August 04, 2014
On August 1, 2014, Weil won another significant victory for American International Group, Inc. (AIG) when the United States Court of Appeals for the District of Columbia Circuit affirmed the dismissal of a putative class action brought by a former holder of AIG equity units, a hybrid security that included a stock purchase contract obligating the equity unitholders to purchase a certain number of shares of AIG common stock. The plaintiff claimed that she and all other equity unitholders were deprived of the value of their investment in the equity units when, among other things, AIG issued additional shares of common stock in 2011 in a series of integrated transactions involving, among others, the United States Department of Treasury, thereby increasing the total number of outstanding shares of AIG common stock. The plaintiff filed suit in the United States District Court for the District of Columbia asserting claims for breach of the implied covenant of good faith and fair dealing and for unjust enrichment, under New York and Delaware law. Rather than seeking to invoke the district court’s diversity jurisdiction to hear her state law claims, plaintiff argued that the federal court could exercise jurisdiction based on her reading of an isolated phrase in the so-called “Delaware carve-out” provisions of the Securities Litigation Uniform Standards Act of 1998 (SLUSA), which preserves certain state law causes of action relating to federally regulated securities that would otherwise be precluded from being filed in state court by SLUSA. Weil sought dismissal on the grounds, among others, that SLUSA does not expand federal court jurisdiction over state law claims in the absence of diversity and provides no independent basis for federal court jurisdiction over such claims. The district court agreed and dismissed the action in March 2013, and the D.C. Circuit affirmed, holding that the plaintiff’s “reading of [SLUSA] is untenable.”
Weil previously won dismissal of another action brought by a former equity unitholder in the United States District Court for the Northern District of California on the grounds that the plaintiff failed to plead facts establishing essential elements of his claims for fraud, negligent misrepresentation and promissory estoppel. The United States Court of Appeals for the Ninth Circuit summarily affirmed the dismissal of that action.