7th Circuit Says ‘Utterly Worthless’ Subway Footlong Settlement Has No Meat

The Daily Report discusses the Subway class-action settlement with Ted Frank.

The litigation saga over Subway’s sometimes-undersized sandwiches neared its end Friday when a federal appeals court ruled plaintiffs lawyers were the only beneficiaries in a proposed settlement.

In the decision, Judge Diane Sykes of the U.S. Court of Appeals for the Seventh Circuit wrote the settlement, between Subway and consumers who said they were jipped out of the advertised “footlong” sandwiches, is “utterly worthless.” The agreement would have required Subway to “use a tool” to measure sandwiches and institute other quality control measures, as well as pay $525,000 in attorney fees to the plaintiffs lawyers. Ted Frank, director of the Competitive Enterprise Institute’s Center for Class Action Fairness, objected to the settlement on the ground that it provided no sustenance to the majority of class members, and only served to enrich the lawyers.
He said the Friday ruling is the clearest rebuttal yet of settlements that don’t provide meaningful benefits for class members.

“It’s a great win for us and it’s an important principle that lawyers can’t bring class actions just to benefit themselves,” Frank said. “They have actual duties to class members and when they structure litigation and settlements without any benefit to the class, courts shouldn’t tolerate that.”

Frank added the ruling creates a circuit split. On Wednesday, Frank and his team lost a similar case at the Tenth Circuit over alleged fraud by major gasoline retailers who, plaintiffs argued, failed to account for how temperature affects gas volume in marketing how much they were selling. Frank said he plans to ask for a rehearing in that case and point to the Subway decision in the petition.

“Courts are split over whether the purpose of class actions is to benefit consumers or to benefit lawyers and we think that’s a pretty obvious question, but apparently not,” Frank said.

Read the full article at The Daily Report.