KeyBank 2013 Annual Report Download - page 219

investment losses borne by Austin’s funds stemmed from investments in a certain Madoff-advised hedge fund.
Several lawsuits pending against Austin, KeyCorp, Victory and certain employees and former employees
(collectively the “KeyCorp defendants”) alleging various claims, including negligence, fraud, breach of fiduciary
duties, and violations of federal securities laws and ERISA, were consolidated into one action styled In re Austin
Capital Management, Ltd., Securities & Employee Retirement Income Security Act (ERISA) Litigation, pending
in the United States District Court for the Southern District of New York. The KeyCorp defendants filed a
motion to dismiss all of the claims in the consolidated amended complaint. On December 21, 2012, the court
dismissed 14 of the plaintiffs’ 16 claims, including all of the plaintiffs’ securities law and state law claims. The
plaintiffs’ two remaining claims are claims under ERISA. Following mediation in October 2013, the parties
reached an agreement in principle to settle the litigation, subject to the preparation of definitive settlement
documentation and approval by the court following notice to the class members. We believe that the settlement
will be covered under our insurance policies and will not have a material impact on our financial condition.
Metyk litigation. Two putative class actions were filed on September 21, 2010, in the United States District
Court for the Northern District of Ohio (the “Northern District of Ohio”). The plaintiffs in these cases sought to
represent a class of all participants in our 401(k) Savings Plan and alleged that the defendants in the lawsuit
breached fiduciary duties owed to them under ERISA. These two putative class action lawsuits were
substantively consolidated with each other in a proceeding styled Thomas Metyk, et al. v. KeyCorp, et al.
(“Metyk”). A substantially similar class action, Taylor v. KeyCorp, et al., was dismissed from the Northern
District of Ohio on August 12, 2010. This dismissal was affirmed by the United States Court of Appeals for the
Sixth Circuit (the “Sixth Circuit”) on May 25, 2012. On January 29, 2013, the Northern District of Ohio entered
its order granting the defendants’ motion to dismiss the plaintiffs’ consolidated complaint for failure to state a
claim and entered its final judgment terminating the Metyk proceeding. On February 19, 2013, plaintiffs filed a
motion to set aside the final judgment and to permit the plaintiffs to file an amended complaint. On April 30,
2013, the Northern District of Ohio denied the motion to set aside the final judgment. Metyk is currently on
appeal before the Sixth Circuit.
Checking Account Overdraft Litigation. KeyBank was named a defendant in a putative class action seeking to
represent a national class of KeyBank customers allegedly harmed by KeyBank’s overdraft practices. The case
was transferred and consolidated for purposes of pretrial discovery and motion proceedings to a multidistrict
proceeding styled In Re: Checking Account Overdraft Litigation pending in the United States District Court for
the Southern District of Florida (the “District Court”). KeyBank filed a notice of appeal in regard to the denial of
its motion to compel arbitration. On August 21, 2012, the United States Court of Appeals for the Eleventh Circuit
(the “Eleventh Circuit”) vacated the District Court’s order denying KeyBank’s motion to compel arbitration and
remanded the case for further consideration. On June 21, 2013, KeyBank filed with the District Court its renewed
motion to compel arbitration and stay or dismiss litigation. On August 27, 2013, the District Court granted
KeyBank’s renewed motion to compel arbitration and dismissed the case. The case is currently on appeal before
the Eleventh Circuit.
Other litigation. In the ordinary course of business, we are subject to various other litigation, investigations and
administrative proceedings. These other matters may involve claims for substantial monetary relief. Due to the
complex nature of these various other matters, it may be years before some matters are resolved. While it is
impossible to ascertain the ultimate resolution or range of financial liability, based on information presently
known to us, we do not believe there is any other matter to which we are a party, or involving any of our
properties that, individually or in the aggregate, would reasonably be expected to have a material adverse effect
on our financial condition. We note, however, that in light of the inherent uncertainty in legal proceedings there
can be no assurance that the ultimate resolution will not exceed established reserves. As a result, the outcome of
a particular matter, or a combination of matters, may be material to our results of operations for a particular
period, depending upon the size of the loss or our income for that particular period.
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