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In re Dial Complete Marketing and Sales Practices Litigation

United States District Court, D. New Hampshire

March 27, 2017

In re Dial Complete Marketing and Sales Practices Litigation Opinion No. 2017 DNH 051

          ORDER

          Steven J. McAuliffe United States District Judge

         This consolidated, multi-district class action litigation is brought by consumers in Arkansas, California, Florida, Illinois, Missouri, Ohio, and Wisconsin, on behalf of themselves and similarly situated consumers in those states, against defendant, The Dial Corporation (“Dial”). Plaintiffs allege that Dial continually misrepresented the antibacterial properties of its “Dial Complete” branded soap, and advance claims under their respective state consumer protection and unfair trade practices statutes, as well as statutory and common law causes of action for breach of warranty and unjust enrichment.

         On November 16, 2012, pursuant to Fed. R. of Civ. P. 23(b)(3), plaintiffs moved to certify a class consisting of each state's purported class members, for a total of eight subclasses, defined as: “All persons residing in [the state] who purchased Dial Complete Antibacterial Foaming Hand Soap for household use at any point in time from Dial Complete's commercial launch in 2001 through the present.” The court ruled on plaintiffs' motion on December 8, 2015, finding that several of the claims asserted by the plaintiffs were incapable of classwide proof (including all the Wisconsin claims). For those claims remaining, the court found that plaintiffs failed to provide detail sufficient to permit a full assessment of whether damages could be adequately calculated on a classwide basis. Accordingly, the court denied plaintiffs' motion for certification, but allowed plaintiffs leave to file an amended motion for class certification to address deficiencies identified in the order.[1]

         On June 24, 2016, plaintiffs filed an amended motion for class certification. Dial again objects. On November 16, 2016, the court held a hearing on the motion, and heard testimony from the parties' experts.

         BACKGROUND

         The parties' familiarity with the relevant facts as set out in the court's December 2015 order is assumed. A brief synopsis follows.

         The plaintiffs take issue with a variety of statements appearing on Dial Complete's product labels, including claims that Dial Complete “Kills 99.99% of Germs*, ”[2] that it is “#1 Doctor Recommended**, ” and that Dial Complete “Kills more germs than any other liquid hand soap.”[3] Plaintiffs contend that these statements are false and misleading. They generally assert four causes of action: (1) violation of the consumer protection laws of Arkansas, California, Florida, Illinois, Missouri, Ohio, and Wisconsin; (2) breach of express warranty; (3) breach of implied warranty; and (4) unjust enrichment. Plaintiffs' original motion sought certification for each of those claims pursuant to Fed.R.Civ.P. 23.

         As referenced above, the court's December 2015 order substantially limited the claims at issue. For the claims remaining, the court determined that plaintiffs had not demonstrated that damages could be calculated on a class-wide basis, and therefore had not shown that common questions predominate over individual questions with respect to damages.

         Plaintiffs' amended motion for class certification again asserts that class-wide damages can be reliably calculated in a manner that comports with their theories of liability. See Document No. 200. The amended motion is supported by the declaration and hearing testimony of a new expert, Stefan Boedeker.

         Mr. Boedeker is a Managing Director of the Berkeley Research Group, where he focuses “on the application of economic, statistical, and financial models to a variety of areas such as solutions to business issues, complex litigation cases, and economic impact studies.” Pls.' Mem. in Supp. of Am. Mot. for Class Certification (hereinafter “Pls.' Br.”), Exhibit A (Declaration of Stefan Boedeker (hereinafter “Boedeker Decl.”)), Appendix A-1 at p. 1. Boedeker received Bachelor of Science degrees in Statistics and Business Administration from the University of Dortmund, Germany, a Master of Science degree in Statistics from the University of Dortmund, and a Master of Arts degree in Economics from the University of California, San Diego.[4] He has worked in the economic and statistical consulting field since he completed graduate school in 1991, and “has extensive experience applying economic and statistical theories and methodologies to a wide variety of cases where [b]ut-for-scenarios have to be developed based on probabilistic methods and where statistical predictive modeling has to be applied to assess liability and damages.” Id.

         According to plaintiffs, Boedeker was retained:

to determine whether any specific economic techniques could determine whether Plaintiffs and the other Class Members had been deprived of a measurable monetary portion of the benefit-of-the-bargain they had struck with Dial by buying Dial Complete with a superior efficacy claim on the label but, in fact, receiving a product that did not provide the promised superior efficacy.

Pls.' Br. at 2. Plaintiffs say that Boedeker completed the task by describing “a well-developed and widely-accepted conjoint analysis methodology, ” and then executing that methodology to calculate the aggregate damages caused by Dial Complete's challenged “Kills 99.99% of Germs” claim. Id.

         As plaintiffs explain it, Boedeker's conjoint analysis methodology consists of three steps: data collection, data analysis, and damages calculation. Pls.' Br. at 3. Boedeker first conducted preliminary background research, reviewed market research data, and conducted field research in online and retail stores, to gain an understanding of the consumer liquid hand soap market. Based on that research, Boedeker designed an “economic loss model” to quantify damages on a classwide basis, focusing on measuring the marginal consumer's “willingness-to-pay.” Id. at 5-6. Boedeker describes that model as follows:

To make the consumers whole for the economic loss, every consumer would have to receive an additional payment sufficiently large to vertically shift the demand curve so that the demand curve for the product with the false claim plus additional compensation intersected with the supply curve in equilibrium for the product without the false claim.
In order to determine how much the demand curve would need to be shifted, we need to focus on the marginal consumer in the market for the product without the false claim and compare the price she had paid to the price she would have paid for the product with the known-to-be-false claim at the point of purchase.
The compensation to make the marginal consumer whole after purchasing the product with the false claim is not simply the difference between the equilibrium prices on the demand curve for the product without the false claim and the demand curve for the product with the known-to-be-false claim . . . Rather, the compensation of the marginal consumer needs to be equal to the difference between the price this marginal consumer would have paid for the product with the known-to-be false claim and the product without the false claim.

Boedeker Decl. ¶¶ 44-46.

         Boedeker developed a “Choice Based Conjoint” consumer survey, in which survey participants were shown hand soap profiles (or “choice sets”) with five different attributes, including the claims: “Kills 99.99% of Germs, ” “antibacterial, ” “foaming, ” and “moisturizing.” The fifth attribute was price. Boedeker set the price attribute at nine different point levels, ranging from $0.99 to $3.99 to reflect prices he observed in his preliminary research. Id. at 7.

         Survey respondents were shown four of the 144 possible choice set combinations, as well as a fifth “none of the above” choice, and “were asked to select one of those five choices in order to reveal their preferences for various features in liquid hand soaps.” Id. at 9 (citing Boedeker Decl. ¶ 65). Each respondent was asked to repeat that exercise with nine different choice sets, each containing a combination of the four attributes plus price. See Boedeker Decl. ¶ 64. To account for those attributes of liquid hand soaps not included in the survey (for example, scent, color, and brand), the survey instructed respondents to assume that the product combinations they were asked to choose between “had all the other features and characteristics (such as brand, scent, color, shape, etc.) that you prefer.” Pls.' Br. at 7 (citing Boedeker Decl. ¶¶ 65 and 67).[5]

         Boedeker explained that he limited the number of attributes to five because:

[i]n Choice-Based Conjoint Analysis[, ] there's obviously a limit as to how much information can be presented in one of those modules. . . . I mean, people would have to read for like minutes and minutes at a time, maybe more, and it's confusing and . . . the more the participants get confused[, ] the higher the likelihood is to get answers . . . that are no longer accurate[;] . . . that's often referred to as the fatigue syndrome.

Document No. 223 (11/16/2016 Hearing) at 52:2-14.

         Boedeker retained a survey company to host the survey; he directed the survey company to target a demographically diverse group of survey respondents. Survey respondents were required to be at least 18 years old, reside in the United States, and have purchased liquid hand soap in the last 12 months. In addition to the choice based conjoint exercise, the survey also asked respondents to answer a series of questions relating to liquid hand soap, including which brands they purchased and which qualities they considered important when making hand soap purchasing decisions. Boedeker Decl. ¶ 63.

         The survey company collected data from 2, 000 qualifying respondents. Pls.' Br. at 8 (citing Boedeker Decl. at ¶ 70). From those respondents, Boedeker collected a total of 18, 000 data points which, he asserts, reflect consumer preferences for certain liquid hand soap attributes. Pls.' Br. at 9 (citing Boedeker Decl. ¶ 76). Boedeker considered that data, performing the following analyses:

(1) using “econometric and statistical estimation techniques specifically based on mixed logit models and Hierarchical Bayesian Estimation techniques to quantify consumer willingness-to- pay for a true ‘Kills 99.99% of Germs' product attribute on a liquid hand soap;”
(2) “running computer-based market simulations to convert willingness-to-pay into actual market value price premium;[6]” and
(3) “calculating the difference in equilibrium market value price” between a hand soap featuring the claim “Kills 99.99% of germs” and a hand ...

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