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HP Pays $14.5M to Make Civil Charges Disappear

Posted by CowboyNeal on Fri Dec 08, 2006 06:13 AM
from the throwing-money-at-the-problem dept.
HP Government The Courts The Almighty Buck News
theodp writes "The California Attorney General's Office negotiated a $14.5 million payoff from HP as part of a settlement that calls for the state not to pursue civil charges related to the now infamous spy scandal against the company and its current or former officers or directors (felony criminal charges against five individuals still remain). HP also agreed to maintain the watchdog positions of chief ethics officer and chief privacy officer for five years."
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HP Pays $14.5M to Make Civil Charges Disappear 50 Comments More /

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  • Corruption (Score:4, Funny)

    by heneganj (786136) on Friday December 08 2006, @06:16AM (#17160316) Homepage
    And I thought corruption only occurred on HP CD burners.
    • That's the thing about California - they have the best government money can buy.

      • Settlement is common in civil cases! (Score:5, Interesting)

        by denebian devil (944045) on Friday December 08 2006, @08:48AM (#17161228)
        The summary is very misleading in the way that it describes HP as paying money to make the case disappear. This wasn't a criminal case where they were buying off a judge to rule favorably. This was a civil matter. and 99 times out of 100, civil matters are about one thing: money. They can either pay money in the settlement, pay money as a result of a judgment from a trial, be dismissed through a motion, or be found not guilty from a trial. Settlement is COMMON, because it allows both sides to save costs from not having to pay for a costly trial. And trials are MUCH more costly than most of what happens pre-trial.

        This isn't some back-alley dealing, it's one legitimate and often used method of resolving civil disputes quickly and cost-effectively. And on top of that, it means that HP can't appeal the decision because they agreed to it. If the case had gone to trial and verdict and resulted in a decision HP didn't like, they could have appealed and kept the case going for years without resolution, while at the same time increasing both their costs and the costs of the state in trying the case.
        • Other than saying "not guilty," which are words that only apply to a criminal case, you are spot-on. I am really irritated by the article summary here. HP didn't negotiate a "payoff," it didn't "make ... charges disappear," and so forth. It settled a lawsuit, and it settled for a substantial sum of money. There's nothing illicit about this at all.

        • The summary is very misleading in the way that it describes HP as paying money to make the case disappear. This wasn't a criminal case where they were buying off a judge to rule favorably. This was a civil matter. and 99 times out of 100, civil matters are about one thing: money. They can either pay money in the settlement, pay money as a result of a judgment from a trial, be dismissed through a motion, or be found not guilty from a trial. Settlement is COMMON, because it allows both sides to save costs from not having to pay for a costly trial. And trials are MUCH more costly than most of what happens pre-trial.

          And the upshot for the State of California is that that a) they don't have to waste money pursuing the suit and b) they now have some cash to help pay off their staggering deficit. Normally I'd say put HP's feet to the fire, but I think here the Governator is being pragmatic and actually doing something to help his state in the long run.

          • Normally I'd say put HP's feet to the fire, but I think here the Governator is being pragmatic and actually doing something to help his state in the long run.


            You mean Attorney-General Bill Lockyer, the independently-elected statewide Constitutional officer responsible for the settlement, who isn't even from the same party as the "Governator", right?

        • This isn't some back-alley dealing,

          Settling without an admission of guilt is back-alley dealing, no matter how common it might be in civil litigation. (And I'm not fond of nolo contendere in criminal law, either.)

          For the public good and the purposes of justice, guilt is as important as imposition of a penalty. The harm done has to be, in old theological terms, publicly "repented". The attachment of a designation of guilt makes it unarguably clear that the perpetrator understands it's got some reforming t

            • Ah, you're talking in a PR sense. I meant in a legal sense, the only sense that matters to corporate overlords.

              A more precise formulation is "HP did nothing illegal, just ask 'em." And if legislative developments continue as they seem to be shaping up, future instances of this behavior will continue to be legal, just ask 'em.

            • Ever heard of the old saying "An Eye for an Eye"?

              It was an idea put forth during the time of waring families, and it was intended to see to it that if you tore out the eye of the son of your enemy, your own son would have his eye torn out, not to punish your son, but to make sure there was no advantage to be had by violating the social order.

              HP engaged in covert espionage. Who knows what they found out?

              There shouldn't be any money paid to the government here.

              HP should have their entire communications struc

        • Re: (Score:3, Insightful)

          by timeOday (582209)
          This was a civil matter. and 99 times out of 100, civil matters are about one thing: money.
          And I guess the responsible executives at HP will be personally responsible and pay from their own pockets, right? I mean, they make millions of dollars because they're practically gods walking the earth, so on the rare occasion they do fall short of perfection, I suppose they'd be the first to bear the consequence of their own personal choices.
          • I'd doubt there's anything in the settlement that precludes the shareholders themselves from taking action against the responsible parties, so I don't think they're quite off the hook yet. I very much agree with your underlying point that the corporate veil enables people to avoid bearing responsibility for their actions in a great many cases though.

  • Heh (Score:4, Funny)

    by lisaparratt (752068) on Friday December 08 2006, @06:38AM (#17160388)
    Ah, the wonderful Land Of The Fee.

    When do they remodel the blindfold on the statue of justice so it's slipped and she can wink and look suggestively at her back pocket?

    • Re:Heh (Score:5, Funny)

      by Harmonious Botch (921977) * on Friday December 08 2006, @06:46AM (#17160434) Homepage Journal
      Back pocket? You're assuming that she still has her pants on?

    • Re:Heh (Score:4, Insightful)

      by Dhalka226 (559740) on Friday December 08 2006, @07:13AM (#17160572)

      I'm not really sure what the big deal here is. I'm all for routing out corruption and all that jazz, but this is an issue of civil law. They settled the case. This happens dozens, maybe hundreds of times per day in civil cases; 90% of civil cases never reach a verdict.

      The fact that the article submitter chose to spin it as a "payoff" doesn't magically make it a bribe. Call me when they pay $14.5 million and get the criminal charges dropped and then I'll hoot and holler about corruption and greed in America with you. Until then, this is a total non-issue for me. The settlement may be a little bit on the low end, but then again I'm not too terribly disappointed that they didn't waste taxpayer money to pursue both a civil and criminal trial over basically the same charges/complaints.

      • I'm all for routing out corruption and all that jazz, but this is an issue of civil law.

        They're in high dudgeon and don't want to be confused with facts.

      • Even for the civil charges, that amount is a drop in the bucket for HP.
    • She can look at her own back pocket? I haven't looked at that statue in awhile, but I don't remember it's neck being a GIANT SLINKY!
      • Hmm, I can eaily turn my head to look at my back pocket, but then I'm European.

        Did they update her so she's as big as the average American?
    • "Land Of The Fee"
      Isn't it nice to know that justice is affordable, only $14.5 million

  • A nice comparison... (Score:3, Insightful)

    by rallycellie (1031068) on Friday December 08 2006, @06:46AM (#17160438) Journal
    Here in holland, where bikes are stolen as a kind of national sport it would be like: Steal 1 bicycle. get caught, go straight to jail. Steal a hundred bicycles, get caught, return 5 of them, say you are sorry, and that it was too easy and get a 'responsible citizens award' because you cooperated with the law.
    • The more I see how corporations in America act, the more I think of our old buddy Joseph Stalin.

      "A single death is a tragedy, a million deaths is a statistic."

      A lot of corporate activity in America seems to be run with that as a guiding principle. Do something on a big enough scale, and it stops being bad, and simply becomes... unethical, but not actually illegal? And if it is done by a committee, no single person actually makes a decision, so it isn't even unethical.

      Of course, this also goes back to the si

  • Buying injustice... (Score:5, Interesting)

    by Justen (517232) on Friday December 08 2006, @06:52AM (#17160470) Homepage Journal
    The case did only involve a civil complaint, so it probably would have ultimately ended up with a financial settlement and some sort of compromised "corrective" measures like we see here, but I really think this is an injustice for the people who had their identities and privacy compromised, and for HP shareholders in the long run. The evidence that senior executives at HP, potentially including Mark Hurd, either ignored or were ignorant of the ongoing, "probably illegal" actions [washingtonpost.com] is pretty well documented, and pretty overwhelming.

    Patricia Dunn took pretty much all the heat for this, and that's unfortunate for her and HP. It seems to me like she should have had a better grip on what was happening at HP, but it doesn't seem to me like she should have been the only one with that responsibility. A full, objective, and independent investigation should have been the first think on everybody's list. Instead, this case is now settled, Congress has moved on, and Dunn will be focussed on proving her innocence.

    The unfortunate thing for Mark Hurd is that his level of responsibility and accountability wasn't determined in this process. The second HP hits a performance blip, this scandal will be the first thing on every shareholder's mind when they're thinking of who to blame. When that day comes, I wouldn't want to be in Mark Hurd's shoes.

    --
    justen
    justen.blogspot.com [blogspot.com]

    • Re:Buying injustice... (Score:5, Insightful)

      by wannabgeek (323414) on Friday December 08 2006, @06:58AM (#17160492)
      I really think this is an injustice for the people who had their identities and privacy compromised, and for HP shareholders in the long run.

      Well, the shareholders do not seem to mind. In fact, the market is relieved that their company got away so lightly.

    • Re:Buying injustice... (Score:4, Informative)

      by Otter (3800) on Friday December 08 2006, @08:09AM (#17160844) Journal
      ...but I really think this is an injustice for the people who had their identities and privacy compromised...

      AFAICT, they can certainly still bring civil action, shareholders already are suing, the SEC is investigating and criminal charges are still on the table. Basically, HP paid a fine to avoid the risk of a larger fine, as is completely routine.

      I'd wonder where "theodp" and CowboyNeal are getting their bizarre spin on this from if I didn't know that most of the people here still don't understand the difference between criminal and civil law, despite spending every day ranting about legal proceedings.

    • Re: (Score:3, Insightful)

      by NDPTAL85 (260093)
      Mark Hurd is the guy who turned HP around. After their many many under-performing choices for CEO pre Hurd they know how hard it is to get a competent guy in the top job. They're not going to be getting rid of Hurd anytime soon.
    • This was largely an internal HP thing; half of the people spied on are on the HP board of directors. They're not going to want to mire the corporate entity in litigation. As far as reforming HP, shifting the balance of power to the people who were spied on is far more effective than any sentence that could be carried out on humans.

      And the criminal cases are unaffected. That's what matters in the end; this was a case of criminal behavior by individuals in control of a company, not corporate policy.

    • The case did only involve a civil complaint, so it probably would have ultimately ended up with a financial settlement and some sort of compromised "corrective" measures like we see here, but I really think this is an injustice for the people who had their identities and privacy compromised, and for HP shareholders in the long run. The evidence that senior executives at HP, potentially including Mark Hurd, either ignored or were ignorant of the ongoing, "probably illegal" actions is pretty well documented,

  • Chief Ethics Officer? In a company like HP? That's going to be a boring job.

    On the plus side, I guess you can have "CEO" on your business cards.
  • It's not just HP that do this kind of thing, it's what Governments (your servants) are up to all over the world every day.
  • Thats ridiculous - the shareholders must pay for the directors' irresponsilibity?

    And since when was it possible to settle criminal cases! ridiculous

    nuke california
    • Yes, the shareholders elected the Board. So ultimately you pay for your bad choice (assuming you're a shareholder). Now, if you (as a shareholder) want to go after the individual Board members, have at it.
    • <blockquote>Thats ridiculous - the shareholders must pay for the directors' irresponsilibity?</blockquote>

      Yes, the shareholders pay for their directors' irresponsibility. This makes the shareholders responsible for the choice of directors. (Of course, the shareholders are free to sue the directors for violating their obligations to the shareholders.)

      <blockquote>And since when was it possible to settle criminal cases!</blockquote>

      This wasn't a criminal case; the criminal cases against

  • Revised definition (Score:4, Insightful)

    by BCW2 (168187) on Friday December 08 2006, @08:55AM (#17161308) Journal
    When did impersonating a law enforcement officer get redefined as "pretexting". The former is a criminal offense and the latter is revisionist bullshit. There should be criminal charges for every person involved in this idiotic farce.
  • The appointment of a Chief Ethics Officer means you'll need to complete online training every year to ensure that you understand the ethical dimensions of your job.

    Here's an example verification, which I found by hacking one of the servers:

    Suppose a supplier offers to bribe you with a pair of World Series tickets to increase your purchases from his company. Should you:

    a) Say yes! Baseball is America's game, and give-and-take is good business.

    b) Refuse the offer and report the incident to top management

    c) A
  • "HP also agreed to maintain the watchdog positions of chief ethics officer and chief privacy officer for five years."

    Especially because their previous one (and also their general counsel) were involved in the pre-texting scandal ...
  • The California Attorney General's Office negotiated a $14.5 million payoff from HP as part of a settlement that calls for the state not to pursue civil charges...

    I guess everyone has their price. Perhaps someone can calculate what percentage of HP's net worth is $14.5 million so others could use that same percentage to settle their civil suits with CA ...

    I'm guessing it would be *very* affordable. :-)

  • meaningless settlement. (Score:3, Funny)

    by swschrad (312009) on Friday December 08 2006, @05:30PM (#17168090) Homepage Journal
    HP burns 11.5 million dollars on shredder oil per year. this settlement means nothing to HP, which remains the poster boy for no ethics in business for spying like Putin.

    • Re:A more fashionable solution! (Score:5, Informative)

      by Anonymous Coward on Friday December 08 2006, @06:32AM (#17160372)
      Nowadays, when breaking the law, a company-supplied penalty is paid and case closed.

      "Normal" people go to jail.....


      Sigh, could you not even bother to read the summary properly? What part of "felony criminal charges against five individuals still remain" do you find difficult to grasp?

        • ...any more than they were before; they were never criminally charged, they were civilly charged, which meant, if they lost, they would pay a fine. By settling, they paid a fine and were subject to specific conduct controls.

          HP surrendered, they didn't get away.
    • Such are the consequences of giving human rights to corporations.
      • Such are the consequences of giving human rights to corporations.

        No, it's not. It's a consequence of the corporate veil [wikipedia.org] and the general unwillingness to pierce it. The veil is considered sacred because it empowers the members of a corporation to take risky, productive steps in the face of possible backlash -- be it legal or financial.

        The veil is further justifiable by realizing that corporations encourage sociopathic groupthink, by their very nature... and so their members are (to some degree) excused for doing so. I say "to some degree" because as the felony charges in this case demonstrate, members are not excused for the serious stuff.

        Another way to look at it is to state the issue in your terms: the veil is the way that a corporation's members pool their human right to free association. The veil essentially announces to the world "If you wish to associate with any of our number, then you do agree to do so by treating us as collective and unseverable". The law gives force to this agreement by standardization, and this results in efficiency gains all around.

        Of course it also results in sociopathic behavior... but that is a cost and it usually compares favorably to the yield.

    • Re:A more fashionable solution! (Score:5, Informative)

      by Christianson (1036710) on Friday December 08 2006, @06:42AM (#17160414)
      Nowadays, when breaking the law, a company-supplied penalty is paid and case closed.

      "Normal" people go to jail.....

      People still might. The AG isn't waiving rights to press criminal charges against indiviuals, and in fact is pressing ahead with at least five cases, including against Dunn.

      This actually doesn't seem like a terrible thing to me. A civil case against HP would be an enormous burden on the state of California, drag on for years, and by the virtue of the sheer size of HP, be unlikely to result in anything more than a wrist-slap. This settlement gets HP to admit to wrongdoing, puts some measures in place (pathetic though they may be) to try and keep them from doing it again, and not only saves the state money, but gives them a warchest to go after the real villains in this case: the executives who felt that the shield of incorporation gave them the right to condone and engage in unethical behaviour.

      • Re:A more fashionable solution! (Score:5, Insightful)

        by Luscious868 (679143) on Friday December 08 2006, @07:55AM (#17160768)
        This settlement gets HP to admit to wrongdoing, puts some measures in place (pathetic though they may be) to try and keep them from doing it again, and not only saves the state money, but gives them a warchest to go after the real villains in this case: the executives who felt that the shield of incorporation gave them the right to condone and engage in unethical behavior.

        No, they engaged in illegal behavior. Not everything that is unethical is illegal. See our current political system and the campaign finance system that supports it. Tell me what is ethical about the fact that elected Senators and Congressman don't even bother to read most of the bills they vote on. They don't even write the bills anymore, their staffers do. You know, the same staffers who will eventually leave to take high paying jobs with lobbying firms after paying their dues writing bills that are friendly to the interest those lobbyist represent. Completely unethical, 100% legal.

        In fact, I wouldn't be at all surprised to see most of these five individuals get what amounts to a slap on the wrist after a large donation or two is made to the proper re-election campaign committees or PACs. Sure one of them will have the book thrown at them so it appears action is being taken. Probably the lowest person on the totem pole. Then, after the smoke clears from that conviction suddenly the state will find no compelling reason to drag these remaining cases out. The poor defendants will have been put through enough. A small fine and 6 months probation will suddenly be more than enough punishment. After all, their names will have already been drug through the mud. That punishment alone will have done more damage than anything they state could do. They will have learned their lessons. I can see it now. What a joke.

    • The problem is two-fold, its not just that corporations have so much money but also the courts really need money. The judicial system is very expensive to run, if they can save the costs of an enitre trial and just get a wad of cash from the corporations, they're going to try and get it. We can reduce the problem by funding the courts better.
    • "Normal" people go to jail.....

      Here's a hint. TFA refers to a civil case. Criminal cases are treated separately, sort of like winning a divorce case doesn't mean you get the kids; typically, you have to slug it all over again in a custody case.

      Criminal law (also known as penal law) is the body of statutory and common law that deals with crime and the legal punishment of criminal offenses. There are four theories of criminal justice: punishment, deterrence, incapacitation, and rehabilitation. It is believe [wikipedia.org]
    • "Normal" people go to jail...../eM?

      Not in civil cases they don't.

      This was a civil case, and HP essentially settled. If the case had gone on and HP lost, all that would have happened is that they would have paid a slightly larger amount of money. This action also applies only to the State of California. It doesn't stop any other party from continuing/seeking a lawsuit over the matter.

    • Re:Bah and bah again. (Score:5, Informative)

      by east coast (590680) on Friday December 08 2006, @08:52AM (#17161268)
      How on earth can anyone actually feel free in a country where citizens are put behind bars for minor fraud, while businesses like HP (which are actually run by REAL people!!) can pay-off a judge while calling it 'being sanctioned'?

      It's called a CIVIL case. If you're not familiar with the American legal system you probably don't know how far off base you are. You can not be "put behind bars" in a civil case. This is a case to determine liability in terms of monetary damages. The criminal case will still happen and that's where people get jailed.

      Either you don't know what you're talking about or you're just a troll.
        • Indeed true, apart from the one guy who took the quick way out. But those people are the sacrificial lambs, sacrificed to convince people that the system still works just fine and that justice will indeed be meted out no matter how much money you have. It keeps people from flipping over cars and setting their own homes on fire in protest, which is fine but not something you want happening every other day.

          For every Martha Stewart and Enron exec you have a thousand faceless men who, despite having committed

    • The biggest question behind these damages is being missed by most people here - Q: How the hell did HP's damages get spun into an anti-piracy effort? And more importantly, who was doing the spinning?

      From the NYTimes article: vast bulk of H.P.'s statuatory damages are to "... finance the investigation of consumer privacy violations and of intellectual-property theft, *** including the copying of movies and music*** ..."

      So, why is this money not being spent to, say, combat consumer identity theft? Or to dissu

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