Judge Rejects Settlement Proposal in HP's Autonomy Suit
Judge Rejects Settlement Proposal in HP's Autonomy Suit

    
        
            
                    
                        
			            
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                        | Judge Rejects Settlement Proposal in HP’s Autonomy Suit
                    
                
            
            
            
            
        
        
            
                
                    
                        
                    
                
                
                    
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                                    Judge Rejects Settlement Proposal in HP’s Autonomy Suit
                                    
                                        
				By Quentin Hardy			
                                        August 25, 2014 7:02 pm
                                        August 25, 2014 7:02 pm
                                    
                                
                                
                                    
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                                            Hewlett-Packard is being sued in conjunction with its $8.8 billion write down for its acquisition of Autonomy, a data analysis company.Credit                                                Thierry Roge/Reuters
                                            
                                        
                                    
                                    
                                    SAN FRANCISCO — The long fight over Hewlett-Packard’s $11.1 billion purchase of Autonomy got a new wrinkle on Monday, which might spell more legal pressure on Autonomy executives.
                                    On Monday, Judge Charles R. Breyer of United States District Court in San Francisco said that HP and the lawyers suing the company must file a revised proposed settlement agreement. The new deal, he said, should steer
                                        clear of payments to the lawyers representing HP shareholders, who are suing HP, and focus on how the giant technology company can improve its behavior.
                                    Down the road, the two sides still seem free to go after Autonomy.
                                    HP is being sued in conjunction with its $8.8 billion write-down for its acquisition of Autonomy, a data analysis company. HP has urged authorities in the United States and Britain to investigate Autonomy for criminal
                                        fraud, and has said it will seek damages. Autonomy officials have denied any wrongdoing.
                                    The shareholder lawsuit against HP included charges of poor corporate governance in buying Autonomy. In June, lawyers in the case agreed to drop all claims against HP officials, while HP said it would join the lawyers
                                        in going after Autonomy executives, including its former chief executive, Michael Lynch.
                                    The deal, which would have paid the shareholders’ lawyers an $18 million retainer and up to $48 million in fees, while offering nothing in the way of money or answers to the shareholders themselves, was criticized
                                        by many.
                                    The judge said on Monday that he would not approve those fees. He held out the possibility, however, that HP could hire the lawyers, including lawyers from Cotchett, Pitre & McCarthy, which is leading the case against
                                        HP.
                                    
                                    Joseph W. Cotchett, a lead lawyer in the suit, put a positive face on the decision. “The court wanted the settlement in two parts,” he said. “One is the governance. The other is future lawsuits.”
                                    The judge “was absolutely right,” Mr. Cotchett said. “The court wants a settlement in two parts.”
                                    The new governance, he said, would include “tremendous” features, like a 560-point checklist before a merger or acquisition could take place.
                                    Mr. Cotchett said his investigations had concluded that Autonomy had misbehaved, and left little doubt he wanted to go after a big judgment, which he said could benefit the current shareholders going after HP.
                                    “It’s clear to me that a major fraud was committed against HP,” Mr. Cotchett said. “Lynch ran off with $800 million. The owners of Autonomy ran off with billions. There are other people involved.”
                                        How the current shareholders he is representing would fit into an HP suit against Mr. Lynch or others was not clear, but he said HP would be free to hire his firm once this case was concluded.
                                    In a statement, HP said it would continue action against Autonomy as well. “We will continue to work to have the derivative actions settled or dismissed and to hold the former executives of Autonomy as well as
                                        Autonomy’s auditor, Deloitte UK, responsible for the wrongdoing that occurred,” the statement said.
                                    Representatives of Mr. Lynch, reached in London, said they had not seen the decision and could not comment.
                                    
                                
                                
                            
                            
                        
                    
                    
                    
                
            
        
        
        
    
    
    
    


