Employment Litigator Says HP Faces ‘Uphill Battle’ in Its Lawsuit Against Former CEO

On Tuesday, Hewlett-Packard (HP) sued former Chief Executive Officer Mark Hurd following the announcement of Hurd’s appointment to its rival Oracle on Monday. According to employment litigator Paul Peralta of Moore & Van Allen (Charlotte, NC), the odds are stacked against HP, which must prove actual misappropriation or misuse to justify its claim.

“I would be very surprised if there is even a hearing on a motion for a preliminary injunction,” says Peralta. “Most likely HP and Mr. Hurd will reach a confidential agreement fairly quickly – possibly within the next 30 days.”

Peralta says there will be a lot of “shuffling of paper” and activity by the companies’ lawyers, but the odds of a hearing actually occurring are very low.

“While the lawsuit is not without merit, it’s an uphill battle for HP,” Peralta adds. “California law expressly forbids non-competes, so any kind of post-employment limitation of the type HP seeks would likely be rejected unless there is a strong showing that an exception applies, such as an actual misappropriation of trade secrets.

“It’s interesting to note that HP’s complaint avoids mentioning the principle of ‘inevitable disclosure,’ which holds that if a high-level employee takes a similar position with a direct competitor in a highly competitive industry, and that employee had access to confidential information or trade secrets, it would be inevitable that the employee would use or rely upon that information, no matter how the employment is structured. Due to its long-standing statutory prohibition on non-competes, inevitable disclosure has not been adopted in California.”

Peralta continued: “It strikes me that this lawsuit is a reaction of corporate outrage, and HP’s reaction might have been very different if – before Hurd and Oracle made their public announcement – discreet discussions had occurred to assure HP’s board that Hurd would take specific steps to ensure the confidentiality of HP’s information.”

Peralta leads the labor and employment litigation practice at Moore & Van Allen and is an adjunct professor at the University of Notre Dame Law School. He is available for interviews immediately. [09/10/2010]