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Davidson v. Kimberly-Clark Corp.

United States Court of Appeals, Ninth Circuit

May 9, 2018

Jennifer Davidson, an individual on behalf of herself, the general public and those similarly situated, Plaintiff-Appellant,
v.
Kimberly-Clark Corporation; Kimberly-Clark Worldwide, Inc.; Kimberly-Clark Global Sales, LLC, Defendants-Appellees.

          Argued and Submitted May 18, 2017 San Francisco, California

          Appeal from the United States District Court for the Northern District of California Phyllis J. Hamilton, Chief Judge, Presiding D.C. No. 4:14-cv-01783-PJH

          Matthew T. McCrary (argued), Kristen G. Simplicio, Seth A. Safier, and Adam J. Gutride, Gutride Safier LLP, San Francisco, California, for Plaintiff-Appellant.

          Constantine L. Trela, Jr. (argued), Sidley Austin LLP, Chicago, Illinois; Michelle Goodman and Amy Lally, Sidley Austin LLP, Los Angeles, California; Naomi Igra, Sidley Austin LLP, San Francisco, California; William R. Levi, Eamon P. Joyce, and Kwaku A. Akowuah, Sidley Austin LLP, Washington, D.C.; for Defendants-Appellees.

          Anton Metlitsky, O'Melveny & Myers LLP, New York, New York; Deanna M. Rice, O'Melveny & Myers LLP, Washington, D.C.; Janet Galeria and Warren Postman, U.S. Chamber Litigation Center Inc., Washington, D.C.; Leland P. Frost, Quentin Riegel, and Linda E. Kelly, Manufacturers' Center for Legal Action, Washington, D.C.; Karin F.R. Moore, Grocery Manufacturers Association, Washington, D.C.; for Amici Curiae Chamber of Commerce of the United States of America, National Association of Manufacturers, and Grocery Manufacturers Association.

          Before: Marsha S. Berzon and Mary H. Murguia, Circuit Judges, and Jon P. McCalla, [*] District Judge.

         ORDER AND AMENDED OPINION

         SUMMARY [**]

         False Advertising / Standing

         The panel issued an order amending the opinion and concurrence filed on October 20, 2017, and denying on behalf of the court a petition for rehearing en banc. In the amended opinion, the panel reversed the district court's dismissal of a complaint in an action, brought in state court against Kimberly-Clark Corporation and removed to federal court pursuant to the Class Action Fairness Act, alleging that Kimberly-Clark falsely advertised that four types of cleansing wipes they manufactured and sold were flushable.

         Davidson sought to recover the premium she paid for the allegedly flushable wipes, as well as an order requiring Kimberly-Clark to stop marketing their wipes as flushable. The panel held that the first amended complaint adequately alleged that Kimberly-Clark's use of the word "flushable" was false because the wipes plaintiff purchased did not disperse as a truly flushable product would have. The panel further held that plaintiff was not required to allege damage to her plumbing or pipes. Under California law, the economic injury of paying a premium for a falsely advertised product was sufficient harm to maintain a cause of action. Because plaintiff only needed to allege an economic injury to state a claim for relief, and because plaintiff alleged that she paid a premium price for the wipes, plaintiff properly alleged that she was injured by Kimberly-Clark's allegedly false advertising.

         The panel held that the district court erred by dismissing the original complaint on the ground that plaintiff failed to allege facts showing how she came to believe that the wipes were not flushable. The panel stated that it was aware of no authority that specifically required a plaintiff bringing a consumer fraud claim to allege how she "came to believe" that the product was misrepresented when, as in this case, all the Fed.R.Civ.P. 9(b) considerations had been met.

         Finally, the panel held that a previously deceived consumer may have standing to seek an injunction against false advertising or labeling, even though the consumer now knows or suspects that the advertising was false at the time of the original purchase, because the consumer may suffer an actual or imminent threat of future harm. The panel held that because plaintiff's allegations sufficiently identified a certainly impending risk of her being subjected to Kimberly-Clark's allegedly false advertising, she had standing to pursue injunctive relief.

         Judge Berzon concurred fully in the majority opinion but wrote separately to note that duplicating the standing analysis - as the majority did for prospective relief by performing a separate standing analysis for each "form of relief" - did not give effect to the "case or controversy" requirement of Article III.

         ORDER

         The opinion and concurrence filed October 20, 2017, and appearing at 873 F.3d 1103, is hereby amended. An amended opinion and concurrence is filed herewith. Judges Berzon and Murguia have voted to deny the petition for rehearing en banc, and Judge McCalla so recommends.

         The full court has been advised of the petition for rehearing en banc and no judge has requested a vote on whether to rehear the matter en banc. Fed. R. App. P. 35.

         The petition for rehearing en banc is DENIED (Doc. 57).

         No further petitions for rehearing or rehearing en banc will be entertained in this case.

          OPINION

          MURGUIA, CIRCUIT JUDGE:

         Under California's consumer protection laws, a consumer who pays extra for a falsely labeled or advertised product may recover the premium she paid for that product. California law also permits that consumer to seek a court order requiring the manufacturer of the product to halt its false advertising. California has decided that its consumers have a right, while shopping in a store selling consumer goods, to rely upon the statements made on a product's packaging. Today, we hold that misled consumers may properly allege a threat of imminent or actual harm sufficient to confer standing to seek injunctive relief. A consumer's inability to rely on a representation made on a package, even if the consumer knows or believes the same representation was false in the past, is an ongoing injury that may justify an order barring the false advertising.

         In this case, Jennifer Davidson paid extra for wipes labeled as "flushable" because she believed that flushable wipes would be better for the environment, and more sanitary, than non-flushable wipes. Davidson alleges that the wipes she purchased, which were manufactured and marketed by Kimberly-Clark Corporation, were not, in fact, flushable. Davidson seeks to recover the premium she paid for the allegedly flushable wipes, as well as an order requiring Kimberly-Clark to stop marketing their wipes as "flushable." Davidson has plausibly alleged that Kimberly-Clark engaged in false advertising. Davidson has also plausibly alleged that she will suffer further harm in the absence of an injunction. We therefore reverse the district court and remand this case for further proceedings.

         I. BACKGROUND

         A. Factual Allegations[1]

         Defendants-appellees Kimberly-Clark Corporation, Kimberly-Clark Worldwide, Inc., and Kimberly-Clark Global Sales, LLC (collectively "Kimberly-Clark") manufacture and market four types of pre-moistened wipes: Cottonelle Wipes, Scott Wipes, Huggies Wipes, and Kotex Wipes. Each of the four products is marketed and sold as "flushable." Kimberly-Clark charges a premium for these

          ¶ushable wipes, as compared to toilet paper or wipes that are not marketed as "flushable." Each of the four flushable wipes products contains a statement on the package (or on the website associated with the product) stating, in various ways, that the product "breaks up after flushing."

         In 2013, Davidson was shopping at a Safeway in San Francisco when she came across Scott Wipes. Davidson saw the word "flushable" on the Scott Wipes package and noticed that the Scott Wipes were more expensive than wipes that did not have the word "flushable" on the package. According to Davidson, flushable ordinarily means "suitable for disposal down a toilet, " not simply "capable of passing from a toilet to the pipes after one flushes." Davidson maintains that this ordinary meaning of flushable is understood by reasonable consumers, who expect a flushable product to be suitable for disposal down a toilet. Consistent with that understanding, the Merriam-Webster dictionary defines flushable as "suitable for disposal by flushing down a toilet, " and a nonprofit organization of water quality professionals states that a flushable item must completely disperse within five minutes of flushing. In other words, "truly flushable products, such as toilet paper, . . . disperse within seconds or minutes."

         Davidson was concerned about products that were not suitable for flushing because she remembered hearing stories about people flushing items that should not be flushed, which then caused problems with home plumbing systems and municipal wastewater treatment facilities. Davidson did not want to cause such damage to her plumbing or to San Francisco's wastewater treatment facilities. Davidson reviewed the front and back of the Scott Wipes package and did not see anything indicating that the wipes were not suitable for flushing. Believing it would be easier and more sanitary to flush wipes than to throw them in the garbage, Davidson purchased the Scott Wipes.

         Once Davidson began using the Scott Wipes, she noticed that each wipe felt sturdy and thick, unlike toilet paper. Davidson also noticed that the wipes did not disperse in the toilet bowl like toilet paper. After using the wipes several times, Davidson became concerned that the wipes were not truly flushable, so she stopped using the Scott Wipes altogether. Davidson investigated the matter further and learned that flushable wipes caused widespread damage to home plumbing and municipal sewer systems. This research "further[ed] her concerns that the [Scott] Wipes were not in fact appropriate for disposal by flushing down a toilet."

         Davidson has never again purchased flushable wipes. Yet Davidson "continues to desire to purchase wipes that are suitable for disposal in a household toilet, " and "would purchase truly flushable wipes manufactured by [Kimberly-Clark] if it were possible to determine prior to purchase if the wipes were suitable to be flushed." Davidson regularly visits stores that sell Kimberly-Clark's flushable wipes but is unable to determine, based on the packaging, whether the wipes are truly flushable. Davidson would not have purchased the Scott Wipes, or would have paid less ...


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