Shareholder Lawsuit Against HP and Mark Hurd Is Dismissed
Computing giant Hewlett-Packard and its former CEO, Mark Hurd, have secured the dismissal of a lawsuit brought by shareholders over the circumstances that led him to resign from that company three years ago this month.
A U.S. District Court judge has dismissed a suit brought by a pension fund that owns HP shares in the wake of the ethics mess that caused Hurd to leave the top job at that company in August 2010.
Hurd resigned as HP’s CEO and chairman after a former marketing consultant, Jodie Fisher, claimed in a letter to HP’s board of directors that Hurd had sexually harassed her. In a later letter, Fisher claimed that there were certain unspecified “inaccuracies” that cast some doubt on her original claims. Hurd later joined Oracle as president.
An internal investigation by HP exonerated Hurd of the sexual harassment claims, but found irregularities in expense reports that it said “had the effect of concealing Mark’s personal relationship with the contractor.”
The investigation found that those expense reports, seeking reimbursements for a total of $1,093.25 , showed that Hurd had failed to accurately document who he was with at a series of dinners from 2007 to 2009.
The suit, brought by the New York Cement & Concrete Workers District Council Pension Fund and other HP shareholders, claimed that Hurd’s activities inflated HP’s share price during the time in question. The plaintiffs also argued that HP had represented that Hurd was in compliance with a corporate ethics policy put in place in 2006, and failed to disclose violations.
U.S. District Judge Jon Tigar ruled that the actions, whatever they may have been, didn’t rise to the level of being material enough to have an effect on HP’s share price. “Plaintiff alleges that the stock price dropped because Hurd resigned, and that Hurd resigned because his unethical conduct was revealed to the Board after he concealed it from the public. That is sufficient, provided Hurd concealed his conduct in a manner that involved making material misstatements or omissions to the public. Because here the omissions were not material, Plaintiff’s claim must fail, not because Plaintiff fails adequately to allege loss causation, but because of the failure to establish materiality,” the judge wrote in his opinion, which you can read in full, below.
Tigar further ruled that related statements by HP were “so general that a reasonable investor would not depend on [them] as a guarantee that [HP] would never take a step that might adversely affect its reputation.”