Size Matters: Seventh Circuit Rejects Subway Footlong Settlement Because It Provided No Meaningful Benefit To Class Members

by:  Peter J. Gallagher (@pjsgallagher) (LinkedIn)

Subway (pd)I am a regular Subway customer, so I read the Seventh Circuit's opinion, In re. Subway Footlong Sandwich Marketing and Sales Practices Litigation, with great interest. You probably remember the events that spawned this litigation. As the Seventh Circuit described it: "In January 2013 Matt Corby, an Australian teenager, purchased a Subway Footlong sandwich and, for reasons unknown, decided to measure it. The sandwich was only 11 inches long. He took a photo of the sandwich next to a tape measure and posted the photo on his Facebook page. Thus a minor social-media sensation was born." And, "[w]ithin days of Corby's post, the American class-action bar rushed to court," therefore, a class action lawsuit was also born. It ended a few years later with a settlement, which the Seventh Circuit just overturned.

To say that the Seventh Circuit was critical of the settlement would be an understatement. Its opinion is filled with subtle, and not so subtle, criticisms of the settlement and plaintiffs' counsel. For example, early in its opinion, the court observed: "In their haste to file suit [ ] the lawyers neglected to consider whether the claims had any merit. They did not." It did not get much better for plaintiffs from that point on.

The court noted that the parties engaged in limited, informal discovery early on in the case, with the intent of going to mediation. This discovery revealed that plaintiffs' claims were deficient. It showed that "the length of the [baked] bread has no effect on the quantity of food each customer receives." First, all of Subway's raw dough is exactly the same size. So, even the few rolls that bake to approximately a quarter-inch less than 12 inches because of natural, and unpreventable, "vagaries in the baking process" provide the same bread as those that bake to the full 12 inches. Second, Subway standardizes the amount of meat and cheese that its "sandwich artists" put on each sandwich, so whether the bread is 12 inches long or a quarter-inch short, the customer still gets the same amount of food. (In the interest of full disclosure, because I am a regular, I do occasionally get an extra slice of ham, salami, and pepperoni on my six-inch BMT at my local Subway.) "This early discovery, limited though it was, extinguished any hope of certifying a damages class."

"Rather than drop the suits as meritless," however, plaintiffs shifted the focus of the lawsuit from one seeking damages to one seeking injunctive relief. THey filed an amendec complaint and, after mediation, reached a settlement with Subway, under which Subway would, for four years, implement practices designed to ensure, the the extent possible, that its sandwich rolls measured at least 12 inches long. But, the settlement noted that "because of the inherent variability in food production and the bread baking process, Subway could not guarantee that each sandwich roll [would] always be exactly 12 inches or greater in length after baking." In other words, Subway would try to fix, but could not guarantee that it would fix, the problem that spawned the lawsuit. 

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“Signs, Signs, Everywhere Signs:” New Jersey Supreme Court Holds That Homeowners’ Associations Cannot Ban Political Signs

by:  Peter J. Gallagher 

It is an issue we have reported on before (here), but yesterday the New Jersey Supreme Court ruled that homeowners’ associations may not entirely ban homeowners from displaying political signs.  In Mazdabrook Commons Homeowners' Association v. Khan, the New Jersey Supreme Court held that homeowners' associations are allowed to impose reasonable content-neutral rules (e.g., regulating the size, number, and location) of signs, but cannot ban them outright and cannot, even under the guise of reasonable content-neutral rules, “distinguish among different types of political signs.”  This decision is obviously important to community associations, but also has a broader impact because it reiterates the New Jersey Supreme Court’s belief that individual rights identified in the New Jersey Constitution are protected, not against abridgment by the government, but also by certain conduct from private entities. 

 Jude Wefing, sitting by assignment from the Appellate Division, was the lone dissenter.  She criticized the majority for both reaching the constitutional issue in the first place, and for its decision on that issue.  In connection with the former, Judge Wefing noted that the dispute between the parties centered primarily on fines related to the homeowners’ growing of a “rose vine” over the homeowners’ association’s objections about the size and placement of the “vine.”  (In a footnote, Judge Wefing noted that she referred to the offending plant as a “rose vine” only because the majority did so, even though “[a] rose is a shrub, not a vine,” and thus “the plant in question must have been a climbing rose.”)  As a result, the record regarding the issue with the political signs was too sparse, in Judge Wefing’s opinion, to justify reaching the broader constitutional issue. 

When it came to the substantive issue, Judge Wefing parted with her colleagues on a more fundamental level:

My colleagues rightly note our nation’s and our state’s commitment to a free and vigorous debate of public questions. I have no quarrel with that commitment; I embrace it. In my judgment, however, individuals are equally entitled to seek shelter from political debate and division. If a group of individuals wish to live in a common-interest community that precludes the posting of signs, political or otherwise, and have agreed freely to do so, and there is no showing of overreaching or coercion, I would adopt the principles enunciated in [the] dissent in the Appellate Division, that these mutually-agreed upon covenants ran with the land, were reasonable, and were enforceable.

Based on these principles, Judge Wefing concluded: “Some may question the choice to avoid political controversy; I simply recognize the right to make that choice.”

Sewer Service Stunting Growth

by:  Katharine A. Muscalino

If the economy and local land use regulations didn’t make development hard enough, some counties and municipalities have discovered the New Jersey Department of Environmental Protection’s June 2009 Water Quality Management Rules as another technique to inhibit growth and property development in New Jersey. The Water Quality Management Rules require counties, and some municipalities, to closely examine sewer service within their borders, and limit expansion of that service when possible. Counties have applied the DEP’s rules to remove undeveloped properties from the sewer service areas in their wastewater management plans, and to limit demand from sewered properties to the gallonage they currently produce.

Holmdel has taken the Water Quality Management Rules a step farther in its attempts to limit the possibilities for the redevelopment of the Alcotel-Lucent corporate campus, by arguing that the campus should not only be limited to its existing gallonage, but that sewer service should be limited to the existing corporate buildings’ footprints. This limitation would not only cap the size of the future development and its sewer service demand, but would also significantly limit the potential for new uses, and particularly residential use, on the site. If Holmdel succeeds in this aggressive wastewater management planning, it will have serious ramifications for the future of the property and its marketability.

 

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