HP 2010 Annual Report Download - page 152

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 18: Litigation and Contingencies (Continued)
settle the lawsuit on behalf of the proposed class, which agreement is subject to approval of the court
before it becomes final. Under the terms of the proposed settlement, eligible class members will each
have the right to obtain e-credits not to exceed $5 million in the aggregate for use in purchasing
printers or printer supplies through HP’s website. In addition, class counsel and the class representative
will be paid attorneys’ fees and expenses and stipends in an amount that is yet to be approved by the
court. On October 13, 2010, the court granted preliminary approval of the proposed settlement. The
court has scheduled a fairness hearing for January 31, 2011 to determine whether to grant final
approval of the proposed settlement.
Fair Labor Standards Act Litigation. HP is involved in several lawsuits in which the plaintiffs are
seeking unpaid overtime compensation and other damages based on allegations that various employees
of EDS or HP have been misclassified as exempt employees under the Fair Labor Standards Act and/or
in violation of the California Labor Code or other state laws. Those matters include the following:
•Cunningham and Cunningham, et al. v. Electronic Data Systems Corporation is a purported
collective action filed on May 10, 2006 in the U.S. District Court for the Southern District of
New York claiming that current and former EDS employees involved in installing and/or
maintaining computer software and hardware were misclassified as exempt employees. Another
purported collective action, Steavens, et al. v. Electronic Data Systems Corporation, which was filed
on October 23, 2007, is also now pending in the same court alleging similar facts. The Steavens
case has been consolidated for pretrial purposes with the Cunningham case. On December 14,
2010, the court granted conditional certification of the class in the consolidated Cunningham and
Steavens matter.
•Heffelfinger, et al. v. Electronic Data Systems Corporation is a class action filed in November 2006
in California Superior Court claiming that certain EDS information technology workers in
California were misclassified as exempt employees. The case was subsequently transferred to the
U.S. District Court for the Central District of California, which, on January 7, 2008, certified a
class of information technology workers in California. On June 6, 2008, the court granted the
defendant’s motion for summary judgment. The plaintiffs subsequently filed an appeal with the
U.S. Court of Appeals for the Ninth Circuit, which is pending. Two other purported class actions
originally filed in California Superior Court, Karlbom, et al. v. Electronic Data Systems
Corporation, which was filed on March 16, 2009, and George, et al. v. Electronic Data Systems
Corporation, which was filed on April 2, 2009, allege similar facts. The Karlbom case is pending
in San Diego County Superior Court but has been temporarily stayed based on the pending
motions in the Steavens consolidated matter. The George case is pending in the U.S. District
Court for the Southern District of New York and has been consolidated for pretrial purposes
with the Cunningham and Steavens cases.
India Directorate of Revenue Intelligence Proceedings. As described below, Hewlett-Packard India
Sales Private Ltd (‘‘HPI’’), a subsidiary of HP, and certain current and former HP employees have
received show cause notices from the India Directorate of Revenue Intelligence (the ‘‘DRI’’) alleging
underpayment of certain customs duties:
• On April 30 and May 10, 2010, the DRI issued show cause notices to HPI, seven current HP
employees and one former HP employee alleging that HP has underpaid customs duties while
importing products and spare parts into India and seeking to recover an aggregate of
approximately $370 million, plus penalties. On June 2, 2010, the DRI issued an additional show
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