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Dress v. Capital One Bank (U.S.A.), N.A.

United States District Court, E.D. Virginia, Alexandria Division

July 30, 2019

SUSAN DRESS, AMY EDWARDS, and STEPHANIE BARNETT, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
CAPITAL ONE BANK (USA), N.A., Defendant.

          MEMORANDUM OPINION AND ORDER

          Liam O. Grady, United States District Judge.

         This matter comes before the Court on Defendant's Motion to Dismiss (Dkt. 50). The motion is fully briefed, and the Court dispensed with oral argument, finding it would not aid in the decisional process. For the reasons stated below, and for good cause shown, Defendant's Motion to Dismiss (Dkt. 50) is GRANTED.

         I. BACKGROUND

         Plaintiffs each have Capital One credit cards and dispute Capital One's authority to charge Plaintiffs interest on new purchases when they pay off their account balance in full by the due date of their next monthly statement, but had not paid off their account balance in full by the due date of their previous monthly statement.

         The Capital One Customer Agreement includes the following relevant provisions regarding charging interest:

We will charge Interest Charges and Fees to your Account as disclosed on your Statement and other Truth-in-Lending Disclosures. In general. Interest Charges begin to accrue from the day a transaction occurs. However, we will not charge you interest on any new transactions posted to the purchase Segment of your Account if you paid the total balance across all Segments of your Account in full by the due date on your Statement each month.
We will continue to charge Interest Charges during Billing Cycles when you carry a balance regardless of whether your Statement includes a minimum payment that is due.

Dkt. 43-1 at 4 (italics in original removed, emphasis added).

         The monthly billing statements sent to Plaintiffs, which were incorporated by reference into the Customer Agreement, included slightly different, yet consistent, disclosures regarding interest:

How can I Avoid Paving Interest Charges? If you pay your statement's New Balance in full by the due date, we will not charge you interest on any new transactions that post to the purchase segment. If you have been paying your account in full with no Interest Charges, but then you do not pay your next New Balance in full, we will charge interest on the portion of the balance that you did not pay....
How is the Interest Charge applied? Interest Charges accrue from the date of the transaction or the first day of the Billing Cycle. Interest Charges accrue on every unpaid amount until it is paid in full. This means you may owe Interest Charges even if you pay the entire New Balance for one Billing Cycle, but did not do so the previous Billing Cycle....
How do you Calculate the Interest Charge? We use a method called Average Daily Balance (including new transactions).
1. First, for each segment we take the beginning balance each day and add in new transactions and the periodic Interest Charge on the previous day's balance. Then we subtract any payments and credits for that segment as of that day. The result is the daily balance for each segment. However, if your previous statement balance was zero or a credit amount, new transactions which post to your purchase segment are not added to the daily balance. ...

E.g., Dkt. 43-2 at 3 (underline and bold in original, emphasis added).

         When Plaintiffs Barnett and Edwards contacted Capital One about the terms of their credit card agreements, Capital One provided Plaintiffs with a copy of the Capital One Customer Agreement and summarized the key current terms in a "Current Terms Letter." In the Current Terms Letter, Capital One stated that it "will not charge interest on new purchases, provided you have paid your previous balance in full by the due date each month." Dkt. 43-3 at 2 (emphasis added). Capital One more fully explained that:

If you pay your statement's "New Balance" in full by the due date, we will not charge interest on any new transactions that post to the Purchase balance. If you have been paying your account in full with no interest charges, but then you do not pay your next "New Balance" in full, we will charge interest on the portion of the balance that you did not pay....
... Interest charges accrue on every unpaid amount until it is paid in full. This means you may owe interest charges even if you pay the entire "New Balance" one month, but did not do so for the previous month....
For each segment of your account, we calculate your total interest charge by multiplying your average daily balance by the daily periodic rate and multiplying the result by the number of days in the billing period.... To determine your daily balance: 1) take the beginning balance and add in new transactions and the periodic interest charge on the previous day's balance. 2) Subtract any payments and credits for that segment as of that day. However, if you paid your previous month's balance in full (or if your balance was zero or a credit amount), new transactions which post to your purchase or ...

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