Tobacco bond cap bill clears House panel—but is it fair?

big tobacco (Large)

A bill to repeal the state’s tobacco bond cap is moving in the Florida House. Whether it’s fair is another story.

The measure (HB 6017), carried by GOP Rep. Cord Byrd of Neptune Beach, cleared its first committee last week by a unanimous 14-0 vote and moves to Appropriations.

A companion bill (SB 124) is in the Senate. The aim is to do away with the limit in state law on the amount of money tobacco companies have to put up as appellate bonds after trial-jury verdicts. 

Tobacco companies have opposed a repeal; the state’s trial lawyers back it. An attempt last year died during the committee weeks leading up to the 2017 Legislative Session.

Here’s how it works: Tobacco companies are required to put up bonds before they appeal unfavorable damages awarded to former smokers, but the state places limits on how much those bonds are.

The tobacco companies have said a repeal would be unfair because, in part, bonds would fall under the “150 percent of judgment” rule without a cap. And with some verdicts in the billions of dollars, bonds could be unreasonably large under that standard, they say.

The state’s trial lawyers, however, have supported a bond cap repeal. They say it will force settlements and end decades-long litigation over plaintiffs’ claims of irreversible illness or early death from smoking.

But again, the repeal seems to be a “solution in search of a problem” since no settling tobacco company has ever failed to pay a judgment.

One argument made was that these bond cap protections don’t benefit any other Florida business. And while that’s technically true, it doesn’t tell the whole story.

When it comes to the thousands of Engle progeny cases, the tobacco companies don’t get the benefit of a punitive damages caps on these lawsuits that any other company sued today would be protected by.

That means there can be awards in the hundreds of millions and even billions of dollars. And there have been. The bond cap legislation was implemented to keep the companies from having to post these huge bond numbers, which can be 100 percent of the verdict plus interest.

In 2014, these same companies came to the Legislature and pointed out there was an unlevel playing field because every other group that did business in the state was under one punitive damage statute and tobacco was under another.

The trial bar didn’t seem to think that was unfair.

Here’s the good news: The Senate version, filed in August by Sarasota Republican Greg Steube, hasn’t yet been scheduled for a hearing, suggesting the House bill – should it pass – will die on indifferent ears in the other chamber.

Peter Schorsch

Peter Schorsch is the President of Extensive Enterprises and is the publisher of some of Florida’s most influential new media websites, including Florida Politics and Sunburn, the morning read of what’s hot in Florida politics. Schorsch is also the publisher of INFLUENCE Magazine. For several years, Peter's blog was ranked by the Washington Post as the best state-based blog in Florida. In addition to his publishing efforts, Peter is a political consultant to several of the state’s largest governmental affairs and public relations firms. Peter lives in St. Petersburg with his wife, Michelle, and their daughter, Ella.


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