Class plaintiffs often accuse food manufacturers of misrepresenting some aspect of their product offerings. There are countless examples where the discrepancies latched onto by the plaintiffs’ bar between what the manufacturer advertised and what the consumer received are small. But how small is too small to matter? Lawyers have a name for this question: materiality. A claim for fraudulent misrepresentation can only go forward if the alleged misrepresentation is material.
The Seventh Circuit recently rejected a proposed settlement involving Subway, citing materiality as one reason. In In re Subway Footlong Sandwich Marketing & Sales Practices Litig., ___ F.3d ___, 2017 WL 3666635 (7th Cir. Aug. 25, 2017), class members sued Subway for marketing its trademark sandwich as a “footlong” when some sandwiches fell a little short. The parties presented a settlement to the district court that involved injunctive relief and up to $525,000 in attorney’s fees. The Seventh Circuit Court of Appeals rejected the settlement, calling it “utterly worthless.” Discovery established that the vast majority of sandwiches are 12-inches; minor variations in length were attributable to unpreventable vagaries in the baking process. Importantly, even if the sandwich was slightly shorter, each customer received the same amount of food. The court noted that “the element of materiality – a requirement for a damages claim under most state consumer-protection statutes – was an insurmountable obstacle to class certification” because “[i]ndividualized hearings would be necessary to identify which customers, if any deemed the minor variation in bread length material to the decision to purchase.” Because there was no compensable injury, the parties shifted to an injunctive relief class, which the court said “d[id] not benefit the class in any meaningful way.”