Antitrust Law Daily Wrap Up, ADVERTISING—D.N.H.: Class certification denied in suit over Dial antibacterial soap labeling, (Dec 10, 2015)

By Linda O’Brien, J.D., LL.M.

Consumers of Dial Complete antibacterial hand wash were unable to obtain class certification in their false advertising suit against Dial over the alleged mislabeling of the hand soap products. The federal district court in Concord, New Hampshire, determined that the consumers failed to show that common questions predominate over individualized questions regarding the damages calculation (In re Dial Complete Marketing and Sales Practices Litigation, December 8, 2015, McAuliffe, S.).

Personal care products company Dial Corporation manufactures “Dial Complete Foaming Antibacterial Hand Wash,” an antibacterial liquid hand wash. The active ingredient in Dial Complete is a compound known as triclosan, which is a form of pesticide. Marketing for Dial Complete included claims that it “kills 99.99% of germs”; that it kills 99.9% of illness-causing bacteria; that it is “doctor recommended”; that it “kills more germs than any other liquid hand soap”; and that it has been “shown to help reduce disease transmission by 50% compared to washing with a plain soap.”

Several consumers filed suit against Dial, alleging that the company misrepresented the antibacterial properties of its Dial Complete brand soaps in violation of state consumer protection and unfair trade practices statutes. Specifically, the consumers alleged that (1) the claims were false and deceptive because there was no scientific proof and (2) Dial Complete was not more effective than soaps that did not contain triclosan. In March 2013, the court denied Dial’s motion to dismiss. Before the court was the plaintiffs’ motion for class certification.

Typicality. The court determined that the plaintiffs satisfied the typicality requirement under Federal Rule of Civil Procedure 23(a). Dial argued that the named plaintiffs’ claims were not typical since they were subject to unique spoliation defenses for failure to retain receipts for their purchases of Dial or other hand soaps and that failure was prejudicial to Dial. The court noted that the receipts were not strictly relevant to the claims or defenses of the case, rendering the purported individual spoliation defenses inapplicable. Moreover, because the named plaintiffs’ claims arose from the same alleged misrepresentations on the packaging of Dial Complete as those of potential class members, they were typical of the class claims.

Predominance. The court determined that the elements of the claims under the consumer protection and unfair trade practices statutes of Arkansas, California, Florida, Illinois, and Missouri could be established on a class-wide basis. Dial contended that the plaintiffs could not establish predominance using generalized proof since individual issues of reliance, causation, and damages specific to the named plaintiffs overwhelm any common issues. There was evidence that some consumers chose Dial Complete for reasons unrelated to the challenged claims, such as fragrance, bottle shape, and foam consistency.

The court noted that the core of the plaintiffs’ claims under those state statutes rested on Dial’s allegedly deceptive conduct in marketing Dial Complete and those alleged misrepresentations appeared on the packaging of each Dial Complete product sold. Whether those claims were false and misleading was a significant common question to be resolved for all class members. Thus, the plaintiffs sufficiently established the predominance of common issues of liability.

Damages. However, the plaintiffs failed to show that common questions predominate over individualized questions with respect to the damages calculation. Dial argued that the plaintiffs’ proposed method of calculating damages on a class-wide basis was not sufficiently tied to their theory of the case. Additionally, individual questions of damages would require “mini-trials” of each potential class member to determine how much each person paid for Dial Complete, what soap they would have purchased if they had not purchased Dial Complete, and what the effective hand cleaning ability of Dial Complete was worth to each person.

The court noted that the plaintiffs’ experts proposed methodologies for computing damages on a class-wide basis based on disgorgement of either the full purchase price of Dial Complete, the full wholesale price, or the full profit margin realized by Dial. Those methodologies ignored the “reality” that the plaintiffs realized value from Dial Complete, according to the court, because the product was unarguably effective as soap in cleaning their hands.

The remaining theory was based on disgorgement of the premium paid by consumers for the antibacterial properties promised but found lacking in the product. In the court’s view, the plaintiffs provided insufficient detail regarding their proposed methodologies for calculating class-wide damages or the “significant conceptual, implementation, or data issues that would be encountered” if their methodologies were adopted. The plaintiffs also presented no evidence that the premium paid for the product was capable of measurement. Although class damages were not required to be calculated to a mathematical certainty at the class certification stage of the proceedings, the plaintiffs failed to provide sufficient detail to allow a full assessment of whether damages could be feasibly calculated on a class-wide basis. Therefore, certification of the putative classes under Rule 23(b)(3) was not appropriate, the court concluded.

The case is No. 1:11-cv-02279-SM.

Attorneys: Jim S. Hall (Hall Law Office, LLC) for Eric Capdeville. Eugene A. Schoon (Sidley Austin LLP) for The Dial Corporation.

Companies: The Dial Corporation

Cases: Advertising ConsumerProtection NewHampshireNews