Fraud Case Essay

As a follow up to my questions last week on Halyard $HYH I did some more digging on the fraud case and thought I would pass along what I found out. Pete said that Mike did more work on this so it may be repetitive but here goes.
I talked to Michael Avenatti the lawyer on the class case. He said the case is ongoing and should go to trial in the next few months. He said it is a Qui Tam case to recover money for the whistle blowers. He is not sure HYH will survive this as they have no insurance. I asked him if Kimberly Clark (KC) had indemnified HYH. He said that when Kimberly spun them the indemnification runs the other way, Halyard indemnified KC, therefore HYH is liable. He said it is a fraud case, you cannot sell a product if it does not meet the standard. He then suggested that I look at the Motion for Class Certification as that is unsealed.
I looked up Michael to see what I could find out about him. He has successfully handled large cases in the past, winning against KPMG and others, and is currently suing the NFL Hall of Fame and Jim Carrey. He goes after large high profile cases so there are a lot of
Cardinal sold surgical gowns that competed with Kimberly Clark’s (KC’s) MicroCool gowns but also distributed KC’s gowns. KC was suing Cardinal in a hotly contested lawsuit, filed in 2010. Cardinal ran tests on the MicroCool gowns and found alarmingly high failure rates. Once Cardinal showed KC the test results they settled within six weeks in 2013. No money was exchanged and as part of the settlement KC indemnified Cardinal on the KC gowns. So now we have the two companies that know the product best, KC & Cardinal, both getting indemnified from liability. I thought perhaps it was standard for KC to indemnify themselves on businesses they sold. Further research showed this is not necessarily the case. For the pain pump product line KC still has the liability and indemnified