AIG 2010 Annual Report Download - page 339

American International Group, Inc., and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On October 1, 2010, defendants in the Commercial Complaint filed motions to dismiss the remaining remanded
claims in the District Court of New Jersey.
As of February 16, 2011, plaintiffs have not specified an amount of alleged damages. Because the District Court
has not ruled on the renewed motion to dismiss, discovery has not yet been completed, and AIG lacks sufficient
information about the total amount of insurance premiums paid to other insurer defendants, AIG is unable to
reasonably estimate the possible loss or range of losses, if any, arising from these remaining claims.
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, 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 in 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., an individual plaintiff alleges damages ‘‘in excess of $75,000.’’ Because
discovery has not been completed, AIG is unable to reasonably estimate the possible loss or range of losses, if
any, arising from the Heritage Corp. litigation. For the remaining consolidated actions, as of February 16, 2011,
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.
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. Briefing on the appeal was
completed in December 2010. 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, 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
(Northern District of Illinois) against AIG with respect to the underpayment by AIG of its residual market
assessments for workers’ compensation insurance. The complaint alleged claims for violations of RICO, breach of
contract, fraud and related state law claims arising out of AIG’s alleged underpayment of these assessments
between 1970 and the present and sought damages purportedly in excess of $1 billion. On August 6, 2007, the
Court denied AIG’s motion seeking to dismiss or stay the complaint or, in the alternative, to transfer to the
Southern District of New York. On December 26, 2007, the Court denied AIG’s motion to dismiss the complaint.
AIG 2010 Form 10-K 323