Walmart Wins Right to Terminate Its Credit Card Deal with Capital One

Since 2018, Capital One has been the exclusive provider of credit cards for Walmart. The parties’ agreement specified that Walmart could terminate their agreement if Capital One failed to meet certain customer service benchmarks. Walmart now claims that Capital One has not in fact met those benchmarks and desires to terminate the relationship. Capital One offers a different interpretation of the parties’ agreement and claims that Walmart is not entitled to terminate. The parties made opposing motions for partial summary judgment seeking declaratory judgment.

In Walmart, Inc. v. Capital One, National Ass’n, the District Court for the Southern District of New York sided with Walmart. There is significant redaction in the case, but it seems that the case turns on one provision of the agreement, which provides that Walmart’s right to terminate is triggered if Capital One fails to meet a critical “Service Level Agreement” (SLA) five times within a twelve-month period. Capital One had missed a total of five “Critical” SLAs in 2022, and Walmart sought to terminate the agreement in February 2023. 

Capital One thought the termination unjustified. It’s understanding was that Walmart’s termination right was triggered only if it failed to meet the same critical SLA in a twelve-month period. In this case, two different critical SLA’s were at issue, and Capital One had not failed to meet either of them five times. The court, finding the contract unambiguous, rejected this reading, noting, “the Court begins from the unremarkable premise that the article ‘a,’ when used prior to a countable noun, is most often understood to refer to a nonspecific thing.” In this case, the contract references a critical SLA, and thus any failure to meet a critical SLA will do.

Although the opinion is 41-pages long, there’s not much to add. The court goes through its paces, consulting dictionaries and distinguishing cases, but it never strays very far from the common-sense proposition with which it started. The court denied Capital One’s motion for partial summary judgment and granted Walmart’s, issuing a declaration that Walmart was legally entitled and legally did terminate the agreement between the parties.