Former AIG in-house attorney sues insurer for illegal termination
In a new complaint, Aaron Katzel accuses AIG's actions of being in response to his reporting of unlawful behavior by employees.
The former head of AIG’s legal consulting center has sued the insurance giant and two of its executives for what he says was an illegal termination in retaliation for whistleblowing.
In a complaint filed Thursday (Sept. 3) in the Southern District of New York, Aaron Katzel accused actions taken by AIG and Peter Solmssen and Lucy Fato, the company’s former and current general counsel, respectively, of being made in response to his reporting of unlawful behavior by employees.
Katzel, who is now the chief operating officer of legal and compliance for Softbank, worked at AIG for 10 years. He was eventually made head of its Legal Operations Center, which in 2015 AIG started trying to turn into an independent business in an effort called Project Kalahari. According to Katzel’s complaint, AIG employees sabotaged Project Kalahari by sharing confidential information with a competitor and intentionally misleading executives about the Legal Operations Center’s performance.
In October 2017, citing concerns of fraud at AIG, Katzel filed a complaint with the Occupational Safety and Health Administration, which was forwarded to the Securities and Exchange Commission.
During his time at AIG, the complaint stated, Katzel had been promoted several times and given multiple raises and performance-related payments, never receiving a negative performance review or warning that he could lose his job. The complaint indicated during the time he headed the Legal Operations Center, Katzel saved AIG more than $1 billion in legal costs.
A record of good performance pointed to retaliation as being the reasoning behind Katzel’s 2017 termination, violating the whistleblower protection provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act, attorney Neal Brickman wrote in the complaint.
“This termination was demonstrably retaliatory, and was followed by a malicious and retaliatory campaign to harm plaintiff’s professional reputation,” Brickman wrote, asserting Katzel’s reports on other AIG employees’ behavior was the only factor that changed between Katzel’s positive performance reviews and his termination.
The complaint alleges that in addition to his termination for protected activity, Katzel was subjected to “onerous obligations and harassment” prior to his termination and was harmed afterward by being removed from AIG’s building and having his IT access cut off before he was able to communicate about the situation to his contacts and employees.
“After an OSHA investigator reviewed and summarily dismissed his claims over a year ago, Mr. Katzel brought them before an administrative law judge, only to abandon his case on the eve of trial,” an AIG spokesperson said Friday. “Now he seeks to bring his baseless claims before a federal court. We look forward to demonstrating, yet again, that Mr. Katzel’s claims have no merit.”
Katzel argued AIG’s retaliation included the elimination of performance-related equity awards valued at more than $1 million, including $200,000 in common stock that was vested and not under AIG control.
Katzel’s complaint claimed AIG and Solmssen violated the Sarbanes Oxley Act of 2002 by terminating Katzel for reporting behavior he thought violated federal law and that AIG and Fato were guilty of post-termination whistleblower retaliation. He also brought breach of contract and tortious interference with contract claims.
In amounts to be specifically determined at trial, Katzel requested damages for back pay and interest estimated to exceed $5 million, more than $1.5 million for retaliatory deprivation of equity awards, more than $1 million in emotional damages for anxiety and distress he experienced as a result of his termination and more than $1 million for damages to his reputation.
Related: