Capital One 2013 Annual Report Download - page 277

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(the “FHLB of Boston Litigation”). Capital One Financial Corporation and CONA are named in the complaint as
alleged successors in interest to CCB, which allegedly marketed some of the mortgage-backed securities at issue
in the litigation. The FHLB of Boston seeks rescission, unspecified damages, attorneys’ fees, and other
unspecified relief. The case was removed to the United States District Court for the District of Massachusetts in
May 2011. FHLB of Boston filed an Amended Complaint in June 2012, and the Company’s motion to dismiss
was denied in September 2013.
Checking Account Overdraft Litigation
In May 2010, Capital One Financial Corporation and COBNA were named as defendants in a putative class
action named Steen v. Capital One Financial Corporation, et al., filed in the U.S. District Court for the Eastern
District of Louisiana. Plaintiff challenges practices relating to fees for overdraft and non-sufficient funds fees on
consumer checking accounts. Plaintiff alleges that our methodology for posting transactions to customer accounts
is designed to maximize the generation of overdraft fees, supporting claims for breach of contract, breach of the
covenant of good faith and fair dealing, unconscionability, conversion, unjust enrichment and violations of state
unfair trade practices laws. Plaintiff seeks a range of remedies, including restitution, disgorgement, injunctive
relief, punitive damages and attorneys’ fees. In May 2010, the case was transferred to the Southern District of
Florida for coordinated pre-trial proceedings as part of a multi-district litigation (MDL) involving numerous
defendant banks, captioned In re Checking Account Overdraft Litigation. In January 2011, plaintiffs filed a
second amended complaint against CONA in the MDL court. In February 2011, CONA filed a motion to dismiss
the second amended complaint. In March 2011, the MDL court granted CONA’s motion to dismiss claims of
breach of the covenant of good faith and fair dealing under Texas law, but denied the motion to dismiss in all
other respects. In June 2012, the MDL court granted plaintiff’s motion for class certification. The modified
scheduling order entered by the MDL court contemplates the conclusion of discovery in the second quarter of
2014 and we anticipate a remand to the Eastern District of Louisiana in the third quarter of 2014.
Hawaii, Mississippi, Missouri and New Mexico State Attorney General Payment Protection Matters
In April 2012, the Attorney General of Hawaii filed a lawsuit in First Circuit Court in Hawaii against Capital One
Bank (USA) N.A., and Capital One Services, LLC. The case is one of several similar lawsuits filed by the
Attorney General of Hawaii against various banks challenging the marketing and sale of payment protection and
credit monitoring products. In June 2012, the Attorney General of Mississippi filed substantially similar suits
against Capital One and several other banks. In April 2013, the Attorney General of New Mexico also filed
substantially similar suits against Capital One and several other banks. All three state attorney general complaints
allege that Capital One enrolls customers in such programs without their consent and that Capital One enrolls
customers in such programs in circumstances in which the customer is not eligible to receive benefits for the
product in question. All suits allege unjust enrichment and violation of Unfair and Deceptive Practices Act
statutes. The remedies sought in the lawsuits include an injunction prohibiting the Company from engaging in the
alleged violations, restitution for all persons allegedly injured by the complained of practices, civil penalties and
costs.
In May 2012, Capital One removed the Hawaii AG case to U.S. District Court, District of Hawaii. In November
2012, the court denied the Hawaii AG’s motion to remand. The Hawaii AG petitioned to appeal the District
Court’s decision to the Ninth Circuit Court of Appeals, which was granted by the Ninth Circuit in April 2013.
The District Court case is now stayed pending the appeal.
In August 2012, Capital One removed the Mississippi AG case to the U.S. District Court, Southern District of
Mississippi. In July 2013, the court denied the Mississippi AG’s motion to remand. The Fifth Circuit overturned
the District Court’s denial of the AG’s motion to remand in December 2013, and the case will proceed in state
court.
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