HP to Mark Hurd: You’re Fired and You’re Sued
Well, Hewlett-Packard apparently regards Mark Hurd more highly than we thought. HP fired Mark Hurd, its CEO, for filing false expense reports. (Here and here.) This decision resulted from a sexual harassment claim against Hurd, although HP ’s investigation turned up no evidence of harassment.
The value of the severance package given to Hurd when he was fired was $34.6, all of which was paid to Hurd immediately. Hurd signed a severance agreement promising not to disclose HP’s trade secrets and confidential information. Hurd recently started work for an HP competitor, Oracle, as its co-president and a member of the board. Less than a day later, HP sued Hurd and Oracle. (Here and here.)
I’m not alone in thinking there are problems with HP’s lawsuit. Hurd’s severance agreement didn’t contain a non-compete provision, probably because courts in California (where suit was filed) give non-competes short shrift. In its lawsuit, HP doesn’t allege that Hurd has disclosed trade secrets to Oracle. Rather, HP contends that because of the positions Hurd has accepted at Oracle, it’s inevitable that Hurd will violate his trade secret promise. California courts haven’t accepted the so-called “inevitable disclosure doctrine.” Thus, it’s likely that HP’s lawsuit will be thrown out of court.
Some observers think HP filed the lawsuit to let Hurd know the company will be watching him closely. A strongly worded letter would have served the same purpose without putting HP at the center of another spectacle. Three other instructive points jump out of this continuing high tech saga. First, don’t fire someone for cause (filing false expense reports) and then pay him $35 million. Second, if you must pay severance to settle a dispute with the fired employee, pay it over a period of time so that you retain fairly significant leverage if the employee begins doing something you don’t like. Third, don’t ever file suit out of spite.
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About Chris Parker
Chris Parker's practice focuses on the representation and counseling of companies in matters pertaining to the workplace and the protection of their intellectual property and trade secrets. In addition to serving as an advocate for clients, Mr. Parker is also trained as a mediator and frequently serves as a third-party neutral.
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Jimmy Daniel provides counseling to businesses of all sizes related to the employment relationship. He assists in the drafting of employment agreements, policies, and handbooks, as well as provides guidance related to compliance with federal, state, and local legislation such as the Fair Labor Standards Act and the Family and Medical Leave Act.
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About Larry Bridgesmith
While serving in an Of Counsel relationship with the firm, Mr. Bridgesmith also serves as the Executive Director at the Institute for Conflict Resolution at Lipscomb University and as an officer and principal in Strategic Resolutions Group, LLC. In these roles, Mr. Bridgesmith brings over 30 years of legal experience in dispute resolution and innovative workplace strategies to clients, students and business entities alike.
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More evidence of how damn good you are John. Thanks, E.
Thanks, E. Maybe HP will hire me.
John
I am amazed that HP has handled it so poorly. Inagree with you. Reading HP’s filing it looks like it was written by recent law grads or unskilled corporate lawyers. Perhaps they outsource that too like they do everything else these days..
Dizz,
As you may have seen today, HP and Hurd settled the lawsuit filed by HP. It appears that both gave up something. It also appears that Oracle probably had more to do with the settlement than HP or Hurd.
http://www.nytimes.com/2010/09/21/technology/21hewlett.html?_r=1&th&emc=th
Thanks for your comment.
John