McDougle v. SC Johnson & Son Inc
2:20-cv-00869
E.D. Wis.Feb 7, 2023Background
- Plaintiffs (three named: McDougle, Lemke, Miller) bought Windex products labeled “Non-Toxic” and allege those labels are false because the products contain ingredients harmful to humans, pets, or the environment, causing them to pay a premium.
- A separate California state-court class action (Clark) alleged essentially the same non-toxic labeling claims and obtained preliminary and final approval of a nationwide settlement that released claims based on the “non-toxic” labeling during the class period (ended July 9, 2021).
- The Clark settlement included notice, opt-out procedures, an injunction stopping use of the “non-toxic” claim, and a release barring later suits by class members who did not opt out; twelve individuals (including the three remaining named plaintiffs here) opted out.
- This federal action was stayed while Clark proceeded; after Clark’s final approval the stay was lifted and S.C. Johnson moved to dismiss or strike class allegations here on grounds including collateral attack, preclusion, and pleading defects.
- The district court applied a limited collateral-review approach, concluded the Clark court adequately addressed due-process (Shutts) factors and the settlement satisfied California law and federal due-process minima, denied Plaintiffs’ collateral attack, and held non‑opt‑outs are precluded as to purchases before July 9, 2021.
- The court dismissed Plaintiffs’ unjust-enrichment claim with prejudice, accepted Rosenberg’s voluntary dismissal, granted the motion to dismiss in part and denied it in part, and allowed Plaintiffs 14 days to amend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court may entertain collateral attack on California class settlement jurisdiction/adequacy | The Clark court lacked jurisdiction over non‑California claims and did not satisfy due process for out‑of‑state class members | Collateral attack is barred (Rooker‑Feldman/res judicata); Clark settlement precludes later challenges | Court applied limited collateral review, found Clark satisfied Shutts factors and denied collateral attack |
| Whether Clark settlement precludes Plaintiffs’ claims (release/res judicata) | Plaintiffs assert their Wisconsin‑law claims differ and are not covered by Clark | Settlement release is broad and covers claims based on the “non‑toxic” labeling regardless of governing state law | Court held Plaintiffs’ pre‑July 9, 2021 claims by non‑opt‑outs are precluded by Clark settlement |
| Whether plaintiffs who opted out may pursue class claims here (effect of opt‑outs) | Opt‑outs argue they can still seek class relief for a broader period or different class | Defendant contends opt‑outs forfeited class claims and only individual suits remain; also argues no purchases post‑settlement period | Court: Opt‑outs may still pursue some relief (individual or class for non‑overlapping period); but cannot represent class members who did not opt out for pre‑July 9, 2021 purchases; fact issues remain for certification/discovery |
| Pleading sufficiency and Rule 9(b) fraud pleading (and unjust enrichment) | Plaintiffs plead fraud on information and belief; seek unjust enrichment | Defendant argues fraud allegations are impermissibly vague and unjust enrichment fails because purchases were from retailers, not defendant | Court allowed leave to amend fraud allegations to add supporting sources; dismissed unjust enrichment with prejudice (benefit conferred to retailers, not defendant) |
Key Cases Cited
- Phillips Petroleum Co. v. Shutts, 472 U.S. 797 (1985) (sets minimal due‑process protections for nationwide class actions: notice, opt‑out, opportunity to be heard, adequate representation)
- Kamilewicz v. Bank of Boston Corp., 92 F.3d 506 (7th Cir. 1996) (applied Rooker‑Feldman and foreclosed federal collateral attack on a state court class settlement approval)
- Gooch v. Life Ins. Co. of Am., 672 F.3d 402 (6th Cir. 2012) (applied res judicata/collateral‑review principles where state court settlement received final approval during federal suit)
- Matsushita Elec. Indus. Co. v. Epstein, 516 U.S. 367 (1996) (noted unresolved scope of collateral review of state class‑action judgments for due‑process compliance)
- Williams v. Gen. Elec. Cap. Auto Lease, Inc., 159 F.3d 266 (7th Cir. 1998) (Seventh Circuit guidance that limited collateral review is appropriate where the settling court addressed due‑process objections)
- Pirelli Armstrong Tire Corp. Retiree Med. Benefits Tr. v. Walgreen Co., 631 F.3d 436 (7th Cir. 2011) (standards for pleading fraud on information and belief and when such pleading is permissible)