Firm Accused of Selling Faulty Ebola Gowns

     MANHATTAN (CN) —Kleenex parent company Kimberly-Clark Corp. aggressively marketed defective medical gowns during the 2014 U.S. Ebola crisis, a shareholder claims in court.
     The lawsuit alleges that board members and executive officers of the corporation lied to shareholders during the 2014 Ebola crisis, concealing the fact the company was selling defective Microcool medical gowns when the virus had drastically increased demand.
     The derivative complaint was filed Tuesday by Margaret C. Richardson, trustee of the Survivors Trust Dated 6/12/84 for the benefit of the H&M Richardson Revocable Trust.
     Kimberly-Clark Corp. owns the health and hygiene brands Kleenex, Scott, Huggies, Pull-Ups, Kotex and Depend, occupying the number one and number two product-share positions in 80 countries. Kimberly-Clark entered into a spin-off agreement in 2014 with Halyard Health Inc., under which Halyard is obligated to indemnify Kimberly-Clark in legal proceedings and other liabilities.
     In August 2014, the World Health Organization designated the outbreak of the Ebola virus as a public health emergency of international concern.
     Growing awareness of the epidemic sparked increased demand for personal protective equipment such as eye shields, face masks and disposable gowns.
     On May 1 of this year, “60 Minutes” reported that Kimberly-Clark and Halyard had knowingly provided defective surgical gowns to U.S. workers at the height of the Ebola crisis.
     Anderson Cooper interviewed Bernard Vezeau, Microcool’s global strategic marketing director, who said that “the company went into high gear to sell the product” despite knowing that “the gowns were not consistently meeting industry standards.”
     Vezeau described the Ebola-period marketing as “a full court press to drive Microcool sales” that encouraged customers “to have at least 8 to 12 weeks of product on hand,” the complaint states.
     In the interview, according to Tuesday’s lawsuit, Vezeau described the Microcool gowns that were being recommended for use as having issues with Ebola leaking, sleeves falling off and ties falling off.
     “They didn’t tell the public. They didn’t tell the FDA. They didn’t tell physicians. They told no one,” California attorney Michael Avenatti reportedly said in the “60 Minutes” interview. “They kept selling the gown to the tune of millions of dollars every month.”
     Avenatti is the lead attorney in a California class action suit against Kimberly-Clark and Halyard that seeks $500 million in damages.
     Tuesday’s lawsuit alleges that Kimberly-Clark “willfully ignored the obvious and pervasive problems being experienced with Kimberly-Clark’s internal controls practices and procedures,” and the company’s failure to remedy those problems “ultimately led to the company becoming the subject of the governmental investigations and subpoenas” described in the suit.
     A June 2016 shareholder class action suit claimed that after the “60 Minutes” episode, Halyard stock fell $1.21, or 4.3 percent to close at $26.95.
     Bob Brand, a spokesperson for Kimberly-Clark, declined to comment on the ongoing litigation, but said “the company does stand behind the safety and efficacy of its products.
     “With more than 58 million sold over the past several years, the Microcool gowns have a strong track record of performance and safety with no indication of harm or injury caused to users of the product,” Brand said. “At no time would Kimberly-Clark sell a product it believed would put consumers at risk.”
     Tuesday’s derivative complaint, which does not seek specific damages, includes counts of breach of fiduciary duty and unjust enrichment. Plaintiff Richardson is represented by Curtis V. Trinko in New York City.

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