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<\/div>\nMastercard Inc. unfairly reduced a \u00a310 billion ($12.6 billion) class action case to a settlement of just \u00a3200 million, according to the firm that funded the lawsuit.<\/p>\n
The credit-card company \u201cskillfully maneuvered\u201d claimant Walter Merricks and his lawyers by offering an inferior settlement to end the case, according to the litigation funder Innsworth Advisors Ltd. The lawsuit alleged Mastercard charged consumers and businesses too much to use its cards.<\/p>\n
\u201cTo the extent that Innsworth\u2019s submissions make poorly aimed pot-shots at the negotiation process, they are hopeless,\u201d lawyers for Mastercard countered. \u201cInnsworth\u2019s interests lie in maximizing its commercial recovery even if that entails a high-risk gamble,\u201d they said arguing the settlement is fair and reasonable.<\/p>\n
The legal drama follows the settlement in what was once the country\u2019s largest class action claim over the amount Mastercard charged consumers and businesses to use its cards. Merricks\u2019 lawyers have since acknowledged that \u201cthere was an overclaim\u201d in his suit.<\/p>\n
The case highlights the tension facing courts in cases meant to maximize returns for consumers at a time when litigation funders are betting on a rise in class actions in the UK. The outcome of the case will likely set a precedent for how judges balance fair compensation and returns for those who foot the legal bill.<\/p>\n
\u201cThe potential settlement raises significant policy questions,\u201d Innsworth\u2019s spokesperson said. The intervention is aimed at getting clarity on the UK\u2019s class action regime for future cases and to ensure scrutiny of the proposed settlement, she said.<\/p>\n
\u201cIt is notable that none of the over 44 million class members have objected,\u201d Mastercard\u2019s lawyers said in their document. The company declined to comment beyond the legal filing.<\/p>\n
The \u00a3200 million settlement is a \u201cvery significant sum\u201d out of which half is to be paid to consumers, according to lawyers for Merricks.<\/p>\n
The funder incurred legal bills worth around \u00a345 million and would double the investment in six years if it gets the remaining \u00a3100 million, lawyers for Merricks said. \u201cMr. Merricks cannot accept that 89.5% of the settlement sum be paid to the funder as this would not be in the best interests of the class,\u201d his lawyers said.<\/p>\n
Merricks obtained a \u00a310 million indemnity from Mastercard to cover his expenses to contest a legal case against him started by Innsworth, according to the documents.<\/p>\n
A spokesperson for Merricks declined to comment.<\/p>\n
Mastercard and its rival Visa Inc. have for years been the focus of civil complaints over the amount they charge consumers and businesses to use their cards. The case stems from an EU ruling that the interchange card fees the company levied for transactions were unfair and breached competition law.<\/p>\n
Photograph: Mastercard Inc. signage. Photo credit: Lionel Ng\/Bloomberg<\/em><\/p>\n Topics<\/span> Lawsuits<\/a> <\/p>\n<\/p><\/div>\n Was this article valuable?<\/p>\n<\/p><\/div>\n