I was called to the table by North after West's 4♦ call. The following information about the early auction was presented:
After East bid 2♣, West somewhat hesitantly alerted, and then withdrew the alert. Something along the lines of "um..Alert....no wait..I guess that's not an Alert." It was not clear to me whether South asked West at this point and was told "Michaels", or whether he just assumed it was Michaels. In any case, this is the ACBL and the only alertable meaning for 2♣ would be natural.
Anyway, South's double of a Michaels 2♣ would promise at least 4 cards in at least one major. West's 3♥ call was based on her belief that 2♣ showed the majors. However, when this was doubled and passed back to her, she re-thought her agreements.
The EW agreement, clearly marked on both of their convention cards, is that 2♣ is a top-and-bottom cuebid, showing, in this case, spades and diamonds. Sometime between the 3♥ call and the 4♦ call, West realized her mistake; there is no suggestion that East expressed any discomfort or transmitted UI to West in any other way. Indeed, he was prepared to take his lumps in 3♥ doubled holding a small doubleton heart.
North was surprised by the 4♦ call opposite a partner who had nominally shown the majors, asked West to clarify the 2♣ call, and then summoned the TD.
After sifting through the facts, I first determined that there was no UI issue. East had no UI, and West had not taken advantage of any UI (by running from 3♥X, for example) in the auction. In addressing the MI issue, it seemed clear that NS now had an accurate explanation of the EW agreements. However, South may have been told Michaels earlier in the auction. I therefore gave him the opportunity to change his last call (the pass just before the 4♦ bid) and he declined. Both North and South were very insistent, however, that given the correct information originally, South would not have doubled 2♣.
At this point I saw no option but for them to play out the hand. I advised North to do so and to call me back if she felt she'd been damaged. She was very persistent: "I think we've been damaged RIGHT NOW." I explained that it was too late to go back and remove South's double, so that I could only assess damage in terms of the actual result. With some grumbling, the auction continued with 3 passes. 4♦ was defeated 1 trick, +50 to NS, but it turns out this was a poor matchpoint result as NS are cold for 5♣.
North was very much of the mind that "our opponents did something fishy; we deserve an adjustment". I explained that she and her partner both had a correct explanation of the opponents' bidding after the 4♦ call, and that to avoid their poor result one of them needed to bid 5♣. Without putting words in their mouths, I gave them every opportunity to make a case that the MI in the early auction caused their poor result. When they failed to make such an argument, I allowed the result to stand, but NS seemed quite dissatisfied with this outcome.
Did I handle this correctly? Is there anything else I should have done/said? I'm still quite new at this, so any feedback is most appreciated.