OPINION AND ORDER

THOMAS W. THRASH, JR., District Judge.

This matter is before the Court on the Defendant's motion for summary judgment [Doc. 48].

I. Background

A. Procedural History

This multidistrict litigation and purported class action stems from the Defendant Capital One's decision to raise interest rates on customers' credit card accounts in 2009. The Plaintiffs allege a multitude of claims, including breach of contract; breach of implied contract; unconscionability; unjust enrichment; and violations of the Truth in Lending Act, 15 U.S.C. § 1601 et seq.; the California Consumers Legal Remedies Act, Cal. Civ.Code § 1750 et seq.; the California Unfair Competition Law, Cal. Bus. & Prof.Code § 17200 et seq.; the California False Advertising Act, Cal. Bus. & Prof.Code § 17500 et seq.; the Kansas Consumer Protection Act, K.S.A. 50-623; and the New Jersey Consumer Fraud Act, N.J.S.A. § 56:8-1 et seq.

The Plaintiffs Barker, Baxter, Gaffney, and Kautz filed their original complaint against Capital One in state court on September 15, 2009. Capital One removed that suit to federal court on September 30, 2009 in a case styled as Barker v. Capital One Bank (USA), N.A., Civil Action No. 1:09-CV-2682, N.D. Ga. After removal, the complaint was amended to add the Plaintiffs Solsberry and Lavallie. The Plaintiffs Mancuso and Roberti filed their complaint against Capital One on April 2, 2010, in the United States District Court for the Eastern District of Virginia in a case styled Mancuso v. Capital One Bank (USA), N.A., Civil Action No. 1:10-CV-326, E.D.Va. The Plaintiff Kolkowski filed her complaint against Capital One on May 10, 2010, in the United States District Court for the Central District of California in a case styled as Kolkowski v. Capital One Bank (USA), N.A., CV10-3486, C.D.Cal. On June 11, 2010, the cases were consolidated in the multidistrict litigation, In re: Capital One Credit Card Interest Rate Litigation, MDL No. 2171.

In earlier proceedings during this litigation, the Court provided the Plaintiffs with the opportunity to file a consolidated amended complaint. See Docket Entry [8], Transcript, July 14, 2010, at 15, 25-26.1 The Court also ruled that the Defendant would be permitted to file a dispositive motion as to certain legal issues (federal causes of action and breach of contract) before any matters of class certification or state consumer protection laws were addressed.2 In a later conference, however, the Defendant asked the Court to revisit its decision to put off consideration of state consumer protection claims.3 The Court agreed that it would consider all federal and state law claims when the Defendant filed its dispositive motion.4

The Defendant filed a motion for summary judgment on August 8, 2011. As the Court has previously explained, however, briefing of this motion was substantially delayed by discovery disputes between the parties that were eventually referred to Special Master Jeffrey Bramlett. Special Master Bramlett issued a Report and Recommendation that required disclosure of certain documents. The parties had previously agreed to accept the ruling of the Special Master without further objection.

After the Special Master issued his Report, the parties filed additional briefing on the Defendant's motion for summary judgment supplemented by the additional documents disclosed. See the Plaintiffs' Supplemental Brief, Docket Entry [115]; the Plaintiffs' Updated Response to Defendant's Statement of Material Facts, Docket Entry [124]; the Plaintiffs' Updated Statement of Material Facts Docket Entry [125]; the Defendant's Reply Brief, Docket Entry [127]; and the Defendant's Response to Plaintiffs' Updated Statement of Material Facts, Docket Entry [128].5 The Defendant's motion for summary judgment is now fully briefed.

B. Facts

The Defendant is a national bank, organized under the National Bank Act, which offers credit cards to consumers. Consumers who hold a Capital One credit card typically have responded to direct mail, internet, or other form of solicitation from Capital One to apply for a credit card.6 These solicitations offer a wide variety of terms, including "fixed rate" and "variable rate" credit cards. Generally, after Capital One approves a credit card application, it mails out the credit card. Within several days, Capital One also mails the new account holder a Customer Agreement in effect at that time.7 Further, in the 2009 time period, the back of Capital One credit cards stated: "By accepting, signing or using this card, you agree to Capital One's present and future rules and regulations."8

Capitol One on occasion amends its Customer Agreement. The Customer Agreement in effect during the 2009 time period was the 2005 Customer Agreement. For those Plaintiffs who had an account prior to 2005, the 2005 Customer Agreement was mailed to them at the time it went into effect. For those Plaintiffs who opened accounts after 2005, the 2005 Customer Agreement was mailed to them at the time they opened their accounts. The 2005 Customer Agreement was not amended until 2010, and that amendment has no impact here.

The 2005 Customer Agreement states that the account holder's contract with Capital One consists of the:

The 2005 Customer Agreement also contains an "Account Closure and Suspension of Credit Privileges" clause, which provides:

The 2005 Customer Agreement contains a "Changes in Terms" clause, which provides:

For the purpose of providing context, witnesses in the case will often refer to Changes in Terms as "CIT." The 2005 Customer Agreement contains a choice of law provision which states the contract "will be governed only by Federal law and Virginia law (to the extent not preempted by Federal law)."12

In late 2008, Capital One decided to increase the annual percentage rate ("APR") applicable to the accounts of certain customers, including the Plaintiffs, as part of a 2009 "repricing" program. This program is sometimes referred to as the 2009 CIT, or 2009 Change in Terms. On other occasions, the company referred to it as "NCR" or noncontractual repricing. The 2009 Change in Terms changed customers' purchase interest rates, cash interest rates, penalty interest rates, and credit limits. Over 30 million customers were "repriced" during the 2009 Change in Terms which occurred in two phases. The first group of accounts was selected for repricing in February 2009, the second in May 2009.

The 2009 Change in Terms excluded certain accounts, including:

As the Plaintiffs note, the implementation of these exemptions was not without error.

In the account records for each affected customer, Capital One noted if the account was designated for repricing in the 2009 Change in Terms.14 Attached to Jiulianti's declaration are screen shots from each of the Plaintiffs' accounts which show that his/her account was selected for inclusion in the 2009 Change in Terms.15

Capital One developed a procedure to send notice of the 2009 Change in Terms to the affected customers. Capital One created several different "templates" for the notices, each of which was assigned a different "Offer ID number." The Offer ID number corresponded to the specific repricing change that would affect that group of customers.

Capital One contracted with third-party vendor R.R. Donnelly to mail the notices in two batches, one in February 2009 and one in May 2009. The notices were mailed to each customer using the addresses listed in Capital One's account records. The envelope containing the notice stated: "IMPORTANT INFORMATION REGARDING YOUR ACCOUNT." The notice generally informed customers of the proposed changes to the annual percentage rate, the effective date of these changes, and the opportunity to decline the changes.

Lisa Gaylor, Principal Production Manager for Capital One Services, LLC, provided a declaration describing the mailing process. Gaylor worked as the "point person" between Capital One and R.R. Donnelly on the February 2009 mailing.16 R.R. Donnelly's facilities allow for "in-line" printing which means that the notice and envelope are processed on one line eliminating the need for another additional machine or person to "stuff" the envelope. Capital One sent an employee to R.R. Donnelly's mail facility in Green Bay, Wisconsin to oversee the February and May 2009 mailings. Capital One provided R.R. Donnelly with an electronic list of those customers who would be subject to the 2009 Change in Terms. When R.R. Donnelly received Capital One's list of customers, it printed the notices and envelopes which were then sorted by zip code and put on pallets for mailing.17 A U.S. Postal Service facility is located within the R.R. Donnelly mail facility where the notices were printed. The notices were placed on pallets which were then given over to the custody of the U.S. Postal Service.

Each Change in Terms notice was mailed via first class mail. The U.S. Postal Service facility in Wisconsin provided to R.R. Donnelly periodic postal receipts in February and May 2009 to show that the number of notices received by the U.S. Postal Service matched the number Capital One requested that R.R. Donnelly print. For the February 2009 mailing, Capital One intended to send 23,862,852 notices and R.R. Donnelly's mailing receipts show that 23,862,852 notices were mailed from the Post Office in the R.R. Donnelly facility.18 For the May 2009 mailing, 11,110,906 notices were printed and 11,110,906 were mailed.19 There was, however, no reconciliation of individual names on mailings with names on accounts.20

The notices mailed in February 2009 gave account holders until April 17, 2009, to contact Capital One to opt out of the Change in Terms. The May 2009 notices gave account holders until July 28, 2009, to contact Capital One to opt out of the Change in Terms. Generally, once those deadlines passed, customers were not permitted to opt out of the Change in Terms. However, sometimes if a customer complained, he would be permitted to opt out after those deadlines.21 These notices were mailed prior to August 22, 2009, the effective date of the Credit Card Accountability Responsibility and Disclosure ("Credit CARD") Act which changed certain disclosure requirements credit card companies had to make to their consumers.

Jiulianti testified that when an explicit promise had been made to a customer concerning how long a "fixed" rate would last, Capital One intended to exclude them from the 2009 Change in Terms.22 Jiulianti also recognized that the company had made an "internal commitment" to keeping customers' rates at "fixed" for three years.23 This was not an external promise, however, and those customers could be "repriced" but Capital One attempted to "delay" the impact of the "repricing" on these customers.24

1. Barker Facts25

In 2003, Capital One offered Barker a fixed APR of 0% on balance transfers until April 2004 and a fixed APR of 9.9% thereafter, as well as a fixed APR of 0% on purchases through his April 2004 billing period and a fixed APR of 9.9% on purchases thereafter. Barker accepted this offer and has held this Capital One card from November 28, 2003 to date, although it has had two different account numbers. The 2003 Customer Agreement apparently is not in the record, but Barker would have been mailed a 2005 Customer Agreement at some point in 2005.26

Barker could not recall whether he responded to a specific solicitation in getting his Capital One credit card in 2003.27 Thus, there is no information in the record that Barker ever received a "fixed for life" offer.28 Barker testified that he "understood" that his rate would remain "fixed" at 7.9%.29 Barker believed that Capital One would "keep [his] rate at that level unless [he] violate[d] the terms of the agreement."30

The 0% promotional fixed APR for purchases remained in effect until April 8, 2004 when the APR switched to a 9.9% fixed rate. On July 8, 2005, the APR for purchases changed to a fixed rate of 14.9%. In April 2007, the default APR changed to a variable rate of 28.15%. On May 8, 2007, the APR for purchases changed to a fixed rate of 7.9%.31

Barker's account was part of the 2009 Change in Terms. Capital One mailed to Barker a notice of the repricing on May 12, 2009. Specifically, the notice informed Barker that the terms of the account for (1) purchase and balance transfer rate and (2) cash advance rate, were changing.32 It further stated that the changes to the "Annual Percentage Rates (APRs) would be effective for all billing periods that begin after July 2, 2009."33 For Purchase and Balance Transfer APR:

The notice went on to state that "[y]ou can choose to decline the changes to your rates and close your account."35 "If you decline, we will close your account on August 2, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to August 2, 2009 will still post to your account."36

Barker testified that he received the notice, but that he understood the notice to mean that the increased interest rate would apply to future purchases and not to existing balances.37 Barker did not opt out and decline these changes. Barker's account is scheduled to close when he pays off the remaining balance.38

Barker testified that when he received the notice, he decided to stop using the card and just pay off his existing balance at the old rate.39 He did not realize that the higher interest rate had been applied to his existing balance until he opened his August 2009 account statement.40 He called then to opt-out, but Capital One told him he could not.41 Barker closed the account and is paying off the balance at the higher rates.42 This has increased his monthly payments by approximately $100 per month.43

2. Baxter Facts

In 2005, Capital One offered Baxter a fixed APR of 0% on purchases through December 2006 and a variable APR tied to the London Interbank Offered Rate ("LIBOR") on purchases thereafter. Baxter did not receive a "fixed for life" offer and understood that he did not have a fixed rate. Baxter also could not identify a specific solicitation to which he responded, but rather stated that Capital One's "no hassle" advertisements convinced him to apply for a Capital One credit card. Under Capital One's general procedures, after Baxter opened his account, he would have been sent the 2005 Customer Agreement in effect at the time.

The promotional fixed APR rate of 0% on purchases continued through December 13, 2006, when the APR for purchases switched to a variable rate of 9.45%. From this point until the 2009 Change in Terms, Baxter's rate varied from 4.53% to 9.89%.44 In April 2007, the default APR on Baxter's account changed to a variable rate of 28.15%.

Baxter's Capital One account was part of the 2009 Change in Terms. Baxter received notice of the 2009 Change in Terms around February 2, 2009. The notice informed Baxter that the terms of the account for (1) purchase and balance transfer rate, (2) cash advance rate, and (3) default rate, were changing.45 It further stated that the changes to the "Annual Percentage Rates (APRs) would be effective for all billing periods that begin after April 17, 2009."46 For Purchase and Balance Transfer APR:

The notice went on to state that "[y]ou can choose to decline this change and close your account."48 "If you decline, we will close your account on May 17, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to May 17, 2009 will still post to your account."49 Baxter did not decline the Change in Terms.50

Baxter testified that he did receive notice of the Change in Terms, but believed that the increased rates would apply only to purchases made after April 17, 2009.51 He did not learn that his interest rate had increased on existing balances until he received his next statement.52

3. Gaffney Facts

Gaffney opened his Capital One account on July 14, 1993 and has had his account since then. Due to the age of the account, only those statements from 2000 forward are available. Gaffney, however, testified that he could not recall any particular solicitation that led to him apply for a Capital One credit card and that he understood his rate could vary over time.53 In his supplemental response to the Defendant's interrogatories, Gaffney stated that he was "enticed" by several promotional checks from Capital One in January and March 2009 which caused him to transfer his other credit card balances to his Capital One account.54 In accordance with Capital One's practices, Gaffney would have been mailed a 2005 Customer Agreement shortly after its terms became effective.55

From October 20 to November 19, 2000, the APR for cash advances on Gaffney's account was a variable rate of 19.9%.56 On November 20, 2000, the APR for cash advances on Gaffney's account changed to a fixed rate of 9.9%.57 In April 2007, the default rate changed to a variable rate of 28.15%.58 On August 26, 2007, the APR for cash advances changed to a variable rate of 22.99%.59 On September 26, 2007, the APR for cash advances changed to a variable rate of 9.9%.60

Gaffney's account was part of the 2009 Change in Terms. Jiulianti testified that Gaffney's account records show that on May 12, 2009, he was mailed a notice with an Offer ID No. 15488.61 Gaffney's account records reflect an address in East Longmeadow, Massachusetts. No. 15488 matches the notice number on the Defendant's Exh. A-11. The notice states that it is providing information on a Change in Terms for the Cash Advance Rate.62 Beginning for all billing periods after July 2, 2009, "[y]our new rate for all balances subject to the Cash Advance rate is 24.9%... This is a variable rate, determined by adding 21.65% to the Prime rate."63 The notice went on to state that "[y]ou can choose to decline this change and close your account."64 "If you decline, we will close your account on August 2, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to August 2, 2009 will still post to your account."65 Gaffney did not decline the Change in Terms.66

Gaffney testified that he did receive notice of the 2009 Change in Terms, but with regard to his purchase and balance transfer rates only.67 He determined that he would not use his card for purchases so he did not feel the need to call and opt out.68 Gaffney testified that he did not receive a notice concerning an increase in his cash advance rate.69 Gaffney testified that he did call Capital One in August when he saw that the cash advance rate had increased to 24.9%.70 He asked that his cash advance rate be lowered and Capital One declined to do so.71

4. Kautz Facts

In 2003, Capital One offered Kautz, neé Casanova, a fixed APR of 0% on balance transfers and purchases through her October 2003 billing period and a fixed APR of 14.9% on balances and transfers thereafter (for account ending -2600). Kautz has had her credit card with Capital One from May 3, 2003 to date. Capital One mailed Kautz a 2005 Customer Service Agreement shortly after it took effect.72

In 2003, Capital One also offered Kautz a credit card with a fixed APR of 0% on purchases through her February 2004 billing period and a fixed APR of 14.9% on purchases thereafter (for account ending -8899). Kautz has had that card from July 20, 2003 to date. Capital One mailed Kautz a 2005 Customer Service Agreement shortly after it took effect.73

For account ending -2600, the 0% fixed APR for purchases lasted until October 20, 2003 when it switched to a 14.9% fixed rate. On October 20, 2004, the APR for purchases changed to a fixed rate of 12.9%.

For account ending -8899, the 0% fixed APR for purchases lasted until October 20, 2003 when it switched to a 12.9% fixed rate. On May 24, 2004, the APR for purchases changed to a fixed rate of 9.9% and on June 24, 2004, the APR for cash advances changed to a variable rate of 19.99%.

Kautz testified that she understood that Capital One had the authority to change the interest rate but had she received notice of the rate change, she would have closed the account.74 She did not think it was right that Capital One doubled her interest rates because her accounts had been in good standing and she did not have any late fees.75 Kautz did not retain any of the solicitations upon which she relied when she decided to apply for credit cards with Capital One.

Both of Kautz's accounts were part of the 2009 Change in Terms. Jiulianti testified that for the account ending -2600, a notation in the account statement shows that a Notice ID No. 15426 was mailed on May 12, 2009.76 For account ending -8899, a Notice ID No. 15468 was mailed on May 12, 2009.77 Notice ID No. 15426 is attached to the Jiulianti Declaration as Exh. A-14 and Notice ID No. 15468 is Exh. A-17.78

Notice ID No. 15426 informed Kautz that the terms of the account for (1) purchase and balance transfer rate, (2) cash advance rate, and (3) default rate, were changing.79 It further stated that the changes to the "Annual Percentage Rates (APRs) would be effective for all billing periods that begin after July 2, 2009."80 For Purchase and Balance Transfer APR:

The notice went on to state that "[y]ou can choose to decline this change and close your account."82 "If you decline, we will close your account on August 2, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to August 2, 2009 will still post to your account."83 Kautz did not decline the Change in Terms.84

Notice ID No. 15468 informed Kautz that the rates for Purchase and Balance Transfers and Cash Advances would be changing.85 The new Purchase and Balance Transfers rate would be a variable rate at 17.9% and Cash Advance rate would also be variable and at 24.9%.86 The notice went on to state that "[y]ou can choose to decline this change and close your account."87 "If you decline, we will close your account on August 2, 2009 .... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to August 2, 2009 will still post to your account."88 Kautz did not decline the Change in Terms.89

Jiulianti testified that these notices were mailed to the Derby, Kansas address on Kautz's accounts.90 Kautz testified that she did not receive notice of the Change in Terms.91 When Kautz learned of the increased rates by looking at her August 2009 statements, she called Capital One to close the accounts.92

5. Lavallie Facts

Lavallie opened his credit card account with Capital One on March 6, 1999.93 Lavallie did not receive a fixed "for life" purchase APR offer on his Capital One credit card account.94 Lavallie could not recall specifically what advertisement induced him to apply for a Capital One credit card but he testified that his interest rate was a fixed 9.5% which he considered to be low.95 Lavallie testified that he did not believe the 2005 Customer Agreement applied to him because he believed he had been "grandfather[ed]" into the terms of the advertisements.96 Lavallie believed he was a "for-life customer with a fixed rate."97 He felt he had a "handshake agreement with them based on the TV ads."98 Lavallie testified that he did not see any difference between the terms "low fixed" and "fixed for life."99 To him a "fixed rate [] means that it's not going to change" and "there's no time definition in that. For life for me means life."100 He further stated: "I can't tell you if the ad said fixed for life or if it just said fixed."101

Due to the age of Lavallie's account, the original customer agreement sent on his account is not available.102 Capital One did send the Plaintiff the 2005 Customer Agreement shortly after its effective date.103 Lavallie's account statements demonstrate that the APR for purchases was fixed at 9.9% from August 12, 2000, to January 12, 2002 when it switched to a fixed rate of 8.9%.104 On August 12, 2003, it changed to a fixed rate of 6.9%; on March 12, 2005, to a variable rate of 10.65%; on April 12, 2005, to a fixed rate of 7.9%; on March 14, 2007, to a fixed rate of 9.9%; on May 12, 2007, to a variable rate of 9.88%; on April 18, 2008 to a fixed rate of 9.9%; and on June 18, 2008, to a variable rate of 10.11%.105

Lavallie's account was part of the 2009 Change in Terms.106 Jiulianti testified that Lavallie was mailed notice of the Change in Terms to the Hampton, Georgia address associated with Lavallie's account.107 Lavallie's account shows that Offer ID Notice No. 15468 was mailed to him on May 12, 2009.108 Exhibit A-20 is a reproduction of Notice No. 15468.109

Notice ID No. 15468 informed Lavallie that the rates for Purchase and Balance Transfers and Cash Advances would be changing.110 The new Purchase and Balance Transfers rate would be a variable rate at 17.9% and Cash Advance rate would also be variable and at 24.9%.111 The notice went on to state that "[y]ou can choose to decline this change and close your account."112 "If you decline, we will close your account on August 2, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to August 2, 2009 will still post to your account."113 Lavallie did not decline the Change in Terms.114

Lavallie testified that he did not receive notice of the Change in Terms.115 He first noticed the increase in his interest rates when he opened his statement in August 2009 and noticed that his interest charges and minimum payment had increased by $100 because his interest rate went up from 7.9% to 17.9%.116

6. Solsberry Facts

Solsberry received an offer from Capital One in 2004 for a 0% APR on balance transfers through his January 2007 billing period and a variable APR of 10.9% thereafter.117 Capital One's records do not reflect any other length of time that Solsberry's APRs would remain in effect at the time he opened his account.118 Solsberry did not receive a fixed "for life" offer.119 Solsberry stated that at the time he opened the account, he received "multiple, unsolicited emails from Capital One advertising low and/or fixed interest rates."120 Solsberry did not retain any of those emails.121

Solsberry opened his Capital One credit card on October 18, 2004 and closed the account on May 2010.122 There is nothing in the record which shows the agreement that governed Solsberry's card when he first opened it, but shortly after its effective date, Capital One mailed the 2005 Customer Agreement.123 Solsberry testified that under the terms of the 2005 Customer Agreement, he understood that the account could be closed and that its terms could be changed.124

Jiulianti testified as to the contents of Solsberry's account statements.125 Solsberry's account had a variable rate from the opening of the account until February 22, 2007.126 The rate varied from 11.23% to 14.95%.127 In April 2007, the default APR on Solsberry's account changed to a variable rate of 28.15%.128 In July 2008, the APR for purchases changed to a fixed rate of 7.9%.129

Solsberry testified that from March 2007 to September 2008, he had no balance on the card because he felt his interest rates were too high.130 In August 2008, Solsberry said he received a telephone call from Capital One saying the company noticed his card had a zero balance. Solsberry responded that he thought the interest rates were too high.131 Capital One said "if we took down the interest rate and gave you a fixed rate for life would you put business back with us. And I said if the rate was correct sure and if the payment was correct. He said how about 7.9 percent. I said sold, okay, I'll do a balance transfer."132 Solsberry was sent a letter on August 12, 2008 memorializing this conversation.133 The letter states:

Thus, the offer made by Capital One as described in the August 12, 2008 letter was for a "fixed" interest rate and there was no use of the term "fixed for life."135

When Solsberry got the February 2009 Change in Terms notice, he called and said he wanted to close the account and pay off the balance at the existing terms even though he did not think Capital One should be able to change his fixed 7.9% rate.136

Solsberry's account was also part of the May 2009 Change in Terms.137 Jiulianti testified that Solsberry's account statements show that Offer ID Notice No. 15473 was mailed on May 12, 2009.138 Exhibit A-23 shows the contents of Notice No. 15473.139 Notice No. 15473 was sent to the address on Solsberry's account in Kennesaw, Georgia.140 Notice No. 15473 stated that Capital One was changing the terms of the account Purchase and Balance Transfer Rate as of the billing cycle beginning July 2, 2009.141 The new rate would be variable at 17.9%.142 The notice went on to state that "[y]ou can choose to decline this change and close your account."143 "If you decline, we will close your account on August 2, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to August 2, 2009 will still post to your account."144 Solsberry did not decline the Change in Terms.145

Solsberry testified that he did not receive notice of the May 2009 Change in Terms.146 Solsberry testified that he did receive notice of the February 2009 Change in Terms and opted-out of those changes.147 Solsberry did close the account then and would make the remaining payments at 7.9% until the balance was cleared.148 He testified that shortly after he opted-out, Capital One called him to reactivate the card at the 7.9% fixed rate, which he did.149 However, Solsberry testified that his rate was increased from 7.9% to 17.9% beginning with the July 29, 2009 statement.150

Solsberry made no payments on his account after November 23, 2009.151 Solsberry filed for bankruptcy in April 2010.152 On May 2010, Capital One "charged off" his account with a balance of $17,043.75.153

7. Mancuso Facts

Although Capital One offered a solicitation it contends was the one sent to Mancuso, that solicitation has the name of "Thurston" on it and Mancuso did not recognize it at her deposition.154 However, at her deposition, Mancuso was asked to look at account statements for her two Capital One credit cards.155 For the account ending -2324, her statements show that from January 16 to February 15, 2003, the account had a 0% APR on purchases. Several months later, that APR went up to 14.9%.156 For the account ending -2336, the first statement was for May 2003.157 It also began with a 0% introductory APR and then rose to 14.9%.158 Mancuso got a third credit card in 2005 ending in -5888.159 The rate on that card appears to be variable starting at 15.15% and fluctuating with 12.9% and 4.9%.160

Mancuso testified that she did not believe she ever had a fixed rate with Capital One.161 Mancuso believed that if she had good credit, she could request a lower rate from Capital One.162 But she also understood that the rate could go higher as well.163

Mancuso's account ending -2324 was opened on February 1, 2003. There is no record of what Customer Agreement governed that account.164 In 2005, a new Customer Agreement was sent to Mancuso.165

Mancuso opened the account ending -2336 in 2003.166 Although there is no specific record of the solicitation offered to Mancuso, as described above, the rates on her statements show a 0% APR introductory rate and then in November 2003, the APR rose to 14.9%.167 The 2336 account was opened on May 14, 2003.168 In 2005, a new Customer Agreement was sent to Mancuso.169

Mancuso's account ending -5888 was opened on June 25, 2005 and there is no specific document in the record that can be identified as a solicitation offer with respect to this account.170 Although he did not point to any specific document in the record, Jiulianti testified that the account had a variable APR of 14.9%.171 As Mancuso testified in her deposition, she agreed that the account statements for -5888 showed a variable rate that fluctuated from 15.15% to 12.9% and 4.9%.172 Moreover, the July 2005 billing statement shows a Purchase APR of 15.15% and a Cash Advance APR of 20.24%.173 Because she opened this account in 2005, a 2005 Customer Agreement would have been sent to Mancuso within days after she opened the account.174

According to her account statements, Mancuso's cards all had an initial promotional rate of 0% fixed APR purchases.175 For account ending -2324, the APR for purchases switched to a 14.9% fixed rate as of August 16, 2003.176 For account ending -2336, that switch occurred on November 4, 2003.177 For accounts ending -2324 and -2336, the rates changed four more times before the 2009 Change in Terms: May 16, 2005, to fixed rate of 12.9% (-2324); August 16, 2005, to a variable rate of 13.28% (-2324); February 16, 2006, to a fixed rate of 9.9% (-2324); May 16, 2006, to a fixed rate of 4.99% (-2324); May 4, 2005, to a fixed rate of 12.9% (-2336); August 4, 2005, to a variable rate of 13.28% (-2336); March 4, 2006, to a fixed rate of 9.9% (-2336); April 4, 2006, to a fixed rate of 4.99% (-2336).178

On account ending -5888, the APR for purchases was a variable rate of 14.9% from June 28 to July 27, 2005.179 On July 28, 2005, the APR for purchases changed to a fixed rate of 12.9%; on February 28, 2006, to a fixed rate of 9.9%, and on March 28, 2006, to a fixed rate of 4.9%.180

Mancuso's accounts ending in -2324, -2336, and -5888 were part of the 2009 Change in Terms.181 Jiulianti testified that Mancuso's -2324 account statements show that Offer ID Notice No. 14798 was mailed on February 2, 2009.182 The same notice was mailed to account ending -2336 on February 2, 2009.183 For account ending -5888, Offer ID Notice No. 14802 was mailed on February 2, 2009.184

Exhibits A-26 and A-29 show the contents of Notice No. 14798.185 Notice No. 14798 was sent to the address on Mancuso's account in Galloway, New Jersey.186

Notice No. 14798 stated that Capital One was changing the terms of the account Purchase and Balance Transfer Rate, the Cash Advance Rate and the Default Rate.187 The Cash Advance and Default APR would change beginning with the April 17, 2009 billing period.188 The Purchase and Balance APR rate would not change until January 2010 when the introductory billing rate would expire.189 The Cash Advance rate would be a variable rate equal to 24.9%.190 The Default Rate would be a variable rate equal to 29.4%.191 The Purchase and Balance APR rate would change to a variable rate equal to 13.9%.192 The notice went on to state that "[y]ou can choose to decline this change and close your account."193 "If you decline, we will close your account on May 17, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to May 17, 2009 will still post to your account."194 Mancuso did not decline the Change in Terms.195

Exhibit A-32 shows the contents of Offer ID Notice No. 14802.196 Notice No. 14802 was sent to the address on Mancuso's account in Galloway, New Jersey.197 Notice No. 14802 stated that Capital One was changing the terms of the account Purchase and Balance Transfer Rate and the Default Rate.198 The new rate would be variable at 17.9%.199 The Default APR would change beginning with the April 17, 2009 billing period.200 The Purchase and Balance APR rate would not change until January 2010 when the introductory billing rate would expire.201 The Default Rate would be a variable rate equal to 29.4%.202 The Purchase and Balance APR rate would change to a variable rate equal to 13.9%.203 The notice went on to state that "[y]ou can choose to decline this change and close your account."204 "If you decline, we will close your account on May 17, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to May 17, 2009 will still post to your account."205 Mancuso did not decline the Change in Terms.206

Mancuso testified that she never received the 2009 Change in Terms.207 She stated she learned of the increases when she looked at her statement after the Change in Terms.208

8. Roberti Facts

In 2007, Capital One offered Roberti a variable APR on purchases of prime plus 5.15% or a variable rate of 12.9%.209 Roberti understood that her variable rate of prime plus 5.15% would be "indefinite."210 There is no evidence in the record that Capital One made Roberti a "fixed for life" offer.211 Roberti responded to an interrogatory and stated that she could not specifically identify any individual commercial or advertisement that caused her to open a Capital One account but does generally recall the "no hassle" and "what's in your wallet?" commercials.212

At the time Roberti opened the account in 2008, she received a folded Customer Agreement with the card.213 Roberti agreed that part of that Customer Agreement stated that Capital One could change any part of the agreement, including the annual percentage rate.214 The Customer Agreement in effect at that time was the 2005 Customer Agreement.215

From January 24, 2008 to December 20, 2008, the variable APR for Purchases fluctuated from 10.15% to 12.4%.216 From December 21, 2008 onward, the variable APR for Purchases remained at 8.4%.217

Roberti's account was part of Capital One's 2009 Change in Terms.218 According to Roberti's account statements, she was mailed Offer ID No. 14818 on February 2, 2009.219 Offer ID No. 14818 is reproduced as the Defendant's Exhibit A-35.220 Notice No. 14818 was sent to the address on Roberti's account in Montgomery, Alabama.221 Notice No. 14818 stated that Capital One was changing the terms of the account Purchase and Balance Transfer Rate and the Default Rate.222 The new Purchase rate would be variable at 17.9%.223 The Purchase and Balance APR rate would not change until January 2010 when the introductory billing rate would expire.224 The Default APR would change beginning with the April 17, 2009 billing period.225 The Default Rate would be a variable rate equal to 29.4%.226 The notice went on to state that "[y]ou can choose to decline this change and close your account."227 "If you decline, we will close your account on May 17, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to May 17, 2009 will still post to your account."228 Roberti did not decline the Change in Terms.229

Roberti testified that she did not receive notice of the rate changes.230 Because she was a "paperless" customer, Roberti also testified that she did not see any messages concerning the expiration of "promotional" rates on her statement, called "in-statement" notices.231 Although Roberti could have downloaded the full paper statement on-line, she never felt the need to do so.232 Roberti did not learn of the increased interest rates until her January 2010 billing statement when she noticed the increased finance charge on her online summary.233

9. Kolkowski Facts

In 2005, Kolkowski received a mail solicitation offering "0% Fixed APR on balance transfers AND purchases until December 2006" and a variable APR of 7.99% on balance transfers and purchases thereafter.234 Kolkowski identified the solicitation during her deposition.235 There is no evidence in the record that Kolkowski received any "fixed for life" offer.236

The solicitation to which Kolkowski responded contained the following language under "OFFER CONDITIONS":

Shortly after Kolkowski opened her account, Capital One would have mailed a 2005 Customer Agreement.238

According to the statements from Kolkowski's account, the promotional 0% fixed APR for Purchases ran until December 20, 2006, when the APR for purchases switched to a variable rate of 9.45%.239 On January 26, 2008, the APR for Purchases changed to a variable rate of 8.64%.240

Kolkowski's account was part of Capital One's 2009 Change in Terms.241 According to Kolkowski's account statements, she was mailed Offer ID No. 14805 on February 2, 2009.242 Offer ID No. 14805 is reproduced as the Defendant's Exhibit A-41.243 Notice No. 14805 was sent to the address on Kolkowski's account in Arroyo Grande, California.244 Notice No. 14805 stated that Capital One was changing the terms of the account Purchase and Balance Transfer Rate, Cash Advance Rate, and Default Rate.245 The new rates would take effect for all billing periods after April 17, 2009.246 The new Purchase rate would be variable at 15.9%.247 The Cash Advance Rate would be variable at 24.9%.248 The Default Rate would be a variable rate equal to 29.4%.249 The notice went on to state that "[y]ou can choose to decline this change and close your account."250 "If you decline, we will close your account on May 17, 2009.... If you decline, you will be able to pay down your balance at your existing terms. Please keep in mind that any transactions you make prior to May 17, 2009 will still post to your account."251 Kolkowski did not decline the Change in Terms.252 Kolkowski testified that she did not receive notice of the Change in Terms.253

Kolkowski did not make payments on the account after September 19, 2009.254 Capital One closed her account on December 9, 2009.255 Kolkowski filed for bankruptcy in December 2010.256

C. Contentions

The Defendant argues because the Plaintiffs had the option to decline the proposed APR changes and because the 2005 Customer Agreement expressly authorized such changes, the Plaintiffs' claims for breach of contract and implied covenant, breach of implied contract, unconscionability of contract, unjust enrichment, declaratory judgment, California Consumer Legal Remedies Act, California Unfair Competition Law, California False Advertising Law, Kansas Consumer Protection Act, and New Jersey Consumer Fraud Act fail. The Defendant further contends that because the Truth in Lending Act only requires that the issuer mail the notice and not that it actually be received, the Plaintiffs' notice claims under that federal statute also fail. The Defendant contends that the Plaintiffs' Truth in Lending Act claim regarding misleading solicitations is without merit because no reasonable consumer would believe that any Capital One solicitation promised a fixed or low rate for as long as the consumer wanted to borrow. The Defendant further argues that the Truth in Lending Act claim is barred by the one year limitations period because the Plaintiffs filed their complaint more than one year after having received their solicitations.

Finally, the Defendant argues that the Court should also grant the Defendant's motion for summary judgment on the Plaintiffs' state law claims because (1) the Plaintiffs cannot bring an implied covenant claim where express terms of an agreement grant Capital One authority to take certain action and the Plaintiffs cannot show damages because they had the option to decline the new terms, (2) the Plaintiffs' implied contract and unjust enrichment claims are barred because of the written agreement that governed the relationship between Capital One and the Plaintiffs, (3) a rate increase authorized by applicable law is not unconscionable, and (4) the Plaintiffs' state statutory claims are time-barred and the Plaintiffs have not identified any deceptive or unfair acts.

The Plaintiffs respond that their breach of contract claims survive because the Defendant had solicited the Plaintiffs with promises of "low" or "fixed" rates such that the Plaintiffs assumed their rates would not increase. The Plaintiffs also argue that the Defendant violated the covenant of good faith and fair dealing because the increase in interest rates was so far above the market rates. With respect to this claim, the Plaintiffs also argue that they could not have simply cancelled their credit cards and paid off their existing balances because they never received proper notice of the 2009 Change in Terms. Finally, the Plaintiffs contend that the Defendant did not comply with either the procedural or substantive requirements of the Truth in Lending Act in mailing notice of the 2009 Change in Terms to its customers. The Plaintiffs contend that the R.R. Donnelly mailing process was not sufficient to assure that each Capital One customer received notification of the Change in Terms. Additionally, the envelope for the Change in Terms notice was indistinguishable from the other "junk mail" sent by the Defendant. Further, in looking at the language of the notices mailed, the Plaintiffs argue that it was not clear to customers that if they did not decline the new terms, their existing balances would also be subject to the higher interest rates. The Plaintiffs also respond that the Defendant's use of the term "fixed" was confusing because consumers understood this term to mean "fixed for life" and not "fixed" as opposed to "variable."

II. Discussion

A. Preliminary Matters

The parties' statements of material facts are wide-ranging and unfocused. The Court has undertaken to limit its discussion of facts to those that are relevant to the causes of action raised by the Plaintiffs. There is no doubt that discovery has demonstrated that the Defendant sent hundreds of millions of direct mail solicitations during the relevant time period. Discovery also shows that it was an enormous task for the Defendant to track card holders with the terms of their initial offers. When the Defendant made the decision to change the terms of the credit cards, it was again difficult for the Defendant to track groups of card holders and tailor communications of the changes to those card holders. Similarly, discovery reveals that the Defendant made the decision to change the terms of the credit card agreements in 2009 to minimize its risk in a difficult economic environment in which credit status fluctuated wildly. None of these facts on its own, however, supports a violation of any of the causes of action raised by the Plaintiffs. Particularly, standing alone, the desire of the company to reduce the cost of doing business in an uncertain economic environment is not wrongful.

The Plaintiffs also attempt to draw attention to their beliefs that the Defendant rushed to implement these changes in early 2009, ahead of the August 22, 2009, effective date of the Credit Card Accountability Responsibility and Disclosure Act of 2009 ("Credit CARD Act"), amending 15 U.S.C. § 1637, which would alter regulatory requirements on credit card companies and put certain restrictions on "repricing." The Plaintiffs' unfortunate focus on these issues has distracted the parties from providing factual support for their positions with respect to the causes of action alleged in the Amended Complaint.

The Court has previously addressed this problem when it stated:

Further, the Plaintiffs' response to the Defendant's motion is peppered with generalities about how the Change in Terms process worked and references to solicitations and groups of Capital One card holders and decisions made about them. The focus at this point in the litigation, however, is whether the individually-named Plaintiffs can raise these causes of action against the Defendant. If they cannot, the Court does not even get to any class-wide issues which might broaden the litigation beyond what happened to these individual Plaintiffs. Unless arguments are tied to the specific Plaintiffs before the Court, the Court does not address them.

It appears to the Court that the Plaintiffs allege three main problems with the Defendant's actions: Capital One (1) did not keep specific promises concerning interest rates; (2) imposed very large increases on customers which were outside of the market range and therefore violative of good faith and fair dealing; and (3) did not give proper notice of the 2009 Change in Terms. The Plaintiffs have raised the following causes of action based on these complaints: (I) breach of contract and implied covenant; (II) Truth in Lending Act, failure to provide proper notice; (III) breach of implied contract; (IV) unconscionability of contract; (V) unjust enrichment; (VI) Truth in Lending Act, failure to provide proper notice; (VII) Truth in Lending Act, misleading solicitations; (VIII) declaratory judgment; (IX) California Consumer Legal Remedies Act; (X) California Unfair Competition Law; (XI) California False Advertising Law; (XII) Kansas Consumer Protection Act; and (XIII) New Jersey Consumer Fraud Act.

B. Breach of Contract

As the Court alluded to in the Statement of Facts, there is some question as to what version of the Customer Agreement various Plaintiffs received at the initial opening of their credit cards. But there is no dispute that the 2005 Customer Agreement was in place at the time of the 2009 Change in Terms.258 Furthermore, during the time of the Change in Terms, the back of each of the Plaintiffs' Capital One credit card read: "By accepting, signing or using this card, you agree to Capital One's present and future rules and regulations."259

The 2005 Customer Agreement also contains an "Account Closure and Suspension of Credit Privileges" clause, which provides:

The 2005 Customer Agreement contains a "Changes in Terms" clause, which provides:

By its terms, the 2005 Customer Agreement is governed by federal and Virginia law. The elements of a breach of contract claim under Virginia law are: (1) a legally enforceable obligation of a defendant to a plaintiff; (2) defendant's violation of that obligation; and (3) resulting harm to the plaintiff.262

The precise source of the Plaintiffs' breach of contract claim is not clear to the Court. The Plaintiffs point to no particular provision of the 2005 Customer Agreement they believe the Defendant breached. This is probably because the clear language of the 2005 Customer Agreement authorized Capital One to change the interest rates charged on the card. Moreover, as the Defendant points out, the terms of the 2005 Customer Agreement allowed Capital One to cancel the account without any cause or advance notice regardless of whether there was a default. The Defendant contends it exercised its rights under this clause by offering to the Plaintiffs to close the account if the Plaintiffs did not like the new interest rates and this offer allowed the Plaintiffs to pay off the existing balance at the existing terms. If the Plaintiffs agreed to the increased interest rates, the Defendant would offer the Plaintiffs credit at the new terms. The Court notes that these particular terms of the 2005 Customer Agreement are in compliance with Virginia law which authorizes unilateral rate increases so long as there is notice.263 Thus, the Court finds the Plaintiffs have not stated a breach of contract claim with respect to the language of the 2005 Customer Agreement.

The gravamen of the Plaintiffs' complaint appears to be that Capital One made promises of "low" or "fixed" rates in commercials or other solicitations and therefore any alteration of interest rates is a breach of those initial solicitations.264 The Plaintiffs did generally testify that they were attracted by Capital One's marketing campaign which promised "low" interest rates and "no hassles" cards. The major flaw in this theory, however, is that the Plaintiffs (other than Kolkowski) have not identified any specific solicitation to which they responded when seeking their Capital One credit cards.265 As a result, there is no way for the Court or a reasonable jury to determine whether any actions taken by Capital One in 2009 violated any term of the initial solicitations.

Significantly, even if the Plaintiffs could show the "low" and "fixed" solicitation to which they responded, their breach of contract claims would still fail. Rubio v. Capital One Bank,266 relied on by the Plaintiffs, for their Truth in Lending Act claims, is of no help to them for their breach of contract claims because Rubio holds that the initial solicitation by a credit card company cannot form the basis of a breach of contract claim. In Rubio, the plaintiff argued that because her solicitation offered a credit card at a "fixed" APR of 6.99% and that rate was later increased to 15.9%, Capital One breached its contract. The Court rejected this argument finding that the solicitation was not an "offer" under any theory of contract law because the solicitation could not simply be "accepted" by the consumer. Rather, the consumer had to fill out a credit application form and there were a number of contingencies under which the application could be rejected.267 Thus, the Court found that the "solicitation and application do not constitute an enforceable contract."268

For the foregoing reasons, the Court GRANTS the Defendant's motion for summary judgment as to the Plaintiffs' breach of contract claim.269

C. Good Faith and Fair Dealing (Virginia)

The Plaintiffs also contend that the Defendant breached the covenant of good faith and fair dealing implied in every contract under Virginia law. In Virginia, "when parties to a contract create valid and binding rights, an implied covenant of good faith and fair dealing is inapplicable to those rights. This is so under either the common law or the Uniform Commercial Code...."270 As the Court found above, the Defendant did not breach the 2005 Customer Agreement with the Plaintiffs and the Plaintiffs offered no other contract which could have been breached.

This would appear to end the inquiry of good faith and fair dealing; however, a line of cases has developed out of Virginia Vermiculite, Ltd. v. W.R. Grace & Co.,271 which holds that in Virginia, every contract contains an implied covenant of good faith and fair dealing which requires a party to exercise its discretion under a contract in good faith. See also Enomoto v. Space Adventures, Ltd., 624 F.Supp.2d 443, 450 (E.D.Va.2009).272 Citing Contractual Good Faith, a hornbook, Virginia Vermiculite held that "although the duty of good faith does not prevent a party from exercising its explicit contractual rights, a party may not exercise contractual discretion in bad faith, even when such discretion is vested solely in that party."273 The Court then distinguished Ward's Equipment and Charles E. Brauer, by stating that they were not "inconsistent" with this rule.274 Virginia Vermiculite has been cited by countless federal courts, but only three unpublished Virginia decisions.275

The Defendant argues that because the Plaintiffs were given the choice of either closing their accounts and paying off their balances at the existing rate, or accepting the higher rates, the Change in Terms could not violate good faith and fair dealing. The Plaintiffs state that either choice would harm consumers and therefore violates the covenant.

The Court need not dig to the philosophical bottom of Virginia law on the covenant of good faith and fair dealing because even Virginia Vermiculite holds that the covenant cannot bar a party for "exercising its explicit contractual rights." If a party has an explicit contractual right, the decision to exercise the right cannot be deemed "discretionary" as that term is used in good faith and fair dealing discussions. If a party could only exercise an explicit contractual right in good faith, then every contractual right could be read as "discretionary."276 As the Court outlined above, the only contract possibly at issue, the 2005 Customer Agreement, explicitly authorizes the Defendant to change any portion of the Agreement, including annual percentage rates, at any time. The Court finds the discretion granted under the Agreement is absolute and uncontrolled and therefore even under Virginia Vermiculite, the Plaintiffs have not stated a claim for breach of the implied covenant of good faith and fair dealing.277

D. Truth in Lending Act — Notice278

The Plaintiffs allege that they did not receive notice of the increase in rates at least 45 days in advance as required by Regulation Z of the Truth in Lending Act.279 The purpose of the Truth in Lending Act is to "assure a meaningful disclosure of credit terms so that the consumer will be able to compare more readily the various credit terms available to him and avoid the uninformed use of credit, and to protect the consumer against inaccurate and unfair credit billing and credit card practices."280 The Truth in Lending Act, itself, did not specify the manner in which such notice was to be given, but the Federal Reserve Board implemented what is known as "Regulation Z" to address specific issues of notice.281

At the time Capital One mailed its notices, Regulation Z required 15 days advance notice.282 Regulation Z provided:

Under Regulation Z, the "creditor is only required to establish that it sent the notice, and need not prove that the consumer actually received the notice."284 The 2005 Customer Agreement also required notice "if required by Federal law." The Agreement stated that notice would be mailed.

As the Court recounted above, Capital One contracted with R.R. Donnelly to process the mailings of the Change in Terms notices to Capital One customers. Gaylor testified as to the details of that process including accounting for the total number of names Capital One provided to R.R. Donnelly compared with the total number of mailings R.R. Donnelly provided to the United States Postal Service. Furthermore, for the five Plaintiffs who allege lack of notice, as the Court set forth above, Jiulianti testified that there is a record in each of their accounts as to the Change in Terms "Offer ID" number that was mailed as well as the fact that the notice was mailed to the address each Plaintiff had on file with Capital One at the time of the 2009 Change in Terms. The Court finds Gaylor's testimony and Capital One's account records are sufficient to meet the requirements of Regulation Z that notice be sent by the credit card company.

Although the Plaintiffs argue that Capital One did not reconcile individual names to mail pieces, had never undertaken such a massive mail notice effort before, and acknowledged there were errors in the mailings, none of these arguments is sufficient for the Court to find that Capital One did not "mail" the notices in accordance with Regulation Z. The Plaintiffs have cited to no requirement in the law that a perfect or near perfect job be done on the mailings. Gaylor's testimony is more than sufficient to show that a process was in place and tens of millions of notices were mailed out. Given the high number of mailings, a certain number of returns would be presumed.285

The Plaintiffs also contend that the 2009 Change in Terms notices were indistinguishable from other "junk mail" offers from Capital One. The Plaintiffs suggest it might have been more helpful if Capital One put "Your Interest Rate Is Going Up Unless You Act Now" message on the envelope.286 To the extent some mailings were returned as undeliverable or the Plaintiffs can imagine a more eye-catching envelope style, Regulation Z does not require that the most perfect form of notice be provided. Rather, it states that Capital One must send written notice to customers. The Court finds it has done so.287

E. Truth in Lending Act — Substance

As the Court described above, the Truth in Lending Act and its implementing Regulation Z govern certain disclosures with respect to credit card annual percentage rates ("APRs").288 Regulation Z designates certain disclosures that must be made to consumers on credit card solicitations. Issuers must disclose in a tabular form (what is known as a "Schumer Box") the "annual percentage rate applicable to extensions of credit under such credit plan" and fees.289 Other requirements on the disclosure of interest rates are listed in the staff commentary to Regulation Z and require that: (1) if the rate is temporary, the solicitation must disclose the rate that will apply after the temporary rate expires, 12 C.F.R. pt. 226, Supp. I, § 226.5a(b)(1)(5) and (2) any specific events that trigger a rate increase without any further notice, such as default rate increase, must be disclosed, 12 C.F.R. pt. 226, Supp. I, § 226.5a(b)(1)(7).

The Truth in Lending Act also specifies that the information "shall be disclosed clearly and conspicuously, in accordance with regulations of the [Board]."290 The disclosure must be "in a reasonably understandable form and readily noticeable to the consumer."291

However, the Truth in Lending Act is a "disclosure statute" and "does not substantively regulate consumer credit but rather `requires disclosure of certain terms and conditions of credit before consummation of a consumer credit transaction.'"292

The Eleventh Circuit addressed disclosure requirements under the Truth in Lending Act in Veale v. Citibank F.S.B.293 There, mortgage borrowers filed suit against Citibank alleging that the bank had violated the Act because it did not provide the required material disclosure of (1) a $21 Federal Express charge in the Finance Charge and only included it in the Amount Financed, (2) the Florida Intangible Tax, and (3) the required number of payments. In addressing the plaintiffs' claims, the court held that "TILA does not require perfect notice; rather it requires a clear and conspicuous notice of recision rights."294 The court found the particular form at issue "provides sufficient notice that the current transaction may be canceled but that previous transactions, including previous mortgages, may not be rescinded. Such meets the requirements of the law."295

The Plaintiffs' primary argument concerning the substance of the 2009 Change in Terms notice is that customers who had "fixed" interest rates understood the term "fixed" to mean "never changing" while Capital One argues that "fixed" in the context of credit card interest rates means a "consistent" value as opposed to "variable" interest rates which are tied to LIBOR.

The Plaintiffs rely on Rubio v. Capital One Bank,296 where the court addressed the use of the term "fixed" on a direct-mail credit card solicitation. Based in part on regulations not yet in effect,297 the court did determine that "fixed" could "reasonably be interpreted to mean `unchangeable.'"298 The Court finds Rubio distinguishable. As an initial matter, significantly, the Ninth Circuit applies as standard of "absolute compliance by creditors" with the Truth in Lending Act and Regulation Z and "even technical or minor violations of TILA impose liability on the creditor."299 The standard of review in the Eleventh Circuit under Veale is far less stringent.

Furthermore, Rubio is not applicable in the instant case because none of the Plaintiffs here (save Kolkowski) has the solicitation upon which he based his decision to apply for a Capital One credit card. Thus, the Court cannot determine whether those solicitations even used the term "fixed" without any specific deadline. As the Court noted above, Kolkowski's solicitation showed a specific period of time for the promotional rate of 0% APR which is what the new regulation suggests as a means of clarifying the term "fixed."

Moreover, based on the Veale standard in the Eleventh Circuit, the Court finds there is nothing unclear or inconspicuous about the terms as used by Capital One in its solicitation materials. The use of the terms "fixed" and "low" in solicitation materials is promotional puffing on the part of the company. At most, "low" and "fixed" mean the same rate going forward and not the same rate for life. Some of the Plaintiffs here testified that they did not believe Capital One had the right ever to change the annual percentage rates (unless the consumer violated the terms of the credit card agreement).300 The Court finds this is not a reasonable understanding of the consumer's rights, particularly when the 2005 Customer Agreement clearly states that Capital One had the right to "add to, remove, amend or change any part of provision of this Agreement, including the annual percentage rates(s)."301 In fact, half of the Plaintiffs here have conceded that they understood Capital One had the right to change the APR.302 Given these circumstances, the most natural reading of "fixed" would be "not variable" as a rate based on LIBOR would be.

Finally, the Plaintiffs' own experience with their credit cards showed that Capital One did change the rates on the credit card accounts, sometimes raising the rates and sometimes lowering the rates. As the Court recounted in the statement of facts, the account statements for all the Plaintiffs reflect these changes.303 Thus, no reasonable jury could find it plausible that the Plaintiffs did not believe that their rates could ever change so long as they complied with the terms of the credit card. The Plaintiffs' rates had increased even before the 2009 Change in Terms.

The Plaintiffs next argue that the 2009 Change in Terms notices mailed to customers did not comply with the Truth in Lending Act and Regulation Z because they were not clear and conspicuous in their meaning. The Plaintiffs contend that the Change in Terms notices never explained that unless the customer specifically declined the new terms of the credit card, the increased interest rates would apply to existing as well as future balances.

The Court disagrees. Although each of the notices mailed to the Plaintiffs contained slightly different formatting and language depending on which particular rates would be increasing, each notice contained a box which had a header of either "Rate increases in 2009"304 or "Changes to the terms of your account."305 The notices also provided that if "you decline, you will be able to pay down your balance at your existing term."306 This language leaves no ambiguity that if you do not decline, you will not be able to pay off your balance at the existing terms. For those who keep their credit card accounts open, the interest rates are going up on all balances. It simply did not make sense on a credit card account to expect that there would be different percentages for new purchases — as opposed to your existing balance — if you keep the account open.307

Furthermore, the 2005 Customer Agreement informs consumers: "Changes to the annual percentage rate(s) will apply to your existing account balance from the effective date of the change, whether or not the account balance includes transactions billed to the account before the change date and whether or not you continue to use the account. Changes to fees and other charges will apply to your account from the effective date of the change."308 Thus, the Court finds that it is clear in both the terms of the Plaintiffs' Customer Agreement and the Change in Terms notices that if the Plaintiffs did not decline the new interest rates, those rates would apply to the Plaintiffs' existing balance as of the effective date of the new rates.

For the foregoing reasons, the Court finds that no reasonable jury could conclude that the Defendant failed to provide proper notice under the Truth in Lending Act and the Court GRANTS the Defendant's motion for summary judgment as to this claim.

For the same reasons, the Court also finds that no reasonable jury could believe that the Defendant's decision to raise interest rates on credit cards in the 2009 Change in Terms was "unilateral." The Change in Terms provided consumers with the choice (1) to close their accounts and pay out their existing balances at the old rates or (2) to keep their accounts open and be subject to the higher interest rates. Because the Court has concluded that the Defendant gave sufficient procedural and substantive notice of the 2009 Change in Terms which offered consumers this choice, the Plaintiffs' argument that consumers were not permitted to retain the credit card terms they originally had with Capital One is without merit. The Plaintiffs had the option of closing their accounts and paying off their existing balances at the existing terms without any increase in rates or keeping their accounts subject to the higher rates. The fact that the Court has determined that these changes were not unilateral informs many of the state law claims raised below.

F. Implied Contract/Unjust Enrichment

The Plaintiffs' implied contract and unjust enrichment claims are premised on their contentions that the Defendant had made promises that the consumers' interest rates would remain "low" or "fixed" forever. The Plaintiffs state these theories are in the alternative to its breach of contract claim. The Defendant argues that the Plaintiffs' implied contract and unjust enrichment claims are barred because the relationship between the Plaintiffs and the Defendant is governed by a written document.

As the Court explained above, under a generous reading of the Plaintiffs' breach of contract theory, the Plaintiffs claimed both that the Defendant violated its promise of "low" or "fixed" interest rates and the Defendant breached the 2005 Customer Agreement in an unspecified manner. To the extent that the Plaintiffs premise their implied contract or unjust enrichment theory on any actions covered by the 2005 Customer Agreement, the Court agrees that this claim would be barred under Virginia law by the existence of the written contract governing the parties' relationship.309

For any claims that may arise outside the terms of the 2005 Customer Agreement, the Court notes that Virginia law recognizes two types of implied contracts: implied-in-fact and implied-in-law.310 An implied-in-fact contract "is an actual contract that was not reduced to writing, but the Court infers the existence of the contract from the conduct of the parties."311 An implied-in-law contract (quasicontract) "applies only when there is not an actual contract or meeting of the minds."312 It is possible that the Plaintiffs are attempting to argue that they had an implied contract with the Plaintiffs to keep interest rates "low" and/or "fixed." The Court finds this claim fails for the reasons discussed above. The Plaintiffs cannot point to anything in the record from which a jury could conclude that use of the terms "fixed" and "low" in solicitation materials was anything more than promotional puffing. Nothing in the record shows that "low" and "fixed" meant the same rate for life as opposed to the same rate going forward or as opposed to a variable LIBOR-tied rate. Over the course of the time they held their accounts, the Plaintiffs' own credit cards rates fluctuated up and down which contradicts any notion that the interest rates would never change.

To bring an unjust enrichment claim under Virginia law, a plaintiff must show: (1) he conferred a benefit on defendant; (2) defendant knew of the benefit and should reasonably be expected to repay the plaintiff; and (3) the defendant accepted or retained the benefit without paying for its value.313 The Plaintiffs appear to contend that the benefit they conferred upon the Defendant is increased financing charges the Plaintiffs paid to the Defendant after the rate changes. However, as the Court explained above, the Defendant offered consumers the choice of closing their accounts and keeping their previous interest rates on existing balances, or keeping their accounts and accepting the increased interest charges. Because the Court has determined that the Defendant provided legally adequate notice of the 2009 Change in Terms, the Plaintiffs were offered this choice and the Defendant did not unilaterally impose financing charges which could form the basis of an unjust enrichment claim.

The Court GRANTS the Defendant's motion for summary judgment on the Plaintiffs' implied contract/unjust enrichment claims.

G. Unconscionability

The Plaintiffs' unconscionability argument is premised on the general Change in Terms provision in the 2005 Customer Agreement which allows Capital One to "add to, remove, amend or change any part or provision of this agreement."314 The Plaintiffs allege that this provision is unconscionable because it allows the Defendant to raise interest rates or impose fees "as high as it deems fit."315 The Plaintiffs assert no reasonable party would agree to a contract where there is no provision to cap interest rate raises. The Plaintiffs contend that they may affirmatively raise "unconscionability" in the context of a declaratory judgment action.

The Defendant responds that "unconscionability" is a defense only and may not be relied upon as an affirmative claim. Furthermore, the Defendant contends that Virginia law specifically authorizes banks to raise interests rates "as high as they see fit" and that market forces prevent credit card companies from imposing fees so high they would bankrupt a customer.

Without parsing an affirmative claim versus an affirmative defense, as a matter of policy, Virginia refuses to enforce unconscionable contracts.316 In Management Enterprises, Inc. v. Thorncroft Co., Inc., the Court defined unconscionability as follows:

The party asserting unconscionability has the burden of proving that the contract is unconscionable by clear and convincing evidence.318

It would be very difficult to declare a provision in a contract unconscionable when it does precisely what is authorized by Virginia law.319 If an act is "so gross as to shock the conscience" one might not expect authorization from the legislature to commit such an act. The Plaintiffs apparently believe that the wording of the Change in Terms provision is broader than the Virginia statute but they fail to explain how. Thus, looking at the provision in isolation, the Court finds that it is not "unconscionable" on its own such that the Court would refuse to enforce it.

Furthermore, as the Court explained above, the 2009 Change in Terms did not just unilaterally raise the interest rate on consumer accounts. Consumers were given the choice of closing their accounts so that they (and their existing balances) would not be subject to the increased rates. While the general Change in Terms provision of the 2005 Customer Agreement might not have required Capital One to give consumers this choice, under the view of the law most favorable to the Plaintiffs, they can raise an "unconscionability" argument only to the form of asking the Court not to enforce such a contractual provision. Since the 2009 Change in Terms is not an enforcement of general provision in the 2005 Customer Agreement, the Plaintiffs' "unconscionability" argument is misplaced. The Court GRANTS the Defendant's motion for summary judgment as to unconscionability.

H. State Law Consumer Claims320

1. California Unfair Competition Law

The Plaintiff Kolkowski brings a claim under several California consumer protection statutes, including California Unfair Competition Law.321 The Unfair Competition Law prohibits "any unlawful, unfair or fraudulent business act or practice and unfair, deceptive, untrue or misleading advertising."322 The "fraudulent" theory requires the Plaintiffs to show that "reasonable members of the public are likely to be deceived" by the business act.323

Kolkowski claims that the Defendant committed "unlawful" practices and "fraudulent acts" because it used the language "low" or "fixed" leaving consumers with the impression that credit card interest rates would remain low and/or fixed. Kolkowski also claims that the Defendant's practice was "unfair" because the harm of the Defendant's act outweighs its utility. Kolkowski argues that her interest rate was increased by 11%, she was not notified of the change, and therefore she was not able to pay off her balance under the existing terms of her agreement. She declined other offers of credit to stay with Capital One believing that she would continue to receive a "low" APR. (Significantly, however, Kolkowski seems to concede that the "repricing itself" was not "deceptive," but rather her issue is with the "manner of imposition.")

As the Court explained above, Kolkowski is in a different position than the other Plaintiffs because she is the single Plaintiff would could actually identify the solicitation that she received and caused her to apply for a card. In 2005, Kolkowski received a mail solicitation offering "0% Fixed APR on balance transfers AND purchases until December 2006" and a variable APR of 7.99% on balance transfers and purchases thereafter. The language of this solicitation is clear and limits any "fixed" promotional offers to a specific period of time. Kolkowski cannot point to anything "unfair," "unlawful," or "fraudulent" about her particular offering. Kolkowski, therefore, cannot carry a claim that the Defendant's statements were likely to cause the public to be deceived.

As to Kolkowski's claims that the increase in her interest rate and failure to be notified of such changes come within the scope of the Unfair Competition Law, the Court find that the Defendant's actions were authorized by another statute and therefore cannot form the basis of a claim under Unfair Competition Law. Conduct that is affirmatively authorized by another statute may provide a defendant with a "safe harbor" against liability under the Unfair Competition Law.324 Under Virginia law, the Defendant was permitted to raise interest rates. Under the federal Truth in Lending Act, the Defendant provided adequate notice of the 2009 Change in Terms. The Court GRANTS the Defendant's motion for summary judgment as to the Plaintiff Kolkowski's California Unfair Competition Law claim.

2. California False Advertising Law

It is unlawful under California law to "make or disseminate ... in any other manner or means whatever ... any statement... which is untrue or misleading, and which is known, or which by the exercise of reasonable care should be known, to be untrue or misleading."325 Kolkowski argues that Capital One's advertisements were misleading because they offered "low" or "fixed" interest rates when Capital One then increased Kolkowski's rates "dramatically." Again, Kolkowski's solicitation was quite clear in the time limits for the promotional rate offers. Thus, for the same reasons as given above, Kolkowski cannot succeed on a false advertising claim. The Court GRANTS the Defendant's motion for summary judgment as to Kolkowski's California False Advertising Law claim.

3. California Consumer Legal Remedies Act

The California Consumer Legal Remedies Act prohibits "unfair or deceptive acts or practices" including:

As the Defendant points out, several California courts have held that the California Consumer Legal Remedies Act does not apply to credit cards.327 In Berry, the court held that the California Consumer Legal Remedies Act does not apply to credit card transactions because such transactions do not result in the sale or lease of goods or services to a consumer.328

The Plaintiffs ask the Court to reject the analysis in Berry contending that the plain language of the statute covers credit cards, citing Davis v. Chase Bank U.S.A. N.A.329 The Court declines this invitation. Berry was decided by a California court applying California law directly on point. Davis addressed issues of preemption and did not even consider the holding in Berry that the Consumer Legal Remedies Act does not apply to credit card transactions.

The Court GRANTS the Defendant's motion for summary judgment as to Kolkowski's Consumer Legal Remedies Act claim.

4. Kansas Consumer Protection Act

The Kansas Consumer Protection Act states that "[n]o supplier shall engage in any deceptive act or practice in connection with a consumer transaction."330 The Plaintiff Kautz states that the Defendant violated this Act because it proffered solicitations which knowingly represented characteristics of the credit card that the card did not have. She also argues that the Defendant failed to provide adequate notice of the increase in interest rates.

Kautz was not able to identify any specific solicitation to which she responded and therefore she has no basis for making a claim regarding "fixed" or "low" rates. Kautz also testified that she understood the Defendant could raise the interest rates on her credit card but that it would not be "right" for Capital One to raise her interest rates so long as she was in "good standing" under the credit card.331 So long as Kautz was not deceived by the terms "low" and "fixed," she cannot bring a claim under the Kansas Consumer Protection Act.

Kautz stated that she never received the 2009 Change in Terms notice, so she cannot argue that any wording in that notice was deceptive. In any event, even if she were contending that notice was inadequate, the Court has found above that the Defendant satisfied the disclosure requirements of the Truth in Lending Act, and that the notices were clear in explaining that unless the consumer closes his account, the higher rates would apply to existing balances. The Court GRANTS the Defendant's motion for summary judgment on Kautz's Kansas Consumer Protection Act claim.

5. New Jersey Consumer Fraud Act

The Plaintiff Mancuso brings claims under New Jersey's Consumer Fraud Act, N.J. Stat. Ann. § 56:8-2 et seq. which provides:

To state a claim under the New Jersey Consumer Fraud Act, a plaintiff must show "(1) unlawful conduct by defendant; (2) an ascertainable loss by plaintiff; and (3) a causal relationship between the unlawful conduct and the ascertainable loss."333

Again, Mancuso cannot point to any misleading or deceptive representation made by Capital One because she does not have the original solicitations. Further, she testified that she understood her credit card rate could go lower or higher. Although Mancuso testified that she did not receive notice of the 2009 Change in Terms, as the Court has explained above, the Defendant satisfied the requirements of substantive and procedural notice under the Truth in Lending Act, as well as any general understanding of whether the increased rates would apply to existing balances if a consumer did not close his credit card account. The Court GRANTS the Defendant's motion for summary judgment on Mancuso's New Jersey Consumer Fraud Act claim.

6. Summary

The Plaintiffs argue that the Defendant should not have been able to undertake the 2009 Change in Terms plan because: (1) it violated promises made to the Plaintiffs that rates would be "low" and "fixed"; (2) the "enormous" interest rate increases were outside the market range; (3) the Defendant failed to give proper notice; (4) the Defendant made the changes in an attempt to avoid the consequences of the Credit CARD Act which was set to become effective shortly after the Defendant implemented the plan; and (5) the Defendant made the changes because it desired to make more money. The Plaintiffs are unable to show any contractual duty on the part of the Defendant to keep rates "low" and "fixed." The Defendant offered consumers a choice as to whether to keep the credit card or not. For this reason, the Plaintiffs cannot argue that the Defendant increased its interest rates "outside the market range." If consumers did not want to pay interest rates that high, they could close their accounts. The Defendant complied with requirements under federal law in the substantive and procedural notice it gave to consumers. The Credit CARD Act has no retroactive effect. There is no legal significance to the possibility that any of the actions the Defendant took in the 2009 Change in Terms might have been barred under the Credit CARD Act. While the Plaintiffs may have pointed out difficulties the Defendant had in implementing the 2009 Change in Terms, the Plaintiffs have not been able to link any of this evidence to their particular causes of action.

III. Conclusion

The Court GRANTS the Defendant's motion for summary judgment [Doc. 48]. The Clerk of the Court is DIRECTED to DISMISS WITH PREJUDICE the Plaintiffs' Amended Complaint.