The heroes who stopped Subway’s foot-long fakery

Business, Bizarre, Money, NakedLaw, News

Thanks to a class action suit for false advertising, Subway restaurants in the United States will now measure every 6-inch and foot-long sandwich they make. Moving forward, customers can expect to get what they paid for.

Still, no one will get rich from this legal wrangling. So why did anyone bother? Answer: there are other reasons for class action suits that go beyond monetary gain.

Subway agrees to make improvements

The settlement agreement, released last week, states that Subway will measure its sandwiches, amend training materials that “allowed for a small tolerance in the size of a footlong sandwich,” and begin compliance inspections to make sure its restaurants and employees abide by the new rules.

The sandwich chain will cover $525,000 in legal expenses and pay up to $1,000 in “service awards” to the nine named plaintiffs. Other members of the class—meaning anyone who bought a 6-inch or foot-long Subway sandwich in recent years—get no monetary compensation. Subway is huge; it has more restaurants than any other fast-food chain in the world. So why is the settlement payout so paltry?

A large class means less restitution per individual

Class action lawsuits are greatly misunderstood, according to attorney W. Bryant Green of Bryant Green & Associates in Atlanta. “When people think of a class action, what usually comes to mind is a large fraud or a large product recall—something involving millions and millions of dollars,” says Green.

But the Subway settlement is anything but lucrative for the plaintiffs. “Subway is paying very little to individuals that were wronged as a group,” explains Green.

“To understand the value of the Subway settlement, you must understand the class action procedural device,” says Kathryn Honecker, chair of the Class Actions Department at Rose Law Group pc. “Class actions allow for the grouping of claims that often would have a small or even zero-damages’ value if brought individually. Lawsuits are expensive, and people generally will not expose themselves to those expenses when the amount of damages involved in a potential case is small or nonexistent.”

Before analyzing the effectiveness of any class action/settlement, it’s important to recognize the legal hurdles to prosecuting such a lawsuit.

“First, a class must be determined to exist,” says Green. To do so, each of four threshold requirements set forth by the Federal Rules of Civil Procedure’s Rule 23(a) must be met:

  1. Numerosity: The class is so numerous that the joinder of class members in impracticable. Bringing together all of the cheated Subway customers across the nation was never going to happen.
  2. Commonality: There are questions of law or fact common to the class.
  3. Typicality: The claims of the class representatives are typical of those of the class. In other words, the typical complaint was that sandwiches were shorter than advertised.
  4. Adequacy: The class representatives will fairly and adequately protect the interests of the class.

Establishing the above requires significant effort by attorneys. Once the class is certified, “the attorneys have to notify all potential class members about the action, how to join it, or how to opt out,” says Green. And while results vary, usually, most will opt in. Hence, the Subway settlement is like that of many class action suits: each individual recovers very little.

Opting in even when the payout is small

So why would a person participate when he or she is not going to recover a meaningful sum? “Hopefully, their conscience—not their wallet—will be their guide,” says Green. “Litigation is necessary to keep a lot of people from getting taken advantage of a little bit per person.”

Case in point: “Subway is taking steps to deliver a product the size it advertises,” explains Green. “Subway shortchanged each of its customers by under-delivering about 8 percent of its sandwiches and benefited from the misrepresentation by recouping the value of undelivered product in millions of sandwiches.”

This is precisely why class action litigation exists. “Subway saved itself about the same percent on costs of goods sold and was able to ‘trade on’ its advertisement of a foot-long sandwich,” Green says. “After all, who does an 11-inch sandwich appeal to?”

“Anytime a large company’s practices are corrected and a change occurs as a result, consumers benefit in the long run,” says Green. “Cases such as Subway’s can have value to society.”

Related articles on the NakedLaw: