Legal Business

Disputes round-up: Links and Milbank secure win on high-stakes Visa dispute as High Court rules against Morrisons on data breach

Linklaters and Milbank, Tweed, Hadley & McCloy have successfully defended client Visa in a claim brought by Sainsbury’s, with Mr Justice Phillips ruling for the first time that interchange fees do not affect competition.

The case which concluded yesterday (30 November) initially saw a number of retailers led by the Arcadia Group claim that fees charged to them each time a customer pays using a credit or debit card breached UK and EU competition law. By the time of the closing submission in February, all claimants had settled except Sainsbury’s, which instructed Morgan, Lewis & Bockius.

Linklaters disputes partner Tom Cassels and Milbank London co-managing partner Julian Stait led the teams co-counselling Visa, while Morgan Lewis London managing partner Frances Murphy acted for Sainsbury’s.

This judgment follows a ruling in favour of another credit card operator, Mastercard, handed down in January for a claim brought by the Arcadia Group.

But while in that case Mr Justice Popplewell held that interchange fees were restrictive of competition but objectively necessary, yesterday’s judgment said they are not anti-competitive by their nature. Phillips said competition between banks to service Sainsbury’s is very strong, and there is no evidence it would be any different if there were no interchange fees: ‘Sainsbury’s claim therefore fails in its entirety.’

A spokesperson for Sainsbury’s said the retailer maintained Visa breached competition law and damaged Sainsbury’s, adding it was ‘disappointed by the decision’. The retailer requested and obtained permission to appeal and is now considering its position.

There have been a number of previous cases brought against Mastercard across Europe for credit card fees. The General Court and Court of Justice of the European Union found that Mastercard’s fees were restrictive of competition.

Sainsbury’s relied upon those cases in its successful claim against Mastercard in July last year, in which the credit card operator was ordered to pay £68.5m in damages.

But yesterday’s ruling took a different approach, distinguishing the European cases and setting a new precedent determining that Visa’s UK interchange fees are not restrictive of competition.

The decision came as the High Court today (1 December) found retail giant Morrisons liable for a mass data leak that took place in 2014, when then-employee Andrew Skelton released the salary and bank details of nearly 100,000 staff. The claimants, a group of 5,518 Morrisons employees, brought the group action and were represented by Manchester law firm JMW Solicitors. DWF disputes consultant Andrew Harris advised Morrisons.

Mr Justice Langstaff ruled that while Morrisons did protect the data of its employees and that the leak was not the company’s fault, it was vicariously liable. In his judgment, Langstaff said: ‘The point which most troubled me in reaching these conclusions was the submission that the wrongful acts of Skelton were deliberately aimed at the party whom the claimants seek to hold responsible, such that to reach the conclusion I have may seem to render the court an accessory in furthering his criminal aims.’ Langstaff granted Morrisons leave to appeal.

Andrew Moir, global head of cyber security at Herbert Smith Freehills, told Legal Business: ‘The case is significant because it is the first successful class action in the UK arising from a data breach, and establishes the principle that companies can be vicariously liable for “inside-jobs” perpetrated by their employees. It also paves the way for those affected by data breaches to claim damages for any distress caused, even if they have not suffered any financial loss as a result of the breach.’

Legal Business

‘Fundamentally different’: MasterCard and Visa to face new £300m UK retailers’ interchange fee claims

Humphries Kerstetter has launched a series of new £300m competition damages claims against MasterCard and Visa, on behalf of a group of 27 UK high street companies including betting firms, online retailers and a major supermarket.

The litigation relates to alleged losses arising from MasterCard’s multilateral interchanges fees (MIFs), which form part of ‘merchant service charges’ retailers pay banks on card transactions made in store or online.

Humphries Kerstetter senior partner Mark Humphries, who is leading the new actions, said the claims are currently worth £300m, although this is expected to rise as new claimants join the action, told Legal Business.

Individual claim forms have been issued already for a majority of the new UK claimants, but there are still further forms to be lodged. The aim is to consolidate the 27 claims into one in the near future, he said.

Therium Capital Management is funding the litigation and has secured ATE insurance to allow businesses to join the claim without significant risks of liability costs, but this will be applied ‘in layers’, Humphries told Legal Business.

The new claims follow a number of similar competition damages cases brought against MasterCard.

Last year, Sainsbury’s won an antitrust damages action against MasterCard after the Competition Appeal Tribunal ruled its UK and Irish MIFs were unlawful. It ordered the global finance company to pay the UK retailer £68.5m in damages plus substantial interest. Jones Day represented MasterCard in the action, while Mishcon de Reya acted for Sainsbury’s. MasterCard sought leave to appeal.

Earlier this year, however, in a separate  claim by a group of UK high street retailers against the company, the High Court ruled that MasterCard’s cross-border interchange fees were lawful, dismissing the £450m damages case. Asda, Morrisons, Arcadia, and Homebase/Argos are currently seeking permission to appeal the judgment.

The judge, Mr Justice Popplewell, rejected the retailers’ claims on the basis that the historical charges were necessary to MasterCard’s business operation and were below any objectionable level. He distinguished between the dates of the claim period and those in the European Commission decision against MasterCard on which the claims were based.

Humphries, however, told Legal Business that these claims will be ‘fundamentally different’ from the latter high street retailers claim. He referred to evidence to be relied on in the claims.

Quinn Emanuel Urquhart & Sullivan’s Boris Bronfentrinker led the team which issued the first consumer opt-out £19bn class action against MasterCard in 2016, brought by representative Walter Merricks.

A MasterCard spokesperson told Legal Business in regard to the new claims: ‘We remain committed to our retail partners and will continue to focus on helping grow their businesses and encouraging the adoption of ever more convenient, safe and secure payments.’

Visa declined to comment.

Legal Business

In-house: Former Deutsche Bank heavyweight Slatter resurfaces at Visa to take European general counsel role

Emma Slatter, Deutsche Bank’s former head of strategy, has agreed to join Visa Europe as general counsel to replace Niamh Grogan.

In her new job at Visa, Slatter will report to New York-based executive vice president and general counsel Kelly Mahon Tullier and European chief executive Nicolas Huss.

Legal Business GC Powerlist 2016 member Slatter will begin her role with the card provider on 20 March 2017, after spending over 20 years at Deutsche Bank in various positions. Most recently, Slatter served as the bank’s global head of strategy for six months between January and June 2016.

An internal memo seen by Legal Business in May 2016 indicated that Slatter was set to leave Deutsche Bank to form her own consultancy, advising on a range of business ventures.

The departure of Slatter was quickly followed by the exit of another senior member of the in-house team. James Hooper, who acted as Deutsche Bank’s head of active asset management since 2013, left to join boutique investment firm J O Hambro Capital Management as the fund’s second in-house lawyer.

Before acting as head as strategy, Slatter was Deutsche Bank’s UK regional general counsel. She was a key figurehead charged with resolving Deutsche Bank’s legal problems. During her tenure as GC Slatter headed a 150-strong legal team across Birmingham and London.

Visa Europe was acquired by US company Visa in November 2015, in a deal worth €21.2bn. Macfarlanes and US firm Wachtell, Lipton, Rosen & Katz advised Visa on the transaction with Linklaters offering counsel to Visa Europe.

Earlier this week it was revealed that Deutsche Bank is close to finalising its roster of legal advisers for its global legal panel. Already making the cut were a host of US heavyweights in addition to the Magic Circle.

The process saw Deutsche Bank combine its UK and global panels into one. Ashurst and Simmons & Simmons are joined a US contingent of Latham & Watkins, Cleary Gottlieb Steen & Hamilton, Mayer Brown and transatlantic firm Hogan Lovells.



Legal Business

Lloyds former head of legal Pithouse takes on deputy GC role at Visa


The former head of legal at Lloyds Banking Group, Prini Pithouse, has taken the deputy general counsel (GC) role at Visa Europe, following a year serving as the payments business’ executive director of commercial law.

Pithouse (pictured) joined Visa Europe in May last year, after a lengthy career in-house at Lloyds, which saw her hold the roles of head of legal and commercial for group IT and head of legal for group operations. Pithouse first joined Lloyds in 2006 as a senior lawyer.

In her new role, Pithouse will report into Visa Europe’s GC Niamh Grogan, who has held the posts of chief legal and regulatory officer as well as company secretary since January 2014. Grogan is also a Lloyds alumni, having served as the bank’s group director of competition and consumer policy for three years. Previous to this, Grogan was an EU and competition partner at legacy SJ Berwin. Other big names in the Visa team include Stephen McCue, director of commercial law and Hugh Stokes, who heads up competition.

Visa Europe, an association owned and operated by over 3,000 European financial institutions, has annual payment volumes of over $1.5trn and processes over 18 billion transactions each year.

In November last year, Visa Europe turned to Linklaters to advise on its €21.2bn acquisition by US company Visa. Macfarlanes acted for Visa alongside Wachtell, Lipton, Rosen & Katz in a transaction with up-front consideration of approximately €16.5bn and the potential for an additional earn-out of up to €4.7bn.

In 2014 Linklaters also advised Visa Europe on high-profile litigation work, alongside Milbank Tweed Hadley & McCloy, to secure a judgment in favour of the company after 12 major UK retailers led by the Arcadia Group sought damages in relation to Visa’s setting of interchange rates.

Last month Legal Business revealed that Lloyds was pushing an incentive scheme to its lawyers to secure new recruits into senior legal roles following a string of exits. The move came after the bank made multiple redundancies as part of an ongoing restructure.

Legal Business

Not a ‘secret cartel’: Linklaters and Milbank secure victory for Visa against major retailers


Linklaters and Milbank Tweed Hadley & McCloy have secured a judgment in favour of Visa after 12 major UK retailers, led by the Arcadia Group, sought damages in relation to Visa’s setting of interchange rates.

Mr Justice Simon ruled today (30 October) that the claim was too historic as they related to a period from 1977. Under Visa’s rules, the merchant pays a multilateral interchange fee (MIF) each time the cardholder makes a payment using the card. According to the claimants, the MIF totalled an illegal restriction of competition.

However, Justice Simon said in the judgment: ‘This is not a case of a ‘secret cartel’ operating over many years without the knowledge of victims and the authorities, and which has been discovered long afterwards. On the contrary, the existence and operation of the Visa four-party card payment system and the multilateral interchange fees were matters of public knowledge, which had been notified to the competition authorities.’

Alongside this, Marks & Spencer (M&S), Sainsbury’s and Tesco, also brought similar claims forward in regards to Visa’s interchange fees, which are still pending, although today’s decision may dispose of the historic claims.

Linklaters’ commercial disputes partner Michael Sanders represented Visa Europe, Visa Europe Services and Visa UK, instructing 20 Essex Street’s Stephen Morris QC, Brick Court Chambers’ Daniel Jowell QC and Monckton Chambers’ Anneli Howard.

For Visa Inc and Visa International Service Association, Milbank’s co-managing partner of London and head of litigation and arbitration Julian Stait instructed Brian Kennelly of Blackstone Chambers.

Stewarts Law’s competition litigation head Jonathan Sinclair, who instructed Brick Court’s Fergus Randolph QC and Max Schaefer, and Matrix Chambers’ Christopher Brown, acted for the claimants.

The 12 claimants were Arcadia Group Brands, Asda Stores, B&Q, Comet Group (which went into liquidation), Debenhams, House of Fraser, Iceland Foods, New Look, Next, Record 2 Shop (also in liquidation), WM Morrison Supermarkets and Argos.

For the other claims, Stewarts Law acted for M&S, Bingham McCutchen’s Frances Murphy advised Sainsbury’s and Mark Humphries senior partner at Humphries Kerstetter represented Tesco.

The outcome is subject to a proposed appeal.

Legal Business

New GCs for Tiffany and Visa as Northern Trust appoints Jenner & Block MP as legal chief


The latest senior in-house moves have seen luxury jewellery company Tiffany & Co promote Leigh Harlan to take over as general counsel as longstanding incumbent Patrick Dorsey announces his retirement, while Visa has brought in PepsiCo’s deputy GC Kelly Mahon Tullier to head its legal function, and Jenner & Block’s managing partner Susan Levy has been appointed as legal chief of global investment management firm Northern Trust.

Dorsey retires after 29 years on 22 May, when associate GC Harlan, who joined the iconic New York Stock Exchange-listed jewellers in 2012 from elite Wall Street firm Cravath, Swaine & Moore will take over as senior vice president, general counsel and secretary, reporting to Tiffany’s chairman and CEO Michael Kowalski.

Kowalski said: ‘I can only express immense appreciation for Pat’s enormous contributions since joining Tiffany in 1985. Pat played a pivotal role in Tiffany’s initial public offering in 1987.

‘Since joining Tiffany, Leigh has proven herself invaluable, demonstrating a sharp, agile intellect, keen legal acumen and strong leadership skills. We are confident in Leigh’s abilities to oversee our highly-talented legal department and delighted to have her as a counsellor on a range of legal matters affecting our global business,’ he added.

Elsewhere, Tullier will join Visa on 16 June as executive vice president (EVP) and deputy general counsel, transitioning into the more senior GC role within the US multinational financial services corporation from 1 October onwards.

Prior to managing PepsiCo’s global and centralised legal teams, Tullier was GC for its Asia, Middle East and Africa division, based in Dubai, where she managed legal issues in over 70 countries, including big growth markets China and India.

Visa’s chief legal officer and chief risk officer Ellen Richey, who joined Visa in 2006 from US bank Washington Mutual, will step into a newly-created vice chairman role for risk and public policy from 1 October, overseeing the chief risk officer and chief audit executive.

She will also lead a newly-created function responsible for public policy at Visa and will be responsible for coordinating global crisis management at the executive level.

Visa’s CEO Charlie Scharf said: ‘I have extraordinary respect for Ellen, she has helped Visa navigate through many complex issues in her legal and risk roles. Her deep expertise and judgment, both at Visa and elsewhere, are invaluable and make her the ideal person to lead global risk management and help us further develop our public policy strategies.’

Meanwhile, Levy, who has been with Chicago-based firm Jenner & Block since leaving law school in 1982, becoming managing partner in 2008, is set to make the move in-house, to wealth and asset management institution Northern Trust, which manages $915bn in assets from offices around the world.

Succeeding Levy as managing partner at the 450-lawyer firm is co-chair of its patent litigation practice Terrence Truax, who will take over the post from 1 May.

Chairman of Jenner & Block, Anton Valukas said: ‘Susan is valued by our clients and our partners for her sound business judgment, strong legal skills and exceptional leadership capabilities. She embodies our firm’s core values and has helped us build a world-class organisation known for its trial, litigation and transactional capabilities. While we are very sad to see her leave the firm, we are exceedingly proud of what she has accomplished.’

Legal Business

Visa Europe’s GC joins A&O’s global antitrust practice


Allen & Overy (A&O) has hired Visa Europe’s general counsel (GC), executive vice president and company secretary Vanessa Turner as a partner in its global antitrust practice.

Turner will be based in the Magic Circle firm’s Brussels office, advising European and international clients dealing with EU and other regulators on merger clearance, cartels and other antitrust and competition matters.