More than forty (40) states have already done something about this little-known threat to businesses, with many capping required appeal bonds to allow parties to appeal court judgments without an unreasonable financial burden. However, in New Jersey, appeal bonds remain uncapped, leading to the following problems:
- Pressure to settle. Even though trial court judgments may be overturned or significantly reduced on appeal, the high costs of an appeal bond may deter legitimate appeals and force payment for claims that arguably should not be paid. This deprives the courts of the opportunity to review claims and causes New Jersey businesses irreparable harm to their reputation and economic viability.
- Suppression of growth. The funds expended by a business to finance a bond for the duration of an appeal – which may last months or years – are lost and never recovered, even if the appeal is ultimately successful. This diverts money away from productive endeavors. Also, the inability to obtain or afford the bond may result in a company filing for Chapter 11 bankruptcy to stay the judgment. This creates a tremendous disruption to the business, its employees, and consumers.
- Decline in key industries. These appeal bonds disproportionately impact businesses and service providers that do not own large facilities or possess hard assets against which a bond can be levied, including high tech, biotech, and research-based companies, all of which are major drivers of economic growth in New Jersey.
For these reasons, NJCJI advocates for capping appeal bonds at $50 million, or the total value of the monetary judgment, whichever is less. Fortunately, there are some in Trenton who stand up for the business community by perennially proposing legislation that would establish appeal bond caps. With your support, perhaps New Jersey can soon make real progress on this obscure issue that impacts us all.