Starr International Co. v. United States
103 Fed. Cl. 287
Fed. Cl.2012Background
- Starr filed a complaint (Nov. 21, 2011) on behalf of AIG shareholders and derivatively for AIG, seeking ~$25 billion in damages.
- Amended complaint (Jan. 31, 2012) maintained class action and derivative posture; Government opposed summons to AIG as nominal defendant.
- Court held a hearing on Starr’s motion on Jan. 31, 2012; issue to be decided.
- AIG is a necessary party to Starr’s derivative action under controlling precedent.
- Derivative procedures do not broaden the Tucker Act waiver of sovereign immunity; relief is within the Tucker Act.
- RCFC 23.1 and RCFC 4 do not authorize issuing a summons to a corporate defendant like AIG; court must join AIG as a party under RCFC 19(a).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is AIG a necessary party in Starr's derivative action? | Starr asserts AIG is necessary. | Government acknowledges necessity but disputes procedure. | AIG must be joined as a necessary party. |
| Do derivative procedures exceed the Tucker Act's waiver of sovereign immunity? | Derivative approach fits within Tucker Act waiver. | No expansion of the waiver beyond traditional scope. | Derivative procedures do not exceed the Tucker Act waiver. |
| Should AIG be aligned as a nominal defendant instead of involuntary plaintiff? | Align with Starr against Government control; nominal defendant preferable. | Involuntary plaintiff mechanism may apply where beyond process. | AIG should be aligned as a nominal defendant. |
| Do RCFC 23.1 and RCFC 4 authorize issuing a summons to AIG? | Rules are ambiguous or inadequate for summons to AIG. | Rules do not contemplate service on agencies or corporations like AIG. | Court joins AIG under RCFC 19(a); summons not issued. |
Key Cases Cited
- Ross v. Bernhard, 396 U.S. 531 (1970) (necessary party rule in derivative suits to give res judicata effect)
- Davenport v. Dows, 85 U.S. 626 (1873) (derivative suits must bind corporation on merits)
- First Hartford Corp. Pension Plan & Trust v. United States, 194 F.3d 1279 (Fed. Cir. 1999) (derivative actions do not broaden Tucker Act waiver)
- Daily Income Fund, Inc. v. Fox, 464 U.S. 523 (1984) (claims within Tucker Act waiver; fiduciary capacity implications)
- Indep. Wireless Tel. Co. v. Radio Corp. of America, 269 U.S. 459 (1926) (involuntary plaintiff concept and joinder principles)
- Smith v. Sperling, 354 U.S. 91 (1957) (alignment of antagonistic parties for jurisdictional purposes)
- Indianapolis v. Chase Nat’l Bank of New York, 314 U.S. 63 (1941) (aliquoting alignment considerations for jurisdiction)