Antitrust Law Daily Wrap Up, ADVERTISING—N.D. Cal.: Consumer claims proceed over Kimberly-Clark’s “pure & natural” diapers and “natural care” wipes, (Dec 11, 2013)

By John W. Arden, J.D., LL.M.

Consumers alleging that Kimberly-Clark made misrepresentations about its Huggies “pure & natural” diapers and “Natural Care” wipes plausibly stated claims under the California Unfair Competition Law, False Advertising Law, and Consumer Legal Remedies Act, according to a magistrate judge in the federal district court in San Francisco (Jou v. Kimberly-Clark Corp., December 10, 2013, Corley, J.). However, claims for injunctive relief and claims brought under the Wisconsin Deceptive Trade Practices Act were dismissed.

Kimberly-Clark manufactures Huggies “pure & natural” diapers. The product packaging prominently displays the phrase “pure & natural,” a statement that the diapers are made of “soft organic cotton,” and images of trees and leaves. This marketing was allegedly an attempt to contrast the “pure & natural” diapers with its other, conventional diaper offerings. The “pure & natural” diapers, however, do not differ materially from other of Kimberly-Clark’s diaper products.

The only two “insignificant” differences are (1) that the product contains organic cotton, which is only on the outside of the diaper and does not come in contact with the baby, and (2) that a liner includes some materials that are potentially less harmful to the environment than materials used in traditional diapers. However, the diapers also contain ingredients, such as polypropylene and sodium polyacrylate, which are components of Kimberly-Clark’s traditional diapers, according to complaining consumers. The packaging did not disclose the about composition of the diapers.

The packaging for the wipes prominently displays the “Natural Care” term, along with green leaves. Despite this representation, the wipes contain two substances (sodium methylparahen and Methylisothiazolinone) that are not natural and are hazardous, according to the complaining consumers.

Dianna Jou and Jaynry Young claim to have purchased the diapers and wipes at a premium price in reliance on the marketing representations regarding the natural nature of the products. The brought an action against Kimberly-Clark, alleging violations of the California Consumers Legal Remedies Act, the California False Advertising Law, the California Environmental Marketing Claims Act, the California Unfair Competition Law, and the Wisconsin Deceptive Trade Practices Act.

Kimberly-Clark moved to dismiss all five fraud-based claims, contending they failed to satisfy the heightened pleading standard for fraud contained in Federal Rule of Civil Procedure 9(b) and were implausible. Kimberly-Clark further argued that the Wisconsin law claims—and the nationwide class action premised on those claims—should be dismissed or stricken.

Standing. Kimberly-Clark argued that the consumer plaintiffs lacked Article III and statutory standing to seek restitution. The court disagreed.

The plaintiffs alleged that they were injured by the Kimberly-Clark’s unlawful conduct because they would not have purchased the products if not for the alleged misrepresentations. They further alleged that the diapers and wipes were sold at a premium price because they were labeled “natural.” Taking these allegations as true and construing them in the light most favorable to the plaintiffs, the court found that the plaintiffs alleged adequate standing.

Kimberly-Clark argued that the plaintiffs lacked standing to seek injunctive relief because they did not allege that they continued to purchase the products or would resume purchasing them if they were labeled differently. To establish standing for prospective injunctive relief, a plaintiff must demonstrate that he has suffered or is threatened with a concrete and particularized legal harm coupled with a likelihood of being wronged again in a similar way. Jou and Young did not allege a sufficient likelihood that they again will be wronged in a similar way, the court noted. The court rejected the contention that it is unnecessary for the plaintiffs to maintain any interest in purchasing the products at issue if they were labeled differently.

Because Jou and Young failed to identify any allegation in their complaint suggesting that they maintained an interest in purchasing the diapers or wipes in the future, the court ruled that they did not sufficiently allege standing to pursue injunctive relief. Thus, the injunctive relief claims were dismissed with leave to amend.

Allegations of fraud. Kimberly-Clark argued that the complaint was deficient under Rule 9(b) because Jou and Young did not offer details or their own purchasing decisions and relied almost exclusively on conclusory assertions about what a reasonable consumer would expect and rely upon. Although the complaint did not specifically state which representations were false and misleading, where those representations appeared on the packages, and how the representations were false, it was logical to infer that the specific allegations regarding the what, where, where, and how of the fraud referred to the earlier allegations concerning the false and misleading representations they relied upon, the court observed.

Kimberly-Clark further contended that the plaintiffs did not establish that a reasonable consumer would likely be deceived by the products’ labeling. It claimed that no reasonable consumer could mistake the “pure & natural” diapers “as anything more than what they are: diapers with both natural and synthetic materials.” In addition, Kimberly-Clark maintained that no reasonable consumer would conclude that the “Natural Care” wipes were entirely composed of natural ingredients. The court was not persuaded that, as a matter of law, no reasonable consumer could be deceived by the packaging.

The “green” marketing strategy of these products reinforced the reasonable consumer’s belief that the diapers were entirely natural and did not contain synthetic ingredients, the court found. Moreover, “natural” was not used standing alone; rather, the diapers were labeled “pure & natural.”

Kimberly-Clark contended that the “pure & natural” advertising claim was nonactionable puffery because consumers know that diapers and wipes do not spring directly from the ground or grow on trees. However, the plaintiffs actually claimed that consumers would be misled to believe that “natural” means the diapers do not have non-natural ingredients—not that they were fruits of the earth. Further claims that the product packaging cleared up any possible misconceptions by identifying which components of the diaper were natural were without merit. The additional information did not disclose what other ingredients were included in the diaper. The court did agree with Kimberly-Clark that a reasonable consumer would not be misled to believe that the diapers were made exclusively out of “Soft Organic Cotton.”

A reasonable consumer could be deceived by the packaging for the “Natural Care” wipes, however. By superimposing that label on background images of green leaves, Kimberly-Clark could lead a reasonable consumer to believe that the wipes contained only natural ingredients, rather than two non-natural ingredients that are allegedly hazardous, including one that is banned by the European Union.

Thus, the plaintiffs’ allegations of fraudulent and misleading labeling satisfied Rule 9(b), according to the court.

Wisconsin Deceptive Practices Act. The plaintiffs’ Wisconsin Deceptive Practices Act claims were dismissed. The plaintiffs failed to state a claim that the statute was applicable to this set of circumstances. The fact that the allegedly deceptive labels were devised and implemented at Kimberly-Clark headquarters in Wisconsin did not satisfy the statutory scheme. The defendant did not violate the Wisconsin statute by selling products in California, and the plaintiffs did not suffer pecuniary loss because of the placement of allegedly deceptive products in Wisconsin, in the court’s view.

The case is No. C-13-03075 JSC.

Attorneys: Michael Robert Reese (Reese Richman LLP) for Dianna Jou and Jaynry Young. Timothy Tully Scott (King & Spalding LLP) for Kimberly-Clark Corp., Kimberly-Clark Worldwide, Inc., and Kimberly-Clark Global Sales, LLC.

Companies: Kimberly-Clark Corp.; Kimberly-Clark Worldwide, Inc.; Kimberly-Clark Global Sales, LLC

Cases: Advertising StateUnfairTradePractices CaliforniaNews