PNC Bank 2009 Annual Report Download - page 161

documentation, notice to the proposed class and court
approval. The amount of the settlement would not be material
to PNC.
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. The defendants filed a motion to dismiss the complaint in
May 2009. In December 2009, the parties reached a tentative
settlement. In January 2010, the parties executed an agreement
memorializing the terms of the settlement. In February 2010,
the court preliminarily approved the settlement, ordered that
notice be provided to the class and scheduled a final settlement
hearing in May 2010. The settlement is subject to, among other
things, notice to the proposed class and court approval. The
amount of the settlement would not be material to PNC.
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 Ohio federal court derivative
litigation. A consolidated complaint was filed in the federal
court. 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.
In October 2009, the federal district court entered an order
dismissing the federal consolidated complaint for lack of
standing.
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
directors of National City. As amended, this lawsuit
was brought as a class action on behalf of purchasers
of National City’s stock during the period April 30,
2007 to April 21, 2008 and also on behalf of
everyone who acquired National City stock pursuant
to a registration statement filed in connection with its
acquisition of MAF Bancorp in 2007. The amended
complaint alleges violations of federal securities laws
regarding public statements and disclosures. A
motion to dismiss the amended complaint is pending.
A magistrate judge has recommended dismissal of
the lawsuit without prejudice, with a right for
plaintiffs to file a further amended complaint within
30 days. Plaintiffs have filed objections to that
recommendation, which is subject to adoption by the
district court.
• In April 2008, a lawsuit was filed in the Cuyahoga
County, Ohio, Court of Common Pleas against
National City, certain officers and directors of
National City, and its auditor, Ernst & Young, LLP.
(Ernst & Young is no longer a defendant in this
lawsuit.) The complaint was brought as a class action
on behalf of all current and former National City
employees who acquired stock pursuant to and/or
traceable to a December 1, 2006 registration
statement filed in connection with the acquisition of
Harbor Federal Savings Bank and who were
participants in the Harbor Bank Employees Stock
Ownership Plan and the Harbor Bank Stock Incentive
Plan. The plaintiffs allege that the registration
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