Berkshire Hathaway 2009 Annual Report Download - page 57

Notes to Consolidated Financial Statements (Continued)
(21) Contingencies and Commitments (Continued)
were filed in April 2003 through June 2006. In the action filed by the Virginia Commissioner of Insurance, the Commissioner
asserts in several of its claims that the alleged damages are believed to exceed $200 million in the aggregate as against all
defendants.
All of these cases are collectively assigned to the U.S. District Court for the Western District of Tennessee for pretrial
proceedings. General Reinsurance filed motions to dismiss all of the claims against it in these cases and, in June 2006, the court
granted General Reinsurance’s motion to dismiss the complaints of the Virginia and Tennessee receivers. The court granted the
Tennessee receiver leave to amend her complaint, and the Tennessee receiver filed an amended complaint on August 7, 2006.
General Reinsurance has filed a motion to dismiss the amended complaint in its entirety and that motion was granted, with the
court dismissing the claim based on an alleged violation of RICO with prejudice and dismissing the state law claims without
prejudice. One of the other defendants filed a motion for the court to reconsider the dismissal of the state law claims, requesting
that the court retain jurisdiction over them. That motion is pending.
The Tennessee Receiver subsequently filed three Tennessee state court actions against General Reinsurance, essentially
asserting the same state law claims that had been dismissed without prejudice by the Federal court. General Reinsurance
removed those actions to Federal court, and the Judicial Panel on Multi-District Litigation ultimately transferred these actions to
the U.S. District Court for the Western District of Tennessee.
The Virginia receiver has moved for reconsideration of the dismissal and for leave to amend his complaint, which was
opposed by General Reinsurance. The court affirmed its original ruling but has given the Virginia receiver leave to amend. In
September 2006, the court also dismissed the complaint filed by the Missouri-based hospital group. The Missouri-based hospital
group has filed a motion for reconsideration of the dismissal and for leave to file an amended complaint. General Reinsurance
has filed its opposition to that motion and awaits a ruling by the court. The court has also not yet ruled on General Reinsurance’s
motions to dismiss the complaints of the other plaintiffs.
General Reinsurance filed a Complaint and a motion in federal court to compel the Tennessee and Virginia receivers to
arbitrate their claims against General Reinsurance. The receivers filed motions to dismiss the Complaint. These motions are
pending.
General Reinsurance has reached tentative settlements with the Virginia and Tennessee receivers as well as the Missouri-
based hospital group. If those settlements are consummated and approved, all the claims by these entities will be dismissed.
Actions related to AIG
General Reinsurance is a defendant in In re American International Group Securities Litigation, Case No. 04-CV-8141-
(LTS), United States District Court, Southern District of New York, a putative class action (the “AIG Securities Litigation”)
asserted on behalf of investors who purchased publicly-traded securities of AIG between October 1999 and March 2005. The
complaint, originally filed in April 2005, asserts various claims against AIG and certain of its officers, directors, investment
banks and other parties, including Ronald Ferguson, Richard Napier and John Houldsworth (whom the Complaint defines,
together with General Reinsurance, as the “General Re Defendants”). The Complaint alleges that the General Re Defendants
violated Section 10(b) of the Securities Exchange Act and Rule 10b-5 in connection with the AIG Transaction. The Complaint
seeks damages and other relief in unspecified amounts. General Reinsurance has answered the Complaint, denying liability and
asserting various affirmative defenses. Lead plaintiffs filed a motion for class certification on February 20, 2008. Various
defendants, including General Reinsurance, have filed oppositions to class certification. On May 29, 2008, General Reinsurance
filed a motion for judgment on the pleadings. Plaintiffs filed an opposition to that motion on June 30, 2008. The court has not
ruled on that motion. The lead plaintiffs and General Reinsurance have reached agreement concerning the terms of a settlement
that would resolve all claims against the General Re Defendants in exchange for a payment by General Reinsurance of $72
million, out of which the court may award plaintiffs’ counsel no more than $11.5 million in fees and reimbursement of costs,
with the remaining amount of at least $60.5 million to be distributed to purchasers of AIG securities. This settlement remains
subject to court approval. On February 22, 2010, the court granted class certification with respect to claims against AIG, and
denied class certification with respect to claims against General Reinsurance. The order does not explicitly address whether the
court will approve the above-described settlement.
A member of the putative class in the litigation described in the preceding paragraph has asserted similar claims against General
Re and Mr. Ferguson in a separate complaint, Florida State Board of Administration v. General Re Corporation, et al., Case
No. 06-CV-3967, United States District Court, Southern District of New York. The claims against General Re and Mr. Ferguson
closely resemble those asserted in the class action. The complaint does not specify the amount of damages sought. General Re has
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