LOS ANGELES - (Mealey's) Capital One Bank NA USA has
agreed to pay $10 million to resolve claims that it promoted its credit card
services as offering low fixed annual percentage rates and then later abruptly
increased them, according to a document the lead plaintiff in a class action
filed in a California federal court on Sep. 13 (Raquel Rubio v. Capital One
Bank NA USA, No. 07-06766, C.D. Calif.; See July 2010, Page 17).
The settlement is subject to the approval of U.S. Judge
Audrey B. Collins of the Central District of California.
The $10 million represents nearly 40 percent of the more
than $26 million in alleged damages to the proposed class and includes attorney
fees and a payment to the lead plaintiff, according to lead plaintiff Raquel
Rubio's brief in support of a motion for approval of the settlement.
Rubio proposes a settlement class consisting of:
"All natural persons who have or had Capital One credit card accounts with
billing addresses in California whose accounts are current, meaning they are
not charged off or in bankruptcy status, as of the Effective Date, who opened
an account with Capital One after October 18, 2003 in response to a
solicitation describing any APR as 'fixed' in the table of information included
in initial disclosures as required by federal law (the 'Schumer Box'), and
whose fixed APR(s) were later increased for reasons other than default, and who
did not opt out of the APR increase after receiving notice."
"In light of the uncertainties of litigation, the value
of the proposed settlement offer is certainly adequate," Rubio said in the
brief. "By any measure, that is a substantial recovery to class members,
given the inherent risks of litigation."
According to Rubio's second amended complaint, which she
filed April 10, 2008, on behalf of herself and all others similarly situated,
she received solicitation materials in February 2004 to open a Capital One
credit card. According to Rubio, the solicitation promised a 6.99 percent
fixed APR that was not an introductory rate. The solicitation listed
three conditions under which the rate could increase, she said. Rubio
applied for and received the card, but three years later, Capital One increased
the rate to 15.9 percent, even though none of three conditions in the
solicitation had occurred, Rubio said.
The plaintiffs are represented by Michael Louis Kelly,
Behram V. Parekh and Joshua A. Fields of Kirtland & Packard in El Segundo, Calif.
Capital One is represented by Nancy R. Thomas and Sylvia Rivera in Los Angeles and James F. McCabe in San Francisco, all of Morrison &
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Is there an update on this case July 2013.