AIG 2010 Annual Report Download - page 336

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Court of New York Derivative Action submitted a stipulation and proposed order dismissing the case with
prejudice.
The Delaware 2004/2005 Derivative Litigation. From October 2004 to April 2005, AIG shareholders filed five
derivative complaints in the Delaware Chancery Court. All of these derivative lawsuits were consolidated into a
single action as In re American International Group, Inc. Consolidated Derivative Litigation (the Delaware
2004/2005 Derivative Litigation). The amended consolidated complaint named 43 defendants (not including
nominal defendant AIG) who, as in the New York 2004/2005 Derivative Litigation, were current and former
officers and directors of AIG, as well as other entities and certain of their current and former employees and
directors. The factual allegations, legal claims and relief sought in this action are similar to those alleged in the
New York 2004/2005 Derivative Litigation, except that the claims are only under state law.
In early 2007, the Court approved an agreement that AIG be realigned as plaintiff, and, on June 13, 2007,
acting on the direction of the Special Committee, AIG filed an amended complaint against former directors and
officers Greenberg and Smith, alleging breach of fiduciary duty and indemnification. Also on June 13, 2007, the
Special Committee filed a motion to terminate the litigation as to certain defendants, while taking no action as to
others. Defendants Greenberg and Smith filed answers to AIG’s complaint and brought third-party complaints
against certain current and former AIG directors and officers, PwC and INS Regulatory Insurance Services, Inc.
On September 28, 2007, AIG and the shareholder plaintiffs filed a combined amended complaint in which AIG
continued to assert claims against defendants Greenberg and Smith and took no position as to the claims asserted
by the shareholder plaintiffs in the remainder of the combined amended complaint. In that pleading, the
shareholder plaintiffs are no longer pursuing claims against certain AIG officers and directors. On February 12,
2008, the Court granted AIG’s motion to stay discovery pending the resolution of claims against AIG in the
Consolidated 2004 Securities Litigation.
On April 11, 2008, the shareholder plaintiffs filed the First Amended Combined Complaint, which added claims
against former AIG directors and officers Greenberg, Edward Matthews, and Thomas Tizzio for breach of
fiduciary duty based on alleged bid-rigging in the municipal derivatives market. On June 13, 2008, certain
defendants filed motions to dismiss the shareholder plaintiffs’ portions of the complaint. On February 10, 2009,
the Court denied the motions to dismiss filed by Greenberg, Matthews, and Tizzio; granted the motion to dismiss
filed by PwC without prejudice; and granted the motion to dismiss filed by certain former employees of AIG
without prejudice for lack of personal jurisdiction. On March 6, 2009, the Court granted an Order of Dismissal,
Notice and Order of Voluntary Dismissal and Stipulation and Order of Dismissal to dismiss those individual
defendants who were similarly situated to the individuals dismissed by the Court for lack of personal jurisdiction.
On March 12, 2009, Defendant Greenberg filed his verified answer to AIG’s complaint; cross-claims against
Marsh, ACE, General Re, and Tizzio and a third-party complaint against certain current and former AIG
directors and officers, as well as INS Regulatory Insurance Services, Inc. Defendant Smith has also filed his
answer to AIG’s complaint, which was amended on July 9, 2009 to add cross-claims against Tizzio and third-party
claims against certain current and former AIG directors and officers, as well as INS Regulatory Insurance
Services, Inc. On June 17, 2009, the Court issued an opinion granting the motions to dismiss filed by General Re,
Marsh, ACE, and Susan Rivera. On July 13, 2009 and July 17, 2009, the Court entered final judgments in favor of
PwC, General Re, Marsh, ACE, and Susan Rivera. Shortly thereafter, the shareholder plaintiffs filed separate
appeals: one addressing the dismissal of PwC, and the other addressing the dismissals of ACE, General Re, and
Marsh. The Delaware Supreme Court certified the question to the New York Court of Appeals as to whether,
under certain circumstances, New York’s in pari delicto doctrine would bar a derivative claim against a
corporation’s accountants for negligently failing to uncover a fraud by the corporation. On October 21, 2010 the
New York Court of Appeals affirmatively answered the certified question.
On November 10, 2009, the Delaware Supreme Court granted AIG’s motion to consolidate the appeal of its
dismissal from the In re Marsh Derivative Litigation (see below, ‘‘Derivative Action — Delaware Chancery Court
(Marsh)’’) with the appeal of the dismissals of Marsh, General Re and ACE from the Delaware 2004/2005
Derivative Litigation, and subsequently issued an order notifying the parties that the appeal would be heard by the
320 AIG 2010 Form 10-K