CEI’s Center for Class Action Fairness has appealed the district court’s approval of the Subway Footlong settlement to the Seventh Circuit Court of Appeals.
The saga began in January 2013 when an Australian teenager’s tweet of a not-quite-footlong Subway Footlong sandwich went viral, spawning nine U.S. lawsuits that were eventually centralized in federal court in Milwaukee.
After two plus years of wrangling (most of that time just spent negotiating class counsel’s fee award), the plaintiffs and defendants sought to have the court sign off on their proposed agreement. Subway agreed to require franchisees to keep a measuring tool on their premises, require monthly inspectors to inspect five loaves of white and five loaves of wheat bread, and maintain certain other trivial best-baking practices. Although the parties wouldn’t exactly let on, it is a good bet that Subway implemented most if not all of these practices well before the parties settled. As common sense would suggest, the settlement stipulates that these practices, and indeed no practices, would guarantee that every footlong sandwich will measure at least 12 inches.
As part of the settlement, Subway also agreed to provide $525,000 in cash—but every cent of that amount ended up with class counsel and the class’s 10 named representatives. The majority of the class got nothing.
In the appeal, we will present a straightforward question to the Court of Appeals: Is it acceptable to certify (approve) a class action where the class represented will derive no benefit?
Misconstruing an earlier Seventh Circuit decision, the district court concluded that as long as the settlement didn’t make class members worse off, the class representatives could be deemed adequate. We believe that view is misguided. When one has assumed a fiduciary duty, doing nothing simply isn’t enough. Consider: if it was enough that individuals in a position of trust did not harm their beneficiaries, then a doctor could stand by idly as a patient had a heart attack on the examining room table, parents could tell their children to forage in the park if they want to eat, or a police officer could hang up on someone reporting a crime.
But there is a fix to this problem. When courts expect more of class attorneys and class representatives, they make greater effort, and class members get better results. To date, the Seventh Circuit has been a pillar in its regard for the integrity of class actions and the interests of absent class members. In the Subway settlement case, the court has a unique opportunity to bolster that fundamental obligation.