Second Circuit affirms flushable wipes damages class certification, disallows injunctive class

Kurtz v. Costco Wholesale Corporation, 818 Fed.Appx. 57,
Nos. 17-1856-cv, 17-1858-cv (2d Cir. Jun. 26, 2020)

This is a “flushable” wipes consumer protection class
action. The district court previously certified damages and injunctive relief
classes. On appeal, the Second Circuit required further clarification on the
predominance argument and remanded.  The
district court received additional evidence, including supplemental expert
reports, and conducted a hearing. On that basis, it reaffirmed its prior
certification decision, determining that Kurtz had demonstrated that he could
prove injury and causation with common evidence, satisfying Rule 23(b)(3)’s
predominance requirement. The court of appeals found no abuse of discretion,
though not on an injunctive relief class.

Kurtz showed adequacy and typicality, despite Kimberly-Clark’s
argument that he sacrificed potentially higher-value plumbing damages claims in
order to advance lower-value, but more easily certifiable, claims based on a
price premium theory. Given that the cost of litigating such plumbing damages
claims likely would have outweighed any recovery, the district court held that the
strategic decision to forgo plumbing damages and pursue statutory damages of
$50 per purchase under NY’s GBL §349 wasn’t a fundamental conflict of interest.
This was not an abuse of discretion. Nor was it a typicality problem that Kurtz
continued to buy the wipes after he learned that they were not flushable; his
theory of injury was 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.”

Standing to represent an injunctive relief class: no,
because there was no likelihood of future injury. Kurtz made no assertion that
he intended to purchase additional flushable wipes products—from Costco,
Kimberly-Clark, or any other company.

Predominance: The court of appeals initial decision
expressed “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, plaintiff’s expert “developed and performed hedonic
regression analyses” indicating “that there is a marketwide price premium for
wipes labeled as flushable,” rather than merely speculating that such a
regression could be run. Though defendants’ experts critiqued this expert
report, the district court deemed the testimony and analysis admissible, and
found that his regression satisfied the obligation to demonstrate predominance.

The “litany” of purported failings in the methodology was
unpersuasive. For example, defendants argued that the model “fails to account
for major variables, including attributes that consumers value most.” Though
some regressions may be “so incomplete as to be inadmissible as irrelevant,” this
model accounted for “a wide range of variables, some of which are substantial
drivers of consumer purchases.” The omitted variables were “arguably
significant,” but that went to weight rather than admissibility. So too with
defendants’ argument that there was no price premium “if the time frame is
shifted or if additional products are included in the underlying dataset.” While
cherry-picking data can render a model so unreliable that it is inadmissible,
the expert here testified that changing the timeframe of his model while making
appropriate adjustments to other variables still yielded a price premium, and
the district court found that he used a sufficiently wide range of sources to
render the end-result “statistically reliable.” There was no abuse of
discretion in relying on his testimony.

Comcast Corp. v. Behrend, 569 U.S. 27 (2014), held that “a
model purporting to serve as evidence of damages in [a] class action must
measure only those damages attributable to that theory.” That’s exactly what this
model purports to measure: the price premium attributable to the “flushable”
label. Although plaintiffs’ claim might still fail, the model worked as “common
evidence of plaintiffs’ theory of injury.”

Ultimately, none of Defendants’ critiques demonstrates that
there exists “some fatal dissimilarity among class members that would make use
of the class-action device inefficient or unfair. Instead, what [Defendants] allege[
] is a fatal similarity—an alleged failure of proof as to an element of the
plaintiffs’ cause of action.” A factfinder might ultimately agree with
defendants’ critiques of the model, but that would make the class claims fail
as a unit.

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