In a twist that clogged the legal pipeline of a high-profile class action, the Second Circuit Court of Appeals on Tuesday vacated a $4 million attorney fee settlement tied to claims that Kimberly-Clark Corp.’s wet wipes were falsely marketed as flushable. The court found that the district court failed to adequately weigh how the payout to lawyers compared to the relief actually received by consumers.
The three-judge panel emphasized that while successful class attorneys should be paid, the disproportion between a $3.1 million attorney payout and only $1 million claimed by class members raised red flags. The remainder of the settlement, $19 million, reverted to Kimberly-Clark.
“The share of recovery that class counsel takes as compensation sheds light on how much is left for the class — or how much was negotiated for the class in the first place,” the panel wrote in its published opinion.
Legal Wipeout: The Fight Over “Flushable” Claims
The class action originated from claims brought by D. Joseph Kurtz, alleging that wipes sold by Costco and Kimberly-Clark do not disintegrate properly, damaging plumbing systems and misleading consumers who paid a premium for “flushable” products. The case was later joined by plaintiff Gladys Honigman and certified in 2017 by U.S. District Judge Jack B. Weinstein for damages and injunctive relief—though the Second Circuit later stripped the injunctive class, citing a lack of standing.
By June 2023, Judge Pamela K. Chen granted final approval to a settlement deal offering up to $20 million in class payments and $4 million in legal fees. But when only $1 million was ultimately claimed by class members, Chen adjusted the attorney award downward to approximately $3.1 million.
Still, that didn’t sit well with objector Theodore H. Frank, whose challenge sparked the appeal that led to Tuesday’s ruling.
