A Good Friday dump: Walmart vs. Capital One

Less than 10 minutes before the SEC closed on Friday night — Good Friday, in fact, when markets had already been closed for more than 24 hours for the holiday — Capital One filed this interesting little chestnut: Walmart Stores was suing the banking giant to end its multi-billion credit card collaboration.

The deal, which was first announced in July 2018, was worth $8.3 billion as of Dec. 31, 2022 and generated $214m in net income for Capital One as of Dec. 31. According to Friday’s filing, Walmart only notified Capital One of its decision to terminate the agreement last Thursday and then filed suit a day later in Southern District Court of New York seeking to terminate the agreement before the expiration date in 2026.

The suit claims that Capital One failed to deliver on several “Critical Service Level Agreements” in the initial deal and “was consistently unable to meet the customer-service standards required by the Contract”. In the suit, Walmart said that it notified the company that it failed to meet these objectives “five or more times in a rolling 12-month period” and terminated the agreement as a result. In an article in the WSJ, a Capital One spokesman described the issues as “immaterial”.

Walmart has not yet filed anything with the SEC related to the suit, though the company usually includes extensive litigation disclosures in its 10Ks and 10Qs, so it will most likely appear in that filing. But both companies have been busy at the Southern District, according to the docket that was updated as recently as today. As you might expect, given the size of both companies, there’s some big name lawyers involved.

Good Friday is one of those rare days that the markets are closed, but the SEC remains open to accept filings, so it’s not uncommon to see companies taking that into account. Any time two very large companies go after one another, it’s usually worth grabbing the popcorn and seeing how it plays out.

A version of this post originally went out to subscribers of my Friday Night Dump newsletter, a subscription-only product that highlights 6-10 filings made after 4 pm on Fridays, when companies tend to bury their most negative information. You can learn more about subscribing here.