AIG 2011 Annual Report Download - page 335

American International Group, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A number of complaints making allegations similar to those in the Multi-District Litigation have been filed
against AIG and other defendants in state and federal courts around the country. The defendants have thus far
been successful in having the federal actions transferred to the District of New Jersey and consolidated into the
Multi-District Litigation. These additional consolidated actions are still pending in the District of New Jersey, but
are currently stayed. In one of those consolidated actions, Palm Tree Computer Systems, Inc. v. Ace USA (Palm
Tree), which is brought by two named plaintiffs on behalf of a proposed class of insurance purchasers, the
plaintiffs allege specifically with respect to their claim for breach of fiduciary duty against the insurer defendants
that neither named plaintiff nor any member of the proposed class suffered damages ‘‘exceeding $74,999 each.’’
Plaintiffs do not specify damages as to other claims against the insurer defendants in the complaint. The plaintiffs
in Palm Tree have not yet sought certification of the class, as that case has been stayed by the District Court of
New Jersey. Because discovery has not been completed and the District Court has not determined if a class action
is appropriate or the size or scope of any class, AIG is unable to reasonably estimate the possible loss or range of
losses, if any, arising from the Palm Tree litigation. In another consolidated action, The Heritage Corp. of South
Florida v. National Union Fire Ins. Co. (Heritage), an individual plaintiff alleges damages ‘‘in excess of $75,000.’’
Because discovery has not been completed and a precise amount of damages has not been specified, AIG is
unable to reasonably estimate the possible loss or range of losses, if any, arising from the Heritage litigation. For
the remaining consolidated actions, as of February, 2012, plaintiffs have not specified an amount of alleged
damages arising from these actions. AIG is therefore unable to reasonably estimate the possible loss or range of
losses, if any, arising from these matters.
In June 2011, the Court ordered counsel for each of the tag-along actions in the Multi-District Litigation
(including the following cases where AIG is a defendant: Avery Dennison Corp. v. Marsh & McLennan
Companies, Inc.; Henley Management Co. v. Marsh Inc.; Heritage; and Palm Tree) to submit a letter to the Court
within 30 days of the date of that order that outlines the effect the current proposed class settlement will have on
their respective cases if finalized in due course. In July 2011, several plaintiffs submitted letters to the Court.
Defendants submitted an omnibus response to the Court on August 19, 2011.
On October 17, 2011, the Court conducted a conference and subsequently ordered that discovery and motion
practice may proceed in all tag-along actions. The parties were ordered to submit a proposed scheduling order for
discovery and any additional motion practice to the Court by October 31, 2011. The Court has not yet issued a
scheduling order.
The AIG defendants have also sought to have state court actions making similar allegations stayed pending
resolution of the Multi-District Litigation proceeding. These efforts have generally been successful, although four
cases have proceeded; one each in Florida and New Jersey state courts that have settled, and one each in Texas
and Kansas state courts have proceeded (although discovery is stayed in both actions). In the Texas action,
plaintiff filed its Fourth Amended Petition on July 13, 2009 and on August 14, 2009, defendants filed renewed
special exceptions. Plaintiff in the Texas action alleges a ‘‘maximum’’ of $125 million in total damages (after
trebling). Because the Court has not rendered a decision on defendants’ renewed special exceptions and discovery
has not been completed, AIG is unable to reasonably estimate the possible loss or range of losses, if any, arising
from the Texas action. In the Kansas action, defendants are appealing to the Kansas Supreme Court the trial
court’s denial of defendants’ motion to dismiss on statute of limitations grounds. In the Kansas action, the plaintiff
alleges damages in an amount ‘‘greater than $75,000’’ for each of the three claims directed against AIG in the
complaint. Because the Kansas Supreme Court has not decided the appeal of the trial court’s denial of
defendants’ motion to dismiss, a precise amount of damages has not been specified and discovery has not been
completed, AIG is unable to reasonably estimate the possible loss or range of losses, if any, from the Kansas
action.
Workers’ Compensation Premium Reporting. On May 24, 2007, the National Council on Compensation
Insurance (NCCI), on behalf of the participating members of the National Workers’ Compensation Reinsurance
Pool (the NWCRP), filed a lawsuit in the United States District Court for the Northern District of Illinois
AIG 2011 Form 10-K 321