You remember that Ingrid Bergman and Charles Boyer classic "Gaslight,' in which Bergman's character is driven by her manipulative husband to doubt her own grip on reality? It gave rise to the term "gaslighting," which, according to Wikipedia, is "a form of mental abuse in which information is twisted or spun, selectively omitted to favor the abuser, or false information is presented with the intent of making victims doubt their own memory, perception, and sanity."
Well, yesterday's New York Times report about the verdict in the AIG bailout takings case, "In A.I.G. Case, Surprise Ruling That Could End All Bailouts," for a moment had us believing we were being gaslighted, because the Court of Federal Claims had issued a zero verdict for the plaintiffs in their takings case against the federal government, even though the court ruled the government wrongly conditioned its bailout on AIG surrendering its constitutional rights. But because this had not resulted in any economic damage to the plaintiffs (without the bailout, AIG would have filed for bankruptcy), the CFC also concluded that AIG was due no compensation. A zero just comp verdict in the CFC is tough to swallow for a property owner. Yet the Times reported as if it were a big win for the plaintiffs.
After we read the story (and this breathless hagiography from Bloomberg, "How Boies Did It: Relentless Focus on U.S. Unfairness to AIG"), we began doubting whether we were reading the same opinion the reporters were, and questioned whether we had somehow missed the court issuing a second opinion. Because as we view it, when you walk away from the CFC with a judgment that the federal government owes nothing in just compensation, it's awfully hard to see how that translates to a "victory," even a "moral victory" as the Times story finally got around to labeling it in the eleventh paragraph (of an eighteen paragraph story):
Still, the judge did not award any monetary damages to Mr. Greenberg, making it a moral victory, but not an economic one. Mr. Greenberg had sought $40 billion and has spent millions bringing his case.Judge Wheeler determined that Mr. Greenberg and the other shareholders did not suffer any economic damage because “if the government had done nothing, the shareholders would have been left with 100 percent of nothing.” The judge cited John Studzinski, vice chairman of the Blackstone Group and an adviser to A.I.G., who had instructed the board to accept the government’s offer in 2008, telling the room of directors: “Twenty percent of something [is] better than 100 percent of nothing.”
Yeah, other than that, Mrs. Lincoln, how was the play?
Now don't get us wrong. We're as happy as the next guy -- perhaps happier -- when a property owner wins a takings claim, even if the plaintiff isn't exactly society's most favored person. See, e.g., "Professor Ely, You Magnificent Bastard, I Read Your Book!" ("How much sympathy should we have for those lenders and bankers who are supposedly keeping homeowners in economic bondage? Not much, I guess, but my point is that in the context of defending property rights, who cares who is doing the defending, since we all benefit from the result when the courts rule correctly."). We're also tickled when a court calls it like it sees it, even in dicta. We love it when a high-profile and admired lawyer is out there defending property rights.
But takings mavens understand that justice in the Court of Federal Claims is measured in dollars awarded in just compensation. You don't get declaratory rulings in that court -- at least declaratory judgments with any teeth. Feelgood rulings that don't award compensation aren't worth a whole lot.
So when a plaintiff fails to obtain the only relief which the CFC can grant in these type of cases -- just compensation -- and spends millions more in legal fees to get a big fat nothing, it's hard for us to swallow the notion that this is somehow a "victory." Maybe we live in a different world than the big boys who play at these levels. Maybe obtaining pages of dicta that the federal government treated the plaintiffs unfairly is worth something, because, as the Times postulates, the ruling may "handcuff" the feds and make the regulators think twice about intervening in the future.
Count us as skeptical: a failed claim, in our experience, doesn't cow the regulators. Hell, a big just compensation win doesn't even faze the regulators, mostly. It isn't their money after all. So next time this happens, we wouldn't count on dicta in a CFC opinion as much of a check on the federal government's regulatory zeal.
Or maybe we're just missing out, and somewhere in the CFC's 75-page order is the silver lining that we're overlooking. Maybe the plaintiffs will take the CFC's Nollan ruling that the government illegally conditioned the bailout on the surrender of their constitutional rights, and go get relief in a court with jurisdiction. Maybe vindication that AIG got jacked was the plaintiffs' ultimate goal, and the $25 billion they sought as just comp was merely gravy.
It's been said that Apple's Steve Jobs fostered a "reality distortion field" which allowed him "to convince himself and others to believe almost anything with a mix of charm, charisma, bravado, hyperbole, marketing, appeasement and persistence. RDF was said to distort an audience's sense of proportion and scales of difficulties and made them believe that the task at hand was possible." Perhaps what we're seeing here is the überlawyer version. Because if mere mortals such as ourselves obtained a zero verdict in the CFC, we wouldn't be gifted these type of write ups in the Times and Bloomberg, that's for sure.
Or maybe it's just a continuation of the reporting which we've witnessed over the course of this case, which has consistently misunderstood the nature and role of the Court of Federal Claims.
Because other than that, it doesn't add up.
Just when we were beginning to light the gaslamps, however, we were saved by Professor Kanner, since he also seemed to be occupying the same reality we are. He posted "The AIG Decision Is Here: Just What We Predicted, A Taking of Worthless Assets, Does Not Entitle their Owner to Compensation" ("So Uncle Sam took nothing of value and the plaintiffs are not entitled to compensation. It thus boils down to a court conclusion of no harm – no foul."). Update: Professor John Echeverria also labels it a "stinging defeat."
Sanity restored.
If you want to see a lawyer who actually wins cases in the Court of Federal Claims, check out our colleague Thor Hearne and his team: they regularly seek -- and actually obtain -- just compensation for their property owner clients in takings cases.
That's really winning, in our view.
