By Erin Geiger Smith 

A case that started six years ago with a bang -- and a $6 billion claim -- against a bevy of high-profile hedge funds accused of conspiring to drive the insurer Fairfax Financial to its demise in a campaign of slander ended this week with a whimper when a New Jersey judge tossed out most of the withered remains of Fairfax's case. The judge did say that co-plaintiff Crum & Forster, an indirectly held Fairfax subsidiary, could proceed with claims of $19 million, but the plaintiffs' attorneys opted instead to wrap that into its inevitable appeal.

So how did a billion-dollar case dwindle to a less than $20 million claim the insurer might not consider worth fighting for?

Fairfax first sued in 2006, naming hedge fund biggies including SAC Capital, Third Point and Kynikos Associates in a lawsuit in state court in New Jersey. SAC won dismissal in September 2011 from Judge Stephan Hansbury, who wrote there was "no direct evidence" that SAC was involved in any conspiracy. In December, the same judge let out additional defendants, including Third Point and Kynikos, concluding they couldn't be sued in New Jersey because they were New York-based and had not purposefully availed themselves of New Jersey law.

The case was transferred to Judge Donald Coburn of New Jersey Superior Court in Morristown, who began throwing out categories of damages claimed by Fairfax, including a multibillion-dollar claim based on its deflated stock price and increases in its director-and-officer insurance premiums.

Still, Fairfax had $3.2 billion in potential damages against remaining defendants including Morgan Keegan (represented by teams from Carrington, Coleman, Sloman & Blumenthal and Greenburg Traurig) and Exis Capital (represented by Walder, Hayden & Brogan and Sayles Werbner). So Fairfax's lawyers at Kasowitz Benson Torres & Friedman pushed on to this week's final pretrial hearings before Coburn.

The trial was projected to last a couple of months. But, as Reuters reported, Coburn said on Tuesday that the plaintiffs' damages measurements didn't, well, measure up. The leftover $3-plus billion included Fairfax's assertion that, as a result of the defendants' rumor-mongering, it was forced to spend about $1.5 billion selling and repurchasing certain securities. It also said it laid out auditing fees of $2.75 million and more than $2 million defending class actions.

But at a hearing on Tuesday, the judge ruled that those costs were not "direct and immediate effects of the conduct of the defendants," and thus not legitimate measures of damages. He was especially critical of Fairfax's assertion that the cost of its stock repurchase program was an appropriate measure of damages, calling that theory "absurd."

After Tuesday's ruling, Crum & Forster still had a claim for $575 million in business loss damages. Those were the subject of a hearing on Wednesday. The plaintiffs' expert, the court said, had only compared Crum's growth rate to other companies with the same ratings and opined that, but for the criticisms, Crum would have grown at the same rate. Coburn, however, found that assessment "unreliable," saying the expert had no knowledge or training in the insurance arena and that his report was based on an "assumption which is, A, counterintuitive, and B, simply ... not supported by any standard." The judge said he would not let the report or the claim go to the jury.

Coburn did leave alive $19 million in claims related to lost insurance sales. But according to Wednesday's transcript, none of the parties could get too worked up about spending two months in trial over $19 million. Nor did they express any willingness to enter into settlement talks, and so the $19 million will be wrapped up in the inevitable appeal.

Kasowitz partner Michael Bowe told Reuters on Wednesday that earlier rulings concluded his clients had suffered enormous losses. "We strongly disagree with the decision that the massive damage caused by that indisputable and intentional conduct is not recoverable," he said. On the Case was unable to speak to Bowe on Thursday and Friday.

Mark Werbner, counsel for Exis, said his client is "relieved that six years of a relentless unfounded suit came to an end" and that plaintiffs' motive for the suit was to "silence critics and stop short sellers."

Though the hedge fund Third Point was dismissed from the suit, one of its attorneys, Tibor Nagy of The Dontzin Law Firm, attended this week's hearings. "The Court's decision demonstrates that Fairfax cannot blame anyone for its purported damages but itself," he said in an email.

Bruce Collins of Carrington, counsel for Morgan Keegan, did not respond to a request for comment.

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