128 F. Supp. 3d 792
S.D.N.Y.2015Background
- Multiple institutional investors opted out of the certified AIG securities class settlement and filed individual actions alleging materially false statements and omissions by AIG and certain officers about AIG’s CDS/CDO exposure during March 16, 2006–September 16, 2008, culminating in the September 2008 government bailout.
- The Individual Complaints largely track the consolidated class complaint and assert claims under Section 10(b)/Rule 10b-5, Section 20(a) (Exchange Act), Sections 11, 12(a)(2), and 15 (Securities Act), and various state-law fraud/unjust enrichment counts.
- Defendants moved to dismiss on several grounds: Securities Act three‑year statute of repose, Exchange Act five‑year statute of repose, SLUSA preclusion of state-law claims, Rule 9(b) pleading failures, and that AIGFP officers Cassano and Forster were not the “makers” of AIG statements (Janus issue).
- The court treated the motions omnibusly and applied Twombly/Iqbal pleading standards and the heightened Rule 9(b) standard for fraud claims.
- Rulings summarized: all Securities Act (Sections 11/12/15) claims dismissed as time‑barred by Section 13; many Exchange Act claims dismissed to the extent they rest on statements older than five years before filing (some complaints dismissed in full); state-law claims dismissed as precluded by SLUSA; and claims against Cassano and Forster based on AIG-issued statements dismissed for failure to plead that they were the “makers.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Are Securities Act claims time‑barred by the 3‑year statute of repose (15 U.S.C. § 77m)? | Class filing tolled or served as the operative commencement date; American Pipe should apply. | Section 13’s repose is absolute; American Pipe tolling does not extend to statutes of repose (IndyMac). | Securities Act claims dismissed as untimely (last effective registration May 12, 2008; repose expired May 12, 2011). |
| Are Exchange Act (§10(b)/Rule 10b‑5) claims time‑barred by the 5‑year statute of repose (28 U.S.C. § 1658(b))? | The statute should run from the end of the fraudulent scheme (Sept. 16, 2008) or be tolled by the class action. | Repose runs from each misstatement; continuing‑violation or tolling doctrines cannot extend repose (IndyMac/Lampf). | Claims time‑barred to the extent based on statements more than five years before each filing; some complaints dismissed in full (e.g., GIC). |
| Do SLUSA provisions preclude Plaintiffs’ state common‑law fraud and unjust enrichment claims? | These are individual opt‑outs and not a "covered class action." | The opt‑outs are coordinated with the class action, share common questions, and proceeded as a single action for purposes of pretrial coordination — SLUSA applies. | State-law claims dismissed under SLUSA (coordinated/related litigation treated as a covered class action). |
| Can AIGFP officers Cassano and Forster be held liable for AIG’s public statements? (Janus maker‑of‑statement issue) | Group pleading and allegations that Cassano/Forster controlled AIGFP and information flow suffice to impute responsibility for AIG statements. | Under Janus, a ‘‘maker’’ is the person with ultimate authority over a statement’s content; AIGFP officers did not have ultimate authority over AIG’s statements. | Claims against Cassano and Forster based on statements issued by AIG dismissed for failure to plausibly allege they were the makers. |
Key Cases Cited
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (pleading must state plausible claim)
- Ashcroft v. Iqbal, 556 U.S. 662 (courts need not accept conclusory allegations)
- American Pipe & Constr. Co. v. Utah, 414 U.S. 538 (class filing tolls statute of limitations in certain contexts)
- Crown, Cork & Seal Co. v. Parker, 462 U.S. 345 (filing of class action tolls limitations until certification denied)
- Police & Fire Retirement System of Detroit v. IndyMac MBS, Inc., 721 F.3d 95 (2d Cir.) (American Pipe tolling does not extend to Securities Act statute of repose)
- Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350 (statute of repose inconsistent with tolling)
- Merck & Co. v. Reynolds, 559 U.S. 633 (statute of repose provides unqualified bar)
- Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (maker of statement = person with ultimate authority over content)
- Central Bank of Denver v. First Interstate Bank of Denver, 511 U.S. 164 (no private cause of action for aiding and abetting under Rule 10b‑5)
- Stoneridge Investment Partners v. Scientific‑Atlanta, 552 U.S. 148 (limitations on liability for third‑party conduct in securities fraud)