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If you’re like me, at least once in your life you’ve received a mailed “Notice of Proposed Class Action Settlement.” In many instances, you aren’t required to do anything to get the so-called ‘benefits’ of the class action settlement.
However, as a bar-card carrying member of the tribe, I read the notice legalese, especially the part about how much the class action lawyers are getting paid.
Let me never be one to begrudge a lawyer’s payday — so long as the plaintiffs get genuine value consistent with the lawyers’ time and risk. Unfortunately, I’ve yet to receive a notice where the proposed remedy has been worth more than John Garner’s “bucket of warm spit.”
The reality is that too often, the class actions aren’t sensible. They don’t fix real client problems. And they don’t provide meaningful value. Indeed, the only ones making out are the lawyers.
Notably, there are exceptions. For example, there’s at least one class action lawyer calling out colleagues for filing what he terms, “lawyer’s cases.” With unvarnished candor, he declares, “Stupid class action lawsuits filed by feckless lawyers are a disgrace.” See “Why ‘Class Action Attorney Fees’ Are Such Dirty Words.”
The foot-long.
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The rules judges and lawyers follow are supposed to govern the class action system. These rules say a class action settlement may not be approved unless it’s “fair, reasonable, and adequate.”
In view of my own spittoon kicking experiences, I was happy to hear those rules were getting enforced thanks to last Friday’s 7th Circuit Appeals Court Opinion torpedoing the class action lawyers in the case of the foot-long Subway sandwich that wasn’t. In the words of Appeals Court Judge Diane Sykes, “Because the settlement yields fees for class counsel and “zero benefits for the class,” the class should not have been certified and the settlement should not have been approved.” The lower court was reversed.
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The sub squabble sprang from a 2013 Facebook post by Australian Matt Corby whose tape measure indicated his Subway sandwich fell short of a foot-long. That was enough to get the class action bar interested. Or as the Court put it, “It went viral. Class-action litigation soon followed.”
Judge Sykes added, “In 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.”
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For claimants’ counsel, however, no matter if there hadn’t been a compensable injury. They sandwiched in another claim instead — one for injunctive relief. And so they reached a settlement approved by the lower court.
In sum, the settlement required Subway’s 4-year implementation of steps to ensure as much as practicable that its foot-longs be at least a foot-long while at the same time acknowledging that notwithstanding such steps, chances were that natural baking variability would make such uniformity unattainable.
The size of the fees.
For plaintiffs’ lawyers, though, the heart of the hoagie was the parties’ agreement to cap class counsel fees at over half a million simoleons — $525,000.00 to be exact. It wasn’t the size of the sandwich in the fight but the size of the fees in the grinder that mattered. See “Lawsuit over Subway ‘footlong’ subs was a ‘racket’ benefiting only lawyers, judge says.”
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Theodore Frank, a member of the class and as director of the Competitive Enterprise Institute’s Center for Class Action Fairness, a “professional objector to hollow class action settlements,” objected to the settlement on grounds it provided no meat to class members and only fed the lawyers.
Frank has a history of objecting to settlements that only benefit the lawyers and not the class, including a case relied on by the Court, In re Walgreen Co. Stockholder Litig., 832 F.3d 718 (7th Cir. 2016).
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Citing Walgreen, the Court reversed. “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.”
In an interview Friday, Theodore Frank declared, “It’s a great win for us and it’s an important principle that lawyers can’t bring class actions just to benefit themselves. 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.” See “7th Circuit Says ‘Utterly Worthless’ Subway Footlong Settlement Has No Meat.”
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So add the Subway case to the ignoble annals of cases like the too much ice Starbucks class action; the Jimmy Johns missing sprouts class action; the no berries in the Cap’n Crunch Crunchberry complaint and the no fruit in the Froot Loops litigation. And as I wait for the first solar eclipse eyeglass class action, there’s little doubt my expectations for more of the same will be met.
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Credits: Out in Aber, Boxing Day 2009, by David Jones at Flickr; Spitoon1928Women.jpg at Wikimedia Commons, public domain; Matt Corby Facebook post; Guy dressed as a Subway sandwich, 2014 04 03, by booledozer at Flickr Creative Commons Attribution; A foot long for lunch, by Gordon Flood at Flickr Creative Commons Attribution; Subway sandwiches & salads, by Chris Harrison at Flickr Creative Commons Attribution; Waiting patiently, by Quinn Dombrowski at Creative Commons Attribution.
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