HP wants probe of article about its embarrassing probes

June 29, 2007, 8:22 PM UTC
Fortune

On June 18 lawyers for Hewlett Packard (HPQ) asked a federal judge in Tyler, Texas, to hold a hearing to investigate who leaked an e-mail to Fortune reporter Nicholas Varchaver. A portion of the e-mail, which HP says was protected by a confidentiality order, was quoted in Varchaver’s recent article about the charges and countercharges in a $100 million suit HP filed against former HP vice president Karl Kamb, Jr. (HP has not asked that the reporter be questioned.)

In the last two days, in what may or may not be a related development, Kamb’s two main law firms have sought permission to withdraw from the case. They have each cited Kamb’s nonpayment of bills, and one also mentions a “breakdown of communication.”

The Fortune article, entitled “A Pretext for Revenge,” came out on May 31 (in the issue dated June 11) and is available here. HP’s letter in response to the article is here.

HP sued Kamb and six associates in November 2005, accusing them of misappropriating HP money and trade secrets. The company said they’d tried to launch a flat-screen TV company at the same time Kamb was working on a flat-screen TV project at HP. In response, Kamb has maintained that he told HP about his work for the other company — a startup called byd:sign of Japan (pronounced “by design”) — and that HP also knew what he was doing with the money in question: spying on Dell (DELL) at HP’s behest. Documents made public in the suit suggest that HP did, indeed, somehow obtain detailed information about Dell’s confidential plans to enter the printer business in early 2003. Kamb also alleges that when HP began to suspect him of wrongdoing in the summer of 2005 that its investigators tried to get his private phone records through pretexting-the unsavory practice in which an investigator pretends to be the phone customer himself. Varchaver argues that HP’s much better known pretexting scandal — the one in which HP pretexted directors and journalists in a ham-fisted attempt to plug a board press leak-may not have been as aberrational as HP maintained when the episode came to light in September 2006. (HP denies trying to get Kamb’s records through pretexting.)

In his 5,300-word story about the case, Varchaver quotes from a January 21, 2004 e-mail Kamb sent to a then-HP employee, David Colf, which tends to support his claim that he told HP something about his moonlighting. In it, according to the article, Kamb wrote: “My good friend Katsumi Iizuka (he was founder of Dell Japan) is the bydsign company, in Tokyo. I know him very well … He has provided endless CI [i.e., competitive intelligence] for me regarding Dell, and it’s been a very covert op. I have provided him with much support and advice on his project.”

HP contends that the e-mail, which was unearthed during the discovery process, was covered by a confidentiality order. “No one associated with HP provided the document . . . to Mr. Varchaver,” the motion states. It asks that the court hold a hearing to determine who did, and then to consider holding the transgressor in contempt.

Varchaver declines comment on who showed him the e-mail. His article states that it is based on “interviews with 20 lawyers or participants in Kamb’s saga,” including both Colf and Kamb.

Attached to HP’s motion was the e-mail correspondence between an HP attorney and two defense lawyers, including Kamb’s. David Alexander of McDermott Will & Emery, who represents a different defendant in the case, told the HP attorney that he didn’t know who had given the e-mail to Varchaver, and that whatever knowledge his client might have was protected by the attorney client privilege. He also parried, “Maybe you should have one of H-P’s gumshoes figure out who gave it to Virchaver [sic] . . . just don’t use any ‘pretexting’ to do so. Have a nice weekend.'”

An attorney for Kamb and certain other co-defendants, Will Ellerman of Jackson Walker in Dallas, told the HP lawyer that he didn’t know who turned it over and that “my clients’ substantive position on this is that they did not provide the document . . . nor did they direct anyone to provide the document to anyone at Fortune.” Ellerman also posed, in turn, a question to Hine: “Why did HP fail to include the document in question in its production, despite its obvious relevance?”

Though the HP attorney did not respond at the time, an HP spokesperson says in an email for this article that HP didn’t possess a copy of the email for two reasons. “First,” he writes, “when the defendants in this lawsuit were terminated from HP they attempted to erase data from the hard drives of their computers and, unfortunately, succeeded to a large extent.” (Kamb disputes this claim.) Second, the HP spokesman continues, since the lawsuit began almost two years after the e-mail was generated, any copies that might have existed on other HP computers “had been deleted in the ordinary course of business.”

As for why HP filed the motion, the spokesperson writes that every attorney has “an affirmative ethical obligation to ensure that all parties comply with the Court’s orders” and that HP was merely fulfilling that duty.

On June 27, Ellerman and his firm, Dallas-based Jackson Walker, filed a request to withdraw from the case, citing Kamb’s failure to pay fees already owed, and the firm’s facing a new round of expensive depositions in July. Then, yesterday, Kamb’s other law firm, Las Vegas’s Hale Lane Peek Dennison and Howard, moved to withdraw on the same grounds, while also citing a “breakdown in communication.” Only Kamb’s local Tyler, Texas counsel, has not asked to be relieved.

U.S. District Judge Michael Schneider has not yet ruled on any of the motions.