PNC Bank 2015 Annual Report Download - page 216

resolved, including, through a settlement between the
plaintiffs and RFC approved in November 2013, the claims in
these lawsuits.) The principal allegations in the amended
complaint are that a group of persons and entities collectively
characterized as the “Shumway/Bapst Organization” referred
prospective second residential mortgage loan borrowers to
CBNV and the other bank, that CBNV and the other bank
charged these borrowers improper title and loan fees at loan
closings, that the disclosures provided to the borrowers at loan
closings were inaccurate, and that CBNV and the other bank
paid some of the loan fees to the Shumway/Bapst
Organization as purported “kickbacks” for the referrals. The
amended complaint asserts claims for violations of the Real
Estate Settlement Procedures Act (RESPA), the Truth in
Lending Act (TILA), as amended by the Home Ownership and
Equity Protection Act (HOEPA), and the Racketeer Influenced
and Corrupt Organizations Act (RICO).
The amended complaint seeks to certify a class of all
borrowers who obtained a second residential non-purchase
money mortgage loan, secured by their principal dwelling,
from either CBNV or the other defendant bank, the terms of
which made the loan subject to HOEPA. The plaintiffs seek,
among other things, unspecified damages (including treble
damages under RICO and RESPA), rescission of loans,
declaratory and injunctive relief, interest, and attorneys’ fees.
In November 2011, the defendants filed a motion to dismiss
the amended complaint. In June 2013, the court granted in part
and denied in part the motion, dismissing the claims of any
plaintiff whose loan did not originate or was not assigned to
CBNV, narrowing the scope of the RESPA claim, and
dismissing several of the named plaintiffs for lack of standing.
The court also dismissed the claims against the other lender
defendant on jurisdictional grounds. The limitation of the
potential class to CBNV borrowers reduces its size to
approximately 26,500 from the 50,000 members alleged in the
amended complaint. Also in June 2013, the plaintiffs filed a
motion for class certification, which was granted in July 2013.
In July 2015, the U.S. Court of Appeals for the Third Circuit
affirmed the grant of class certification by the Pennsylvania
district court. We moved for a rehearing of the appeal, which
was denied in October 2015. In November 2015, we filed a
petition for a writ of certiorari with the U.S. Supreme Court
seeking review of the decision of the court of appeals, which
remains pending.
Overdraft Litigation
Beginning in October 2009, PNC Bank, National City Bank
and RBC Bank (USA) have been named in lawsuits brought as
class actions relating to the manner in which they charged
overdraft fees on ATM and debit transactions to customers
and related matters. All but two of these lawsuits, both
pending against RBC Bank (USA), have been settled. The
following is a description of the remaining pending lawsuits.
The pending lawsuits naming RBC Bank (USA), along with
similar lawsuits pending against other banks, have been
consolidated for pre-trial proceedings in the U.S. District
Court for the Southern District of Florida (the MDL Court)
under the caption In re Checking Account Overdraft Litigation
(MDL No. 2036, Case No. 1:09-MD-02036-JLK ). A
consolidated amended complaint was filed in December 2010
that consolidated all of the claims in these MDL Court cases.
The first case against RBC Bank (USA) pending in the MDL
Court (Dasher v. RBC Bank (10-cv-22190-JLK)) was filed in
July 2010 in the U.S. District Court for the Southern District
of Florida. The other case against RBC Bank (USA) (Avery v.
RBC Bank (Case No. 10-cv-329)) was originally filed in North
Carolina state court in July 2010 and was removed to the U.S.
District Court for the Eastern District of North Carolina before
being transferred to the MDL Court. A consolidated amended
complaint was filed in November 2014.
These cases seek to certify multi-state classes of customers for
the common law claims described below (covering all states in
which RBC Bank (USA) had retail branch operations during
the class periods), and subclasses of RBC Bank (USA)
customers with accounts in North Carolina branches, with
each subclass being asserted for purposes of claims under
those states’ consumer protection statutes. No class periods
are stated in any of the complaints, other than for the
applicable statutes of limitations, which vary by state and
claim.
The customer agreements with the plaintiffs in these two cases
contain arbitration provisions. RBC Bank (USA)’s original
motion in Dasher to compel arbitration under these provisions
was denied by the MDL Court. This denial was appealed to
the U.S. Court of Appeals for the Eleventh Circuit. While this
appeal was pending, the U.S. Supreme Court issued its
decision in AT&T Mobility v. Concepcion, following which
the court of appeals vacated the MDL Court’s denial of the
arbitration motion and remanded to the MDL Court for further
consideration in light of the Concepcion decision. RBC Bank
(USA)’s motion to compel arbitration, now covering both
Dasher and Avery, was denied in January 2013. We appealed
the denial of the motion to the U.S. Court of Appeals for the
Eleventh Circuit, which, in February 2014, affirmed the order
of the district court denying arbitration. We filed a motion
asking the court of appeals to reconsider its decision, which it
denied in March 2014. In December 2014, we filed a motion
to compel arbitration as to the claims of the plaintiff in Dasher
based on an arbitration provision added to the PNC account
agreement in 2013. In August 2015, the district court denied
our motion. Later in August 2015, we appealed the denial of
our arbitration motion to the court of appeals. The appeal is
pending. In December 2014, we filed a motion to dismiss the
complaint. In February 2016, the district court denied our
motion.
198 The PNC Financial Services Group, Inc. – Form 10-K