IN RE: Subway Footlong Sandwich Marketing and Sales Practices Litigation. Appeal of: Theodore Frank, Objector.
September 8, 2016
from the United States District Court for the Eastern
District of Wisconsin. MDL No. 13-02439 - Lynn Adelman,
Flaum, Rovner, and Sykes, Circuit Judges.
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
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
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.
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.
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.
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),
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.
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. 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.
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, ...