Wells Fargo 2014 Annual Report Download - page 206

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Note 15: Legal Actions (continued)
judgment was entered in Gutierrez. On October 28, 2010,
Wells Fargo appealed to the U.S. Court of Appeals for the Ninth
Circuit. On December 26, 2012, the Ninth Circuit reversed the
order requiring Wells Fargo to change its order of posting and
vacated the portion of the order granting remediation of
approximately $203 million on the grounds of federal
preemption. The Ninth Circuit affirmed the District Court’s
finding that Wells Fargo violated a California state law
prohibition on fraudulent representations and remanded the
case to the District Court for further proceedings. On
August 5, 2013, the District Court entered a judgment against
Wells Fargo in the approximate amount of $203 million,
together with post-judgment interest thereon from
October 25, 2010, and, effective as of July 15, 2013, enjoined
Wells Fargo from making or disseminating additional
misrepresentations about its order of posting of transactions. On
August 7, 2013, Wells Fargo appealed the judgment to the Ninth
Circuit. On October 29, 2014, the Ninth Circuit affirmed the trial
court’s judgment against Wells Fargo for approximately
$203 million, but limited the injunction to debit card
transactions. Wells Fargo is presently considering its options.
SECURITIES LENDING LITIGATION Wells Fargo Bank, N.A. is
involved in four separate actions brought by securities lending
customers of Wells Fargo and Wachovia Bank in various courts.
In general, each of the cases alleges losses based on claims that
Wells Fargo violated fiduciary and contractual duties in its
investment of collateral for loaned securities. Blue Cross/Blue
Shield of Minnesota, et al., v. Wells Fargo Bank, N.A. resulted in
verdicts dismissing the claims against Wells Fargo. Plaintiffs
have appealed the verdicts. The remaining cases are scheduled
for trial in 2015.
OUTLOOK When establishing a liability for contingent litigation
losses, the Company determines a range of potential losses for
each matter that is both probable and estimable, and records the
amount it considers to be the best estimate within the range. The
high end of the range of reasonably possible potential litigation
losses in excess of the Company’s liability for probable and
estimable losses was $1.1 billion as of December 31, 2014. For
these matters and others where an unfavorable outcome is
reasonably possible but not probable, there may be a range of
possible losses in excess of the established liability that cannot
be estimated. Based on information currently available, advice of
counsel, available insurance coverage and established reserves,
Wells Fargo believes that the eventual outcome of the actions
against Wells Fargo and/or its subsidiaries, including the
matters described above, will not, individually or in the
aggregate, have a material adverse effect on Wells Fargo’s
consolidated financial position. However, in the event of
unexpected future developments, it is possible that the ultimate
resolution of those matters, if unfavorable, may be material to
Wells Fargo’s results of operations for any particular period.
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