Hewlett-Packard Co. (2011)
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Hewlett-Packard Co. (2011) Securities Settlement
The lawsuit was settled for $57 million in cash on March 31, 2014. The following is a summary of the proceedings in this lawsuit: ‘HP is a leading global provider of products, technologies, software, solutions and services to individual consumers, small and medium-sized businesses and large enterprises, including customers in the government, health and education sectors. HP offerings include personal computers, including desktops and laptop notebooks (collectively, PCs), and printers. In July 2010, HP acquired Palm, Inc. (Palm), together with Palm mobile operating system, webOS. On September 13, 2011, this Action was commenced and by order dated December 19, 2011, the Court appointed the Institutional Investor Group as Lead Plaintiffs and approved the Institutional Investor Group selection of Labaton Sucharow LLP and Motley Rice LLC as Co-Lead Counsel. On February 10, 2012, the Institutional Investor Group filed the First Amended Class Action Complaint for Violations of the Federal Securities Laws (the FAC) asserting claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the Exchange Act). On April 11, 2012, Defendants filed motions seeking the dismissal of the FAC. On August 29, 2012, following briefing and oral argument on Defendants motions, Judge Guilford issued an order dismissing the FAC with leave to replead. On October 19, 2012, the Institutional Investor Group filed the Second Amended Class Action Complaint for Violations of the Federal Securities Laws (the Complaint). Among other things, Lead Plaintiffs asserted that following the July 2010 announcement of HP acquisition of Palm, HP and its representatives made a series of public statements regarding the development of new devices using the webOS operating system. Lead Plaintiffs alleged that HP represented that within two years, the Company would introduce millions of webOS-enabled PCs and printers, on a massive scale. Lead Plaintiffs also alleged that, contrary to HP public statements regarding webOS for PCs and printers, the Company was not in a position to introduce webOS to PCs or printers for sale or within the time frame represented by Defendants. Lead Plaintiffs further alleged that the truth regarding webOS was not disclosed to investors until August 18, 2011, when the Company announced several pieces of news, including that it would discontinue operations for webOS devices, including smartphones and tablets. Lead Plaintiffs contend that, upon these disclosures, artificial inflation created by Defendants false and misleading public statements regarding webOS development was removed from the trading price of HP publicly traded common stock, damaging Lead Plaintiffs and members of the Settlement Class. Defendants again moved to dismiss and, on May 8, 2013, following extensive briefing and oral argument, Judge Guilford granted Defendants motion in part and denied it in part. Specifically, Judge Guilford ruled that Lead Plaintiffs had adequately pled violations of Sections 10(b) and 20(a) of the Exchange Act in connection with certain statements made by Defendants Apotheker and Bradley in June and July 2011. Following Judge Guilford order of May 8, 2013, Defendants filed a motion for reconsideration, seeking the dismissal of those allegations that the Court had found sufficient to state a claim against Defendants. Following briefing, on June 17, 2013, Judge Guilford denied Defendants motion for reconsideration. On July 17, 2013, Defendants filed and served answers to the Complaint. Thereafter, the Settling Parties engaged in discovery, including the service of document requests by Lead Plaintiffs. During the course of discovery, Co-Lead Counsel retained and consulted with experts in damages, software development, operating system development, and hardware production. As discovery progressed, Defendants and Lead Plaintiffs discussed the utility of engaging a neutral mediator for the purpose of exploring a resolution of the Action. To that end, the Settling Parties agreed to engage the Honorable Layn R. Phillips (ret.) (Judge Phillips), a former United States District Judge with extensive experience in mediating complex securities class actions. In connection with the mediation, Defendants produced over 314,000 pages of documents. At the request of Judge Phillips, in November 2013, Lead Plaintiffs and Defendants exchanged lengthy and detailed mediation briefs, each citing extensively to the documents that were produced by Defendants. On December 3, 2013, Lead Plaintiffs and Defendants, or their representatives, along with representatives of HP insurers, met for a day-long mediation at the Newport Beach, California offices of Judge Phillips. The Settling Parties were unable to reach an agreement as to the terms of a proposed settlement at that mediation. However, between December 4, 2013 and January 15, 2014, the Settling Parties continued to engage in extensive and protracted settlement discussions facilitated by Judge Phillips. On January 15, 2014, the Settling Parties agreed in principle to the Settlement which was thereafter memorialized in the Settlement Agreement.’