I                                                                   FILED
                                                                    14-0175



I
                                                                    2/20/20151:38-11 PM
                                                                    tex-4230467
                                                                    SUPREME COURT OF TEXAS
                                                                    BLAKE A. HAWTHORNE. CLERK


                            No. 14-0175



             IN THE SUPREME COURT OF TEXAS



r          In re Longview Energy Company, Relator
           Im DC I rtMrtlMC\W pMCDr-.V CrWAtlA MV Dei ATI-ID                                  \
                                                                                              ■




                      Brief of Amici Curiae
I   Chamber of Commerce of the United States of America,
           American Tort Reform Association, and
              NFIB Small Business Legal Center
                    in Support of Defendants
         with respf.ct to interpretation of bond cap




                                El more James Shepherd III
                                SBN 24008025
                                eshepherd@shb.com
                                Shook. Hardy & Bacon L.L.R
                                JP Morgan Chase Tower
                                600 Travis Street. Suite 3400
                                Houston, TX 77002
                                (713)227-8008
                                (713) 227-9508 (fax)


                                Counsel for Amici Curiae

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i
r
r
i                                                           FILED
                                                            14-0175
                                                            2/20/2015 1:38:11 PM
                                                            tex-4230467
                                                            SUPREME COURT OF TEXAS
                                                            BLAKE A HAWTHORNE. CLERK

                          No. 14-0175
r



              IN THE SUPREME COURT OF TEXAS



            In re Longview Energy Company, Relator




                    Brief of Amici Curiae
     Chamber of Commerce of the United States of America,
            American Tort Reform Association, and
              NFIB Small Business Legal Center
«.                 in Support of Defendants
          with Respect to Interpretation of Bond Cap




                            Elmore James Shepherd III
                            SBN 24008025
                            eshepherd@shb.com
                            Shook, Hardy & Bacon L.L.P.
                            JP Morgan Chase Tower
                            600 Travis Street, Suite 3400
                            Houston, TX 77002
                            (713)227-8008
                            (713) 227-9508 (fax)


                            Counsel for Amici Curiae




r




r
                               TABLE OF CONTENTS
!                                                                               Page

p      TABLE OF AUTHORITIES                                                         ii

       STATEMENT OF THE CASE                                                        vi

f      ISSUE PRESENTED                                                              vi
p      INTEREST OF AMICICURIAE                                                       1

       SUMMARY OF ARGUMENT                                                          3

[      ARGUMENT                                                                     4
r          I.     APPEAL BOND LIMITS ARE INCREASINGLY
i                 NECESSARY TO SAFEGUARD DUE PROCESS GIVEN
                  THE RISE OF EXTRAORDINARY VERDICTS                                4

1          II.    TEXAS LED THE STATES IN ADOPTING APPEAL BOND
                  REFORMS IN RESPONSE TO INSTANCES OF MANIFEST
r                 INJUSTICE DUE TO EXCESSIVE BONDS                                   7
                  A.   The Texaco v. Pennzoil Case Exemplifies the Impossible
r
                       Choices Faced by Texas Defendants with Blockbuster
                       Judgments Before the 2003 Appeal Bond Reforms                 7

|                 B.   As Instances of Injustice Mounted, Texas Had the Foresight
                       to Enact a Generally Applicable Appeal Bond Limit            9

i                 C.   The Vast Majority of States Now Protect a
                       Defendant's Ability to Appeal                                13

t          III.   THE STATUTE SHOULD BE READ TO PROMOTE THE
                  AVAILABILITY OF MEANINGFUL APPELLATE REVIEW                       15

>[     PRAYER                                                                       16
f      CERTIFICATE OF COMPLIANCE                                                    17
l




       CERTIFICATE OF SERVICE                                                       18



GZ&1
                                  TABLE OF AUTHORITIES

[    CASES                                                                  PAGE
[    Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla. 2006)                10

p    Evitts v. Lucey, 469 U.S. 387 (1985)                                      4


     Honda v. Oberg, 512 U.S. 415 (1994)                                       4


':   In re Nolle Plastics Family Ltd P 'ship, 406 S.W.3d 168 (Tex. 2013)    7, 12

I    N. Ind. Pub. Serv. Co. v. Carbon County Coal Co.,
           799 F.2d 265 (7th Cir. 1986)                                        6

!    O 'Keefe v. The Lowen Group, No. 91 -67-423
           (Circ. Ct., Hinds Co., Miss. 1995)                                 11

I    Philip Morris, Inc. v. III. App. Ct., Fifth Dist., No. 96644,
           2003 111. LEXIS 2625 (111. Sept. 16, 2003)                         10

^    Price v. Philip Morris Inc., 793 N.E.2d 942 (111. App. Ct. 2003)         10
     Texaco, Inc. v. Penmoil Co., 626 F. Supp. 250 (S.D.N.Y. 1986),
           aff'd, 784 F.2d 1133 (2d Cir 1986), rev 'd sub nom.,
r          Penmoil Co. v. Texaco, Inc., 481 U.S. 1 (1987)                    7-8

     Texaco, Inc. v. Penmoil Co., 729 S.W.2d 768 (Tex. App. 1987)              8
r
'    STATUTES. LEGISLATION. AND COURT RULES

j"   Ala. Code § 6-12-4                                                        5
r    Ark. Code § 16-55-214                                                    13
i
     Ariz. Rev. Stat. § 12-2108                                               13
r
!    Colo. Rev. Stat. § 13-16-125                                          13, 14

["   Conn. R. App. P. §61-11                                                  13

     Fed. R. Civ. P. 62                                                         6



                                                n
RTH
      Fla. Stat. Ann. § 768.733                  9

      Ga. Code Ann. § 5-6-46                 13, 14

      Haw. Rev. Stat. Ann. § 607-26             13


r     111. Sup. Ct. R. 305                      10

      Ind. Code Ann. § 34-49-5-3                13

      Ky. Rev. Stat. § 411.187                  14

      Me. R. Civ. P. 62                         13

      Mass. R. Civ. P. 62                       13

      Mich. Comp. Laws § 600.2607               13

      Miss. R. App. R. 8                        11

      Mo. Rev. Stat. § 512.099                  14

      Mont. Code Ann. § 25-12-103               14
r
      Nev. Rev. Stat. § 20.035.1                11


      N.C. Gen. Stat. § 1-289                13, 14

      N.D. Cent. Code § 28-21-25                13

      N.H. Rev. State. Ann. § 527:1             13

      Okla. Stat. Ann. tit. 12 §990.4        13, 14

      P.R. R. Civ. P. 53.9                      13

      S.C. Code Ann. § 18-9-130              13, 14

      S.D. Sup. Ct. R. 03-13                    13

      Tenn. Code Ann. § 27-1-124             13, 14




                                        in
        Tex. Civ. Prac. & Rem. Code § 52.006                                   passim

    1   Tex. R. App. P. 9.4                                                        17

    |   Tex. R. App. P. 11                                                          1
    p   Tex. R. App. P. 24.2                                                        7
    i
        Va. Code Ann. § 8.01-676.1                                                 13
    r
    [   Vt. R. Civ. P. 62                                                          13

T       W. Va. Code §4-11A-4                                                       11
    r   W. Va. Code § 58-5-14                                                      14

        Wyo. Stat. § 1-17-201                                                      13


    I   H.B. 4, 78th Leg., R.S. (2003)                                             11
    P   OTHER AUTHORITIES

p,      Michael Arndt, Texaco Files For Bankruptcy: Oil Giant Buys Time in
|             $12 Billion Fight, Chic. Trib., Apr. 13, 1987                         8

    p   Nina Bernstein, Funeral Chain Settles, Avoiding a Big Bill,
!             N.Y. Times, Jan. 30, 1996, at D5                                     11
P       Elaine Carlson, Mandatory Supersedeas Bond Requirements - A Denial
1             ofDue Process Rights?, 39 Baylor L. Rev. 29 (1987)                    7

I       Elaine A. Carlson, Reshuffling the Deck: Enforcing and Superseding
              Civil Judgments on Appeal after House Bill 4,
r             46 S. Tex. L. Rev. 1035 (2005)                                       12
I

        Richard L. Cupp, State Medical Reimbursement Lawsuits After Tobacco:
P             Is the Domino Effect For Lead Paint Manufacturers And Others
!             Fair Game?, 27 Pepp. L. Rev. 685 (2000)                               9

P       Editorial, Too Costly an Appeal, N.Y. Times, Apr. 4, 2003, at A20          10



                                                 IV
     Jef Feeley, Takeda, Lilly Win 99.6% Cut in Actos Punitive Damages,
           Bloomberg, Oct. 28, 2014, at http://www.bloomberg.com/news/
           articles/2014-10-27/takeda-lilly-get-9-billion-actos-award-cut-99-
p          percent                                                                     6
i
     Hiroyuki Kachi, Takeda, Lilly Ordered to Pay $9 Billion in Diabetes-
P          Drug Case, Wall St. J., Apr. 8, 2014                                        6

p    Top 100 Verdicts of 2013, Nat'l L.J., Mar. 24, 2014,
j          at http://www.nationallawjournal.com/id= 1202647966490/
           Top-100-Verdicts-of-2013                                                    5
r
!    Joseph Nixon, Ten Years of Tort Reform in Texas: A Review
           (Heritage Found. & Tex. Pub. Pol'y Found. 2013),
P          ^ http://thfjiiedia.s3.amazonaws.com/2013/pdf/bg2830.pdf                   11

     The Perryman Group, A Texas Turnaround: The Impact of Lawsuit
p
           Reform on Business Activity in the Lone Star State (2008), at http://
           tlrfoundation.com/beta/files/Texas_Tort_Reform_Report_2008.pdf          11-12

[    Doug Rendleman, A Cap on the Defendent's Appeal Bond?: Punitive
           Damages Tort Reform, 39 Akron L. Rev. 1089 (2006)                       8, 11

'    Joel Rosenblatt & Laurence Viele Davidson, Exxon Wins $3.5 Billion
           Appeal in Alabama Fees Case, Bloomberg, Nov. 1, 2007,
j          at http://www.bloomberg.com/apps/news?pid=newsarchive&sid=
           afqiYjedTs_o&refer=news                                                     5

I    Victor E. Schwartz, Mark A. Behrens & Leah Lorber, Tort Reform Past,
           Present And Future: Solving Old Problems And Dealing With
["         "NewStyle" Litigation, 27 Wm. Mitchell L. Rev. 237 (2000)                   4

     Sindhu Sundar, Top Product Verdicts of2014—And the Firms That Won
I          Them, Feb. 9, 2015, at http://www.law360.eom/articles/619796/
           top-product-verdicts-of-2014-and-the-firms-that-won-them                    6




r
                               STATEMENT OF THE CASE

1           Amici adopt the Statement of the Case of Defendants, The Huff Energy


T     Fund, L.P., WRH Energy Partners, L.L.C., William R. "Bill" Huff, Rick
r     D'Angelo, Riley-Huff Energy Group, LLC, to the extent it relates to the issues

_
p
      addressed in this amicus brief.


                                   ISSUE PRESENTED

r
'           Amici limit their brief to the issue of whether the Court of Appeals correctly

P     concluded that Texas law limits the amount of security a defendant must post to

m     stay enforcement of a judgment during appeal to $25 million per judgment and


      does not authorize quadrupling the amount of security required when there are four


      judgment debtors.




r




p^i




r^




                                              VI
                                  INTEREST OF AMICICURIAE


              Amici are non-profit trade associations whose members operate in Texas and


1      throughout the United States.1 Amici have an interest in ensuring that Texas law

]      adequately safeguards the right of businesses to appeal extraordinary judgments.


p*     Amici agree with Defendants' reading of Tex. Civ. Prac. & Rem. Code § 52.006,


       adopted by the Court of Appeals, that the maximum appeal bond permitted is
r
^      $25 million per judgment, regardless of the number of defendants. Amici do not

I      restate these statutory construction arguments, but write to provide the Court with

P      the public policy underlying appeal bonds and why interpreting Texas law in a


       manner favoring the right to appeal is even more critical today than ever before.

       Amici take no position on the merits of the underlying litigation.

r
i             The    Chamber      of    Commerce        of   the   United   States    of   America


P      ("U.S. Chamber") is the world's largest federation of businesses and associations.

«      The Chamber represents 300,000 direct members and indirectly represents the

       interests of more than three million U.S. businesses and professional organizations

'      of every size and in every economic sector and geographic region of the country,

J      including Texas.      An important function of the Chamber is to represent the

p      interests of its members in important matters before the courts, legislatures, and


       '      No counsel for a party authored this brief in whole or in part, and no counsel or party
       made a monetary contribution intended to fund the preparation of submission of this brief. No
       person other than amici, their members, or their counsel made a monetary contribution to its
       preparation or submission. Tex. R. App. P. 11.



PIT)
executive agencies. To that end, the Chamber regularly files amicus curiae briefs


in cases, such as this one, that raise issues of concern to the business community.


       Founded in 1986, the American Tort Reform Association ("ATRA") is a


broad-based coalition of businesses, corporations, municipalities, associations, and


professional firms that have pooled their resources to promote reform of the civil


justice system with the goal of ensuring fairness, balance, and predictability in civil


litigation.   For over two decades, ATRA has filed amicus curiae briefs in cases


before state and federal courts that have addressed important liability issues.


       The NFIB Small Business Legal Center, a nonprofit, public interest law firm


established to protect the rights of America's small-business owners, is the legal


arm of the National Federation of Independent Business ("NFIB").          NFIB is the


nation's oldest and largest organization dedicated to representing the interests of


small-business owners throughout all fifty states.      The approximately 350,000


members of NFIB own a wide variety of America's independent businesses from


manufacturing firms to hardware stores.
I

FT?)




                                 SUMMARY OF ARGUMENT


              Texas's limit on appeal bonds should be interpreted in a manner that

r
1       promotes its purpose: to safeguard the ability of a defendant to appeal an


f"      extraordinary adverse judgment.      In furtherance of this goal, in 2003, the

p.      Legislature limited the security necessary to stay enforcement of a judgment during


        an appeal to the lesser of $25 million or 50% of the judgment debtor's net worth.


^       See Tex. Civ. Prac. & Rem. Code § 52.006. Interpreting this limit to apply per
j       judgment advances the public policy underlying the statutory limit, as the Court of


f*      Appeals recognized.   The alternative, interpreting the cap to apply per judgment
    I

        debtor, would adversely impair the ability of businesses facing adverse judgments


        - particularly in high-stakes "bet-the-business" litigation - to seek appellate


    [   review. In multi-defendant suits, as here, the required security to appeal a single

P       case could reach or exceed $100 million. Such a result is not only contrary to the

™       statutory text, as Defendants show, but the objective of such        laws.   Amid


        respectfully urge this Court to affirm the Court of Appeals'        per judgment


        interpretation of Tex. Civ. Prac. & Rem. Code § 52.006.




r
                                        ARGUMENT


     I.       APPEAL BOND LIMITS ARE INCREASINGLY
r             NECESSARY TO SAFEGUARD DUE PROCESS GIVEN
i             THE RISE OF EXTRAORDINARY VERDICTS

H             Appeal bond limits safeguard due process rights by facilitating meaningful

™,   access to a state's appellate court system to challenge an adverse judgment.   See


     Honda v. Oberg, 512 U.S. 415, 432 (1994) (holding that states must adopt


1    sufficient procedural safeguards to guard against arbitrary deprivation of property


!    resulting from punitive damage awards); Evitts v. Lucey, 469 U.S. 387, 393-94

f    (1985) (recognizing that the procedures used to decide appeals must make the right
i
     to appeal "meaningful" and "more than a meaningless ritual").


1             The importance of limiting the security required to appeal an adverse

I    judgment has significantly increased with the rise of class actions and mass torts,

P    the emergence of government-sponsored lawsuits that target corporate defendants

     through use of contingency-fee counsel, and the creation of novel and expansive


     theories of liability.   See Victor E. Schwartz, Mark A. Behrens & Leah Lorber,


!    Tort Reform Past, Present and Future: Solving Old Problems and Dealing With

P    "New Style" Litigation, 27 Wm. Mitchell L. Rev. 237, 261 (2000). These now-

p    entrenched litigation tactics increase the odds of astronomical judgments in civil

     cases.
           Many areas of litigation are increasingly producing eye-popping verdicts of


     the type that could present bonding problems for some defendants.        For example,


(    Exxon Mobil Corp. faced an $11.9 billion judgment for allegedly underpaying

P    natural gas royalties from wells in Gulf Coast waters. The punitive damage award,

m    which had already been reduced to $3.6 billion, was ultimately thrown out by the


     Alabama Supreme Court. See Joel Rosenblatt & Laurence Viele Davidson, Exxon


^    Wins $3.5 Billion Appeal in Alabama Fees Case, Bloomberg, Nov. 1, 2007, at

j    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=afqiYjedTs

P    _o&refer=news. Exxon was required to post a $4.5 billion appeal bond, see id, as


     Alabama limits the amount of a bond only for tobacco defendants. See Ala. Code


     § 6-12-4.    Most businesses - particularly small, closely held, family-owned


I    businesses - would not have the liquid assets necessary to meet such a requirement.

T          Insurers,   product   manufacturers,    and   other   businesses     also   face

m    extraordinary judgments that necessitate appeal bond limits.       According to the


     National Law Journal, there were 82 verdicts over $25 million in 2013, including

r
1    19 verdicts at or exceeding SI00 million, and 3 verdicts exceeding $1 billion. See

["   Top 100 Verdicts of 2013, Nat'l L.J., Mar. 24, 2014, at http://
p    www.nationallawjournal.com/id=1202647966490/Top-100-Verdicts-of-2013.

     These verdicts spanned areas including anti-trust, toxic tort, intellectual property,


     product liability, medical malpractice, and nursing home liability. See id.
              It is no longer difficult to find examples of these types of massive awards.


     Last April, a federal jury in Louisiana reached a $9 billion verdict against Takeda


I    Pharmaceutical Co. and Eli Lilly & Co. stemming from a lawsuit alleging that the

     companies did not adequately disclose the risks of the diabetes medicine, Actos.


rm   See Hiroyuki Kachi, Takeda, Lilly Ordered to Pay $9 Billion in Diabetes-Drug


     Case, Wall St. J., Apr. 8, 2014.2           Other top product liability verdicts of 2014

     included $23.6 billion against a tobacco company, $1.2 billion against paint


     manufacturers in a novel public nuisance suit, and $81.1                    million against an


     automaker in a case alleging a steering defect (after the trial court judge reduced a


     $248 million verdict). See Sindhu Sundar, Top Product Verdicts of 2014—And the


     Firms That Won Them, Feb. 9, 2015, at http://www.law360.com/articles/619796/


     top-product-verdicts-of-2014-and-the-firms-that-won-them.3

              Given that verdicts such as these are "the new normal," it is particularly


     important that Texas's appeal bond statute is interpreted in a manner that
t




              The trial court judge reduced the verdict to $36.8 million. Jef Feeley, Takeda, Lilly Win
H    99.6%     Cut   in   Actos   Punitive   Damages,     Bloomberg,     Oct.   28,   2014,   at   http://
l    ww\v.bloomberg.com/news/articles/2014-10-27/takeda-lilly-get-9-billion-actos-a\vard-cut-99-
     percent. Had the trial court not significantly reduced the award, the federal rules gave the judge
P    discretion to set a lower bond. See N. Ind. Pub. Serv. Co. v. Carbon County Coal Co., 799 F.2d
l    265, 281 (7th Cir. 1986) (finding Fed. R. Civ. P. 62(d) did not require utility to post $181 million
     bond).
rm

     3        While trial courts are likely to use remittitur to reduce many "runaway" verdicts, as
     several of the cases discussed in this amicus brief show, some judges may allow the verdict to
m,   stand. In these instances, it is imperative that a company have the ability to pursue an appeal.
_       safeguards and preserves the ability of defendants to appeal an extraordinary


        judgment.


1       II.   TEXAS HAS LED THE STATES IN ADOPTING APPEAL
              BOND REFORMS IN RESPONSE TO INSTANCES OF
              MANIFEST INJUSTICE DUE TO EXCESSIVE BONDS


p             A.    The Texaco v. Pennzoil Case Exemplifies the Impossible
{                   Choices Faced by Texas Defendants with Blockbuster
                    Judgments Before the 2003 Appeal Bond Reforms

i             One of the most dramatic examples of the impact of unconstrained appeal

I       bond rules occurred here in Texas in the 1980s, after a $10.53 billion verdict—
L




p       $7.53 billion in actual damages, plus $3 billion in punitive damages and interest —


        against Texaco.   See generally Elaine Carlson, Mandatory Supersedeas Bond


*■      Requirements - A Denial of Due Process Rights?, 39 Baylor L. Rev. 29 (1987)

I       (discussing Pennzoil v. Texaco).

    m         Texas's Rules of Appellate Procedure at the time required posting a bond


        equal to the entire judgment, regardless of amount, plus costs and interest for the


        estimated duration of the appeal. See In re Nalle Plastics Family Ltd. P'ship, 406


1       S.W.3d 168, 170 (Tex. 2013) (citing former Tex. R. App. P. 24.2(a)(l)). Texaco
P       sought and successfully obtained a federal injunction, arguing that Texas's appeal

p*      bond requirement effectively prevented it from appealing in violation of the Due

        Process Clause of the Fourteenth Amendment.      See Texaco, Inc. v. Pennzoil Co.,


I       626 F. Supp. 250, 256 (S.D.N.Y.), aff'd, 784 F.2d 1133 (2d Cir. 1986) (requiring a
     $1 billion bond).   While an appeal of that ruling was pending before the U.S.


     Supreme Court, a Texas appellate court upheld the trial court's verdict, but reduced


'    the punitive damage award by $2 billion. See Texaco, Inc. v. Pennzoil Co., 729

j    S.W.2d 768 (Tex. App. 1987). The U.S. Supreme Court then reversed the federal


(w   injunction, finding that the lower courts should not have intervened in a pending
[
     state proceeding. See Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 10(1987).


1          Six days after the U.S. Supreme Court's decision restoring the full bond


I    required by Texas law, Texaco filed for bankruptcy, becoming the largest company

I™   in U.S. history to seek protection under Chapter 11.    See Michael Arndt, Texaco


     Files For Bankruptcy: Oil Giant Buys Time in $12 Billion Fight, Chic. Trib., Apr.


     13, 1987.   The bankruptcy filing had the effect of an appeal bond, providing an

r
     automatic stay on execution of the judgment, and the litigation eventually settled at


     a fraction of the verdict. See Doug Rendleman, A Cap on the Defendent's Appeal


     Bond?: Punitive Damages Tort Reform, 39 Akron L. Rev. 1089, 1105-06 (2006).


     Bankruptcy, however, is an odious alternative to posting a bond.    See id. at 1106-


     07. It can harm employees, shareholders, and creditors. See Arndt, supra (reporting

     that the filing immediately hurt Texaco's ability to conduct day-to-day operations,


     such as the ability to obtain credit and the loss of major suppliers, and led the


     company to suspend dividends and anticipate a significant drop in its stock price).




                                              8
_,            B.     As Instances of Injustice Mounted, Texas Had the Foresight
[                    to Enact a Generally Applicable Appeal Bond Limit


p»             Texaco was a preview of a problem that, with an increasing number of


        blockbuster verdicts, would soon rise to a national concern.      Throughout the


        country, appeal bond rules requiring defendants to post security in the full amount
pro



[       of a judgment (or more) created unfair roadblocks to the ability to appeal crushing


        verdicts.


              The problem of oppressive appeal bonding requirements became particularly


        evident during the state attorneys general litigation against the tobacco industry
pro



L       and in the private lawsuits that followed. Commentators at the time suggested that


r       the defendants "may have been forced into bankruptcy" because they likely "would

p>      have lacked the resources to immediately pay the judgments (or even to post an
i
        appeal bond)." See Richard L. Cupp, State Medical Reimbursement Lawsuits After
Ffilt




        Tobacco:    Is the Domino Effect For Lead Paint Manufacturers and Others Fair


f       Game?, 27 Pepp. L. Rev. 685, 689-90 (2000).
r             Concerns about bankrupting appeal bonds potentially blocking the ability to


        appeal moved from the theoretical to the practical in 2000 with a record-setting

        $145 billion punitive damage award in a 700,000 member class action against the

I       tobacco industry in Florida. In order to allow the defendants the opportunity to

P       appeal the unprecedented judgment, the Florida legislature stepped in to reform the

™       state's bonding statute. See Fla. Stat. Ann. § 768.733. The blockbuster award was



r                                               9
    ultimately overturned.   See Engle v. Liggett Group, Inc., 945 So. 2d 1246 (Fla.


    2006).


             The unfairness of appeal bonds came up again in Illinois in 2003 when a


    Madison County class action resulted in a $10.1 billion verdict against a tobacco

    company alleged to have misled consumers about the health effects of light


    cigarettes compared to regular cigarettes.    The trial court judge initially set the


    appeal bond at $12 billion, and after lengthy hearings, cut the bond in half.      An

r
    appellate court, however, overturned the trial court judge's reduction of the bond.


r   See Price v. Philip Morris Inc., 793 N.E.2d 942 (111. App. Ct. 2003). The editorial


    page of the New York Times weighed in to protest the unfairness of requiring a


    $12 billion bond, likened it to "extortion" to settle, decried the violation of due


I   process, and noted requiring such a bond "erodes the credibility of our legal

P   system." See Editorial, Too Costly an Appeal, N.Y. Times, Apr. 4, 2003, at A20.

™   The Illinois Supreme Court reinstated the lowered bond. Philip Morris, Inc. v. III.


    App. Ct., Fifth Dist., No. 96644, 2003 111. LEXIS 2625 (111. Sept. 16, 2003). It then


'   amended its rules to avoid such unfairness in the future by clearly giving trial court

|   judge's discretion in setting the amount of the bond. See 111. Sup. Ct. R. 305(a),

p   Commentary (2004), at http://www.state.il.us/COURT/SUPREMECOURT/Rules/

    Art_III/ArtIII.htm#305 (recognizing that in some circumstances an appeal bond for


    the full amount of the judgment, interest, and costs "may be so onerous that it




                                             10
           creates an artificial barrier to appeal, forcing a party to settle a case or declare


           bankruptcy").


I                 Due to these types of cases, some of the early states to adopt appeal bond

H          caps applied them only to tobacco companies. See, e.g., Nev. Rev. Stat. § 20.035.1

»          (enacted 2001); W. Va. Code § 4-11A-4 (enacted 2001).                       With the troubling


           history of the Texaco fiasco hanging over the state's reputation, the Texas


L          Legislature had the foresight to enact the appeal bond limit at issue in this case,

[          which applies to all defendants in any type of litigation.4 The legislation limited

r          appeal bonds to the lesser of 50% of the judgment debtor's net worth or


           $25 million.    Tex. Civ. Prac. & Rem. Code § 52.006(b). The Legislature enacted


           the appeal bond cap as part of a comprehensive civil justice reform bill that has
f-.'.HSI




I          created a more business-friendly environment in Texas.                 See H.B. 4, 78th Leg.,


r          R.S. (2003).5




           4      Other states also recognized that safeguarding the right to appeal was not a tobacco-
           specific issue. For example, Loewen Group, a Canadian funeral home and insurance chain, was
           forced to settle a dispute with a competitor after a Mississippi jury reached a S500 million verdict
           against it. See Rendleman, 39 Akron L. Rev. at 1128-29 (discussing O'Keefe v. The Lowen
           Group, No. 91-67-423 (Circ. Ct., Hinds Co., Miss. 1995)). Under Mississippi's rules, the
           company was required to post a $625 million bond, the approximate net worth of the company.
           Id. To avoid filing for bankruptcy protection, the company settled the case for S175 million. See
           Nina Bernstein, Funeral Chain Settles, Avoiding a Big Bill, N.Y. Times, Jan. 30, 1996, at D5.
           Soon thereafter, Mississippi limited appeal bonds, but it was too late to help Loewen. See Miss.
           R. App. R. 8 (amended in 2001 to limit appeal bonds to the lesser of 125% of the judgment, 10%
           of the net worth of the defendant, or SI 00 million).

           5      For articles documenting the success of Texas's 2003 reform package, see generally
           Joseph Nixon, Ten Years of Tort Reform in Texas: A Review (Heritage Found. & Tex. Pub.
           Pol'y Found. 2013), at http://thfmedia.s3.amazonaws.com/2013/pdf/bg2830.pdf; The Perryman


                                                           11
       Unlike the prior appellate rule, the Texas statute does not require a debtor to


secure any punitive damages portion of the award.           Id. § 52.006(a)(l). The 2003


law also reduced the evidentiary burden required for a debtor to seek a lower bond


due to the substantial economic harm it would cause.              Id. § 52.006(c).    As this


Court recognized, the Legislature's enactment of Section 52.006 '"reflect[ed] a


new balance between the judgment creditor's right in the judgment and the


dissipation of the judgment debtor's assets during the appeal against the judgment

debtor's right to meaningful and easier access to appellate review.'"             Nalle, 406


S.W.3d at 170 (quoting Elaine A. Carlson, Reshuffling the Deck: Enforcing and


Superseding Civil Judgments on Appeal after House Bill 4, 46 S. Tex. L. Rev.


1035, 1038 (2005)). In 2013, consistent with the purpose of the statute, this Court


held that a prevailing party's          attorney's   fees   and costs are typically not

"compensatory damages" included in a judgment debtor's bond.                   See id.    The


Court should again interpret the statute to promote appellate rights.




Group, A Texas Turnaround: The Impact of Lawsuit Reform on Business Activity in the Lone
Star State (2008), at http://tlrfoundation.com/beta/files/Texas_Tort_Reform_Report_2008.pdf.



                                              12
            C.      The Vast Majority of States Now Protect a
|                   Defendant's Ability to Appeal


p           Recognizing the problem of unconstrained appeal bonds, approximately
t
t




     thirty jurisdictions have passed legislation or amended court rules to limit the size


'    of the bond requirements in any civil case involving a large judgment.6                      Like

|    Texas, these states acted to safeguard a defendant's right to appeal. The Court

P    should interpret Texas's appeal bond statute to promote this sound policy.


            Texas's appeal bond statute is in the mainstream. Many states have adopted


     similar $25 million limits. See, e.g., Ark. Code § 16-55-214; Ariz. Rev. Stat. § 12-


I    2108; Colo. Rev. Stat. § 13-16-125; Ga. Code Ann. § 5-6-46; Haw. Rev. Stat. Ann.

P    § 607-26; Ind. Code Ann. § 34-49-5-3; Mich. Comp. Laws § 600.2607(1); N.C.

r    Gen. Stat. §      1-289; N.D. Cent. Code § 28-21-25; Okla. Stat. Ann. tit.                      12


     § 990.4(B)(5); S.C. Code Ann. § 18-9-130(A)(l); S.D. Sup. Ct. R. 03-13; Tenn.


I    Code Ann. § 27-1-124; Va. Code Ann. § 8.01-676.1; Wyo. Stat. § 1-17-201.
            In recent years, states continue to follow Texas's lead.                   For example,


p»   Arizona similarly limited appeal bonds to the lesser of $25 million or 50% of the


     appellant's net worth. Ariz. Rev. Stat. § 12-2108 (enacted 2011). South Carolina


[    limited the amount of an appeal bond to $25 million for all judgments against


     6      Approximately ten additional states have enacted appeal bond limits specific to tobacco
     litigation. Six jurisdictions do not require defendants to post a bond at all during an appeal. See
     Conn. R. App. P. § 61-11; Me. R. Civ. P. 62; Mass. R. Civ. P. 62(d); N.H. Rev. State. Ann.
     § 527:1; Vt. R. Civ. P. 62(d)(l); P.R. R. Civ. P. 53.9.



                                                      13
        defendants with fifty or more employees and gross revenue of $5 million, and


        $1 million for all judgments against all other defendants.   S.C. Code Ann. § 18-9-


    I   130(A)(l) (enacted 2011).     Tennessee lowered the amount a defendant can be

    P   required to pay to appeal a decision from $75 million to $25 million, not to exceed

p,      125% of the judgment.      Tenn. Code Ann. § 27-1-124 (enacted 2011).           North


        Carolina maintained its $25 million limit set in 2003, but required its courts to hold


*■      a hearing to determine a fair amount of the bond.          N.C. Gen. Stat. § 1-289


!       (amended 2011). Oklahoma, similar to Texas, amended its $25 million limit to

p       eliminate the need to bond any portion of the award for punitive damages.       Okla.

        Stat. Ann. tit. 12 § 990.4(1) (enacted 2009); see also Mont. Code Ann. § 25-12-103
pro




        (enacted 2013) (limiting appeal bonds to $50 million).


I             Many state bond caps do not explicitly address the maximum amount of the

["      bond when there are multiple defendants. Those statutes in which the legislature

_,      thought to expressly address the issue recognize that the cap should apply


        collectively to all appellants. See Colo. Rev. Stat. § 13-16-125(1); Ga. Code Ann.


I       § 5-6-46(b); Ky. Rev. Stat. § 411.187(1); Mo. Rev. Stat. § 512.099( 1); see also W.
I       Va. Code Ann. § 58-5-14(b) (treating multiple judgments resulting from cases


p*      consolidated or aggregated for trial as a single judgment).     Texas's appeal bond


        limit should be applied in this manner.       The alternative is a return to massive
j
i




rrrn)




                                                 14
     appeal bond requirements in complex cases, high-stakes cases involving multiple


     defendants, where the risk of an error is particularly high.


1    III. THE STATUTE SHOULD BE READ TO PROMOTE THE
           AVAILABILITY OF MEANINGFUL APPELLATE REVIEW

L          Without fair limits on appeal bonds, there is often only one way for a

I    defendant to avoid bankruptcy after an extraordinary verdict: the defendant must

r    settle, even if the judgment resulted from egregious errors, and it must do so at a


     "premium" rate, because the plaintiff knows the defendant has no alternative.


     Following Texas's lead, states have increasingly protected the right to appeal by


[    expanding the applicability of appeal bond limits from tobacco to all litigation,


T    excluding the punitive damage portion of awards from bonding requirements, and

p,   reducing the maximum amount of the bond. It would be both odd and unfortunate


     for Texas to backpedal now by adopting an interpretation of its appeal bond limit


l    that impairs the right to meaningful appellate review.     Texas's appeal bond limit


     should be read in the context of its pre-2003 experience with excessive appeal


f1   bonds, with the legislative intent as recognized by this Court, and in a manner that


     safeguards the right to appeal in an environment of increasingly novel legal


1    theories and breathtaking verdicts.




                                               15
r
                                       PRAYER


          For the foregoing reasons, Amici respectfully request that this Court affirm


    the ruling of the Court of Appeals, Fourth District, finding that the supersedeas


    bond contained in Tex. Civ. Prac. & Rem. Code § 52.006 applies per judgment, not


    per judgment debtor.


                                         Respectfully submitted,


                                          /s/ Elmore James Shepherd III
                                         Elmore James Shepherd III
                                         SBN 24008025
                                         eshepherd@shb.com
                                         Shook, Hardy & Bacon L.L.P.
                                         JP Morgan Chase Tower
                                         600 Travis Street, Suite 3400
                                         Houston, TX 77002
                                         (713)227-8008
                                         (713) 227-9508 (fax)


                                         Counsel for Amici Curiae


    Dated: February 20, 2015
                             CERTIFICATE OF COMPLIANCE


             I hereby certify that: (1) the word count of this document is 3,599 words


       according to Microsoft Word 2010 and excluding those parts of the document


H      specified in Tex. R. App. P. 9.4(i)(l); and (2) this document was prepared in a

       conventional typeface no smaller than 14-point for text and 12-point for footnotes,


       with the exception of the counsel listing on the cover.


                                                   /s/ Elmore James Shepherd HI
                                                  Elmore James Shepherd III




p!?I
                         CERTIFICATE OF SERVICE


      I certify that on February 20, 2015, a copy of the foregoing Brief was served


upon the following by first class U.S. mail, postage prepaid, addressed as follows:


Craig B. Florence                          Daryl L. Moore
Randy D. Gordon                            Daryl L. Moore, P.C.
Stacey R. Obenhaus                         1005 Heights Boulevard
Rachel Kingrey                             Houston, TX 77008
Gardere Wynne Sewell LLP                   Attorneyfor
1601 Elm Street, Suite 3000                The Huff Energy Fund, L.P.
Dallas, Texas 75201-4761
      and                                  Thomas R. Phillips
Mikal C. Watts                             Matt C. Wood
Francisco Guerra IV                        Baker Botts L.L.P.
Watts Guerra, LLP                          98 San Jacinto Blvd.
Four Dominion Drive                        Suite 1500
Bldg. 3, Suite 100                         Austin, TX 78701
San Antonio, Texas 78257                           and
Attorneys for                              Dean V. Fleming
Longview Energy Company                    Michael W. O'Donnell
                                           Jeffrey A. Webb
Pamela Stanton Baron                       FULBRIGHT & JAWORSKI, L.L.P.
Post Office Box 5573                       300 Convent St., Ste. 2100
Austin, Texas 78763                        San Antonio, TX 78205
Attorneyfor Rick D 'Angelo                 Attorneys for Riley-HuffEnergy Group, LLC


Sharon E. Callaway                         The Honorable Amado Abascal
Crofts & Callaway, P.C.                    Judge, 365th Judicial District Court
613 N.W. Loop 410, Suite 800               501 Main Street
San Antonio, Texas 78216-5509              Eagle Pass, Texas 78852
      and                                          and
Ricardo R. Reyna                           Fourth Court of Appeals
Brock Person Guerra Reyna, P.C.            Cadena-Reeves Justice Center
17339 Redland Road                         300 Dolorosa, Suite 3200
San Antonio, Texas 78247                   San Antonio, Texas 78205-3037
Attorneys for                              Respondents
WilliamR. "Bill" Huff
                                              /s/Elmore James Shepherd III


                                         18
                                                                                         Shook,
                                                                                          Harch
                                                                                                              LULRi

                                                                                             www.shb.com
February 20, 2015

                                                                                                    James Shepherd



                                                                   ■   :                     JPMorgan Chase Tower
BY US MAIL                                                                               600 Travis Street. Suite 3400
                                                                                                      Houston. Texas
The Honorable Amado Abascal                                                                                   77002-2926

Judge, 365th Judicial District Court                                                                      713.227.6008

501 Main Street                                                                                     713.546.5610 DD
                                                                                                    713.227.9508 Fax
Eagle Pass, Texas 78852
                                                                                           ESHEPHERD@SHB.COM


Re:   No. 14-0175; In the Supreme Court of Texas
      In Re: Longview Energy Company. Relator


Dear Honorable Amado Abascal:


Enclosed please tlnd the Brief of Amici Curiac Chamber of Commerce of the United
States of America, ct. al, that was electronically filed with the Supreme Court of Texas
today.


Sincerely,



                                                                                —^   *         no     ^       - ' —

                                                                                               CO
James Shepherd                                                              -   <\
                                                                                                          ■    *T
                                                                                                               1 ' :i
Partner


EJS:mlg
Enclosure


cc:   Craig B. Florence                          Thomas R. Phillips
      Randy D. Gordon                            Man C. Wood
      Stacey R. Obcnhaus                         Dean V. Fleming
      Mikal C. Watts                             Michael W. O'Donnell
      Francisco Guerra IV                        Jeffrey A. Webb

      Attorneysfor Longview Energy               Attorneys for Riley-Huff Energy Group, t LC
      Company                                                                                                           Denver

                                                                                                                        Geneva

                                                                                                                      Houston
      Sharon E. Callaway                         Pamela Stanton Baron
                                                                                                              Kansas City
      Ricardo R. Reyna
                                                 Attorney for Rick D 'Angela                                            London

      Attorneys for William R. "BUI" Huff                                                                                Miami

                                                                                                       Orange County
                                                                                                              Philadelphia
      Daryl L. Moore                             Fourth Court of Appeals
                                                                                                          San Francisco

      Attorney for 'The Huff Energy Fund, L.P.                                                                          Seattle
                                                                                                                        Tampa

                                                                                                     Washington. D.C.


607906vi
                                                    CLASS MAIL
                                                                 55   ii~«




Shook,
 Hardygr
     www.shb.com
JPMorgMCIiiieTowa
600 Travis Sliw«. Suite MOO
lloulton. Tons 77002-2926
>64040




                              FOURTH COURT OF APPEALS
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                              300 DOLOROSA SUITE 3200
                              SAN ANTONIO TEXAS 78205-3037


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