“Every lawsuit results from someone doing something wrong. If everybody did right, we wouldn’t need lawsuits.”
“Lawsuit: A machine you go into as a pig and come out of as a sausage.”
Does Red Bull really give you wings? Is Nutella actually a healthy snack alternative? Are those foot long subs at Subway really 12 inches of sandwich? All of these have been real false advertising actions and all have been filed as class action lawsuits.
A class action suit is brought by a group of plaintiffs who ask the court to certify that they represent a larger group of people who are not involved in the lawsuit but who likely have a similar claim against a major defendant- often a large corporation. If the court agrees, there then has been a definition of exactly who the ‘class’ of plaintiffs are. Any verdict or monetary settlement in favor of the plaintiffs is then divided, in some way, among the class.
For the plaintiffs, a class action lawsuit is an opportunity to join together to bring an action against a powerful opponent whom a single plaintiff might not have the resources to sue. The fact that an entire class of plaintiffs will be eligible to recover increases the potential damages amount and provides greater opportunities to cover possible legal fees in the case. For defendants, class actions give them the opportunity to resolve their liability in a single case or single settlement rather than face dozens, hundreds or even thousands of individual suits.
All three of the suits mentioned above actually happened. Red Bull settled a suit two years ago for $13 million after a group of plaintiffs claimed that the company made false or unverifiable complaints about the drink’s ability to improve energy and concentration. Nutella settled two different suits four years ago that arose from claims that it made false statements about nutritional qualities of the delicious chocolate hazelnut goodness.
If a class action lawsuit is settled, several things have to happen. First, a settlement amount has to bet set. Nutella’s suit was capped at about $3 million. Second, a mechanism has to be established to allow members of the class to claim their settlement amount. They may need to show a receipt from a purchase made, or may have been identified by the defendant as a past customer. In the Nutella lawsuit, all potential plaintiffs had to do was go to a website and fill out a form and they were eligible for a $4 credit.
The Subway foot-long lawsuit was back in the news just this week. Although the case was settled by the fast food chain some time ago, it continues to be litigated because of the odd nature of the settlement and what some claim is a drastic imbalance between the amount of the settlement that is going to consumers and the amount that is going to the Plaintiff’s lawyers.
The action was commenced in 2013 when separate lawsuits were consolidated that each claimed that Subway’s foot long sandwiches were really more like eleven inches. Rather than a pool of money to the class, Subway agreed to pay a small amount to the original named plaintiffs and to institute quality control measures to make sure that a Subway standard foot is actually twelve inches. Finally, the agreement also provided for a payment of $520,000 in attorney fees to the plaintiff’s lawyers.
Subway thought their troubles were over, but an advocacy organization intervened on behalf of unnamed members of the class and is arguing that the quality control measures were already in place, that Subway still won’t guarantee uniformity of their sandwiches and that the case has amounted to little more than a boondoggle for plaintiff’s lawyers. In arguments before the 7th U.S. Circuit Court of Appeals, the plaintiff’s lawyers said that they had simply run into ‘bad facts’ and they should be entitled to compensation for their work.
Thus, a case that was settled three years ago continues to be tied up in court while the parties await a decision from the appellate judges. In the meantime, you can always bring your tape measure to the sandwich shop with you.