AmLaw Daily – US Legal News Daily – The Differing Styles of Ted Wells and David Boies

16 June 2009 – –
At about 2 P.M. Monday a gaggle of lawyers and journalists gathered behind the courtroom door of Manhattan federal district court judge Jed Rakoff. They all wanted to get a peak at the showdown between Ted Wells and David Boies. American International Group, represented by Wells, is seeking $4.3 billion plus control of nearly 186 million shares of AIG held by Boies’s client, Starr International Company, led by former AIG CEO Maurice Greenberg. (At around the same time, Huntsman’s $4.65 billion case against Credit Suisse and Deutsche Bank was also getting under way.)

Most of the would-be spectators were sent to another courtroom to watch the proceedings on video. But the Litigation Daily made it in for the live version. Good thing. The stars did not disappoint. Both Wells, of Paul, Weiss, Rifkind, Wharton & Garrison, and Boies, of Boies, Schiller & Flexner, spoke to the jury without notes–each had 45 minutes–and both were equally eloquent and convincing. (Boies will finish the rest of his opening statement Tuesday morning.) But that’s about where the similarities end. Where Wells was dramatic, Boies came off more cerebral, and where Wells used catchy phrases to make his points, Boies opted for more straightforward language.

For those new to the case, AIG is alleging that a trust was established in 1970 as part of a reorganization plan involving AIG-affiliated companies. As part of that transaction, Starr acquired more than $100 million worth of AIG shares in exchange for selling its insurance companies to AIG. Although AIG admits there was no trust made in writing, it argues that SICO was obligated to hold the stock to compensate AIG employees. Starr argues that no such trust for AIG ever existed.

Wells, who went first, told the jury of eight women and two men that for 35 years SICO honored its obligation to hold the stock for its original purpose. “They adhered to what they were supposed to do,” said Wells, who showed the jury an example of an actual stock certificate, clutching it in his hands and pressing it to his chest when he wanted to emphasize SICO’s alleged obligations to hold the shares for his client.

But SICO stopped honoring its commitment after Greenberg was forced to resign from AIG in March 2005, Wells told the jury. Since then, SICO sold more than $4 billion worth of AIG stock. Using an ominous tone, Wells also said SICO recently began investing some of that money in China and Russia.

“This case will not be boring,” Wells assured jurors.

Every case involving corporations is really about people, Wells said, and this one is about Maurice Greenberg. While Wells did not bring up the circumstances surrounding Greenberg’s ouster from AIG–Judge Rakoff precluded him from raising government investigations into Greenberg in a decision made Monday morning–he said that Greenberg was angry about his removal and so he sought to end SICO’s program of compensating AIG executives. That led to one of Wells’s catchy phrases: “Anger, betrayal, cover-up.”

It was “anger by Mr. Greenberg [that he was kicked out of AIG], the betrayal of the trust by Mr. Greenberg, and the cover-up,” said Wells.

For evidence of AIG’s claims, Wells said that he would be introducing videos and documents showing SICO’s acknowledgment of the trust. “They said it, they wrote it, and they did it,” said Wells in another memorable turn of phrase.

Wells played a clip of Greenberg speaking to AIG employees in 2000, discussing the shares SICO held in “trust” for AIG executives. “This is a videotape confession,” Wells said. “You don’t need it in writing.”

In his final statement to the jury, Wells told them not to go easy on Greenberg. “Don’t treat him any worse, but doggonit don’t treat him any better,” he said.

Boies, sporting his signature Lands’ End look, immediately presented the jury with a document from 1970 establishing the purpose of SICO’s acquired stock. “Mr. Wells said this is where the pledge is,” said Boies, “and I’m telling you this is where the pledge is.”

The document clearly states that the stock is for SICO and that if SICO is liquidated, then the stock will go to charity, said Boies. “It’s pledged to charity, not AIG,” said Boies.

Boies argued that it didn’t make sense that a trust involving more than $100 million was not put in writing when the same people had done so in other situations. “When they wanted to create a trust, they did so in writing,” said Boies.

Boies went on to argue that AIG could not be the creator of a trust of acquired stock since it didn’t own the stock. Boies also said that AIG never manifested an intent to create such a trust. For 30 years, until the suit was filed, AIG had never mentioned the trust to its auditors, shareholders or its regulators, said Boies. On the contrary, AIG admitted in regulatory filings that SICO was the beneficial owner of the stock and that it had sole discretion to control the stock.

“I suggest to you that it could not be clearer that what SICO does with SICO’s stock is up to SICO,” said Boies.

At 5 P.M., Judge Rakoff interrupted Boies’s openings and called it a day. But not before complimenting Boies and Wells. “I thought the openings were a model of clarity,” he said. “But past performance is not guarantee of future performance.”

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