UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

) 

) No. 20 C 4115 

IN RE FIFTH THIRD BANCORP ) 

DERIVATIVE LITIGATION ) Judge Sara L. Ellis 

) 

OPINION AND ORDER

 Fifth Third Bancorp (“Fifth Third”) shareholders filed this shareholder derivative action

against Defendants Fifth Third; Fifth Third board members Nicholas K. Akins, B. Evan Bayh III, 

Jorge L. Benitez, Katherine B. Blackburn, Emerson L. Brumback, Jerry W. Burris, Greg. D. 

Carmichael, C. Bryan Daniels, Mitchell S. Feiger, Thomas H. Harvey, Gary R. Heminger, Jewell 

D. Hoover, Eileen A. Mallesch, Michael B. McCallister, Marsha C. Williams (the “Director 

Defendants”); and former Fifth Third officers Tayfun Tuzun and Frank Forrest (the “Officer 

Defendants,” and together with the Director Defendants, the “Individual Defendants”). In this 

action, Plaintiffs seek to remedy wrongdoing allegedly committed by the Individual Defendants

from February 26, 2016 through the present (the “relevant time period”). Specifically, Plaintiffs 

allege that the Individual Defendants breached their fiduciary duties to Fifth Third, were unjustly 

enriched, wasted corporate assets, and committed violations of Sections 10(b) and 14(a) of the

Securities Exchange Act of 1934 (the “Exchange Act”), codified at 15 U.S.C. §§ 78j(b) and 

78t(a), and SEC Rule 10b-5, 17 C.F.R. § 240.10b-5. 

On March 30, 2022, the Court dismissed Plaintiffs’ consolidated complaint pursuant to 

Federal Rule of Civil Procedure 23.1 for failure to plead demand futility. Doc. 107. Plaintiffs

filed an amended complaint, which Defendants have moved to dismiss for failure to plead 

demand futility and, pursuant to Federal Rule of Civil Procedure 12(b)(6) and the Private 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 1 of 48 PageID #:2940
2 

Securities Litigation Reform Act of 1995 (the “PSLRA”), for failure to state a claim. Because

Plaintiffs have again failed to specifically allege the futility of a demand upon the Director 

Defendants, the Court grants Defendants’ motion to dismiss [121] and dismisses this action with

prejudice. 

BACKGROUND1

I. Fifth Third’s Cross-Sell Strategy

Fifth Third, headquartered in Cincinnati, provides financial services to corporations,

individuals, and non-profits, including an assortment of checking, savings, and money market

accounts, wealth management solutions, payments and commerce solutions, insurance services, 

and credit products such as commercial loans and leases, mortgage loans, credit cards,

installment loans, and auto loans. Fifth Third operates full-service banking centers across Ohio, 

Kentucky, Indiana, Michigan, Illinois, Florida, Tennessee, West Virginia, Georgia, and North 

Carolina. 

 Between 2010 and at least 2019, Fifth Third employed a cross-sell strategy, encouraging 

employees to sell additional services and/or products to existing customers to meet aggressive 

1

 The Court takes the facts in the background section from Plaintiffs’ amended complaint and the exhibits 

attached thereto and presumes them to be true for the purpose of resolving Defendants’ motion to dismiss. 

See Phillips v. Prudential Ins. Co. of Am., 714 F.3d 1017, 1019–20 (7th Cir. 2013). Although the Court 

normally cannot consider extrinsic evidence without converting a motion to dismiss into one for summary 

judgment, Jackson v. Curry, 888 F.3d 259, 263 (7th Cir. 2018), the Court may consider “documents that 

are central to the complaint and are referred to in it” in ruling on a motion to dismiss, Williamson v. 

Curran, 714 F.3d 432, 436 (7th Cir. 2013). The Court “may also take judicial notice of matters of public 

record.” Orgone Cap. III, LLC v. Daubenspeck, 912 F.3d 1039, 1043–44 (7th Cir. 2019). Plaintiffs filed

their amended complaint and response under seal and Defendants filed their memorandum in support of 

the motion to dismiss under seal, also providing redacted versions. If the Court refers to a sealed 

document, it attempts to do so without revealing any information that could reasonably be deemed 

confidential. Nonetheless, if the Court discusses confidential information, it has done so because it is 

necessary to explain the path of its reasoning. See In re Specht, 622 F.3d 697, 701 (7th Cir. 2010) 

(“Documents that affect the disposition of federal litigation are presumptively open to public view, even if 

the litigants strongly prefer secrecy, unless a statute, rule, or privilege justifies confidentiality.”); Union

Oil Co. of Cal. v. Leavell, 220 F.3d 562, 568 (7th Cir. 2000) (explaining that a judge’s “opinions and 

orders belong in the public domain”).

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 2 of 48 PageID #:2941
3

sales targets, all supported and awarded through various incentive programs. As part of this 

strategy, Fifth Third set a goal of providing each customer with at least four products. To meet 

these sales targets, management encouraged or pressured employees into using improper sales 

tactics, such as opening false accounts, also known as gaming.

2

 The success of the cross-sell 

strategy led to inflated financial results and the impression that Fifth Third was growing 

organically. 

Fifth Third did not have a system to detect or stop unauthorized account activity, instead 

relying on customer or employee reports of misconduct. This led to the underreporting of the 

scope of the problem. But Fifth Third did engage in monthly testing and reviews of account 

documentation, with a special investigation group reporting suspicious activities to senior 

executives. To the extent Fifth Third reviewed improper activity, it only recorded the conduct as 

improper if the allegation was escalated above the bank branch, internally investigated, and

determined to be substantiated by an investigator. A senior vice president in March 2015 noted 

that 568 Fifth Third branches did not escalate or report a single complaint. 

II. The Individual Defendants

A. The Director Defendants

The Director Defendants are current and former members of Fifth Third’s Board of 

Directors. When this action was filed, the Board consisted of fourteen members, Fifth Third’s

Chief Executive Officer, Carmichael, and thirteen independent directors: Akins, Bayh, Benitez, 

Blackburn, Brumback, Daniels, Feiger, Harvey, Heminger, Hoover, Mallesch, McCallister, and 

Williams. Burris resigned from the Board in June 2020. 

2 Plaintiffs define gaming as “manipulation or concealment of accounts or activities with intent to deceive 

either customer or bank for personal gain, including goal attainment, financial gain, retention of position, 

etc.” Doc. 112-1 ¶ 155.

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 3 of 48 PageID #:2942
4

1. Committee Membership

The Director Defendants have all served on various Fifth Third committees. The Audit 

Committee has oversight responsibilities relating to Fifth Third’s accounting and financial 

reporting processes and the audits of its financial statements. The Audit Committee also

monitors Fifth Third’s system of internal controls and compliance with applicable legal and 

regulatory requirements. Akins, Benitez, Blackburn, Brumback, Burris, Daniels, Harvey, 

Hoover, Mallesch, McCallister, and Williams have served on the Audit Committee. 

Akins, Blackburn, Brumback, Hoover, and Williams also served on the Regulatory 

Oversight Committee, which had oversight responsibilities relating to compliance with 

regulatory findings and supervisory issues between 2015 and December 2016, after which some 

of its responsibilities moved to the Risk and Compliance Committee. The Risk and Compliance

Committee oversees the risk management policies of Fifth Third’s global operation and oversight 

of its global risk management framework. It also oversees Fifth Third’s operational, legal, and 

reputational risks. Bayh, Benitez, Blackburn, Brumback, Burris, Daniels, Harvey, Heminger, 

Hoover, Mallesch, and Williams have served on the Risk and Compliance Committee. 

Akins, Brumback, Heminger, Mallesch, McCallister, and Williams served on the Human 

Capital and Compensation Committee. This committee oversees the development and 

implementation of Fifth Third’s incentive compensation strategy, policies, and programs. 

Finally, Akins, Bayh, Benitez, Blackburn, Harvey, Heminger, and Williams have served on Fifth 

Third’s Nominating and Corporate Governance Committee. This committee develops,

recommends, and performs annual reviews of Fifth Third’s corporate governance policies and 

guidelines. It also identifies and nominates director and committee member candidates. 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 4 of 48 PageID #:2943
5

2. Outside Relationships

Several of the Director Defendants have longstanding business and personal relationships 

with one another and Fifth Third. Harvey, Daniels, and Feiger all have ties to MB Financial 

Bank, N.A. (“MB Financial”), where Harvey served as Chairman of the Board of Directors,

Daniels served as a director, and Feiger served as president and CEO. On May 3, 2019, MB 

Financial merged with and into Fifth Third Bank, N.A., with Fifth Third Bank, N.A. as the 

surviving entity. Fifth Third Bank, N.A. is an indirect subsidiary of Fifth Third. Feiger then 

served as the chairman and CEO of Fifth Third Bank Chicago until he retired from these

positions on May 29, 2020. Upon Fifth Third’s acquisition of MB Financial, Daniels became a 

Fifth Third director. Daniels is also the co-founder and principal of Prairie Capital, a private 

equity firm that has done business with MB Financial and Fifth Third. 

Bayh previously served on the board of Marathon Petroleum Corporation, for which 

Heminger served as the CEO and Board Chair. Mallesch, Burris, and Carmichael have all had 

management and leadership positions at General Electric in the past, with Mallesch having 

served as its Chief Financial Officer. 

Finally, Blackburn serves as the Executive Vice President of the Cincinnati Bengals.

Fifth Third has paid the Bengals $1.8 million for sponsorship arrangements, tickets, and 

advertising expenses. Around the same time that Blackburn became a director, Fifth Third

signed a five-year extension contract with the team, paying a total of $7.9 million to the Bengals. 

Fifth Third’s 2020 Proxy Statement discloses that “[b]y virtue of Ms. Blackburn’s being an 

executive officer and a principal owner of the Cincinnati Bengals, she is deemed to be a related 

party having a direct material interest in these arrangements.” Doc. 111 ¶ 533. 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 5 of 48 PageID #:2944
6 

3. Director Compensation and Stock Trades

The Director Defendants receive compensation from Fifth Third for their service as 

Board members, including stock awards. Carmichael has served as Fifth Third’s President since 

September 2012, its CEO since November 2015, a director since 2015, and the elected Chairman 

of the Board since 2018. At the end of fiscal year 2019, Carmichael received $8,999,237 in 

compensation from Fifth Third, including $1,100,070 in salary, $4,462,507 in stock awards, 

$787,498 in option awards, $2,200,000 in non-equity incentive plan compensation, and $449,162 

in other compensation. As of December 31, 2019, Carmichael owned 1,336,633 shares of Fifth 

Third’s common stock. From 2016 through 2019, Carmichael made the following sales of Fifth 

Third’s common stock:

Date Number of Shares Price Proceeds

10/29/2019 55,251 $29.59 $1,634,877.09

02/13/2018 87,613 $32.37 $2,836,032.81

11/16/2016 36,821 $25.11 $924,575.31

11/10/2016 17,689 $23.45 $414,807.05

Id. ¶ 53. 

Similarly, both Hoover and Brumback sold Fifth Third’s common stock during the 

relevant time period. Hoover made the following sales of Fifth Third’s common stock: 

Date Number of Shares Price Proceeds

06/03/2019 3,739 $26.51 $99,120.89

02/12/2018 3,700 $32.40 $119,880.00

04/28/2017 2,000 $24.82 $49,640.00

Id. ¶ 86. Brumback made the following sale of Fifth Third’s common stock: 

Date Number of Shares Price Proceeds

03/05/2018 3,000 $33.44 $100,320.00

Id. ¶ 69. 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 6 of 48 PageID #:2945
7

B. The Officer Defendants

As for the Officer Defendants, Tuzun served as Fifth Third’s Executive Vice President 

and Chief Financial Officer (“CFO”) from 2013 through November 9, 2020. As CFO, Tuzun 

had responsibility for Fifth Third’s financial planning and reporting, among other things. Before 

becoming CFO, Tuzun served as Fifth Third’s treasurer and assistant treasurer, with his 

responsibilities including Fifth Third’s balance sheet, capital and liquidity management, and risk 

management and compliance. Forrest currently serves as Fifth Third’s executive vice president 

and special advisor to the CEO. Prior to assuming this role in January 2020, Forrest served as 

Fifth Third’s chief risk officer.

III. Fifth Third’s Code of Business Conduct and Ethics

Fifth Third maintains a Code of Business Conduct and Ethics (the “Code of Conduct”), 

which applies to all officers, directors, and employees. The Code of Conduct states that 

“[k]eeping the customer at the center of everything we do and delivering a world-class customer 

experience every time are paramount to our success,” and that “every employee plays a part in

building and maintaining a strong culture at Fifth Third, a culture in which ethics and compliance 

are the standard.” Id. ¶ 288 (alteration in original). The Code of Conduct requires all employees 

to raise any issues when they become aware of misconduct or other violations of the Code. 

The Code of Conduct also reiterates Fifth Third’s “commit[ment] to providing customers 

with financial products and services in ways that avoid any practices that could be deemed 

predatory, unfair, deceptive or abusive.” Id. ¶ 292. In a section entitled “Fair and Honest 

Business Practices,” it specifically provides:

Unethical business practices are strictly prohibited. Examples of 

such activities include, but are not limited to:

• Incentive gaming.

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 7 of 48 PageID #:2946
8

• Falsifying documents or inflating performance results.

• Manipulating records.

• Opening bogus or fake accounts.

• Opening accounts or selling products without customer 

authorization.

• Offering customers unnecessary products.

• Falsifying records or applications in order to benefit yourself or 

other Fifth Third employees.

Id. ¶ 291.

The Code of Conduct also provides that those subject to it cannot “buy, sell or 

recommend the securities (or derivatives in respect thereof) of any issuer (including Fifth Third) 

for any proprietary, customer, employee, or other account while in possession of material, nonpublic information (MNPI),” further indicating that Fifth Third has “zero tolerance for internal 

fraud.” Id. ¶¶ 294–95. The Code of Conduct requires the reporting of all internal fraudulent 

activity to Fifth Third’s bank protection division when suspected. Further, in a section titled

“Maintaining Accurate Records and Accounts,” the Code of Conduct provides:

Business and financial records are critical to Fifth Third Bancorp’s

operations. We rely on the integrity and accuracy of those records 

for both internal decision-making and for the benefit of our 

investors, government agencies, regulators and others to whom we

report. It is imperative that all records and public communications, 

including, but not limited to, those filed or produced with the 

Securities Exchange Commission, are complete, fair, accurate, 

timely, clear and transparent.

Id. ¶ 296.

Fifth Third also has Corporate Governance Guidelines, which it most recently revised in 

September 2019. The Corporate Governance Guidelines provide in relevant part:

In addition to monitoring Fifth Third’s Chief Executive Officer 

and senior executives, the Board is responsible for the following 

matters, among other things: 

*** 

• enhancing Fifth Third’s integrity and reputation by ensuring that 

the corporation establishes, implements and maintains policies, 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 8 of 48 PageID #:2947
9

practices and procedures for full compliance with all applicable 

laws and for meeting the high ethical standards that the Board and 

the public expect of a leading financial institution.

Id. ¶ 299. The Guidelines also state:

Directors are subject to the provisions of various policies, other 

than these Guidelines, which have been adopted by the Board of

Directors, including, but not limited to, the Code of Business 

Conduct and Ethics, Director Air Travel Guidelines, the Enterprise 

Insider Trading and Ethical Investing Policy, the Information 

Disclosure Policy, the Transactions with Insiders Policy, the NonRetaliation Policy for Employees who Report Potential Violations, 

and the Social Media Use Policy. These policies are approved 

annually by the Board and available to all Board members in the 

Diligent Boards portal.

Id.

IV. Prior Actions Before the Relevant Period at Issue

A. The 2015 Consumer Financial Protection Bureau (“CFPB”) Credit Card 

Action

On September 28, 2015, the CFPB issued a press release announcing that it intended to 

take action against Fifth Third Bank “for violations of the Dodd-Frank Act for deceptive acts or 

practices” relating to Fifth Third Bank’s marketing and sales practices with respect to a credit 

card add-on product. Id. ¶ 113. The CFPB found that Fifth Third enrolled bank customers or 

cardholders in the add-on product without the customer’s consent between January 2007 and

February 2013. 

The CFPB and Fifth Third entered into a Consent Order relating to the 2015 CFPB Credit 

Card Action. Fifth Third agreed to pay at least $3 million as redress to damaged consumers and 

a $500,000 civil penalty. Additionally, Fifth Third agreed to establish a Board-level Regulatory 

Oversight Committee that would monitor and coordinate compliance with the Consent Order. 

The Consent Order also imposed specific requirements upon Fifth Third’s Board to ensure 

compliance with Fifth Third’s obligations under the Consent Order.

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 9 of 48 PageID #:2948
10

B. The 2015 CFPB Auto Lending Enforcement Action

In the same September 28, 2015 press release, the CFPB announced the 2015 CFPB Auto 

Lending Enforcement Action against Fifth Third. This action resulted from a joint CFPB and 

Department of Justice (“DOJ”) examination and investigation that began in January 2013 into 

Fifth Third’s indirect auto-lending program’s compliance with the Equal Credit Opportunity 

Act’s prohibition on discriminating against loan applicants on the basis of characteristics such as 

race and national origin. The CFPB and DOJ found that Fifth Third violated the Equal Credit 

Opportunity Act between January 2010 and September 2015 by charging African American and 

Hispanic borrowers higher markups for their auto loans than white borrowers. On September 28, 

2015, the CFPB and Fifth Third entered into another Consent Order relating to the 2015 CFPB 

Auto Lending Enforcement Action, which required Fifth Third’s Regulatory Oversight 

Committee to monitor and coordinate compliance with the Consent Order. Fifth Third also 

agreed to pay $18 million to affected consumers. 

C. Wells Fargo Consent Order

On September 8, 2016, the CFPB filed a Consent Order against Wells Fargo. In that 

order, the CFPB determined that Wells Fargo employees opened unauthorized deposit accounts 

that could have been funded by the transfer of funds from existing accounts without the 

consumer’s knowledge or consent. The CFPB also found that Wells Fargo employees submitted 

unauthorized credit card applications and used email addresses not belonging to consumers to 

enroll consumers in online banking services without their knowledge or consent. The Consent 

Order imposed specific requirements on Wells Fargo’s Board of Directors, similar to the 

obligations imposed on the Fifth Third Board in the 2015 CFPB Credit Card Action, and also 

required Wells Fargo to pay civil redress to impacted customers and a $100 million civil 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 10 of 48 PageID #:2949
11

monetary penalty. The CFPB’s action against Wells Fargo resulted in congressional 

investigations and received national attention. For example, CNN published an article with the 

title “5,300 Wells Fargo employees fired over 2 million phony accounts,” reporting that Wells 

Fargo needed to make changes to its sales practices and internal oversight. Id. ¶ 149. 

V. The CFPB’s Investigation into Fifth Third’s Sales Practices

About two months after the disclosure of the Wells Fargo Consent Order, on November

3, 2016, the CFPB notified Fifth Third of an investigation into its sales practices, providing Fifth 

Third with a Civil Investigation Demand (“CID”) addressed to Carmichael. The CID indicated 

that the CFPB had concerns with Fifth Third’s practices in, among other things, “opening an

account for any product or service offered by the Company without the knowledge and consent

of a consumer,” “changing, without the consumer’s knowledge and consent, the type of account 

or service in which the consumer is enrolled,” and “engaging in unauthorized transactions on

behalf of a consumer.” Id. ¶ 150. The CFPB issued five additional CIDs to Fifth Third 

concerning the use of unauthorized accounts and predatory consumer practices between 2017 

and 2019, all addressed to Carmichael. Fifth Third entered into eight tolling agreements with the 

CFPB on April 17, 2018; November 6, 2018; June 5, 2019; August 4, 2019; November 27, 2019; 

December 17, 2019; January 28, 2020; and February 26, 2020.

In response to the requests, Fifth Third provided nearly a half-billion data points, 

thousands of documents, and extensive testimony to the CFPB. Fifth Third also admitted in 

2017 that it had opened unauthorized accounts every year between 2010 and 2017, that it knew 

that employees opened unauthorized accounts by at least 2010, and that it had detected 

approximately 1,100 unauthorized accounts opened between 2010 and 2016. After March 2020, 

Fifth Third conducted a further investigation and identified an additional 800 customers entitled 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 11 of 48 PageID #:2950
12

to relief because of unauthorized accounts opened during that time period. Fifth Third also 

admitted to almost 400 instances of abusive practices, including changing the types of accounts 

or services in which consumers were enrolled without their consent, making false representations 

about financial products to induce consumers to enroll in those products, using consumers’ credit 

reports without an authorized purpose, and assigning personal identification numbers or falsified 

contact information to facilitate unauthorized enrollment. Fifth Third also admitted to having 

enrolled over 125 consumers in overdraft protection without their consent in 2015 and 2016.

VI. The Director Defendants’ Knowledge of the Alleged Misconduct

The commencement of the CFPB investigation was the latest in a string of events that 

should have alerted the Director Defendants to the existence of pervasive issues within Fifth 

Third’s retail banking division. For example, a June 2010 internal email from Fifth Third’s 

“head of retail banking” stated that the Chicago “leadership team ha[s] a reputation of less than 

desirable sales management practices” and that “[b]ullying and threats are often used to achieve 

results.” Id. ¶ 152(a). The email further noted “consistent problems around unauthorized credit 

card sales in Chicago.” Id. And in a 2011 letter to management, a Fifth Third employee raised 

concerns about Fifth Third’s culture, highlighting unethical behavior with respect to customer 

accounts and perceived sexual harassment. In particular, the employee described Fifth Third as

“becoming a ‘predatory’ institution,” with customers “hav[ing] 2 or 3 other checking accounts 

that they didn’t even know they had.” Id. ¶ 152(b). The employee further described how

“regional and market management” encouraged the sales practices, which employees “openly 

discussed on . . . conference calls.” Id.

Fifth Third’s various Board and committee meeting minutes reflect the Director 

Defendants’ knowledge of risks associated with Fifth Third’s cross-selling strategy. Notes from 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 12 of 48 PageID #:2951
13

Audit Committee meetings on March 18, 2013, March 17, 2014, and March 16, 2015, attended 

by Brumback, Hoover, McCallister, Williams, and sometimes Blackburn, Forrest, and Tuzun,

indicate that the committee discussed call volume on the ethics line that alleged some type of 

account gaming. The March 16, 2015 minutes further highlighted the need to improve oversight 

and risk management procedures. The minutes for the September 19, 2016 Regulatory Oversight 

Committee meeting, attended by Bayh, Benitez, Blackburn, Brumback, Carmichael, Forrest,

Heminger, Hoover, and Williams, indicate that, in addition to discussing the Wells Fargo

Consent Order related to cross-selling, the committee discussed Fifth Third’s product sales 

practices, including that Fifth Third had recently moved away from product specific sales goals. 

A November 7, 2016 Audit Committee meeting, attended by Brumback, Burris, Carmichael, 

Forrest, Hoover, Tuzun, and Williams, discussed a proposed audit process for sales practices and 

Fifth Third’s processes for identifying and terminating employees who engaged in improper 

sales practices. Notes from the February 27, 2017 Risk and Compliance Committee meeting, 

attended by Akins, Bayh, Benitez, Blackburn, Brumback, Burris, Carmichael, Forrest, Heminger, 

Hoover, Mallesch, McCallister, Tuzun, and Williams, identified sales practices and conduct risk 

as top operational risks. At a March 16, 2017 Audit Committee meeting, attended by Blackburn, 

Brumback, Burris, Hoover, Tuzun, and Williams, the committee discussed the results of the 

fourth quarter 2016 internal audit, observing that Fifth Third’s oversight, prevention, and 

detection systems needed improvement but that Fifth Third had action plans to address the 

remaining issues. And at a June 19, 2017 Audit and Risk and Compliance Committee joint 

meeting, Forrest noted that compliance, operational (including sales practices/conduct), and 

strategic risk remained “above tolerance,” with “Operational Risk’s move into moderate 

tolerance . . . delayed” and subject to further evaluation “in subsequent quarters.’” Doc. 112-1

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 13 of 48 PageID #:2952
14

¶ 154(g). Forrest also noted that “risks relating to Regulatory Inquiries and investigations were 

increasing due to increased scrutiny of sales practices in the wake of recent industry events.” Id.

¶ 368. Members in attendance also heard that an elevated number of consumer compliancerelated issues continued to exist. That same day, at a Board meeting, attended by Akins, Bayh, 

Benitez, Blackburn, Brumback, Burris, Carmichael, Heminger, Hoover, McCallister, and 

Williams, the Board members learned that a strategic review revealed opportunities for 

enhancement of sales practices controls. Forrest then reported at the September 18, 2017 Audit 

and Risk and Compliance Committee joint meeting that sales and conduct risk remained “flat,”

while “inherent Operational risk remained High.” Id. ¶ 154(h). The Board reviewed sales

practices enhancement activities at a December 19, 2017 meeting, with the Audit Committee

following up at a March 15, 2018 meeting on ongoing consumer audit results and remediation 

plans. And at several Board meetings and joint meetings of the Risk and Compliance and Audit 

Committees between December 2017 and April 2019, attendees discussed the fact that Fifth 

Third’s ethics line’s call volume had increased. 

VII. Fifth Third’s SEC Filings

A. Annual Reports

On February 25, 2016, Fifth Third filed its annual report with the SEC for the fiscal year 

ended December 31, 2015 on a Form 10-K (the “2015 10-K”), which Akins, Bayh, Benitez,

Blackburn, Brumback, Carmichael, Heminger, Hoover, McCallister, Tuzun, and Williams

signed. The 2015 10-K stated that Fifth Third benefited from cross-sell opportunities generated

by synergies formed by its business segments. 

The 2015 10-K also highlighted Fifth Third’s comprehensive compliance and risk 

management systems, stating that “Fifth Third focuses on managing regulatory compliance risk 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 14 of 48 PageID #:2953
15

in accordance with [its] integrated risk management framework, which ensures consistent 

processes for identifying, assessing and monitoring, and reporting risks.” Doc. 111 ¶ 210. The 

report also emphasized Fifth Third’s internal reporting systems for overseeing compliance 

concerns and Fifth Third management’s commitment to addressing compliance concerns, stating

in part that “Fifth Third . . . focuses on reporting and escalation of compliance issues to senior 

management and the Board.” Id. ¶ 211. It also noted that “[t]he Management Compliance 

Committee addresses Fifth Third-wide compliance issues, industry best practices, legislative 

developments, regulatory concerns, and other leading indicators of compliance risk” and “reports 

to the Enterprise Risk Management Committee, which reports to Risk and Compliance 

Committee of the Board of Directors.” Id. Further, the 2015 10-K generally identified risk 

factors Fifth Third faced, including that “the CFPB . . . ha[s] the authority to compel or restrict 

certain actions by Fifth Third and its banking subsidiary.” Id. ¶ 212.

Subsequent Form 10-Ks included statements similar to those in the 2015 10-K. Bayh, 

Benitez, Blackburn, Brumback, Carmichael, Heminger, Hoover, Mallesch, Tuzun, and Williams

signed the 2016, 2017, 2018, and 2019 Form 10-Ks. Akins signed all but the 2017 Form 10-K, 

and McCallister signed all but the 2016 Form 10-K. Burris, Daniels, and Harvey also signed the 

2019 Form 10-K. The 2019 Form 10-K, filed on March 2, 2020, stated that the CFPB had 

notified Fifth Third Bank that “it intends to file an enforcement action in relation to alleged 

unauthorized account openings.” Id. ¶ 239. It further went on to say that “Fifth Third believes 

that the facts do not warrant an enforcement proceeding and intends to defend itself vigorously if 

such an action should be filed” and that “[t]he impact of this potential enforcement action has 

been reflected in our reasonably possible losses.” Id. ¶ 241 (alteration in original).

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 15 of 48 PageID #:2954
16

B. Proxy Statements

In Fifth Third’s 2017 Proxy Statement, it noted that the 2017 executive compensation 

plan changed to include the addition of “customer experience [ ] as a funding modifier.” Id.

¶ 184. The statement further explained that “[t]he addition of customer experience to the plan 

will add specific focus to the cornerstone of our business strategy of ‘putting the customer at the 

center of all we do.’” Id. The 2017 Proxy Statement also included changes to performance goals

to award executives for objectives such as customer growth and the number or type of customer 

relationships. 

On March 6, 2018, Fifth Third filed its 2018 Proxy Statement. Akins, Benitez, 

Blackburn, Brumback, Burris, Carmichael, Heminger, Hoover, Mallesch, McCallister, and 

Williams solicited the 2018 Proxy Statement, which was filed pursuant to Section 14(a) of the 

Exchange Act. The 2018 Proxy Statement indicated that “[t]he Board of Directors has also 

adopted the Fifth Third Bancorp Code of Business Conduct and Ethics which applies to our

directors; Chief Executive Officer, Chief Financial Officer, and Controller; and our other 

employees.” Id. ¶ 219. The 2018 Proxy Statement further described Fifth Third’s risk 

management practices, noting that the Board “sets [Fifth Third’s] overall risk appetite, including 

the establishment and monitoring of risk tolerances,” while the Risk and Compliance Committee 

had primary responsibility for risk management oversight and governance. Id. ¶ 221. It further 

stated that Fifth Third had “a multi-faceted strategy toward mitigating risk in incentive plans,”

with transparency in compensation “to ensure that pay facilitates the appropriate strategic and 

risk awareness behaviors.” Id. ¶ 222. Additionally, the 2018 Proxy Statement noted that

executive compensation “provide[d] executives with balanced incentive to increase the absolute 

level of earnings growth, ensure[d] that shareholder capital is used efficiently to generate 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 16 of 48 PageID #:2955
17

competitive returns, and assesse[d] the cost efficiency of the Company’s operations.” Id. ¶ 223 

(alterations in original). 

Similarly, the 2019 Proxy Statement, solicited by Akins, Benitez, Blackburn, Brumback, 

Burris, Carmichael, Heminger, Hoover, Mallesch, McCallister, and Williams, stated that 

“[d]irectors receive annual ethics training and directors must review and acknowledge the Code 

of Business Conduct and Ethics.” Id. ¶ 228 (alteration in original). It included similar language 

to the 2018 Proxy Statement concerning executive compensation. The 2020 Proxy Statement, 

solicited by Akins, Benitez, Blackburn, Brumback, Burris, Carmichael, Daniels, Harvey, 

Heminger, Hoover, Mallesch, McCallister, and Williams, touted Fifth Third’s compensation 

program as supported by certain “best practices” such as a “[r]obust code of business conduct 

and ethics,” as well as the fact that directors received annual ethics training and had to follow 

Fifth Third’s Corporate Governance Guidelines and Code of Conduct. Id. ¶ 245.

C. January 2020 Form 8-K

On January 30, 2020, Fifth Third filed a Current Report on Form 8-K (the “January 2020 

Form 8-K”), indicating that Forrest had assumed the role of executive vice president and special 

advisor for risk management and regulatory matters, a role in which he planned to serve through 

the end of the year, when he planned to retire. The January 2020 Form 8-K further provided that 

Fifth Third had promoted James C. Leonard to executive vice president and chief risk officer, 

Forrest’s former role. Fifth Third also issued a press release the same day making similar 

statements about the transition. 

VIII. CFPB Action against Fifth Third

On March 9, 2020, the CFPB filed a complaint against Fifth Third in the United States

District Court for the Northern District of Illinois, Bureau of Consumer Financial Protection v. 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 17 of 48 PageID #:2956
18

Fifth Third Bank, N.A., No. 20 C 1683 (the “2020 CFPB Action”). The CFPB complaint alleged

that Fifth Third violated the Consumer Financial Protection Act’s prohibition against unfair and 

abusive acts or practices, the Truth in Lending Act, and the Truth in Savings Act. The CFPB 

claimed that Fifth Third used a cross-sell strategy to increase the total number of products and 

services to existing customers and used an incentive-compensation program that rewarded 

managers and their subordinate employees for selling new products and services to existing 

customers. The CFPB also claimed that Fifth Third opened deposit and credit card accounts 

without customers’ knowledge or consent and imposed aggressive sales goals for its employees 

to enroll consumers in its online banking services. 

The CFPB asserted that “despite knowing since at least 2008 that employees were 

opening unauthorized consumer-financial accounts, Fifth Third took insufficient steps to detect 

and stop the conduct and to identify and remediate harmed consumers.” Id. ¶ 250. Even Fifth 

Third’s Director of Corporate Investigations and its corporate designee in the 2020 CFPB 

Action, Darrin Steinmann, acknowledged that Fifth Third Bank did not “have a systematic way 

of detecting gaming.” Id. ¶ 169.

After the lawsuit became public, Fifth Third’s stock price fell from closing at $18.30 per 

share on March 9, 2020 to closing at $17.66 per share on March 11, 2020, two trading sessions 

later. Fifth Third’s stock price further declined by $1.76 the following trading session to close at 

$15.90 per share on March 12, 2020. Between March 2 and March 12, 2020, Fifth Third’s stock

dropped $8.50 per share, a market capitalization decline of $6 billion.

IX. Fifth Third’s Response to the CFPB Action

In response to the 2020 CFPB Action, on March 9, 2020, Fifth Third filed a Current 

Report on Form 8-K (the “March 9, 2020 Form 8-K”), along with an attached press release 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 18 of 48 PageID #:2957
19

entitled “Fifth Third Bancorp Rejects Charges in CFPB’s Civil Lawsuit, Points to Its Customer

Commitment and Proven Track Record of Aligning Employee Incentives with CustomerFocused Best Practices” (the “March 2020 PR”), a fact sheet (the “March 2020 Fact Sheet”), and 

a list of frequently asked questions (the “March 2020 FAQ”).

The March 9, 2020 Form 8-K stated that “[o]n March 9, 2020, Fifth Third Bancorp issued 

a press release regarding its litigation with the Consumer Financial Protection Bureau. Fifth 

Third is also furnishing a fact sheet and answers to frequently asked questions relating to this 

matter.” Id. ¶ 253. In both the March 2020 PR and the March 2020 Fact Sheet, Fifth Third 

rejected the CFPB’s allegations. The March 2020 Fact Sheet stated, in part:

While Fifth Third Bank respects and values the important role that 

the Consumer Financial Protection Bureau (CFPB) plays in 

protecting consumers, the allegations in the civil lawsuit brought 

by the CFPB against Fifth Third are unsubstantiated, based on

limited, non-systemic, and remediated events, and reflect 

misunderstandings of our products, services, and work culture. 

When a federal court examines the evidence, we believe it will 

agree with Fifth Third that the civil suit filed today is unnecessary 

and unwarranted.

Id. ¶ 255. The March 2020 Fact Sheet admitted that Fifth Third identified over a thousand 

unauthorized accounts opened between 2010 and 2016, but it highlighted that this amounted to 

only 0.01% of all accounts and that Fifth Third found no evidence of systemic misconduct. Fifth

Third further acknowledged that it had received “424 complaints regarding unauthorized 

accounts” from the same subset of analyzed accounts. Id. ¶ 256. The March 2020 Fact Sheet 

indicated that “[i]ncentives have always been modest” and that Fifth Third’s “retail employee 

compensation structure is designed to deter the opening of unauthorized accounts.” Id. ¶ 257

(alteration in original). The March 2020 FAQ admitted to “[l]imited instances of employee

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 19 of 48 PageID #:2958
20

misconduct” and stated that “only a small percentage [of compensation] is based on sales 

performance.” Id. ¶ 258 (alterations in original).

Fifteen days after the filing of the 2020 CFPB Action, on March 24, 2020, Fifth Third 

filed another Current Report on Form 8-K (the “March 24, 2020 Form 8-K”), which indicated 

that Fifth Third had made amendments to its Code of Regulations. Specifically, the March 24, 

2020 Form 8-K states:

Section 17 of Article III of the Regulations was also revised to 

allow indemnification of employees to the fullest extent permitted 

by Ohio law. Lastly, a new Section 18 of Article III was added to 

the Regulations in order to expressly allow, with certain

exceptions, the advancement of expenses (including attorney’s 

fees) to anyone defending an action pursuant to the

indemnification provisions of the Regulations.

Id. ¶ 261. The amended Section 17 of Article III states, in part:

Indemnification. The Corporation shall indemnify, to the full 

extent permitted or authorized by applicable law, as it may from 

time to time be amended, any person made or threatened to be 

made a party to any threatened, pending, or completed action, suit, 

or proceeding, whether civil, criminal, administrative, or 

investigative, by reason of the fact that he or she is or was a 

director, officer, or employee of the Corporation, or is or was 

serving at the request of the Corporation as a director, trustee, 

officer, or employee of a bank, other corporation, partnership, joint 

venture, trust, or other enterprise.

Id. ¶ 262. The newly added Section 18 of Article III states:

Advancement of Expenses. To the extent permitted by applicable 

law, expenses (including attorneys’ fees) incurred by a director 

subject to Section 17 in defending any action, suit or proceeding 

referred to in Section 17 shall be paid by the Corporation as 

incurred, in advance of the final disposition of such action, suit or 

proceeding, upon receipt by the Corporation of an undertaking by 

or on behalf of such director that satisfies the conditions for such 

advancement under Ohio law. To the extent permitted by 

applicable law, liabilities and expenses (including attorneys’ fees) 

incurred by any person subject to Section 17 other than a director 

in defending any action, suit or proceeding referred to in Section 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 20 of 48 PageID #:2959
21

17 may be paid by the Corporation as incurred, in advance of the 

final disposition of such action, suit or proceeding, if and to the 

extent so determined by the Board of Directors (including pursuant 

to policies adopted from time to time by the Board of Directors), 

subject to compliance by such person with the applicable 

conditions for such advancement under Ohio law and any other 

conditions determined by the Board of Directors.

Id. ¶ 263. 

On April 14, 2020, Fifth Third filed another Current Report on Form 8-K (the “April 

2020 Form 8-K”), which contained a presentation prepared for Fifth Third’s 2020 annual 

shareholder meeting. The presentation made no mention of the 2020 CFPB Action, instead

touting Fifth Third’s resilient balance sheet, proactive management, and its diversified revenue

mix. Similar to the April 2020 Form 8-K, Fifth Third’s First Quarter 2020 Earnings Presentation 

filed with the SEC on April 21, 2020 failed to mention the 2020 CFPB Action or any subsequent 

lawsuits filed against Fifth Third. But Fifth Third’s Quarterly Report on Form 10-Q for the

period ending on March 31, 2020 specifically mentioned the 2020 CFPB Action, as well as a

securities class action filed against Fifth Third on April 7, 2020.

X. Stock Repurchases and Damages to Fifth Third

The Director Defendants caused Fifth Third to initiate repurchases of its common stock

throughout the relevant time period. In total, Fifth Third spent an aggregate amount of over $5.6 

billion to repurchase approximately 216,504,051 shares of its own common stock at artificially 

inflated prices from March 2016 through the end of February 2020. In total, Plaintiffs calculate

that Fifth Third overpaid for repurchases of its own stock by over $2 billion. 

XI. CFPB’s Amended Complaint

The CFPB filed an amended complaint on June 16, 2021. In the amended complaint, the 

CFPB alleges that Fifth Third acknowledged in 2017 that it had opened consumer financial 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 21 of 48 PageID #:2960
22

products without customer authorization from 2010 to 2017, and that Fifth Third and senior 

management could have implemented unauthorized account identification methods beginning in 

2010. But the CFPB claims that Fifth Third chose not to take action then because it determined 

that greater identification would cause it reputational and financial harm. The CFPB amended 

complaint identifies Carmichael as the responsible individual for reviewing and overseeing the 

retail banking business and its sales and practices during the relevant time period. It also 

highlights that executives who directly reported to Carmichael contemporaneously detailed illicit 

sales practices, indicating that the practices were “widely known within the organization.” Id.

¶ 30. 

According to the CFPB, its investigation revealed “hundreds of thousands of Fifth Third 

accounts that bear indicia of non-authorization.” Id. ¶ 35 (emphasis omitted). Specifically, the 

amended complaint alleges that since 2010, Fifth Third issued over 218,000 consumer credit 

cards that have never been activated or used for consumer-initiated transaction, with an 

additional over 4,000 consumer credit card accounts that were opened, associated with a Fifth 

Third email address, and did not have any consumer-initiated purchases. Further, according to 

the CFPB, in over 26,000 instances since 2010, a new Fifth Third deposit account was funded 

with $100 or less from an existing account and had no activity other than the subsequent transfer 

of those funds back to the original account. The CFPB also alleges that since 2010, more than 

124,000 new deposit accounts were funded with $100 or less and then defunded to a zero 

balance within ninety days. 

According to the CFPB amended complaint, Fifth Third allowed its employees to take 

credit card applications over the phone, with no indication of the consumer’s consent aside from 

writing “phone application” and the date and time on the signature line of the application. Id.

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 22 of 48 PageID #:2961
23 

¶ 126. Fifth Third allegedly continued this practice despite the fact that Fifth Third’s head of 

retail banking advised the head of Fifth Third’s consumer bank in 2010 that Fifth Third 

continued having issues with unauthorized credit card applications and should suspend 

employees’ ability to take applications without a wet signature. The CFPB also alleges that Fifth 

Third employees suppressed paper account statements in instances where they had no email 

address to send an electronic statement. Because Fifth Third incentivized employees for 

enrolling customers in online banking services provided that the customer logged into the 

account at least three times, the CFPB also alleges that Fifth Third employees enrolled over 

48,000 accounts in online banking using a Fifth Third email address since 2010. 

LEGAL STANDARD

 A motion to dismiss under Rule 12(b)(6) challenges the sufficiency of the complaint, not 

its merits. Fed. R. Civ. P. 12(b)(6); Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 

1990). In considering a Rule 12(b)(6) motion, the Court accepts as true all well-pleaded facts in 

the plaintiff’s complaint and draws all reasonable inferences from those facts in the plaintiff’s 

favor. Kubiak v. City of Chicago, 810 F.3d 476, 480–81 (7th Cir. 2016). To survive a Rule

12(b)(6) motion, the complaint must assert a facially plausible claim and provide fair notice to 

the defendant of the claim’s basis. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009); Bell Atl. Corp. v. 

Twombly, 550 U.S. 544, 555 (2007); Adams v. City of Indianapolis, 742 F.3d 720, 728–29 (7th 

Cir. 2014). A claim is facially plausible “when the plaintiff pleads factual content that allows the 

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 

Iqbal, 556 U.S. at 678. 

Securities fraud claims must also satisfy Rule 9(b)’s particularity requirement, which 

requires a party to “state with particularity the circumstances constituting fraud.” Fed. R. Civ. P. 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 23 of 48 PageID #:2962
24 

9(b); Cornielsen v. Infinium Cap. Mgmt., LLC, 916 F.3d 589, 598 (7th Cir. 2019); AnchorBank, 

FSB v. Hofer, 649 F.3d 610, 614–15 (7th Cir. 2011). “This ordinarily requires describing the 

‘who, what, when, where, and how’ of the fraud, although the exact level of particularity that is 

required will necessarily differ based on the facts of the case.” AnchorBank, 649 F.3d at 615 

(citation omitted). Congress further heightened the pleading standards for securities fraud claims 

when it enacted the PSLRA “[a]s a check against abusive litigation by private parties” in

securities fraud suits. Tellabs, Inc. v. Makor Issues & Rights, Ltd., 551 U.S. 308, 313 (2007). 

The PSLRA requires “complaints alleging securities fraud [to] ‘state with particularity facts 

giving rise to a strong inference that the defendant acted with the required state of mind.’” 

Cornielsen, 916 F.3d at 598–99 (quoting 15 U.S.C. § 78u-4(b)(2)(A)). The PSLRA also requires 

“[a]ny complaint alleging a material misstatement or omission [to] ‘specify each statement 

alleged to have been misleading’ and the ‘reason or reasons why the statement is misleading.’” 

Id. at 599 (quoting 15 U.S.C. § 78u-4(b)(1)). On motion by a defendant, the Court must dismiss

a complaint that does not meet these requirements. 15 U.S.C. § 78u-4(b)(3)(A). 

Shareholder derivative actions must also satisfy Rule 23.1(b)(3), which requires a 

complaint to state with particularity “any effort by the plaintiff to obtain the desired action from 

the directors” and, if applicable, “the reasons for not obtaining the action or not making effort.” 

Fed. R. Civ. P. 23.1; In re Abbott Lab’ys Derivative S’holders Litig., 325 F.3d 795, 803–04 (7th 

Cir. 2003) (“Rule 23.1 requires the plaintiff ‘to allege with particularity the efforts, if any, made 

by the plaintiff to obtain the action the plaintiff desires from the directors . . . and the reasons for 

the plaintiff’s failure to obtain the action or for not making the effort.’” (citation omitted)). 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 24 of 48 PageID #:2963
25

ANALYSIS

Defendants seek to dismiss Plaintiffs’ amended complaint pursuant to Rules 23.1 and

12(b)(6), arguing that Plaintiffs have again failed to sufficiently assert demand futility under

Ohio law or otherwise state a claim. Because Defendants’ demand futility argument is 

dispositive, the Court limits its analysis to that argument. 

The Court looks to the substantive law of Fifth Third’s state of incorporation, Ohio, in 

addressing demand futility. Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 108–09 (1991).

Plaintiffs do not allege that they made a demand on the Director Defendants and so they must 

instead allege why making such a demand would be futile. See In re Ferro Corp. Derivative 

Litig., 511 F.3d 611, 617 (6th Cir. 2008) (“Ohio recognizes an exception to the general demand

rule, which permits a shareholder to proceed with an independent suit without making a demand 

when the shareholder can demonstrate that the demand would have been futile.”); Davis v. DCB 

Fin. Corp., 259 F. Supp. 2d 664, 670 (S.D. Ohio 2003) (“Under Ohio Rule 23.1, a complaining

shareholder must (1) spell out the efforts made to have the directors or other shareholders take 

the action demanded; (2) explain why he failed in this effort or did not make it; and (3) show that 

he fairly and adequately represents the interests of other similarly situated shareholders.”).

Under Ohio law, “[t]he board of directors has the primary authority to file a lawsuit on 

behalf of the corporation.” Drage v. Procter & Gamble, 694 N.E.2d 479, 482 (Ohio Ct. App. 

1997). Ohio law presumes “that any action taken by a director on behalf of the corporation is 

taken in good faith and for the benefit of the corporation.” Id. While “[t]he shareholders may 

make a demand on the directors to bring a suit on behalf of the corporation, . . . no shareholder 

has an independent right to bring suit unless the board refuses to do so and that refusal is 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 25 of 48 PageID #:2964
26

wrongful, fraudulent, or arbitrary, or is the result of bad faith or bias on the part of the directors.” 

Id. 

Plaintiffs carry the burden of showing futility and must plead with particularity that “a 

majority of the directors are so personally and directly conflicted or committed to the decision in 

dispute that they cannot reasonably be expected to respond to a demand in good faith and within 

the ambit of the business judgment rule.” Caston v. Hoaglin, No. 2:08-cv-200, 2009 WL 

3078214, at *7 (S.D. Ohio Sept. 23, 2009) (citation omitted); Davis, 259 F. Supp. 2d at 670

(“Futility means that the directors’ minds are closed to argument and that they cannot properly 

exercise their business judgment in determining whether the suit should be filed.”). The standard 

to establish demand futility is difficult and “not just a procedural technicality.” Monday v. 

Meyer, No. 1:10 CV 1838, 2011 WL 5974664, at *4 (N.D. Ohio Nov. 29, 2011). 

The Court considers demand futility with respect to the Board as it existed at the time of 

the initial filing of the complaint. McCall v. Scott, 239 F.3d 808, 816 (6th Cir. 2001); Drage, 

694 N.E.2d at 483. Thus, Plaintiffs must set forth particularized facts establishing that at least 

eight of the fourteen Fifth Third Board members on July 13, 2020 were not disinterested and thus 

could not have fairly considered a demand.

3 See In re Cardinal Health, Inc. Derivative Litig., 

518 F. Supp. 3d 1046, 1064 (S.D. Ohio 2021) (pleading demand futility requires particularized 

facts “creating a reasonable doubt that a majority of the board of directors is capable of making a

disinterested and independent decision about whether to initiate litigation”). Plaintiffs argue that 

they have met this requirement by pleading that the Director Defendants were not independent 

and that they all face a substantial likelihood of personal liability on Plaintiffs’ claims. The 

Court addresses these arguments in turn. 

3 Because Burris had resigned from Fifth Third’s Board at the time one of the Plaintiffs, Stephen 

Pemberton, initiated this lawsuit on July 13, 2020, the Court’s references to the Director Defendants 

going forward in this Opinion do not include Burris. 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 26 of 48 PageID #:2965
27

I. The Directors’ Independence

The Court first addresses Defendants’ argument that Plaintiffs’ amended complaint does 

not create the required reasonable doubt as to the Director Defendants’ independence to excuse 

demand futility. The amended complaint includes identical allegations to that of the 

consolidated complaint concerning the Director Defendants’ independence, focusing on Harvey, 

Daniels, and Feiger’s personal relationships with each other, Blackburn’s affiliation with the 

Bengals, and the amendment of the Code of Regulations.

4

 The Court previously rejected each of 

these bases for finding the Director Defendants’ independence compromised. Doc. 107 at 21–

24. Specifically, the Court first concluded that “‘[n]othing about the relationship between

[Harvey, Daniels, and Feiger], as alleged by Plaintiffs, so much as hints at an inference that 

[they] would sacrifice [their] personal reputation for the sake of [their] relationship’ with each 

other.”5 Id. at 22–23 (quoting In re Keithley Instruments, Inc., Derivative Litig., 599 F. Supp. 2d

875, 893 (N.D. Ohio 2008) (“The only fact set forth in the Complaint regarding the relationship 

between Reddy and Keithley is that both serve on the board of directors at another unaffiliated 

company. In all likelihood, such an allegation—that two individuals on a board also serve 

together on another board—could be levied against hundreds, if not thousands, of public 

company directors.”)). The Court also found that Plaintiffs had not alleged particularized facts to 

4 As with their response to the motion to dismiss the consolidated complaint, Plaintiffs do not address 

Defendants’ arguments concerning the existence of a directors’ and officers’ insurance policy and so the 

Court understands that they do not pursue the policy’s existence as a basis for excusing demand futility. 

See Alioto v. Town of Lisbon, 651 F.3d 715, 721 (7th Cir. 2011) (a party waives an argument “by not 

responding to alleged deficiencies in a motion to dismiss”).

5 Like in the consolidated complaint, the amended complaint also alleges that Bayh and Heminger have a 

relationship outside of Fifth Third and that Carmichael and Mallesch previously held management and 

leadership positions at General Electric. Plaintiffs again do not focus on these relationships and so, for 

the same reasons as discussed with respect to Harvey, Daniels, and Feiger, the Court again would not find 

that these outside relationships sufficiently compromised Bayh, Heminger, Carmichael, and Mallesch’s

independence so as to make demand futile. 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 27 of 48 PageID #:2966
28

suggest that Blackburn’s ties to the Bengals compromised her independent discretion and, even 

were her ties sufficient to call into question her independence, that would not get Plaintiffs far 

enough in establishing demand futility on the Director Defendants as she is only one of fourteen 

directors. Id. at 23. Finally, the Court agreed with Defendants that the amendments to the Code 

of Regulations did not create any new rights for the Director Defendants but instead codified 

Fifth Third’s existing obligations under Ohio law. Id. at 24.

In amending their complaint, Plaintiffs did not add any additional allegations concerning 

the Director Defendants’ alleged lack of independence, instead resting on the same allegations 

the Court previously rejected as insufficient. And in their response to the motion to dismiss, 

Plaintiffs do not even acknowledge the Court’s prior ruling and instead make the same 

arguments the Court already rejected.6 The Court does not find any reason to deviate from its 

prior conclusions about Plaintiffs’ allegations concerning the Director Defendants’ independence 

and so again finds that Plaintiffs cannot show demand futility on this basis. Id. at 21–24. 

II. Substantial Likelihood of Liability

Plaintiffs alternatively may establish demand futility through allegations that suggest that

the Director Defendants face a substantial likelihood of personal liability on the asserted claims. 

In re Keithley, 599 F. Supp. 2d at 895 (“The demand futility issue thus turns entirely on whether 

the allegations in the Complaint sufficiently establish a substantial likelihood of liability as to 

[the majority of the] directors”). The Court thus must examine whether a majority of the 

6 More egregiously, in language that recurs throughout Plaintiffs’ response, with respect to the 

amendment of the Code of Regulations, Plaintiffs merely “reallege and incorporate by reference herein 

arguments . . . as found in Plaintiffs’ Memorandum of Law in Opposition to Defendants’ Motion to 

Dismiss the Verified Shareholder Derivative Consolidated Complaint.” Doc. 130 at 27. Although this 

may be an attempt to preserve their arguments for appellate review, this practice suggests an 

unwillingness to acknowledge and grapple with the analysis conducted by the Court in ruling on the same 

issues in the March 30, 2022 Opinion. 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 28 of 48 PageID #:2967
29

Director Defendants face a substantial likelihood of personal liability for their alleged 

wrongdoing on each of Plaintiffs’ claims.

7

 

A. Breach of Fiduciary Duty Based on Failure of Oversight Claim

Directors of an Ohio corporation face personal liability if clear and convincing evidence 

shows that they “acted with reckless disregard for the corporation’s best interest, or with 

deliberate intent to cause injury to the corporation.” In re Cardinal Health, 518 F. Supp. 3d at 

1065 (citing Ohio Rev. Code Ann. § 1701.59(E)). Directors “have a duty to exercise oversight 

and to monitor the corporation’s operational viability, legal compliance, and financial 

performance” under Ohio law. Emps. Ret. Sys. of City of St. Louis v. Jones, No. 2:20-cv-04813, 

2021 WL 1890490, at *20 (S.D. Ohio May 11, 2021) (citing Marchand v. Barnhill, 212 A.3d 

805, 809 (Del. 2019)). “In cases like this one, directors face liability when they ignore ‘red 

flags’ that put them on notice of possible misconduct, and they recklessly fail to investigate and 

take affirmative action to protect the interests of the company.” Id.; see also Forsythe v. ESC 

Fund Mgmt. Co. (U.S.), Inc., CA. No. 1091-VCL, 2007 WL 2982247, at *7 (Del. Ch. Oct. 9, 

2007) (in a failure of oversight case involving a board of directors, liability hinges on whether 

the directors “ignore ‘red flags’ that actually come to their attention, warning of compliance 

problems”).

8 Such “red flags” are “facts showing that the board ever was aware that [the

corporation’s] internal controls were inadequate.” King ex rel. Cephalon Inc. v. Baldino, 409 F. 

7 Although Defendants first argue that the Court should dismiss the amended complaint because Plaintiffs 

have engaged in group pleading, failing to allege specific facts about each of the Director Defendants, as 

it did in considering the consolidated complaint, the Court finds it more appropriate to consider whether 

Plaintiffs have sufficiently pleaded a substantial likelihood of liability on any of their claims. 

8 “Ohio courts routinely look to Delaware case law for guidance in deciding corporate law issues 

generally, and demand futility issues specifically.” In re Cardinal Health, 518 F. Supp. 3d at 1064 n.7 

(quoting In re Keithley, 599 F. Supp. 2d at 888 n.10). 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 29 of 48 PageID #:2968
30

App’x 535, 538 (3d Cir. 2010) (alteration in original) (quoting Stone v. Ritter, 911 A.2d 362, 370 

(Del. 2006)). 

As they did in their consolidated complaint, Plaintiffs assert that the Director Defendants 

conducted little, if any, oversight over Fifth Third’s cross-selling practices and thus consciously 

disregarded their duties to monitor these areas of operation. Plaintiffs also assert that the 

Director Defendants knew of red flags regarding the risk associated with Fifth Third’s improper 

cross-selling strategy, pointing specifically to the CFPB’s 2015 Auto-Lending and Credit Card 

Actions, Board and committee meeting minutes, internal complaints, and the Wells Fargo 

Consent Order. 

“[T]he alleged red flags must involve or relate to conduct sufficiently similar to the 

alleged wrongful conduct [concerning cross-selling practices] to alert a reasonable director or 

officer to potential misconduct [involving cross-selling].” In re Cap. One Derivative S’holder 

Litig., 952 F. Supp. 2d 770, 786 (E.D. Va. 2013). The CFPB 2015 Auto-Lending and Credit 

Card Actions and the ensuing Consent Orders had nothing to do with the cross-selling practices 

at issue in this lawsuit and thus cannot serve as red flags regarding the risks associated with Fifth 

Third’s cross-selling strategy. See id. at 787 (consent order concerning account closing 

processes did not serve as red flag for call center misconduct where the conduct implicated in the 

consent order was “significantly different from the alleged misconduct at the call centers”); In re 

Dow Chem. Co. Derivative Litig., No. CIV.A. 4349-CC, 2010 WL 66769, at *13 (Del. Ch. Jan. 

11, 2010) (“Plaintiffs argue that because bribery may have occurred in the past (Dow paid a fine 

to the SEC in January 2007), by different members of management, in a different country 

(India), and for a different transaction (pesticide registrations), the board should have suspected 

similar conduct by different members of management, in a different country, in an unrelated 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 30 of 48 PageID #:2969
31

transaction. This argument is simply too attenuated to support a [failure of oversight] claim.” 

(footnote omitted)). But even treating the Consent Orders as red flags, because Fifth Third 

established a Board-level Regulatory Oversight Committee that monitored and coordinated

compliance, the Director Defendants “would be reasonable in concluding that [Fifth Third] cured

the earlier flagged deficiencies when it entered into the [Consent Orders].” In re Abbott 

Depakote S’holder Derivative Litig., 909 F. Supp. 2d 984, 996 (N.D. Ill. 2012) (board could rely

on Abbott’s entry into a corporate integrity agreement agreeing to reform its sales and marketing 

practices “to believe that Abbott did indeed reform its sales and marketing practices after 2003”); 

see also Melbourne Mun. Firefighters’ Pension Tr. Fund v. Jacobs, No. 10872-VCMR, 2016 

WL 4076369, at *12 (Del. Ch. Aug. 1, 2016) (“In this case, even if the alleged red flags actually 

constituted evidence of misconduct at Qualcomm, it is unreasonable to infer that the Board 

consciously disregarded its fiduciary duties in response to those red flags. The Complaint 

concedes that the Board continuously monitored each of the three alleged red flags as well as the 

NDRC Decision.”), aff’d, 158 A.3d 449 (Del. 2017). 

Plaintiffs’ allegations concerning knowledge of the Wells Fargo Consent Order also do 

not suggest that the Director Defendants recklessly failed to investigate or take affirmative action 

to protect Fifth Third’s interests. Misconduct at other companies does not serve as a red flag 

concerning the same or similar misconduct at Fifth Third. See Okla. Firefighters Pension & Ret. 

Sys. v. Corbat, No. CV 12151, 2017 WL 6452240, at *22 (Del. Ch. Dec. 18, 2017) (“But 

directors’ failure to act in the face of warnings about misconduct at other businesses does not 

imply bad faith with respect to the entity to which the directors owe fiduciary duties.”). Nor 

does the fact that the CFPB’s director indicated that the Wells Fargo Consent Order “should 

serve notice to the entire industry.” Doc. 111 ¶ 147; see In re Cap. One, 952 F. Supp. 2d at 787 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 31 of 48 PageID #:2970
32

(“[P]laintiffs allege that defendants should have been alerted by regulatory agencies’ public 

statements that these agencies intended to begin more rigorous enforcement of consumer 

protection laws related to the sales of credit card add-on products. Yet, the mere fact that the 

agencies were increasing enforcement in no way suggests or indicates that wrongful conduct was 

occurring at the call centers. To serve as a red flag, there must be some link between the alleged 

red flag and an actual problem within the company, and there is no such link between the agency 

statements about more vigorous enforcement of the consumer protection laws and the alleged 

call center misconduct.”). 

Moreover, the amended complaint undermines the contention that the Director 

Defendants ignored the increased focus on regulation of sales practices evidenced by the Wells 

Fargo Consent Order or otherwise acted in bad faith with respect to the cross-selling misconduct 

at issue. For example, the amended complaint highlights Audit Committee notes that, in 

November 2016, Fifth Third engaged an outside party to perform an assessment of Fifth Third’s 

“sales practices against regulatory and industry expectations.” Doc. 112-1 ¶ 359. And 

subsequent meeting minutes indicate that the Director Defendants received updates on the 

outside assessment and steps Fifth Third had taken to improve areas of concern. See, e.g., id.

¶¶ 372, 375 (reporting on recommendations from the assessment and the fact that “a crossfunctional team had been managing the ongoing progress of each enhancement”). Similarly, the 

September 19, 2016 Regulatory Oversight Committee meeting minutes reflect discussion of Fifth 

Third’s product sales practices and additional measures that Fifth Third had recently 

implemented in light of the Wells Fargo cross-selling scandal, including moving away from

product specific sales goals that allegedly encouraged cross-selling. See id. ¶ 154 (additionally 

highlighting March 18, 2013, March 17, 2014, and March 16, 2015 Audit Committee meetings

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 32 of 48 PageID #:2971
33 

that discussed certain actions taken by management to address call volume that alleged account 

gaming). Plaintiffs argue that these meeting minutes are too vague to suggest that Fifth Third 

actually took any action to address the underlying issues leading to account gaming, particularly 

given that the issue persisted for years. But “showing that a board took insufficient remedial 

action—or remedial action that, in hindsight, could have been better or more robust—is not the 

standard.” In re Chemed Corp., S’holder Derivative Litig., No. CV 13-1854-LPS-CJB, 2019 WL 

3215852, at *24 (D. Del. Feb. 26, 2019). In other words, Plaintiffs’ criticism of the Director 

Defendants for not taking strong enough action to end the problematic cross-selling practices

does not serve as a basis for a finding of bad faith. See Corbat, 2017 WL 6452240, at *17 (“[I]t 

is not enough to say that the board’s response was ineffective. ‘Plaintiffs here simply seek to 

second-guess the . . . manner of the board’s response to the red flags, which fails to state a 

Caremark claim.’” (second alteration in original) (quoting In re Qualcomm Inc. FCPA S’holder 

Derivative Litig., 2017 WL 2608723, at *4 (Del. Ch. June 16, 2017))); Reiter v. Fairbank, No. 

CV 11693-CB, 2016 WL 6081823, at *13 (Del. Ch. Oct. 18, 2016) (“[T]he same reports that 

described the Company’s heightened compliance risk simultaneously explained to the directors 

in considerable detail on a regular basis the initiatives management was taking to address those 

problems and to ameliorate the AML compliance risk. Thus the factual context here is 

fundamentally inconsistent with the inference plaintiff asks the Court to draw—that the directors 

must have known they were breaching their fiduciary duties by tolerating a climate in which the 

Company was operating part of its business in defiance of the law.”); cf. Marchand, 212 A.3d at 

822 (“When a plaintiff can plead an inference that a board has undertaken no efforts to make 

sure it is informed of a compliance issue intrinsically critical to the company’s business 

operation, then that supports an inference that the board has not made the good faith effort that 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 33 of 48 PageID #:2972
34 

Caremark requires.”); Inter-Mktg. Grp. USA, Inc. v. Armstrong, C.A. No. 2017-0030, 2020 WL 

756965, at *14 (Del. Ch. Jan. 31, 2020) (“[B]ecause Armstrong clearly stated that pipeline 

integrity was ‘not discussed at the board level,’ Plaintiff reasonably infers that . . . the boardlevel reports did not actually address pipeline integrity.”). 

Therefore, even taking all the alleged red flags together, the Court cannot conclude that 

Plaintiffs have sufficiently alleged that the majority of the Director Defendants face a substantial 

likelihood of personal liability on the failure of oversight claim.9 See Marchand, 212 A.3d at

823–24 (“In decisions dismissing Caremark claims, the plaintiffs usually lose because they must 

concede the existence of board-level systems of monitoring and oversight such as a relevant 

committee, a regular protocol requiring board-level reports about the relevant risks, or the 

board’s use of third-party monitors, auditors, or consultants.”); Stone, 911 A.2d at 372–73 (“[A 

report’s] findings reflect that the Board received and approved relevant policies and procedures, 

9 Plaintiffs’ newfound reliance on Shaev v. Baker, No. 16-CV-05541, 2017 WL 1735573 (N.D. Cal. May 

4, 2017), is not persuasive despite the fact that both cases involve allegations of cross-selling misconduct. 

In Shaev, the Wells Fargo board had received letters from a regulator that specifically identified Wells 

Fargo’s “lack of an appropriate control or oversight structure given corporate emphasis on product sales 

and cross-selling” and its “lack of a formalized governance process to oversee sales practices.” Id. at *12

A Wells Fargo board member also testified that the board received reports of the opening of fraudulent 

accounts, and a former employee directly advised the board of the improper cross-selling practices. Id. at 

*10–11. Despite these and other red flags, the complaint alleged that, aside from including a new entry 

code in ethics complaint forms for cross-selling, id. at *15, the board did not take any action to address 

the cross-selling issues, in part because of the importance of cross-selling to Wells Fargo’s business

model, and thus “consciously disregarded their fiduciary duties” Id. at *13, 15. Here, however, Plaintiffs 

have not marshalled the same type of allegations, with the amended complaint instead suggesting that 

Fifth Third and the Board responded to reports of wrongdoing, complied with the CFPB’s investigative 

demands, refined their compliance procedures, and oversaw steps management took to address areas of 

concern. While Plaintiffs have identified a potentially flawed or inadequate response to the cross-selling 

problems at Fifth Third, their allegations do not suggest a conscious disregard for the Board’s duties

similar to that found in Shaev. See Lyondell Chem. Co. v. Ryan, 970 A.2d 235, 243 (Del. 2009) (“[T]here 

is a vast difference between an inadequate or flawed effort to carry out fiduciary duties and a conscious 

disregard for those duties.”); Corbat, 2017 WL 6452240, at *17, 23 (finding demand futility was not 

excused where the board took action in response to reports of wrongdoing, explaining that “a board’s 

efforts can be ineffective, its actions obtuse, its results harmful to the corporate weal, without implicating 

bad faith” and that instead “[b]ad faith may be inferred where the directors knew or should have known 

that illegal conduct was taking place, yet ‘took no steps in a good faith effort to prevent or remedy that 

situation’” (quoting In re Caremark Int’l Inc. Derivative Litig., 698 A.2d 959, 971 (Del. Ch. 1996))). 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 34 of 48 PageID #:2973
35

delegated to certain employees and departments the responsibility for filing SARs and 

monitoring compliance, and exercised oversight by relying on periodic reports from them. 

Although there ultimately may have been failures by employees to report deficiencies to the

Board, there is no basis for an oversight claim seeking to hold the directors personally liable for 

such failures by the employees.”).

B. Breach of Fiduciary Duty Based on False and Misleading Statements

Plaintiffs contend that the Director Defendants deliberately misled their shareholders in 

violation of their fiduciary duties by representing that Fifth Third’s cross-selling strategy and 

success resulted from legitimate sales practices, not false, illegally generated cross-sell numbers. 

Defendants argue that Plaintiffs have again failed to plead particularized allegations sufficient to 

show that the Director Defendants face a substantial likelihood of personal liability for a breach 

of the fiduciary duty of disclosure based on the dissemination of allegedly false and misleading 

statements.

10

As with the consolidated complaint, Plaintiffs again assert no specific allegations that, 

individually, the Director Defendants had direct involvement in the preparation of Fifth Third’s 

filings apart from affixing their signatures. See Monday, 2011 WL 5974664, at *6 (plaintiffs 

failed to allege sufficient facts to show how and when defendants participated in the purported 

misleading statements). Indeed, “[e]ven the fact that [the Director] Defendants signed and 

approved [Fifth Third’s] annual reports does not mean that they had actual knowledge of the [ ]

errors contained within the reports.” Ferro Corp., 511 F.3d at 621. And, as the Court previously

discussed, Plaintiffs have not sufficiently alleged red flags that would have put the Director 

10 Defendants question whether Ohio law even recognizes a claim for breach of fiduciary duty of 

disclosure outside of the context of matters requiring shareholder action, while Plaintiffs argue to the 

contrary. The Court again finds that it need not decide this issue to resolve Defendants’ motion to 

dismiss.

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 35 of 48 PageID #:2974
36

Defendants on notice of the allegedly false and misleading statements. Thus, the Court again

finds that Plaintiffs have not adequately pleaded that the Director Defendants face a substantial 

likelihood of personal liability for the dissemination of false and misleading statements. See 

Drage, 694 N.E.2d at 486 (“[A]llegations in appellant’s amended complaint of the nondefendant 

directors’ acquiescence, even if true, do not state with particularity a reason that demand upon 

the nondefendant directors would be futile.”).

C. Breach of Fiduciary Duty Based on Insider Trading Claim

A breach of fiduciary duty claim based on insider trading requires allegations sufficient 

to support a reasonable inference that “(1) the corporate fiduciary possessed material, nonpublic 

company information; and (2) the corporate fiduciary used that information improperly by 

making trades because she was motivated, in whole or in part, by the substance of that 

information.” In re Gas Nat., Inc., No. 1:13 CV 02805, 2015 WL 3557207, at *21 (N.D. Ohio 

June 4, 2015). The Court previously found that Plaintiffs had not sufficiently alleged demand

futility on this claim because they only contended that three of the Director Defendants 

(Brumback, Carmichael, and Hoover) had knowledge of material, non-public information and 

made stock trades based on that information. Doc. 107 at 30. Plaintiffs make no additional 

allegations or arguments in their amended complaint or response to the motion to dismiss, and so 

the Court adopts its prior analysis that Plaintiffs cannot allege demand futility as to this claim. 

See id.; In re Goodyear Tire & Rubber Co. Derivative Litig., No. 5:03CV2180, 2007 WL 43557,

at *6 (N.D. Ohio Jan. 5, 2007) (“Only Gibara is alleged to have engaged in insider trading. 

Because a majority of the directors are not alleged to have engaged in insider trading, the Court 

finds that the plaintiffs’ insider trading allegations do not raise a reasonable doubt that the Board 

is incapable of being impartial in considering a demand.”). 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 36 of 48 PageID #:2975
37

D. Breach of Fiduciary Duty Based on Corporate Waste

Under Ohio law, corporate waste constitutes one form of demonstrating breach of

fiduciary duty and does not amount to a separate cause of action. See In re Keithley, 599 F.

Supp. 2d at 903 (“[U]nder Ohio law, corporate waste and gross mismanagement are ways in 

which fiduciary duty can be breached, not separate causes of action independent of a fiduciary 

breach.”). Thus, in order to show demand futility for breach of fiduciary duty based on corporate 

waste, Plaintiffs must allege that the Director Defendants undertook their actions concerning the 

repurchase of Fifth Third’s stocks and the payment of legal fees “‘with deliberate intent to cause 

injury to the corporation’ or ‘with reckless disregard for the best interests of the corporation’—

and then only if that misconduct is proved by ‘clear and convincing evidence.’” Stanley v. 

Arnold, No. 1:12-cv-482, 2012 WL 5269147, at *5 (S.D. Ohio Oct. 23, 2012) (citing Ohio Rev.

Code Ann. § 1701.59(E)). In considering the consolidated complaint, the Court found that 

Plaintiffs had not sufficiently alleged demand futility with respect to the corporate waste claim 

because the consolidated complaint lacked specific allegations suggesting that the Director 

Defendants acted with reckless disregard for Fifth Third’s best interests. Doc. 107 at 31–32. 

Plaintiffs make no additional allegations or arguments in their amended complaint or response to 

the motion to dismiss, and so the Court adopts its prior analysis that Plaintiffs cannot allege 

demand futility as to their claim for breach of fiduciary duty based on corporate waste. Id. 

E. Unjust Enrichment Claim

Under Ohio law, a claim for unjust enrichment must allege: (1) a benefit conferred upon 

the Director Defendants; (2) the Director Defendants’ knowledge of said benefit; and 

(3) “retention of the benefit by [the Director Defendants] under circumstances where it would be 

inequitable for [the Director Defendants] to do so without compensation.” In re Gas Nat., Inc, 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 37 of 48 PageID #:2976
38

2015 WL 3557207, at *19. The Court found that the consolidated complaint’s allegations of 

unjust enrichment fell short because Plaintiffs did not tie the Director Defendants’ compensation 

to harm suffered by Fifth Third or the shareholders, or otherwise suggest why the compensation 

was improper or excessive. Doc. 107 at 32–33. Plaintiffs have not added any allegations to the 

amended complaint that would overcome this conclusion, and so the Court again finds that 

Plaintiffs fall short of pleading facts that would suggest that the Director Defendants “intended to 

harm or acted with conscious disregard when determining executive compensation” so as to 

establish demand futility on this claim. Monday, 2011 WL 5974664, at *7; see also In re Gas 

Nat., Inc., 2015 WL 3557207, at *20 (“Plaintiffs’ bare assertion that they have stated a valid

claim for unjust enrichment because it would be unconscionable to allow [the Individual 

Defendants] to retain the compensation they received while knowingly breaching their fiduciary 

duties to Gas Natural and causing the Company to incur severe damages falls short of stating a 

cognizable claim of unjust enrichment.” (alteration in original) (internal quotation marks

omitted)). 

F. Section 10(b) Claim

Next, Defendants argue that Plaintiffs fail to set forth particularized facts showing that 

the Director Defendants face a substantial likelihood of personal liability on the Section 10(b) 

claim. Section 10(b) and SEC Rule 10b-5 “prohibit fraudulent or misleading statements of 

material fact in connection with the purchase or sale of a security.” Walleye Trading LLC v. 

AbbVie Inc., 962 F.3d 975, 977 (7th Cir. 2020). Section 10(b) prohibits the “use or employ, in 

connection with the purchase or sale of any security . . . [of] any manipulative or deceptive 

device or contrivance in contravention of” the SEC’s rules and regulations. 15 U.S.C. § 78j(b). 

Relevant here, Rule 10b-5 implements Section 10(b) by making it unlawful to “make any untrue 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 38 of 48 PageID #:2977
39

statement of a material fact or to omit to state a material fact necessary in order to make the 

statements made, in the light of the circumstances under which they were made, not misleading 

. . . in connection with the purchase or sale of any security.” 17 C.F.R. § 240.10b-5(b). 

To state a claim under Section 10(b) and Rule 10b-5(b), Plaintiffs must allege that 

“(1) [the Director Defendants] made a false statement or omission (2) of material fact (3) with 

scienter (4) in connection with the purchase or sale of securities (5) upon which [Plaintiffs]

justifiably relied (6) and that the false statement proximately caused [Plaintiffs’] damages.” 

Fryman v. Atlas Fin. Holdings, Inc., 462 F. Supp. 3d 888, 896 (N.D. Ill. 2020) (citations 

omitted). In considering the consolidated complaint, the Court concluded that Plaintiffs had not 

adequately pleaded scienter. Doc. 107 at 34–38. Because Defendants’ scienter argument is

again dispositive, the Court only addresses that argument. 

To meet the scienter requirement, Plaintiffs must allege with particularity facts giving 

rise to a strong inference that each Director Defendant acted with the required state of mind,

which is “‘an intent to deceive, demonstrated by knowledge of the statement’s falsity or reckless 

disregard of a substantial risk that the statement is false.’” Pension Tr. Fund for Operating 

Eng’rs v. Kohl’s Corp., 895 F.3d 933, 936 (7th Cir. 2018) (quoting Higginbotham v. Baxter Int’l, 

Inc., 495 F.3d 753, 756 (7th Cir. 2007)). Plaintiffs must “state with particularity facts giving rise 

to a strong inference that the defendant acted with the required state of mind” for “each act or 

omission alleged to violate this chapter.” 15 U.S.C. § 78u-4(b)(2)(A) (emphasis added). To 

meet this “strong inference” standard, “an inference of scienter must be more than merely 

plausible or reasonable—it must be cogent and at least as compelling as any opposing inference

of nonfraudulent intent.” Tellabs, 551 U.S. at 314. Plaintiffs must allege facts showing that each 

of the Director Defendants “had the requisite scienter at the time that they made each allegedly 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 39 of 48 PageID #:2978
40

fraudulent statement.” In re NeoPharm, Inc. Sec. Litig., No. 02 C 2976, 2007 WL 625533, at *6 

(N.D. Ill. Feb. 23, 2007); see also Pugh v. Tribune Co., 521 F.3d 686, 692–95, 697–98 (7th Cir. 

2008) (where the plaintiffs alleged that both a corporate defendant and its executive officers 

violated Section 10(b), addressing separately whether the plaintiffs had adequately pleaded 

scienter for the individual officers and the corporate defendant).

Plaintiffs repeat their argument that the amended complaint gives rise to a strong 

inference that the Director Defendants knew of the risks involved in the unauthorized conduct 

related to cross-selling. Plaintiffs again urge the Court to infer scienter based on a “core 

operations” theory, in other words, because of the significance of the consumer business 

operation to Fifth Third’s overall operations. See W. Palm Beach Firefighters Pension Fund v. 

Conagra Brands, Inc., 495 F. Supp. 3d 622, 661 (N.D. Ill. 2020) (“Scienter can be inferred when 

executives make statements about core or critical aspects of their own companies.”), aff’d sub 

nom. Nat’l Elevator Indus. Pension Fund v. Conagra Brands, Inc., No. 21-1155, 2022 WL 

1449184 (7th Cir. May 9, 2022). This doctrine “typically applies only where the operation in 

question constitute[s] nearly all of a company’s business.” Das v. Rio Tinto plc, 332 F. Supp. 3d 

786, 816 (S.D.N.Y. 2018) (alteration in original) (citation omitted). Defendants dispute that the 

consumer business operation qualifies as a core operation. But even assuming that it does,

Plaintiffs do not provide any reason for the Court to diverge from its prior conclusion that the 

core operations theory does not support a strong inference of scienter here because “it does not 

necessarily follow that [the Director Defendants] disbelieved their statements or sought to 

deceive [shareholders] with their statements.” Doc. 107 at 35 (quoting Societe Generale Sec. 

Servs., GbmH v. Caterpillar, Inc., No. 17 CV 1713, 2018 WL 4616356, at *8 (N.D. Ill. Sept. 26, 

2018)). 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 40 of 48 PageID #:2979
41

Plaintiffs also focus on the same red flags the Court previously found insufficient when

considering the consolidated complaint. See Doc. 107 at 35–38. The Court reiterates that the

2015 CFPB Credit Card and Auto Lending Consent Orders, as well as the Wells Fargo Consent 

Order, do not suggest that the Director Defendants willfully or recklessly disregarded the 

existence of problematic practices. See Stambaugh v. Corrpro Cos., 116 F. App’x 592, 595, 597

(6th Cir. 2004) (no scienter arising “from the prior SEC enforcement action because the 

complaint contained no allegation establishing that current officers should have reason to know 

of accounting irregularities occurring at an Australian subsidiary” (internal quotation marks 

omitted)). As for the Board and committee meeting minutes, although they suggest that the 

Director Defendants had some knowledge of customer complaints, they do not suggest that the

Director Defendants knew of the falsity of any of the allegedly actionable statements. Further, to 

the extent Plaintiffs rely on disclosures from before the relevant period, those disclosures cannot 

support a strong inference that the Director Defendants knew that statements made during the

relevant period were materially false. See Smallen v. W. Union Co., 950 F.3d 1297, 1314 (10th 

Cir. 2020) (pre-class period statement did not allow inference of knowledge of ongoing, class 

period legal violations). And while knowledge of pre-class period facts can be relevant to the 

analysis, see In re Scholastic Corp. Sec. Litig., 252 F.3d 63, 72 (2d Cir. 2001) (considering preclass period sales data as relevant to what executives should have predicted for class period 

sales), these facts, even taken together, do not support Plaintiffs’ conclusion of persistent account 

problems or a culture of abusive sales practices. See Boca Raton Firefighters’ & Police Pension 

Fund v. DeVry Inc., No. 10 C 7031, 2012 WL 1030474, at *10 (N.D. Ill. Mar. 27, 2012) 

(“diffuse” allegations of fraudulent activity insufficient).

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 41 of 48 PageID #:2980
42

With respect to the CFPB’s multi-year investigation of Fifth Third, the allegations 

concerning the six CIDs that Fifth Third received at this stage only demonstrate Carmichael’s

and certain other Director Defendants’ knowledge of the investigation, not necessarily of the 

problem itself. See Higginbotham, 495 F.3d at 758 (“[T]here is a big difference between 

knowing about the reports . . . and knowing that the reports are false.”). And the fact that Fifth 

Third cooperated in the investigation and disclosed a small number of unauthorized accounts to 

the CFPB undercuts Plaintiffs’ assertion that the Director Defendants consciously underreported 

or refused to look for instances of misconduct. See Pugh, 521 F.3d at 694 (rejecting plaintiff’s 

conclusory allegation about weak internal controls as “fraud by hindsight”). 

Further, while government investigations such as that conducted by the CFPB can 

reinforce allegations of scienter, see In re Akorn, Inc. Sec. Litig., 240 F. Supp. 3d 802, 820 (N.D. 

Ill. 2017) (“That the SEC and DOJ initiated investigations provides additional support for finding 

that scienter has been adequately pleaded.”), making such an inference on its own amounts to

improperly inferring fraud by hindsight, see Societe Generale, 2018 WL 4616356, at *3 (the 

PSLRA’s heightened pleading requirements are intended “to discourage claims of so-called 

fraud by hindsight” (citations omitted) (internal quotation marks omitted)); see also Conagra 

Brands, 495 F. Supp. 3d at 659 (“The Seventh Circuit has emphasized that ‘hindsight’ cannot be 

the ‘only basis’ of a proposed scienter inference, since there is no ‘fraud by hindsight.’” (citing 

Higginbotham, 495 F.3d at 759)). “Courts in this district have declined to allow plaintiffs to use 

a must have known theory as an end-run around the requirement that plaintiffs set forth 

particularized facts to suggest that defendants acted knowingly or recklessly.” Conagra Brands, 

495 F. Supp. 3d at 659 (citations omitted) (internal quotation marks omitted). Further, Plaintiffs

point to nothing in the 2020 CFPB Action that suggests that the Director Defendants had 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 42 of 48 PageID #:2981
43

personal knowledge of any problematic practices at the time they made the challenged 

statements. And although Plaintiffs present the allegations in the CFPB’s amended complaint as 

conclusions or findings, the Court does not find it appropriate to give the amended complaint any 

additional weight or to infer scienter from conclusory statements made in that litigation, 

especially where the CFPB’s allegations do not specifically name the Director Defendants or 

detail their personal knowledge. See In re Herbal Supplements Mktg. & Sales Pracs. Litig., No. 

15-CV-5070, 2017 WL 2215025, at *6 (N.D. Ill. May 19, 2017) (treating factual allegations 

from government investigation as properly pleaded allegations in private complaint); K.H. 

through Murphy v. Morgan, 914 F.2d 846, 848 (7th Cir. 1990) (“[A]llegations in a complaint are 

not proven facts.”). At most, the CFPB investigation and litigation allow an inference that some 

of the Director Defendants should have known about the fraud, but what they should have known 

does not suffice to show that they acted recklessly. In re Chi. Bd. Options Exch. Volatility Index 

Manipulation Antitrust Litig., 435 F. Supp. 3d 845, 861 (N.D. Ill. 2020) (“Knowledge of the risk

of fraud does not automatically mean that Cboe was severely reckless, or intended that fraud to 

continue.”). Because Plaintiffs have again failed to sufficiently plead allegations that give rise to

a strong inference of scienter as to a majority of the Director Defendants, they have not

established demand futility as to the Section 10(b) claim.

G. Section 14(a) Claim

Finally, Plaintiffs allege that the Director Defendants violated Section 14(a) of the 

Exchange Act by omitting certain material information from Fifth Third’s Proxy Statements.

“Section 14(a) of the Exchange Act makes it unlawful to solicit shareholder approval by using 

proxy statements that do not comply with the rules and regulations of the Securities Exchange 

Commission.” Emps. Ret. Sys., 2021 WL 1890490, at *6 (citing 15 U.S.C. § 78n(a)(1)). “To 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 43 of 48 PageID #:2982
44

state a claim under Section 14(a), a plaintiff must allege: (i) that the proxy statement contained a 

material misstatement or omission that (ii) caused the plaintiff’s injury, and (iii) that the proxy 

solicitation was an essential link in accomplishing the transaction.” Kuebler v. Vectren Corp., 13 

F.4th 631, 637 (7th Cir. 2021). In reviewing the consolidated complaint, the Court found that 

Plaintiffs had failed to sufficiently allege a material misstatement or omission for purposes of 

their Section 14(a) claim. Doc. 107 at 39–41. Defendants argue that the amended complaint has 

failed to cure this problem. 

Both Rule 9(b) and the PSLRA require Plaintiffs to identify each statement alleged to 

have been misleading, the reason or reasons why the statement is misleading, and, if based on 

information and belief, all facts on which they form that belief. Smith v. Robbins & Myers, Inc., 

969 F. Supp. 2d 850, 868 (S.D. Ohio 2013). “Omission of information from a proxy statement 

will violate Section 14(a) . . . only if either the SEC regulations specifically require disclosure of

the omitted information in a proxy statement, or the omission makes other statements in the 

proxy statement materially false or misleading.” Local 295/Local 851 IBT Emp. Grp. v. Fifth 

Third Bancorp., 731 F. Supp. 2d 689, 716 (S.D. Ohio 2010). An omission is material “if there is

a substantial likelihood that a reasonable shareholder would consider it important in deciding 

how to vote,” with the plaintiff required to allege “a substantial likelihood that the disclosure of 

the omitted fact would have . . . significantly altered the ‘total mix’ of information” available to 

the shareholders. TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449 (7th Cir. 1976). 

Here, Plaintiffs assert that the Director Defendants caused the issuance of materially 

misleading statements and failed to disclose material facts in the Proxy Statements from 2018 to 

2020. As in the consolidated complaint, they pursue the same three categories of statements. 

First, Plaintiffs contend that the Proxy Statements hid from shareholders the true operational and 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 44 of 48 PageID #:2983
45

financial state of Fifth Third by omitting the fact that Fifth Third’s apparent success was based in 

part on false cross-sell numbers. Second, they allege that the Proxy Statements falsely and 

misleadingly stated that Fifth Third’s directors and officers were subject to the Code of Conduct 

while omitting that the Code of Conduct was not being followed or enforced. And third, 

Plaintiffs maintain that the Proxy Statements were false and misleading with regard to executive 

compensation because they represented that Fifth Third used a pay for performance element but 

did not disclose that the price of Fifth Third’s stock was artificially inflated, meaning that 

executive compensation was similarly artificially inflated. 

Again, the Court agrees that Plaintiffs have failed to sufficiently plead the required false 

and misleading statements so as to suggest that the Director Defendants face personal liability as 

to those statements. For the first category of statements, as opposed to the consolidated

complaint, the amended complaint sets forth the relevant Proxy Statements’ descriptions of Fifth 

Third’s risk management practices that Plaintiffs contend were problematic. Cf. Doc. 107 at 39 

(“Plaintiffs only generally cite to the Proxy Statements without identifying the specific 

statements made misleading by the Director Defendants’ alleged omissions concerning crossselling and related investigations, which does not suffice.”). Specifically, Plaintiffs focus on 

statements that the Board sets the overall risk appetite and monitors risk tolerances, with the Risk

and Compliance Committee primarily responsible for risk management oversight and 

governance. See Doc. 111 ¶ 221. The amended complaint also highlights the Proxy Statements’ 

representation that Fifth Third had a multi-faceted strategy toward mitigating risk in incentive 

plans, working “to ensure that pay facilitates the appropriate strategic and risk awareness 

behaviors.” Id. ¶ 222. Among other things, Defendants contend that these statements about 

Fifth Third’s risk management practices are general and aspirational statements that are not 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 45 of 48 PageID #:2984
46

actionable. Plaintiffs fail to respond to this argument, with which the Court agrees. Statements

about oversight programs designed to mitigate risks are general and aspirational, and therefore 

not actionable. See City of Taylor Police & Fire Ret. Sys. v. Zebra Techs. Corp., 8 F. 4th 592, 

595 (7th Cir. 2021) (statement not misleading when it did not make any “concrete assertion”); 

Singh v. Cigna Corp., 918 F.3d 57, 63–64 (2d Cir. 2019) (“simple and generic assertions about 

having ‘policies and procedures’ and allocating ‘significant resources’” would not mislead a 

reasonable investor); In re Wells Fargo & Co. S’holder Deriv. Litig., No. 20-cv-08750, 2022 WL 

345066, at *5–6 (N.D. Cal. Feb. 4, 2022) (vague, generalized statements concerning 

commitment to remedying problems or about company’s risk management program not 

actionable under Section 14(a)) ; cf. Ross v. Career Educ. Corp., No. 12 C 276, 2012 WL 

5363431, at *6–7 (N.D. Ill. Oct. 30, 2012) (statements that regulatory problems were “behind 

us,” when placed in context of alleged continuing problematic practices, sufficiently alleged 

falsity).11 No reasonable shareholder would conclude that, by making these disclosures about 

Fifth Third’s risk management practices that Fifth Third promised that its practices ensured that 

it faced no legal or compliance risks. See Washtenaw Cnty. Emps.’ Ret. Sys. v. Walgreen Co., 

No. 15-CV-3187, 2016 WL 5720375, at *6 (N.D. Ill. Sept. 30, 2016) (“[D]efendants’ statement 

was that there were measures to ‘mitigate’ the risk, not to ‘eliminate’ it.”); Howard v. Arconic 

Inc., 395 F. Supp. 3d 516, 552 (W.D. Pa. 2019) (“[A] reasonable investor reading the 10-K risk 

disclosures would not conclude that [defendant] faced no legal or compliance risks, or that the

risk management and compliance programs [defendant] had adopted were completely adequate 

to prevent all such risks.”). Moreover, “Section 14(a) does not require that . . . uncharged, 

unadjudicated charges of mismanagement be disclosed.” Mogell v. Calhoun, No. CV 15-1239, 

11 Although the Court cites to Section 10(b) cases for support, the same materiality standard applies to 

Section 14(a) cases. See S.E.C. v. Black, No. 04 C 7377, 2008 WL 4394891, at *13 (N.D. Ill. Sept. 24, 

2008) (collecting cases).

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 46 of 48 PageID #:2985
47

2016 WL 3369233, at *5 (C.D. Ill. Mar. 15, 2016) (alteration in original) (quoting In re Marsh & 

McLennan Cos., Inc. Sec. Litig., 536 F. Supp. 2d 313, 322 (S.D.N.Y. 2007)); see also In re 

Marriott Int’l, Inc. Customer Data Sec. Breach Litig., No. 19-md-2879, 2021 WL 2401641, at 

*14 (D. Md. June 11, 2021) (“Section 14(a) and Rule 14a-9 do not themselves impose a 

freestanding disclosure requirement, particularly regarding unadjudicated allegations.”

(collecting cases)). Thus, Plaintiffs’ allegations that the Director Defendants’ failure to disclose

the ongoing CFPB investigation and the problematic cross-selling practices caused statements 

about Fifth Third’s risk management practices to be materially misleading do not provide a basis 

for a Section 14(a) claim. 

Plaintiffs’ allegations concerning the remaining two categories of false statements have 

not changed from the consolidated complaint, nor do Plaintiffs make any additional arguments as 

to why the Court should reconsider its conclusions that they did not suffice to state a Section 

14(a) claim. See Doc. 107 at 40–41. The Court thus reiterates its prior conclusions here. With 

respect to the statements about executive compensation, as the Court previously found, the Proxy 

Statements only provide the framework for how Fifth Third determines executive compensation, 

and Plaintiffs fail to provide any facts to suggest why the failure to include information about the 

allegedly artificially inflated nature of Fifth Third’s stock made the Proxy Statements’ 

representations about how executive compensation was determined misleading. See Garden City 

Emps.’ Ret. Sys. v. Anixter Int’l, Inc., No. 09-CV-5641, 2012 WL 1068761, at *2 (N.D. Ill. Mar. 

29, 2012) (“[P]laintiffs must point to a specific statement that is made misleading by [an] 

omission,’ and offer ‘specific, contradictory information’ known to Anixter sufficient to 

establish that Anixter made any misleading statements.” (second alteration in original) (citations 

omitted)). As for the representations about the Code of Conduct, “a company’s adoption and 

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 47 of 48 PageID #:2986
48

publication of a code of ethics does not imply that all of its directors and officers are in 

compliance with that code.” Desai v. Gen. Growth Props., Inc., 654 F. Supp. 2d 836, 859 (N.D. 

Ill. 2009). Thus, statements about the applicability of the Code of Conduct to the Board did not 

require the Director Defendants to provide detailed information about compliance with that 

Code. Nor do Plaintiffs suggest how omission of the Director Defendants’ failure to comply 

with the Code of Conduct renders the statement about their being bound by it false or 

misleading; even if the Director Defendants did not follow the Code of Conduct, they still 

remained bound by it. Accordingly, the Court again finds that Plaintiffs have failed to 

demonstrate demand futility as to the Section 14(a) claim.

III. Demand Futility Summary

In summary, the Court cannot find that Plaintiffs have sufficiently alleged demand futility 

as required by Rule 23.1 to proceed with this shareholder derivative action. Plaintiffs’ failure to 

comply with the demand requirements for shareholder derivative actions thus requires the Court 

to dismiss the amended complaint. And because Plaintiffs had an opportunity to amend their 

complaint to address the deficiencies the Court previously identified but failed to do so, the 

Court dismisses the amended complaint with prejudice. 

CONCLUSION

For the foregoing reasons, the Court grants Defendants’ motion to dismiss [121]. The 

Court dismisses the amended complaint with prejudice. Case terminated.

Dated: March 8, 2023 ______________________

SARA L. ELLIS

United States District Judge

Case: 1:20-cv-04115 Document #: 137 Filed: 03/08/23 Page 48 of 48 PageID #:2987