PNC Bank 2014 Annual Report Download - page 227

violations of Florida and New Jersey statutes pertaining to
deceptive and unfair trade practices. These plaintiffs also
assert claims under the federal TILA and RICO statutes. The
plaintiffs seek a nationwide class on all claims except the state
law statutory claims, for which they seek to certify subclasses
of Florida and New Jersey residents, respectively. The
plaintiffs seek, among other things, damages (including treble
damages), disgorgement of “unjust benefits,” injunctive relief,
interest and attorneys’ fees. PNC filed a motion to dismiss the
complaint in Montoya in May 2014. In August 2014, the court
in Montoya granted in part and denied in part PNC’s motion to
dismiss. Specifically, the court dismissed the breach of
contract, Florida deceptive and unfair trade practices, and
federal TILA and RICO claims, although it allowed the RICO
claims to be re-pled. The remaining claims are state claims for
breach of the covenant of good faith, unjust enrichment, the
New Jersey Consumer Fraud Act, and breach of fiduciary
duty. Thereafter, in September 2014, on plaintiffs’
uncontested motions, the Lauren lawsuit was voluntarily
dismissed and a third amended complaint in Montoya was
filed adding Lauren as a plaintiff there. In October 2014, PNC
moved to partially dismiss the third amended complaint. The
motion to dismiss seeks dismissal of the re-pleaded RICO
claims and plaintiff Lauren’s state law claims for breach of the
covenant of good faith and fair dealing and breach of fiduciary
duty. At the same time, PNC also moved to strike nationwide
class allegations with respect to the state law claims. Shortly
thereafter, the plaintiffs stipulated to this relief, as a result of
which the plaintiffs’ state law claims are now being brought
solely as statewide class action claims in the three states in
which the plaintiffs reside. In January 2015, the plaintiffs filed
a motion for class certification.
Patent Infringement Litigation
In June 2013, a lawsuit (Intellectual Ventures I LLC and
Intellectual Ventures II LLC vs. PNC Financial Services
Group, Inc., and PNC Bank, NA, Case No. 2:13-cv-00740-
AJS) was filed in the United States District Court for the
Western District of Pennsylvania against PNC and PNC Bank
for patent infringement. The plaintiffs allege that multiple
systems by which PNC and PNC Bank provide online banking
services and other services via electronic means infringe five
patents owned by the plaintiffs. The plaintiffs seek, among
other things, a declaration that PNC and PNC Bank are
infringing each of the patents, damages for past and future
infringement, and attorneys’ fees. In July 2013, we filed an
answer with counterclaims, denying liability and seeking
declarations that the asserted patents are invalid and that PNC
has not infringed them. In November 2013, PNC filed
Covered Business Method/Post Grant Review petitions in the
U.S. Patent & Trademark Office (“PTO”) seeking to
invalidate all five of the patents. In December 2013, the court
dismissed the plaintiffs’ claims as to two of the patents and
entered a stay of the lawsuit pending the PTO’s consideration
of PNC’s review petitions, including any appeals from
decisions of the PTO. The PTO instituted review proceedings
in May 2014 on four of the five patents at issue, finding that
the subject matter of those patents was “more likely than not”
unpatentable. The court previously dismissed the plaintiffs’
claims with respect to the one patent not selected for review
by the PTO.
In June 2014, Intellectual Ventures filed a second lawsuit
(Intellectual Ventures I LLC and Intellectual Ventures II LLC
v. PNC Bank Financial Services Group, Inc., PNC Bank NA,
and PNC Merchant Services Company, LP, Case No. 2:14-cv-
00832-AKS) in the same court as the first lawsuit. This
lawsuit alleges that PNC defendants infringed five patents,
including the patent dismissed in the first lawsuit that is not
subject to PTO review, and relates generally to the same
technology and subject matter as the first lawsuit. The court
has stayed this case pending the PTO’s consideration of
various review petitions of the patents at issue in this case, as
well as the review of the patents at issue in the first lawsuit
and the appeals from any PTO decisions.
Mortgage Repurchase Litigation
In December 2013, Residential Funding Company, LLC
(“RFC”) filed a lawsuit in the United States District Court for
the District of Minnesota against PNC Bank, N.A., as alleged
successor in interest to National City Mortgage Co., NCMC
Newco, Inc., and North Central Financial Corporation
(Residential Funding Company, LLC v. PNC Bank, N.A., et al.
(Civil No. 13-3498- JRT-JSM)). In its complaint, RFC alleges
that PNC Bank (through predecessors) sold $6.5 billion worth
of residential mortgage loans to RFC during the timeframe at
issue (approximately May 2006 through September 2008), a
portion of which were allegedly materially defective, resulting
in damages and losses to RFC. RFC alleges that PNC Bank
breached representations and warranties made under seller
contracts in connection with these sales. The complaint asserts
claims for breach of contract and indemnification. RFC seeks,
among other things, monetary damages, costs, and attorney’s
fees. In March 2014, we filed a motion to dismiss the
complaint. RFC then filed an amended complaint, as well as a
motion to transfer the lawsuit to the United States Bankruptcy
Court for the Southern District of New York. In April 2014,
we moved to dismiss the amended complaint. In June 2014,
RFC withdrew its motion to transfer the lawsuit. In October
2014, the court granted our motion to dismiss with prejudice
the breach of contract claims in the complaint with respect to
loans sold before May 14, 2006 and otherwise denied our
motion to dismiss.
Pre-need Funeral Arrangements
National City Bank and PNC Bank are defendants in a lawsuit
pending in the United States District Court for the Eastern
District of Missouri under the caption Jo Ann Howard, P.C., et
al. v. Cassity, et al. (No. 4:09-CV-1252-ERW) arising out of
trustee services provided by Allegiant Bank, a National City
Bank and PNC Bank predecessor, with respect to Missouri
trusts that held pre-need funeral contract assets. Under a pre-
The PNC Financial Services Group, Inc. – Form 10-K 209