In a victory for class action fairness, an appeals court today rejected a settlement in the Subway Footlong case that would have paid plaintiffs’ attorneys over half a million dollars while leaving the class members with nothing.
“By rejecting this class action settlement, the Seventh Circuit recognized it as part of the ‘racket’ plaintiffs’ attorneys use to extract fees for themselves while providing class members with nothing,” said Ted Frank, director of CEI’s Center for Class Action Fairness and the Subway customer objecting to the settlement. “The Seventh Circuit has been at the forefront of protecting consumers from litigation in which plaintiffs’ attorneys abuse the class action system solely for their personal profit.”
Today’s victory comes after CEI objected to the settlement in a lower court and then appealed the approval of the settlement to the U.S. Court of Appeals for the Seventh Circuit.
The original class action lawsuit alleged that sandwiches sold by the Subway restaurant franchise sometimes fell short of the chain’s “footlong” marketing claims. No one disputed the fact that the actual weight of the dough and the amount of ingredients was uniform for each sandwich; and even the named plaintiffs in the lawsuit conceded that the exact length of the sandwiches didn’t affect their purchases or change their future plans to eat at Subway. Moreover, before the litigation started, the company had already taken steps to reduce minor disparities in the length of its bread rolls during baking. Nonetheless, the plaintiffs’ lawyers sought a fee award and payments to class representatives totaling $525,000.
Mr. Frank argued that the lower court’s approval of the class settlement is contrary to case law, which establishes class actions should not be allowed to proceed when their only effect is to enrich lawyers while producing no relief for the class members themselves.
CEI’s Center for Class Action Fairness represents class members against unfair class action procedures and settlements. Originally founded by Ted Frank in 2009, the center has won millions of dollars for consumers and shareholders and won landmark precedents that safeguard investors, courts, and the general public.
Unfair settlements generally serve self-interested lawyers and third parties at the expense of absent class members, whose rights are traded away to settle a class action. The class lawyers want their fees and the defendants want to cheaply and quickly end the lawsuit, but the class’s interests often take a back seat in the process. The Center seeks to solve this problem by representing class members pro bono and presenting judges the other side of the argument. When the Center prevails, lawyers get less, class members get more, and the rule of law is strengthened.