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A cigarette industry bill that would cap appeal bonds in tobacco cases at $100 million has passed the New York state Senate and has some backing among the Democratic majority in the Assembly. Tobacco lobbyists are pushing hard for New York to join some 30 other states and relieve the industry from a burden they say threatens the manufacturers, the jobs they provide and the continued flow of settlement dollars to states. New York lawmakers, concerned over the state’s share of a $200 billion settlement between tobacco companies and states, are looking to quietly help the industry, observers said. They said the bill could be among a flurry of bills rushed through at the end of session. “The purpose of this bill is to safeguard the flow of funds under the tobacco master settlement agreement (MSA) to the state,” Senator Owen H. Johnson, a Long Island, N.Y., Republican, said in his bill justification message. Johnson’s bill would amend the Civil Practice Law and Rules on appeal bonds in tobacco cases. A company would have to post a maximum of $100 million rather than the amount of the judgment. That is far more than the $25 million cap sought by the tobacco lobbyists but far less than the multibillion-dollar bond a company could have to pledge if a jury awarded a particularly large amount of damages. Appeal bonds are generally required under the rules to ensure that funds are available to pay a judgment in case the appeal is unsuccessful. The aim is to prevent losing parties from disappearing or dissipating their assets while an appeal is pending. The tobacco cases are prompting policymakers to rethink that policy. New York is counting on billions of dollars from its share of the 1998 master settlement agreement. However, tobacco companies say huge verdicts could jeopardize those funds. They have said that if firms are required to pledge billions of dollars to secure judgments under appeal, they may seek relief from a bankruptcy court. Skeptics, including the American Cancer Society, the American Lung Association, the American Heart Association and the New York Public Interest Research Group (NYPIRG), are all lobbying against S6557 by Johnson. They claim that a cap would give cigarette makers an incentive to appeal endlessly and drag litigation out for as long as possible. “Relieving cigarette manufacturers of the legal responsibilities faced by every other company doing business in New York would be just one more example of the special treatment afforded an industry that has grown rich through the suffering of millions,” the Cancer, Lung and Heart Associations and NYPIRG said in a recent letter to Governor George E. Pataki and legislative leaders. Blair Horner, legislative director for NYPIRG, said it is ironic that the bill’s sponsors cite concern over settlement payments as their justification for the legislation. “While unlikely, this justification means that the State of New York has an economic interest in the continued financial health of an industry that has lied to policymakers for years, violated New York laws and deceived millions into a life of addiction and early death,” Horner said. Under the legislation by Johnson and Assemblyman Peter M. Rivera, D-Bronx, judges would have the discretion to order a higher appeal bond if it was shown by a preponderance of the evidence that the tobacco company was dissipating assets to avoid paying a judgment. They could not order a bond exceeding the value of the judgment. SETTLEMENT PACT “This legislation � 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,” Johnson said in his bill justification, referring to the master settlement agreement. The New York State Trial Lawyers Association is lobbying against the bill. The bill passed 42-12 in the Senate on June 16. It is now before the Assembly, where Rivera is attempting to garner support. Rivera said in an interview Friday that he opposes appeals bonds in general and, if he had his way, would eliminate them altogether. However, he said it is particularly important to restrict the bond requirement as it relates to tobacco companies to protect New York’s interests under the master settlement agreement. “It is my hope we will do something before the session is out,” Rivera said. “It is a good bill because it allows people to be able to appeal without the onerous burden. This should not only happen in this kind of case, but in as many cases as possible.”

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