New York Law Journal recently interviewed New York-based partner and Litigation Department co-chair, Vincent Sama, regarding People v. Greenberg, a decade-old civil fraud case against former American International Group (AIG) executives Maurice Greenberg and Howard Smith that New York State is now appealing despite settlements reached in federal court with AIG and its shareholders in 2013.
Solicitor General Barbara Underwood argued before the Court of Appeals Tuesday, May 3, 2016, that the settlements do not preclude the state from seeking disgorgement against Greenberg and former AIG financial chief Howard Smith.
However, David Boies, Greenberg’s attorney, advised the court to state that the case is closed, at least as far as the claim of civil fraud under the Martin Act and Executive Law are concerned. Boies further explained that it ended with the 2013 settlement of the federal court shareholder class action lawsuit involving AID, shareholders, the SEC and the state, which resulted in the payment of about $7.5 million in repayment by the defendants.
Boies also argued that Applied Card similarly barred the attorney general’s action against Greenberg and Smith. “Once you have a final judgment, you don't go back and reexamine whether that was fair or incomplete," he said.
Sama, who is representing Smith, said the same argument that Boies made for Greenberg applied to the state's actions against his client as well. He said the state was barred from proceeding because of the preemptive powers exercised by the SEC in the AIG settlement, and the effects of res judicata as recognized by the court in Applied Card.
"They specifically said, 'Res judicata wins out,'" he explained.
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