Antitrust Law Daily Wrap Up, ADVERTISING—E.D.N.Y.: Lift of stay, FTC referral denied in ‘flushable’ wipe class action, (Dec 14, 2015)

By Linda O’Brien, J.D., LL.M.

In an action against two cleansing wipe manufacturers for allegedly falsely advertising that their wipes were flushable, the federal district court in Brooklyn, New York, has denied a request by a complaining consumer to lift an order staying the case and referring certain issues to the FTC (Kurtz v. Kimberly-Clark Corp., December 10, 2015, Weinstein, J.).

Kimberly-Clark is the manufacturer of Scott Naturals Flushable Moist Wipes, Cottonelle Fresh Care Flushable Wipes and Cleansing Cloths, Huggies Pull-Ups Flushable Moist Wipes, and U by Kotex Refresh flushable wipes. Costco makes Kirkland Signature Moist Flushable Wipes.

Joseph Kurtz, a consumer of Cottonelle and Kirkland Signature flushable wipes, filed a putative class action suit against Kimberly-Clark and Costco, alleging that the companies deceptively advertised the products as “flushable,” in violation of New York Deceptive Practices Act and New Jersey Consumer Fraud Act. In October 2015, the court issued a memorandum and order, in the instant and five related cases, staying class certification motions and referred issues to the FTC, including the determination of a definition of “flushable” under the primary jurisdiction doctrine. Subsequently, the FTC finalized a consent order with wet wipe manufacturer Nice-Pak Products, settling charges that the company violated the FTC Act by falsely advertising that its wipes were flushable. In November 2015, the plaintiff moved to lift the stay and referral to the FTC.

The court found that the plaintiff’s motion to lift the stay and referral was premature. The adoption of a definition of “flushable” in the FTC consent decree did not address the concern with the development of a uniform and nationally applicable definition in related cases and the FTC had not yet responded to the referral.

The plaintiff contended the FTC consent order with Nice-Pak applied to a significant portion of the flushable wipes manufacturing and retail market and the order’s definition of “flushability” provided a sufficiently detailed and workable definition that could be universally applied throughout the industry. The court disagreed, finding that the FTC consent order did not purport to create a single, uniform definition of “flushable” which could be applied to manufacturers and retailers nationwide. The order concerned wipes made by Nice-Pak and was binding only on Nice-Pak and retailers that sold those products.

Furthermore, the FTC is continuing to investigate other manufacturers of “flushable” wipes, including the defendants of the instant case. The FTC should be given a meaningful opportunity to respond to the court’s referral and lifting the stay would not further the public interest in a uniform, nationally applicable definition of “flushability,” the court determined.

The case is No. 1:14-cv-01142-JBW-RML.

Attorneys: Edward Y. Kroub (Robbins Geller Rudman & Dowd LLP) for D. Joseph Kurtz. Eamon Paul Joyce (Sidley Austin LLP) for Kimberly-Clark Corp. James M. Bergin (Morrison & Foerster) for Costco Wholesale Corp.

Companies: Kimberly-Clark Corp.; Costco Wholesale Corp.

Cases: Advertising NewYorkNews FederalTradeCommissionNews