senate Bill S3852A

2013-2014 Legislative Session

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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Archive: Last Bill Status - Passed Senate


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

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Actions

view actions (17)
Assembly Actions - Lowercase
Senate Actions - UPPERCASE
Jun 23, 2014 referred to judiciary
Jun 20, 2014 delivered to assembly
passed senate
Jun 16, 2014 amended on third reading 3852b
May 19, 2014 advanced to third reading
May 14, 2014 2nd report cal.
May 13, 2014 1st report cal.665
Jan 08, 2014 referred to judiciary
returned to senate
died in assembly
Jun 21, 2013 referred to judiciary
delivered to assembly
passed senate
Jun 13, 2013 amended on third reading 3852a
Jun 10, 2013 ordered to third reading cal.1190
committee discharged and committed to rules
Feb 22, 2013 referred to judiciary

Votes

view votes

May 13, 2014 - Judiciary committee Vote

S3852A
16
5
committee
16
Aye
5
Nay
1
Aye with Reservations
0
Absent
1
Excused
0
Abstained
show Judiciary committee vote details

Jun 10, 2013 - Rules committee Vote

S3852
23
0
committee
23
Aye
0
Nay
2
Aye with Reservations
0
Absent
0
Excused
0
Abstained
show committee vote details

Bill Amendments

Original
A
B (Active)
Original
A
B (Active)

S3852 - Bill Details

Current Committee:
Law Section:
Civil Practice Law and Rules
Laws Affected:
Add §5519-a, CPLR

S3852 - Bill Texts

view 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.

view sponsor memo
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.

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

                                  3852

                       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

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  PENDENCY

 EXPLANATION--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.

S3852A - Bill Details

Current Committee:
Law Section:
Civil Practice Law and Rules
Laws Affected:
Add §5519-a, CPLR

S3852A - Bill Texts

view 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.

view 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 full text
download pdf
                    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.

S3852B (ACTIVE) - Bill Details

Current Committee:
Law Section:
Civil Practice Law and Rules
Laws Affected:
Add §5519-a, CPLR

S3852B (ACTIVE) - Bill Texts

view 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.

view sponsor memo
BILL NUMBER:S3852B

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.

SUMMARY OF PROVISIONS: This bill would provide that the maximum aggre-
gate 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.

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 impor-
tant 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 possi-
bility 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. This under-
taking limit would not in any way affect the outcome of the appeal or
the ultimate ability of the plaintiff to prevail in the appeal. Plain-
tiffs 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 judg-
ment 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 pend-
ing on or filed on or after such effective date.

view full text
download pdf
                    S T A T E   O F   N E W   Y O R K
________________________________________________________________________

                                 3852--B
    Cal. No. 665

                       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 -- recommitted to the Commit-
  tee on Judiciary in accordance with Senate Rule 6, sec. 8 --  reported
  favorably  from  said  committee,  ordered to first and second report,
  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. 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 CONCERNING A THEORY OF LIABILITY RELATING TO THE HEALTH
EFFECTS, DESIGN, OR MARKETING OF, OR REPRESENTATIONS CONCERNING, TOBACCO
PRODUCTS AS  DEFINED  BY  THE  MASTER  SETTLEMENT  AGREEMENT,  AND  THAT
INVOLVES  A  PARTICIPATING  OR  NON-PARTICIPATING MANUFACTURER, AS THOSE
TERMS ARE DEFINED IN THE MASTER SETTLEMENT AGREEMENT, OR  ANY  OF  THEIR
SUCCESSORS,  OR  PARENT  ENTITIES  FOUND TO BE LIABLE BY VIRTUE OF THEIR
STATUS AS PARENT TO HAVE CONTROLLED THE CONDUCT OF SUCH MANUFACTURERS OR
THEIR SUCCESSORS, THE UNDERTAKING 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

 EXPLANATION--Matter in ITALICS (underscored) is new; matter in brackets
                      [ ] is old law to be omitted.
                                                           LBD08897-04-4

S. 3852--B                          2

APPLICABLE PROVISIONS OF LAW;  PROVIDED,  HOWEVER,  THAT  THE  COURT  OF
ORIGINAL  INSTANCE SHALL SET THE TOTAL UNDERTAKING REQUIRED IN AN AMOUNT
NOT TO EXCEED TWO HUNDRED FIFTY MILLION DOLLARS, REGARDLESS OF THE VALUE
OF  THE JUDGMENT APPEALED. NOTHING HEREIN SHALL AFFECT THE DISCRETION OF
AN APPELLATE COURT PURSUANT TO SUBDIVISION  (C)  OF  SECTION  FIFTY-FIVE
HUNDRED  NINETEEN OF THIS ARTICLE.  WHERE THE COURT SETS THE UNDERTAKING
IN AN AMOUNT LESS THAN THE JUDGMENT,  THE  APPEAL  SHALL  BE  DILIGENTLY
PROSECUTED IN GOOD FAITH.
  (B)  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.
  (C)  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 2. 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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