The much-anticipated trial pitting David Boies against Ted Wells has been on our calendar for months. And now we're just days away. On Monday, American International Group is set to go to trial against Starr International Co., a holding company controlled by former AIG CEO Maurice "Hank" Greenberg. Wells of Paul, Weiss, Rifkind, Wharton & Garrison will be in AIG's corner and Boies of Boies, Schiller & Flexner will be on Hank's side. It will be the first time the two giants have faced off against each other at trial.
The dispute concerns the ownership of a massive block of shares in AIG that Starr holds or sold. AIG, which is seeking damages of roughly $4 billion, claims that Starr was obligated to keep those shares as part of a trust for AIG, and that Starr wrongly sold the shares for its benefit. Starr counters that no trust ever existed. Indeed, there is no written contract between the two and AIG has never mentioned the trust in its securities filings. Instead AIG has pointed to statements made by Greenberg in which he mentions the stock being held in "trust" for AIG.
Last week, Manhattan federal district court judge Jed Rakoff ruled that a jury would decide whether Starr wrongly sold the shares, but he has yet to rule on a whole bunch of motions in limine. We've perused some of them. Among the most interesting issues is one regarding government investigations of Greenberg. Not surprisingly, Starr's attorneys at Boies Schiller and Skadden, Arps, Slate, Meagher & Flom are trying to prevent AIG from raising this topic at trial. In one motion, they sought to keep out evidence that Greenberg took the Fifth Amendment at a deposition with the New York Attorney General in its case over his role in a controversial transaction between AIG and General Reinsurance. (The motion itself was filed under seal but was referred to in a separate motion.)
AIG's lawyers have argued that the investigations go to the issue of Greenberg's track record of disclosure. Disclosure practices at AIG under Greenberg are relevant, they argue, because one of Starr's defenses is that the trust was never mentioned in AIG's securities filings.
Another interesting issue teed up for Rakoff is to what extent the relative financial well-being of either AIG or Starr and Greenberg can be mentioned at trial. In a motion, Starr's lawyers are seeking to exclude evidence of Greenberg's wealth and the government's bailout of AIG. "The danger of unfair prejudice is particular acute in this case," they write. "AIG owes billions of dollars to the federal government and could argue not only that it is in poor financial condition, but that any award in its favor would inure to the benefit of the American taxpayer. Jurors may very well be influenced by a desire to take money from the pockets of private parties -- particularly where those parties (or their shareholders) are perceived to be wealthy -- into the hands of the government for the benefit of the public."
In its reply, AIG's lawyers state that they have no intention of making the trial about rich versus poor to evoke sympathy or disdain from the jury. But they argue that Greenberg's wealth -- specifically his holdings of AIG and Starr stock -- is relevant. They also want to preserve the right to raise AIG's financial condition to defend it from certain contentions made by Starr. "AIG will prove, and should not be prevented from doing so, that Starr's deliberate and vindictive breach of fiduciary duty warrants its removal [as trustee], particularly at a time when fidelity and commitment to the needs and best interests of AIG and its shareholders are more vital than ever," they write.
Looks like Rakoff's weekend plans have already been made.
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.
