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Class actions set for certification hearings in wake of Mastercard ruling

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Bronfentrinker: Landmark day

Claimant representatives have hailed the Supreme Court’s ruling [2] in the Merricks collective action case as a “pro-claimant and pro-litigation funding decision” which reinvigorates the regime.

Five years on from the Consumer Rights Act 2015 that introduced the possibility of opt-out class actions, no cases have been certified but Friday’s judgment should break the impasse.

Seven applications for collective proceedings orders have been adjourned or stayed pending the Supreme Court ruling and will now begin to proceed to certification hearings, beginning with the boundary fare claim brought by Justin Gutmann, for which the main certification hearing has been listed for March 2021.

This case alleges that South Western and Southeastern rail franchises did not make ‘boundary’ fares readily available for Travelcard holders to purchase, nor making passengers aware of their existence.  As a result, customers had to buy a higher-priced ticket than they would have needed because their Travelcard already entitled them to travel for part of their journey.

Responding to the ruling, the class representative Walter Merricks – a solicitor and one-time senior Law Society official who went on to be Chief Financial Services Ombudsman – said: “I am particularly pleased that the Supreme Court has recognised Parliament’s aim in providing for collective claims where companies have broken competition laws and have caused loss to consumers or small businesses.

“Enforcement of fair competition laws is vital for this country’s market economy and companies who break them these laws can now expect not only to be fined by the regulator, but to face much bigger bills in redress claims from those they damaged.

“The Supreme Court’s decision means that claims relating to losses affected by anti-competitive business wrongdoing in other sectors can be pursued. Today’s judgement sends a powerful signal to companies that infringe competition law that they do so at their financial peril.”

Boris Bronfentrinker, the Quinn Emanuel Urquhart & Sullivan partner representing Mr Merricks, described the ruling as a “landmark day for all UK consumers”.

He explained: “Mastercard and its lawyers have long made dismissive remarks and commented that the case was overblown and unsuitable to proceed as a collective action, yet the Supreme Court has today definitely determined the exact opposite.

“The Supreme Court has recognised the need for mass consumer collective actions to be pursued.”

The action has been funded by Innsworth, which stepped in at “very short notice” when the original funder Burford decided to withdraw after the CAT’s decision to refuse certification.

Another funder, Woodsford, which is backing the Gutman case as well as the Mark McLaren case [3] – against five shipping companies whose cartel is alleged to have led to increased delivery costs for car buyers – described the ruling as “pro-claimant and pro-litigation funding”.

Chief executive Steven Friel said: “I am particularly pleased to see the Supreme Court’s recognition that consumer collective redress and litigation funding fit together like hand in glove. The Supreme Court has endorsed the access to justice benefits of litigation funding.

“All too often, large corporate defendants, with their armies of expensive lawyers, seek to avoid justice by arguing about the mechanisms by which consumers can seek compensation for wrongdoing, including factors relevant to litigation funding.

“The Supreme Court’s decision is the latest, and most senior, judicial confirmation that the English courts are fed up with these defendant tactics. This bodes well for the CAT cases that Woodsford has already agreed to fund, and the further cases that we are actively considering.”

Rob Murray, a partner at Mishcon de Reya, said the decision “keeps alive the practical utility of the collective action regime”.

Though there was no guarantee that certification would be granted by the Competition Appeal Tribunal, he said on balance it seemed “more likely” that it would, “particularly where there may be no other mechanism for redress for consumers”.

His partner, Sarah Houghton, added: “The CAT’s role as the ‘expert gatekeeper’ with sole jurisdiction over these types of collective claims for competition law damages has certainly been given a shot in the arm as a result of this.

“The judgment will also likely give the CAT confidence in its approach to other cases where complex issues of certification need to be addressed. Finally, the judgment recognises that collective actions are an important deterrence tool.”

John McElroy, a partner at Hausfeld and committee member of the London Solicitors Litigation Association, said 2021 was “likely to see the first opt-out claim certified, if not several”.

He continued: “The ruling sets the standard which future collective claims will be required to meet for the purposes of certification. It makes clear that that prospective claimants should neither face a “mini-trial” nor be expected to provide an overly onerous level of evidence at any early stage in proceedings.”

Another of the collective actions awaiting certification is the Michael O’Higgins UKFX claim [4], which alleges that five banks that unlawfully manipulated the foreign exchange market between 2007 and 2013.

Mr O’Higgins said: “We are confident that the UKFX cartel claim will receive certification in due course.

“Even the dissenting judgement in the Merricks case would support certification of our claim as it is exactly the sort of case described as suitable for collective proceedings.”

However, Harold Kim, president of the US Chamber Institute for Legal Reform – part of the US Chamber of Commerce that has long lobbied against collective actions and litigation funding – said the ruling was “a watershed moment that risks opening the floodgates for US-style class actions in the UK”.

He added: “By making it easier for collective actions to be certified, the Supreme Court has signaled that law firms and entrepreneurial litigation funders, not consumers and job-creating businesses, will benefit the most from its lawsuit system.”