Hurd-era Suit Against HP Dismissed for Good

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For the second time in a year, a federal judge tossed the suit brought by investors saying the plaintiffs’ claims were too vague to show HP did anything wrong.

[caption id="attachment_4805" align="alignright" width="300"]Oracle's Mark Hurd HP Former HP CEO Mark Hurd.[/caption]

For all the other challenges it still faces, Hewlett-Packard Co. can breathe easier in at least one small area. A lawsuit brought by shareholders claiming they were misled in the period surrounding the ouster of former HP CEO Mark Hurd has been dismissed and cannot be refiled.

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That ruling came down earlier this week in U.S. District Court in San Francisco where, for the second time in a year, Judge John S. Tigar tossed the suit brought by the Retail Wholesale and Department Store Union Local 338 Retirement Fund of Mineola, N.Y., among others saying the plaintiffs’ claims were too vague to show HP did anything wrong.

This time around, the dismissal was made “with prejudice” meaning the suit cannot be revived a third time.

The plaintiffs alleged HP officials in 2010 misled investors about the company’s commitment to ethical behavior even as they knew about looming allegations of sexual harassment against Hurd that ultimately led to his ouster. Hurd, now president of Oracle Corp., was exonerated on the harassment claims in an HP internal investigation, but was found to have violated the vendor’s expense reporting rules to the tune of about $1,100.

The lawsuit claimed shareholders were consistently told Hurd was leading a successful turnaround of the company and, more importantly, was in compliance with HP’s Standards of Business Conduct rules, which had been updated two years earlier in the wake of a scandal involving HP contractors spying on journalists covering the company and news leaks by one of its own board members.

As he did in the lawsuit’s first go-round, Tigar said the plaintiffs failed to show the actions by Hurd or HP rose to the level of "a warranty of ethical compliance" with regard to the Standards of Business Conduct.

Also, “plaintiff has not stated a securities law violation" adding that it was not a materially false" omission for Hurd to fail failure to disclose his non-compliance with the standards rules.

Representatives of HP, Oracle and the union did not immediately respond to requests for comment.

But the suit’s dismissal is likely to come as some relief to the Palo Alto, Calif., IT giant as it continues to wrestle with a long turnaround effort and prepares to cut thousands more jobs globally as part of its rebuilding efforts.

Last month, HP confirmed that between 11,000 and 16,000 more jobs would be cut in a move that takes the total number of roles axed up to 50,000 since the turnaround plan started.

HP CEO Meg Whitman said in an earnings call in May that slashing the workforce is vital to getting the company back on track. “We have to continue to focus and… be a more nimble, lower-cost, and more customer- and partner-centric company,” she told reporters and analysts. “We have made a lot of progress to that end over the past two years but we still have more work to do in our structure, our systems and our go-to-market. No company likes to reduce their workforce but the reality is that HP must be manically focused on continuous improvement in our cost structure.”

For the three months to April 30, HP’s GAAP net earnings jumped 18 percent annually to $1.3 billion on revenue that slipped 1 percent to $27.3 billion over the same period.

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