Proposed Appeal Bond Cap Hike Threatens Fairness and Business Climate, ATRA Says
The American Tort Reform Association is calling on Virginia Gov. Glenn Youngkin to veto House Bill 2351, which would dramatically increase the Commonwealth’s appeal bond cap.
In a letter delivered to the Governor’s office yesterday, ATRA, along with a coalition of business organizations, warned that the bill would undermine fairness in the civil justice system and harm Virginia’s business climate.
“H.B. 2351 would impose an unnecessarily heavy burden on the exercise of the right to appeal a sizable adverse judgment,” Tiger Joyce, American Tort Reform Association president said. “Increasing the state’s appeal bond cap to $200 million, plus an annual inflation adjuster, is an unprecedented retreat from reform that would make Virginia an outlier in the country, particularly at a time when other states are diligently working to improve their civil justice and business climates.”
If defendants lose a lawsuit and want to appeal, they usually need to obtain a stay, or pause the judgment, so they don’t have to pay immediately. To do this, they often need to provide a bond — a guarantee that the winning party will get their money if the appeal fails. An appeal bond limit sets a maximum amount for that guarantee, making it possible for more people to appeal.
While nearly every state in the country has some form of appeal bond limit, the proposed legislation would make Virginia’s upper limit the highest generally applicable bond limit in the nation. Currently, 15 states, including Virginia, limit the size of appeal bonds to $25 million. Another 13 states limit appeal bonds between $35 million and $150 million, and five states do not require the posting of an appeal bond at all.
According to ATRA, Virginia’s current $25 million limit strikes a reasonable balance, ensuring that plaintiffs are protected while preserving defendants’ ability to pursue legitimate appeals. Without a reasonable limit, defendants facing judgments for tens or hundreds of millions of dollars would be required to post bonds in the full amount – a prospect that would be financially impossible for many, especially small businesses.
“This legislation would force defendants into a horrible choice between declaring bankruptcy or forgoing their right to appeal,” Joyce said. “To preserve defendants’ practical ability to pursue meritorious appeals where it would otherwise be impossible, Virginia established an upper limit on the size of the bond a defendant would be required to post.”
ATRA also noted that Virginia’s existing laws already protect plaintiffs from defendants who attempt to evade payment. The court can require a defendant to post a bond for the full amount of the judgment if there is evidence of asset dissipation or diversion.
Additionally, plaintiffs are entitled to post-judgment interest if the appeal is unsuccessful.
“Gov. Youngkin has an opportunity to protect Virginia’s reputation for fairness and its pro-business environment,” Joyce said. “We urge him to veto H.B. 2351 and uphold the right to appeal for all Virginians.”
The following organizations joined ATRA in urging Gov. Youngkin to veto H.B. 2351:
American Property Casualty Insurance Association
American Trucking Associations
ChamberRVA
Hampton Roads Chamber of Commerce
Independent Insurance Agents of Virginia, Inc.
National Association of Mutual Insurance Companies
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