'A difficult task ahead' - the UK Supreme Court revives Mastercard class action
While a historic claim on behalf of 46 million citizens can now proceed the final outcome is by no means certain
Claimant lawyers have hailed the UK Supreme Court’s decision on Friday to certify a ‘gargantuan’ class action against Mastercard as a victory for consumers .
A clear-cut victory for the 46 million British citizens in the class remains some way off, however, given the complexities of the case. ‘This is a momentous decision for enforcing consumer antitrust rights,’ Tweeted Law Society of England & Wales president David Greene, a class action litigator himself, despite commentary from Mastercard’s lawyers, Freshfields Bruckhaus Deringer, pointing to the Supreme Court’s split decision.
The claim for an estimated £14bn brought by former Financial Services Ombudsman Walter Merricks on behalf of 46 million consumers relating to alleged overcharging of credit card fees over a 16-year period ending more than a decade ago must now be reconsidered by the Competition Appeal Tribunal (CAT).
Merricks’ advisers, Quinn Emanuel Urquhart & Sullivan, were understandably delighted with the ruling, noting that the Supreme Court had not just set aside the CAT’s refusal to let the action proceed, but had also found for Merricks on other grounds.
Lead partner Boris Bronfentrinker said the result was “a significant day for the collective action regime in this country, after a number of false starts” while Merricks said it sent “a powerful signal to companies that infringe competition law that they do so at their financial peril”.
For Hausfeld partner Antony Maton, intervener on behalf of consumer group, Which?, the case gave the “green light for collective actions to be brought on a straightforward and easily understood basis”.
The CAT had originally rejected the application on the grounds both that the methodology for calculating the damages on an aggregate basis was unworkable and that, in any event, the distribution of any damages across the class would bear no relation to the actual loss each individual had suffered.
The Court of Appeal upheld Merricks’ appeal and on Friday the Supreme Court rejected Mastercard’s attempt to overturn it, although the circumstances were unusual due to the death of the panel’s chair, Lord Kerr, on 1 December shortly before the judgment was due to be handed down.
This led to a 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 in turn opened the door for Mastercard’s lead lawyer, Freshfields partner Mark Sansom, to note that “the Supreme Court dismissed the appeal rather than carry out a re-hearing in very unusual circumstances”.
He added: “It is important to note that there was a 2-2 split between the judges on a number of the key issues, with two judges accepting that the CAT had been entitled to reject the proposed claim rather than certify it to proceed. The [CAT] will now engage with the implications of that at a future hearing”.
Most commentators, however, agreed that the outcome of the hearing was unambiguous given Lord Kerr’s support of the majority opinion.
“Lord Kerr’s sad death does not affect the outcome of the case; it is clear he supported the majority opinion,” said barrister Ben Rayment, of Monckton Chambers.
Genevieve Quierin, a commercial disputes partner at Stephenson Harwood, said the judgment made it clear the CAT’s most serious error had been to refuse certification on the grounds that incomplete data rendered it too difficult to reach a sufficiently robust conclusion on quantum.
One major stumbling block, noted Quierin, had been the questionable suitability of the case for that award of aggregate damages, as noted by the minority Supreme Court judges.
“As a lawyer handling claims brought by many hundreds of merchant claimants in a number of different business sectors, I fully appreciate the difficulties that would be faced by the CAT in establishing an award of aggregate damages if Merricks is given certification," she said. "The CAT has a difficult task ahead to weigh the importance of providing consumers with access to justice and recompense against the potential imprecision and consequential injustice to other representative classes.”
Rayment added: “The Supreme Court’s judgment does not pre-judge the outcome of the CAT’s reconsideration, but it does contain a fairly clear steer that unless the problems with the claim are so significant… then mere difficulties that might apply just as well to an individual claim are not enough to defeat certification of a collective action."
The decision unblocks seven other cases before the CAT that were either stayed or adjourned pending the appeal, including a claim against five investment banks alleging potentially billions of pounds in damages from cartel conduct in the foreign exchange markets.