American International Group Inc. shareholders can sue the U.S. as a group in a lawsuit brought by former Chief Executive Officer Maurice “Hank” Greenberg over losses caused by the government takeover of the insurer, a judge ruled, saying the case may affect tens of thousands of people.
U.S. Claims Judge Thomas Wheeler today granted a request by Greenberg’s Starr International Co. to certify two classes of AIG investors in the suit. The judge also appointed David Boies of Boies, Schiller & Flexner LLP as lead counsel for the groups.
“Considering the estimation of plaintiff’s counsel that the putative plaintiffs may number more than tens of thousands of geographically dispersed persons, class certification is by far the most efficient method of adjudicating these claims,” Wheeler said in his ruling.
Starr International Co. sued the government in 2011 in the U.S. Court of Federal Claims in Washington, calling the public assumption of almost 80 percent of AIG stock in September 2008 a seizure of property in violation of the Constitution’s Fifth Amendment right to just compensation. The lawsuit seeks at least $25 billion in damages.
One class involves those holding shares on Sept. 22, 2008, when a credit agreement giving the U.S. 79.9 percent equity interest in AIG was imposed. The second class comprises people who owned AIG stock on June 30, 2009, who were denied a vote when the company conducted a reverse stock split, according to the ruling.
In January, New York-based AIG’s board opted against joining the lawsuit, saying it was unlikely to succeed and risked harming the insurer’s reputation after its bailout by the government.
The case is Starr International Co. v. U.S., 1:11-cv-00779, U.S. Court of Federal Claims (Washington).