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$25 Billion Class Action and Derivative Action Allowed to Proceed Against U.S. Government for 2008 AIG Takeover


David Boies

On July 2, 2012, Judge Thomas C. Wheeler denied the motion to dismiss of defendant United States of America in an action brought on behalf of Starr International Company, Inc. by Boies, Schiller & Flexner in the United States Court of Federal Claims. Starr brought that class action and derivative lawsuit seeking over $25 billion in damages against the U.S. government resulting from its use of insurance giant AIG to bail out other financial institutions in 2008 without providing just compensation to AIG and its shareholders for the assets that were taken.

Judge Wheeler found that the Court had jurisdiction over those claims, that Starr had standing to bring those claims, and that Starr had adequately alleged its claims that the government had taken property (including equity interests, voting rights and other assets) from AIG and its shareholders (including Starr) either as an illegal exaction or as a taking without just compensation. 

In particular, Judge Wheeler found that the 79.9% of AIG’s equity (then valued by the government at $23 billion) that the government obtained for $500,000 was not collateral for the government’s loan to AIG and that the government did not have express authority or incidental powers justifying that acquisition.

Discovery has commenced and is proceeding in that action, which is scheduled for trial in 2014.

The principal attorneys on the motion were Chairman David Boies; partners Robert Dwyer, Nicholas Gravante, Jr., Hamish Hume, Samuel Kaplan, Duane Loft, Alanna Rutherford, and Robert Silver; counsel Eric Posner; and associates Julia Hamilton, Laura Harris, Ilana Miller, Joshua Libling, and Luke Thara.