Capital One Financial Corp., one of the nation's five biggest credit-card issuers, agreed to settle a three-year legal dispute with Sears Holdings Corp. over management of the retailer's Kmart MasterCard.
Terms of the settlement are confidential, and neither party acknowledges fault or liability, said Tatiana Stead, a Capital One spokeswoman.
"Capital One and Kmart reached a mutually agreeable settlement that fully resolves the lawsuit and all disputes between them," Ms. Stead said.
Kim Freely, a spokeswoman for Sears, did not have an immediate comment.
Kmart Holding Corp. filed a federal lawsuit in November 2003 seeking damages of more than $100 million. The suit alleged that Capital One, of McLean, Va., agreed to spend as much as $40 million a year promoting the retailer's MasterCard.
The dispute moved to a state court in Michigan, where Kmart was based. According to the suit, Kmart chose Capital One for its expertise in subprime card loans, which are made to people with blemished repayment histories or no established credit record. The suit said this included shoppers in "traditionally underserved communities and minority communities," which accounted for a large number of Kmart's customers. According to the suit, Kmart gave Capital One access to a proprietary database in 2000, and the card company signed up 4 million Kmart shoppers in the first two years of the five-year contract. The suit said Capital One backed out of the accord in 2003.
Sears, Roebuck and Co. merged with Kmart in 2005 to form Sears Holdings. Citigroup Inc. issues Sears-branded credit cards.
