HP Wins Dismissal of Suit Over Hurd Expense Allegations

Hewlett-Packard Co. (HPQ) won dismissal of a lawsuit claiming it failed to disclose that former Chief Executive Officer Mark Hurd violated company standards with false expense reports and unwanted sexual advances.

U.S. District Judge Jon S. Tigar in San Francisco dismissed a similar shareholder suit last year while giving the plaintiffs a chance to refile. According to their revised complaint, Hewlett-Packard made significant misrepresentations when it adopted its Standards of Business Conduct without saying Hurd was violating them. Hurd was also named in the suit.

Tigar said in his ruling yesterday that the second complaint, like the first, failed to adequately allege that the code of conduct contained “material misrepresentations, or that Hurd’s concealment of his conduct constituted a fraudulent omission.”

Hurd, now co-president of software maker Oracle Corp. (ORCL), resigned from Hewlett-Packard in August 2010 after an internal investigation by HP found that he violated company policy in trying to conceal a personal relationship with marketing contractor Jodie Fisher.

The shareholders argued that in an effort to rebuild public trust, the company updated the code in 2008, reacting to a 2006 scandal in which HP hired investigators posing as reporters and directors to obtain phone records in a bid to learn which board members leaked information to the media.

The document opened with a statement from Hurd urging employees to, among other things, report any misconduct, according to court filings. The suit claimed that in public statements, Hurd and other company officials suggested he had complied with the conduct code.

Hewlett-Packard spokesman Michael Thacker, and Deborah Hellinger, a spokeswoman for Oracle, declined to comment on the decision.

“We were hoping for a different result,” Ira Press, a lawyer for the shareholders, said in an e-mailed statement. “We are currently evaluating possible next steps.”

The case is Cement and Concrete Workers District Council Pension Fund v. Hewlett Packard Company and Mark Hurd, 12-cv-04115, U.S. District Court for the Northern District of California (San Francisco).

To contact the reporter on this story: Joel Rosenblatt in San Francisco at jrosenblatt@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Fred Strasser, David E. Rovella

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