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April 25, 2012 7:30 pm
American International Group has sued Steven Udvar-Hazy, a former employee who helped found its aircraft leasing unit, alleging that he stole trade secrets to help build up a rival company.
In a lawsuit filed in California state court, the insurance group said Mr Hazy and colleagues at his Air Lease Corp venture had unlawfully taken crucial information including pricing and marketing data from its International Lease Finance Corp subsidiary.
AIG, which is majority owned by the US government, said it was seeking to recover a substantial portion of the value of Air Lease’s business “which may be hundreds of millions of dollars or more.” The suit was filed on Tuesday.
The 33-page document also alleged, among other things, that Mr Hazy had effectively stolen ILFC’s business by encouraging senior executives to divert contracts to his new venture and eventually to leave the company altogether.
Mr Hazy and colleagues “engaged in massive downloading and theft” of data that “became the blueprint for customer communications, contracts, pricing, marketing and other strategies upon which ALC built its business,” the AIG suit said.
In a statement Air Lease described the allegations as “baseless” and suggested they were motivated by ILFC inability to “compete effectively.” The company added that it planned to “vigorously contest and defeat” the lawsuit.
According to sources familiar with the dispute, ALC will argue that the data at issue were not trade secrets, that California law gives workers wide latitude to discuss new ventures with colleagues and clients and that the crucial ingredient of ALC’s success was its management’s reputation and expertise.
Mr Hazy has long been known as the dean of the aircraft leasing industry. He cofounded ILFC in 1973 and eventually sold it to AIG in 1990 for $1.3bn, staying on as chief executive and chairman.
During the heart of the financial crisis when a cascade of bad bets crippled AIG and forced the insurance group to rely on more than $180bn of government support, Mr Hazy participated in efforts to buy out some or all of ILFC.
AIG said in its suit that even before those efforts failed and Mr Hazy retired to start his own leasing company in February 2010, he had contacted top ILFC officials about joining him at the new business.
“While he was still the acting CEO for ILFC, Udvar-Hazy directed several ILFC executives to divert company opportunities to his new company,” the complaint alleged, in breach of his fiduciary duties.
Those deals, the court document said, gave Air Lease “instant credibility in the market place”. Air Lease went on to raise about $3.3bn in initial financing and has built up a fleet of more than 100 aircraft.
Subsequently, AIG claimed, a series of ILFC employees left the company to join Air Lease and took with them devices containing confidential information such as so called ‘sin lists’ that outlined which customers were behind on their payments.
Some devices were eventually returned to ILFC by Air Lease staff at the end of 2011, but not before “much of the information they had stolen had already been used for ALC’s behalf,” the complaint alleged.
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