Starr International Co. v. United States, 106 Fed. Cl. 50

Background

Starr alleges the 2008 AIG bailout by the Government was a backdoor plan to fund other financial institutions by taking AIG assets, including 562,868,096 shares of common stock.
Starr sued the United States (and FRBNY in a separate case) asserting violations of the Due Process, Equal Protection, and Takings Clauses, plus an illegal exaction claim.
Key transactions at issue include the September 2008 Credit Agreement (up to $85B, secured by AIG assets, with Government control and a 79.9% equity stake via Series C Preferred Stock).
Subsequent events—June 2009 reverse stock split and January 2011 conversion of Series C Preferred into common stock—purportedly diluted Starr’s and other public shareholders’ equity and voting power.
Maiden Lane III (ML III) transactions used AIG collateral to purchase CDOs, with counterparties holding collateral and releasing claims, which Starr contends was a takings of collateral.
The Court granted in part and denied in part the Government’s motion to dismiss and reserved ruling on some derivative-demand issues.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether §1500 bars the action due to pending district-court claims	Starr filed first in this Court, so §1500 should not bar here.	Section 1500 precludes duplicative actions pending in other courts.	Section 1500 does not deprive this Court of jurisdiction.
Whether Starr may pursue due process and equal protection claims	Tucker Act claims may include money-mandating due process/illegal exaction theories.	22 or 28 U.S.C. claims must be money-mandating; DP/EP are not money-mandating here.	Court lacks jurisdiction over due process and equal protection claims except to the extent based on illegal exaction.
Whether Starr has standing to bring a direct takings claim	Gatz/Rossette allow direct claims by minority shareholders for dilution by a controlling party.	Starr lacks standing because Government was not a stockholder when dilution occurred.	Starr has standing to pursue a direct takings claim.
Whether Starr states a cognizable takings claim relating to specific actions	Credit Agreement imposition, reverse split, and ML III collateral use constitute takings.	Some actions were implementations of the initial agreement or voluntary, not separate takings.	Takings claims survive for certain actions (e.g., imposition of the Credit Agreement, reverse split, ML III collateral) but not for duplicative theories.
Whether the Dolan rough proportionality test applies to Starr's takings claim	The test applies to any alleged excess benefits for the Government.	Dolan is limited to land-use exactions and does not apply here.	Dolan rough proportionality test does not apply to this monetary takings case.

Key Cases Cited

Tooley v. Donaldson, 845 A.2d 1031 (Del. 2004) (derivative vs direct claims hinges on who suffers harm and who benefits)
Gatz v. Ponsoldt, 925 A.2d 1265 (Del. 2007) (protects direct/expropriation style claims when a controlling shareholder dilutes minority)
Rossette v. Feldman, 906 A.2d 91 (Del. 2006) (recognizes direct dilution claims when controlling entity expropriates minority value)
Feldman v. Cutaia, 951 A.2d 727 (Del. 2008) (corporate overpayment/dilution doctrine under Delaware law)
Dolan v. City of Tigard, 512 U.S. 374 (U.S. 1994) (unconstitutional conditions; rough proportionality in land-use exactions)
Nollan v. California Coastal Commission, 483 U.S. 825 (U.S. 1987) (essential nexus and proportionality in exactions)
Del-Rio Drilling Programs Inc. v. United States, 146 F.3d 1358 (Fed. Cir. 1998) (authorized vs unauthorized government action for takings claim)
Acadia Tech., Inc. v. United States, 458 F.3d 1327 (Fed. Cir. 2006) (separates authorization from unlawfulness in takings claims)
Lion Raisins, Inc. v. United States, 416 F.3d 1356 (Fed. Cir. 2005) (administrative/agency takings; requires administrative route when appropriate)