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In a major victory for Quinn Emanuel Urquhart & Sullivan, the UK Supreme Court has today allowed a £14bn class action against Mastercard over the alleged over-charging of credit card fees to proceed.
The ruling – the first of its kind to reach the court – confirms the correct legal requirements for certifying class actions and gives the green light for Quinn Emanuel’s client, former financial ombudsman Walter Merricks, to press ahead with a claim before the Competition Appeal Tribunal (CAT) on behalf of 46 million UK consumers.
Quinn Emanuel’s lead partner, Boris Bronfentrinker, hailed “a significant day for the collective action regime in this country, after a number of false starts”.
However, the death of the Supreme Court panel’s chair, Lord Kerr, on 1 December led to a highly unusual 2-2 split decision between the remaining judges, with the dissenting pair – Lord Sales and Lord Leggatt – backing the appeal on the basis that Lord Kerr had sided with Lord Briggs and Lord Thomas and a re-hearing of the case would be unjust and “hugely wasteful of resources”.
This prompted Freshfields Bruckhaus Deringer partner Mark Sansom, lead adviser to Mastercard, to point to the “unusual circumstances” surrounding the judgment with two of the judges “accepting that the CAT had been entitled to reject the proposed claim rather than certify it to proceed”.
Merricks is seeking damages from Mastercard in respect of interchange fees, which have been ruled illegal by the European courts and which he claims led to consumers paying higher prices in shops over a 16-year period. It is suggested most adults who were living in the UK during the period the fees were being charged will be in line for pay outs of up to £300.
According to a joint briefing by barristers at the top commercial set of chambers Brick Court, Mastercard raised two issues before the UK’s court.
It sought to uphold the CAT’s original decision that the claimant’s methodology was unworkable, disabling the calculation of damages on an aggregate basis. Secondly, it argued the CAT was being asked to distribute aggregate damages in a way that bore no relation to the loss individual class members had suffered.
‘Lord Sales and Lord Leggatt broadly agreed with Lord Briggs as to the second ground of appeal, finding that the tribunal had misdirected itself by finding that an aggregate damages award would have to be distributed on a compensatory basis,’ the briefing stated. ‘As to the first ground, Lord Sales and Lord Leggatt agreed with Mastercard that the tribunal had been entitled to find that the claims were not suitable for an award of aggregate damages, and so for that reason were not suitable to be brought in collective proceedings.'
The majority, however, including the late Lord Kerr, made it clear the claim was suitable to proceed; Lord Briggs holding the CAT had 'erred in its approach to assessing Merricks’ proposed method of assessing damages on an aggregate basis across the class'. Such a process, the majority found, should not be a mini-trial, and nor should an arguable claim be dismissed simply because of the difficulties in assessing aggregate damages.
In June, one of the largest-ever UK cartel damages claims reached a key stage when the Supreme Court held that interchange fees set by the MasterCard and Visa were unlawful under EU law.