Part of the case will be decided solely by a jury, and jurors will be asked to render an advisory opinion on other claims that isn’t binding on the court, U.S. District Judge Jed Rakoff in Manhattan said in a decision issued yesterday.
“All of the claims will initially be tried to a jury,” Rakoff wrote. “But the jury will effectively be rendering only an advisory verdict as to certain of the claims.”
Starr sued AIG in 2005 claiming that the world’s biggest insurer refused to return computers and business records as well as an art collection valued at more than $15 million. AIG countersued, claiming that Greenberg, then its biggest investor, left the company in 2005 with 290 million shares of AIG stock held by Starr. AIG seeks more than $4.3 billion in proceeds that it claims Starr collected after it sold the stock.
Rakoff said the jury will issue an advisory opinion on claims that relate to whether Starr was created as a trust for AIG’s benefit and whether Starr breached its fiduciary duty.
The judge said AIG was entitled to have a jury hear its claim of “conversion,” or the unauthorized taking of the AIG shares, which he said is a right guaranteed by the U.S. Constitution.
‘Very Doubtful’
Starr’s claim in its initial suit that it isn’t a controlling person or affiliate of AIG is “very doubtful,” Rakoff said in his ruling. “The court will therefore take up again with counsel, before opening statements to the jury, whether this claim even survives.”
AIG has argued that the stock was held in trust by Starr for the benefit of AIG employees. Starr has argued that no agreement exists mandating that use of the AIG shares.
“AIG is pleased that the court has granted its request for a jury and looks forward to a full hearing of the evidence at the public trial scheduled to begin on June 15,” said Mark Herr, an AIG spokesman.
Liz Bower, a spokeswoman for Starr International, noted that most of AIG’s claims against Greenberg’s firm were dismissed in June 2008, and that Starr “prevailed on all of its claims against AIG in March 2009.”
“As to its remaining claims, AIG will face an uphill battle explaining to a jury why it believes that additional bonus compensation for AIG’s top executives is appropriate at this time,” she said.
Earlier this week, AIG said a jury shouldn’t be permitted to hear evidence about its controversial bonuses to employees after it received a U.S. bailout. Rakoff hasn’t ruled on Starr’s request to introduce that evidence.
The case is Starr International Co. v. American International Group Inc., 05-cv-6283, U.S. District Court, Southern District of New York (Manhattan).