Presenting a live 90-minute webinar with interactive Q&A Appeal Bonds and Other Asset Protection: Staying an Adverse Judgment Execution Navigating Supersedeas Bonds and Rule-Based and Discretionary Alternatives THURSDAY, MAY 9, 2013 1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific Today’s faculty features: Joshua D. Yount, Partner, Mayer Brown , Chicago Michael B. Kimberly, Mayer Brown , Washington, D.C. Brian J. Wong, Mayer Brown , Washington, D.C. The audio portion of the conference may be accessed via the telephone or by using your computer's speakers. Please refer to the instructions emailed to registrants for additional information. If you have any questions, please contact Customer Service at 1-800-926-7926 ext. 10 .
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Appeal Bonds and Other Asset Protection Staying Adverse Judgments Josh Yount jyount@mayerbrown.com Brian Wong May 2013 bwong@mayerbrown.com Michael Kimberly mkimberly@mayerbrown.com Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe-Brussels LLP both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & ChequerAdvogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.
The Importance of Staying an Adverse Judgment • We live in a world where class actions, expansive liability theories, speculative damages evidence, and run-away juries open the way for truly massive monetary awards and crippling injunctive relief. • Eight- and nine-figures awards are increasingly common. Ten- figure awards are no longer unheard of. Sweeping injunctions are sought to stop allegedly unfair competition. • Such judgments can impose significant financial and operational burdens on the losing party, if not threaten its continued existence. • Promising appeal arguments alone will not save the losing party from those burdens. 6
The Importance of Staying an Adverse Judgment • In federal courts, enforcement of a judgment can begin even before the time to appeal expires. • Under Rule 62(a), a 14-day automatic stay applies to money judgments, and injunctions can be enforced immediately: – “Except as stated in this rule, no execution may issue on a judgment, nor may proceedings be taken to enforce it, until 14 days have passed after its entry. But unless the court orders otherwise, the following are not stayed after being entered, even if an appeal is taken: (1) an interlocutory or final judgment in an action for an injunction or a receivership; or (2) a judgment or order that directs an accounting in an action for patent infringement.” Fed. R. Civ. P. 62(a). 7
The Importance of Staying an Adverse Judgment • Enforcement before appeal usually will cause the losing party irreparable harm. – Bank accounts might be frozen. – Citation proceedings might begin against the losing party and its business partners. – The losing party might be forced into bankruptcy. – Money paid to the winning party might be spent or made inaccessible to the losing party. – Changes in the status quo might moot any appeal on injunction issues. • In such circumstances, it is critical to obtain a stay of a judgment. • Parties should begin to think about how to stay an adverse judgment well before judgment is entered. 8
Rule 62(d) – Obtaining a Stay via Supersedeas Bond • Most straightforward procedure • Posting a supersedeas bond stays a money judgment pending appeal beyond the 14-day period • FRCP 62(d): “If an appeal is taken, the appellant may obtain a stay by supersedeas bond . . . . The bond may be given upon or after filing the notice of appeal or after obtaining the order allowing the appeal. The stay takes effect when the court approves the bond.” • Exception – FRCP 62(e): The court must not require a bond, obligation, or other security from the appellant when granting a stay on an appeal by the United States, its officers, or its agencies or on an appeal directed by a department of the federal government. 9
What is a supersedeas bond? • Black’s Law Dictionary: “A writ or bond that suspends a judgment creditor’s power to levy execution, usually pending appeal” • Supersedeas is Latin for “you shall desist” 10
Why a supersedeas bond? • The problem: balancing the interests of the judgment creditor and the judgment debtor • Judgment creditor wants to collect immediately • Judgment debtor wants to postpone payment 11
The judgment debtor’s dilemma • If the judgment creditor is able to execute on the judgment immediately, the debtor loses the use of the resources during the pendency of the appeal • Should the debtor later win its appeal, it may file a lawsuit and try to recover the lost resources . . . . • . . . but a right to recover does not necessarily translate into the ability to recover. The creditor might have dissipated the resources or placed it beyond recovery by transferring it to another entity or foreign jurisdiction 12
The judgment creditor’s dilemma • If the judgment creditor has to wait until the judgment is finally sustained on appeal, the assets might no longer be there to execute upon • Judgment debtor might in the meantime declare bankruptcy or dissipate assets during the year or more that it will take to resolve the appeal 13
The supersedeas bond as a middle ground • “A judgment debtor who wishes to appeal may use the bond to avoid the risk of satisfying the judgment only to find that restitution is impossible after reversal on appeal.” • “At the same time, the bond secures the prevailing party against any loss sustained as a result of being forced to forgo execution on a judgment during the course of an ineffectual appeal.” • Poplar Grove Planting & Ref. Co. v. Bache Halsey Stuart, Inc. , 600 F.2d 1189, 1191 (5th Cir. 1979). 14
Mechanics of posting a supersedeas bond • Differs considerably depending on jurisdiction • But generally – File a notice of appeal before or concurrently with the bond – File the supersedeas bond – Seek court approval of the amount and form of the bond • When in doubt, consult with the Clerk’s Office 15
Example procedures • Northern District of Illinois: – Clerk may approve bond — both as to amount and form — without further order of the court if it satisfies certain requirements. See LR 62.1, 65.1, 65.2 • Northern District of New York – LR 67.1: Seek judicial approval first, then file the supersedeas bond with the clerk, and serve a copy on all parties. “If a party raises objections to the form of the bond or to the sufficiency of the surety, the Court shall provide prompt notice of a hearing to consider such objections.” 16
The amount of the bond – the general rule • Predecessor to FRCP 62(d) provided that the amount of the bond was to be “the whole amount of the judgment remaining unsatisfied, costs on the appeal, interest, and damages for delay, unless the court after notice and hearing and for good cause shown fixes a different amount or orders security other than the bond.” • “Although the present rule does not by its terms precisely define the amount and conditions of a supersedeas bond, it has been read consistently with the earlier rule.” Poplar Grove , 600 F.2d at 1191. 17
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