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Morgan Lewis Scores for Hewlett-Packard in Securities Case over webOS, Litigation Daily

Wednesday, September 5, 2012

Given that Hewlett-Packard Co.'s last general counsel and his recently-appointed successor both hailed from Morgan Lewis & Bockius, it's no surprise that the company throws plenty of business the firm's way. And given the firm's performance in shareholder litigation against HP so far this year, the relationship doesn't seem likely to go sour anytime soon.

The latest victory for Morgan Lewis came last week, when a team led by partner Marc Sonnenfeld persuaded a judge in Santa Ana, Calif., to dismiss a one-year-old securities class action over HP's allegedly failed efforts to develop an "ecosystem" of devices running on the proprietary operating system webOS. U.S. District Judge Andrew Guilford threw out the plaintiffs' amended complaint on Aug. 29, ruling that they hadn't established that HP purposefully duped investors about its commitment to developing and integrating its webOS products.

Guilford ruled that the statements at the heart of the complaint are protected because they contained meaningful cautionary language or constituted "inactionable puffery."

"Far form establishing defendants' lack of commitment to webOS, plaintiffs' allegations concerning defendants' imperfect efforts to bring the TouchPad to market show that defendants were committed to webOS, at least as late as July 1, 2011," Guilford wrote. "Plaintiffs' allegations of scienter, standing alone and viewed holistically, are insufficient to raise a strong inference that the defendants acted with the required state of mind."

Morgan Lewis's Sonnenfeld declined to comment. Co-lead plaintiffs counsel Mark Labaton of Motely Rice, not surprisingly, told us he disagreed with the ruling but promised not to give up. "We are glad we have the opportunity to amend and intend to do that," he said. Motley Rice secured lead counsel status in December along with lawyers from Labaton Sucharow, beating out a bid by Robbins Geller Rudman & Dowd. 

The defense lineup for the individual HP executives named in the complaint includes Munger Tolles & Olson (for former CEO Leo Apotheker); Wilson Sonsini Goodrich & Rosati (for CFO Catherine Lesjak); and Fenwick & West (for executive VP R. Todd Bradley).

In June, Sonnenfeld and his partners at Morgan Lewis were among a group of firms that helped HP and its board knock out a Delaware Chancery Court derivative suit over the company's decision to grant outgoing CEO Mark Hurd a $40 million severance package. And in March, the firm helped persuade a federal judge in San Jose to dismiss another shareholder derivative suit against HP and its directors, this time related to alleged bribery involving government contracts.