Shareholders Retool Suit Over Former HP CEO's Conduct
SAN FRANCISCO — Plaintiffs lawyers have tried once more to make a case that Hewlett-Packard Co. misled investors by touting its code of corporate ethics while staying mum about the misbehavior of former CEO Mark Hurd.
Shareholders pounced on HP after Hurd stepped down in 2010 over allegations that he had falsified expense reports to hide his attempts to seduce a company contractor.
Last month, U.S. District Judge Jon Tigar dismissed the securities fraud suit, finding that the ethical code Hurd championed was not false or materially misleading, despite his transgressions, and giving plaintiffs lawyers 30 days to refine their case.
In their second amended complaint filed Monday in U.S. District Court for the Northern District of California, lawyers at Kirby McInerney and Glancy Binkow & Goldberg strove to make a stronger case for why HP's statements about its ethics affected information available to investors who purchased the company's stock between 2007 and 2010, the class they seek to represent in Retail Wholesale & Department Store Union Local 338 Retirement Fund v. Hewlett-Packard, 12-4115.
Hurd led HP, they assert, as the company was reeling from revelations of the legal department's use of pretexting to spy on journalists and members of its board.
"In the wake of the 2006 scandal, HP was keenly aware that HP executives' ethical compliance was highly material to investors in HP stock," Kirby McInerney partner Ira Press wrote in the second amended complaint.
Plaintiffs lawyers also highlighted the specifics of HP's ethical code that Hurd allegedly violated and how those indiscretions deceived investors, detailing allegations that Hurd made unwanted sexual advances toward a marketing consultant on numerous business trips and lied when he was confronted.
"The logical inference is that Hurd always knew these dealings and activities violated tenets set forth in the [Standards of Business Conduct] and jeopardized his continued tenure as CEO," Press wrote.
Press did not respond to a request for comment. HP lead counsel Marc Sonnenfeld of Morgan, Lewis & Bockius declined to comment.