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.
Ayes (54): Adams, Addabbo, Ball, Bonacic, Boyle, Breslin, Carlucci, DeFrancisco, Diaz, Dilan, Espaillat, Farley, Felder, Flanagan, Fuschillo, Gallivan, Golden, Griffo, Grisanti, Hannon, Hoylman, Kennedy, Klein, Lanza, Larkin, Latimer, LaValle, Libous, Little, Marcellino, Marchione, Martins, Maziarz, Montgomery, Nozzolio, O'Mara, Parker, Peralta, Perkins, Ranzenhofer, Ritchie, Robach, Sampson, Savino, Seward, Skelos, Smith, Squadron, Stavisky, Stewart-Cousin, Tkaczyk, Valesky, Young, Zeldin
Nays (9): Avella, Gianaris, Gipson, Hassell-Thomps, Krueger, O'Brien, Rivera, Sanders, Serrano
BILL NUMBER:S3852A REVISED 6/14/13
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 parents and successors and nonparticipating manufacturers must post to stay the execution of a judgment during appeal to two-hundred fifty million dollars 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 parent or a successor to a signatory to the MSA or a nonparticipating manufacturer shall not exceed $250 million. 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.
The bill provides that if the appeal is not diligently prosecuted in good faith, the court may lift the stay of enforcement. In addition, the court has the discretion to lift the stay of enforcement if a defendant fails to make any payments to the state or its political subdivisions as required under the master settlement agreement, except for payments that are disputed in good faith.
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-nine 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. In all, 46 of the 50 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, parents, successors and nonparticipating manufacturers appeal such a judgment.
This bill would impose a $250 million limit on the undertaking that MSA signatories, parents, successors and nonparticipating manufacturers must post to stay the execution of a judgment in New York. 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.
The bill also protects plaintiffs from appeals that are not diligently prosecuted in good faith by allowing the court to lift the stay of enforcement. In addition, the court has the discretion to lift the stay of enforcement if a defendant fails to make any payments to the state or its political subdivisions as required under the master settlement agreement, except for payments that are disputed in good faith.
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.
EFFECTIVE DATE: 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--A Cal. No. 1190 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 -- commit- tee discharged and said bill committed to the Committee on Rules -- ordered to a third reading, amended and ordered reprinted, retaining its place in the order of third reading 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. Legislative intent. The legislature hereby finds that this amendment of the laws governing the security necessary to stay enforce- ment of a judgment while on appeal is necessary to preserve the revenue stream to the state provided under the master settlement agreement. S 2. 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 AND NON-PARTICIPATING MANUFACTURERS OR THEIR SUCCESSORS. (A) IN CIVIL LITIGATION UNDER ANY LEGAL THEORY THAT INVOLVES A PARTICIPATING OR NON-PARTICIPATING MANUFACTURER, AS THOSE TERMS ARE DEFINED IN THE MASTER SETTLEMENT AGREEMENT, OR ANY OF THEIR PARENTS OR SUCCESSORS, THE UNDER- TAKING REQUIRED DURING THE PENDENCY 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. WHERE THE COURT SETS THE UNDERTAKING IN AN AMOUNT LESS THAN THE JUDG-EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets [ ] is old law to be omitted. LBD08897-02-3 S. 3852--A 2
MENT, THE APPEAL SHALL BE DILIGENTLY PROSECUTED IN GOOD FAITH. IF THE APPEAL IS NOT DILIGENTLY PROSECUTED IN GOOD FAITH, THE COURT MAY LIFT THE STAY OF ENFORCEMENT. IN ADDITION, IF A DEFENDANT FAILS TO MAKE ANY PAYMENTS TO THE STATE OR ITS POLITICAL SUBDIVISIONS AS MAY BE REQUIRED UNDER THE MASTER SETTLEMENT AGREEMENT, EXCEPT FOR PAYMENTS THAT ARE DISPUTED IN GOOD FAITH, THE COURT SHALL HAVE DISCRETION TO LIFT THE STAY OF ENFORCEMENT. (B) NOTWITHSTANDING THE PROVISIONS OF SUBDIVISION (A) OF THIS SECTION, UPON A FINDING BY THE COURT THAT AN APPELLANT IS DISSIPATING ASSETS OUTSIDE THE COURSE OF ORDINARY BUSINESS TO AVOID PAYMENT OF A JUDGMENT, THE COURT MAY LIFT THE STAY OF ENFORCEMENT OR REQUIRE THE APPELLANT TO POST A BOND IN AN AMOUNT UP TO THE TOTAL AMOUNT OF THE JUDGMENT. (C) UPON A SHOWING OF GOOD CAUSE THAT THE APPELLANT IS NOT DILIGENTLY PROSECUTING THE APPEAL IN GOOD FAITH AS SET FORTH IN SUBDIVISION (A) OF THIS SECTION OR IS DISSIPATING ASSETS AS SET FORTH IN SUBDIVISION (B) OF THIS SECTION, AN APPELLATE COURT MAY LIFT THE STAY OF ENFORCEMENT OR REQUIRE APPELLANT TO POST A BOND IN AN AMOUNT UP TO THE TOTAL AMOUNT OF THE JUDGMENT. (D) 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. (E) NOTHING CONTAINED IN THIS SECTION SHALL BE READ TO ALLOW: (I) SUCH PARTICIPATING MANUFACTURER TO CURTAIL ITS FINANCIAL OBLIGATION UNDER THE MASTER SETTLEMENT AGREEMENT; OR (II) SUCH NON-PARTICIPATING MANUFACTURER TO CURTAIL ITS OBLIGATION TO PLACE THE AMOUNTS SPECIFIED IN SUBDIVISION TWO OF SECTION THIRTEEN HUNDRED NINETY-NINE-PP OF THE PUBLIC HEALTH LAW INTO A QUALIFIED ESCROW FUND AS DEFINED IN SUBDIVISION SIX OF SECTION THIRTEEN HUNDRED NINETY-NINE-OO OF THE PUBLIC HEALTH LAW. S 3. 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.