SunTrust 2014 Annual Report Download - page 178

Notes to Consolidated Financial Statements, continued
155
of the amounts currently reserved, if any, will not have a material
impact on the Company’s financial condition, results of
operations, or cash flows. However, in light of the significant
uncertainties involved in these matters and the large or
indeterminate damages sought in some of these matters, an
adverse outcome in one or more of these matters could be
material to the Company’s financial condition, results of
operations, or cash flows for any given reporting period.
The following is a description of certain litigation and regulatory
matters:
Card Association Antitrust Litigation
The Company is a defendant, along with Visa and MasterCard,
as well as several other banks, in several antitrust lawsuits
challenging their practices. For a discussion regarding the
Company’s involvement in this litigation matter, see Note 16,
“Guarantees.”
Lehman Brothers Holdings, Inc. Litigation
Beginning in October 2008, STRH, along with other
underwriters and individuals, were named as defendants in
several individual and putative class action complaints filed in
the U.S. District Court for the Southern District of New York
and state and federal courts in Arkansas, California, Texas, and
Washington. Plaintiffs alleged violations of Sections 11 and 12
of the Securities Act of 1933 and/or state law for allegedly false
and misleading disclosures in connection with various debt and
preferred stock offerings of Lehman Brothers Holdings, Inc.
("Lehman Brothers") and sought unspecified damages. All cases
were transferred for coordination to the multi-district litigation
captioned In re Lehman Brothers Equity/Debt Securities
Litigation pending in the U.S. District Court for the Southern
District of New York. Defendants filed a motion to dismiss all
claims asserted in the class action. On July 27, 2011, the District
Court granted in part and denied in part the motion to dismiss
the claims against STRH and the other underwriter defendants
in the class action. A settlement with the class plaintiffs was
approved by the Court and the class settlement approval process
was completed. A number of individual lawsuits and smaller
putative class actions remained following the class settlement.
STRH settled two such individual actions. The other individual
lawsuits were dismissed. The appeal period for two of the
individual actions will not expire until the plaintiffs' claims
against a third party have been resolved.
Colonial BancGroup Securities Litigation
Beginning in July 2009, STRH, certain other underwriters, the
Colonial BancGroup, Inc. (“Colonial BancGroup”) and certain
officers and directors of Colonial BancGroup were named as
defendants in a putative class action filed in the U.S. District
Court for the Middle District of Alabama entitled In re Colonial
BancGroup, Inc. Securities Litigation. The complaint was
brought by purchasers of certain debt and equity securities of
Colonial BancGroup and seeks unspecified damages. Plaintiffs
allege violations of Sections 11 and 12 of the Securities Act of
1933 due to allegedly false and misleading disclosures in the
relevant registration statement and prospectus relating to
Colonial BancGroup’s goodwill impairment, mortgage
underwriting standards, and credit quality. On February 3, 2015,
the parties settled this matter and, if approved by the Court, the
settlement will become final and will resolve all remaining
claims against STRH.
Bickerstaff v. SunTrust Bank
This case was filed in the Fulton County State Court on July 12,
2010, and an amended complaint was filed on August 9, 2010.
Plaintiff asserts that all overdraft fees charged to his account
which related to debit card and ATM transactions are actually
interest charges and therefore subject to the usury laws of
Georgia. Plaintiff has brought claims for violations of civil and
criminal usury laws, conversion, and money had and received,
and purports to bring the action on behalf of all Georgia citizens
who incurred such overdraft fees within the four years before
the complaint was filed where the overdraft fee resulted in an
interest rate being charged in excess of the usury rate. SunTrust
filed a motion to compel arbitration and on March 16, 2012, the
Court entered an order holding that SunTrust's arbitration
provision is enforceable but that the named plaintiff in the case
had opted out of that provision pursuant to its terms. The Court
explicitly stated that it was not ruling at that time on the question
of whether the named plaintiff could have opted out for the
putative class members. SunTrust filed an appeal of this decision,
but this appeal was dismissed based on a finding that the appeal
was prematurely granted. On April 8, 2013, the plaintiff filed a
motion for class certification and that motion was denied on
February 19, 2014. Plaintiff appealed the denial of class
certification on February 26, 2014. The parties have filed briefs
and conducted oral arguments, and now await the Court's ruling.
Putative ERISA Class Actions
Company Stock Class Action
Beginning in July 2008, the Company and certain officers,
directors, and employees of the Company were named in a
putative class action alleging that they breached their fiduciary
duties under ERISA by offering the Company's common stock
as an investment option in the SunTrust Banks, Inc. 401(k) Plan
(the “Plan”). The plaintiffs purport to represent all current and
former Plan participants who held the Company stock in their
Plan accounts from May 2007 to the present and seek to recover
alleged losses these participants supposedly incurred as a result
of their investment in Company stock.
The Company Stock Class Action was originally filed in the
U.S. District Court for the Southern District of Florida but was
transferred to the U.S. District Court for the Northern District of
Georgia, Atlanta Division, (the “District Court”) in November
2008. On October 26, 2009, an amended complaint was filed.
On December 9, 2009, defendants filed a motion to dismiss the
amended complaint. On October 25, 2010, the District Court
granted in part and denied in part defendants' motion to dismiss
the amended complaint. Defendants and plaintiffs filed separate
motions for the District Court to certify its October 25, 2010
order for immediate interlocutory appeal. On January 3, 2011,
the District Court granted both motions.
On January 13, 2011, defendants and plaintiffs filed separate
petitions seeking permission to pursue interlocutory appeals with
the U.S. Court of Appeals for the Eleventh Circuit (“the Circuit
Court”). On April 14, 2011, the Circuit Court granted defendants
and plaintiffs permission to pursue interlocutory review in
separate appeals. The Circuit Court subsequently stayed these