Judge Upholds Capital One 0% APR Class Action Lawsuit

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A Virginia federal judge refused to dismiss a possible class action lawsuit against Capital One (USA) N.A. alleging it misled customers about fees and conditions applied for their zero-percent APR access balances.

U.S. District Judge Leonie Brinkema upheld six of the seven claims filed against the credit card company. The one claim that was tossed had charged Capital One with breach of good faith and fair dealing under state law.

The Capital One class action lawsuit was filed in September 2013 by Margaret Murr, who alleged that Capital One charged her fees for apparent payment shortfalls that she claims the credit card company manufactured, which she said violated her contract.

In addition, the class action lawsuit alleges that when Murr would try to pay off her balances from purchases for the month, the bank would allegedly put part of each payment toward her access check balance, which meant that Murr always owed interest on part of her account.

She also charged Capital One with charging her interest on transactions that were supposed to be zero-percent APR transactions when she was still within the contractual grace period, and still sending information to credit-rating agencies that she said was “derogatory,” because she refused to pay the fees that she didn’t believe she should have been charged.

Murr’s class action lawsuit claims that Capital One divides credit card accounts into four parts, and the different parts are given their own interest rates or grace periods. One part is designated for regular purchases, in which customers aren’t required to pay interest as long as they full balance is paid off within a month. Another part is designated for balance transfers that are supposed to have a zero percent APR that Capital One offers.

Capital One filed a motion to dismiss the proposed class action lawsuit on Oct. 18, 2013, saying that Murr was charged a fee and interest because she miscalculated her payment, thus leaving a balance on her account, which she agreed to when she applied for the credit card.

“Capital One followed the terms of the written customer agreement in charging interest to [Murr] claim for breach of contract therefore fails as a matter of law, as do her remaining federal and state consumer claims, which are derivative of the mistaken contract claim,” the bank said in its motion to dismiss.

Judge Brinkema agreed with Capital One that the bank did not breach a covenant of good faith because there was only a contract and the bank did not have contractual discretion, according to Virginia law, but did let the rest of the class action lawsuit stand.

“The only cause of action is for breach of contract, and the only time the implied covenant has a role to play is when the terms of the contract give a party discretion to exercise,” the bank argued. “In that situation, the party must exercise its contractual discretion in good faith.”

The plaintiff is is represented by Daniel M. Cohen of Cuneo Gilbert & LaDuca LLP.

The Capital One Zero-Percent APR Class Action Lawsuit is Murr v. Capital One Bank (USA) NA, Case No. 1:13-cv-01091, in the U.S. District Court for the Eastern District of Virginia.

UPDATE: A follow-up motion to dismiss the Capital One 0% APR class action lawsuit but was denied again by Judge Brinkema on June 27, 2014, who agreed only to dismiss two of the six remaining claims. The case continues.

UPDATE 2: Capital One has agreed to settle the 0% APR class action lawsuit. Click here or visit www.CapitalOneZeroPercentSettlement.com for instructions on how to file a claim.

UPDATE 3: On Feb. 5, 2016, the Capital One 0% Settlement website announced that replacement checks were mailed on Dec. 18, 2015 to all Class Members whose original checks were not cashed. If you received a postcard check from the Murr v. Capital One Settlement Fund in August of 2015, that check is expired and a new check was mailed to you in December of 2015.