Report Title:

Tobacco Master Settlement Agreement; Supersedeas Bond

Description:

Limits supersedeas bond amount for tobacco master settlement signatories to ensure their ability to continue to make settlement payments.

HOUSE OF REPRESENTATIVES

H.B. NO.

2715

TWENTY-SECOND LEGISLATURE, 2004

 

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO TOBACCO SETTLEMENT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The legislature finds that the payments that the State receives from tobacco companies under the tobacco master settlement agreement fund vitally important public programs, and it is in the State's interest to protect the continued receipt of these funds.

The legislature further finds that the tobacco companies that make payments to the State pursuant to the tobacco master settlement agreement are involved in extensive litigation that on occasion produces verdicts in the hundreds of millions or billions of dollars. As in other states, were such a verdict entered against the tobacco companies in Hawaii, the only way they could protect their assets, and hence their ability to make their tobacco master settlement agreements payments to the State while they appeal, would be to post a supersedeas bond that could equal or exceed the amount of the judgment. The companies may not be able to post such a bond, and this could adversely impact their ability to continue to meet their obligations under the tobacco master settlement agreement.

The legislature further finds that twenty-four states have recognized this, and these states have passed legislation limiting the size of supersedeas bonds, sometimes in legislation that applies to all litigants and other times in legislation that applies only to tobacco master settlement agreement signatories, successors, and affiliates. By limiting the amount of the bond that defendants must post to stay the execution of the judgment during appeal, such legislation guarantees that tobacco master settlement agreement signatories, affiliates, and successors will be able to appeal a judgment while continuing to make their payments to Hawaii and other states. A supersedeas bond limit would not in any way affect the outcome of the appeal or the ultimate ability of the plaintiff to prevail in the appeal. It would only ensure that the tobacco companies are able fully to utilize their constitutional right to appeal, while protecting the interest of the State in the receipt of its tobacco master settlement agreement funds during the course of appeal.

Accordingly, the purpose of this Act is to safeguard the flow of funds under the tobacco master settlement agreement to the State, by limiting the supersedeas bond that tobacco master settlement agreement signatories and their successors and affiliates must post to stay the execution of a judgment during appeal to $25,000,000 regardless of the value of the judgment. This Act also provides 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 a judgment.

SECTION 2. Chapter 328L, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"328L- Limitation on bond requirements in litigation involving master settlement agreement signatories, successors, and affiliates. (a) In order to secure and protect the moneys to be received as a result of the tobacco master settlement agreement, as defined in section 675-2, in civil litigation under any legal theory involving a signatory, a successor of a signatory, or an affiliate of a signatory to the tobacco master settlement agreement, the supersedeas bond to be furnished in order to stay the execution of the judgment during the entire course of appellate review shall be set in accordance with applicable laws or court rules, except that the total bond that is required of all appellants collectively shall not exceed $25,000,000, regardless of the value of the judgment.

(b) Notwithstanding subsection (a), if an appellee proves by a preponderance of the evidence that an appellant is dissipating assets outside the ordinary course of business to avoid the payment of a judgment, a court may require the appellant to post a bond in an amount up to the full amount of the judgment."

SECTION 3. New statutory material is underscored.

SECTION 4. This Act shall take effect upon its approval and shall apply to all cases pending on or filed on or after its effective date.

INTRODUCED BY:

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