Ted Wells may have delivered the most memorable lines in the AIG-Greenberg trial, but it was David Boies who provided the best arguments. At least according to a federal jury in New York, which needed just a few hours to return a verdict Tuesday afternoon in favor of Hank Greenberg's Starr International Co. AIG was seeking more than $4 billion in damages. The embattled insurance company claimed that after Greenberg was ousted from AIG in 2005, he caused SICO to take control of shares that were supposed to be held in trust for AIG.
The jury found SICO not liable on AIG's breach of trust claim and its conversion claim. The case is now in the hands of Manhattan federal district court Judge Jed Rakoff, who will provide his own opinion on the breach of trust claim, which could set aside the jury's ruling. But according to Bloomberg, he said he would not reconsider the jury's conclusion on the conversion claim.
"This is not the final judgment," Rakoff said, according to Bloomberg. "There are still the other shoes that need to drop, so to speak."
Wells, a partner at Paul, Weiss, Rifkind, Wharton & Garrison, appeared to have an uphill battle from the start. Although he was making the case that a trust was established in 1970 for AIG as part of a corporate restructuring, there was nothing in writing he could point to. AIG, as Boies pounded at trial, never mentioned the trust in regulatory filings or anywhere else. Wells had to show that an unwritten trust existed, which required a high burden of proof. (See Rakoff's jury instructions.)
Wells made the case about Greenberg, who had talked in past speeches about SICO holding stock in "trust" for AIG. He tried to paint Greenberg as a vindictive man who wanted to punish AIG for forcing him to resign. He also encouraged the jury to question Greenberg's credibility. In his summation, Wells said that Greenberg, who testified extensively, had lied on the stand. He pointed to testimony given by Simpson Thacher & Bartlett Chairman Richard Beattie that contradicted statements made by Greenberg.
"It was just false testimony under oath," said Wells, according to a court transcript of the closing arguments (pdf). "Now, I want you to understand, the false testimony and the fabrication of evidence that you have seen in this case, I submit, based on the evidence, you know, these are not just ordinary, if there is such a thing, these are not small lies. These are big lies. And there is a certain brazenness to these lies. Running through all of this, I submit, you can conclude based on the evidence, is a certain arrogance, almost, and I can just say anything. I can walk through the raindrops and not be touched. A certain arrogance, almost an audacity of arrogance."
Boies, of Boies, Schiller & Flexner, was able to counter Wells' attack on Greenberg with sober arguments that never seemed strained. "The question is, did AIG prove, by unequivocal evidence, that they intended to create particular trusts that they're alleging in this litigation, the trust that they've never before mentioned, not written down any place, and nobody ever heard of before," said Boies at the beginning of his summation. "That particular trust."
Boies was able to return to the lack of a written record showing anything about a trust for AIG. "Mr. Wells did not point you to one piece of paper that says, in words or in substance, we, AIG, want to create a trust," said Boies. "There is not one piece of paper that says, in words or in substance, that AIG is creating a trust or did create a trust in 1970. Again, I think that, by itself, is independently fatal to the plaintiff's claim. You simply cannot, on a common sense basis, believe that AIG had an intent to create a trust if they didn't write it down. But more than that, the law is as the judge describes, that that intent must be manifested. It must be out there, it can't be secret, it can't be quiet, it has to be manifested."
Wells arguing before a jury was seemingly AIG's best shot at a recovery, but the company says it's still holding out hope. "We are disappointed by the jury's verdict and we await the court's final ruling," said an AIG spokesperson in a statement. "We continue to believe in the merits of our case."
"I am disappointed in the jury's verdict, but it is just an advisory verdict and I will await Judge Rakoff's decision," wrote Wells in an e-mail to the Am Law Litigation Daily.
A Starr spokesperson said: "We are gratified by the jury's quick and complete vindication of Starr International and Mr. Greenberg and the jurors' quick and complete rejection of the outrageous personal attacks on Mr. Greenberg's character by AIG and its counsel."
This article first appeared on The Am Law Litigation Daily blog on AmericanLawyer.com.