The Costco flushable wipes settlement is stalled. The claim filing deadline closed on August 9, 2024, no payments have been distributed, and on July 1, 2025, the Second Circuit Court of Appeals vacated the trial court’s approval and sent the case back for reconsideration.1Justia Law. Kurtz v. Kimberly-Clark Corp., No. 24-425 (2d Cir. 2025) Anyone who filed a valid claim is in a holding pattern until the district court rules again.
Where the Settlement Stands Now
No money has gone out. The official settlement website states that funds will not be distributed until the district court reissues an order approving the settlement and any further appeals from that order are resolved. No distribution date has been set.2Flushablewipessettlement.com. Kurtz/Honigman v. Kimberly-Clark Corporation, et al.
From here, the district court could reapprove the settlement under the corrected legal standard, possibly with reduced attorney’s fees. It could reject the settlement entirely. Or the parties could renegotiate. There is no public timeline for the next step.
Why the Appeals Court Vacated the Deal
An objector appealed the trial court’s approval, arguing the settlement paid lawyers far more than class members. The district court had awarded class counsel roughly $3.1 million in fees. Class members actually claimed only about $1 million of the $20 million fund by the August 2024 deadline, leaving around $19 million unclaimed and retained by the company. Attorneys stood to collect more than three times what consumers did.1Justia Law. Kurtz v. Kimberly-Clark Corp., No. 24-425 (2d Cir. 2025)
On July 1, 2025, the Second Circuit ruled that the district court used the wrong legal standard when evaluating fairness because it never compared the share of the total recovery going to lawyers against the share going to class members. The appellate court did not rule that the settlement itself was unfair or that the fees were too high. It required the trial court to redo the analysis using the correct framework.1Justia Law. Kurtz v. Kimberly-Clark Corp., No. 24-425 (2d Cir. 2025)
Who Was Eligible and Why the Deadline Matters
The class was limited to New York consumers who purchased Kirkland Signature Moist Flushable Wipes between July 1, 2011, and May 31, 2017. Despite news coverage that suggested a nationwide class, the geographic scope covered only New York purchasers.
The claim filing deadline was August 9, 2024. That date has passed, and the settlement administrator is no longer accepting new claims. There is no mechanism to file a late claim under the current settlement terms, even with the case now back before the trial court.
What Payments Would Look Like If Approved
The settlement promised $1.30 per package of wipes purchased, with a minimum payment of $7.50 per household. Claimants without a receipt could claim up to 43 packages for a maximum of $55.90. No proof of purchase was required.2Flushablewipessettlement.com. Kurtz/Honigman v. Kimberly-Clark Corporation, et al.
The fund was capped at up to $20 million for the class, with up to $4 million more allocated for attorney’s fees and costs.1Justia Law. Kurtz v. Kimberly-Clark Corp., No. 24-425 (2d Cir. 2025)
What Participating Class Members Give Up
If the settlement is eventually approved and you filed a claim (or simply did not opt out by the August 9, 2024 deadline), you release Kimberly-Clark from all liability related to the wipes. Personal injury claims are specifically carved out. You cannot later sue over the purchase price or marketing, but you can still pursue a separate lawsuit if the wipes caused physical harm to you personally.1Justia Law. Kurtz v. Kimberly-Clark Corp., No. 24-425 (2d Cir. 2025)
The payment is tied to the number of packages purchased, not to actual plumbing or septic repair costs. Anyone who spent thousands repairing pipes would find the $55.90 maximum far short of their losses. Consumers who opted out by the deadline preserved their right to sue individually over those kinds of damages.
Tax Treatment of Any Eventual Payment
Settlement payments structured as refunds for a product’s purchase price are generally not taxable income because they return money already spent. Under IRS guidance, the taxability of a settlement depends on the nature of the underlying claim. These payments compensate for an allegedly overpriced or mislabeled product, not lost wages or punitive damages, so most recipients would not owe federal income tax on them.3Internal Revenue Service. Tax Implications of Settlements and Judgments
At a maximum of $55.90, the practical tax consequences are negligible. Administrators generally do not issue a 1099 form for payments below $600.