AIG and taxpayers now share assets -- and lawsuit liabilities too

Steve Korris Oct. 31, 2008, 9:00am

EAST ST. LOUIS – Now that American taxpayers own insurer AIG, they must defend it against a defamation suit that Edwardsville attorney Brian Wendler filed in 2003.

In discovery, AIG has been ordered to hand over personal details of 25,000 employees in Wendler's attempt to find out who posted an allegedly defamatory statement on a union website six years ago.

His suit against AIG offers taxpayers an early peek at a mountain of lawsuits -- and their far reaching discovery -- that will fall on them as they take over businesses.

Last month the U.S. government agreed to provide an $85 billion emergency loan to rescue the huge insurer. The Federal Reserve said it determined that a "disorderly failure" of AIG could hurt financial markets and the economy.

AIG is a defendant in at least one other pending class action suit in Madison County.

Judge orders AIG to supply names of 25,000 employees

Wendler, who represents Teamster truckers in personal injury suits, alleges in U.S. district court that AIG posted on a Teamster website a message and a newspaper article about his arrest on a domestic battery charge.

He said Teamster webmaster Phillip Ybarrolaza told him the posting came from AIG.

Wendler admits he struck his wife and went to jail.

He alleges defamation because the message advised, "Don't make the same mistake me and my husband did - it's a waste of time and money."

In April the U.S. Seventh Circuit Court of Appeals in Chicago reversed District Judge William Stiehl of East St. Louis, who granted summary judgment to AIG in 2006.

The appellate court held that Stiehl couldn't stop the case without resolving a motion from Wendler to compel answers to questions he submitted in 2004.

On remand, U.S. Magistrate Judge Clifford Proud interpreted the Seventh Circuit decision as a mandate to grant Wendler's motion.

He ordered AIG to answer all questions without objection.

One question seeks the name of every AIG employee with access to electronic mail on the date of the posting, six years ago.

AIG estimates that 25,000 employees had e-mail access.

The insurer has maintained that it can't trace the message to a source.

AIG might have traced it if Wendler had promptly complained, AIG lawyers say.

Instead, they say, he waited seven months before suing.

AIG has been ordered to answer a myriad of other questions.

For instance:

  • Name, social security number, driver's license number, home address, telephone number and current employer for the person who posted the message.

  • Name and address of each person AIG communicated with in trying to ascertain the identity of the person who posted it.

  • Name and address of each agent, representative or broker transacting AIG business in the last ten years in Madison, St. Clair, Jersey and Bond counties in Illinois, and St. Louis city and county in Missouri.

  • Name, address and number of each Wendler client who informed AIG that he or she felt his or her representation was a waste of time and money. And, "Further state the contents, to the best of your ability, of all things said during such communications and identify all persons present."

  • Any reason for posting the message other than to damage Wendler's reputation.

  • Names of all persons with whom AIG has spoken with regard to Wendler's skills in the last ten years.

  • Jurisdiction and cause number of each case in which AIG was a party to litigation in the last ten years in which an attorney alleged defamation or business interference.

  • Names of all businesses engaged in car hauling for which AIG provided liability insurance in the last ten years.

  • Name, last known address and phone number, and current job for each person who had access to a computer system to enable him or her to post a message.

    According to AIG, the last question has 25,000 answers.

    AIG attorney Eric Mattson has stated in pleadings, "It is impossible to produce information that does not exist."

    The night of the arrest

    At a deposition Wendler said the article on his arrest was accurate.

    Regarding events leading up to the arrest, he said his wife wanted to leave a party but not with him.

    "I told my wife that if she was going to call a friend to get a ride home, that she should stay at the friend's house," he said.

    "I went home and 15 or so minutes later, my wife comes knocking at the door and I did not want her to come in the house," he said.

    "She was trying to squeeze her way into the doorway," he said.

    "I was trying to push her out and she wouldn't give up," he said.

    "I wouldn't give up, and to get the door shut I pushed her back a little bit," he said.

    "She tripped and fell and scraped her hand," he said.

    She went to a neighbor and called police, he said.

    "When the police arrived they saw the mark on her hand," he said.

    He said he spent a couple hours in jail.

    When the story hit the Teamster web, he said, he had an endless list of suspects.

    "Anybody associated with the companies I sue," he said.

    The long and winding road

    The suit was initially filed in Madison County by Wendler's firm, Wendler and Ezra. It was later removed and remains pending in Judge Stiehl's court.

    In 2006, Stiehl wrapped up the case, or thought he did.

    He granted summary judgment to AIG, ruling that "there is no credible evidence linking the defendants to the web posting."

    He rejected an affidavit of Teamster webmaster Ybarrolaza as "less than trustworthy."

    He found it "devoid of any specificity as to the manner in which the information was retrieved, the software used, or the method of preparation."

    Wendler moved to alter judgment, and last year Stiehl denied it.

    Wendler appealed, challenging several points of Stiehl's judgment.

    The Seventh Circuit agreed with Stiehl on most points, except an important one.

    "The district court was right to exclude the affidavit, and without it Wendler and Ezra had no evidence," Seventh Circuit judges stated in an unsigned opinion.

    They backed Stiehl in ignoring a claim that an AIG person was told the message came from AIG, branding it "rank hearsay."

    They rejected a claim that AIG was negligent in its investigation of the message.

    "There is no duty to investigate assertions made against yourself, no liability to strangers for how AIG conducts its internal affairs," the judges wrote.

    "Otherwise by making wild assertions people could foist large costs on third parties," they wrote.

    Then they changed their minds.

    "The lack of evidence is not necessarily fatal, however," they wrote.

    Stiehl's failure to rule on a motion to compel answers was a mistake, they wrote.

    "If the motion to compel is denied, or if it is granted but AIG has no useful information to supply, then Wendler and Ezra loses the case," they wrote.

    "But if information in AIG's possession implies that the posting came from AIG's internet address, then it becomes necessary to pin down who sent it, under what circumstances, and whether AIG is responsible," they wrote.

    Magistrate Proud swiftly resolved the motion, granting it six days after the Seventh Circuit issued its mandate.

    Two weeks later, AIG submitted to Stiehl objections to Proud's decision.

    Three months later, Wendler moved for sanctions.

    On Sept. 15 AIG attorney Eric Mattson wrote, "Regrettably, it appears that plaintiff is using its sanctions motion as a tactical ploy to shore up a missing element of proof – namely that defendants were legally responsible for the allegedly defamatory posting at issue in this case."

    Stiehl hasn't ruled on AIG's objections to Proud's order or on sanctions.

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