Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 1 of 15 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF ILLINOIS

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1 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 1 of 15 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF ILLINOIS DAVID WALLS, On Behalf Of Himself And On Behalf Of All Others Similarly Situated, Civil Action No. 3:10-cv WDS-DGW v. Plaintiff, CLASS ACTION COMPLAINT THE DIAL CORPORATION., Defendant. Demand For Jury Trial Plaintiff, David Walls ( Walls or Plaintiff ), by and through his attorneys, brings this action, on behalf of himself and all other similarly situated, against Defendant, The Dial Corporation ( Dial or Defendant ), and, except for information based on his own personal knowledge, alleges on information and belief based on the investigation conducted by his counsel, and the facts that are a matter of public record, as follows: NATURE OF THE ACTION 1. Plaintiff brings this action individually and on behalf of a proposed class ("Class"), as more fully defined below, of similarly situated consumers Nationwide seeking to redress the pervasive pattern of fraudulent, deceptive, false and otherwise improper advertising, sales and marketing practices that Defendant continues to engage in regarding its Dial Complete Foaming Antibacterial Hand Wash ( Dial Complete or the Product ). As more fully alleged herein, Defendant s schemes or artifices to defraud Plaintiff and other members of the proposed Class have consisted of systemic and continuing practices of disseminating false and misleading information via television commercials, Internet websites and postings, blast s, radio media

2 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 2 of 15 tours, video news releases, advertisements, and the packaging of the Product, all of which is intended to induce unsuspecting consumers, including Plaintiff and other members of the proposed Class, into purchasing millions of dollars' worth of the Products, which may be manufactured, and is marketed, advertised and sold, by Defendant. 2. Through its extensive and comprehensive nationwide marketing campaign, Defendant claims that Dial Complete kills 99.99% of germs, is the #1 Doctor Recommended brand of antibacterial liquid hand wash and kills more germs than any other liquid hand soap, when in actuality, it does not, a fact which Dial knew and purposely misrepresented and failed to disclose to consumers. To this day, Dial has taken no meaningful steps to clear up consumer misconceptions regarding its Product. 3. Since the introduction of the Product, Defendant s nationwide advertising campaign for the Product has been extensive, and Defendant has spent a significant amount of money to convey these deceptive messages to consumers throughout the United States. Through this massive marketing campaign, Defendant has conveyed one message: the Product performs better than regular soap and water. Each person who has purchased the Product has been exposed to Defendant s misleading advertising message and purchased the Product as a result of that advertising and paid a premium for the Product. 4. Defendant s claims are deceptive and misleading, designed solely to cause consumers to buy the Product. The active ingredient in Dial Complete is Triclosan. There are no reliable studies showing that Triclosan provides any of the results promised by Defendant, or in other words, that it provides a benefit over washing with regular soap and water, and Defendant has no substantiation for the claims it makes regarding the Product as it relates to washing with regular soap and water. 5. As a consequence of Dial s unfair and deceptive practices, Plaintiff and members of the Class have purchased the Dial Complete under the false impression that the Product provides a benefit over washing with regular soap and water. Each consumer has been exposed to the same material misrepresentations and/or omissions which are prominently displayed on the product packaging for the Dial Complete, and in its advertising, prior to purchasing the Product. 6. As a result of Dial s misrepresentations and/or omissions regarding Dial 2

3 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 3 of 15 Complete, Plaintiff and class members substantially overpaid for the soap because the value of the Product was diminished at the time it was sold to consumers. Had Plaintiff and Class members been made aware that the Dial Complete provides no benefit over washing with regular soap and water, contrary to that represented, they would not have purchased the Dial Complete or would have paid less for it. 7. Plaintiff brings this action on behalf of himself and other similarly situated consumers in the State of Illinois pursuant to the Illinois Consumer Fraud and Deceptive Practices Act ( Consumer Fraud Act ), 815 ILCS 505/1 et.seq., to halt the dissemination of this false and misleading advertising, correct the false and misleading perception they have created in the minds of consumers, and to obtain redress for those who have purchased the Dial Complete. Plaintiff alleges violations of the Illinois and breach of the express warranty created by Defendant s advertising, including the labeling of the Product, and unjust enrichment. JURISDICTION AND VENUE 8. This Court has original jurisdiction pursuant to 28 U.S.C. 1332(d)(2). The matter in controversy, exclusive of interest and costs, exceeds the sum or value of $5,000,000 and certain members of the Class are citizens of a state different from Defendant. 9. Venue is proper in this Court pursuant to 28 U.S.C in that many of the acts and transaction giving rise to this action occurred in this district and because Defendant: is authorized to conduct business in this district, has intentionally availed itself of the laws and markets within this district through the promotion, marketing, distribution and sale of its products in this district; does substantial business in this district; and is subject to personal jurisdiction in this district. THE PARTIES 10. Plaintiff is, and at all times relevant to this action has been, a resident of Carterville, Illinois which is situated in this district. As such, Plaintiff is an Illinois citizen. Prior to purchasing the Dial Complete, Plaintiff was exposed to and saw Dial s advertising and packaging claims and purchased the Dial Complete in reliance on those claims. As a result of those purchases, Plaintiff suffered injury in fact and lost money as a result of the conduct described herein. 3

4 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 4 of In making his purchasing decision, Plaintiff relied upon, inter alia, the labeling, packaging, advertising and/or other promotional materials which were prepared and approved by Dial and its agents and disseminated through its packaging, advertising, and marketing, and/or through local and national advertising media, including Dial s Internet website, media and instore advertisements and labeling at local retail outlets, containing the misrepresentations and/or omissions alleged herein. 12. Defendant Dial is incorporated in the State of Delaware and is headquartered in Scottsdale, Arizona. Dial is a subsidiary of Henkel AG & Co.KGaA, a Duesseldorf Germany-based, Fortune Global 500 Company. Dial promotes, markets, distributes and sells a broad range of well-known branded products, including body washes, bar soap, liquid hand soap and hand sanitizer throughout the United States, including to tens of thousands of consumers in the State of Illinois. SUBSTANTIVE ALLEGATIONS The Ingredient 13. Dial Complete contains Triclosan, which was originally developed as a surgical scrub for medical professionals. In recent years, it has been added to many consumer products such as soaps and body washes, toothpaste, clothing, kitchenware, furniture, and toys. 14. Triclosan is a chlorophenol, a class of chemicals which is suspected of causing cancer in humans. While the companies that manufacture products containing triclosan claim that it is safe, the Environmental Protection Agency (EPA) has registered it as a pesticide. The EPA gives triclosan high scores both as a human health risk and as an environmental risk. 15. Triclosan has already been banned or restricted in other countries, including the European Union. The Product and Its Advertising 16. Defendant's misleading marketing campaign begins with a deceptive name - Dial Complete - as it implies that it will completely protect you from germs. Defendant's exhaustive advertising campaign builds on this deception. In truth, Defendant has no competent and reliable support for these claims. 17. Defendant markets Dial Complete as a highly effective and doctor-recommended 4

5 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 5 of 15 product, claiming on its current packaging that it "kills 99.99% of germs" and that it is "Doctor Recomm ended," among other claims. 18. As advertised on the packing, Dial Complete contains triclosan as the sole active ingredient, and it is this ingredient that Defendant claims is a germ killer and will kill "99.99% of germs." 19. Further, the Product packaging provides that it KILLS MORE GERMS Than Any Other Liquid Hand Soap. 20. In addition to the product label, Dial deceptively describes the Dial Complete on its website at which is accessible to the general public. In the Fact Sheet on the website, it is described as a hospital strength formula that is over 10 times more effective at killing disease-causing germs than ordinary liquid soap. 21. In the Complete Facts section of the website, however, the Product is said to be over 1000 times more effective at killing disease-causing germs than other antibacterial liquid hand soap. And, according to the A Closer Look section, it also has been shown to help reduce disease transmission by 50% compared to washing with a plain soap. 22. Defendant's misleading marketing campaign also included a web-based "Campaign for Clean Hands" as reported by Ad Week, available at 5

6 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 6 of 15 campaigns/e3i5d81a ae38a9017f8, which featured a website with games, puzzles, a hand wash chart and other interactive features. This promotion included the following packing, claiming "Superior Germ Kill." 23. Defendant's nationwide advertising campaign has been extensive and comprehensive, and it has spent millions of dollars to convey these deceptive messages to consumers throughout the United States. Defendant conveyed and continues to convey deceptive claims about Dial Complete through a variety of media, including television, newspapers, radio media tours, the Internet, blasts, video news releases, point-of-sale displays, and on the product's labels and labeling. 24. Through this extensive and comprehensive campaign, Defendant has directly participated in the conveyance of one message: Dial Complete is more effective at protecting you from germs and is better than washing with soap and water. Each person who has purchased Dial Complete has been exposed to Defendant s misleading advertising message multiple times, but has never been provided the well-known and critical information that washing with regular soap and water provides the same level of protection. As a result of Defendant s false and misleading representations and omissions, consumers have paid more for Dial Complete than they otherwise would have. 25. Defendant's advertising and marketing campaign is designed to cause consumers to buy Dial Complete on the basis that it is more effective than washing with regular soap and water and, thus, is worth paying a premium for. As a result of this false and misleading campaign, Dial has elevated Dial Complete to one of the top sellers in the antibacterial product category. 26. As a result of the deceptive and misleading messages directly conveyed through their campaign, Defendant has been able to charge a significant price premium for Dial Complete over traditional hand soaps. Triclosin and Recent Research and Discussion 27. Although liquid soaps had been around for years, according to Herbert Baum, Chairman of Dial Corp., Dial Complete "is the greatest advancement in liquid soap since the 6

7 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 7 of 15 production of Liquid Dial in 1988." 28. These claims are based on a single, in-house study, conducted at its own Dial Center for Innovation. In 2001, Dial renamed its R&D department as the Dial Center for Innovation. It is located across the street from corporate headquarters, at: Dial Center for Innovation, The Dial Corporation, North Scottsdale Road, Scottsdale, Arizona 85254, USA. 29. Contrary to Dial s self-serving research, in connection with a review of 27 studies conducted over the past 30 years, scientists from the University of Michigan, Columbia University and Tufts University, determined (and published in the academic journal Clinical Infectious Diseases), that soaps containing added ingredients such as triclosan in liquid soap and triclocarban in bar soap do not show a benefit above and beyond plain soap in the consumer environment. 30. The independent scientists concluded that: The lack of an additional health benefit associated with the use of triclosan-containing consumer soaps over regular soap, coupled with laboratory data demonstrating a potential risk of selecting for drug resistance, warrants further evaluation by governmental. 31. The U.S. Food & Drug Administration (FDA) concurs with these results. In 2005, the FDA concluded that antimicrobial soaps and sanitizers do not reduce the risk of illness and infection in the home, yet products made with triclosan not only remain on the market, but are aggressively marketed by corporations, including Defendant. The Canadian Pediatric Society, the American Medical Association and other groups have concluded and publically stated that antibacterial soaps and washes are no more effective than regular soap and water in fighting infection in everyday use. 32. In April 2010, Rep. Edward J. Markey (D-Mass), chairman of the House Energy and Commerce Subcommittee on Energy and the Environment, called for restrictions on triclosan after the FDA acknowledged to him that it was worried about the possible health risks of the chemical. In January, Rep. Markey had written to the FDA requesting information about the status of its ongoing review of triclosan in consumer products. He also sent a similar letter to the EPA. 7

8 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 8 of In an April 8, 2010 Consumer Update, the FDA unequivocally stated that: At this time, FDA does not have evidence that triclosan added to antibacterial soaps and body washes provides extra health benefits over soap and water. 34. In the same update, the FDA expressed concerns that triclosan may alter hormone regulation, or could create antibiotic-resistant bacteria. 35. Although Defendant was, and is, aware of this vital lack of substantiation as well as the questions as to the safety and efficacy of the Product, it nevertheless has, and continues to, make false and misleading representations to consumers about the Dial Complete. 36. As a result of the forgoing, Defendant s claims regarding the Product are deceptive and misleading. Had Plaintiff and other members of the proposed Class been aware of the truth about the Dial Complete, they would not have purchased the Product, or would not have paid a premium price for the Product. CLASS ACTION ALLEGATIONS 37. Plaintiff brings this suit as a class action on behalf of himself and on behalf of other similarly situated pursuant to Fed.R.Civ.P.23(a), 23(b)(2), and/or 23(b)(3). Subject to additional information obtained through further investigation and/or discovery, the foregoing definition of the Class may be expanded or narrowed. The proposed Class is defined as follows: Class: All persons in Illinois who purchased Dial Complete. 38. Excluded from the Class are: (1) Defendant, Defendant s subsidiaries, affiliates, officers, directors, assigns and successors, and any entity which Defendant has a controlling interest; (2) the judge to whom this case is assigned and any member of the judge s immediate family; (3) anyone who purchased Dial Completes for the purpose of resale; and (4) anyone asserting claims for personal injury. Plaintiff reserves the right to modify the Class definition as further investigation and/or discovery so warrant. 39. This action has been brought and may properly be maintained as a class action pursuant to Fed.R.Civ.Pro. 23 and case law thereunder. 40. Numerosity: The members of the Class are so numerous that joinder of all members is impracticable. Plaintiff reasonably believes that the Class is comprised of tens of 8

9 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 9 of 15 thousands of consumers throughout the United States. 41. Commonality: Common questions of law and fact exist as to all members of the Class. These common questions predominate over any questions affecting only individual Class members. These common legal and factual questions include, but are not limited to, the following: (a) whether Defendant s claims regarding the Dial Complete are deceptive or misleading; (b) (c) (d) (e) (f) (g) whether Defendant engaged in false or misleading advertising; whether Defendant s conduct as alleged herein violates the Illinois Consumer Fraud Act; whether Defendant s conduct as alleged herein constitutes a breach of warranty; whether Defendant s conduct as alleged herein constitutes unjust enrichment; whether Plaintiff and Class members have sustained monetary loss and the proper measure of that loss; and whether Plaintiff and Class members are entitled to declaratory and injunctive relief. These and other questions of law or fact which are common to the members of the Class predominate over any questions affecting only individual members of the Class. 42. Typicality: Plaintiff s claims are typical of the claims of the members of the Class, as all Class members are similarly affected by Defendant s wrongful conduct. Plaintiff, like other members of the Class, purchased the Dial Complete after exposure to the same material misrepresentations and/or omissions appearing on the product packaging and on Dial s website and other advertising, and received a product that was not as represented. Plaintiff is advancing the same claims and legal theories on behalf of himself and all absent members of the Class. 43. Adequacy: Plaintiff s claims are made in a representative capacity on behalf of 9

10 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 10 of 15 the other members of the Class. Plaintiff has no interests antagonistic to the interests of the other members of the proposed Class and is subject to no unique defenses. 44. Plaintiff is similarly situated in interest to all members of the proposed Class and is committed to the vigorous prosecution of this action and has retained competent counsel experienced in the prosecution of class actions. Accordingly, Plaintiff is an adequate representative of the proposed Class and will fairly and adequately protect the interests of the Class. 45. This suit may be maintained as a class action under Fed.R.Civ.Pro. 23(b)(2) because Defendant has acted, and/or refused to act, on grounds generally applicable to the Class, thereby making appropriate final injunctive relief. Specifically, injunctive relief is necessary and appropriate to require Defendant to: (i) discontinue advertising, marketing, packaging and otherwise representing its Dial Complete as superior; (ii) undertake an immediate public information campaign to inform members of the proposed Class as to their prior practices; and (iii) to correct any erroneous impression consumers may have derived concerning the nature, characteristics, or qualities of its Dial Complete, including without limitation, the placement of corrective advertising and providing written notice to the public. 46. In addition, this suit may be maintained as a class action under Fed.R.Civ.Pro. 23 (b)(3) because a class action is superior to all other available methods for the fair and efficient adjudication of this controversy since joinder of all members is impracticable. The injury suffered by each individual class member is relatively small in comparison to the burden and expense of individual prosecution of the complex and extensive litigation necessitated by Defendant s conduct. It would be virtually impossible for members of the Class individually to redress effectively the wrongs done to them. Even if the members of the Class could afford such litigation, the court system could not. Individualized litigation presents a potential for inconsistent or contradictory judgments. Individualized litigation increases the delay and expense to all parties, and to the court system, presented by the complex legal and factual issues of the case. By contrast, the class action device presents no management difficulties, and provides the benefits of single adjudication, economy of scale, and comprehensive supervision by a single court. 10

11 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 11 of 15 COUNT I (Violations of the Illinois Consumer Fraud and Deceptive Practices Act -- Asserted on Behalf of the Class) 47. Plaintiff realleges and incorporates by reference the allegations contained in the paragraphs above as if fully set forth herein. 48. At all time material hereto, there has been in effect in the State of Illinois a certain statute known as the Illinois Consumer Fraud and Deceptive Business Practices Act ( the Act ), set forth as Chapter 815, Act 505 of the Illinois Compiled Statutes, which provides in pertinent part, as follows: Unfair methods of competition and unfair or deceptive acts or practices, including but not limited to the use or employment of any deception fraud, false pretense, false promise, misrepresentation or the concealment, suppression or omission of any material fact... in the conduct of any trade or commerce are hereby declared unlawful whether any person has in fact been misled, deceived or damage thereby ILCS 505/ This cause of action is brought pursuant to the Act. Plaintiff is a consumer as defined by the Act. Dial Complete is a good sold in trade or commerce within the meaning of the CLRA. 50. Defendant s packaging, marketing and sales of Dial Complete placing it into trade and commerce as a superior product is an unfair business practice under the Act. 51. Defendant s act of advertising and marketing Dial Complete as superior product over traditional hand soap is a deceptive practice under the Act. Rather than provide consumers such as Plaintiff and the Class Members with full information on which to base purchases, Defendant knowingly concealed such facts and to date has yet to issue even a single word of clarification or retraction. 52. Defendant s intentional misrepresentation and concealment of material facts constitute prohibited fraudulent conduct under the Act. 53. At all times material hereto, it was reasonably foreseeable that Plaintiff, and other similarly situated, would rely on the false and fraudulent statements made by 11

12 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 12 of 15 Defendant. Said reliance has caused Plaintiff, and others similarly situated, to be damaged. 54. Plaintiff and the class have suffered actual damages as an actual and proximate result of the Defendant s intentional misrepresentation and concealment of material facts in that they paid an unfair and unwarranted premium for a product which they wouldn t have otherwise paid. 55. Defendant s conduct as described throughout this Complaint constitutes unfair, immoral and unscrupulous business practices that harmed not only Plaintiff and the Class members, but the general public as well. Defendant s immoral and unscrupulous practices were implemented so as to extract an unwarranted premium from consumers, and are evidenced as more fully set forth in this Complaint. 56. The actions of Defendant were done willfully, intentionally and with reckless disregard for harm that would be caused to Plaintiff, and others similarly situated, and Defendant s conduct warrants imposition of punitive damages to deter Defendant, and others in similar circumstances, from committing such actions in the future. 57. Defendant s conduct described herein actually and proximately caused Plaintiff and the Subclass members to suffer damages as described throughout this Complaint. COUNT II (Breach Of Express Warranty -- Asserted On Behalf Of The Class) 58. Plaintiff realleges and incorporates by reference the allegations contained in the paragraphs above as if fully set forth herein. 59. Plaintiff, and each member of the Class, formed a contract with Dial at the time they purchased the Dial Complete. The terms of that contract include the promises and affirmations of fact made by Dial on the labels of the Dial Complete and through the advertising and marketing campaign, as alleged above. The Product labeling and advertising constitute express warranties, became part of the basis of the 12

13 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 13 of 15 bargain, and are part of a standardized contract between Plaintiff and the members of the Class, on the one hand, and Dial, on the other. 60. All conditions precedent to Dial s liability under the warranty have been performed by Plaintiff and the Class. 61. Dial breached the terms of the express warranty by not providing Dial Complete that provided the benefits promised. 62. As a result of Dial s breach of warranty, Plaintiff and the Class have been damaged in the amount of the purchase price of the Dial Complete they purchased. COUNT III (Unjust Enrichment Asserted On Behalf Of The Class) 63. Plaintiff realleges and incorporates by reference the allegations contained in the paragraphs above as if fully set forth herein. 64. This claim is asserted in the alternative on behalf of Plaintiff and Class members to the extent that any contracts do not govern the entirety of the subject matter of the dispute with Dial. 65. Plaintiff and Class members conferred a tangible economic benefit upon Dial by purchasing the Dial Complete. Plaintiff and Class members would have expected remuneration from Dial at the time this benefit was conferred had they known that the Product did not perform as promised and has been widely criticized by government officials and scientists. 66. As a direct and proximate result of Dial s misconduct as set forth above, Dial has been unjustly enriched at the expense of Plaintiff and Class members. 67. It would be inequitable for Defendant to retain the profits, benefits and other compensation obtained by its wrongful conduct in marketing and selling the Dial Complete. 68. Plaintiff, on behalf of himself and Class members, seeks restitution from Dial, and an order of this Court disgorging all profits, benefits and other compensation obtained by Dial from its wrongful conduct. 13

14 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 14 of 15 PRAYER FOR RELIEF WHEREFORE, Plaintiff, on behalf of himself and all members of the Class defined herein, prays for judgment as follows: 1. Certification of the Class under Federal Rule of Civil Procedure 23 and appointment of Plaintiff as representative of the Class and his counsel as Class counsel; 2. A temporary, preliminary and/or permanent order for injunctive relief requiring Dial to: (I) discontinue advertising, marketing, packaging and otherwise representing the Dial Complete as having benefits that its does not have; (ii) undertake an immediate pubic information campaign to inform members of the proposed Class as to the prior practices; and (iii) to correct any erroneous impression consumers may have derived concerning the nature, characteristics, or qualities of its Dial Complete, including without limitation, the placement of corrective advertising and providing written notice to the public; 3. An order requiring imposition of a constructive trust and/or disgorgement of Defendant s ill-gotten gains and to pay restitution to Plaintiff and all members of the Class and to restore to the Plaintiff and members of the Class all funds acquired by means of any act or practice declared by this Court to be an unlawful, fraudulent or unfair business act or practice, a violation of laws, statutes or regulations, or constituting unfair competition or false advertising; 4. Distribution of any moneys recovered on behalf of members of the Class via fluid recovery or cy pres recovery where necessary and as applicable, to prevent Defendant from retaining the benefits of their wrongful conduct; 5. Compensatory and other damages for economic and non-economic damages identified herein; 6. Statutory pre-judgment and post-judgment interest on any amounts; 7. Reasonable attorneys fees as may be allowable under applicable law; 8. Costs of this suit; and 9. Such other relief as the Court may deem just and proper. 14

15 Case 3:10-cv WDS -DGW Document 2 Filed 09/23/10 Page 15 of 15 JURY DEMAND Plaintiff demands a trial by jury on all causes of action so triable. DATED: September 23, 2010 Respectfully submitted /s/ Eric D. Holland Eric D. Holland Steven J. Stolze HOLLAND GROVES SCHNELLER & STOLZE, LLC 300 North Tucker Blvd., Suite 801 St. Louis, MO Telephone: (314) Fax: (314) eholland@allfela.com Attorneys for Plaintiff 15