Starr International and Maurice “Hank” Greenberg, its controlling shareholder, have “no more than a 20 percent” chance of winning damages from the government in its lawsuit claiming that that the government acted punitively against its shareholders when it acted to bail out American International Group starting in September 2008, AIG’s lawyers have told its board.
The opinion on the viability of the Starr lawsuit against the government was made by Paul C. Curnin, AIG’s lawyer at Simpson Thacher & Bartlett LLP, in New York, during the Jan. 9 meeting where AIG’s board considered Starr/Greenberg’s request that AIG join the lawsuit.
It was at that meeting that the AIG board decided not to join the lawsuit, and doing so in such a way that even in the event Starr/Greenberg won the lawsuit, AIG would not benefit.
The disclosure of Curnin’s advice to the board was made in a letter sent to David Boies, Starr/Greenberg’s lawyers at Boies, Schiller & Flexner in Armonk, N.Y., Wednesday night and obtained by the National Underwriter.
The letter was also sent to the U.S. Federal Claims Court in Washington, D.C., which is hearing the suit. In the suit, Starr/Greenberg are seeking $25 billion from the government.
“Curnin reported that, in the view of all counsel advising AIG and the board, Starr’s claims had a low likelihood of success on the merits,” the letter says.
The letter said that Curnin specifically told the board that, “if it was helpful to the board’s consideration of the demand, he would quantify Starr’s likelihood of success at no more than 20 percent, and that given the difficulties of predicting litigation outcomes, he would add or subtract 5 percent on either side of his estimate.”
According to the letter to Boies, Curnin then told the board, “this estimate took into consideration the fact that Starr is well financed and well represented, and has already survived a motion to dismiss in the Court of Claims action.”
The letter to Boies and the court filing seek to transfer to court filings Boies’ statement on CNBC the day after the meeting that, “We’re not suing AIG or AIG’s board; we’re looking to the government, we’re not looking to sue AIG.”
Curnin and Simpson Thacher were identified as one of the law firms AIG’s board had retained to help it determine whether to join the lawsuit.
The letter and the court filing are asking Boies, “If these statements reflect Starr’s current intentions, then no derivative claims remain in the case and AIG will no longer be a party to this action, nominal or otherwise.”
And, the letter and the court papers say, “If Starr intends to seek to overturn the board’s decision, then Starr must,” under the terms of an agreement between AIG and Starr/Greenberg in the case filed Sept. 12 file an amended complaint with the Court of Claims.
That amended lawsuit should attempt “to state facts demonstrating that no demand was required [of AIG] or that demand was ‘wrongfully refused.’”
The letter concludes, “For all of these reasons, AIG respectfully requests that Starr inform the court whether it intends to seek to overturn AIG’s decision to refuse Starr’s demand, and, if Starr intends to do so, that the court schedule a case management conference to address the filing of an amended complaint and AIG’s motion to dismiss.”