Consumers brought various putative class actions against manufacturers and retailers of moist toilet wipe products, claiming they falsely labeled the products as “flushable”. Judge Weinstein certified classes for injunctive relief and damages under state consumer protection laws. After the Court of Appeal vacated and remanded for further consideration of the predominance requirement, the District Court reaffirmed its prior certification decision. On successive appeal, the Second Circuit reversed the certification for injuncive relief, but affirmed the damages class.
Defendants challenged on adequacy grounds, asserting that the named plaintiff sacrificed potentially higher-value plumbing damages claims in order to advance lower-value, but more easily certifiable, claims based on a price premium theory. However: “As the district court explained, the plumbing damages other class members might have suffered are not significantly higher than the statutory damages of $50 per purchase provided for under New York’s General Business Law §349. Because the cost of litigating such plumbing damages claims likely would have outweighed any recovery, the district court concluded that the strategic decision to forgo plumbing damages and pursue statutory damages did not amount to a ‘fundamental’ conflict.”
Defendants also challenged on typicality, on the basis that the named plaintiff continued to buy the wipes after he learned that they were not flushable. “But Plaintiff’s theory of injury is predicated on the existence of a price premium, so the harm he suffered occurred at the time of purchase. Accordingly, his purchasing history is largely irrelevant to typicality and does not warrant setting aside the court’s certification order.”
At the same time, in reversing the certification of claims for injunctive relief, the Court stated that: “Defendants argue that Kurtz lacks standing to seek an injunction because there is no indication that Kurtz will buy Defendants’ flushable wipes products in the future and, therefore, there is no likelihood of future injury. We agree.”
Finally, in affirming certification of the claims for damages, the Court of Appeal rejects defendants’ arguments on predominance. “In our initial decision, we noted our specific concern with the Plaintiffs’ proof that they can establish the injury and causation elements of their claims at trial with common evidence. On remand, the district court held substantial post-mandate evidentiary hearings with extensive evidence and briefs. Significantly, Plaintiff’s expert, Colin Weir, developed and performed hedonic regression analyses indicating that there is a marketwide price premium for wipes labeled as flushable. In other words, Weir actually ran a regression analysis that demonstrated a specific price premium for both Costco and Kimberly-Clark products attributable to the ‘flushable’ representation, rather than merely speculating that such a regression could be run. Defendants’ own experts critiqued Plaintiff’s expert report, asserting that both the underlying theory and actual computation were flawed. Despite these objections, the district court deemed Weir’s testimony and analysis admissible, and found that his regression satisfied Plaintiff’s obligation to demonstrate predominance. On appeal, Defendants offer a litany of purported failings in Weir’s methodology…. Defendants’ central contention is that Weir’s analysis either does not or cannot establish a price premium because of issues such as an incomplete dataset, flawed parameters of the regression, or business considerations not captured by the model. A factfinder may ultimately agree. But if that is the case, then the class claims will fail as a unit.”
Kurtz v. Costco Wholesale Corp., No.17-1856, 2020 WL 3480830 (2nd Cir. June 26, 2020).