Class Action Lawsuit for Subway but Not for Equifax, Why?

In January 2013, an Australian teenager shared a Facebook picture of his Subway Footlong Sandwich alongside a measuring tape, showing that the advertised “Footlong Sandwich” was only 11 inches. Class-action lawsuits over false advertising of 11 inch sandwiches were filed by the dozens as lawyers all rushed to the courthouse to get a piece of the dough.

A Milwaukee federal judge approved a settlement that would have given the plaintiffs’ side $520,000 in attorneys fees, $500 for a couple of named plaintiffs, and a court order that Subway change its baking procedures. The catch: Subway had already changed its procedures before the first lawsuits were ever filed. The settlement did next to nothing to actually change Subway’s practices. One of the class members to the case, Theodore Frank, appealed the settlement. The Seventh Circuit overturned the deal.

According to Judge Sykes, the appeals court overturned the settlement because early discovery established that Subway’s baked rolls were almost uniformly within 12 inches. Rolls that were shorter were almost certainly due to minor statistic variance that was unavoidable. More importantly, the Court found that no customer was shorted any food, even if a sandwich roll fails to bake to a full 12 inches. Finally, subway sandwiches are made to order in front of the customer; any discrepancy can be immediately corrected at the counter.

Nevertheless, the class action lawyers who brought the case plan to challenge the appeal. They claim there were Subway memos that prove their case wasn’t a frivolous cash grab. The memos were not part of the public record because the documents were introduced during settlement discussions, where evidence is kept off the record.

class actionThe Value of Class Actions

Proponents of tort reform will certainly jump on this case and this ruling to justify reforming class action suits. Tort reform, at least in the early 2000s, mostly refers to reform of medical malpractice. However, those same reformers would be happy to remove or neuter class actions to the point of impotence.

The Subway case clearly highlights how class actions can be abused. The fact that a few sandwiches are off by an inch due to baking variances while the quality and quantity of the food received remains unchanged is hardly a serious injustice that warrants a court’s intervention. The case would merely be humorous if not for the idea that lawyers were profiting off the case while the consumers they claim to represent were given mere inches of the fees the lawyers received.

However, this Subway case should not bring the extinction of class action suits. In an era when corporations are allegedly neglect or even malicious, removing class action suits would only mean removing one potential tool in checking corporate power. The issue with the Subway case isn’t that the attorneys were paid ($520,000 is on the low end for a case like this), but that the alleged injury seems very trivial. An inch off a sandwich is hardly the end of anyone’s world.

Will Equifax Also Face a Class Action Lawsuit?

On the other hand, a company like Equifax is a more legitimate target for a class action. I’m not suggesting Equifax can be liable for being hacked; that would be like blaming a bank for getting robbed. However, the fact that Equifax knew for weeks that there was something wrong and failed to notify those affected is an egregious breach of public trust. If the hackers had obtained an individual’s information and Equifax had the opportunity to alert that individual to the theft of that person’s information, then Equifax can certainty be liable for that negligence.

Indeed, the use of class actions against Equifax would be solution that both sides of the political spectrum could support. Conservatives are divided on whether to use the heavy arm of the Justice Department to punish Equifax for its failure to report because conservatives prefer to minimize federal power and maximize the free market. The perfect midway point of that discussion would be class actions, private individuals coming together to sue a company instead of relying on the federal government to prosecute criminal indictments.

The only issue is that Equifax’s terms of service requires that individuals waive their right to a class action lawsuit. Class actions can be used against Subway to pay $520,000 in fees to protect a few hundred individuals from 11 inch sandwiches, but millions of Americans can have their private data stolen without ability to bring a class action. If people want to reform to class action, they should start with contracts that hamstring proper usage of these kinds of lawsuits.

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