(August 25, 2017) A settlement giving the class attorneys $525,000 without giving customers any meaningful benefits was thrown out by the Seventh Circuit, which found class never should have been certified because the case sought only worthless benefits to class members.
The opinion aptly described this case by comparing it to another, finding, “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.’”
This case arose out of a 2013 posting of a photograph that showed a Subway Footlong sandwich measuring only 11 inches. The photo went viral and numerous class-action cases were brought against Subway for damages and injunctive relief. After cases were consolidated in Wisconsin, the trial court judge approved a settlement that awarded class counsel $525,000.
The appellate court noted that early discovery “limited as it was” found an “overwhelming majority of Subway’s sandwiches lived up to their advertised length,” so that individual hearings would be necessary to identify which customers “deemed the minor variation in bread length material to the decision to purchase.”
Rather than dropping the case, the parties agreed to a settlement where Subway would “institute a number of practices designed to ensure, to the extent practicable, that its sandwich rolls measure at least 12 inches long.” The parties also agreed to give the class-action attorneys $525,000. A member of the class objected to the settlement and filed the appeal.
The appellate court noted that before the settlement, “class members could be fairly certain that a Subway Footlong sandwich would be at least 12 inches long . . . [a]nd if a loaf happened to bake up slightly shorter than 12 inches, customers could be assured of receiving the same quantity of meat and cheese as any other customer.” After the settlement, the appellate court found, “there’s still the same small chance that Subway will sell a class member a sandwich that is slightly shorter than advertised.” Therefore, the appellate court said, the settlement does not benefit the class in any meaningful way. “The settlement acknowledges as much when it says that uniformity in bread length is impossible due to the natural variability of the bread-baking process.”
“Because the settlement yields fees for class counsel and ‘zero benefits for the class,’ the class should not have been certified and the settlement should not have been approved,” the court ruled in reversing class certification and voiding the settlement.
In re: Subway Footlong Sandwich Marketing and Sales Practices Litigation, appeal of Theodore Frank, Seventh Cir. No. 16-1652, decided August 25, 2017.