October 23, 2014

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Hewlett-Packard sued for phone records search

SAN JOSE, Calif. (AP) — A group of reporters and their family members whose private telephone records were secretly obtained as part of Hewlett-Packard Co.’s boardroom surveillance scheme sued the technology giant and two former executives Wednesday.

Five separate lawsuits claiming “illegal and reprehensible conduct” were filed in San Francisco Superior Court against Palo Alto-based Hewlett-Packard, former Chairwoman Patricia Dunn and Kevin Hunsaker, the company’s former ethics chief.

Both executives were ousted last year because of their roles in HP’s probe of unauthorized leaks to the media. The probe turned into a national scandal for the world’s No. 1 seller of PCs and led to criminal investigations and congressional hearings over investigators’ use of Social Security numbers and other personal information to trick phone companies into handing over confidential call logs.

The plaintiffs include three reporters from online media company CNET Networks Inc.’s News.com — Dawn Kawamoto, Stephen Shankland and Tom Krazit — and one reporter from The Associated Press — Rachel Konrad, who is Shankland’s wife. Other plaintiffs are Kawamoto’s husband, Jon Kawamoto, and Shankland’s parents, Thomas and Rebecca Shankland.

The lawsuits allege invasion of privacy, intentional infliction of emotional distress, and engaging in unfair business practices. They seek unspecified damages and a jury trial.

“We’re filing the lawsuits to make sure this never happens again,” said Kevin Boyle, one of the attorneys for the plaintiffs.

HP said it apologized to each of the people affected by the spying probe and made a “substantial” settlement offer.

“Unfortunately, rather than respond to the offer, they have decided to sue,” HP said in a statement. “HP is disappointed by their decision and will defend itself.”

Defense lawyers for Dunn and Hunsaker did not immediately return calls from the AP for comment.

The lawsuits come nearly a year after HP disclosed in a Sept. 2006 regulatory filing that investigators used a tactic called “pretexting” — or pretending to be someone else to obtain private information from companies — to spy on board members, journalists and their families.

The next month, California’s attorney general charged Dunn, Hunsaker and three private investigators with four felony counts each — including fraud, identity theft and conspiracy. Those charges were later dropped, with a Santa Clara County judge calling their conduct a “betrayal of trust and honor” that nonetheless did not rise to the level of criminal activity.

Separately, HP agreed to pay $14.5 million in a civil settlement with the state, most of which was slated to fund investigations into privacy rights and intellectual property violations.

The U.S. attorney’s office in San Francisco brought charges against one of the investigators, Bryan Wagner, who pleaded guilty to two felony counts of identity theft and conspiracy in the case. His sentencing is set for October in San Jose federal court.

Despite the uproar, the scandal has had little effect on HP’s stock price, which has jumped 27 percent since before the scandal was disclosed. The rise has created more than $20 billion in shareholder wealth. HP’s market value stood at nearly $121 billion Wednesday after shares fell $1.13 to close at $46.15.

Investors have been impressed with HP’s operational efficiency and strategy under Chief Executive Mark Hurd. The company has dramatically cut costs and last fall reclaimed the No. 1 ranking in worldwide PC sales from struggling Dell Inc.

HP is scheduled to report its third-quarter financial results after the market closes Thursday. Analysts are expecting another solid quarter of growth, with profit of 66 cents per share on $24.1 billion in revenues.