Last September we began coverage of a lawsuit by some AIG shareholders, alleging that Uncle Sam’s treatment of their company was so harsh that it constituted a taking of their property. You can check it out at http://gideonstrumpet.info/?p=6997 and several follow up posts.
AIG is a giant insurance company that faced insolvency during the 2008 crash, but was rescued by Uncle Sam.
The AIG shareholders’ litigation in the US Court of Federal Claims was a whopper of a lawsuit that took some six months to try, arguing that Uncle Sam’s treatment of AIG was harsh, unfair and discriminatory as compared to the treatment of other entities that were bailed out during that crash. Still, during that time, argue the plaintiffs-shareholders, Uncle Sam seized controlling stock of AIG which amounted to an uncompensated taking of AIG’s property.
The case went to trial before a Court of Federal Claims judge last fall. Yesterday’s New York Times reported that final arguments by counsel were scheduled to begin yesterday, April 20th, 2015. See A.I.G. Suit Nears End, N.Y. Times, at p.B2. So the end of this saga is in sight.
Defendant, Uncle Sam, argues that its ministrations saved AIG from bankruptcy, so its suit is an example of rank ingratitude. The plaintiffs respond by pointing out that the rescue doe not provide the government with justification of harsh, discriminatory treatment that, among other things, involved a temporary seizure of AIG’s stock, thus constituting a taking of property.
Follow-up. Don’t miss one of those analysis/opinion pieces in today’s NY Times, Aaron M. Kessler, April 22, 2015, at p. B4, entitled With Top Lawyer on Offensive, Legal Odds in A.I.G. Bailout Case Are Shifting. http://www.nytimes.com/2015/04/22/business/dealbook/the-legal-odds-are-shifting-in-the-aig-case.html?src=me&_r=0 It’s mostly a paean of praise for the plaintiffs’ lead trial lawyer, David Boies, and his “small army of associates accompany[ing] him to Washington.” They ”accompanied him to Washington when the action began in October, taking over an entire floor of the downtown Willard Hotel. The team also set up a ‘war room’ at nearby Skadden Arps, where each day and late into the night dozens of young lawyers crowded around a large table, churning away on computers and picking through boxes of documents on coming witnesses.”
So that’s how the other half litigates. Which is not to detract from Mr. Boies’ litigational prowess. We suppose that with the might of the United States’ unlimited resources aligned against you, you can use all the help you can get. Still, we wonder on what basis the plaintiffs think they’ll carry the day insofar as an award of compensation is concerned. As we noted in our earlier posts, their problem is not so much establishing liability — after all Uncle Sam did take their stock, if only temporarily — but rather establishing damages. After all, when the temporary taking period was over, AIG was not only rescued from bankruptcy by Uncle Sam’s rescue, but also got its stock back, and made a hefty profit in the end when the market value of the seized (and returned) stock soared. So where is the damage to AIG? Would this be a case of injuria absque damno?
So once again, stay tuned. Presumably, all will be explained in the decision of the Court of Federal claims, whose decision is expected some time this summer.