Mastercard: Funder sues own class rep for £200m settlement in £10bn case
The litigation funder in the mammoth class action against Mastercard is set to sue its own class rep after he settled a £10bn case for just £200m.
The case came to a head following a nine year legal battle which went all the way to the Supreme Court, over alleged overcharging interchange fees on Mastercard debit and credit cards settled last month.
This case was the first case under the UK’s 2015 Consumer Rights Act which allowed collective proceedings in competition matters.
It was also a ‘follow-on’ action based on the European Commission ruling which found Mastercard’s interchange fees breached EU laws.
This class action was led by lawyer Walter Merricks and funded by Innsworth Capital to the sum of up to £60.1m, with an additional £15m to cover defendant costs if unsuccessful.
The claim was seeking compensation of approximately £10bn, however it was revealed in December that it settled for £200m.
Documents revealed on Thursday that out of the settlement sum, £100m would be distributed equally to everyone who submitted a claim, which was predicted to be around 44m people.
That resulted in people being entitled to £2.27 each.
While the remaining £100m “will be used to pay the litigation funder”.
The funder indicated that they would oppose the settlement and asserted that Merricks would be in breach of his obligations under the litigation funding agreements.
However, in his witness statement, Merricks stated that “despite this stance taken by Innsworth, I remained of the view that the interests of the class were best served by agreeing the £200m settlement, so I indicated to Mastercard that I was minded to accept the offer.”
He also highlighted in his witness statement that as a result of this move, Innsworth Capital is seeking to commence arbitration proceedings against Merricks, including a claim for damages.
He explained that when he told Mastercard that he was facing the threat of a claim by Innsworth, Mastercard decided it would make available the sum of £10m “in order to deal with the threatened arbitration against me”.
Commenting on the latest move in this ongoing battle, Seema Kennedy, executive director, Fair Civil Justice stated that “this claim shows why reform is so badly needed, and we will continue to call on the Government to introduce measures to improve transparency and accountability of the funding sector.”
While Kenny Henderson, partner at law firm CMS said: “The UK introduced this class action system to try and improve access to justice. But what is happening in practice: £100m to the funder, millions to the lawyers, nine years of wasted court time and a reported £2 per consumer – even if most take steps to claim that sum which is very unlikely.”
“It’s a feeding frenzy for the funders and lawyers. Access to justice is a serious subject, but anyone looking at these numbers can see who is really benefitting. Outcomes like this damage our legal system,” he added.
Back last August, the newly appointed government pushed the Litigation Funding Bill back until after a review was concluded, which could be at least Summer 2025.