City of Wyo. v. Procter & Gamble Co.

210 F.Supp.3d 1137

CITY OF WYOMING, City of Mankato, Chisago Lakes Joint Sewage Treatment Commission, Sauk Centre Public Utilities Commission, Village of Holmen, City of Fergus Falls, City of Elk River, and City of Princeton, Plaintiffs,

v.PROCTER & GAMBLE COMPANY, Kimberly–Clark Corporation, Nice–Pak Products, Inc., Professional Disposables International, Inc., Tufco Technologies Inc., and Rockline Industries, Defendants.

Civil No. 15-2101 (JRT/TNL)

United States District Court, D. Minnesota.

Signed September 28, 2016

Daniel E. Gustafson, GUSTAFSON GLUEK PLLC, 120 South Sixth Street, Suite 2600, Minneapolis, MN 55402; Simon Bahne Paris, SALTZ, MONGELUZZI, BARRETT & BENDESKY, PC, 1650 Market Street, Fifty–Second Floor, Philadelphia, PA 19103; and Kristin J. Moody, BERMAN DEVALERIO, One California Street, Suite 900, San Francisco, CA 94111, for plaintiffs.

Emily Johnson Henn, COVINGTON & BURLING LLP, 333 Twin Dolphin Drive, Suite 700, Redwood Shores, CA 94065, and Nicole M. Moen, FREDRIKSON & BYRON, PA, 200 South Sixth Street, Suite 4000, Minneapolis, MN 55402, for defendant Procter & Gamble Company.

Kara L. McCall, SIDLEY AUSTIN LLP, One South Dearborn, Suite 3300, Chicago, IL 60603, and Tracy J. Van Steenburgh, NILAN JOHNSON LEWIS PA, 120 South Sixth Street, Suite 400, Minneapolis, MN 55402, for defendant Kimberly–Clark Corporation.

Karl A. Bekeny and Michael J. Ruttinger, TUCKER ELLIS LLP, 950 Main Avenue, Suite 1100, Cleveland, OH 44113, for defendants Nice–Pak Products, Inc., and Professional Disposables International, Inc.

Aaron D. Van Oort, FAEGRE BAKER DANIELS LLP, 90 South Seventh Street, Suite 2200, Minneapolis, MN 55402, and Jason Heinz Anderson, STRADLING YOCCA CARLSON & RAUTH P.C., 660 Newport Center Drive, Suite 1600, Newport Beach, CA 92660, for defendant Tufco Technologies Inc.

Jerry W. Blackwell and S. Jamal Faleel, BLACKWELL BURKE PA, 431 South Seventh Street, Suite 2500, Minneapolis, MN 55415, for defendant Rockline Industries.

MEMORANDUM OPINION AND ORDER ON MOTIONS TO DISMISS

JOHN R. TUNHEIM, Chief Judge United States District Court

Hygienic wipes labeled and sold as "flushable" have caused and are continuing to cause increased costs and property damage to the governmental entities that operate sewer systems and water treatment facilities. These "flushable" wipes do not break down like toilet paper—or at least not all of them do—and as a result, they end their life at the tail end of the sewer line, clogging up sewer-system facilities. Those are the allegations of the Plaintiffs in this case, all of whom are municipalities in Minnesota and Wisconsin seeking relief for the costs and property damage they say they have suffered due to flushable wipes. The crux of their complaint is that Defendants—the major manufacturers of flushable wipes—all represented to consumers and the public that their flushable wipes were literally "flushable," when they were not.

The complication is that Plaintiffs' complaint attempts to shoehorn a novel set of facts into a rather traditional set of claims. For example, Plaintiffs allege traditional warranty claims even though they are not traditional warranty plaintiffs, and they allege various consumer protection claims even though they are not consumers of flushable wipes.

Defendants have filed motions to dismiss, arguing that Plaintiffs' attempted innovations go too far. The Court agrees with Defendants that some of Plaintiffs' claims cannot succeed—Plaintiffs' Declaratory Judgment Act claim is not a true Declaratory Judgment Act claim and Plaintiffs have not pleaded facts suggesting Defendants ever made a warranty for a particular purpose. But on the rest of the warranty and consumer protection-related claims, the Court finds that Plaintiffs have stated a claim, in large part because, at least for the purposes of this motion to dismiss, Plaintiffs have thoroughly reviewed the products they allege to cause and to have caused them harm, and also because Minnesota's warranty law and consumer protections statutes extend to those who could be reasonably expected to suffer an injury for applicable violations. The Court will therefore grant in part and deny in part Defendants' motion to dismiss.

Defendant Tufco Technologies, Inc. ("Tufco") has also filed its own motion to dismiss, highlighting the relatively sparse attention devoted to Tufco in Plaintiffs' complaint. While Tufco's arguments are stronger than the other defendants', the Court finds that Plaintiffs have nonetheless stated a claim against Tufco with respect to six of their claims by alleging that Tufco represented to its customers directly and to all visitors to its website that it manufactured "flushable" wipes. But Wisconsin's Tort Reform Act heightened the bar for plaintiffs pursuing Wisconsin claims, and Plaintiffs' Wisconsin claims against Tufco—unlike Defendants generally—do not include allegations about specific Tufco products. The Court will therefore grant in part and deny in part Tufco's motion as well.

BACKGROUND

I. FACTUAL BACKGROUND

Plaintiffs are municipalities located in Minnesota and Wisconsin, all of whom operate "lift stations" that pump wastewater to water treatment facilities. (Am. Compl. ¶¶ 6–14, Aug. 10, 2015, Docket No. 61.)

Defendants are all foreign corporations that manufacture and sell wipes that are labeled as "flushable." (Id. ¶¶ 15–20.) Defendant Procter & Gamble Co. ("P&G") "manufactures, distributes, markets, and sells a variety of flushable wipes worldwide," as does Defendant Kimberly–Clark Corp. ("Kimberly–Clark"). (Id. ¶¶ 15, 16.) Defendant Nice–Pak Products, Inc. ("Nice–Pak") "makes flushable wipes under its Nice 'n Clean brand," and "manufactures flushable wipes for private label retailers including Costco, Target, and CVS." (Id. ¶ 17.) Defendant Professional Disposables International, Inc. ("PDI") is an "affiliate" of Nice–Pak, and "designs, makes, markets, and sells flushable wipes under its Hygea brand." (Id. ¶ 18.) Defendant Tufco "offers" private label customers "manufacturing and packaging services, including the manufacture and packaging of flushable wipes." (Id. ¶ 19.) And the "primary product line" of Defendant Rockline Industries ("Rockline") "is wet wipes, including flushable wipes." (Id. ¶ 20.) Defendants all do business in the State of Minnesota. (Id. ¶¶ 15–20.)

Plaintiffs allege, often with detail, that each defendant represents that its respective wipes are "flushable." For example, the complaint includes a photograph of "Charmin freshmates," a P&G product, labeled as "flushable wipes":

(Id. ¶ 59.) The complaint also contains photographs of the packaging on Kimberly–Clark's "Cottonelle FreshCare flushable cleansing cloths," which states that the products are not only "Sewer and Septic Safe" but also "break up like toilet paper after flushing":

(Id. ¶¶ 67, 69.) The complaint also includes a photograph of the packaging on Nice–Pak's "Nice n' Clean" "flushable moist wipes," wipes which Plaintiffs allege Nice–Pak has described as "safe for all well maintained sewers and septic systems":

(Id. ¶¶ 76–77.) Plaintiffs' complaint also includes a photograph of PDI's "Hygea Flushable Personal Cleansing Cloths" packaging, and alleges that PDI's website describes the product as "safe for sewers and septic systems":

(Id. ¶ 89.) And the complaint contains photographs of Rockline's "Equate Flushable Wipes" packaging as well; that packaging states that Rockline's wipes "Break[ ] Apart After Flushing":

(Id. ¶ 93.) Plaintiffs do not include photographs of any of Tufco's flushable wipe packaging, but Plaintiffs do allege that Tufco, "advertises 'flushable' wipes for its consumers" on its website and "offers its private label customers ... services, including the manufacture and packaging of flushable wipes." (Id. ¶¶ 19, 90.)

Contrary to the representations that Plaintiffs allege Defendants to have made, Plaintiffs claim that Defendants' wipes are not actually "flushable." According to Plaintiffs, "flushable wipes do not degrade after flushing," and "[o]nce in the sewer system, the flushable wipes ultimately wrap around structures within the system, such as filters or pumps." (Id. ¶ 32.) As a result, flushable wipes cause "clogs and back-ups." (Id. ) Plaintiffs state that approximately 25% of these clogs can be attributed to flushable wipes. (Id. ¶ 49.) "[T]o clear the clogs, the systems need to be shut down and the wipes manually removed." (Id. ¶ 32.) Plaintiffs, as operators of their respective sewer systems, allege that they have each incurred expenses from removing flushable wipes from their sewers. (Id. ¶¶ 6–14; see also id. ¶¶ 28, 33, 170, 191 (stating flushable wipes damage sewer facility-property).)

Plaintiffs also allege that Defendants are members of the Association of Nonwoven Fabrics Industry ("INDA"), a trade association comprised of the manufacturers who make wipes marketed as "flushable." (Id. ¶¶ 51–52.) Per Plaintiffs, INDA is influential because manufacturers of "flushable" wipes look to INDA's "Guidelines for Assessing the Flushability of Disposable Nonwoven Products" when determining whether a given product may be labeled as "flushable." (Id. ) Plaintiffs allege that Defendants, through their membership in INDA, "manipulated [INDA's] test standards and guidelines making them weaker to guarantee [Defendants'] products could be marketed as 'flushable' under the INDA guidelines." (Id. at 54.)

II. PROCEDURAL BACKGROUND

Plaintiffs filed their initial complaint on April 23, 2015. (Compl., Apr. 23, 2015.) Then Plaintiffs amended their complaint on August 10, 2015, and that amended complaint ("complaint") is the currently-operative complaint in this case. (Am. Compl.)

Plaintiffs' complaint alleges ten different claims in ten different counts against Defendants: (1) Declaratory Judgment Act claim, (2) breach of express warranty, (3) breach of implied warranty of merchantability, (4) breach of implied warranty for particular purpose, (5) Minnesota Unlawful Trade Practices Act, (6) Minnesota...