Antitrust Law Daily Wrap Up, ADVERTISING—E.D. Wis.: Subway® settles “Six Inch,” “Footlong” deceptive marketing claims, (Oct 22, 2015)

By Greg Hammond, J.D.

A class of Subway® consumers has obtained preliminary approval of a settlement resolving claims that Subway engaged in unfair and deceptive marketing practices concerning the length of its Six Inch and Footlong sandwiches. In granting the unopposed motion for preliminary approval, the federal district court in Milwaukee determined that the settlement, which would provide no monetary benefit to the class, is fair, reasonable, adequate, and the product of arms-length negotiations (In re Subway Footlong Sandwich Marketing and Sales Practices Litigation, October 2, 2015, Adelman, L.).

Doctor’s Associates, Inc. franchises Subway restaurants, which is the largest submarine sandwich chain around the world. Consumers filed suit against the franchisor in 2013, claiming that Subway disseminated false and misleading information through television commercials, Internet websites and postings, point of purchase advertisements, and national print advertisements, which were intended to trick consumers into believing that they were receiving more food for their money than they were actually getting. Specifically, the consumers claim that Subway violated the consumer fraud and deceptive trade practices acts of various states and the District of Columbia, because Subway’s Footlong and Six Inch sandwiches were smaller than they were advertised.

The proposed settlement does not offer monetary relief for the class. Instead, Doctor’s Associates has agreed to: (1) require franchisees to use a tool to measure bread in each Subway restaurant to ensure that the bread sold to customers is either six or 12 inches long; (2) require that a sampling of baked bread be measured as part of regular compliance inspections; (3) require bread ovens and proofers to be inspected during evaluations; (4) increase the penalty for non-compliance for Subway restaurants found using bread that is not at least 12 inches long; (5) require franchisees to post notice at all Subway restaurants concerning the inherent variability in the dimensions of fresh bread; among other requirements. Subway has also agreed to pay up to $525,000 in attorney fees, costs, and Class Representative Service Awards of up to $1,000.

The district court granted preliminary approval of the proposed settlement, finding the settlement to be: (1) fair, reasonable and adequate; (2) the product of informed, good-faith, arms-length negotiations between the parties and their experienced counsel; and (3) within the range of reasonableness and possible judicial approval. In addition, the court found that the plaintiffs met the requirements of Federal Rule of Civil Procedure 23(a) and 23(b)(3) and therefore granted certification of a class consisting of all persons in the United States who purchased a Six Inch or Footlong sandwich at a Subway restaurant any time between January 1, 2003 and October 2, 2015.

A final approval hearing has been scheduled for January 15, 2016.

The case number is 2:13-md-02439-LA.

Attorneys: Adam M. Tamburelli (Zimmerman Law Offices P.C.) for Nguyen Buren. Bethany L. Appleby (Wiggin & Dana LLP) and Howard L. Teplinsky (Beermann Pritikin Mirabelli Swerdlove LLP) for Doctor's Associates Inc. and Subway Sandwich Shops Inc.

Companies: Doctor’s Associates Inc.; Subway Sandwich Shops Inc.

Cases: Advertising WisconsinNews