October 27, 2015

deceptive-trade-practiceEarlier this month, a federal judge in Milwaukee preliminarily approved the settlement of a class action deceptive trade practices lawsuit surrounding the advertised length of sandwiches sold by fast food giant Doctor’s Associates Inc. d/b/a Subway Restaurants (“Subway”).

How does Subway’s settlement agreement measure up?

Deceptive Trade Practices Suits

In December 2013, nine separate federal deceptive trade practices lawsuits filed in Arkansas, California, Illinois, New Jersey, North Dakota, Pennsylvania and Wisconsin were consolidated in the Eastern District of Wisconsin. The lawsuit’s class consists of everyone in the United States who purchased a “foot-long” or “six-Inch” Subway sandwich between January 1, 2003 and October 2, 2015.

The ten class representatives claim that they relied on the “foot-long” or “six-inch” designations of their Subway sandwiches, but found their subs to be approximately 10% shorter than advertised. The consolidated class action lawsuit alleges that Subway violated the consumer protection laws of all fifty states and the District of Columbia. In addition to their attorneys’ fees, the plaintiffs demanded “equitable relief to ensure that its ‘Footlong’ subs are 12 inches in length, and to advise the public that the length of ‘Footlong’ subs may vary.”

Court Preliminarily Approves Subway’s Settlement Agreement

Last month, in exchange for a full release from the deceptive trade practices suits and all other claims brought by Class Members regarding the “length, size, shape, mass, weight, width, dimensions or proportions” of its sandwiches, Subway agreed to pay each of the ten class representatives a “Service Award” of $1,000, as well as $525,000 toward their collective attorneys’ fees.

Additionally, for a period of four years, Subway has agreed to:

  • Use a tool to measure bread in each Subway restaurant;
  • Conduct monthly compliance inspections where bread loaves are measured;
  • Institute internal penalties for Subway restaurants that sell non-compliant sandwiches; and
  • Provide consumers with the following notice: “Due to natural variations in the bread baking process, the size and shape of bread may vary.”

The Settlement Agreement only applies to claims for injunctive relief and the monetary claims of the ten named plaintiffs. The agreement expressly “does not bar Class Members from seeking monetary damages, or instituting any lawsuit to recover monetary damages.”

Earlier this month, the court issued an Order preliminarily approving the Settlement Agreement “as fair, reasonable and adequate” and certifying the settlement class.

The Value of Legal Compliance Is Beyond Measure

When it comes to class action defense, a penny of prevention is worth a pound of cure.  The best way to succeed in any deceptive trade practices lawsuit is to never appear on plaintiffs’ radar screen in the first place.  Are you currently working on a regular basis with experienced compliance counsel?  Retaining counsel versed in the intricacies and nuances of state and federal marketing law will go a long way toward making sure a class action complaint, or regulatory complaint, never gets filed in the first place.

If you are interested in ensuring that you are compliant with current marketing regulations, or if you are facing class action litigation, please e-mail us at info@kleinmoynihan.com, or call us at (212) 246-0900.

The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.

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