Wells Fargo 2008 Annual Report Download - page 131

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DATA TREASURY LITIGATION Wells Fargo & Company,
Wells Fargo Bank, N.A., Wachovia Bank, N.A. and Wachovia
Corporation are among over 55 defendants named in two
actions asserting patent infringement claims filed by Data
Treasury Corporation in the U.S. District Court for the
Eastern District of Texas. Data Treasury seeks a declaration
that its patents are valid and have been infringed, and seeks
damages and permanent injunctive relief. The cases are
currently in discovery.
ELAVON LITIGATION On January 16, 2009, Elavon, Inc., a
provider of merchant processing services, filed a complaint
in the U.S. District Court for the Northern District of Georgia
against Wachovia Corporation, Wachovia Bank, N.A.,
Wells Fargo & Company, and Wells Fargo Bank, N.A.
The complaint seeks equitable relief, including specific
performance, and damages for Wachovia Bank’s allegedly
wrongful termination of its merchant referral contract
with Elavon. The complaint also seeks damages, including
punitive damages, against the Wells Fargo entities for
tortious interference with contractual relations.
ERISA LITIGATION Seven purported class actions have been
filed against Wachovia Corporation, its board of directors
and certain senior officers in the U.S. District Court for the
Southern District of New York on behalf of employees of
Wachovia Corporation and its affiliates who held shares
of Wachovia Corporation common stock in their Wachovia
Savings Plan accounts. The plaintiffs allege breach of
fiduciary duty under ERISA, among other things, claiming
that the defendants should not have permitted Wachovia
Corporation common stock to remain an investment option
in the Savings Plan because alleged misleading disclosures
relating to the Golden West mortgage portfolio, exposure
to CDOs and other problem loans, and other alleged
misstatements made its stock a risky and imprudent
investment for employee retirement accounts.
GOLDEN WEST AND RELATED LITIGATION A purported securities
class action, Lipetz v. Wachovia Corporation, et al., was filed
on July 7, 2008, in the U.S. District Court for the Southern
District of New York by purported Wachovia Corporation
shareholders alleging violations of Sections 10 and 20 of
the Securities Exchange Act of 1934. An amended complaint
was filed on December 15, 2008. Among other allegations,
plaintiffs allege Wachovia Corporation’s common stock price
was artificially inflated as a result of allegedly misleading
disclosures relating to the Golden West Financial Corp.
(Golden West) mortgage portfolio, Wachovia Corporation’s
exposure to other mortgage related products such as
CDOs, control issues and auction rate securities. The defen-
dants have until February 27, 2009, to respond to the com-
plaint.
A purported class action, Miller, et al. v. Wachovia
Corporation, et al., was filed on January 31, 2008, against
Wachovia Corporation, its board of directors and certain
senior officers in the New York Supreme Court for the
County of Nassau, relating to Wachovia Corporation’s May
2007 issuance of trust preferred securities. The plaintiffs
allege violations of Sections 11, 12 and 15 of the Securities
Act of 1933 as a result of allegedly misleading disclosures
relating to the Golden West mortgage portfolio. Wachovia
Corporation removed the case to the U.S. District Court for
the Eastern District of New York. On January 16, 2009, the
case was voluntarily dismissed by the plaintiff and, on the
same day, was refiled in the Superior Court of the State of
California, Alameda County. A similar case, Swiskay v.
Wachovia Corporation, et al., was filed on December 19, 2008,
in the same court. The Swiskay case is essentially identical
to the Miller case except it includes allegations relating to
additional Wachovia preferred offerings. On January 21,
2009, a third case, Orange County Employees’ Retirement
System, et al. v. Wachovia Corporation, et al., was also filed
in the same California Superior Court on behalf of Orange
County Employees’ Retirement System and others. The
complaint contains similar allegations to the Miller and
Swiskay cases, except it includes some additional individuals
and non-affiliated entities as defendants and adds claims
relating to additional issuances of preferred stock and debt
securities. Wells Fargo will file appropriate venue and other
motions in response to these actions.
Several government agencies are investigating matters
similar to the issues raised in this litigation. Wells Fargo
and its affiliates are cooperating fully.
INTERCHANGE LITIGATION Wells Fargo Bank, N.A.,
Wells Fargo & Company, Wachovia Bank, N.A. and Wachovia
Corporation are named as defendants, separately or in
combination, in putative class actions filed on behalf of a
plaintiff class of merchants and individual actions brought
by individual merchants with regard to the interchange fees
associated with Visa and MasterCard payment card
transactions. These actions have been consolidated in the
United States District Court for the Eastern District of New
York. Visa, MasterCard and several banks and bank holding
companies are named as defendants in various of these
actions. The amended and consolidated complaint asserts
claims against defendants based on alleged violations of
federal and state antitrust laws and seeks damages, as well
as injunctive relief. Plaintiff merchants allege that Visa,
MasterCard and their member banks unlawfully colluded to
set interchange rates. Plaintiffs also allege that enforcement
of certain Visa and MasterCard rules and alleged tying and
bundling of services offered to merchants are anticompetitive.
Wells Fargo and Wachovia, along with other members of
Visa, are parties to Loss and Judgment Sharing Agreements,
which provide that they, along with other member banks
of Visa, will share, based on a formula, in any losses from
certain litigation specified in the Agreements, including
the Interchange Litigation.