BILL NUMBER:S3852

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.

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.

                                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.