Insurers Move to Block Coverage in Dude Products Class Action Lawsuit
In a notable legal battle unfolding in 2025, Owners Insurance Company and Auto-Owners Insurance Company have filed a lawsuit in a Chicago federal court to avoid covering Dude Products, Inc. in a class action case. The class action, filed in California, claims that Dude Products misled consumers by labeling its personal hygiene products, such as Dude Wipes, as “Assembled in USA.” This dispute, which began on August 19, 2025, in the United States District Court for the Northern District of Illinois, highlights the complexities of insurance coverage in class action lawsuits and could impact how businesses handle marketing claims. Here’s a straightforward look at the case, its background, and what it means for companies and consumers across the United States.
What Is the Dude Products Class Action About?
The class action against Dude Products, a Delaware company based in Chicago, was filed on March 20, 2025, in the Southern District of California by plaintiffs Benjamin Karter and Diego Ornelas. They allege that Dude Products falsely advertised its hygiene products, including wipes, as “Assembled in USA” on product labels, its website, and through third-party retailers like Amazon and Walmart. The lawsuit claims that ingredients like tea tree oil and shea butter come from outside the U.S., misleading consumers who believed they were buying American-made goods to support local jobs and quality.
The California lawsuit accuses Dude Products of violating several state laws, including the Consumer Legal Remedies Act, Unfair Competition Law, and False Advertising Law, as well as charges of unjust enrichment and misrepresentation (both negligent and intentional). The plaintiffs seek repayment of profits, damages (including punitive), and an order to stop using the “Assembled in USA” claim. This case echoes a previous Dude Products lawsuit over “flushable” wipes, which settled for $9 million in 2023 after claims that the wipes caused plumbing issues.
Why Are Insurers Refusing to Cover Dude Products?
Owners Insurance and Auto-Owners Insurance provided Dude Products with two policies—a tailored protection policy and a commercial umbrella policy—covering April 21, 2015, to April 21, 2021. These policies cover “Bodily Injury and Property Damage Liability” (for physical harm or property damage) and “Personal and Advertising Injury Liability” (for issues like slander or false advertising). However, the insurers argue they don’t have to defend or pay for Dude Products’ legal costs or damages in this class action for two main reasons:
- The Claims Don’t Match the Policy: The insurers say the lawsuit’s allegations focus on economic harm—consumers overpaying due to false “Assembled in USA” claims—not physical injury, property damage, or advertising injury like libel or slander. Economic losses, they argue, aren’t covered by their policies.
- Policy Exclusions Apply: The policies exclude coverage for intentional violations, such as knowingly making false claims or failing to meet advertised quality standards. The insurers point out that the lawsuit accuses Dude Products of deliberately misleading consumers, which would fall under these exclusions.
On May 5, 2025, Dude Products asked the insurers to cover their defense in the class action. On July 2, 2025, the insurers denied the request, stating the policies don’t apply. Dude Products didn’t withdraw its demand, prompting the insurers to file a lawsuit in Chicago’s federal court to get a judge’s ruling that they have no obligation to cover the case. The case is still in the complaint stage, with no decision yet.
How Does This Compare to Earlier Dude Products Cases?
This isn’t Dude Products’ first brush with insurance disputes over class actions. In 2022, Harleysville Preferred Insurance Company tried to avoid covering Dude Products in a lawsuit claiming their “flushable” wipes weren’t truly flushable, causing clogs and sewage damage. In that case, an Illinois federal court ruled that Harleysville had to defend Dude Products because the lawsuit included claims of property damage (like clogged pipes), which fit the policy’s coverage.
Illinois law requires insurers to defend if any part of a lawsuit might be covered, a broad standard that favored Dude Products in the “flushable” case. The current “Assembled in USA” case is different, as it focuses on economic harm rather than physical damage, which may weaken Dude Products’ argument for coverage. This distinction could make it harder for Dude Products to force the insurers to pay.
Why This Case Matters in 2025
This lawsuit reflects broader trends in the U.S. business and insurance landscape. For companies, it’s a warning about the risks of misleading marketing claims. Class actions over false advertising, like those targeting “Made in USA” or “eco-friendly” labels, are surging, with consumers demanding transparency. The Federal Trade Commission has tightened rules on “Made in USA” claims, and this case could push companies to be more careful.
For businesses, the case highlights the limits of insurance coverage. Many policies don’t cover economic losses or intentional acts, leaving companies to foot legal bills if sued for false advertising. Small businesses, in particular, could face financial strain without insurance support, as legal fees and settlements can run into millions. The $9 million “flushable” wipes settlement shows the stakes.
For consumers, this case is part of a wave of class actions holding companies accountable. If successful, it could lead to compensation for buyers misled by “Assembled in USA” claims, similar to the flushable wipes payout. However, if insurers avoid coverage, it might limit the funds available for settlements, affecting what consumers receive.
The insurance industry is also watching closely. Insurers are increasingly fighting to limit their liability in class actions, especially as these lawsuits grow in number and cost. A win for Owners and Auto-Owners could encourage other insurers to challenge coverage in similar cases, potentially raising costs for businesses and consumers.
What Happens Next?
The Chicago federal court will decide whether Owners and Auto-Owners must cover Dude Products’ defense or damages. If the judge agrees with the insurers, Dude Products could face significant legal costs, potentially impacting its finances. If the court sides with Dude Products, it may force the insurers to pay, reinforcing Illinois’ broad duty-to-defend laws. The decision could set a precedent for how insurers handle class actions over false advertising.
This case also ties into a larger conversation about marketing claims. With the FTC cracking down on “Made in USA” labels, companies may face more scrutiny, and insurers might tighten policy terms to exclude such claims. For now, the case remains unresolved, but its outcome could ripple across industries.
Advice for Businesses and Consumers
For Businesses: Check your insurance policies carefully. Ensure coverage includes advertising injury and understand exclusions for intentional acts. Work with a broker to close gaps, and verify marketing claims to avoid lawsuits. Transparency in labeling, especially for “Made in USA,” can prevent costly legal battles.
For Consumers: If you purchased Dude Products like Dude Wipes, monitor this class action for potential compensation. Websites like ClassAction.org provide updates on similar cases. Be skeptical of product claims—ask companies for proof of “Made in USA” or similar labels to make informed choices.
Conclusion
The legal fight between Owners Insurance, Auto-Owners Insurance, and Dude Products over the “Assembled in USA” class action is a key moment in 2025’s business and insurance world. As Dude Products faces allegations of misleading consumers, its insurers are pushing to avoid covering the costs, arguing the claims don’t fit their policies. The outcome, still pending in Chicago’s federal court, could affect how companies market products and how insurers handle class actions. For businesses, it’s a reminder to secure strong insurance and truthful advertising. For consumers, it’s a chance to demand accountability—and possibly compensation—in a market where trust matters more than ever.