The Colorado Supreme Court on Monday upheld a state law that caps the amount of money defendants must secure while they appeal their loss in a civil case.

The decision implicated two competing concerns: First, ensuring that the losing party in a civil case has the meaningful ability to appeal a high-dollar verdict against them. Second, guaranteeing that the prevailing party will receive the money owed to them at the conclusion of the appeals process.

When a losing party appeals, it will normally post a bond – a certain amount of money or collateral as insurance – to prevent the judgment from taking effect while an appellate court considers the case. In 2003, Colorado lawmakers responded to an increase in high-dollar awards by capping the money a losing party must secure at $25 million.

Nearly two decades later, after Antero Treatment LLC won $240 million in breach-of-contract damages against Veolia Water Technologies, Inc., a Denver judge agreed Veolia only had to post a $25 million bond while it appealed the decision. 

Antero Treatment challenged that cap directly to the Supreme Court. It pointed to a judicial rule generally requiring losing parties to put up 125% of the money owed while they appeal. If the rule took precedence over state law, Veolia would have needed to secure $350 million to appeal – $325 million more than the trial judge required.

The Supreme Court, answering the question for the first time, concluded it was unnecessary to declare one provision or the other as void. The rule merely sets the default amount a losing party has to secure while they appeal, and the law ensures that amount cannot exceed $25 million.

The legislature’s decision to impose a cap “was a judgment call rooted in public policy,” wrote Justice William W. Hood III in the Dec. 4 opinion.

The case received interest from several outside organizations that attempted to sway the court toward preserving the ability to appeal extra-large, possibly erroneous trial awards, on the one hand, and – to the other side – protecting prevailing parties from the possibility that the loser will thwart the victory by getting rid of its assets while the case is appealed.

At the time the General Assembly enacted the $25 million cap on bonds in 2003, it heard about a recent rise in large-dollar awards. Lawmakers voiced concerns about losing parties having to decide whether to appeal and “set the record right,” even if securing enough money to do so could bankrupt them.

Now, more than two dozen states have similar caps for all civil cases, with the most common amount being $25 million. No court has struck down any legislatively enacted cap.

After a trial judge required Veolia to only secure $25 million to prevent it from having to pay the judgment while it appealed, Antero Treatment sought to strike down the cap as unconstitutional. It noted the Colorado Constitution gives the Supreme Court the authority to issue rules about “practice and procedure.” Arguably, the legislative cap infringed on the court’s prerogative to set the bond amount at 125%, as it did shortly after the law’s passage.

Moreover, contended the Colorado Trial Lawyers Association in a supportive brief, the legislature had arbitrarily allowed defendants who owe millions or billions of dollars in damages to appeal, despite guaranteeing a far lower percentage of the award – less than 10% in Veolia’s case.

“This treatment is unfair and inequitable,” wrote attorney Nelson Boyle.

Veolia countered that its chief executive had already given assurances the company would not get rid of any assets to avoid paying the full amount if the Veolia loses its appeal. Antero was only trying to “make it more expensive for Veolia to appeal,” the company claimed.

The Supreme Court concluded the law and its rule could be synthesized to establish an absolute limit of $25 million – with an explicit exception in the law if there is evidence a losing party is getting rid of its assets to evade paying damages. Even if the law was at odds with the rule, Hood elaborated, the legislature’s actions did not wade into court procedure, but appropriately addressed the rights of litigants instead.

“The amount implicates two matters of public policy: the appellee’s right to protect its interest in the judgment,” he wrote, “and the appellant’s practical ability to appeal.”

Hood acknowledged it may be “tough” to prove that a losing party is intentionally trying to get out of its obligation to pay, but that was the procedure the General Assembly envisioned.

The case is Antero Treatment LLC v. Veolia Water Technologies, Inc.