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Seventh Circuit Rejects Sub-Way Class Action Settlement For Failing to Provide Enough Benefit to the Class — Chicago Class Action Lawyers

It may be a first when class-action consumer litigation requires a Seventh Circuit panel to describe the step-by-step process of creating a Subway sandwich in a published opinion.

But that’s indeed what the court did in its recent ruling dismissing a class-action suit against the Subway fast-food chain; ham, provolone, pepper jack and all.

It all started in 2013 when an Australian teenager posted a photograph of his Subway “Footlong” sandwich next to a tape measure on his Facebook page. The sandwich measured only 11 inches. The post went viral and Subway customers in the U.S. began measuring their own sandwiches, and it was only a matter of time before the plaintiffs’ bar got in on the action.

Plaintiffs’ lawyers sued Subway, seeking damages and injunctive relief under state consumer-protection laws. The different cases were consolidated in the Eastern District of Wisconsin.

Subway’s defense was that because of deviations in the baking process, some rolls would inevitably shrink to under 12 inches, but all customers still received the same quantity of ingredients and most customers still got to enjoy a foot-long sandwich.

The court determined it was a practical impossibility to calculate each class member’s damages because no customer whose sandwich roll failed to measure 12 inches received less food than another customer, therefore injury could not be proven. The class then demanded only injunctive relief. The parties agreed to a settlement whereby the sandwich chain would institute procedures to try to ensure each roll lived up to its full 12-inch potential. Still, the company warned it could not guarantee that some wouldn’t fall short.

The parties agreed to cap attorneys’ fees at $525,000 with a $500 “incentive payment” to class representatives. The district court judge approved the settlement and certified a class of “all persons in the United States who purchased a 6-inch or Footlong sandwich at a Subway restaurant between January 1, 2003[,] and … October 2, 2015.”

Class member Theodore F., described in the Seventh Circuit opinion as a “professional objector to hollow class-action settlements,” challenged the settlement on the grounds it enriched only the attorneys and provided no meaningful benefits to the class.

On appeal the Seventh Circuit reversed, stating: “A class action that seeks only worthless benefits for the class and yields [only] fees for class counsel is no better than a racket and should be dismissed out of hand.”

The crux of the court’s reasoning was that the sandwich-munching class members were no better off after the settlement than they had been before. The settlement did not guarantee that some Subway sandwiches would not come up short, and most customers won’t know the difference anyway. “Sandwich measuring by Subway customers had been a fleeting social-media meme,” Judge Sykes wrote for the panel. “Most people consume their sandwiches without first measuring them.”  The length of the bread has no effect on the quantity of food each customer receives, which had been the case before the lawsuit.

The court concluded the settlement provided no meaningful relief to the class and its “principal effect” is to “induce the defendants to pay the class’s lawyers enough to make them go away.” Class counsel had failed to protect the interests of the class under the In re Walgreens holding.

According to the Court: “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 case is In re Subway Footlong Sandwich Marketing and Sales Practices Litigation, No. 16-1652 (7th Cir. 2017).

Our Oak Brook, Illinois consumer rights private law firm handles individual and class action gift card, data breach, privacy rights, deceptive advertising, predatory lending, unfair debt collection, lemon law, and other consumer fraud cases that government agencies and public interest law firms such as the Illinois Attorney General may not pursue. Class action lawsuits our law firm has been involved in or spear-headed have led to substantial awards totaling over a million dollars to organizations including the National Association of Consumer Advocatesthe National Consumer Law Center, and local law school consumer programs. The Chicago consumer lawyers at DiTommaso Lubin Austermuehle are proud of our achievements in assisting national and local consumer rights organizations to obtain the funds needed to ensure that consumers are protected and informed of their rights. By standing up to consumer fraud and consumer rip-offs, and in the right case filing consumer protection lawsuits and class-actions you too can help ensure that other consumers’ rights are protected from consumer rip-offs and unscrupulous or dishonest practices.

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