Fresh off the heels of an in-depth report detailing Arizona Attorney General Mark Brnovich’s leadership and consistent scrutiny of class action settlements, the Department of Justice and twelve state attorneys general, led by Arizona, independently filed objections to a proposed nationwide class action settlement between consumers and Dial. The class settlement focused on misleading advertisements related to the effectiveness of the active ingredient in Dial Complete hand wash, triclosan.
The proposed settlement awards approximately $4.4 million to class counsel of the total $32.4 million settlement. The attorneys’ fees are bifurcated into $1.9 million for the $25 million in injunctive relief, $1.9 million for the approximately $2.325 million monetary settlement, and $573,141 in costs. The settlement includes a broad release of all claims related to Dial Complete hand wash, not just those related to misleading advertisements regarding triclosan (minus injury claims).
This one-two punch of objections by federal and state regulators asks the Court to disregard the “substantial value” of $25 million in injunctive relief, deeming such relief as “inflated,” “illusory,” and “essentially meaningless.” Specifically, Dial has agreed to stop using triclosan in its Dial Complete and will no longer advertise that that this product “‘Kills 99.99%* of Germs’ as that product is currently formulated” for the next five years. The states and the DOJ observed that Dial has already stopped using triclosan as an active ingredient in its hand wash and revised its “Kills 99.99% of Germs” advertisement in 2014, long before this settlement. The regulators state that these changes were based on the Food and Drug Administration’s issuance of a proposed rule regarding antibacterial hand and body washes. Thereafter, in 2016, the Food and Drug Administration finalized this rule, banning triclosan from over-the-counter antibacterial wash products. As such, the DOJ and states argue that the settlement inserts a $25 million valuation for Dial to stop doing what is already prohibited by law. Additionally, the DOJ’s Statement of Interest also focuses on the fact that $1.9 million in injunction-related attorneys’ fees are attributed to this worthless relief.
Disregarding the “value” of this injunctive relief, the states and the DOJ conclude that the remaining distribution is insufficient to consumers because class counsel will receive 60% of the actual monetary settlement ($4.4 million of the total $7.4 million remaining after reduction of the “value” of injunctive relief). The monetary award available to claims is distributed so that claimants may receive a maximum of 27 cents per package of Dial Complete foaming hand wash. This relief is limited to 30 packages (or a total of $8.10) unless the consumer can provide proof of purchase. If claims surpass this amount, claimants will receive a pro-rata share.
This is at least the fourteenth instance where Brnovich has led a bipartisan group of state attorneys general in objecting to a proposed class action settlement. In this amicus brief, Arizona was joined by attorneys general from Arkansas, Florida, Idaho, Indiana, Louisiana, Oklahoma, Michigan, Missouri, Rhode Island, Tennessee, and Texas.
Additionally, the DOJ’s Statement of Interest is at least the third class action settlement objection filed in recent months. Previously, the DOJ filed another Statement of Interest in Cowen et al. v. Lenny & Larry’s before the Northern District of Illinois and filed an amicus brief in the Sixth Circuit Court of Appeals, both opposing the sufficiency of the relief offered to consumers. Trial Attorney Kendrack Lewis of the Civil Division’s Consumer Protection Branch was the signatory on behalf of the DOJ in all three matters.
We will continue to follow this action to analyze the trial court’s evaluation of the proposed class action settlement and the increasing scrutiny of state and federal regulators related to proposed class action settlements.