BILL NUMBER:  S8002

 TITLE OF BILL :

An act to amend the civil practice law and rules, in relation to
enacting the "local government jobs and revenue protection act of
2016"

 PURPOSE :

The purpose of this bill is to enact the Local Government Jobs and
Revenue Protection Act of 2016 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 :

Currently the Tobacco Master Settlement Agreement delivers hundreds of
millions of dollars in revenues to the state and its localities
annually, and it will continue to do so in perpetuity. In 2016 alone,
New York State, New York City and other New York Counties received
approximately $1,432,460,402 under the MSA and total payments to date
under the MSA to New York State, New York City and other New York
Counties are reaching $14.5 billion. These funds have either been
bonded by recipients or are used each year as a critical funding
stream for jobs, programs and infrastructure.

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 interests of the
state, counties, and New York City in the continued receipt of its MSA
funds during the course of appeal.

 LEGISLATIVE HISTORY :

S.249, S.6857 of 2015;
S.3852-B of 2013-2014

 FISCAL IMPLICATIONS :

No fiscal impact. This bill protects revenues of the state, counties,
and New York City.

 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.