AIG 2009 Annual Report Download - page 310

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Policyholder Antitrust and RICO Actions. Commencing in 2004, policyholders brought multiple federal antitrust
and RICO class actions in jurisdictions across the nation against insurers and brokers, including AIG and a number of
its subsidiaries, alleging that the insurers and brokers engaged in a broad conspiracy to allocate customers, steer
business, and rig bids. These actions, including 24 complaints filed in different federal Courts naming AIG or an AIG
subsidiary as a defendant, were consolidated by the judicial panel on multi-district litigation and transferred to the
United States District Court for the District of New Jersey (District of New Jersey) for coordinated pretrial
proceedings. The consolidated actions have proceeded in that Court in two parallel actions, In re Insurance Brokerage
Antitrust Litigation (the Commercial Complaint) and In re Employee Benefits Insurance Brokerage Antitrust
Litigation (the Employee Benefits Complaint, and, together with the Commercial Complaint, the Multi-district
Litigation).
The plaintiffs in the Commercial Complaint are a group of corporations, individuals and public entities that
contracted with the broker defendants for the provision of insurance brokerage services for a variety of insurance
needs. The broker defendants are alleged to have placed insurance coverage on the plaintiffs’ behalf with a number of
insurance companies named as defendants, including AIG subsidiaries. The Commercial Complaint also named
various brokers and other insurers as defendants (three of which have since settled). The Commercial Complaint
alleges, among other things, that defendants engaged in a widespread conspiracy to allocate customers through
bid-rigging and steering practices. Plaintiffs assert that the defendants violated the 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 made in the Commercial
Complaint.
The Court, in connection with the Commercial Complaint, 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. On January 14, 2008, the Court granted defendants’ motion for summary judgment on the
ERISA claims in the Employee Benefits Complaint and subsequently dismissed the remaining state law claims
without prejudice, thereby dismissing the Employee Benefits Complaint in its entirety. On February 12, 2008,
plaintiffs filed a notice of appeal to the United States Court of Appeals for the Third Circuit with respect to the
dismissal of the Employee Benefits Complaint. Plaintiffs previously appealed the dismissal of the Commercial
Complaint to the United States Court of Appeals for the Third Circuit on October 10, 2007. Both appeals are fully
briefed and oral argument in both appeals was held on April 21, 2009.
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. The District Court, however, will hold a hearing on March 2, 2010 to decide whether it should
suggest to the Judicial Panel on Multi-district Litigation that the remaining pending actions be remanded to their
transferor Courts. On August 20, 2008, the District Court granted plaintiff’s motion to lift the stay in one tag-along
matter and suggested that the case be remanded to the transferor Court, and on November 26, 2008, the Judicial
Panel on Multi-district Litigation issued an order remanding the case to the transferor Court. On March 12, 2009, the
transferor Court held oral argument on the insurer defendants’ motion to dismiss and granted that motion from the
bench. 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 discovery
AIG 2009 Form 10-K 302