PNC Bank 2006 Annual Report Download - page 22

nature of any such event that occurs. The adverse impact of
natural disasters or terrorist activities or international
hostilities also could be increased to the extent that there is a
lack of preparedness on the part of national or regional
emergency responders or on the part of other organizations
and businesses that we deal with, particularly those that we
depend upon.
ITEM 1 B – UNRESOLVED STAFF COMMENTS
There are no SEC staff comments regarding PNC’s periodic or
current reports under the Exchange Act that are pending
resolution.
ITEM 2– PROPERTIES
Our executive and administrative offices are located at One
PNC Plaza, Pittsburgh, Pennsylvania. The thirty-story
structure is owned by PNC Bank, N. A. We occupy the entire
building. In addition, PNC Bank, N.A. owns a thirty-four story
structure adjacent to One PNC Plaza, known as Two PNC
Plaza, that houses additional office space.
We own or lease numerous other premises for use in
conducting business activities. We consider the facilities
owned or occupied under lease by our subsidiaries to be
adequate. We include here by reference the additional
information regarding our properties in Note 10 Premises,
Equipment and Leasehold Improvements in the Notes To
Consolidated Financial Statements in Item 8 of this Report.
ITEM 3– LEGAL PROCEEDINGS
Some of our subsidiaries are defendants (or have potential
contractual contribution obligations to other defendants) in
several pending lawsuits brought during late 2002 and 2003
arising out of the bankruptcy of Adelphia Communications
Corporation and its subsidiaries. There also are threatened
additional proceedings arising out of the same matters. One of
the lawsuits was brought on Adelphia’s behalf by the
unsecured creditors’ committee and equity committee in
Adelphia’s consolidated bankruptcy proceeding and was
removed to the United States District Court for the Southern
District of New York by order dated February 9, 2006. The
other lawsuits, one of which is a putative consolidated class
action, were brought by holders of debt and equity securities
of Adelphia and have been consolidated for pretrial purposes
in that district court. These lawsuits arise out of lending and
securities underwriting activities engaged in by these PNC
subsidiaries together with other financial services companies.
In the aggregate, more than 400 other financial services
companies and numerous other companies and individuals
have been named as defendants in one or more of the lawsuits.
Collectively, with respect to some or all of the defendants, the
lawsuits allege federal law claims, including violations of
federal securities and other federal laws, violations of
common law duties, aiding and abetting such violations,
voidable preference payments, and fraudulent transfers,
among other matters. The lawsuits seek unquantified
monetary damages, interest, attorneys’ fees and other
expenses, and a return of the alleged voidable preference and
fraudulent transfer payments, among other remedies. The bank
defendants, including the PNC defendants, have entered into a
settlement of the consolidated class action referred to above.
This settlement was approved by the district court in
November 2006. In December 2006, a group of class members
appealed the order approving the settlement agreement to the
United States Court of Appeals for the Second Circuit. The
amount for which we would be responsible under this
settlement is insignificant. We believe that we have defenses
to the claims against us in these lawsuits, as well as potential
claims against third parties, and intend to defend the
remaining lawsuits vigorously. These lawsuits involve
complex issues of law and fact, presenting complicated
relationships among the many financial and other participants
in the events giving rise to these lawsuits, and have not
progressed to the point where we can predict the outcome of
the remaining lawsuits other than the one for which a
settlement is pending. It is not possible to determine what the
likely aggregate recoveries on the part of the plaintiffs in these
remaining matters might be or the portion of any such
recoveries for which we would ultimately be responsible, but
the final consequences to PNC could be material.
In April 2005, an amended complaint was filed in the putative
class action against PNC, PNC Bank, N.A., our Pension Plan
and its Pension Committee in the United States District Court
for the Eastern District of Pennsylvania (originally filed in
December 2004). The complaint claims violations of the
Employee Retirement Income Security Act of 1974, as
amended (“ERISA”), arising out of the January 1, 1999
conversion of our Pension Plan from a traditional defined
benefit formula into a “cash balance” formula, the design and
continued operation of the Plan, and other related matters.
Plaintiffs seek to represent a class of all current and former
employee-participants in and beneficiaries of the Plan as of
December 31, 1998 and thereafter. Plaintiffs also seek to
represent a subclass of all current and former employee
participants in and beneficiaries of the Plan as of
December 31, 1998 and thereafter who were or would have
become eligible for an early retirement subsidy under the
former Plan at some time prior to the date of the amended
complaint. The plaintiffs are seeking unquantified damages
and equitable relief available under ERISA, including interest,
costs, and attorneys’ fees. In November 2005, the court
granted our motion to dismiss the amended complaint.
Plaintiffs appealed this ruling to the United States Court of
Appeals for the Third Circuit, which affirmed the district court
ruling in an opinion dated January 30, 2007. On February 13,
2007, plaintiffs filed in the court of appeals a petition for
rehearing. Plaintiffs may seek further judicial review of the
dismissal of their complaint.
In March 2006, a first amended complaint was filed in the
United States District Court for the Eastern District of Texas
by Data Treasury Corporation against PNC and PNC Bank,
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