HP Pretexting Lawsuit Is Dismissed

The company is still recovering from last year's leak-investigation scandal, but it finally received some good news

By Aaron Ricadela

Hewlett-Packard scored a key victory in a lawsuit that resurfaced allegations the computer maker lied to obtain phone records of an employee.

A federal judge in the U.S. District Court in the Eastern District of Texas on Jan. 25 ordered the dismissal of a lawsuit brought by Karl Kamb, a former executive, who said HP (HPQ) investigators posed as him to obtain his phone records, a practice known as pretexting.

The allegations, filed on Jan. 19, rekindled concerns—however briefly—over HP's use of spying tactics. These tactics landed the company in hot water last year with California Attorney General Bill Lockyer, forced the departure of HP Chairwoman Patricia Dunn, and were the subject of congressional hearings. Kamb's accusation came in the context of a larger legal dispute with his former employer over accusations he stole trade secrets while he was still employed at the company.

HP is suing Kamb, saying he laid the foundations of a flat-panel TV company, byd:sign, while still working for Hewlett-Packard. HP fired Kamb in 2005. Kamb countersued, saying the company falsely accused him of pocketing funds earmarked for a former Dell (DELL) executive in Japan, in exchange for competitive intelligence about Dell's pending entry into the printer market.

It's likely Kamb was looking to capitalize on the image problems suffered by HP in the wake of the pretexting scandal, says Rob Enderle, principal at market research company the Enderle Group. "When you see a company that's in trouble of exposure, you'll often see someone try to extort money, or get them off his back," Enderle says. "HP was vulnerable to pretexting."

'Patently Untrue'

In a statement issued Wednesday, Hewlett-Packard called Kamb's suit "wholly without merit," and said his claim that HP pretexted him was "to the best of our knowledge, patently untrue." Efforts to reach Kamb's attorney were unsuccessful. A salesman who answered the phone at the Las Vegas office of byd:sign said Kamb was traveling out of town and unreachable.