A lawsuit against HP over alleged violations of an internal ethics code relating to ex-CEO Mark Hurd’s alleged misbehaviour has been dismissed once again after shareholders failed to make their case.
The shareholder plaintiffs alleged securities fraud for the second time, claiming that back in 2006 when HP adopted a “Standards of Business Conduct” (SBC) code, it had been misrepresenting itself.
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According to the plaintiffs' complaint in the latest case, HP had not let on that Hurd was already allegedly violating the code by submitting false expense reports and allegedly making unwanted advances on one-time Playboy model Jodie Fisher, who had been working as a consultant for HP.
District Judge Jon Tigar, sitting in California, threw the suit out once back in August 2013 and said this week that the revised version of the suit didn't address his problems with the case.
He dismissed the case with prejudice this time, which means the shareholders can’t try again.
Hurd left the company in a hurry in August 2010 when the allegations of harassment emerged, including an explosive letter from Fisher which went into full and frank detail. An internal HP investigation cleared Hurd of the sexual harassment allegations, but did find that he had submitted inaccurate expense reports.
The shareholders originally told the court that HP’s share price was "inflated" during the time of Hurd’s alleged misbehaviour and that the company’s statements had made it sound like the chief exec was following its code of conduct. But Judge Tigar said HP’s statements about the code were too vague to justify any liability for them and the new complaint did nothing to convince him otherwise.
“The Court previously dismissed the First Amended Complaint because Plaintiff had failed adequately to allege that the SBC contained material misrepresentations, or that Hurd’s concealment of his conduct constituted a fraudulent omission,” Tigar said in his ruling. “The Second Amended Complaint does not cure these problems.
“The bottom line is that the SBC is an ethical code of the kind the Court previously found not to be actionable, and the complaint does not identify any representation by HP or Hurd that amounts to a warranty of ethical compliance with the SBC. Accordingly, Plaintiff has not stated a securities law violation.”
Tigar also said that because he had given the shareholders a second chance to make their case and they’d failed to find enough to back up their claims, any further court action would be “futile”. ®