Sheehan & Associates, P.L.C.

Judge dismisses lawsuit against HP after second try

Michigan businesses may be interested in the story of one technology company's victory in court over a shareholder dispute. The shareholders' case was dismissed, even after the judge allowed them a second attempt at the lawsuit.

In 2006, after a scandal involving leaked information, Palo Alto-based Hewlett-Packard Co. revised its Standards of Business Conduct to reflect their renewed commitment to business ethics. Its chief executive officer, Mark Hurd, subsequently improved the company's performance. In August 2010, however, Hurd left the company after being accused of sexual harassment by one of the company's independent consultants. Though Hurd was not found to have done so after an internal investigation into the matter, the audit did find that he had turned in incorrect expense reports.

Last August, several plaintiffs sued HP, alleging that this unethical behavior by Hurd inflated the share price of HP's stock during that period. Because of the Standards of Business Conduct, the plaintiffs claimed that the company was warranting its compliance with those standards. The San Francisco court hearing the case dismissed it without prejudice on the grounds that HP's statements were not clear enough to make it liable. The plaintiffs filed a new complaint, but on June 25 the case was dismissed once again. While the complaint contained more information, it did not rise to the level of securities law infringement, according to the judge.

In a shareholder or corporate dispute like this, the law is often complicated. An attorney with experience in business litigation may be able to help explain the issues and determine the best cause of action to bring.

Source: Reuters, "HP wins dismissal of lawsuit linked to ex-CEO Hurd's ouster", Jonathan Stempel, June 26, 2014

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