Willkie Obtains Win in Virginia in Navy Federal Foreign Merchant Fee Suit

October 28, 2021

Willkie represented Navy Federal Credit Union in the class action suit, the third filed in various federal courts across the country.

On October 27, Willkie won a decisive and sweeping victory for Navy Federal Credit Union— a federally chartered, member owned, not-for-profit credit union serving the military, veterans, and their families—in the United States District Court for the Eastern District of Virginia. The two plaintiffs who filed the lawsuit sought to represent a nationwide class of customers who incurred a small fee for purchasing items online while in the United States from merchants located abroad. The action marked the third complaint filed by essentially the same plaintiffs based on the same factual and legal claims. Judge Liam O’Grady resoundingly rejected plaintiffs’ arguments, noting that they “call for a willful ignorance of how the internet functions,” and dismissed the action with prejudice.

One of the EDVA plaintiffs first filed a virtually identical suit in the Southern District of California in August 2020, and voluntarily dismissed her complaint after Willkie filed a motion to dismiss the action and without even filing an opposition. Around the same time, a different plaintiffs filed a nearly identical lawsuit in the District of South Carolina, and also voluntarily withdrew her claims shortly after Willkie filed its motion to dismiss. Within 48 hours of Willkie filing a reply in support of its motion to dismiss the nationwide class, the South Carolina court dismissed the nationwide class pursuant to the South Carolina’s Door Closing Statute (which bars out of state plaintiffs from suing in South Carolina a foreign corporation for claims arising outside the state), but kept the claims of the South Carolina class potentially alive based on a finding that the contractual terms were potentially ambiguous.

The plaintiffs in the California and South Carolina actions who had voluntarily dismissed those claims teamed up to file the third lawsuit in the EDVA. Winning dismissal required Willkie to explain not only that the terms of the contract were not ambiguous but also to convince the court that it was not bound by and should not adopt the reasoning of the South Carolina decision.

Judge O’Grady ultimately agreed with Willkie’s arguments, that under the plain meaning of the contract “the relevant factor is not where the purchaser is but where the store or vendor is located” and that the South Carolina court did not “make a definitive” or binding ruling as to ambiguity.

The Willkie team included partners Michael Gottlieb, Simona Agnolucci and Mark Stancil and associates Nicholas Reddick, Meryl Governski and Melissa Taustine.