Antitrust Law Daily Wrap Up, ADVERTISING—9th Cir.: Class action against Kimberly-Clark vacated on jurisdiction grounds, (Sep 25, 2025)

By Wendy Biddle, J.D.

The class failed to establish the required amount in controversy, failing to wipe away the deficiencies despite multiple opportunities.

The U.S. Court of Appeals in San Francisco vacated a district court judgment and ordered dismissal without prejudice of a consumer class action against Kimberly-Clark Corporation that alleged the Kleenex Germ Removal Wet Wipes packaging was deceptive when it stated it “wipes away 99% of germs from skin” but does not contain any germicide. The appellate court ruled that neither the trial court nor the appellate court possessed diversity jurisdiction over the case because the plaintiffs failed to allege the minimum $75,000 amount in controversy in their pleadings (Rosenwald v. Kimberly Clark Corp., No. 24-299 (9th Cir. Sept. 24, 2025)).

The lawsuit centered on Kimberly-Clark's Kleenex Germ Removal Wet Wipes, which are sold in packages bearing front and back labels. The front label advertises that the wipes provide "germ removal" and "safely wipes away 99% of germs from skin" with "no harsh chemicals," accompanied by a "WIPES AWAY" banner in capital letters. The back label states that the wipes provide "the cleansing power of water" and lists ingredients showing the product contains soaps but no germicides.

The plaintiffs filed suit in August 2022, alleging they purchased the wipes based on labels that misled them into believing the product contained germicides rather than merely soaps, and that the wipes would kill germs rather than simply wipe them away. The plaintiffs brought several California state law claims on behalf of themselves and a proposed class of consumers, seeking to invoke federal diversity jurisdiction.

The federal district court in San Francisco dismissed both the First Amended Complaint and Second Amended Complaint, finding that the labels would not deceive a reasonable consumer. The district court also dismissed non-California plaintiffs' claims for lack of personal jurisdiction. The plaintiffs appealed the dismissal of their Second Amended Complaint (SAC).

Jurisdictional deficiencies. On appeal, the Ninth Circuit identified sua sponte that the case suffered from fundamental jurisdictional defects. The SAC failed to allege two essential elements of diversity jurisdiction under 28 U.S.C. Section 1332: the defendant's citizenship and the amount in controversy.

Regarding corporate citizenship, the complaint alleged only that each plaintiff was a citizen of California, Washington, or Wyoming, but said nothing about Kimberly-Clark's citizenship. The court rejected arguments that Kimberly-Clark's citizenship was established through Exhibit 1, which was merely a letter to the company's offices in Texas and Wisconsin. The panel emphasized that a corporation can maintain offices in a state without being a citizen of that state, and conversely, can be a citizen of its state of incorporation even without maintaining offices there.

The court addressed a circuit split regarding whether district courts may establish diversity of citizenship through judicial notice. Disagreeing with the Fifth Circuit's position in Swindol v. Aurora Flight Sciences Corp. 805 F.3d 516 (5th Cir. 2015), the Ninth Circuit aligned with the Tenth Circuit's holding in Buell v. Sears, Roebuck & Co., 321 F.2d 468 (10th Cir. 1963) ruling that courts cannot establish diversity of citizenship purely through judicial notice. The panel reasoned that allowing judicial notice would undermine the fundamental principle that plaintiffs bear the burden of both pleading and proving diversity jurisdiction. The court noted that if judicial notice were permitted, there would be no necessity for alleging diversity of citizenship between corporate parties in federal courts, effectively nullifying established pleading requirements.

The court also found Federal Rule of Evidence 201(b)(2) insufficient to support judicial notice in this context. While courts can notice facts that can be accurately and readily determined from unquestionable sources, determining a corporation's principal place of business requires more than identifying its state of incorporation. Courts must establish that the headquarters serves as the actual center of direction, control, and coordination, information rarely available from readily accessible public sources.

Amount in controversy. Even more problematic was the complaint's complete failure to allege any amount in controversy. The SAC contained no dollar value for damages, either in jurisdictional allegations or elsewhere. Under Ninth Circuit precedent, when plaintiffs originally file in federal court, the amount in controversy must be determined from the face of the pleadings, and plaintiffs must affirmatively allege all essential elements of diversity jurisdiction.

The district court initially permitted plaintiffs to seek amendment under 28 U.S.C. Section 1653, which allows correction of defective jurisdictional allegations even on appeal. In their proposed Third Amended Complaint, plaintiffs successfully alleged complete and minimal diversity by establishing Kimberly-Clark's citizenship as Delaware and Texas, creating diversity with all named plaintiffs.

However, plaintiffs conceded they could not allege the five million dollars in controversy required under the Class Action Fairness Act's minimal diversity provision. They therefore needed to establish more than $75,000 in controversy under traditional diversity jurisdiction, where claims cannot be aggregated and at least one plaintiff must satisfy the threshold independently.

The court systematically dismantled the plaintiffs' amount-in-controversy theories. Regarding actual damages, plaintiffs misinterpreted California's Consumer Legal Remedies Act, which requires a total class award of at least $1,000 but establishes no individual floor. Given the widespread availability of the wipes and the likelihood of thousands of California class members, individual recoveries would amount to less than one dollar each under this provision.

Even assuming individual plaintiffs could recover the full purchase price ranging from 99 cents to $14.03, the court found these amounts nowhere near the required threshold. The complaint provided no basis to conclude any class member purchased sufficient quantities to approach $1,000 in actual damages.

For punitive damages, while plaintiffs suggested they could recover up to $10,000 by applying a ten-to-one ratio to actual damages, this calculation depended on the erroneous $1,000 actual damage figure. With actual damages well below that amount, punitive damages would be correspondingly minimal.

Attorney fees cannot bridge the gap. The court rejected the argument that attorney fees could bridge the gap to reach $75,000 per plaintiff. Under Ninth Circuit precedent in Goldberg v. CPC International, Inc., 678 F.2d 1365 (9th Cir. 1982), attorney fees in class actions must be attributed pro rata among all class members rather than concentrated on named plaintiffs.

The court calculated that even under generous assumptions about class size—estimating approximately 53,500 California class members based on Kimberly-Clark's six million dollars in nationwide sales—each plaintiff would need $64,000 in pro rata attorney's fees to reach the jurisdictional threshold when combined with generous estimates of actual and punitive damages. This would require total fees of $3.4 billion, an obviously implausible figure. Even reducing the class size to a generous minimum of 1,000 members would still require $64 million dollars in total fees.

No constructive amendment. The court declined to constructively amend the pleadings despite Kimberly-Clark's arguments that the record supported finding CAFA jurisdiction. Applying a six-factor test for constructive amendment, the panel found most factors cut against amendment. Most importantly, plaintiffs themselves had explicitly disclaimed the ability to allege five million dollars in controversy in good faith, making constructive amendment inappropriate where it would contradict the plaintiff's chosen jurisdictional theory.

The court therefore vacated the district court's judgment and remanded with instructions to dismiss without prejudice for lack of subject-matter jurisdiction. The court denied as moot plaintiffs' motion for leave to amend, finding that further amendment would not serve judicial economy given plaintiffs' explicit concession regarding CAFA jurisdiction and their demonstrated inability to plausibly allege the required amount under traditional diversity jurisdiction.

The Case is No. 24-299.

Judge: Smith, M.

Attorneys: David M. Rosenberg (Hershenson Rosenberg-Wohl, APC) for Judah Rosenwald. Theodore J. Boutrous (Gibson, Dunn & Crutcher, LLP) for Kimberly-Clark Corp.

Companies: Kimberly-Clark Corp.

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