Law 360 profiles the Subway Footlong Sandwich Marketing and Sales Practices Litigation case from CEI's Center for Class Action Fairness:
Overlooked in the year-end articles is a ruling from the Seventh Circuit that will have an outsized effect on settling product liability cases in 2018 and beyond. In In re Subway Footlong Sandwich Marketing and Sales Practices Litigation, 869 F.3d 551 (7th Cir. 2017), the Seventh Circuit reversed approval of a class action settlement that provided “no meaningful relief” to class members. Pointedly, the court went so far as to note that such a settlement that results in fees to class counsel “is no better than a racket.”
On appeal, the Seventh Circuit upheld the objection and reversed. Comparing the state of affairs before and after the settlement, the court viewed each as having the same small chance that a consumer would purchase a sandwich measuring less than twelve inches, but having the same amount of dough, meat and cheese — plus all the toppings the customer requests.
The remedy to which the parties agreed did not change things, and the court emphasized that the parties conceded that ensuring uniformity is impossible given variability inherent in the bread-making process. For these reasons, the court saw the settlement as little more than an effort to pay off class counsel.
But the court went further. It roundly denounced the settlement as cynical and “utterly worthless” to consumers. The Seventh Circuit opined that a settlement that provides fees to class counsel, but no benefit to the class, “is no better than a racket.”
The Seventh Circuit’s ruling, however, signals that greater scrutiny lies ahead and that class action defendants will have to materially change their position or provide real benefits to class members as part of any settlement. Because of the leading voice the Seventh Circuit has had on many issues relating to settlement in modern class action practice, its ruling in In re Subway Footlong Sandwich Marketing and Sales Practices Litigation will likely carry considerable sway in 2018 and beyond.
Read the full article here.