2007 Annual Report - AIG.com
2007 Annual Report - AIG.com
2007 Annual Report - AIG.com
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American International Group, Inc. and Subsidiaries<br />
<strong>com</strong>pensation to each broker. Plaintiffs assert that the defendants and In re Employee Benefit Insurance Brokerage Antitrust Litigaviolated<br />
the Sherman Antitrust Act, RICO, the antitrust laws of 48 tion (the Second Employee Benefits Complaint) along with revised<br />
states and the District of Columbia, and are liable under <strong>com</strong>mon law particularized statements in both actions on May 22, <strong>2007</strong>. The<br />
breach of fiduciary duty and unjust enrichment theories. Plaintiffs allegations in the Second Commercial Complaint and the Second<br />
seek treble damages plus interest and attorneys’ fees as a result of Employee Benefits Complaint are substantially similar to the<br />
the alleged RICO and Sherman Antitrust Act violations.<br />
allegations in the First Commercial Complaint and First Employee<br />
The plaintiffs in the First Employee Benefits Complaint are nine Benefits Complaint, respectively. The <strong>com</strong>plaints also attempt to<br />
individual employees and corporate and municipal employers add several new parties and delete others; the Second Commeralleging<br />
claims on behalf of two separate nationwide purported cial Complaint adds two new plaintiffs and twenty seven new<br />
classes: an employee class and an employer class that acquired defendants (including three new <strong>AIG</strong> defendants), and the Second<br />
insurance products from the defendants from August 26, 1994 to Employee Benefits Complaint adds eight new plaintiffs and nine<br />
the date of any class certification. The First Employee Benefits new defendants (including two new <strong>AIG</strong> defendants). The defend-<br />
Complaint names <strong>AIG</strong>, as well as eleven brokers and five other ants filed motions to dismiss the amended <strong>com</strong>plaints and to<br />
insurers, as defendants. The activities alleged in the First<br />
strike the newly added parties. The Court granted (without leave<br />
Employee Benefits Complaint, with certain exceptions, track the to amend) defendants’ motions to dismiss the federal antitrust<br />
allegations of contingent <strong>com</strong>missions, bid-rigging and tying made and RICO claims on August 31, <strong>2007</strong> and September 28, <strong>2007</strong>,<br />
in the First Commercial Complaint.<br />
respectively. The Court declined to exercise supplemental jurisdic-<br />
On October 3, 2006, Judge Hochberg of the District of New tion over the state law claims in the Second Commercial<br />
Jersey reserved in part and denied in part motions filed by the Complaint and therefore dismissed it in its entirety. On Januinsurer<br />
defendants and broker defendants to dismiss the multi- ary 14, 2008, the court granted defendants’ motion for summary<br />
district litigation. The Court also ordered the plaintiffs in both judgment on the ERISA claims in the Second Employee Benefits<br />
actions to file supplemental statements of particularity to elabo- Complaint and subsequently dismissed the remaining state law<br />
rate on the allegations in their <strong>com</strong>plaints. Plaintiffs filed their claims without prejudice, thereby dismissing the Second Employee<br />
supplemental statements on October 25, 2006, and the <strong>AIG</strong> Benefits Complaint in its entirety. On February 12, 2008, plaintiffs<br />
defendants, along with other insurer and broker defendants in the filed a notice of appeal to the United States Court of Appeals for<br />
two consolidated actions, filed renewed motions to dismiss on the Third Circuit with respect to the dismissal of the Second<br />
November 30, 2006. On February 16, <strong>2007</strong>, the case was<br />
Employee Benefits Complaint. Plaintiffs previously appealed the<br />
transferred to Judge Garrett E. Brown, Chief Judge of the District dismissal of the Second Commercial Complaint to the United<br />
of New Jersey. On April 5, <strong>2007</strong>, Chief Judge Brown granted the States Court of Appeals for the Third Circuit on October 10, <strong>2007</strong>.<br />
defendants’ renewed motions to dismiss the First Commercial Several similar actions that were consolidated before Chief Judge<br />
Complaint and First Employee Benefits Complaint with respect to Brown are still pending in the District Court. Those actions are<br />
the antitrust and RICO claims. The claims were dismissed without currently stayed pending a decision by the court on whether they<br />
prejudice and the plaintiffs were given 30 days, later extended to will proceed during the appeal of the dismissal of the Second<br />
45 days, to file amended <strong>com</strong>plaints. On April 11, <strong>2007</strong>, the Commercial Complaint and the Second Employee Benefits<br />
Court stayed all proceedings, including all discovery, that are part Complaint.<br />
of the multi-district litigation until any renewed motions to dismiss On August 24, <strong>2007</strong>, the Ohio Attorney General filed a<br />
the amended <strong>com</strong>plaints are resolved.<br />
<strong>com</strong>plaint in the Ohio Court of Common Pleas against <strong>AIG</strong> and a<br />
A number of <strong>com</strong>plaints making allegations similar to those in number of its subsidiaries, as well as several other broker and<br />
the First Commercial Complaint have been filed against <strong>AIG</strong> and insurer defendants, asserting violation of Ohio’s antitrust laws.<br />
other defendants in state and federal courts around the country. The <strong>com</strong>plaint, which is similar to the Second Commercial<br />
The defendants have thus far been successful in having the Complaint, alleges that <strong>AIG</strong> and the other broker and insurer<br />
federal actions transferred to the District of New Jersey and defendants conspired to allocate customers, divide markets, and<br />
consolidated into the multi-district litigation. The <strong>AIG</strong> defendants restrain <strong>com</strong>petition in <strong>com</strong>mercial lines of casualty insurance<br />
have also sought to have state court actions making similar sold through the broker defendant. The <strong>com</strong>plaint seeks treble<br />
allegations stayed pending resolution of the multi-district litigation damages on behalf of Ohio public purchasers of <strong>com</strong>mercial<br />
proceeding. In one state court action pending in Florida, the trial casualty insurance, disgorgement on behalf of both public and<br />
court recently decided not to grant an additional stay, but instead private purchasers of <strong>com</strong>mercial casualty insurance, as well as a<br />
to allow the case to proceed. Defendants filed their motions to $500 per day penalty for each day of conspiratorial conduct. <strong>AIG</strong>,<br />
dismiss, and on September 24, <strong>2007</strong>, the court denied the along with other co-defendants, moved to dismiss the <strong>com</strong>plaint<br />
motions with respect to the state antitrust, RICO, and <strong>com</strong>mon on November 16, <strong>2007</strong>. Discovery is stayed in the case pending<br />
law claims and granted the motions with respect to both the a ruling on the motion to dismiss or until May 15, 2008,<br />
Florida insurance bad faith claim against <strong>AIG</strong> (with prejudice) and whichever occurs first.<br />
the punitive damages claim (without prejudice). Discovery in this<br />
SICO. In July, 2005, SICO filed a <strong>com</strong>plaint against <strong>AIG</strong> in the<br />
action is ongoing.<br />
Southern District of New York, claiming that <strong>AIG</strong> had refused to<br />
Plaintiffs filed amended <strong>com</strong>plaints in both In re Insurance<br />
provide SICO access to certain artwork and asked the court to<br />
Brokerage Antitrust Litigation (the Second Commercial Complaint)<br />
order <strong>AIG</strong> immediately to release the property to SICO. <strong>AIG</strong> filed<br />
24 <strong>AIG</strong> <strong>2007</strong> Form 10-K