CONCORD — Despite objections from the U.S. Justice Department and 10 state attorneys general, a federal judge in New Hampshire last week approved a $7.4 million settlement over misleading germ-killing claims involving a Dial Corp. soap product.
The settlement in U.S. District Court concludes a lawsuit almost 8 years old. It dealt with marketing claims that Dial Complete hand soap kills 99.99% of germs.
As part of the settlement, Dial agreed to not use the marketing claim for five years, to reimburse 260,000 customers 27 cents for each bottle they purchased, and to pay lawyer fees and expenses of $4.43 million.
“We are very pleased with the result. A consumer class action that achieves a full recovery for class members is an excellent result,” said Lucy Karl, the lead interim counsel in the suit and a member of the Shaheen and Gordon law firm.
In an emailed statement, Dial spokesman Jenny Schiavone said: “We are pleased that the Court approved the proposed settlement, and we look forward to continuing to provide consumers with the quality products they’ve come to expect from Dial.”
Only the customers who signed on to the class action suit are eligible for reimbursement.
They can receive reimbursement for up to 30 bottles — a total of $8.10 — without having to produce receipts.
But such settlements are drawing the ire of the Trump Justice Department, which is stepping up its role under the 2005 Class Action Fairness Act, which allows federal and state consumer protection officials to act when they believe that class-action legal fees are excessive.
Since February 2018, when the Justice Department official signaled a new focus on class action suits, it has sought to intervene in four cases, most recently the Dial case. Others involved false advertising in an online wine retailer, a defective pressure cooker and nutritional labeling in a cookie product.
“The (Class Action Law) focused especially on making sure that class action settlements provide real recovery to class members and not just big payouts to plaintiffs’ lawyers,” said then Associate Attorney General Rachel Brand in a speech to the Federalist Society in Washington.
That’s the role taken by the Justice Department on May 14, when it filed a challenge to the Dial settlement. That same day Arizona Attorney General Mark Brnovich filed similar papers on behalf of his state and Arkansas, Florida, Idaho, Indiana, Louisiana, Oklahoma, Michigan, Missouri, Rhode Island, Tennessee and Texas.
“The proposed settlement contemplates hefty, uncontested attorney’s fees based in part on obtaining forward-looking injunctive relief of illusory value,” wrote Kendrack D. Lewis, with the U.S. Attorney General’s Consumer Protection Branch. “The Court should reject the call to compensate attorneys at the expense of unnamed plaintiffs for any portion of work that provides little or no actual value to the class.”
He asked U.S. District Court Judge Steven McAuliffe to reject the settlement, arguing that years ago Dial dropped the “kills 99.99% of germs” claim in favor of the more scientifically correct “kills 99.99% of bacteria.”
According to subsequent filings by Karl and co-counsel, the filings represent an effort by the Trump Justice Department to go after attorney fees in class-action cases.
Ten firms participated in the Dial case. Hourly rates at just Shaheen Gordon ranged from $525 for senior lawyers at the firm to $250 for associates, according to court filings.
The government officials, Karl wrote, lacked the fortitude to protect the public from false claims made by Dial and instead decided to attack the settlement.
During a court hearing last week, both parties to the settlement asked McAuliffe to let it stand.
Dial acknowledged that the lawsuit — along with a 2016 FDA ban on the Dial Complete ingredient triclosan — prompted the advertising change.
Karl and her co-counsel have submitted reports by economists that value the five-year ban on the germ-killing claim at $25 million; a portion of their legal fees are based on that estimate.
In his ruling from the bench, McAuliffe approved the settlement.
He said the settlement provided real cash value to Dial customers who had signed up. Many class-action consumer suits end up in coupons for the customers, he noted. He agreed that the five-year ban had a value and protected the customers.
And he noted the lawyers who brought the case filed papers that they were underwater in the case.
“All I’m getting (from lawyers opposed to the settlement) is this ennui that ‘I hate to see plaintiff counsel compensated like that,’ “ McAuliffe said. “This is an 8-year-old case that begs for conclusion.”