AIG 2011 Annual Report Download - page 334

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Sherman Antitrust Act, RICO, and the antitrust laws of 48 states and the District of Columbia, and are liable
under common law breach of fiduciary duty and unjust enrichment theories. Plaintiffs seek treble damages plus
interest and attorneys’ fees as a result of the alleged RICO and Sherman Antitrust Act violations.
The plaintiffs in the Employee Benefits Complaint are a group of individual employees and corporate and
municipal employers alleging claims on behalf of two separate nationwide purported classes: an employee class
and an employer class that acquired insurance products from the defendants from January 1, 1998 to
December 31, 2004. The Employee Benefits Complaint names AIG, as well as various other brokers and insurers,
as defendants. The activities alleged in the Employee Benefits Complaint, with certain exceptions, track the
allegations of customer allocation through steering and bid-rigging made in the Commercial Complaint.
The District Court, in connection with the Commercial and Employee Benefits Complaints, granted (without
leave to amend) defendants’ motions to dismiss the federal antitrust and RICO claims on August 31, 2007 and
September 28, 2007, respectively. The Court declined to exercise supplemental jurisdiction over the state law
claims in the Commercial Complaint and therefore dismissed it in its entirety. Plaintiffs appealed the dismissal of
the Commercial Complaint to the United States Court of Appeals for the Third Circuit (the Third Circuit) on
October 10, 2007. On January 14, 2008, the District Court granted summary judgment to defendants on plaintiffs’
ERISA claims in the Employee Benefits Complaint. On February 12, 2008, plaintiffs filed a notice of appeal to
the Third Circuit with respect to the dismissal of the antitrust and RICO claims in the Employee Benefits
Complaint.
On August 16, 2010, the Third Circuit affirmed the dismissal of the Employee Benefits Complaint in its entirety,
affirmed in part and vacated in part the District Court’s dismissal of the Commercial Complaint, and remanded
the case for further proceedings consistent with the opinion. Specifically, the Third Circuit affirmed the dismissal
of plaintiffs’ broader antitrust and RICO claims, but the Court reversed the District Court’s dismissal of alleged
‘‘Marsh-centered’’ antitrust and RICO claims based on allegations of bid-rigging involving excess casualty
insurance. The Court remanded these Marsh-centered claims to the District Court for consideration as to whether
plaintiffs had adequately pleaded them. Because the Third Circuit vacated in part the judgment dismissing the
federal claims in the Commercial Complaint, the Third Circuit also vacated the District Court’s dismissal of the
state-law claims in the Commercial Complaint.
On October 1, 2010, defendants named in the Commercial Complaint filed motions to dismiss the remaining
remanded claims in the District of New Jersey. On March 18, 2011, AIG and certain other defendants announced
that they had entered into a memorandum of understanding (MOU) with class plaintiffs to settle the claims
asserted against them in the Commercial Complaint. As of May 20, 2011, the parties to the MOU and certain
other defendants entered into a Stipulation of Settlement. Under the terms of the settlement, it is anticipated that
AIG will pay $6.75 million of a total aggregate settlement amount of approximately $37 million. The settlement is
conditioned on final court approval. Plaintiffs’ attorneys’ fees and litigation expenses, and the aggregate costs of
notice and claims administration in connection with the settlement, would be paid from the settlement fund.
On June 20, 2011, the Court ‘‘administratively terminated’’ without prejudice the various Defendants’ pending
motions to dismiss the proposed class plaintiffs’ operative pleading indicating that those motions may be re-filed
after adjudication of all issues related to the proposed class settlement and subject to the approval of the
Magistrate Judge. On June 27, 2011, the Court preliminarily approved the class settlement. On June 30, 2011,
AIG placed its portion of the total settlement payment into escrow. If the settlement does not receive final court
approval, those funds will revert to AIG. A final fairness hearing was held on September 14, 2011. The Court has
not yet ruled on the motion for final approval of the class settlement.
320 AIG 2011 Form 10-K