senate Bill S3852A

Amended

Relates to the undertaking required during the pendency of a stay of enforcement of a judgment under the master settlement agreement

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Bill Status


  • Introduced
  • In Committee
  • On Floor Calendar
    • Passed Senate
    • Passed Assembly
  • Delivered to Governor
  • Signed/Vetoed by Governor
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actions

  • 22 / Feb / 2013
    • REFERRED TO JUDICIARY
  • 10 / Jun / 2013
    • COMMITTEE DISCHARGED AND COMMITTED TO RULES
  • 10 / Jun / 2013
    • ORDERED TO THIRD READING CAL.1190
  • 13 / Jun / 2013
    • AMENDED ON THIRD READING 3852A
  • 21 / Jun / 2013
    • PASSED SENATE
  • 21 / Jun / 2013
    • DELIVERED TO ASSEMBLY
  • 21 / Jun / 2013
    • REFERRED TO JUDICIARY
  • 08 / Jan / 2014
    • DIED IN ASSEMBLY
  • 08 / Jan / 2014
    • RETURNED TO SENATE
  • 08 / Jan / 2014
    • REFERRED TO JUDICIARY
  • 13 / May / 2014
    • 1ST REPORT CAL.665
  • 14 / May / 2014
    • 2ND REPORT CAL.
  • 19 / May / 2014
    • ADVANCED TO THIRD READING
  • 16 / Jun / 2014
    • AMENDED ON THIRD READING 3852B
  • 20 / Jun / 2014
    • PASSED SENATE
  • 20 / Jun / 2014
    • DELIVERED TO ASSEMBLY
  • 23 / Jun / 2014
    • REFERRED TO JUDICIARY

Summary

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.

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Bill Details

Versions:
S3852
S3852A
S3852B
Legislative Cycle:
2013-2014
Current Committee:
Assembly Judiciary
Law Section:
Civil Practice Law and Rules
Laws Affected:
Add ยง5519-a, CPLR

Sponsor Memo

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.


view bill text
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 3852--A
    Cal. No. 1190

                       2013-2014 Regular Sessions

                            I N  S E N A T E

                            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.

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