Kimberly-Clark Flushable Wipe Settlement Rejected by 2d Circuit

The settlement in a class action against Kimberly-Clark Corp. alleging its flushable wipes weren’t flushable was rejected by the US Court of Appeals for the Second Circuit.

The lower court failed “to assess the allocation of recovery between the class and the counsel” when it approved the settlement, Judges Guido Calabresi wrote for the court.

Plaintiff Joseph Kurtz alleged the company falsely advertised their wipes as flushable and charged an unjustified price premium for the product, when they in fact caused plumbing damage.

In the 2022 settlement agreement, Kimberly-Clark agreed to pay up to $20 million to the class. Members of the class could claim as much as $50.60 with proof of purchase and as much as $7.00 without a receipt, the court said. The defendant also agreed to pay up to $4.1 million in attorneys’ fees and expenses, separate from the funds for class recovery, it said.

Ultimately the class members claimed less than $1 million, but the lower court approved the settlement as fair, reasonable, and adequate under the Federal Rules.

Class action activist Theodore Frank objected and later appealed the approval arguing that it was unfair. The agreement “disproportionately benefited class counsel” because they received most of the monetary relief actually paid out, he said.

The court held that Federal Rule 23(e) requires a proportionality analysis between the class recovery and the fee award, but the benchmark for determining proportionality is a fact-bound one best left to the district court’s discretion.

Here, however, the lower court erred in deciding that because the fee award was separated from the class fund it couldn’t affect it. The two amounts are often negotiated together and how much a defendant is willing to pay to one fund may depend on what it has to pay to the other, so a proportionality analysis is necessary, the court said.

Judges Susan L. Carney and Maria Araújo Kahn joined the opinion.

Kurtz was represented by Robins Geller Rudman & Dowd LLP. Kimberly-Clark was represented by Gibson, Dunn & Crutcher LLP and Sidley Austin LLP.

The case is Kurtz v. Kimberly-Clark Corp., 2d Cir., No. 24-425, 7/1/25.