Bank of America 2011 Annual Report Download - page 220

218 Bank of America 2011
this action is now concluded. The second action, Bondar v. Bank
of America Corporation, was brought by a putative class of ARS
purchasers against the Corporation and Banc of America
Securities, LLC (BAS). On February 24, 2011, the U.S. District
Court for the Northern District of California dismissed the amended
complaint and directed plaintiffs to state whether they will file a
further amended complaint or appeal the court’s dismissal.
Following the Second Circuit’s decision in In Re Merrill Lynch
Auction Rate Securities Litigation, plaintiffs voluntarily dismissed
their action on January 4, 2012. The dismissal is subject to the
district court’s approval.
Antitrust Actions
The Corporation, Merrill Lynch and other financial institutions were
also named in two putative antitrust class actions in the U.S.
District Court for the Southern District of New York. Plaintiffs in
both actions assert federal antitrust claims under Section 1 of the
Sherman Act based on allegations that defendants conspired to
restrain trade in ARS by placing support bids in ARS auctions, only
to collectively withdraw those bids in February 2008, which
allegedly caused ARS auctions to fail. In the first action, Mayor
and City Council of Baltimore, Maryland v. Citigroup, Inc., et al.,
plaintiff seeks to represent a class of issuers of ARS that
defendants underwrote between May 12, 2003 and February 13,
2008. This issuer action seeks to recover, among other relief, the
alleged above-market interest payments that ARS issuers allegedly
have had to make after defendants allegedly stopped placing
“support bids” in ARS auctions. In the second action, Mayfield, et
al. v. Citigroup, Inc., et al., plaintiff seeks to represent a class of
investors that purchased ARS from defendants and held those
securities when ARS auctions failed on February 13, 2008. Plaintiff
seeks to recover, among other relief, unspecified damages for
losses in the ARS’ market value, and rescission of the investors’
ARS purchases. Both actions also seek treble damages and
attorneys’ fees under the Sherman Act’s private civil remedy. On
January 25, 2010, the court dismissed both actions with prejudice
and plaintiffs’ respective appeals are currently pending in the U.S.
Court of Appeals for the Second Circuit.
Checking Account Overdraft Litigation
Bank of America, N.A. (BANA) is currently a defendant in several
consumer suits challenging certain deposit account-related
business practices. Four suits are part of a multi-district litigation
proceeding (the MDL) involving approximately 65 individual cases
against 30 financial institutions assigned by the Judicial Panel on
Multi-district Litigation (JPML) to the U.S. District Court for the
Southern District of Florida. The four cases: Tornes v. Bank of
America, N.A.; Yourke, et al. v. Bank of America, N.A., et al.; Knighten
v. Bank of America, N.A.; and Phillips, et al. v. Bank of America, N.A.;
allege that BANA improperly and unfairly increased the number of
overdraft fees it assessed on consumer deposit accounts by
various means. The cases challenge the practice of reordering
debit card transactions to post high-to-low and BANA’s failure to
notify customers at the point of sale that the transaction may result
in an overdraft charge. The cases also allege that BANA’s
disclosures and advertising regarding the posting of debit card
transactions are false, deceptive and misleading. These cases
assert claims including breach of the implied covenant of good
faith and fair dealing, conversion, unjust enrichment and violation
of the unfair and deceptive practices statutes of various states.
Plaintiffs generally seek restitution of all overdraft fees paid to
BANA as a result of BANA’s allegedly wrongful business practices,
as well as disgorgement, punitive damages, injunctive relief, pre-
judgment interest and attorneys’ fees. Omnibus motions to
dismiss many of the complaints involved in the MDL, including
Tornes, Yourke and Knighten, were denied on March 12, 2010.
Knighten was dismissed without prejudice on February 4,
2011. On November 22, 2011, the MDL court granted final
approval of a settlement of all the remaining class matters in the
MDL (including Tornes, Yourke and Phillips), providing for a payment
by the Corporation of $410 million (which amount was fully accrued
by the Corporation, as of December 31, 2011) in exchange for a
complete release of claims asserted against the Corporation in
the MDL. Several MDL settlement class members have appealed
to the U.S. Court of Appeals for the Eleventh Circuit from the
judgment granting final approval to the settlement.
Countrywide Bond Insurance Litigation
The Corporation, Countrywide Financial Corporation (CFC) and
other Countrywide entities are subject to claims from several
monoline bond insurance companies. These claims generally
relate to bond insurance policies provided by the insurers on
securitized pools of home equity lines of credit (HELOC) and fixed-
rate second-lien mortgage loans. Plaintiffs in these cases generally
allege that they have paid claims as a result of defaults in the
underlying loans and assert that these defaults are the result of
improper underwriting by defendants.
Ambac
The Corporation, CFC and other Countrywide entities are named
as defendants in an action filed by Ambac Assurance Corporation
(Ambac) entitled Ambac Assurance Corporation and The Segregated
Account of Ambac Assurance Corporation v. Countrywide Home
Loans, Inc., et al. This action, currently pending in New York
Supreme Court, New York County, relates to bond insurance
policies provided by Ambac on certain securitized pools of HELOC
and fixed-rate second-lien mortgage loans. On September 8, 2011,
plaintiffs filed an amended complaint, which asserts claims
involving five additional securitizations of first- and second-lien
mortgage loans and alleges fraudulent inducement, breach of
contract as well as other claims set forth in the initial complaint.
The amended complaint also reasserts a claim that the
Corporation is jointly and severally liable as the successor to
Countrywide. The amended complaint seeks unspecified actual
and punitive damages and equitable relief.
FGIC
The Corporation, CFC and other Countrywide entities are named
as defendants in an action filed by Financial Guaranty Insurance
Company (FGIC) entitled Financial Guaranty Insurance Co. v.
Countrywide Home Loans, Inc. This action, currently pending in New
York Supreme Court, New York County, relates to bond insurance
policies provided by FGIC on securitized pools of HELOC and fixed-
rate second-lien mortgage loans. In June 2010, the court entered
an order that granted in part and denied in part the Countrywide
defendants’ motion to dismiss. On April 30, 2010, FGIC filed an
amended complaint reasserting claims set forth in the initial
complaint and asserting a claim that the Corporation is jointly and
severally liable as the successor to Countrywide. In October 2011,
following the appellate court’s June 30, 2011 order on the cross-
appeals in MBIA Insurance Corporation, Inc. v. Countrywide Home
Loans, et al., the parties entered a joint stipulated order