HP/COMPAQ: Lawyers in HP suit agree to shield sources from mgmt

Walter Hewlett's lawyers can keep Hewlett Packard Co.'s upper management from learning the identities of a "widespread" number of HP and Compaq Computer Corp. employees who have leaked information criticizing the HP/Compaq merger, an agreement between both sides of the lawsuit said today.

But Hewlett's lawyers must divulge the identities to HP's in-house counsel, the agreement said.

The agreement is the latest step in the suit Hewlett filed against HP last month in which he accuses the company of buying votes to win shareholder approval for its merger with Compaq. Hewlett, son of one of HP's co-founders and a board member, charged that HP coerced Deutsche Bank AG to vote in favor of the merger by making it co-arranger of a multibillion-dollar line of credit.

In a letter, Hewlett's lawyers told Delaware Chancery Court Judge William B. Chandler III that they feared those managers who disclosed information might lose their jobs if HP management found out who they were.

"Plaintiffs have received unsolicited information apparently from HP [and Compaq] employees tending to support plaintiffs' allegations that integration was not proceeding smoothly at the time management was issuing statements to the contrary," according to a letter to the judge from Hewlett attorney Lawrence C. Ashby, an attorney for Hewlett at law firm Ashby & Geddes in Wilmington, Del. "These employees, however, either remain anonymous to plaintiffs or have expressed deeply felt and genuine concern with regard to their employment situation."

Ashby wrote that he wanted to shield the identities of these employees, who he says came forward in large numbers, because it "is the right thing to do." He also said identifying these individuals would have a "chilling effect" on Hewlett's ability to gather information needed to present his case in the legal battle with HP.

HP lawyer Peter Walsh rejected Ashby's claim, saying that protection in these cases only concerned trade secrets. To restrict HP's own lawyers from looking at the company's own documents would "subvert the purpose" of the law and "hamstrings HP in its defense," he said.

However, lawyers for both parties reached an agreement that documents that could identify the employees would be released to HP's lawyers, but not to the company's upper management.

Under the terms of that agreement, both sides will be able to classify documents as "highly confidential."Only the attorneys, HP in-house counsel and people such as court transcription services will be able to see those documents. HP's upper management isn't among those listed as having access.

Anyone who violates this agreement will be held in contempt of court and punished accordingly, the agreement filed this afternoon said.

HP spokeswoman Judy Radlinsky said the company doesn't comment on ongoing legal matters. However, a source inside the company said Hewlett's lawyers "caved" in dropping their objection to allowing HP's in-house lawyers to have access to the documents.

Hewlett spokesman Todd Glass denied that lawyers for their side gave in. Details of the agreement hadn't been released at press time, and neither Glass nor HP would comment further.

In other developments, documents filed in the Chancery Court show that HP has subpoenaed Hewlett's public relations firm, New York-based Joele Frank, Wilkinson, Brimmer, Katcher LLC, to give a deposition and to turn over all its documents relating to Hewlett and his fight against the merger.

Glass confirmed that the company had received the request and referred any further questions back to the documents themselves.

In addition, HP's lawyers have asked strategic management company Booz Allen & Hamilton Inc. in McLean, Va., to testify on its behalf next Thursday, during the pretrial discovery phase.

Meanwhile, Hewlett's attorneys have told the court that they also will seek information from Northern Trust Corp. Chicago-based Northern Trust and Frankfurt-based Deutsche Bank were mentioned in the voice mail left by HP CEO and Chairwoman Carly Fiorina to HP Chief Financial Officer Robert Wayman and later leaked to the press. In the voice mail, Fiorina mentions that the company would have to take extraordinary action to make sure that both Northern Trust and Deutsche Bank would vote in favor of the Compaq/HP merger.

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