The NJCPA and the New Jersey Civil Justice Institute support this legislation which limits the amount of appeal bonds in civil actions to $50 million. When a defendant loses a case at trial and the plaintiff receives a monetary award, state law typically allows the plaintiff to collect that money as soon as the trial court proceedings are completed. In many cases, however, the defendant will appeal to a higher court seeking reversal of the trial court’s determination. Under current New Jersey law, the defendant must post a bond for the full amount of the award while the appeal is pending.
With awards now reaching hundreds of millions of dollars, it is often financially ruinous for a defendant to post such a large bond, and this de facto inability to appeal is used by plaintiff attorneys as a club against defendants. Defendants are forced to settle cases even though they are confident an unfair award would be lowered or dismissed at the appellate level. This legislation will help ensure that the appellate level remains open to defendants who are hit with large damages at the trial level.
The CPA profession’s concern about the impact of having to post huge appeal bonds is not just theoretical. There have been many multi-million-dollar judgments against CPA firms. For example, in the 2007 case of Banco Espirito v. BDO International in Florida, the CPA firm BDO was held liable for $522 million. If Florida had not enacted legislation similar to A434 in the previous year, BDO would probably not have been able to post a bond of $522 million and would probably have gone out of business. That would have put the 2,700 people who work at BDO out of work. Instead, BDO was able to appeal and the case was eventually dismissed.