Canopy Civil War Ends

The Canopy Group and its former executives settle their differences out of court.

What could have been an ugly public brawl over the firing of three Canopy executives has come to a quiet, out-of-court settlement early this week.

The fight between The Canopy Group, parent company to the SCO Group Inc., and former CEO Ralph Yarro, Chief Financial Officer Darcy Mott and Corporate Counsel Brent Christensen began when the three were ousted in a surprise move days before last Christmas.

Canopy was founded by Ray Noorda, the former CEO of Novell Inc., to manage his family fortune and bring jobs to the greater Salt Lake City area. Yarro was a graphic artist who worked for Noorda and after gaining his trust rose to head of Canopy in February 1996. Mott served as Canopys vice president, treasurer and CFO since May 1999. Before joining Canopy, Mott worked as vice president and treasurer for Novell.

After being fired, the trio of executives sued Canopy and others, including Val Noorda Kriedel, Noordas daughter; Canopy investment adviser Terry Peterson; and William Mustard. Mustard, managing director for Smooth Engine, a senior executive consulting firm, had replaced Yarro as CEO.

The former Canopy executives asked for at least $100 million and a return to their positions, alleging that they had been illegally fired. Canopy and the Noorda Family Trust countersued them on the grounds that they illegally paid themselves $20 million.

Both sides claimed that the other took advantage of Ray Noorda, 80, and his wife Lewena, 81, who are said to be in failing health. Ray Noorda has also had memory problems for years now. One question, which kept revolving around the cases, was which groups might have unduly influenced the elderly Noordas into making unwise decisions.

The cases were due to appear in court this week when the two sides came to a settlement.

Kimball Thomson, a spokesman for Yarro, confirmed that there was a settlement, but for now, "we have no official comment" on the arrangement.

"There are vulnerabilities on both sides, on the Noordas side due to health issues leading to questions about fiduciary duties, and its obvious what the vulnerabilities were on the other side, and its embarrassing all around," wrote Pamela Jones, paralegal and editor of the legal news site Groklaw.

Expanding on the vulnerabilities, Jones said, "There were allegations of outright fraud. The trio was accused of misappropriating some $20 million in Canopy assets, by taking advantage of an elderly couple who trusted Mr. Yarro and signed whatever he put in front of them."

Jones was not surprised to see the case come to a settlement.

"When a case is mainly about money, its much, much easier to settle. Both sides throw their best shot, and if it looks like neither has a clear path to victory, or more typically if one side sees it is likely to lose, a settlement is worked out."


Check out eWEEK.coms for the latest open-source news, reviews and analysis.