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Panera Faces Class Action Lawsuit Over Misleading Subscription Program

* Rachel Gold is a law clerk in the Corporate/Securities Law practice group.

Panera Bread Company (“Panera”) is facing a class action lawsuit that alleges its Unlimited Sip Club (“Club”) is in fact not so unlimited. According to Panera’s own promotional materials, the Club is a refill program where members pay $10.99 per month for access to lemonade, soda, coffee, and tea drinks of “any size” at “any time.”

The lawsuit, filed in the Eastern District of Michigan, alleges that although Panera markets the Club as “Unlimited” and makes promises to dispense “endless NEW Charged Lemonades,” the fine print actually restricts member refills to once every two hours. The plaintiff argues “[c]onsumers expect a beverage subscription represented – directly or indirectly – as an unlimited service, to allow for an unlimited number of redeemed drinks and refills.”

 The complaint further contends that Panera’s accompanying one month free trial offer amounts to a deceptive subscription practice because it immediately charges customers for their first month. More specifically, the complaint explains that signing up for the free trial simultaneously enrolls the customer into a default automatic renewal of the service, as opposed to an opt-in type of renewal after the initial term. Further, the plaintiff claims that Panera makes it unreasonably difficult for customers to cancel their subscription or free trial, as the instructions for cancellation are buried deep within the terms and conditions, and according to the complaint, Panera provides no reminder of upcoming payments before the subscription automatically renews each month.

The plaintiff is demanding a jury trial as well as injunctive relief and monetary, statutory, and/or punitive damages for the class. The complaint contains allegations of unjust enrichment, negligent misrepresentation, fraud, breaches of warranties, and violations of Michigan consumer protection statutes. Panera has yet to file a response to the complaint or release any public statements addressing the matter.

TAKEAWAY: With the increasing popularity of subscription-based marketing strategies by customer facing businesses, those wishing to create new programs should be cautious of their word choices. Businesses need to ensure that the important terms and conditions of subscription programs are prominently displayed. Avoiding the use of over inclusive terminology may also be beneficial.

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