NEW YORK, March 26 (Reuters) - A federal judge ruled on

Tuesday that Walmart ( WMT ) can end its credit card partnership

with Capital One early because the bank failed to

provide the required level of customer service.

U.S. District Judge Katherine Polk Failla in Manhattan said

the terms of a 2018 agreement making Capital One the exclusive

issuer of Walmart ( WMT )-branded credit cards in the United States

"clearly dictate" that Capital One's "repeated customer service

failures" entitled Walmart ( WMT ) to end their relationship.

Capital One, based in McLean, Virginia, said it disagreed

with the decision and was evaluating its right to appeal.

Walmart ( WMT ), based in Bentonville, Arkansas, said it was pleased

with the decision.

The world's largest retailer had accused Capital One of

being too slow to post many transactions to cardholders'

accounts, and failing to promptly replace many lost cards.

The problems were uncovered in late 2022 and early 2023.

Walmart ( WMT ) said it could end the partnership if Capital One

failed to meet any of 13 "critical" customer service standards

at least five times in a 12-month period.

Capital One said the retailer could invoke that right only

if it failed any single critical standard at least five times.

In a heavily redacted decision that reads like a grammar

lesson, including the meanings of "a" and "an" and the adverbial

phrase "five or more times," Failla said the agreement's "plain

and unambiguous" terms favored Walmart's ( WMT ) view.

She said Capital One's interpretation would leave Walmart ( WMT )

powerless even if the bank failed all 13 customer service

standards four times a year - 52 failures in all -for 10 years,

a position Walmart ( WMT ) called "patently absurd."

Failla directed both companies to advise by April 19 how to

resolve their remaining claims and counterclaims.

The lawsuit began in April 2023. Capital One agreed last

month to buy credit card rival Discover Financial Services ( DFS )

in an all-stock transaction valued at $35.3 billion.

The case is Walmart Inc ( WMT ) et al v Capital One NA, U.S.

District Court, Southern District of New York, No. 23-02942.