Halyard Health (NYSE:HYH) is suing its former parent company Kimberly-Clark seeking to clear Halyard’s responsibility to pay for $354 million in damages in a fraud case decided last April.
In the case, plaintiffs alleged that Kimberly-Clark and Halyard Health engaged in common law fraud and violations of California’s Unfair Competition Law in connection with their marketing and sale of MicroCool surgical gowns.
A decision returned on April 7, 2017 found Kimberly-Clark liable for $4 million in compensatory damages and $350 million in punitive damages, with Halyard Health found liable for $300,000 in compensatory damages and $100 million in punitive damages, according to an SEC filing.
Halyard said it is taking action to challenge the decision in the case on its own, but also threatened to defend itself from further indemnification to Kimberly-Clark in relation to the $354 million in damages the former parent company faced.
“We have notified Kimberly-Clark that we have reserved our rights to challenge any purported obligation to indemnify Kimberly-Clark for the punitive damages awarded against them,” Halyard Health wrote in an SEC filing.
Halyard said it Kimberly-Clark has filed suits seeking to indemnify Halyard with the full amount of the damages it faces in the case, as well as making claims that Halyard’s failure to indemnify them breached a distribution agreement between the two companies.
The complaint was stayed last September, according to the SEC filing, but Halyard Health said it plans to “vigorously pursue our case against Kimberly-Clark in California and vigorously defend against their case against us.”
Late last month, Halyard Health saw shares fall slightly after the medical device maker met expectations on Wall Street with its fourth quarter and full-year finances.
