PNC Bank 2008 Annual Report Download - page 146

Merrill Lynch alleges that National City Bank breached
certain representations or warranties contained in the purchase
agreement related to Merrill Lynch’s alleged repurchases of
mortgage loans originated by First Franklin prior to its sale to
Merrill Lynch as well as mortgage loans as to which it faces
repurchase demands. Merrill Lynch also asserts that National
City Bank is responsible for indemnifying it for certain settled
or pending lawsuits against First Franklin.
ERISA Cases. Commencing in January 2008, a series of
substantially similar lawsuits were brought against National
City, the Administrative Committee of the National City
Savings and Investment Plan (the “Plan”), National City Bank
(as trustee), and some of National City’s officers and
directors. These cases have been consolidated in the United
States District Court for the Northern District of Ohio, and the
plaintiffs have filed a consolidated amended complaint. The
consolidated action is brought as a class action on behalf of all
participants in or beneficiaries of the Plan at any time between
September 5, 2006 and the present and whose Plan accounts
included investments in National City common stock, as well
as all participants in or beneficiaries of the Plan and whose
accounts were invested in Allegiant Funds from March 25,
2002 to the present. The consolidated complaint alleges
breaches of fiduciary duty under the Employee Retirement
Income Security Act of 1974 (“ERISA”) relating to, among
other things, National City stock being offered as an
investment alternative in the Plan, conflicts of interest, and
monitoring and disclosure obligations. The consolidated
complaint also alleges that the Administrative Committee
defendants breached their fiduciary duties under ERISA,
engaged in prohibited transactions by authorizing or causing
the Plan to invest in Allegiant Funds, and violated ERISA
duties of loyalty by virtue of National City’s receipt of
financial benefits in the forms of fees paid to Allegiant for
managing the mutual funds. The complaint seeks equitable
relief (including a declaration that defendants breached their
ERISA fiduciary duties, an order compelling the defendants to
make good any losses to the Plan caused by their actions, the
imposition of a constructive trust on any profits earned by the
defendants from their actions and restitution), unspecified
money damages and attorneys’ fees and costs. A motion to
dismiss the amended consolidated complaint is pending.
In February 2009, a lawsuit was filed in the United States
District Court for the Northern District of Ohio against
National City, National City Bank, the Administrative
Committee of the National City Savings and Investment Plan,
Harbor Federal Savings Bank, the Harbor Employees Stock
Ownership Plan Committee and certain National City and
Harbor directors and officers. This lawsuit was brought as a
class action on behalf of all participants in or beneficiaries of
the Harbor ESOP between December 1, 2006 and the present
whose account in the Harbor ESOP held National City stock
(including National City units), and who continued to be
employed by National City through December 31, 2007. The
complaint alleges breaches of fiduciary duties under ERISA
relating to, among other things, National City stock being
offered as an investment alternative, an alleged lock-up of
National City stock, failure to pay benefits, conflicts of
interest, and monitoring and disclosure obligations. The
complaint seeks equitable relief (including a declaration that
the defendants breached their ERISA fiduciary duties, an
injunction prohibiting further breaches, an order compelling
the defendants to make good any losses to the Plan caused by
their actions, the imposition of a constructive trust on any
profits earned by the defendants from their actions and
restitution), unspecified money damages and attorneys’ fees
and costs.
Derivative Cases. Commencing in January 2008, a series of
shareholder derivative complaints were filed in the United
States District Court for the Northern District of Ohio, the
Chancery Court for the State of Delaware and the Cuyahoga
County, Ohio, Court of Common Pleas against certain officers
and directors of National City. Subsequently, the complaints
filed in Delaware were voluntarily dismissed and the
complaints filed in Ohio state court were consolidated and
stayed pending resolution of the federal court cases. A
consolidated complaint has been filed in the federal court, and
there is a pending motion to dismiss that case. These suits
make substantially similar allegations against certain officers
and directors of National City for, among other things,
breaches of fiduciary duty, waste of corporate assets, unjust
enrichment and (in the federal court case) violations of the
Securities Exchange Act of 1934, based on claims, among
others, that National City issued inaccurate information to
investors about the status of its business and prospects, and
that the defendants caused National City to repurchase shares
of its stock at artificially inflated prices. The complaints seek
unspecified money damages and equitable relief (including
restitution and certain corporate governance changes) against
the individual defendants on behalf of National City, as well
as attorneys’ fees and costs.
Securities and State Law Fiduciary Cases. Several lawsuits
have been filed against National City and its officers and
directors alleging misrepresentations and omissions in
violation of the federal securities laws in connection with
statements and disclosures relating in one or more cases to,
among other things, the nature, quality, performance and risks
of National City’s non-prime, construction and home equity
portfolios, its loan loss reserves, its financial condition, and
related allegedly false and misleading financial statements.
Some of the lawsuits allege state common law violations. In
some cases, the lawsuits were brought in an individual
capacity, with the others brought as class actions. The relief
sought generally includes unspecified damages, attorneys’
fees and expenses, and, where indicated below, equitable
relief. The following is a summary of the significant lawsuits
in this category:
• In January 2008, a lawsuit was filed in the United
States District Court for the Northern District of Ohio
against National City and certain officers and
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