Senate Bill S249

                                 BILL NUMBER:  S249

 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 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. 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. 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 : S.3852-B of 2013-2014

 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.