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Court of Chancery Upholds In Pari Dilecto Defense

American International Group Inc. Consolidated Derivative Litigation, C.A. 769-VCS (June 17, 2009)

This is the latest decision in the continuing saga of the AIG litigation. In this case, the Court declined to permit a derivative stockholder of AIG to sue the co-conspirators of AIG in the various frauds alleged to have hurt AIG and its stockholders. The Court upheld the in pari dilecto defense that generally prohibits one wrongdoer from suing her fellow wrongdoers. This scholarly opinion covers all the reasons for upholding that defense and why the only exception it will  permit is for the corporation to sue its own directors who caused it to do wrong.

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