What’s On Your Docket? Capital One Wades Through Lawsuits While Pursuing Historic Merger

You’ve probably heard of financial services company Capital One, even if you don’t have one of its credit cards in your wallet or use any of its banking services. Capital One features celebrities in its advertising that you may not expect to see in a credit card issuer’s commercials — including rock guitarist Slash and former professional basketball star Charles Barkley — to garner attention for its brand and stable of products and services.

If you aren’t familiar with Capital One, chances are you will be soon. The company is acquiring credit card brand Discover to expand its reach and bolster its product lineup. Should the deal receive final regulatory approvals — stockholders of both companies approved the acquisition last month — the combined entity stands to be the largest credit card issuer in the U.S.

Ongoing litigation can impede a company’s attempt to acquire another institution. Unfortunately for Capital One, the company has had a busy first few months of the year on the litigation front. 

The Consumer Financial Protection Bureau (CFPB) sued Capital One in January, alleging that it took illegal action to avoid paying interest to customers. But the CFPB — teetering on life support under President Donald Trump’s second stint in the Oval Office — withdrew its lawsuit against Capital One in late February amid changes in the agency’s direction.

Whether that lawsuit had merit is debatable. But in the wake of the CFPB’s partial dismantling, the court of public opinion may ultimately view the suit’s content as more indicative of the defanged CFPB’s aimlessness and less of any wrongdoing on Capital One’s part.

The CFPB is undergoing changes in leadership — and being taunted by Department of Government Efficiency leader Elon Musk on social media — leaving Capital One with an opportunity to get the last word in on the dismissed suit.

“We welcome the CFPB’s decision to dismiss this action, which we strongly disputed,” a spokesperson for Capital One said in an email to Barron’s.

With the obstacle from the Consumer Financial Protection Bureau out of its way, Capital One’s legal counsel may have had time to focus more attention on the Discover acquisition, at least temporarily. The company now faces a new lawsuit from an entity that has more clout than the CFPB in 2025’s America — the Trump Organization.

Led by President Trump’s sons, Donald Jr. and Eric, the Trump Organization manages a portfolio of luxury real estate properties, including exclusive estates, golf courses, and hotels. Until 2021, the organization had banked with Capital One for decades, holding hundreds of accounts and transacting tens of millions of dollars through the financial institution. 

Last week, the Trump Organization announced it’s suing Capital One for debanking the company in 2021. According to the complaint the Trump Organization submitted on March 7, Capital One notified the organization on March 8, 2021 that its Capital One bank accounts would be closed on June 7, 2021. The complaint alleges that Capital One did not assist the Trump Organization in finding an alternative solution to address its banking needs.

The Trump Organization “suffered considerable financial harm and losses caused not only by the interruption to their access to Capital One’s banking services, but also by the devastating impact on Plaintiffs’ ability to transact and access their monies.”

So why did Capital One terminate its decades-long relationship with the Trump Organization in an allegedly unceremonious fashion? According to the complaint, the Trump Organization has “reason to believe that Capital One’s unilateral decision came about as a result of political and social motivations” and Capital One’s belief that it “needed to distance itself from President Trump and his conservative political views.”

There are two sides to every story. And one of the best parts of the U.S. judicial system is that it affords both parties in a lawsuit a platform from which to give their account on an issue.

Capital One has been tight-lipped about the Trump Organization’s lawsuit thus far, but that isn’t an uncommon position for a defendant in a lawsuit to take. The financial institution responded to media inquiries about the lawsuit by saying the bank “has not and does not close customer accounts for political reasons.”

Lawsuits can take time to settle, and it’s difficult to project how this suit will ultimately unfold without more information from its defendant. But Capital One should be able to dismiss the lawsuit, according to Georgetown Law Professor Adam Levitin.

Levitin wrote an essay examining the merits of the suit and the numerous reasons why it may not stand much of a chance of succeeding in the court of law. But Levitin also raised a point that may have Capital One’s legal team putting in some long days: “If Capital One doesn’t pay up, the implicit threat is that the Trump administration will move to block the Capital One-Discover merger and generally make life unpleasant for Capital One.”

The proposed union between the two companies stands to increase competition in the credit card arena. And enhanced competition may yield lower processing costs for merchants and more innovative solutions for consumers. 

Those who believe good things come to those who wait can take heart in the stalled finalization of the deal between Capital One and Discover. Initially expected to consummate on or before February 19, 2025, that date has been extended by three months to May 19. Whether the deal is delayed again may depend on the direction the Trump Organization’s lawsuit heads next.