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Welcome to Day 2 of our live blog following the appeal brought by Mastercard concerning class certification under the UK’s collective action regime. Today’s live blog team comprises Devina Shah, Jennifer Love, Siobhan Kahmann, Russell Hoare and another round-up of the day’s hearing from Dan Tench, Kenny Henderson, Siobhan Kahmann and Jess Foley, all from CMS.

Please refresh the UKSC Blog homepage throughout the day in order to get the latest posts.

UPDATES

1426: As we bring this Live Blog to a close, we all eagerly await the UK Supreme Court’s judgment in this important matter.  We have received a contribution from Canada, from one of our followers in that jurisdiction.  David Wingfield, a partner with Canadian class action law firm Strosberg, Sasso, Sutts LLP, former head of the competition law division of the Canadian Department of Justice and an English-qualified barrister, has commented:

“It will be interesting to read the Supreme Court’s ruling, and how it interprets the relationship between the UK competition class action procedure and Canadian class action law. 

Much of the argument before the Supreme Court and the lower courts in Merricks has focused on two issues: common impact and the evidentiary threshold required to permit a class action to proceed.  In Canadian law, these issues are kept separate.  As to common impact, unless there is evidence that the overcharge was passed on to the indirect purchaser class the action will not be allowed to proceed as a class action in Canada. This is because the core issue that needs to be common to a class in a competition case involving an overcharge will not be present.  To answer this question some evidentiary threshold needs to be established.  In Canadian law the “some evidence” standard is used.  It appears in Merricks that there was evidence of common impact, but the CAT and the Court of Appeal did not examine that issue directly. Instead they focused on the second issue. That issue is whether damages may be assessed using a formula that applies commonly to the class – this is aggregate damages – or whether damages are to be assessed in some other way. To certify a competition law case under Canadian law it is not necessary to prove that damages may be assessed on an aggregate basis. This is because the case will be suitable to proceed as a class action if some issues, including common impact, may be resolved for a class of people using common evidence at a common issues trial. The availability of aggregate damages is being examined in the UK Supreme Court in this case. But under Canadian law, whether or not the case is suitable for being certified as a collective proceedings would not depend on the form that damages might take.  The trial judge is ultimately in the best position to sort out damages if the case is otherwise suitable to proceed as a class action.”

UPDATE: The second and final day of the Mastercard v Merricks appeal has now concluded.

Lord Kerr opened the (virtual) proceedings at 10am. Mr Paul Harris QC appeared for Merricks and continued his submissions on the first ground of appeal, namely what is the legal test for certification of claims as eligible for inclusion in collective proceedings. He opened his submissions by quoting a passage from the Canadian Microsoft case, taking the position that only some data needs to be available at the certification stage. Mr Harris QC further submitted that at the certification stage there should be a focus on form and procedure (and not substance and merits) and that it would be unreasonable to expect an expert to carry out an exhaustive survey before seeing what the defendant is going to produce in its disclosure. The question at the certification stage is one of economic viability. He cautioned that if the Tribunal were to apply a stringent test at the certification stage, that would have the potential to knock out mass consumer claims.

The Court also heard arguments on the different types of data referenced in an expert report, which Mr Harris QC concluded represented available data, which could be further debated at trial. On the point of commonality of loss, Mr Harris QC submitted that Rule r79(2)(a) (consideration by the Tribunal of whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues) was very much in Merricks’ favour. He then concluded his points on the first ground of appeal, and in doing so agreed with the Court of Appeal’s interpretation of Microsoft, and submitted that the Tribunal had misdirected itself in law, applying too stringent a test.

Following a short break, Ms Demetriou QC commenced submissions on behalf of Mr Merricks on the second ground of appeal, namely how should the tribunal consider questions on distribution of damages at the certification stage. She first brought the Court’s attention to the issues of available evidence and cost, and the significant difficulties an individual would experience in trying to obtain and provide evidence in this case. She highlighted that the relevant provisions of the applicable legislation, guidance, and even the claim form itself do not require details of specific distribution to members of the class at the certification stage. In responding to a query on the fairness of compensation by Lord Leggett, Ms Demetriou QC submitted that it would be impossible to deal with this issue at the certification stage in the present case, with the high numbers of individuals and large sum involved. However, in cases where the award was more limited, the principles of fairness and compensation would be more applicable.  She also submitted that the Tribunal made an error in relation to the compensatory principle, and that it was a misdirection to say one needed to broadly compensate each individual. In conclusion, Ms Demetriou QC stated that the Rules provided a means for members of a class to put forward their own proposals for distribution, and potentially reject the proposal put forward by the class representative. To determine these issues at certification stage would mean that the Tribunal would not be able to hear any submissions from class members, which would be unfair.

Finally, Mr Hoskins QC made his submissions on behalf of Mastercard in reply for around 30 minutes. He responded initially on the first ground, highlighting the differences between Canadian law and UK law, with reference to the specific suitability and commonality requirements under UK legislation. He then went on to contend that Mr Harris QC’s proposed methodology did not reveal what was practicable at certification stage, and that it was not correct for Mr Harris QC to say that much of the evidence had already been gathered to support Merricks’ methodology, observing that the relevant data appeared to be missing from the expert report. In conclusion, Mr Hoskins QC stated that Merricks had chosen to ‘stand or fall’ on his submitted expert report, and he fell – and that it was not appropriate to try to go through the ‘back door’ to recover the position by putting in a supplemental report now. On the second ground, Mr Hoskins QC observed that it was entirely open for the Tribunal to reach the conclusion that the certification criteria were not met, and that it was not a legal requirement to consider compensation, albeit it had a discretion to do so. In conclusion, Mr Hoskins QC contended that the issue of whether there was sufficient evidence to reach a conclusion on certification was unique to the facts of each case. For a £14bn case, he surmised, to say that the applicant could not have given more thought to evidential issues was incorrect – one should do the work to convince the Tribunal that the criteria had been reached.

At 1pm, Lord Kerr thanks the parties for their submissions and closed the proceedings.

1259: Lord Kerr thanks the parties for their submissions and brings proceedings to a close.

1258: Finally, Mr Hoskins QC says the issue of whether there is sufficient evidence to reach a conclusion on certification is unique to the facts of each case. For a £14bn case, to say that the applicant could not have given more thought to evidential issues is incorrect. One should do the work to convince the Tribunal that the criteria had been reached.

1255: Lord Leggatt asks when the Tribunal should consider compensation? Mr Hoskins QC declines to speculate on the Tribunal’s reasoning.

1252: Mr Hoskins QC says it was entirely open for the Tribunal to reach the conclusion that the certification criteria were not met. It was not a legal requirement to consider compensation albeit it had a discretion to do so.

1252: Mr Hoskins QC moves to his submissions on Ground 2.

1250: Mr Hoskins QC says that the applicant chose to stand or fall on its submitted expert report and he fell. It is not appropriate to try through the ‘back door’ to recover the position by putting in a supplemental report now. All of the evidence was available at the time of the first report, as the Court of Appeal noted.

1247: Mr Hoskins QC refers to the RBB report from which one can see that relevant data is ‘missing’ even before one looks to its quality.

1245: Mr Hoskins QC highlights the limited overlap of disclosure periods covered by other retailer class actions (e.g. Sainsbury’s – 18 months) which was not sufficient to carry out the necessary analysis to support the claimant’s proposed methodology. Data would need to be obtained from other sources to cover each market for the entire period from 1992-2008. He says that it was not correct of Mr Harris QC to say that much of the evidence has already been gathered to support their methodology.

1235: Mr Hoskins QC says Mr Harris QC’s proposed methodology does not reveal what is practicable at certification stage.

1232: Lord Briggs asks if ‘preferability’ is different to ‘commonality’ in the Canadian legislation. In Canada ‘preferable’ seems to infer ‘preferable to something else’, but if we say ‘suitability’ in the UK is that simply another way of saying ‘preferable’ to letting everyone bring their own claim? Mr Hoskins QC says the concept is broader in UK law.

1230: Mr Hoskins QC says under our legislation one needs to satisfy both ‘commonality’ and ‘suitability’. This is not the same as the Canadian legislation.

1226: Mr Hoskins QC says Canadian legislation referred to in the Microsoft case does not contain the specific ‘suitability’ requirement that we have in the UK legislation.

1224: Mr Hoskins QC commences submissions in reply.

1223: Ms Demetriou QC concludes her submissions on Ground 2.

1222: Ms Demetriou QC says the the rules provide a means for members of a class to put forward their own proposals for distribution and potentially reject the proposal put forward by the class representative. To determine these issues at certification stage would mean that the Tribunal would not be able to hear any submissions from class members which would be unfair.

1219: Ms Demetriou QC turns to the question of prematurity which she says is the other area where the Court of Appeal found the Tribunal fell into error.

1215: Lord Sales asks Ms Demetriou to clarify her point. She says that if it is found to be an error of law to say there needs to be compensatory award, Mr Hoskins QC had made written submissions that that should not matter as the Tribunal would have reached the same result on Ground 2 in any event. She submits that is incorrect.

1212: Ms Demetriou QC submits that the Tribunal conflated in error proper compensation and fair contribution. It was a misdirection to say one needed to broadly compensate each individual.

1209: Ms Demetriou QC says it is clear that the Tribunal saw there as being a governing principle that individual claimants must be restored to position they would have been in but for the infringement, which is wrong as a matter of statutory construction.

1202: Ms Demetriou QC states that the compensatory principle is not irrelevant at distribution stage, but it is not a statutory requirement. There may be cases where it is not fair to distribute according to that principle.

1158:  Ms Demetriou QC refers to Mastercard’s argument that the proposal is not compensatory. She contends that this argument looks at the CA legislation requiring a reasonable relationship with the compensatory principle, which she concludes is where the Tribunal went wrong.

1156: Lord Leggatt raises the issue of compensation being fairer. Ms Demetriou QC does not disagree but considers a simpler case would be easier on the evidence – like mobility scooters. She contends that in the present case this would be nigh on impossible. She considers that is why distribution is done at the end – with such a large case and such a potentially large award. However, where the award was more limited, that fairness and compensation may well be more easily applicable and represent very important points.

1153: Ms Demetriou QC contends that the defendant is not involved in process of distribution, because it’s interest disappears (following the award of damages made at trial).

1150: Ms Demetriou QC notes there is nothing in the claim form regarding distribution. She refers to r79(2), highlighting that none of the provisions address distribution. She also refers to R80, again noting that none of them refer to distribution. She concludes none of these rules on the certification stage relate to distribution.

1147: Ms Demetriou QC refers to the public consultation on the matter of distribution processes, and cites a relevant case for which the aggregate damages were not distributed in a compensatory manner.

1144: Ms Demetriou QC refers to the Court of Appeal decision, agreeing with its conclusion on the distribution of an aggregate award. She refers again to CA s47, as the primary legislation, which she notes does not have any requirement included for specific distribution of the aggregate award to members of the class.

1140: Ms Demetriou QC raises the issues of available evidence and cost. She notes the significant amount of difficulty an individual would need to go to to attain and provide evidence in this case individually. She highlights that this is exactly the type of case to which CA s47(c)(2) applies.

1136: Ms Demetriou QC now commences submissions on behalf of Mr Merricks on the second ground.

1136: Lord Kerr welcomes the parties back following the break.

1126: The Court takes a short break.

1125: Mr Harris QC notes the time, concluding his arguments and refers to the Court of Appeal decision. In doing so agrees on the Court of Appeal’s interpretation of Microsoft, and the Tribunal’s misdirection in law applying too stringent a test.

1120: Mr Harris QC invites the Court to re-review paragraphs 115 onwards of Microsoft , on pass-on issues, which he contends provides the correct context in which the test should be applied – as had been previously referred to by the Tribunal in part.

1115: Lord Leggatt queries the point being made on commonality. Mr Harris QC refers to the key issues in form and procedure – whether  it be done collectively or individually is specifically relevant for the suitability requirement. Mr Harris QC contends that in the present case if it does not have to be done 46.2 million times individually, that this is highly relevant to suitability. He notes that this point is confirmed in Microsoft. Lord Briggs refers to commonality of loss under the CAT Rules r79(2)(a). Mr Harris QC responds that this is very much in his favour.

1111: Mr Harris QC agrees with the Court of Appeal’s position on the test – whether there is proof at trial of loss. He considers this is supported by the referenced cases of Godfrey and Microsoft.

1109: Mr Harris QC then goes on to examine the relevant test – for which he states there has to be some evidence, not none, and some pass on to the purchasers.

1107: Mr Harris QC further explains this is relevant to aggregate damages, and fairness and justice. He further references that Mastercard stated that at CPO stage the parties are on an equal footing.  Mr Harris QC materially disagrees on this issue, the parties are not.

1104: Mr Harris QC continues to detail the supplemental report, referencing lists of availability of data for use in methodology including subsets. He explains that this can be, appropriately at the time, further debated in trial.

1058: Mr Harris QC directs the court briefly to the supplemental report.  Importantly, he refers to the passages regarding there being available data.

1056: Mr Harris QC states the ‘VAT point’ cannot be set aside in the manner Mr Hoskins QC sought to do.

1054: Mr Harris QC asserts that what the expert is identifying as available data, is across all manner of sectors.  He states that it is unarguable that this is available data.

1052: The expert report is now referred to.  According to Mr Harris QC, what one has here is identification and evidence of available data.

 1049: Mr Harris QC continues and states that Mastercard could have come and said, on the merits the claim won’t succeed.  However it didn’t do this. The Tribunal has strayed in to an assessment on the probative data.

1046: The court resumes.  Lord Kerr confirms that the court has decided that they will receive reference to the report (only).

1037: Lord Kerr states that the justices will have to adjourn on this matter to consider further. The court adjourns.

1035: Lord Kerr considers and questions Mr Hoskins QC objection.  Mr Hoskins QC states that the reason for objection is one of legality.

1033: Mr Harris QC moves to refer the court to an expert report.  However Mr Hoskins QC interjects to object to the referral – it is simply not possible for Mr Harris QC to refer to the expert report.

1031: Lord Kerr continues to query Mr Harris QC questioning, does that mean if the Tribunal considers the data offered as available is without any substance or merit, it simply ignores that circumstance?  Mr Harris QC states this situation should be contrasted with no availability of data.  He states that what one has to do at this stage is have regard to the opinion of the expert who thinks that this is the data that should be used in their methodology.

1028: Lord Kerr questions Mr Harris QC querying whether it is his position that as long as you can point to the existence of data – it is not appropriate for the Tribunal to conduct an evaluation?

1025: Mr Harris QC states that the distinction between form and merits, is equally drawn out at sub paragraph 4.  He continues to say that this is not just a technical point, this is a fundamental structure of the legislation.

1022:  Mr Harris QC refers to Rule 79(3) regarding strength of claims and turns to expand on this submission.

1020: Mr Harris QC directs the court to Rule 79 (a)-(c) and submits these subsections are all matters of form.

1018: Mr Harris QC states that the just and reasonable factors he has listed stands in his client’s favour.

1015: Mr Harris QC lists to the court the following points: (1) not required in Canada (2) there should be focus on form and procedure (and not substance) (3) unreasonable to expect the expert to carry out an exhaustive survey before seeing what the defendant is going to produce in disclosure (4) more generally pre-disclosure issues (5) there is a question of economic viability at the CPO stage (6) if there is a stringent test, this has the potential to knock out mass consumer claims.

1009: Lord Leggatt questions the issue of aggregate damages.  Mr Harris QC starts to articulate his answer however Lord Leggatt directs Mr Harris QC to the question at hand.

1004: Mr Harris QC states that his submission is that you only need some availability of data.  He submits that the question of availability of data across all the sectors would be the same in an individual claim or a collective claim.

1000: Proceedings commence with Mr Harris QC continuing from yesterday.  Mr Harris QC directs the court to a passage in the Microsoft case quoting paragraph 99 of the judgement.

0911: Good morning from the UKSC Blog as we join day 2 of following the Mastercard v Merricks appeal.  The hearing will pick up with Mr Harris QC, continuing his submissions on behalf of Mr Merricks about what should be proven at the certification stage of a collective proceeding. Further arguments are also likely to be advanced regarding the level of losses Mr Merricks would be required to prove in a collective proceedings and in particular, whether it is sufficient to show losses suffered by the class as a whole, rather than loss suffered by each individual class member. The hearing is scheduled to conclude at 1pm.

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