Appeal wiped out for ACCC's case against 'flushability' representations

What you need to know

• The Full Federal Court dismissed the ACCC's appeal regarding the allegedly misleading 'flushability' representations made by Kimberly-Clark about its Kleenex Cottonelle wipes products.
• The ACCC was unsuccessful in trying to rely on a broader case on appeal than was run at trial.  

What you need to do

• Be aware that when running an appeal case, the Federal Court does not consider any new evidence or information that was not presented in the original case.
• Ensure that all evidence required to establish your case is tendered at trial.  Multiple evidentiary problems in the ACCC's case rendered its evidence insufficient at both trial and on appeal. 

Background

In 2019 the Australian Competition and Consumer Commission (ACCC) brought proceedings against Kimberly-Clark Australia Pty Ltd (Kimberly-Clark) for misleading or deceptive conduct in relation to its representations to consumers that its Kleenex Cottonelle wipes were "flushable". The ACCC contended that the wipes were not suitable to be flushed because they caused harm to sewerage systems.

The Federal Court dismissed the ACCC's case (except for representations made with respect to the wipes being made in Australia), finding that Kimberly-Clark's "flushable" claims were not false or misleading because there was insufficient evidence that the wipes caused or contributed to real harm to sewerage systems and the wipes complied with international "flushability" standards. For more information in relation to the trial judgment, read our previous article here. 

The ACCC appealed to the Full Court arguing that the Court was not required to establish that the wipes caused actual harm to the sewerage systems, rather it contended that only a real risk of harm needed to be established. 

The Appeal decision

The Full Federal Court handed down its decision on 15 June 2020.  The first instance decision was upheld and the ACCC's arguments were rejected. 

Proving harm v risk of harm 

The ACCC's case at trial focused on proving harm to household and municipal sewerage systems. Before the Full Court the ACCC attempted to argue that the lower threshold of a risk of harm should be applied. The Full Court rejected this approach stating that "the case cannot be run for the first time on appeal" and that such a case would "raise quite different questions".

The judgment explained that such an argument "would have been an alternative case which should have been …. the subject of express written and oral submissions if was intended to have been run." 

Material risk not proved

The Full Court also considered that the trial judge had already addressed the risk of harm posed by the wipes and that the evidence which had been presented in the trial judgment did not demonstrate that the risk was materially greater than the risk posed by toilet paper.  The Full Court reiterated that most matter which is introduced into sewerage entails a risk of harm due to wear in tear in systems and other products such as toilet paper and faecal matter. Given that toilet paper is flushable and also poses a risk of harm, the ACCC would have to prove that the wipes pose a risk of harm which was greater to prove that it was unsuitable for flushing.  

The Full Court referred to the trial decision in which it was stated that in light of the evidence presented, it was not accepted that the wipes presented a real risk of harm over and above the risk posed by toilet paper.  In addition, the Full Court reiterated that although the evidence demonstrated that the wipes contributed to the blockages, it did not demonstrate that Kimberly-Clark Cottonelle wipes caused the blockages. 

"Flushability" guidelines

The ACCC also appealed on the ground that the trial judge erred in finding that the guidelines relied upon by the Kimberly-Clark were an appropriate framework for assessing flushability. This was on the basis that the scientists who developed the guidelines were employees of the manufacturers of the wipes. 

The Full Court rejected this argument finding that the ACCC did not establish that the wipes would have failed other existing guidelines including what was called the IWSFG disintegration test. It was also stated that the trial judge had noted that although the scientists were employed by the manufacturers, earlier versions of the guidelines had been peer reviewed and the scientists were no less scientists because of the fact that they were employed by the manufacturers. 

Consumer complaints

In the trial judgment evidence was provided by the ACCC which included complaints made by members of the public in relation to the wipes clogging up their sewerage systems. In the appeal, the ACCC argued that the Court should have relied on this evidence. 

It was upheld by the Full Court that this evidence was considered to be weak given that the complaints contain information that the relevant consumers chose to supply and there was no opportunity to test that information during the proceedings. Additionally, in the context of hundreds of millions of wipes which were sold, only 26 complaints were made, which was not considered influential. It was noted that the ACCC did not call any of those individuals to provide evidence about the underlying facts.  

Other representations

The ACCC also argued that the Court had erred by not taking into account various representations made by Kimberly-Clark concerning characteristics of the wipes being similar to toilet paper. The Full Court rejected this argument and concluded that the trial judge did not makes errors when finding that no such representations were made out.