Half-baked Subway ‘footlong’ class action tossedReprints
Using harsh language, a federal appeals court has dismissed a class action settlement over the length of Subway’s “footlong” sandwiches as “utterly worthless” and benefiting only plaintiff attorneys.
In January 2013, an Australian teenager measured a “footlong” sandwich sold by a franchisee of Milford, Connecticut-based Subway IP Inc. and discovered it was only 11 inches long, according to Friday’s ruling by the 7th U.S. District Court of Appeals in Chicago in Subway Footlong Sandwich Marketing and Sales Practices Litigation.
“It went viral” and “class action litigation soon followed,” according to the appeals court ruling, with plaintiffs lawyers across the United States suing Subway for damages and injunctive relief under state consumer protection laws and seeking class certification under the Federal Rules of Civil Procedures.
The suits were combined in multidistrict litigation in U.S. District Court in Milwaukee.
“In their haste to file suit, however, the lawyers neglected to consider whether the claims had any merit,” said the appeals court ruling. “They did not. Early discovery established that Subway’s unbaked bread sticks are uniform, and the baked rolls rarely fall short of 12 inches.
“The minor variations that do occur are wholly attributable to the natural variability in the baking process and cannot be prevented. That much is common sense, and modest initial discovery confirmed it,” the ruling said.
“As important, no customer is shorted any food even if a sandwich roll fails to bake to a full 12 inches. Subway sandwiches are made to order in front of the customer; meat and cheese ingredients are standardized, and ‘sandwich artists’ add toppings in whatever quantity the customer desires.”
With no compensable injury, the plaintiffs lawyers shifted their focus from damage claims under the Rules of Civil Procedure to a claim for injuctive relief, the ruling said.
After four years, a settlement was reached under which Subway agreed to implement ceritan measures to ensure “to the extent practicable” that all “footlong” sandwiches are at least 12 inches long, the ruling said.
The parties also agreed to cap class counsel fees at $525,000, according to the ruling. The District Court gave preliminary approval to the settlement, as well as a $500 incentive award for each of 10 named plaintiffs.
Theodore Frank, whom the ruling describes as a class member and “professional objector to hollow class action settlements,” objected to the settlement, arguing it “enriched only the lawyers and provided no meaningful benefits to the class.” The District Court, however, nevertheless certified the proposed class and approved the settlement.
At three-judge appeals court panel unanimously agreed with Mr. Frank. “A class settlement that results in fees for class counsel, but yields no meaningful relief for the class ‘is no better than a racket,’” said the ruling, in quoting an earlier decision.
“The injunctive relief approved by the district judge is utterly worthless. The settlement enriches only class counsel and, to a lesser degree, the class representatives,” the decision said.
“Because the settlement yields fees for class counsel and ‘zero benefits for the class,’” said the ruling, in quoting the earlier decision, “the class should not have been certified and the settlement should not have been approved.”
The District Court ruling was reversed and the case remanded for further proceedings.