Footlong Litigation to Continue, Despite Settlement Dismissal

by Manatt, Phelps & Phillips, LLP
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Manatt, Phelps & Phillips, LLP

The saga over Subway’s “footlong” sandwiches will continue, a group of former plaintiffs vowed in a court filing after the U.S. Court of Appeals for the Seventh Circuit threw out a settlement agreement between the parties.

Multiple class actions were filed in 2013 after an Australian teenager posted an image of his 11-inch Subway footlong sandwich that went viral. The parties reached a deal that would have paid class counsel $525,000 and required Subway to implement a new series of policies and procedures to ensure the sandwiches are a full 12 inches in length. However, the settlement acknowledged that even with the new measures in place, some sandwich rolls would inevitably fall short due to the natural variability in the baking process.

A district court judge signed off on the deal, but when an objector appealed, the Seventh Circuit tossed the settlement, with some harsh words for the agreement.

“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 three-judge panel wrote. “That’s an apt description of this case.”

Early discovery in the case revealed that the plaintiffs’ claims were factually deficient, the court said, as “the vast majority” of the footlong sandwiches are at least 12 inches long. All the sticks of raw dough weigh the same amount, so even if a roll fails to bake to a full 12-inch length, it contains no less bread than any other, the court added. Subway also standardizes the amount of fillings, so the length of the bread “has no effect on the quantity of food each customer receives.”

Given the recognized variations in the baking process, the promised changes in the settlement provided little relief, the Seventh Circuit said. “In sum, before the settlement there was a small chance that Subway would sell a class member a sandwich that was slightly shorter than advertised, but that sandwich would provide no less food than any other,” the court wrote. “After the settlement—despite the new measuring tools, protocols, and inspections—there’s still the same small chance that Subway will sell a class member a sandwich that is slightly shorter than advertised.”

Calling the injunctive relief approved by the district judge “utterly worthless,” the panel, in reversing the approval of the deal, said the deal “enriches only class counsel and, to a lesser degree, the class representatives.”

Wasting no time, the plaintiffs continued pursuit of their claims and filed a notice that said they plan to terminate their settlement agreement.

According to the plaintiffs, much of the confidential discovery documented that short rolls were caused not by variabilities in the bread baking process, but because bread vendors failed to put enough dough in the frozen dough stick, “in order to increase their profits at the expense of Subway customers.”

Had the appellate panel been aware of these allegations, it would have reached the opposite conclusion with regard to the settlement agreement, the plaintiffs said: “On remand, plaintiffs intend to have all of the confidential information and documents made part of the public record, and plaintiffs intend to pursue this litigation.”

To read the opinion in In re: Subway Footlong Sandwich Marketing and Sales Practices Litigation, click here.

To read the plaintiffs’ notice of termination of the settlement agreement, click here.

Why it matters: The Seventh Circuit did not mince words when rejecting the argument that the deal improved the situation for sandwich consumers and could be judicially enforced. “Contempt as a remedy to enforce a worthless settlement is itself worthless,” the panel wrote. “Zero plus zero equals zero.” Despite this seemingly clear message, the plaintiffs announced their plans to pursue the litigation on remand.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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