5/6/2019 Avenatti Blasts Class Counsel 'Hijack' In Surgical Gown Case - Law360

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Avenatti Blasts Class Counsel 'Hijack' In Surgical

Gown Case
By Andrew Strickler

Law360 (May 6, 2019, 4:52 PM EDT) -- Embattled attorney Michael Avenatti told a California federal
court Friday that the receiver for his bankrupt law firm wants to "hijack" a class action focused on
defective surgical gowns and improperly boot him from the case.

Avenatti told the court that the receiver for the defunct Eagan Avenatti LLP, Brian Weiss, had no
standing to raise the latest call for him to be replaced as a lead plaintiffs' counsel. Moreover, Weiss
didn't even show the court that he had conferred with the lead plaintiff in the class action before
asking the court to remove and replace him, Avenatti said.

Weiss "seems to be operating under the flawed understanding that because [Eagan Avenatti] may
have some small economic interest in the attorneys' fees and costs in this case at some later date,
[Eagan Avenatti] and the receiver have standing before the court to seek to hijack this case [and]
deliver it to a creditor of the firm, Jason Frank, who can then quickly engineer a substandard
settlement that will allow him to quickly be paid," Avenatti said.

The dispute centers on control of a case first filed by buyers of the supposedly defective surgical
gowns in 2014, accusing Kimberly-Clark Corp. and spinoff Halyard Health Inc. of falsely representing
the gowns' effectiveness in blocking the spread of pathogens. A California federal jury in 2017 called
for Kimberly-Clark and Halyard to pay $450 million in damages, but the judge later cut it to $20
million. The appeal challenging that ruling is pending at the Ninth Circuit.

After Avenatti was charged in New York with trying to extort $20 million from Nike and in California
with embezzling $1.6 million in client money and bank fraud, Weiss sought to replace him with Frank
Sims & Stolper LLP in the gown class action, saying Avenatti's legal and financial troubles made his
continuing role unviable. Frank Sims includes former Eagan Avenatti attorneys Jason Frank and Scott
Sims, who have battled Avenatti in their former firm's bankruptcy matter.

Frank also secured last year a judgment of $10 million against Avenatti over fees he said his former
partner refused to pay him after he, Sims and a third Eagan Avenatti lawyer left to start a new firm.

In his latest motion fighting the replacement effort, Avenatti told the court that Weiss is not a lawyer,
much less one with class action experience, and apparently did nothing to explore other options for
lawyers to take over as lead class counsel. Avenatti also argued that the firm's appointment would
create an immediate conflict of interest, as the goal of the appointment request was to put Frank in a
position to settle the case and reap fees for his own benefit.

Moreover, after splitting with Eagan Avenatti, the trio of lawyers "undertook efforts to derail this
case" by contacting defense counsel and "encouraging them to file a motion to delay the trial in this
matter, have [Eagan Avenatti] replaced as class counsel (even though [Eagan Avenatti] was never
class counsel) and decertify the class," he told the court.

Avenatti also reiterated his support for two other lawyers with experience in the case, William Hearon
and Ahmed Ibrahim, to take over as co-lead class counsels.

"In light of the blatant unethical conduct I described in detail in my filing, there is simply no way
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5/6/2019 Avenatti Blasts Class Counsel 'Hijack' In Surgical Gown Case - Law360

Frank, Sims and Stolper can be appointed class counsel," Avenatti told Law360 in an email Monday.
"No way."

Hearon and Ibrahim filed their own opposition to the receiver motion on Friday, and urged the court
to maintain "the status quo" by appointing them as interim co-class counsel.

In yet another motion filed Friday, the defendant companies said they took "no position" on the
competing bids to be lead class counsel beyond agreeing that Avenatti should be replaced. But
counsels for Kimberly-Clark and Halyard did ask the court to "require the candidates to be very clear"
on what, if any, role Avenatti would have in the case moving forward.

They noted that Avenatti has in some recent filings identified himself only as counsel for himself and
his current firm, but submitted a declaration in support of the Hearon and Ibrahim motion saying he
would step aside as lead class counsel "at this time" and continue to consult on the case. Avenatti
also filed a lien notice in the case in April that purported to obligate "all counsel in this matter" to
communicate with him about the suit and any potential mediation or settlement, the companies said.
And in an email to defense counsel, he threatened to sue if they aided the receiver's request.

"[G]iven the very concerns that have led all parties and movants to agree that Avenatti should be
removed as class counsel, the court cannot ignore the current ambiguity in the record as to the
continued role of Avenatti going forward," the companies said.

"A continuing relationship and entanglement with Avenatti may raise a substantial question as to that
counsel's continued ability to adequately represent the class," according to the filing.

U.S. District Judge Dolly M. Gee denied previous requests from Weiss and Ibrahim. A hearing is
scheduled for May 24.

Sims declined to comment. Weiss' counsel did not respond to messages Monday. Counsels
for Kimberly-Clark and Halyard also did not respond to requests for comment.

The class is represented by Michael Avenatti.

Weiss is represented by Jack A. Reitman of Landau Gottfried & Berger LLP.

Kimberly-Clark is represented by Theodore J. Boutrous Jr., Julian W. Poon and Theane Evangelis of
Gibson Dunn & Crutcher LLP. Halyard is represented by Donald B. Verrilli Jr. and Daniel P. Collins of
Munger Tolles & Olson LLP. Both companies are also represented by Alexander G. Calfo, Julia
Romano, Chilton D. Varner, Stephen B. Devereaux and Madison H. Kitchens of King & Spalding LLP.

The case is Bahamas Surgery Center LLC v. Kimberly-Clark Corp. et al., case number 2:14-cv-08390,
in the U.S. District Court for the Central District of California.

--Additional reporting by Emma Cueto. Editing by Adam LoBelia.

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