Tuesday, May 27, 2008

Amending a Complaint

The state of Ohio wants to amend a four-year-old complaint in its lawsuit against insurance giant AIG.

In 2004, that state's attorney general filed a class action on behalf of three public pension funds that had investment in AIG, seeking compensation for the losses those funds sustained because of certain accounting improprieties.

The accounting dispute (though not specifically Ohio's action) led to the ouster of Hank Greenberg as AIG honcho in 2005.

On Friday, May 23, the federal district court in Manhattan that is hearing the Ohio case, and several others with which it has been consolidated, issued an order on the scheduling of discovery -- the proceedings by means of which each party learns what it needs to know about the other party's case. Discovery is to be completed in February 2010.

Anyway, the AG's office must smell blood, because four years in, it was also on Friday that the office announced it wants to add claims to that complaint "relating to AIG's recent multi-billion dollar write-downs stemming from its exposure to problems in the residential housing market."

It has to have the permission of the court for this, of course, and there will be a hearing on the issue a week from today.

It is possible that AIG will consent to the amendment and the court wil grant it on that basis. If so, this would be a calculation in which AIG's lawyers decide it's easier to fight this new grievance under the same heading, that to require Ohio to file another lawsuit separately and fight them both.

It say that is "possible" because lots of things are possible. But my own impression is that Ohio is trying to shoehorn in some very different allegations into an established four-year-old action, that AIG's lawyers will likely make a lot of contrary noises, and that those noises will be heeded.

My guess, furthermore, is that some young eager-beaver in the attorney general's office got ahead of himself.

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