Bank of America 2005 Annual Report Download - page 164

BANK OF AMERICA CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements—(Continued)
In accordance with SFAS No. 5, “Accounting for Contingencies”, the Corporation establishes reserves for litigation
and regulatory matters when those matters present loss contingencies that are both probable and estimable. When loss
contingencies are not both probable and estimable, the Corporation does not establish reserves. In some of the matters
described below, including but not limited to the Parmalat Finanziaria, S.p.A. matter, loss contingencies are not both
probable and estimable in the view of management, and, accordingly, reserves have not been established for those
matters. Based on current knowledge, management does not believe that loss contingencies, if any, arising from pending
litigation and regulatory matters, including the litigation and regulatory matters described below, will have a material
adverse effect on the consolidated financial position or liquidity of the Corporation, but may be material to the
Corporation’s operating results for any particular reporting period.
Adelphia Communications Corporation (Adelphia)
Bank of America, N.A. (BANA) and Banc of America Securities LLC (BAS) are defendants, among other defendants,
in a putative class action and individual civil actions relating to Adelphia. The first of these actions was filed in June
2002; these actions have been consolidated for pre-trial purposes in the U.S. District Court for the Southern District of
New York. BAS was a member of seven underwriting syndicates of securities issued by Adelphia, and BANA was an agent
and/or lender in connection with five credit facilities in which Adelphia subsidiaries were borrowers. Fleet National Bank
(FNB) and Fleet Securities, Inc. (FSI) are also named as defendants in certain of the actions. FSI was a member of three
underwriting syndicates of securities issued by Adelphia, and FNB was a lender in connection with four credit facilities in
which Adelphia subsidiaries were borrowers. The complaints allege claims under the Securities Act of 1933, the Securities
Exchange Act of 1934, and various state law theories. The complaints seek damages of unspecified amounts.
The court has granted the motions of BANA, BAS and other bank defendants to dismiss certain class plaintiffs’
claims on statute of limitations grounds. The court permitted plaintiffs who purchased bonds in a 2001 $750 million
bond offering, of which BAS underwrote fifty percent, to assert claims against BAS relating to that offering and certain
other offerings made under the same registration statement. The court has also granted in part and denied in part
defendants’ motions to dismiss certain of the individual actions. Other motions to dismiss the class action and certain of
the individual actions remain pending.
BANA, BAS, FNB, and FSI are also defendants in an adversary proceeding brought by the Official Committee of
Unsecured Creditors on behalf of Adelphia and Adelphia as co-plaintiffs that had been pending in the U.S. Bankruptcy
Court for the Southern District of New York. The lawsuit names over 400 defendants and asserts over 50 claims under
federal statutes, including the Bank Holding Company Act, state common law, and various provisions of the Bankruptcy
Code. The plaintiffs seek avoidance and recovery of payments, equitable subordination, disallowance and
re-characterization of claims, and recovery of damages in an unspecified amount. The Official Committee of Equity
Security Holders of Adelphia has intervened in this proceeding and filed its own complaint, which is similar to the
unsecured creditors’ committee complaint and also asserts claims under RICO and additional state law theories. BANA,
BAS and FSI have filed motions to dismiss both complaints. On February 9, 2006, the U.S. District Court for the
Southern District of New York overseeing the Adelphia securities litigation granted the motions of the adversary
defendants to withdraw the adversary proceeding from the bankruptcy court, except with respect to the pending motions
to dismiss.
Data Treasury
The Corporation and BANA have been named as defendants in an action filed by Data Treasury Corporation in the
U.S. District Court for the Eastern District of Texas. Plaintiff alleges that defendants have “provided, sold, installed,
utilized, and assisted others to use and utilize image-based banking and archival solutions” in a manner that infringes
United States Patent Nos. 5,910,988 and 6,032,137. Plaintiff seeks unspecified damages and injunctive relief against the
alleged infringement. The court has scheduled a trial of this action for October 2, 2007.
The Corporation and BANA have been named as defendants, along with 54 other defendants, in an action filed by
Data Treasury Corporation in the U.S. District Court for the Eastern District of Texas. Plaintiff alleges that the
Corporation and BANA, among other defendants, are “making, using, selling, offering for sale, and/or importing into the
United States, directly, contributory, and/or by inducement, without authority, products and services that fall within the
scope of the claims of” United States Patent Nos. 5,265,007; 5,583,759; 5,717,868; and 5,930,778. Plaintiff seeks
unspecified damages and injunctive relief against the alleged infringement.
In re Initial Public Offering Securities
Beginning in 2001, Robertson Stephens, Inc. (an investment banking subsidiary of FleetBoston that ceased
operations during 2002), BAS, other underwriters, and various issuers and others, were named as defendants in
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