Supreme Court rejects Hewlett-Packard's efforts to block class action suit

AP

The Supreme Court on Tuesday allowed a class action lawsuit to proceed against Hewlett-Packard Co. that alleges Compaq, now a part of HP, sold defective computers.

The Supreme Court's action lets stand a 2005 ruling by an Oklahoma state court. The case involves a lawsuit by two Oklahoma residents, Stephen and Beverly Grider, who allege that Compaq Computer Corp. sold them a defective computer and didn't repair or replace it, as called for in the company's warranty.

The Griders sued in June 2003 and their lawyers asked the state court to certify a class of 1.7 million people who had bought similar computers. Their request was granted in 2005.
Compaq was purchased by Hewlett-Packard in 2002.

Class action suits allow numerous plaintiffs with similar claims to proceed in a single trial. Businesses usually oppose such designations given the greater damage awards that can result.
Compaq argued in court papers filed with the Supreme Court that a virtually identical lawsuit was brought in Texas in 2000. In that case, the Texas Supreme Court refused to certify a class action, ruling that Texas law shouldn't apply to out-of-state members of the class.

Nevertheless, Oklahoma's highest court not only certified the class, but said that Texas law should be applied in the case because, among other things, Compaq was headquartered in Texas.

Compaq's lawyers said that under the full faith and credit clause of the Constitution, which requires states to honor each others' laws and court rulings, Oklahoma shouldn't be able to apply Texas law when Texas' highest court has reached the opposite conclusion.

HP scandal: where are they now?

San Jose Mercury News

The HP spying scandal ruined careers, decimated family businesses and sullied previously sterling reputations. Here is a brief update on the key players:

* Tom Perkins, partner emeritus, Kleiner Perkins Caufield & Byers, former HP board member. Perkins blew the whistle on HP's investigation after learning his phone records were obtained by investigators. At press time, he was in Europe on his massive yacht, the Maltese Falcon, with a crew from "60 Minutes." His autobiography, "Valley Boy," is due from Penguin Nov. 5.

* Patricia Dunn, former chair. Hewlett-Packard Dunn initiated two internal investigations into boardroom leaks while chair of HP. She resigned from the board in September 2006. The California attorney general dropped felony charges against her in March. Dunn is spending time with her family, trying to stay healthy and fight cancer. She has also given talks on the lecture circuit.

* George "Jay" Keyworth, former HP board member. Keyworth resigned from HP's board in September 2006, acknowledging that he was the source of an article on CNET about a management retreat to discuss strategy. He is chairman of the Progress & Freedom Foundation, a Washington think tank, and on the board of General Atomics.

* Larry Sonsini, chair, Wilson Sonsini Goodrich & Rosati. As HP's outside counsel, Sonsini interviewed board members about leaks to the press in 2005 for then-CEO Carly Fiorina, and in 2006 his firm was asked by HP to investigate its use of pretexting during the subsequent boardroom leak probes. At the end of last year, he was replaced as HP's outside counsel, though his company still does legal work for HP.

* Ann Baskins, former general counsel HP. After a 24-year-career with HP, Baskins resigned as the company's head attorney on the morning of a congressional hearing in Washington, D.C. Married to a Wilson Sonsini lawyer, Tom DeFilipps, Baskins is not currently practicing as an attorney.

* Kevin Hunsaker, former ethics chief HP. Hunsaker, a lawyer, was the person who ended up running the investigation to uncover the boardroom leak. In June, Santa Clara County Superior Court Judge Ray E. Cunningham dismissed pretexting charges against Hunsaker after he completed 96 hours of community service during which he worked for the Fair Housing Law Project, a community legal aid service.

* Ron DeLia, Security Outsourcing Solutions of Boston; Matthew DePante, Action Research Group of Melbourne, Fla.; Bryan Wagner, a data broker in Littleton, Colorado. Charges against outside investigators Delia and DePante were dismissed after they performed community service. Wagner pleaded guilty to two felonies; sentencing is set for Oct. 3. DeLia's company is still operating, but the scandal has had a "devastating" personal and financial impact, said his lawyer, John Williams. The DePantes were both "financially and emotionally devastated," said attorney Susy Ribero-Ayala. "They shut down their business. It took a toll on their family."

50.47 $ !!!

Reporters, Family Sue HP in Spy Scheme

FT, AP : "HP's boardroom-spying scandal was back in the spotlight on Wednesday after a group of reporters and their families sued the computer maker over its controversial internal investigation into the identity of a boardroom mole.

Five separate lawsuits claiming "illegal and reprehensible conduct" were filed in San Francisco Superior Court against Palo Alto-based Hewlett-Packard, former Chairwoman Patricia Dunn and Kevin Hunsaker, the company's former ethics chief.

The lawsuits allege invasion of privacy, intentional infliction of emotional distress, and engaging in unfair business practices. They seek unspecified damages and a jury trial. "We're filing the lawsuits to make sure this never happens again," said Kevin Boyle, one of the attorneys for the plaintiffs.

HP said it apologized to each of the people affected by the spying probe and made a "substantial" settlement offer. "Unfortunately, rather than respond to the offer, they have decided to sue," HP said in a statement. "HP is disappointed by their decision and will defend itself."

The lawsuits come nearly a year after HP disclosed in a Sept. 2006 regulatory filing that investigators used a tactic called "pretexting" -- or pretending to be someone else to obtain private information from companies -- to spy on board members, journalists and their families.
The next month, California's attorney general charged Dunn, Hunsaker and three private investigators with four felony counts each -- including fraud, identity theft and conspiracy.

Those charges were later dropped, with a Santa Clara County judge calling their conduct a "betrayal of trust and honor" that nonetheless did not rise to the level of criminal activity.
Separately, HP agreed to pay $14.5 million in a civil settlement with the state, most of which was slated to fund investigations into privacy rights and intellectual property violations.

The U.S. attorney's office in San Francisco brought charges against one of the investigators, Bryan Wagner, who pleaded guilty to two felony counts of identity theft and conspiracy in the case. His sentencing is set for October in San Jose federal court.

Judge Drops Remaining Charges in HP Case

SAN FRANCISCO (AP) -

A Santa Clara County judge dismissed the remaining charges against three defendants in the Hewlett-Packard Co. boardroom spying case Thursday, calling their conduct a "betrayal of trust and honor" that nonetheless did not rise to the level of criminal activity.

Superior Court Judge Ray E. Cunningham followed through on a deal reached in March to drop reduced fraud charges if the defendants -- former HP ethics chief Kevin Hunsaker and private investigators Ronald DeLia and Matthew DePante -- each completed 96 hours of community service. The move ended the state's role in a case that ensnared some of the top officials at the venerable HP, now the world's largest technology company by revenue. A federal investigation is continuing.

Hunsaker and the two private investigators, who had pleaded no contest to misdemeanor charges of fraudulent wire communications, were accused of illegally obtaining the phone logs of directors, journalists and HP employees in an effort to identify board members leaking confidential information to the media. In tossing the misdemeanor charges, Cunningham praised the California attorney general's office for its investigation of HP's ill-fated effort to root out the source of boardroom leaks, but said the defendants' actions were not criminal at the time they occurred.

"At worst, the conduct in this case amounted to boardroom politics and a betrayal of trust and honor, rather than criminal activity," the judge said, according to a transcript of his remarks supplied by the attorney general's office. The judge said the investigation nevertheless "achieved much public good," including helping spur the passage of state and federal legislation specifically outlawing "pretexting," or pretending to be someone else to secretly secure copies of their private telephone logs. In addition, the state reached a $14.5 million civil settlement with HP in December, the bulk of which is slated to fund state and local investigations into privacy rights and intellectual property violations.

Ralph Sivilla, a deputy attorney general, said after the hearing that state prosecutors still think criminal conduct occurred, but that the office was satisfied with this resolution of the criminal case because of the "chilling effect" the HP investigation had on similar sleuthing tactics. Thomas Nolan, one of Kevin Hunsaker's defense lawyers, said the defendants paid a "pretty heavy price" in being prosecuted and that "the people at HP, everyone, felt they were doing the right thing and basically didn't believe they were committing any crime.

"The judge's comments and the ultimate dismissal of the charges backed up that belief, Nolan said after the hearing. Five people, including former HP Chairwoman Patricia Dunn, were originally charged in October with four felony counts in the HP probe: use of false or fraudulent pretenses to obtain confidential information from a public utility; unauthorized access to computer data; identity theft; and conspiracy to commit each of those crimes. Charges against Dunn, who was accused of orchestrating the spying effort, were dropped in March. State charges against private investigator Bryan Wagner were also dropped, but only after he pleaded guilty to two federal felony counts of identity theft and conspiracy in the case. Wagner's sentencing is set for October in San Jose federal court, and the federal probe is ongoing.

HP CEO, CFO, EVP Exercise Options...

In a form filed with the SEC, Mark V. Hurd reported he exercised 100 000 options for $21.73 apiece and then sold 150,000 shares on the same day for $45.25 to $45.86 a piece.

Catherine A. Lesjak, CFO, reported she exercised 11,755 options for $15.75 apiece and then sold a total of 23,490 shares on Thursday and Friday for $45.34 to $45.70 a piece.

Executive VP Shane V. Robinson (strategy and technology officer) exercised options on 125,000 shares for $15.75 to $22.02 a piece. He sold the shares the same day for $45.26 and $45.38 each.

Open market purchases and sales of insiders must be reported within two business days of the transaction.

HP estimates FY07 revenue will be $100 billion

"While we still have considerable work ahead of us, I am confident we can continue to execute with discipline and deliver strong financial returns."

Mark Hurd