Michelle Quinn and Marc Lifsher
Dunn was cleared of all charges by Santa Clara County Superior Court Judge Ray Cunningham. He said Dunn and the other defendants could have cited as a defense that they were acting on the advice of lawyers in zealously pursuing boardroom leaks, including accessing phone records of reporters.
Cunningham also cited Dunn's health as another reason for dismissing charges against her, referring to her battle with ovarian cancer.
Defendants Kevin Hunsaker, HP's former ethics chief, and two private investigators, Ronald DeLia and Matthew Depante, each pleaded no contest to a single misdemeanor count of fraudulent wiretapping. But they will have their records cleared if they each serve 96 hours of community service.
"The only way it could have been resolved more favorably would have been an outright dismissal and an apology from the attorney general," said Jan Handzlik, a Los Angeles defense lawyer. "This prosecution was not designed to herald a new, get-tough approach to protecting digital privacy but rather to capitalize on the high-profile nature of the targets."
Peter Henning, a professor at Wayne State University's law school and a white-collar crime specialist, said the case seemed a stretch. "Getting there would have been difficult," he said.
But Tom Dresslar, a spokesman for former state attorney general Bill Lockyer, who brought the case last year, said prosecutors acted in good faith. "We had a team of prosecutors with over 70 years of experience who looked at this case and decided that the felony charges were appropriate," he said.
The office of Jerry Brown, Lockyer's replacement as attorney general, did say Hunsaker, DeLia and Depante potentially could face federal charges.
State officials previously dismissed a case against defendant Bryan Wagner after he pleaded guilty to federal charges.
The deal with the state ends a major chapter of the scandal that besmirched the reputation of one of Silicon Valley's iconic companies.
Private investigators trying to find out who was leaking board information to reporters obtained telephone records via "pretexting," in which they posed as reporters online to access their records.
Cunningham said "much public good" had resulted from the publicity about the case, including federal and state laws making pretexting a criminal offense and US$12 million (HK$93.6 million) in fines paid by the Palo Alto- based computer and printer maker.
In the wake of the scandal, Dunn resigned in disgrace as did several high- level executives.
In a statement, Dunn said: "I have always had faith that the truth would win out and justice would be served."