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Case 2:14-cv-08390-DMG-PLA Document 620 Filed 05/03/19 Page 1 of 17 Page ID

#:44019

Michael J. Avenatti, Esq. (Bar No. 206929)


1 10000 Santa Monica Blvd., 21st Floor
Los Angeles, CA 90067
2 Tel: (949) 887-4118
m@thefight.us
3
Attorney for Bahamas Surgery Center, LLC;
4 Michael Avenatti and Avenatti & Associates, APC
5
6
7
8 UNITED STATES DISTRICT COURT
9 CENTRAL DISTRICT OF CALIFORNIA
10
11 BAHAMAS SURGERY CENTER, LLC,
CASE NO.: 14-CV-08390 DMG (PLA)
12 Plaintiff,
vs. LEAD CLASS COUNSEL
13
MICHAEL AVENATTI’S
KIMBERLY-CLARK CORPORATION,
14 a Delaware Corporation, and HALYARD OPPOSITION TO RECEIVER’S
HEALTH, INC., a Delaware MOTION FOR “INDICATIVE
15 Corporation,
RULING” (1) REMOVING EAGAN
16 AVENATTI LLP AND MICHAEL
Defendants. AVENATTI AS CLASS COUNSEL
17
AND (2) APPOINTING JASON M.
18 FRANK, SCOTT H. SIMS AND
ANDREW D. STOLPER OF
19
FRANK, SIMS & STOLPER, LLP
20 AS LEAD CLASS COUNSEL [DKT
610]
21
22
Date: May 24, 2019
23
Time: 9:30 a.m.
24 Place: Courtroom 8C
25 350 West 1st Street
Los Angeles, CA 90012
26
27
28
LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
Case 2:14-cv-08390-DMG-PLA Document 620 Filed 05/03/19 Page 2 of 17 Page ID
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1 TABLE OF CONTENTS
Page(s)
2
3 I. INTRODUCTION .................................................................................. 1

4 II. ARGUMENT .......................................................................................... 2


5
A. The Receiver’s Motion Must Fail Because He and EA
6 Lack Standing. .............................................................................. 2
7
B. The Receiver’s Failure to Consult with Lead Plaintiff
8 Bahamas Requires the Motion be Denied. ................................... 6
9
C. The Receiver Failed to Conduct Any Due Diligence or
10 Investigate Alternative Counsel Before Selecting Frank,
11 Sims and Stolper, Thus Requiring that His Selection be
Afforded No Weight. .................................................................... 7
12
13 D. Frank, Sims and Stolper Are Not Qualified to Serve as
Lead Class Counsel. ..................................................................... 8
14
15 1. Frank, Sims and Stolper Assisted the Defendants in
This Case After Having Been Terminated from EA. .............. 8
16
17 2. The Facts Surrounding the Termination of Frank,
Sims and Stolper from EA Render Them Unable to
18 Be Appointed Lead Class Counsel.......................................... 9
19
3. Serious Ethical Issues Prevent Frank, Sims and
20 Stolper From Being Appointed Lead Class Counsel. ............. 10
21
4. Frank, Sims and Stolper Did Little Work on This
22 Case Prior to Their Termination. ............................................ 11
23
5. Frank, Sims and Stolper Lack the Experience Necessary
24 For this Case. ........................................................................... 12
25
6. The Appointment of Frank, Sims and Stolper Would
26 Create an Immediate Conflict of Interest with the Class. ....... 13
27
III. CONCLUSION ....................................................................................... 14
28
i
LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
Case 2:14-cv-08390-DMG-PLA Document 620 Filed 05/03/19 Page 3 of 17 Page ID
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1 TABLE OF AUTHORITIES
Page(s)
2 Carroll v. Interstate Brands Corp.
3 (2002) 99 Cal. App. 4th 1168 .................................................................. 6

4 Clinton v. Adams,
5 2014 WL 6896021 (C.D. Cal., Dec. 5, 2014) ......................................... 6

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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 I. INTRODUCTION
2 Current lead class action counsel Michael Avenatti (“Avenatti”) 1 hereby opposes the
3 Receiver’s Motion for “Indicative Ruling” (1) Removing Eagan Avenatti LLP and Michael
4 Avenatti as Class Counsel and (2) Appointing Jason M. Frank, Scott H. Sims and Andrew
5 D. Stolper of Frank , Sims & Stolper, LLP as Lead Class Counsel [Dkt. 610] (the “Motion”)
6 filed by Brian Weiss (the “Receiver”).2 The Motion should be denied for at least the
7 following reasons.
8 First, the Receiver lacks legal standing to bring the Motion and seek the relief
9 requested. As this Court well knows, standing is a fundamental legal prerequisite that must
10
11 1
As set forth in the Declaration of Michael Avenatti (“Avenatti Decl.”) filed concurrently
herewith, Avenatti (a) originated this complex case years ago; (b) served as lead counsel on
12 the matter since its inception; (c) supervised all work done on the case since its inception,
13 including the very limited work done by Frank, Sims and Stolper; (d) was the ultimate
decisionmaker on virtually all major aspects of the case before, during and after trial; (e)
14 devoted thousands of hours of work on the case before, during and after trial; (f) argued
15 numerous key motions prior to and during trial; (g) was responsible for nearly every major
deposition taken in the case; and (h) presented the opening and closing arguments at trial and
16 examined approximately 80% of the witnesses at trial, including numerous key witnesses.
17 [Avenatti Decl., ¶2]. As a result of his work, together with that of Messrs. Hearon and Ibrahim,
the plaintiffs obtained a jury verdict of over $454 million - one of the largest class action
18 verdicts of the last five years. [Avenatti Decl., ¶3]. This Court has presided over this case
19 since its inception, including the trial, and is well aware of the quality of the legal and trial
work exhibited by Avenatti across many years. There can be little question that Avenatti is
20 highly qualified to opine as to this case, its history and the matters set forth in this Opposition
and his declaration.
21
22 2
Importantly, Avenatti presently maintains a valid license to practice law, is currently
practicing law and representing clients, and has not had any disciplinary charges brought
23 against him by the State Bar of California during his career as a lawyer (nearly 20 years).
24 [Avenatti Decl., ¶4]. In addition, he has not been convicted of any crime and is entitled to a
full presumption of innocence. [Avenatti Decl., ¶5]. In furtherance of his fiduciary duties,
25 Avenatti decided to relinquish his role as Lead Class Counsel earlier this year, well before
26 having any notice that the Receiver would be proceeding with any motion to replace him.
[Avenatti Decl., ¶6] He supports attorneys William Hearon and Ahmed Ibrahim assuming co-
27 lead counsel roles as set forth in his declaration in support of their motion seeking such relief
28 [Dkt. 609]. The reason is clear – they have the requisite experience, knowledge of the facts,
and ethics to properly represent the class.
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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 be satisfied prior to seeking relief before the Court. Here, however, the Receiver has no
2 such standing, nor has the Receiver made any attempt to acquire such standing by filing a
3 motion to intervene as required. This alone should end the inquiry.
4 To be clear, (a) the Receiver is not an attorney or party in this action; (b) the firm he
5 purports to serve as the head of - Eagan Avenatti, LLP (“EA”) – is not lead class counsel
6 nor have they ever been lead class counsel; 3 (c) neither the Receiver nor the firm EA
7 presently represents the lead plaintiff in this case nor any other party or class member in
8 this case; 4 and (d) no party or class member to this action, let alone the lead Plaintiff
9 Bahamas, has joined the Motion. [Avenatti Decl., ¶7] Instead, the Receiver seems to be
10 operating under the flawed understanding that because the firm EA may have some small
11 economic interest in the attorneys’ fees and costs in this case at some later date, EA and
12 the Receiver have standing before the Court to seek to hijack this case, effectively take it
13 over after years of litigation, and then deliver it to a creditor of the firm, Jason Frank, who
14 can then quickly engineer a substandard settlement that will allow him to quickly be paid.
15 This, however, is not the law. Entities that may have an economic interest in a class action,
16 whether they be vendors or otherwise, do not have legal standing to seek to replace class
17 counsel in a major, complex class action that has been pending for years.
18 Second, there is no evidence that the Receiver met and conferred with the lead
19 plaintiff Bahamas Surgery Center, LLC (“Bahamas”), class counsel Avenatti, or any other
20 plaintiff or class member before filing his motion. [Avenatti Decl., ¶8] In fact, there is no
21 evidence that the Receiver even bothered to inform lead plaintiff Bahamas or any other
22 class member that the Receiver would be filing the Motion, let alone seek the client’s
23 consent. [Avenatti Decl., ¶8] Indeed, just the opposite is apparent from the Declaration of
24
25 3
On November 14, 2016, this Court appointed “Michael Avenatti of Eagan Avenatti, LLP” as
26` class counsel. [Dkt 270 at p. 35.]. The ruling appointing Mr. Avenatti individually (as opposed
to the Eagan Avenatti firm) was reaffirmed by the Court on March 24, 2017 [Dkt 452 (“[T]he
27 Court notes that class counsel is Michael Avenatti, not Eagan Avenatti.”)], and was not
28 appealed.
4
Eagan Avenatti, LLP presently has no attorney employees.
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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 Rashel Campos submitted in connection with this dispute, wherein Bahamas makes it clear
2 that Bahamas does not wish for lead counsel to be changed as the Receiver demands.
3 Accordingly, even if EA presently represents Bahamas as counsel (they do not), the
4 Receiver has breached his fundamental duty to the client Bahamas by filing a motion
5 opposed by the client and failing to even inform the client of his course of action
6 beforehand. This alone requires denial of the Motion.
7 Third, the Receiver lacks the experience required to choose class counsel and did
8 nothing to investigate alternative class counsel prior to selecting attorneys Frank, Sims and
9 Stolper. [Avenatti Decl., ¶10]. The Receiver is not a licensed attorney nor has he ever
10 been. He has no legal training and never attended law school. He has never run a
11 contingency/class action law firm like EA. He has no experience in complex class actions.
12 Nor has he ever selected class counsel in a class action, let alone a class action of this
13 magnitude. [Avenatti Decl., ¶11]. Simply put, the Receiver may be qualified to liquidate
14 assets and wind down a manufacturing company with inventory, but he is wholly
15 unqualified to select class counsel in a case of this size, especially when he does so in
16 opposition to the wishes of a client he purports to represent. Moreover, there is no evidence
17 that the Receiver consulted with other class action firms or even explored the possibility of
18 having any firm assume the lead counsel position before “choosing” Frank, Sims and
19 Stolper. [Avenatti Decl., ¶12] Instead, because Jason Frank happens to be a creditor owed
20 money by EA and also happens to be an attorney, the Receiver determined that he and his
21 partners (from their three person law firm) were the best possible choice out of literally
22 thousands of attorneys and law firms - without doing any due diligence whatsoever 5 or
23 seeking any other possible alternatives. This is not a proper way to select class counsel in
24 any case, let alone in a case of this significance.
25
26` Had the Receiver done any due diligence of any significance, the Receiver would have
5

discovered the myriad of ethical problems plaguing Messrs. Frank, Sims and Stolper as
27 described infra, including but not limited to their assistance of the Defendants in this case on
28 the eve of trial in this matter. Shockingly, he failed to make any such inquiry despite being
advised of those facts months ago. [Avenatti Decl., ¶15]
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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 Fourth, Frank, Sims and Stolper are not qualified to serve as class counsel in this
2 matter because, as described in more detail below, (a) they assisted the Defendants in
3 seeking to derail the trial and disband the class in March of 2017, in direct violation of their
4 fiduciary duties; (b) they lack the relevant experience to successfully represent the plaintiffs
5 in this matter; (c) they did very little work on this matter before being fired from EA and
6 the work they did do was supervised by Avenatti; (d) they were fired from EA after they
7 were caught conspiring to steal clients and documents from the firm and set up a competing
8 law firm, while at the same time hiding their conduct and being paid millions of dollars by
9 EA across many months; (e) their appointment would create an immediate conflict of
10 interest with the class; and (f) serious additional ethical issues surround Frank, Sims and
11 Stolper as shown by, among other things, Andrew Stolper’s history of committing blatant
12 attorney misconduct as evidenced by, among other things, U.S. District Court Judge
13 Cormac Carney being forced to dismiss serious criminal charges against multiple
14 defendants for what he described as more than seven (7) unethical acts on Stolper’s part,
15 including suborning perjury and witness intimidation. [Avenatti Decl., ¶13] Indeed, in a
16 scathing decision the likes of which are rarely seen, Judge Carney remarked that Stolper
17 had “forgot that truth is never negotiable.” 6 [Avenatti Decl., ¶14] The Court is urged to
18 read this decision in its entirety when assessing Mr. Stolper’s fitness to be appointed lead
19 class counsel as requested by the Receiver. Accordingly, of all the available alternatives
20 for class counsel, of which there are thousands, Frank, Sims and Stolper can hardly be
21 described as preferred.
22 For each of the above reasons, as well as those set forth below, the Motion should
23 be denied in its entirety.
24
25
26`
27
28
6
Judge Carney’s ruling and detailed description of Mr. Stolper’s misconduct is attached to the
Avenatti Decl. as Exhibit 1. See also Exhibits 2 and 3.
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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 II. ARGUMENT
2 A. The Receiver’s Motion Must Fail Because He and EA Lack
3 Standing.
4 The Receiver and his counsel rely on an entirely false premise for the foundation of
5 their motion, namely that EA, as opposed to Michael Avenatti, was named class counsel.
6 According to the Receiver, this allows the Receiver to dictate who replaces Avenatti.
7 As this Court well knows, however, and as this Court’s multiple orders make clear
8 – EA was never appointed class counsel. The only class counsel this Court has ever
9 appointed in this case is Michael Avenatti individually. 7 Indeed, this fact was affirmed
10 immediately prior to trial by the Court when the defendants, at the urging of Messrs. Frank,
11 Sims and Stolper, see infra, attempted to use EA’s Chapter 11 Bankruptcy filing to derail
12 the trial and decertify the class [Dkt. 412]. Moreover, prior to the instant Motion, during
13 years of litigation, the appointment of Avenatti as lead class counsel has never been
14 challenged nor have any of this Court’s orders designating him as lead counsel been
15 appealed. Accordingly, the “law of the case” is clear and there can be no argument that
16 EA, as opposed to Avenatti, is lead class counsel. The Receiver has been advised of this
17 repeatedly over the last few months – in writing and orally – and yet has repeatedly failed
18 to offer any evidence or documentation to the contrary. [Avenatti Decl., ¶16] The reason
19 is clear – there is none. As a result, the Receiver has no standing to bring the instant
20 Motion, thus requiring its denial.
21 The law provides that before a party seeks relief in a particular case, the party must
22 first have legal standing to participate in that case. This is especially true in a class action.
23 See, e.g., Newberg on Class Actions, Section 19:3 (5th Edition). The Receiver, however,
24 ignores this requirement in its entirety. The facts are: (a) the Receiver is not an attorney
25
26` On November 14, 2016, this Court appointed “Michael Avenatti of Eagan Avenatti, LLP” as
7

class counsel. [Dkt 270 at p. 35.] The ruling appointing Mr. Avenatti individually (as opposed
27 to the Eagan Avenatti firm) was reaffirmed by the Court on March 24, 2017 [Dkt 452 (“[T]he
28 Court notes that class counsel is Michael Avenatti, not Eagan Avenatti.”)], and was never
appealed.
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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 or party in this action; (b) the firm he purports to serve as the head of - Eagan Avenatti,
2 LLP (“EA”) – is not lead class counsel nor have they ever been lead class counsel; (c)
3 neither the Receiver nor the firm EA presently represents the lead plaintiff in this case nor
4 any other party or class member in this case; and (d) no party or class member to this action,
5 let alone the lead Plaintiff Bahamas, 8 has joined the Motion. [Avenatti Decl., ¶7] Instead,
6 the Receiver claims that because the firm EA may have some small economic interest in
7 the attorneys’ fees and costs in this case at some later date, EA and the Receiver have
8 standing before this Court. But this is not the law. Entities that may have an economic
9 interest in a class action, whether they be vendors or otherwise, do not automatically have
10 legal standing to seek to replace class counsel in a major class action that has been pending
11 for years.
12 In addition, California law is clear that even if EA has a right to attorneys’ fees and
13 costs from this matter, that right does not provide EA any standing to seek relief before this
14 court. See Carroll v. Interstate Brands Corp. (2002) 99 Cal. App. 4th 1168, 1173. As a
15 result, counsel “has no right to intervene” in the main action. Id. (citations omitted); see
16 also Clinton v. Adams, 2014 WL 6896021, at *4 (C.D. Cal., Dec. 5, 2014) (“an attorney
17 claiming an attorney’s lien on the judgment is not a party and had no right to intervene”).
18 Thus, the Motion must be denied for lack of standing.
19 B. The Receiver’s Failure to Consult with Lead Plaintiff Bahamas
20 Requires the Motion be Denied.
21 There is no evidence that the Receiver met and conferred with the lead plaintiff
22 Bahamas, Avenatti, nor any other plaintiff or class member before filing his motion.
23 [Avenatti Decl., ¶8] This requires the motion be denied for failure to follow this Court’s
24 local rules, as well as failure for the Receiver and EA to adhere to their obligations to lead
25 plaintiff Bahamas.
26`
The Receiver, who is not an attorney, has criticized Avenatti for having contact with lead
8
27 Plaintiff Bahamas during the last few months. Such criticism is baseless. Avenatti is lead
28 counsel to the class and has ethical obligations to consult with Bahamas. Failure to do so
would constitute legal malpractice and a breach of his fiduciary duties.
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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 In fact, there is no evidence that the Receiver even bothered to inform lead plaintiff
2 Bahamas or any other class member that the Receiver would be filing the Motion, let alone
3 seek the client’s consent. [Avenatti Decl., ¶9] Indeed, it is clear from the Declaration of
4 Rashel Campos [Dkt. 611] submitted in connection with the competing motion [Dkt. 609],
5 wherein Bahamas makes it clear that Bahamas does not wish for lead counsel to be changed
6 as the Receiver demands, that the Receiver never obtained the client’s consent prior to
7 filing his motion. Accordingly, if EA presently represents Bahamas as counsel as the
8 Receiver may attempt to claim (they do not), the Receiver has breached his fundamental
9 duty to the client by filing a motion opposed by the client and failing to even inform the
10 client of his intended motion. As a result, the Receiver’s Motion should be denied.
11 C. The Receiver Failed to Conduct Any Due Diligence or Investigate
12 Alternative Counsel Before Selecting Frank, Sims and Stolper, Thus
13 Requiring that His Selection be Afforded No Weight.
14 In deciding the Motion, it is important for the Court to understand what the Receiver
15 is not. He is not a licensed attorney nor has he ever been. He has no legal training and
16 never attended law school. He has never run a contingency/class action law firm like EA.
17 He has no experience in complex class actions. Nor has he ever selected class counsel in
18 a class action, let alone a class action of this magnitude. [Avenatti Decl., ¶11]
19 Simply put, the Receiver may be qualified to liquidate assets and wind down a
20 manufacturing company with inventory, but he is not remotely qualified to select class
21 counsel in a case of this importance and complexity, especially when he does so in
22 opposition to the wishes of a lead client he purports to represent. To compound matters,
23 there is no evidence that the Receiver ever considered any alternative to having Franks,
24 Sims and Stolper take over the case as lead counsel or took any steps to consult with any
25 other class action firms to gauge their interest prior to filing his Motion. [Avenatti Decl.,
26` ¶12] Had the Receiver been interested in locating the best alternative counsel to Avenatti,
27 other than Messrs. Hearon and Ibrahim, he would have undertaken a lengthy nationwide
28
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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 search to locate such counsel. Such an effort was not only advisable, it was required. And
2 yet the Receiver did practically nothing.
3 Instead, because Jason Frank happens to be a creditor owed money by EA and also
4 happens to be an attorney, the Receiver determined that Frank, Sims and Stolper (of a three
5 person law firm) were the best possible choice out of literally thousands of attorneys and
6 law firms - without doing any due diligence whatsoever or seeking any other possible
7 alternatives. This is not a proper way to select class counsel in any case, let alone in a case
8 with this significance. Accordingly, the Receiver’s preference in counsel is meaningless
9 and should be afforded no weight.
10 D. Frank, Sims and Stolper Are Not Qualified to Serve as Lead Class
11 Counsel.
12 For a myriad of reasons, Frank, Sims and Stolper are not qualified to serve as lead
13 class counsel in this matter and cannot be appointed by this Court to serve in such a role.
14 [Avenatti Decl., ¶13] Many of these reasons in isolation are disqualifying, but in the
15 aggregate, there is no question that Frank, Sims and Stolper should not be trusted to
16 ethically and adequately see this case through to completion.
17 1. Frank, Sims and Stolper Assisted the Defendants in This Case
18 After Having Been Terminated from EA.
19 As described more fully below, in May 2016, Frank, Sims and Stolper were fired by
20 EA after having been discovered to have been committing, among other things, fraud
21 against the firm across many months. [Avenatti Decl., ¶17] Thereafter, in approximately
22 March 2017, EA consented to a filing for Chapter 11 bankruptcy protection, approximately
23 one month before the scheduled trial date in this matter. [Avenatti Decl., ¶18] Frank, Sims
24 and Stolper, angry about being fired by EA and EA’s alleged subsequent failure to pay Mr.
25 Frank monies due him, subsequently undertook efforts to derail this case and infringe on
26` the rights of the class, namely by contacting counsel for the Defendants and encouraging
27 them to file a motion to delay the trial in this matter, have EA replaced as class counsel
28
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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 (even though EA was never class counsel) and decertify the class. 9 [Avenatti Decl., ¶19]
2 They did so in direct violation of their fiduciary duties to the plaintiff and the class, as they
3 had done limited work on the case prior to being terminated. [Avenatti Decl., ¶20] They
4 ignored their clear ethical duties for no other reason than to harm EA, Avenatti, and the
5 very class they now seek to represent.
6 Thereafter, as the Court is aware, the Defendants acted on the advice and
7 encouragement of Frank, Sims and Stolper and attempted to derail this case by way of a
8 lengthy motion filed mere weeks before the scheduled trial. [Dkt. 412]. Class counsel was
9 subsequently required to devote a significant amount of time and resources to the
10 opposition to that motion for the benefit of the class – as opposed to preparing for the
11 upcoming trial. Ultimately, the Court denied the motion [Dkt. 452] and the trial proceeded.
12 Now, the Receiver seeks to have this court appoint Frank, Sims and Stolper to
13 represent the same plaintiffs and the same class that they attempted to harm two years ago.
14 He does so without any explanation as to how or why this conduct should be excused. This
15 cannot possibly be condoned by this Court; class counsel cannot be appointed who has a
16 close relationship with the Defendants and previously assisted them in the case.
17 2. The Facts Surrounding the Termination of Frank, Sims and
18 Stolper from EA Render Them Unable to Be Appointed Lead
19 Class Counsel.
20 On Friday, May 20, 2016, at approximately 11:00 a.m., EA’s management
21 discovered by shear happenstance that Frank, Sims and Stolper had been spending, since
22
23 9
In the unlikely event the Court strongly considers the appointment of Frank, Sims and
24 Stolper, it is incumbent upon this Court to first inquire as to all attorneys for the Defendants
(prior and current) as to all communications they have had, or are aware of, with Frank, Sims
25 and Stolper since their termination from EA in May 2016 up through the date of this filing.
26` This would include any communications relating to the efforts in March 2017 to decertify the
class and damage it, as well as any recent communications by Frank, Sims and Stolper with
27 Defendants discussing settlement (which would be entirely improper seeing as they are not
28 counsel and know practically nothing about the case other than Mr. Frank wants to get paid
from its proceeds).
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LEAD CLASS COUNSEL MICHAEL AVENATTI’S OPPOSITION TO RECEIVER’S MOTION FOR
“INDICATIVE RULING” [DKT 610]
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1 at least March 2016 (later discovered to be February), considerable time and effort during
2 working hours and while employed at EA forming a competing law firm and scheming to
3 steal cases and clients of EA’s in the months to follow. The three attorneys did so at the
4 same time they were being highly compensated by the firm and while purposely taking
5 steps to hide their activities from the firm, including through the use of personal e-mail
6 accounts and bogus firm names. [Avenatti Decl., ¶21] Within two hours of this discovery
7 by the firm, the three attorneys were locked out of the firm’s offices and computer systems.
8 For instance, Mr. Sims was told to immediately pack his personal belongings and leave,
9 and was subsequently physically escorted out of the firm’s offices. [Avenatti Decl., ¶22]
10 A later investigation by EA revealed that Frank, Sims and Stolper had attempted to defraud
11 the firm out of millions of dollars for their own benefit. [Avenatti Decl., ¶23] In light of
12 these facts, Frank, Sims and Stolper cannot be appointed class counsel.
13 3. Serious Ethical Issues Prevent Frank, Sims and Stolper From
14 Being Appointed Lead Class Counsel.
15 In connection with the Motion, it is incumbent upon this Court to ensure that Frank,
16 Sims and Stolper possess the necessary ethics to properly represent the class. As evidenced
17 above by the facts surrounding their conduct in seeking to interfere with the class and trial
18 in March 2017, however, it is impossible for the Court to make such a determination in this
19 instance, thus requiring the denial of the Motion.
20 Moreover, the Receiver’s attempt to have lead class counsel include Mr. Stolper, Mr.
21 Frank’s hand chosen “Partner,” is especially problematic in light of his history of
22 misconduct, including by way of purposeful violation of Department of Justice guidelines
23 and federal court orders, designed to violate the constitutional rights of the accused.
24 Indeed, this Court need not look any further than Judge Carney’s Order dismissing
25 serious criminal charges and cratering the government’s prosecution after years of work in
26` the Broadcom matter, all as a result of numerous instances of prosecutorial misconduct
27 carried out by Mr. Stolper as the lead prosecutor. [Avenatti Decl., ¶24] It bears repeating
28 that the Court is urged to read Judge Carney’s decision in its entirety when assessing Mr.
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1 Stolper’s fitness to be appointed lead class counsel as requested by the Receiver. The
2 detailed, conclusive findings in that case, including subjoining perjury, witness tampering,
3 and leaking grand jury testimony to the media before trial (Los Angeles Times and Wall
4 Street Journal), coupled with the lack of any evidence of rehabilitation by Mr. Stolper or
5 remorse, render Frank, Sims and Stolper unqualified to serve as class counsel in this case.
6 [Avenatti Decl., ¶25] They likewise give rise to considerable questions relating to the
7 Receiver’s competency in selecting lead class counsel.
8 4. Frank, Sims and Stolper Did Little Work on This Case Prior to
9 Their Termination.
10 Contrary to their claims, Messrs. Frank, Sims and Stolper did very little work on this
11 case prior to their termination from EA in May 2016, nearly one year before trial and before
12 the filing of the Motion for Class Certification. And the work they did perform was
13 supervised by Avenatti. [Avenatti Decl., ¶26] The Court need not look any farther than
14 the docket to determine that as of the date of their termination (May 20, 2016), the majority
15 of the work in the case had yet to be completed [the last docket entry was 157; the docket
16 currently stands greater than 600].
17 Moreover, the vast majority of depositions and critical motions all occurred well
18 after Frank, Sims and Stolper had all been terminated from EA. [Avenatti Decl., ¶27] As
19 a result, their limited prior involvement in the case, which had little to no impact on the
20 outcome, cannot serve as a legitimate reason for their appointment.10
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Frank, Sims and Stolper have also made it clear that they intend on not having any
involvement by Avenatti in the case on a go forward basis and likewise will not consult with
23 him as to any issue. [Avenatti Decl., ¶28]. . This alone shows that their personal animus
24 towards Avenatti is likewise a disqualifying factor. Regardless of the charges Avenatti
presently faces, none of those charges relate to this case. More importantly, Avenatti has a
25 wealth of unsurpassed knowledge concerning this case, the trial, witnesses, documents, facts
26` and the relevant law, all as a result of the thousands of hours he had devoted to this case for
years. [Avenatti Decl., ¶29] Frank, Sims and Stolper’s refusal to use him as a resource
27 demonstrates that they are not interested in maximizing the value of the case and its outcome
28 for the benefit of the class (as opposed to obtaining a quick settlement allowing Mr. Frank to
be paid).
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1 5. Frank, Sims and Stolper Lack the Experience Necessary For this
2 Case
3 This case proceeded to trial once and may very well proceed to trial again. As a
4 result, it will be necessary for lead counsel to have sufficient recent trial experience trying
5 matters in a successful, ethical manner. Simply put, Frank, Sims and Stolper lack such
6 experience and are not “trial lawyers.”11 [Avenatti Decl., ¶30]
7 First, Mr. Scott Sims has never given an opening or closing argument in his career
8 nor has he handled any meaningful cross-examinations of any witnesses. His real-world
9 trial experience is extremely limited. His skill lies in preparing motions and pleadings.
10 And occasionally, but not often, arguing a motion or appeal. This case is too significant
11 and complex to serve as a training ground for Mr. Sims to get “first chair” experience.
12 [Avenatti Decl., ¶8]
13 Second, Mr. Frank has first chaired one minor case in his career – years ago – and
14 has never given an opening statement or closing argument in any meaningful case.
15 Moreover, the number of witnesses that he has examined at trial in the last ten years is
16 extremely limited. Mr. Frank may be an adequate pre-trial lawyer and may properly
17 prepare cases for quick settlement, but he does not have the skill set necessary to try a case
18 of this magnitude to a jury. [Avenatti Decl., ¶32]
19 Third, as described in detail below, Mr. Stolper has previously exhibited significant
20 unethical conduct rendering him unable to serve as class counsel. Moreover, Mr. Stolper
21 has yet to give a single opening or closing argument in any substantial civil matter nor does
22 he have relevant civil trial experience, especially during the last ten years. [Avenatti Decl.,
23 ¶33]
24 In sum, this has been a hard-fought case that may require attorneys with trial
25 experience to resolve – either at trial or by way of a reasonable threat of trial. Frank, Sims
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Moreover, Messrs. Frank, Sims and Stolper have extremely limited resources as a three-
28 person firm and also have very little experience arguing before the Federal Courts of Appeal.
This alone is disqualifying. [Avenatti Decl., ¶35]
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1 and Stolper, however, do not represent any real trial threat due to their lack of experience
2 obtaining trial results as lead counsel. This is too important of a case to be handled by
3 counsel with inadequate experience. 12 [Avenatti Decl., ¶34]
4 6. The Appointment of Frank, Sims and Stolper Would Create an
5 Immediate Conflict of Interest with the Class
6 The goal of Frank, Sims and Stolper is clear – to be appointed class counsel and
7 settle this case as quickly as possible for an amount that will permit an award of attorneys’
8 fees sufficient to pay Jason Frank and Jason Frank alone. [Avenatti Decl., ¶36] Frank,
9 Sims and Stolper have no incentive to maximize the recovery for any other party – not
10 plaintiff, not the class, not EA and not other counsel. [Avenatti Decl., ¶37] They have no
11 desire to push Defendants for more money or more fees beyond what Frank is owed. Their
12 only incentive is to engineer a quick settlement so Frank can get paid as quickly as possible.
13 If this means sacrificing the interests of the class by settling the case on the cheap, but
14 allowing for sufficient attorneys’ fees to pay Frank, so be it.
15 As a result, were Frank, Sims and Stolper to be appointed, an immediate conflict of
16 interest would arise between lead counsel and the class. [Avenatti Decl., ¶38] The Class
17 wishes to be paid as much as possible, while Frank desires a settlement as quickly as
18 possible in an amount just high enough for him to collect his judgment in the form of
19 attorneys’ fees. This creates an unmistakable and unavoidable conflict. Accordingly, this
20 Court cannot appoint Frank, Sims and Stolper as lead counsel as requested by the Receiver.
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26` Frank, Sims and Stolper will likely respond with claims as to their alleged roles and results
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in various cases. The Court should inquire as to, among other things, whether they were lead
27 counsel; what substantive role, if any, they actually played in those cases; and how much work
28 was actually done in those cases, especially at trial or on appeal. Upon examination, the claims
will not hold up.
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1 III. CONCLUSION
2 For each of the reasons set forth above, the Motion should be denied in its entirety.
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Dated: May 3, 2019
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6 By: /s/ Michael J. Avenatti
Michael J. Avenatti
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