STARR INTERNATIONAL COMPANY, INC., on its behalf and on behalf of a class of others similarly situated, Plaintiff, v. The UNITED STATES, Defendant.
No. 11-779C
United States Court of Federal Claims.
Filed: September 27, 2013
112 Fed. Cl. 601
WHEELER, Judge.
Finally, plaintiff‘s insistence in its proposed amended complaint that the proposed supplemental agreement “failed to meet basic accounting and math standards” is conclusory, and therefore not “sufficient factual matter” for stating a claim for relief. See Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citing Twombly, 550 U.S. at 570, 127 S.Ct. 1955). Plaintiff does not say what “basic accounting and math standards” it is referring to, how the proposed supplemental agreement violated them, or even how a merely “proposed” supplemental agreement has caused plaintiff to suffer any damages. Because its allegations are both conclusory and unclear, plaintiff has not stated a claim upon which relief may be granted.
III. CONCLUSION
For the foregoing reasons, amending the complaint would be futile. Plaintiff‘s MOTION for leave to amend its complaint is therefore DENIED. Because plaintiff has failed to state a claim for breach of the implied covenant of good faith and fair dealing upon which relief may be granted, defendant‘s MOTION to dismiss plaintiff‘s claims relating to the implied covenant is GRANTED.
IT IS SO ORDERED.
Brian A. Mizoguchi, Assistant Director, with whom were Joyce R. Branda, Deputy Assistant Attorney General, Jeanne E. Davidson, Director, Scott D. Austin, Assistant Director, Timothy P. McIlmail, Senior Trial Counsel, Amanda L. Tantum, and Benjamin J. Zeitlin, Trial Attorneys, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, Washington, D.C., for Defendant.
Motion to Certify Court Order for Interlocutory Review;
ORDER ON DEFENDANT‘S MOTION TO CERTIFY THE COURT‘S JUNE 26, 2013 ORDER FOR INTERLOCUTORY REVIEW
WHEELER, Judge.
On August 16, 2013, Defendant filed a motion pursuant to
Courts have long held that “[i]nterlocutory appeals [under
A. Timeliness of Defendant‘s Motion
In this case, the Court first must address whether Defendant‘s August 16, 2013 request for certification is timely. The Court ruled on the issue of whether Starr and its class members could assert direct shareholder claims more than 14 months ago, on July 2, 2012. On that date, in a comprehensive 49-page opinion, the Court granted in part and denied in part Defendant‘s motion to dismiss. Starr Int‘l Co. v. United States, 106 Fed.Cl. 50 (2012). The Court provided a detailed analysis of whether Starr has standing to bring a direct shareholder claim, discussing at length the applicable Delaware law.1 Id. at 61-65. Later, on September 17, 2012, the Court denied Defendant‘s motion for reconsideration, noting that “[t]he Government has not asserted any ‘intervening change of legal authority,’ nor has it demonstrated that the Court‘s decision would work a ‘manifest injustice.‘” Starr Int‘l Co. v. United States, 107 Fed. Cl. 374, 376 (2012) (citing Intergraph Corp. v. Intel Corp., 253 F.3d 695, 698 (Fed. Cir.2001)). Defendant thus has had the Court‘s unequivocal rulings on Plaintiff‘s standing to bring direct shareholder claims for many months. Reasonable diligence would have demanded that Defendant file a motion to certify for interlocutory appeal, if that was its choice, long before now.
Earlier this year, in January 2013, AIG‘s Board of Directors determined after careful analysis that AIG did not wish to pursue the shareholder derivative claims in this case. A controversy arose as to whether AIG should be dismissed as a nominal defendant under Delaware‘s business judgment rule, in deference to its Board‘s reasoned decision. On March 22, 2013, the Court issued a briefing schedule for AIG‘s and Defendant‘s motions to dismiss Starr‘s shareholder derivative claims. Dkt. No. 107. In response to Defendant‘s stated intention also to challenge again the direct shareholder claims, the Court stated:
Although the Government may, for procedural reasons of preserving issues for appeal, assert that these amended direct claims should be dismissed, the Court will not entertain any arguments that have been previously rejected. The Court expects the issue of Starr‘s derivative claims to predominate in any motion to dismiss.
In circumstances where the Court has issued three rulings denying Defendant‘s motions to dismiss the direct shareholder claims, and only the June 26, 2013 order could serve as a basis to seek timely interlocutory review, the question becomes whether anything of significance has changed since the first or second orders issued in 2012. See FTC v. Minneapolis-Honeywell Regulator Co., 344 U.S. 206, 211-12, 73 S.Ct. 245, 97 L.Ed. 245 (1952) (“[T]he mere fact that a judgment previously entered has been reentered or revised in an immaterial way does not toll the time within which review must be sought. Only when the lower court changes matters of substance or resolves a genuine ambiguity, in a judgment previously rendered should the period within which an appeal must be taken or a petition for certiorari filed begin to run anew.“); Erb v. Alliance Capital Mgmt. L.P., 423 F.3d 647, 650-51 (7th Cir.2005) (“Unless the circumstances have changed significantly since the entry of the original order, we will deem the notice of an appeal from that order, even though it may designate a later order as the order being appealed.“).
In this case, one new development from the June 26, 2013 order is that AIG no longer is a party, and the shareholder derivative claims have been dismissed. From Defendant‘s standpoint, the entire focus of the case now is the direct shareholder claims, and in some sense, those claims arguably are more “controlling” under
B. Merits of Defendant‘s Motion
Even in the absence of a timeliness problem, Defendant‘s motion would not satisfy the criteria for interlocutory appeal under
Starr has brought a “corporate overpayment” shareholder claim by asserting that the Government forced AIG to issue to the Government over 562 million shares of AIG common stock for insufficient consideration. Starr Int‘l, 106 Fed.Cl. at 62. Depending upon the circumstances, such a claim under Delaware law can be derivative and direct where an action harms both the shareholders and the corporation. Gatz v. Ponsoldt, 925 A.2d 1265, 1278 (Del.2007); Gentile v. Rosette, 906 A.2d 91, 100 (Del.2006). Public shareholders have a direct claim for the expropriation of their economic value and voting power where: “(1) a stockholder having majority or effective control causes the corporation to issue ‘excessive’ shares of its stock in exchange for assets of the controlling stockholder that have a lesser value; and (2) the exchange causes an increase in the percentage of the outstanding shares owned by the controlling stockholder, and a corresponding decrease in the share percentage owned by the public (minority) shareholders.” Rosette, 906 A.2d at 100.
Adhering to the U.S. Supreme Court‘s holding that interlocutory review should be reserved for “exceptional cases,” Caterpillar Inc., 519 U.S. at 74, it is useful to contrast this case with Nebraska Public Power District v. United States, 74 Fed.Cl. 762 (2006), where Judge Francis Allegra certified a truly novel issue for interlocutory review by the Federal Circuit. In Nebraska Power, a spent nuclear fuel case, Judge Allegra found that a writ of mandamus issued by the U.S. Court of Appeals for the District of Columbia in Northern States Power Co. v. Dept. of Energy, 128 F.3d 754 (D.C. Cir.1997) was void for want of jurisdiction, and he ordered the Government to brief its arguments regarding the “unavoidable delays” clause of the standard Department of Energy contract. Nebraska Power, 74 Fed.Cl. at 762-63. The plaintiff in Nebraska Power, seeing an unusual jurisdictional issue involving another court, asked Judge Allegra to certify the question for interlocutory review, and the Government did not oppose the plaintiff‘s request. Id. at 763. The Federal Circuit accepted interlocutory review and on January 12, 2010, issued its decision reversing and remanding Judge Allegra‘s decision. Nebraska Public Power District v. United States, 590 F.3d 1357 (Fed. Cir.2010).
Nebraska Power presented an issue much more suitable for interlocutory appeal than in this case, and the parties there agreed that review by the Federal Circuit should be requested. Here, conversely, the parties do not agree, with Starr advocating that the Court defer appellate review in the usual manner until a final judgment is entered. The Government argues that certifying the issue will conserve the limited resources of the judiciary and the parties by giving the Federal Circuit the opportunity to rule on a controlling question of law prior to trial. However, this argument ignores an important countervailing consideration. Starr carries the burden of proof in this case, and a delay will make it more difficult for them to pursue their claims as time goes on and memories fade.
At this stage in the litigation, it is doubtful that the Federal Circuit could perform an effective review of a Delaware causation rule without a factual record. The Court sees no likelihood that an interlocutory review would materially advance the termination of the litigation as prescribed in
The Court also agrees with Plaintiff that, in Fifth Amendment taking claims, “the appellate court should address this case only with the benefit of a complete factual record.” Pl.‘s Opp. 13. In taking claims generally, the Supreme Court has observed that the outcome depends largely upon the particular circumstance of the case, and “this Court, quite simply, has been unable to develop any ‘set formula’ for determining when ‘justice and fairness’ require that economic injuries caused by public action be compensated by the government, rather than remain disproportionately concentrated on a few persons.” Penn Central Transp. Co. v. City of New York, 438 U.S. 104, 123-24, 98 S.Ct. 2646, 57 L.Ed.2d 631 (1978) (citations omitted); see also, Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 426, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982) (courts “must engage in ‘essentially ad hoc, factual inquiries‘” to determine whether a unique takings case has arisen) (citations omitted).
Finally, the test for Starr‘s illegal exaction claim “is identical to the Takings test.” Casa de Cambio Comdiv S.A. de C.V. v. United States, 291 F.3d 1356, 1364 (Fed. Cir.2002). Whether an illegal exaction has occurred is
C. Conclusion
Based on the foregoing, the Court concludes that Defendant‘s motion to certify the June 26, 2013 order for interlocutory review is untimely, and that the grounds for the motion do not satisfy the criteria in
IT IS SO ORDERED.
THOMAS C. WHEELER
Judge