HP 2014 Annual Report Download - page 167

HEWLETT-PACKARD COMPANY AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Continued)
Note 15: Litigation and Contingencies (Continued)
•Karlbom, et al. v. Electronic Data Systems Corporation is a class action filed on March 16, 2009 in
California Superior Court alleging facts similar to the Cunningham and Steavens matters. The
parties are currently engaged in discovery.
•Blake, et al. v. Hewlett-Packard Company was filed as a purported nationwide collective action on
February 17, 2011 in the United States District Court for the Southern District of Texas claiming
that a class of information technology support personnel had been misclassified as exempt
employees under the Fair Labor Standards Act. On February 10, 2012, the plaintiffs filed a
motion requesting that the court conditionally certify the case as a collective action. On July 11,
2013, the court denied the plaintiffs’ motion for conditional certification in its entirety. Following
the denial of class certification, the case has continued as an individual action on behalf of the
named plaintiff and one other employee. The parties have reached an agreement to resolve this
matter with the two plaintiffs agreeing to settle their individual claims and release any other
claims they may have against HP. The court approved the settlement on August 19, 2014, and
dismissed the case with prejudice on September 9, 2014.
•Benedict v. Hewlett-Packard Company is a purported collective action filed on January 10, 2013 in
the United States District Court for the Northern District of California alleging that certain
technical support employees allegedly involved in installing, maintaining and/or supporting
computer software and/or hardware for HP were misclassified as exempt employees under the
Fair Labor Standards Act. The plaintiff has also alleged that HP violated California law by,
among other things, allegedly improperly classifying these employees as exempt. On February 13,
2014, the court granted the plaintiff’s motion for conditional class certification. The parties are
engaged in discovery.
State of South Carolina Department of Social Services Contract Dispute. In October 2012, the State
of South Carolina Department of Social Services and related government agencies (‘‘SCDSS’’) filed a
proceeding before South Carolina’s Chief Procurement Officer (‘‘CPO’’) against Hewlett-Packard
State & Local Enterprise Services, Inc., a subsidiary of HP (‘‘HPSLES’’). The dispute arises from a
contract between SCDSS and HPSLES for the design, implementation and maintenance of a Child
Support Enforcement and a Family Court Case Management System (the ‘‘CFS System’’). SCDSS seeks
aggregate damages of approximately $275 million, a declaration that HPSLES is in material breach of
the contract and, therefore, that termination of the contract for cause by SCDSS would be appropriate,
and a declaration that HPSLES is required to perform certain additional disputed work that expands
the scope of the original contract. In November 2012, HPSLES filed responsive pleadings asserting
defenses and seeking payment of past-due invoices totaling more than $12 million. On July 10, 2013,
SCDSS terminated the contract with HPSLES for cause, and, in its termination notice, SCDSS asserted
that HPSLES is responsible for all future federal penalties until the CFS System achieves federal
certification, sought an immediate order requiring HPSLES to transfer to SCDSS all work completed
and in progress, and indicated that it intends to seek suspension and debarment of HPSLES from
contracting with the State of South Carolina. HPSLES is disputing the termination as improper and
defective. In addition, on August 9, 2013, HPSLES filed its own affirmative claim within the proceeding
alleging that SCDSS materially breached the contract by its improper termination and that SCDSS was
a primary and material cause of the project delays. On September 4, 2013, the CPO denied SCDSS’s
motion for injunctive relief seeking immediate transfer of the system assets to SCDSS and indicated
that the CPO would address that request following a hearing on the merits. The hearing on the merits
before the CPO concluded on February 25, 2014 and closing briefs were submitted on July 18, 2014.
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