Secret HP dossier on ex-CEO Hurd's antics to stay sealed

Supreme Court says shareholder can't see red-hot file


HP doesn't have to hand over a secret investigation's report on former chief executive Mark Hurd's sexual activities, or lack thereof, a US Supreme Court ruled.

Hurd left HP amid allegations of sexual harassment and breach of conduct codes, but still got a lovely golden handshake on the way out the door.

HP shareholder Ernesto Espinoza has been suing the PC maker to obtain all the documents relating to Hurd leaving the firm. Espinoza believes it might have been "a waste of the company's assets" to let him resign and get $30m in the process if there was any wrongdoing.

The whole saga of Hurd's departure kicked off with a letter from a lawyer in June 2010 which claimed that he had sexually harassed the brief's client Jodie Fisher, a former HP contractor and soft-porn actress, over a two-year period while Fisher worked for the firm.

The letter threatened legal action against Hurd and HP but also said it might be possible to reach a confidential settlement, which Hurd later agreed to. Hurd then handed the letter to HP's lawyers and the board decided to do their own probe into the claims.

The report Espinoza wanted to see is the one prepared by lawyers Covington & Burley after their internal investigation of the sexual harassment allegations.

After receiving the report from the law firm, the HP board announced that while the investigation didn't show Hurd had committed sexual harassment, he had breached HP's standards of business conduct.

According to the court's ruling:

In a conference call later that day, HP’s General Counsel, Michael J Holston, publicly reported further details of Hurd’s misconduct. Mr Holston stated that HP’s internal probe revealed a “systematic pattern” of “inaccurate” expense reports that were intended to conceal Hurd’s relationship with Fisher. The probe also revealed payments of HP funds “where there was not a legitimate business purpose".

HP didn't sack Hurd, however, instead he resigned and got a severance payment of over $30m. He now works at Oracle as president. Espinoza asked HP to see a number of documents related to the resignation and when the firm didn't voluntarily hand over the Covington report, he took the tech titan to court.

Now the Supreme Court has ruled that HP doesn't have to show the document, backing up a previous ruling by the Court of Chancery:

The Court of Chancery held that Espinoza had not demonstrated a need to inspect the Covington Report sufficient to overcome the attorney-client privilege and work product immunity protections. On that basis that court denied Espinoza relief. We affirm, but on the alternative ground that Espinoza has not shown that the Covington Report is essential to his stated purpose, which is to investigate possible corporate wrongdoing.

The Supreme Court has yet to rule on an appeal of a Chancery Court decision to unseal the letter that detailed the sexual harassment allegations. ®

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