UNITED STATES EX REL PELULLO v. AMERICAN INTERNATIONAL GROUP INC (2018)

SUMMARY ORDER

Plaintiff-Appellant Leonard A. Pelullo appeals the dismissal of this qui tam action against Defendants-Appellees American International Group, Inc. (“AIG”), Star International Company, Inc. (“SICO”), C.V. Starr & Co., Inc., Maurice “Hank” Greenberg, Howard Smith, and Mel Harris under the False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq., the New York False Claims Act (“NYFCA”), N.Y. State Fin. Law § 187 et seq., and federal securities laws. Pelullo’s lengthy Second Amended Complaint (“SAC”) alleges that AIG facilitated the activities of organized crime families (i.e., the “Mafia”) for over 25 years with the aid and approval of Greenberg, AIG’s former Chairman and CEO, and that Defendants-Appellees concealed crimes that they committed from the public, government regulators, and law enforcement, causing “billions of dollars in false claims.” App. 15 (SAC ¶ 12). Pelullo specifically challenges the dismissal of several of his claims pursuant to Fed. R. Civ. P. 12(b)(6) for failure to state a claim and on statute of limitations grounds.¹ We assume the parties’ familiarity with the underlying facts, the procedural history of the case, and the issues on appeal.

“We review de novo a grant of a motion to dismiss pursuant to Rule 12(b)(6), accepting the complaint’s factual allegations as true and drawing all reasonable inferences in the plaintiff’s favor.” Marcel Fashions Grp., Inc. v. Lucky Brand Dungarees, Inc., 898 F.3d 232, 236 (2d Cir. 2018) (internal quotation marks omitted). Dismissal is proper if the complaint “does not plead ‘enough facts to state a claim to relief that is plausible on its face.’ ” Brown v. Daikin Am. Inc., 756 F.3d 219, 225 (2d Cir. 2014) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). “Facial plausibility” means the plaintiff has alleged “ ‘factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Id. (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) ). We also apply Fed. R. Civ P. 9(b)’s heightened pleading standard to claims brought under the FCA. United States ex rel. Ladas v. Exelis, Inc., 824 F.3d 16, 26 (2d Cir. 2016). The NYFCA mirrors the federal FCA, and New York courts look to federal law to interpret the state statute. See State of New York ex rel. Seiden v. Utica First Ins. Co., 96 A.D.3d 67, 71, 943 N.Y.S.2d 36, 39 (1st Dep’t 2012).

The SAC, which attempts to tie sweeping allegations of misconduct involving, inter alia, AIG’s putative fraudulent underwriting of insurance to Mafia-controlled entities, payment of illegal commissions, and manipulation of books and records to events and transactions occurring decades later, does not plausibly suggest that AIG or any of its co-Defendants presented “a false or fraudulent claim for payment or approval” within the meaning of the FCA or the NYFCA. 31 U.S.C. § 3729(1)(A); N.Y. State Fin. Law § 189(1)(a). Nor do the SAC’s wildly speculative contentions – that, had the government known of AIG’s varied wrongdoing and misrepresentations, it would not have entered into the 2006 settlement agreement between AIG, the Department of Justice, the Securities and Exchange Commission, the New York Attorney General, and the New York State Department of Insurance, see, e.g., App. 60 (SAC ¶ 165), or undertaken its bailout of AIG following the 2008 financial crisis, App. 62 (SAC ¶ 169) – allege a “false record or statement” with particularity, let alone one that is “material to a false or fraudulent claim,” 31 U.S.C. § 3729(a)(1)(B), or “material to an obligation to pay or transmit money or property to the Government,” id. § 3729(a)(1)(G). See Universal Health Servs., Inc. v. United States, ––– U.S. ––––, 136 S.Ct. 1989, 2002–03, 195 L.Ed.2d 348 (2016) (“a misrepresentation ․ must be material to the Government’s payment decision in order to be actionable under the [FCA]”; “materiality looks to the effect on the likely or actual behavior of the recipient of the alleged misrepresentation.” (internal quotation marks and brackets omitted) ). Dismissal was therefore proper as to Counts II and III.

Pelullo cites no authority for the proposition that the lawsuits filed by Defendants-Appellees Greenberg and SICO against the New York Federal Reserve Bank and the U.S. government are somehow actionable as false claims, and dismissal was appropriate as to Counts IV and V as well.² And even assuming arguendo that Pelullo has not abandoned his challenge to the dismissal of Counts X and XI under the NYFCA, as Appellees contend, these claims merely allege in conclusory form that AIG, Greenberg, and Smith filed fraudulent financial statements with state agencies that concealed decades-old misconduct and likewise fail to state a claim upon which relief may be granted.

We have considered Appellant’s remaining arguments and find them to be without merit. Since oral argument, Appellant has filed two motions: (1) to file a supplemental appendix comprised of a declaration Appellant submitted in connection with the district court proceedings; and (2) to clarify certain statements made by counsel during oral argument before this Court. We hereby GRANT both motions and conclude that the additional information furnished by Appellant does not alter the disposition of this appeal. Because we hold that the district court properly dismissed the SAC for failure to state a claim, we do not reach the alternate statute of limitations arguments advanced by the parties. We hereby AFFIRM the judgment of the district court.

FOOTNOTES

1.   The SAC alleges eleven Counts and Pelullo acknowledges that he is not appealing the dismissal of Counts I, VI, VII, VIII and IX. This summary order therefore addresses only the remaining Counts—i.e., Counts II, III, IV, V, X and XI.

2.   The FCA, moreover, expressly bars actions “based upon allegations or transactions which are the subject of a civil suit ․ in which the Government is already a party.” 31 U.S.C. § 3730(e)(3).