Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_07-cv-00671/USCOURTS-cand-3_07-cv-00671-20/pdf.json

Nature of Suit Code: 371
Nature of Suit: Truth in Lending
Cause of Action: 15:1601 Truth in Lending

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

DAVID VAN SLYKE, FRANKLIN CHAN,

and THOMAS E. BROWNING, on behalf of

himself and all others similarly situated, 

Plaintiffs,

 v.

CAPITAL ONE BANK, CAPITAL ONE

FINANCIAL CORPORATION, and DOES

1–10, inclusive,

Defendants. /

No. C 07-00671 WHA

ORDER (1) GRANTING MOTION

TO DISMISS; (2) GRANTING IN

PART AND DENYING IN PART

MOTION FOR SUMMARY

JUDGMENT; AND (3) GRANTING

MOTION FOR SUMMARY

JUDGMENT AS TO CLAIMS

ASSERTED BY PLAINTIFF

BROWNING 

INTRODUCTION

In this putative class action regarding defendants’ credit card practices, defendants have

filed three motions. First, they move to dismiss plaintiffs’ Truth In Lending Act claim under

Rule 12(b)(6). Second, they move for summary judgment as to all claims asserted against

defendant Capital One Financial Corporation on the grounds that it does not issue credit cards. 

Finally, they move for summary judgment as to all claims asserted by plaintiff Thomas E.

Browning. Defendants assert that Browning was bound by a prior class-action settlement in

Arkansas state court which bars him from asserting claims in this action against defendants. 

Defendants have shown that plaintiffs have failed to state a claim for a violation of the Truth in

Lending Act. Plaintiffs have shown that there remain triable issues of fact as to whether Capital

One Financial can be held directly liable for deceit and violations of California’s unfair

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competition law. Defendants have eliminated all triable issues of fact as to whether plaintiff

Browning’s claims are barred by a prior class settlement. Accordingly, defendants’ motion to

dismiss is GRANTED. Plaintiffs will be allowed to file a proposed amended pleading and a

motion for leave to file an amended complaint. Defendants’ motion for summary judgment on

claims against Capital One Financial is GRANTED IN PART AND DENIED IN PART. Defendants

motion for summary judgment on claims asserted by plaintiff Browning is GRANTED. 

STATEMENT

Plaintiffs David Van Slyke, Franklin Chan, Myrna Bragado, Robert Hart, Susan L.

Garcia, and Thomas E. Browning were all offered and accepted credit cards, allegedly from

defendants Capital One Bank and Capital One Financial Corporation (Second Amended

Compl. ¶¶ 8–13). 

This action largely concerns defendants’ sub-prime credit card business, which it refers

to as its Mainstreet line of credit cards. When targeting the subprime credit card market,

defendants allegedly do so with the expectation that card holders will default on at least one

account allowing defendants to charge very high fees (id. at ¶ 18–22). Capital One Bank

allegedly offers several credit cards with low credit limits, around $250 to $500, to its subprime

customers, betting that they will exceed the limit on at least one card, allowing Capital One to

charge fees on all card accounts (ibid.). 

Plaintiffs also allege that Capital One Bank’s disclosures related to the cost of credit for

its Mainstreet products are inadequate and deceptive (id. at ¶¶ 62–65). For example, credit card

customers receive a monthly statement that shows a minimum payment that customers must

pay. Many of Capital One’s subprime customers are allegedly led to think they need only make

the minimum payment to keep from defaulting on their account. Problems arise when Capital

One has added late fees or overlimit fees to the account. With alleged deceptiveness, the

minimum payment does not include those fees, so even though a customer pays the minimum

payment, his or her account is still in default because of the additional fees, leading to a daisy

chain of further penalties (ibid.). New to the second amended complaint is plaintiffs’ allegation

that Capital One has a practice of refusing to issue billing statements on accounts that it has

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“charged off” for a loss for tax purposes, even though interest rates and fees are still accruing on

those accounts’ outstanding balance (id. at ¶ 26). 

As to the relationship between defendants Capital One Bank and Capital One Financial

Corporation, plaintiffs allege that defendants acted as one another’s agents with respect to the

actions at issue (id. at ¶ 17). It also alleges that Capital One Bank is a wholly-owned subsidiary

of Capital One Financial (“COF”) (id. at ¶ 1). 

Defendants contend that Capital One Financial does not issue credit cards or collect fees

on credit card accounts. Amy Cook, senior director and associate general counsel, declares that

Capital One Financial does no business other than owning subsidiaries (Cook Decl. ¶ 3). 

Capital One Bank is a subsidiary of Capital One Financial Corporation and maintains separate

boards of directors, books and accounts (id. at ¶ 4). Furthermore, Cook declares that Capital

One Financial does not market, solicit, or issue credit cards (id. at ¶ 5). 

In one of their motions for summary judgment, defendants argue that plaintiff

Browning’s claims are barred because he was bound by a prior settlement. Defendants’ senior

complaint associate declares that the only Capital One account Browning ever held was a “Easy

D” or “EZD virtual deposit card” (Doome Decl. ¶¶ 3–4, Exh. A). A report generated from

defendants’ databases using plaintiff Browning’s name indicates his account type as “EZD”

(Doome Reply Decl. Exh. A) Defendants also present statements from Browning’s account

which show payment of and credits against a security deposit of the kind used in virtual deposit

cards (McGuire Decl. Exhs. A, B). 

In April 2002, a class action complaint was filed in the circuit court of Pulaski County,

Arkansas that challenged Capital One Bank’s marketing and administration practices related to

their EZD virtual deposit cards. That action was captioned Foster v. Capital One Bank, Inc.,

and Capital One Services, Inc., Case. No. Civ. 02-3775 (Def’s Req. Jud. Not. Exh. A). 

By an order dated October 26, 2005, the Foster court certified a class consisting of (id.

at Exh. C, ¶ 3):

All residents of the State of Arkansas who [sic] (1) who were

solicited by Capital One by mail and/or telephone; (2) who were

marketed by Capital One for a Capital One “secured” credit card;

(3) who received a “secured” credit card; (4) whose “security

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deposit” was charged to the credit card. The class definition

expressly excludes damages for any charges by Defendants which

could reasonably be construed as being related to interest charges. 

The court issued a preliminary order approving parties’ proposed settlement on March 24, 2006

(ibid.). The scope of the claims released was defined by the settlement agreement as (id. at Exh.

E, at 8) (emphasis added):

[A]ll claims, demands, rights, liabilities, and causes of action of

every nature and description whatsoever, known or unknown, as

asserted or that might have been asserted in the Litigation against

the Released Persons for the period commencing April 4, 1997

through and including the Effective Date, pertaining in any way

to the EZD virtual deposit credit card issued by Capital One

Bank, including the advertising connected with the credit card, the

handling of the security deposit changed to the card, the

assessment of fees and finance charges, and the application of

payments to account balances, based upon contract or tort

(including, without limitation, breach of contract, negligence,

recklessness, misrepresentation, fraud, suppression), contribution,

indemnification, or violations of any federal, state, local, statutory

or common law or any other law, rule, or regulation, including

both known and unknown claims, that have been or could have

been asserted in any forum by Plaintiff or any Member of the

Settlement Class, or any of them, or the successors and assigns of

any of them, including but not limited to all claims, rights or

causes of action which have been or could have been asserted in

the Litigation for the Settlement Class Period and/or the acts,

omissions or failures to act which were or could have been

alleged in the Litigation for the Settlement Class Period. 

Pursuant to the settlement agreement, defendants were directed to send notice of the

settlement to class members by United States mail and to publish a notice of settlement in a

local newspaper (id. at ¶ 6). The claims administrator generated a list of absent class members,

including Browning, updated the list using the National Change of Address Database, and sent

out notices to the class members (Tilghman Decl. ¶¶ 4–6). No claim form was received from

Browning, he did not file an opt-out notice, and his notice and claim form was not returned

undeliverable to the administrator (id. at ¶ 7). The settlement was finally approved on June 5,

2006, with the Court holding that notice was given to absent class members in the best

practicable method under the circumstances. 

This action was filed on February 1, 2007. Defendants filed a first motion to dismiss

and a motion to transfer to the Eastern District of Virginia on April 12, 2007. By an order dated

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June 7, 2007, the motion to transfer was denied and the motion to dismiss was granted in part

and denied in part. Plaintiffs’ California Consumer Legal Remedies Act claim was dismissed,

and plaintiffs were granted leave to amend. The remainder of defendants’ motion to dismiss,

including their motion to dismiss all claims against Capital One Financial, was denied. 

Defendants filed a motion for leave to file a motion for reconsideration on June 18,

2007. On June 26, 2007, plaintiffs filed a first amended complaint that deleted the Consumer

Legal Remedies Act claim and added three California plaintiffs. Defendants’ motion for leave

to file a motion for reconsideration was denied in part and granted in part by an order dated July

3, 2007. Defendants’ motion to strike a portion of plaintiffs’ deceit claim was granted. All

other portions of the motion, including defendants’ motion to dismiss all claims against Capital

One Financial, were denied. Also, on July 3, 2007, plaintiffs filed a second amended complaint

to conform to the order on defendants’ motion to strike and added a handful of other allegations. 

Defendants filed the three extant motions — a motion to dismiss the Truth in Lending Act

claim, a motion for summary judgment as to Capital One Financial and a motion for summary

judgment on plaintiff Browning’s claims — on July 12, 2007. In addition to the large number

of motions filed in this action, parties have vexatiously fought over discovery. 

ANALYSIS

Plaintiffs first argue that all three of defendants’ motions are procedurally improper. 

Specifically, they contend that the motion to dismiss is barred by Rule 12(g) because defendants

have advanced theories in a subsequent motion to dismiss that could have been advanced in an

earlier motion to dismiss, without a change in pleaded facts or underlying law. Defendants

point out that plaintiffs made substantive changes to their complaint by adding the allegation

that defendants stop issuing account statements under certain circumstances. Defendants also

contend that there were legitimate strategic reasons for dividing their motions to dismiss. They

first moved to dismiss the California claims in order to be able to enforce the arbitration clause. 

The first motion was unsuccessful, so they brought the second motion. The Court will hear this

motion, however, subsequent motions to dismiss will not be viewed favorably.

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As to the motions for summary judgment, there is nothing per se wrong with early

motions for summary judgment. Indeed, they can promote efficiency by narrowing issues in

advance of trial. These motions, however, were filed on the day that defendants first turned

over some documents to plaintiffs. Still, plaintiffs’ assertion that they are “entitled” to

discovery before a motion for summary judgment is filed under Rule 56(f) overstates their

position. They may request further discovery, but nothing in the rules forbids early summary

judgment motions. Nonetheless, this order must note that defendants are presenting the issue of

Capital One Financial’s liability for the third time and further motion practice will not be

encouraged. 

1. MOTION TO DISMISS TRUTH IN LENDING ACT CLAIM.

A motion to dismiss under Rule 12(b)(6) tests the legal sufficiency of the claims alleged

in the complaint. “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not

need detailed factual allegations, a plaintiff’s obligation to provide the ‘grounds’ of his

‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of

the elements of a cause of action will not do.” Bell Atlantic Corp. v. Twombly, ___ U.S. ____,

127 S.Ct. 1955, 1964–65 (May 21, 2007). “All allegations of material fact are taken as true and

construed in the light most favorable to plaintiff. However, conclusory allegations of law and

unwarranted inferences are insufficient to defeat a motion to dismiss for failure to state a

claim.” Epstein v. Wash. Energy Co., 83 F.3d 1136, 1140 (9th Cir. 1996).

A. Unsolicited, Preapproved Credit Card Offers.

Plaintiffs’ TILA claim first alleges that “the unsolicited submission of ‘pre-approved’

credit card offers violates the TILA and Regulation Z” (Sec. Amd. Compl. ¶ 61). The relevant

section of TILA provides that “No credit card shall be issued except in response to a request or

an application therefor.” 15 U.S.C. 1642. Similarly, Regulation Z provides that no credit card

can be issued except in response to an application or request for a card. 12 C.F.R. 226.12(a). 

The mere sending of a pre-approved credit card application is not prohibited because no credit

card issues except on the recipient’s request. Indeed, plaintiffs do not oppose this part of the

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motion to dismiss. Accordingly, this allegation cannot form the basis of plaintiffs’ TILA claim. 

B. Disclosure of Minimum Payments.

Plaintiffs next allege that defendants failed to disclose that the minimum payment listed

on monthly statements does not include all of the fees charged so that cardholders are

continually in default on their accounts. According to plaintiffs, this practice violates 15 U.S.C.

1637(b)(9), which requires disclosure of “the date by which or the period (if any) within which,

payment must be made to avoid additional finance charges, except that the creditor may, at his

election and without disclosure, impose no such additional finance charge if payment is

received after such date or the termination of such period.” The fees are a finance charge, so

the argument goes, because defendants anticipate that cardholders will exceed the limits and

make late payments. 

Overlimit fees and late fees are not finance charges. They are explicitly excluded from

TILA’s definition of finance charges. According to 12 C.F.R. 226.4(c), “charges for actual

unanticipated late payment, for exceeding a credit limit, or for delinquency, default, or a similar

occurrence” are not finance charges. Although they never make it clear, plaintiffs may be

arguing that since defendants are betting that their subprime customers will make late payments,

late fees are not “unanticipated” under the regulation. This argument is tenuous at best given

that the chances of any particular cardholder making a late payment or exceeding their limit at

any time are unknown. Even if all of plaintiffs’ allegations are true, defendants are still only

playing percentages. Under Regulation Z, late fees and overlimit fees need not be disclosed as

finance charges. Indeed, they are governed by different parts of TILA and Regulation Z and

must be itemized on the statement. See 12 C.F.R. 226.7(f). 

Additionally, defendants are correct that TILA and Regulation Z promulgated

thereunder do not require card issuers to disclose a minimum payment. See 12 C.F.R. 226.5,

226.6, 226.7. Regulation Z requires disclosure of many items of information regarding a credit

card agreement but not a minimum payment or how any minimum payment is calculated. The

statute and regulations cited in the complaint govern due dates and the disclosure of new

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balances, not the minimum payments. The regulations require the disclosure of the “free-ride

period” or the date by which cardholders must pay to avoid finance charges. 

In their opposition, plaintiffs protest that such mechanistic discussion “misses the point”

of their claim (Opp. at 7). Plaintiffs contend that they have alleged that defendants deceived

them into thinking that paying the minimum payment would keep their account out of default. 

Defendants did not include overlimit and late fees in calculating the minimum payment. If a

cardholder only pays the minimum payment, the other fees still keep accruing on the account. 

Plaintiffs’ argument simply ignores that 15 U.S.C. 1637(b)(9) does not address minimum

payments; it requires that the creditor disclose the new balance and the time by which it must be

paid off to avoid finance charges. The argument that defendants are trapping their cardholders

into paying higher fees by not including fees in the minimum payment fits much better into

plaintiffs’ claims for deceit and unfair business practices. Taking plaintiffs allegations as true,

defendants are hiding the ball on fees and the amount of payment required to keep from

incurring more fees, but plaintiff simply cannot shoehorn this claim into TILA. 

C. True Cost of Credit.

Plaintiffs allege that defendants violate TILA because Capital One’s customer

agreement required that cardholders and applicants write a letter to determine the true cost of

credit (Sec. Amd. Compl. ¶ 64). Defendants’ website allegedly stated “The information about

the costs of the cards described is accurate as of 01/01/07. This information may have changed

after that date” (id. at ¶ 29). Cardholders allegedly would have to write to defendants to obtain

the most recent terms that governed their credit agreements. 

Under 15 U.S.C. 1637(b)(4), creditors are required to disclose on monthly statements

“the amount of any finance charge added to the account during the period, itemized to show the

amounts, if any, due to the application of percentage rates and the amount, if any, imposed as a

minimum or fixed charge.” Here, plaintiffs did not allege that information was missing from

monthly statements, they instead pleaded that cardholders and applicants must write a letter to

defendants to obtain the most up-to-date terms for credit (Sec. Amd. Compl. ¶ 64). In their

opposition, plaintiffs abandon that allegation and instead argue that defendants did not disclose

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the cost of credit because they failed to disclose finance charges. Whether they mean the

finance charges in the statements or in the customer agreement is unclear. Plaintiffs appear to

again refer to their allegation that the minimum payment does not include overlimit fees and

late fees. Such fees, however, are explicitly excluded from TILA’s definition of finance

charges. 12 C.F.R. 226.4(c). Accordingly, this cannot forms the basis of a claim under TILA. 

D. Failure to Send Statements.

In their opposition, plaintiffs advance an entirely new theory of how defendants’

conduct violated TILA. For accounts that defendants considered charged off as uncollectible,

they stopped sending account statements while still maintaining that the accounts were still

accruing fees and interest (Sec. Amd. Compl. ¶ 26). Regulation Z requires that creditors issue

monthly statements, except “if the creditor deems [the account] uncollectible, or if delinquency

collection proceedings have been instituted, or if furnishing the statement would violate Federal

law.” 12 C.F.R. 226.5(b)(2). Creditors for open-ended accounts, such as credit cards, are

required to classify accounts that are more than 180 days past due as a loss and charge them off. 

Such classified losses are deemed uncollectible. 65 Fed. Reg. 36903, 36904 n.1 (June 12,

2000). As a credit card issuer, defendants are required to charge off accounts that are 180 days

past due. Once accounts are charged off, Regulation Z states that creditors are no longer

obliged to send statements. Here, plaintiffs have alleged that defendants have done something

that they are expressly allowed to do under the law. It is not possible that this could be a

violation of TILA. 

Plaintiffs cite Murray v. Amoco Oil Co., 539 F.2d 1385, 1387 (5th Cir. 1976), for the

proposition that the failure to issue billing statements is a TILA violation. This out-of-circuit

authority gives plaintiffs little help. In Murray, the plaintiff pleaded only that he did not receive

account statements. The defendants raised the defense that Murray’s account was in collection

procedures, so they did not need to send statements. Plaintiffs here neglected to tell the Court

the Murray never pleaded that the defendants had started collection proceedings. Ibid. Here,

plaintiffs pleaded that “Capital One has a policy and practice in which it refuses to issue billing

statements to accounts which it has ‘charged off’ as a loss for tax purposes, even though it

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claims interest and fees continue to accrue on the outstanding balances” (Sec. Amd. Compl. ¶

26). Plaintiffs’ allegation that the accounts on which defendants stopped sending statements

were uncollectible cannot be ignored. Accordingly, defendants have shown, at based upon the

issues briefed, that plaintiffs have failed to state a claim for violation of TILA. Defendants’

motion to dismiss is GRANTED, and this claim is dismissed. 

E. Leave to Amend. 

At the hearing on this motion, plaintiffs for the first time advanced a theory that

defendants have violated TILA by levying finance charges or interest on the overlimit and late

fees charged on cardholders’ accounts. Because this issue was not developed in the complaint

or in the briefing, it is unclear whether this can constitute a violation of TILA. Plaintiffs also

stated at the hearing that they would seek leave to amend for which they did not ask in their

opposition. Whether or not to allow leave to amend is a close question. This is the third

iteration of the complaint. 

Plaintiffs, however, will allowed to seek leave to amend their TILA claim and develop

the new “interest on fees” theory. Plaintiffs must file their proposed, amended pleading, along

with a motion to seek leave to amend their TILA claim explaining why their new theory states a

claim. This must be done no later than MONDAY, AUGUST 27, 2007, AT NOON. Defendants’

opposition will be due no later than TUESDAY, SEPTEMBER 4, 2007, AT NOON. Plaintiffs’ reply

will be due no later than FRIDAY, SEPTEMBER 7, 2007, AT NOON. The Court will then decide

whether or not a hearing on the motion is necessary. Please do not ask for extensions. 

Regardless of whether leave to amend is ultimately granted, plaintiffs must confine themselves

to amending only the TILA claim to state the “interest on fees” theory they presented at the

hearing. Because of this, the deadline by which the motion for class certification must be filed

is extended to SEPTEMBER 27, 2007, with the hearing to be held on NOVEMBER 1, 2007. 

2. MOTION FOR SUMMARY JUDGMENT AS TO CAPITAL ONE FINANCIAL.

Summary judgment should be granted where the pleadings, discovery, and affidavits

show “that there is no genuine issue as to any material fact and that the moving party is entitled

to judgment as a matter of law.” FRCP 56(c). The moving party has the initial burden of

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production to demonstrate the absence of any genuine issue of material fact. Playboy

Enterprises, Inc. v. Netscape Communications Corp., 354 F.3d 1020, 1023–24 (9th Cir. 2004). 

Once the moving party has met its initial burden, the nonmoving party must “designate specific

facts showing there is a genuine issue for trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 323–24

(1986). “If the moving party shows the absence of a genuine issue of material fact, the nonmoving party must go beyond the pleadings and ‘set forth specific facts’ that show a genuine

issue for trial.” Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir. 2002) (citation

omitted).

A. TILA Claim.

As to plaintiffs’ first claim, defendants contend that Capital One Financial cannot be

held liable under TILA because it is not a creditor. TILA imposes civil liability on “any

creditor who fails to comply with [its] requirement[s].” 15 U.S.C. 1640(a). Creditors are

defined as persons who regularly extend credit and to whom the consumer’s debt is initially

payable. 15 U.S.C. 1602(f). 

Here, defendants present evidence that Capital One Financial does not issue credit cards

(Cook Decl. ¶ 5). Capital One Financial also maintains separate corporate formalities and a

separate board of directors from Capital One Bank (id. at ¶ 4). Furthermore, they present

plaintiffs’ card member agreements, all of which are with Capital One Bank, not Capital One

Financial (Doome Decl. Exhs. A–M). Plaintiffs do not present any evidence, they merely argue

that Capital One Financial should be held directly liable. Defendants have, however, eliminated

all triable issues of fact as to whether Capital One Financial was a creditor under the TILA. 

Moreover, defendants’ motion to dismiss this claim has been granted. Plaintiffs argue that they

are entitled to discovery under Rule 56(f) before a summary judgment motion is heard. “A

party requesting a continuance pursuant to Rule 56(f) must identify by affidavit the specific

facts that further discovery would reveal, and explain why those facts would preclude summary

judgment.” Plaintiffs have identified no specific facts they could find on further discovery. 

Accordingly, they cannot be held liable, and defendants’ motion is GRANTED as to the TILA

claim. 

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B. UCL and Deceit Claims.

As to plaintiffs’ other claims, defendants argue that Capital One Financial cannot be

held liable because plaintiffs never had credit cards from them, nor did they ever pay any fees to

them. Again, defendants present evidence that the two companies, Capital One Financial and

Capital One Bank are separate companies. They maintain corporate formalities and have

separate boards. They also reiterate that Capital One Financial was not a party to any credit

agreements, does not issue credit cards, and does not levy or collect fees. 

In response, plaintiffs maintain that they are not arguing that Capital One Financial is

vicariously liable. Instead they argue that Capital One Financial is directly liable. In support,

they present a select number of documents in which Capital One Financial appears to discuss

responses to inquiries by consumer groups regarding Capital One’s credit card practices

(Mottek Decl. Exhs. 2–9). While plaintiffs’ contention that “[a]t virtually every turn, the

documents show that COF was the entity directing the operations” overstates the contents of

those documents, plaintiffs have still shown that, at least at this stage, there is a triable issue of

fact as to Capital One Financial’s involvement in formulating credit card policies (Opp. at 3). 

Further discovery is needed to determine Capital One Financial’s involvement, if any, in setting

credit card policies and practices. Accordingly, defendants’ motion for summary jugdment is

GRANTED as to plaintiffs’ TILA claim, and DENIED as to plaintiffs’ other claims. 

3. MOTION FOR SUMMARY JUDGMENT ON BROWNING’S CLAIMS.

Defendants also move for summary judgment on all claims asserted by plaintiff Thomas

E. Browning because he is barred from asserting them by a prior settlement agreement in Foster

v. Capital One Bank and Capital One Services, filed in Arkansas state court. “[A] federal court

must give to a state-court judgment the same preclusive effect as would be given that judgment

under the law of the State in which the judgment was rendered.” Migra v. Warren City Sch.

Dist. Bd. of Educ., 465 U.S. 75, 81 (1984). Under Arkansas law, res judicata bars the claims

that were actually litigated, in addition to those that could have been litigated in the first action. 

Carwell Elevator Co. v. Leathers, 352 Ark. 381, 388 (2003). 

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Absent class members can be bound by a class judgment or settlement if the following

due process requirements are satisfied: (1) absent plaintiffs must receive notice; (2) the method

of giving notice must be reasonably calculated to apprise interested parties of the pendency of

the action and give them a chance to present their objections; (3) the notice must explain the

action and class members’ rights in the action; (4) absent plaintiffs must be given an

opportunity to opt out of the class; and (5) the named plaintiffs must adequately represent the

interests of absent class members. Phillips Petroleum Co. v. Shutts, 472 U.S. 797, 811–12

(1985). 

Here, defendants present evidence that Browning received notice of the suit. The claims

administrator declared that Browning’s name was on the class list, that he was sent a notice, and

that the notice was not returned undeliverable. The notice also informed absent class members

of the action, and explained their rights. The court held that the method of giving notice was

carried out in such a way as to be the best practicable way of apprising absent plaintiffs to the

pendency of the action under the circumstances. Absent plaintiffs were also given the

opportunity object to and opt out of the settlement which Browning declined to do. Finally, in

approving the settlement agreement, the Arkansas court held that the named plaintiffs

adequately represented the interests of the absent class members. Moreover, the release in

Foster covered not only claims related to the security deposit, but all claims related to fees and

charges on virtual deposit accounts. 

In response, plaintiffs contend that the Foster settlement covers only secured or virtual

deposit cards, and Browning did not have a secured account. Defendants present the

declaration of Tom Doome, a senior complaint associate for Capital One Services, Inc. He

declares that Browning had a virtual deposit card of the kind covered by the Foster settlement. 

In Doome’s reply declaration, he presents a report generated from Capital One’s databases

which listed Browning’s account as “EZD” (Doome Reply Decl. Exh. A). Plaintiffs also point

out that none of Browning’s account statements received from defendants state that he has a

virtual deposit card (Mottek Decl. Exh. A). It appears, however, that plaintiffs submitted only a

few selected statements from Browning’s account. Statements submitted by defendants clearly

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show that a security deposit was charged on Browning’s account. Those statements also

contain multiple references to the security deposit. Even viewing the evidence in the light most

favorable the plaintiffs, no reasonable jury could find that Browning did not have a virtual

deposit card. Accordingly, defendants’ motion for summary judgment as to claims brought by

plaintiffs Thomas Browning is GRANTED, and his claims must be DISMISSED. 

CONCLUSION

For all of the above-stated reasons, defendants’ motion to dismiss plaintiffs’ first claim

is GRANTED. Defendants’ motion for summary judgment on all claims against Capital One

Financial is GRANTED IN PART AND DENIED IN PART. Defendants’ motion for summary

judgment on all claims asserted by plaintiff Thomas E. Browning is GRANTED, and those

claims must be DISMISSED. 

As stated above, plaintiffs should file their proposed amended pleading and motion for

leave to file an amended complaint by MONDAY, AUGUST 27, 2007, AT NOON. Defendants’

opposition is due TUESDAY, SEPTEMBER 4, 2007, AT NOON. Plaintiffs’ reply is due FRIDAY,

SEPTEMBER 7, 2007, AT NOON. The deadline by which the motion for class certification must

be filed is extended to SEPTEMBER 27, 2007, with the hearing to be held on NOVEMBER 1,

2007. 

IT IS SO ORDERED.

Dated: August 17, 2007. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

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