MASTER SETTLEMENT AGREEMENT, OR ANY OF THEIR SUCCESSORS OR AFFILIATES, THE UNDERTAKING REQUIRED DURING THE PENDENCYEXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08897-01-3 S. 3852 2
OF ALL APPEALS OR DISCRETIONARY REVIEWS BY ANY APPELLATE COURTS IN ORDER TO STAY THE EXECUTION OF ANY JUDGMENT OR ORDER GRANTING LEGAL, EQUITABLE OR OTHER RELIEF DURING THE ENTIRE COURSE OF APPELLATE REVIEW, INCLUDING REVIEW BY THE UNITED STATES SUPREME COURT, SHALL BE SET PURSUANT TO THE APPLICABLE PROVISIONS OF LAW OR COURT RULES; PROVIDED, HOWEVER, THAT THE TOTAL UNDERTAKING REQUIRED OF ALL APPELLANTS COLLECTIVELY SHALL NOT EXCEED TWO HUNDRED FIFTY MILLION DOLLARS, REGARDLESS OF THE VALUE OF THE JUDGMENT APPEALED. THIS LIMITATION SHALL APPLY ONLY IF APPELLANTS FILE AT LEAST THIRTY PERCENT OF THE TOTAL AMOUNT OF THE UNDERTAKING IN THE FORM OF CASH, A LETTER OF CREDIT, A CERTIFICATE OF DEPOSIT, OR OTHER CASH EQUIVALENT WITH THE COURT. THE CASH OR CASH EQUIVALENT SHALL BE DEPOSITED BY THE CLERK OF THE COURT IN THE ACCOUNT OF THE COURT, AND ANY INTEREST EARNED SHALL BE UTILIZED AS PROVIDED BY LAW. (B) NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION (A) OF THIS SECTION, UPON PROOF BY A PREPONDERANCE OF THE EVIDENCE, BY AN APPELLEE, THAT AN APPELLANT IS DISSIPATING ASSETS OUTSIDE THE COURSE OF ORDINARY BUSINESS TO AVOID PAYMENT OF A JUDGMENT, A COURT MAY REQUIRE THE APPELLANT TO POST A BOND IN AN AMOUNT UP TO THE TOTAL AMOUNT OF THE JUDGMENT. (C) AS USED IN THIS SECTION, "MASTER SETTLEMENT AGREEMENT" SHALL HAVE THE SAME MEANING AS SET FORTH IN SUBDIVISION FIVE OF SECTION THIRTEEN HUNDRED NINETY-NINE-OO OF THE PUBLIC HEALTH LAW. S 4. This act shall take effect on the thirtieth day after it shall have become a law, and shall apply to any cause of action pending on or filed on or after such effective date.