The botched acquisition of Autonomy Corp., keeps coming back to haunt Hewlett-Packard Co.. Three years and a leadership change after plunking down $11.7 billion for the British analytics provider, HP has hit another legal stumbling block as a U.S. District Judge on Friday rejected a settlement that would have released company executives from culpability. Judge Charles Breyer had previously struck down a similar deal in August on the grounds that it diminished the rights of investors to take legal action against the vendor.

When HP originally revealed the acquisition as part of an effort to grow software revenues in August of 2011, the deal immediately received harsh criticism from pundits and even competitors who argued that it was overpriced, a view that many insiders shared but apparently not the board of directors. The real problems started a year later when it became clear that the company not only paid more than it should have but also received considerably less than it anticipated in return.

Autonomy had reported significantly greater revenue than it actually generated, a discrepancy that HP CEO Whitman blamed on “serious accounting improprieties” in a conference call with investors two years later. But shareholders were not satisfied to let the company shrug off responsibility, especially after HP took an 8.8 billion writedown to cover its losses.

Investors have since lost some of their interest in holding HP’s top-brass accountable for the botched purchase, but Judge Breyer has not been as forgiving. He said the terms of the settlement would have shielded the HP leadership from “all known claims” concerning not only the Autonomy deal but also a long list of past and future actions, effectively barring shareholders from suing the firm. That, he wrote, is unfair when a “whole universe” of potential lawsuits exist regarding the company’s business conduct.

Breyer also called into question the value of the governance reforms that investors would have received in return for releasing HP’s management from liability. The ruling leaves the company with only one more chance to hammer out an out-of-court settlement.

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