Capital One Settles $4.4M Class Action Over Repossessed Cars

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A class action settlement has been reached between Capital One NA and a class of borrowers who allege that they were not properly notified that their repossessed vehicles were being sold at a public auction, violating Maryland law.

Under the class action settlement agreement, Capital One will pay $4.4 million to class members, clear all outstanding balances that class members owe to the lender, dismiss lawsuits Capital One filed in an attempt to have outstanding balances paid, and report to three major credit reporting agencies that class members’ debts have been paid in full.

Plaintiff Dorothy Gales filed a memorandum in support of a motion for preliminary approval of settlement and for approval of the form, manner, and administration of notice on Monday.

According to Gales, the $4.4 million class action settlement “could increase if new Class Members are found, if Capital One miscalculated amounts collected from Class Members, if refreshed data indicates higher amounts collected from Class Members, or if extra money is collected by Capital One after the execution of the Settlement Agreement.”

If approved, class members will receive “a check from the settlement fund in accordance with the formulas set forth in the settlement agreement that takes into account the amount collected in excess of the principle amount of the loan.”

And in order to receive a check from Capital One, Class Members will not have to file a claim form, and they will automatically receive a check from the settlement fund unless they choose to opt out.

The reason for this is that during the discovery phase of the class action settlement negotiations, Capital One revealed that it had a list of the 7,423 names of the consumers, who had loans with Capital One that were governed under Maryland’s Credit Grantor Closed End Credit Provisions, or CLEC.

“The proposed classwide settlement in this case is believed by class counsel to be a favorable and reasonable settlement based upon the claims and upon the defenses available to Capital One,” Gales wrote. “Named plaintiff’s counsel respectfully submits that the settlement is favorable for the plaintiff class and most certainly in ‘the range of possible approval.’”

The Capital One class action lawsuit filed by Gales alleged that the lender had violated the Maryland statute by telling borrowers, whose cars had been repossessed, that Capital One was selling them at a public auction, when in reality, they were sold privately.

She “alleged that Capital One failed to provide post-sale notices that contained information required after a private sale for all repossession sales taking place a Manheim Baltimore Washington.”

“Capital One’s use of deficient form presale and post-sale notices which omit material information required by Maryland law makes this case particularly suitable for resolution through a class action lawsuit,” Gales said in the first amended class action lawsuit.

Even though Capital One has agree to this class action settlement, the lender still denies any wrongdoing or liability in the matter.

Gales is represented by Cory L. Zajdel of Z Law LLC.

Capital One is represented by Jessica Erin Morrison, Bryan A. Fratkin and Phillip C. Chang of McGuireWoods LLP.

The Capital One Class Action Lawsuit is Dorothy Gales v. Capital One NA, Case No. 8:13-cv-01624, in the U.S. District Court for the District of Maryland.