17-2837 United States ex rel. Leonard A. Pelullo et al. v. AIG et al. 

### UNITED STATES COURT OF APPEALS FOR THE SECO ND CIRCUIT SUMMARY ORDER

RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AF TER JANUARY 1, 2007, IS PERM ITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROC EDURE 32.1 AND THIS COURT’S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPEND IX OR AN ELECTRONIC DATAB ASE (WITH THE NOTATION “SUMMARY ORDER”). A PARTY CITING A SUMM ARY ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL. At a stated term of the United States Court of Appeals for the Second Circuit, held at the Thurgood Marshall United States Courthous e, 40 Foley Square, in the City of New York, on the 27 th day of November, two thousand eighteen. PRESENT: REENA RAGGI, PETER W. HALL, RICHARD J. SULLIVAN, Circuit Judges

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_____________________________________ United States ex rel. Leonard A. Pelullo, State of New York ex rel. Leonard A. Pelullo, Plaintiffs-Appellants , v. No. 17-2837 American Internationa l Group, Inc., Starr International Company, Inc., C.V. Starr & Co., Inc., Maurice R. Hank Greenberg, Howard I. Smith, Mel Harris, Defendants-Appellees

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_____________________________________ For Appellant: J OSEPH T. A DRAGNA , Huntington, NY

* The Clerk of Court is respectfully requ ested to amend the caption as listed above.

### 2 For Appellee American International Group, Inc.: L ORI L. P INES (Robert F. Carangelo, Robert S. Ruff, on the brief ), Weil, Gotshal & Manges LLP, New York, NY, Nicholas Klenow, Selendy & Gay PLLC, New York, NY For Appellees Starr In ternational Company, Inc., C.V. Starr & Co., Inc., Maurice R. Hank Greenberg, Howard Smith: R. R YAN S TOLL (John Gardiner, on the brief ), Skadden, Arps, Slate, Meagher & Flom LLP, New York, NY For Appellee Mel Harris: J ASON A. K OLBE (Matthew Dontzin, Tibor L. Nagy, David A. Fleissig, on the brief ), Dontzin Nagy & Fleissig LLP, New York, NY Appeal from a judgment of the United States District Court for the Southern District of New York (Forrest, J. ). UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the district court is AFFIRMED. Plaintiff-Appellant Leonard A. Pe lullo appeals the dismissal of this qui tam action against Defendants-Appellees American International Gr oup, Inc. (“AIG”), Star International Company, Inc. (“SICO”), C.V. Starr & C o., 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 AI G facilitated the activities of organized crime families (i.e., the “Mafia”) for over 25 years w ith the aid and approval of Greenberg, AIG’s former Chairman and CEO, and that De fendants-Appellees concealed crimes that they committed from the public, government regulators, and law enfor cement, causing “billions of dollars in false claims.” App. 15 (SAC ¶ 12). Pelullo specifical ly challenges the dismissal of several of his

### 3 claims pursuant to Fed. R. Civ. P. 12(b)(6) for failu re to state a claim and on statute of limitations grounds. 1 We assume the parties’ familiarity with th e underlying facts, the procedural history of the case, and the issues on appeal. “We review de novo a grant of a motion to dismiss pur suant to Rule 12(b)(6), accepting the complaint’s factual allegations as true and dr awing all reasonable infere nces in the plaintiff’s favor.” Marcel Fashions Grp., Inc. v. Lucky Brand Dungarees, Inc ., 898 F.3d 232, 236 (2d Cir. 2018) (internal quotation ma rks 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 (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 (2009)). We also appl y 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 th e federal FCA, and New York courts look to federal law to interpret the state statute. See State of New York ex re l. 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 swee ping allegations of misconduct involving, inter alia , AIG’s putative fraudulent underwriting of insuran ce to Mafia-controlled entities, payment of illegal commissions, and manipulation of books and r ecords to events and tr ansactions occurring decades later, does not plausibly suggest that AI G or any of its co-Defendants presented “a false

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 summa ry order therefore addresses only the remaining Counts— i.e ., Counts II, III, IV, V, X and XI.

### 4 or fraudulent claim for payment or approval” with in the meaning of the FCA or the NYFCA. 31 U.S.C. § 3729(1)(A); N.Y. Stat e 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 ag reement 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 fo llowing 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 , 136 S. Ct. 1989, 2002–03 (2016) (“a misrepresenta tion . . . must be material to the Government’s payment decision in order to be ac tionable under the [FCA]”; “materiality looks to the effect on the likely or actua l 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 fo r the proposition that the la wsuits filed by DefendantsAppellees Greenberg and SICO against the New York Federa l 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

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

### 5 allege in conclusory form that AIG, Greenberg , and Smith filed fraudulent financial statements with state agencies that concealed decades-old misconduct and likewise fa il to state a claim upon which relief may be granted. We have considered Appellant’s remaining ar guments 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 certai n statements made by counsel during oral argument before this Court. We hereby GRANT both motions and conclude that the addi tional information furnished by Appellant does not alter the disposition of this appeal. B ecause 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.
FOR THE COURT: Catherine O’Hagan Wolfe, Clerk of Court