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In re Subway Footlong Sandwich Marketing and Sales Practices Litigation

United States Court of Appeals, Seventh Circuit

August 25, 2017

IN RE: Subway Footlong Sandwich Marketing and Sales Practices Litigation. Appeal of: Theodore Frank, Objector.

          Argued September 8, 2016

         Appeal from the United States District Court for the Eastern District of Wisconsin. MDL No. 13-02439 - Lynn Adelman, Judge.

          Before Flaum, Rovner, and Sykes, Circuit Judges.

          Sykes, Circuit Judge.

         In January 2013 an Australian teenager measured his Subway Footlong sandwich and discovered that it was only 11 inches long. He photographed the sandwich alongside a tape measure and posted the photo on his Facebook page. It went viral. Class-action litigation soon followed. Plaintiffs' lawyers across the United States sued Subway for damages and injunctive relief under state consumer-protection laws, seeking class certification under Rule 23 of the Federal Rules of Civil Procedure. The suits were combined in a multidistrict litigation in the Eastern District of Wisconsin.

         In their haste to file suit, however, the lawyers neglected to consider whether the claims had any merit. 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. 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 a damages class under Rule 23(b)(3) to a class claim for injunctive relief under Rule 23(b)(2). The parties thereafter reached a settlement. For a period of four years, Subway agreed to implement certain measures to ensure, to the extent practicable, that all Footlong sandwiches are at least 12 inches long. The settlement acknowledged, however, that even with these measures in place, some sandwich rolls will inevitably fall short due to the natural variability in the baking process. The parties also agreed to cap the fees of class counsel at $525, 000. The district court preliminarily approved the settlement.

         Theodore Frank objected. A class member and professional objector to hollow class-action settlements, see, e.g., In re Walgreen Co. Stockholder Litig., 832 F.3d 718 (7th Cir. 2016), Frank argued that the settlement enriched only the lawyers and provided no meaningful benefits to the class. The judge was not persuaded. He certified the proposed class and approved the settlement. Frank appealed.

         We reverse. 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." Id. at 724. That's an apt description of this case.

         I. Background

         In January 2013 Matt Corby, an Australian teenager, purchased a Subway Footlong sandwich and, for reasons unknown, decided to measure it. The sandwich was only 11 inches long. He took a photo of the sandwich next to a tape measure and posted the photo on his Facebook page. Thus a minor social-media sensation was born. A few media outlets and some Subway customers were inspired to conduct their own sandwich-measuring experiments. See, e.g., Kaylee Osowski, Some Subway "Footlong" subs don't measure up, N.Y. POST (Jan. 17, 2013), http://nypost.com/2013/01/17/ some-subway-footlong-subs-dont-measure-up.

         Subway immediately issued a press release announcing that it had "redoubled" its efforts "to ensure consistency and correct length in every sandwich." The franchisor assured its customers that its "commitment remains steadfast" to ensure that every Footlong sandwich sold at each of its restaurants "worldwide" is at least 12 inches long.

         Within days of Corby's post, the American class-action bar rushed to court. Plaintiffs' lawyers sued Subway seeking damages and injunctive relief under the consumer-protection laws of various states.[1] Subway moved to transfer the cases to a single district court for a multidistrict litigation. The cases-nine in total-were eventually consolidated in the Eastern District of Wisconsin.

         In the meantime, the parties agreed to conduct limited informal discovery in anticipation of mediation. The early discovery revealed that the claims were factually deficient. For starters, the vast majority of Subway Footlong sandwiches are, as the name implies, at least 12 inches long. The few that do not measure up generally fall short by only about a quarter-inch, and the shortfalls are the inevitable consequence of natural-and unpreventable-vagaries in the baking process. Additionally, all of Subway's raw dough sticks weigh exactly the same, so the rare sandwich roll that fails to bake to a full 12 inches actually contains no less bread than any other. What's more, Subway standardizes the amount of meat and cheese in each sandwich, ...


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