Unreported / Non-Citable
Background
This ERISA class action was brought by former U.S.-based Atmel Corporation employees who were employed when the Atmel-Microchip merger closed on April 4, 2016, and whom Microchip Technology Incorporated terminated without cause by March 19, 2017. The court had certified the class and denied a motion to decertify, while leaving open whether common issues would continue to predominate. Over about a decade the parties litigated motions to dismiss, class certification, summary judgment, an appeal in which the Ninth Circuit set a new multi-factor test for enforcing releases, and, on remand, decertification and discovery motions.
The parties settled on the eve of trial under a memorandum of understanding. The court preliminarily approved the settlement class on August 3, 2026, and held a final fairness hearing on October 15, 2026. The class has 220 members. Counsel had reached 213 of them, including representatives for three deceased members, and 198 had returned the required tax forms; seven remained unreached. No one objected and one member opted out, a person who signed a separate release in 2016 and, by agreement, is not entitled to payment. According to counsel, the five members who never signed releases receive all unpaid severance plus nearly a decade of prejudgment interest, while members who signed releases receive about 20 percent less than their best possible trial outcome. Total payments exceed $9 million, averaging about $43,000 and ranging from roughly $5,881 to $136,628.
The Court’s Holding
The court granted final approval under Rule 23(e)(2), finding the settlement fair, reasonable, and adequate. Applying the heightened scrutiny for collusion required by Roes and Briseño, it again examined the three warning signs: disproportionate fees, clear-sailing arrangements, and reverter clauses. The settlement is non-reversionary, most of it goes to class members, and notwithstanding any clear-sailing provision the court independently reviewed the fee request. It also found that notice was the best practicable under Rule 23(c)(2)(B), that class representatives and counsel adequately represented the class, and that the deal was negotiated at arm's length.
On relief, the court found it adequate given the cost, risk, and delay of continued litigation, including the unsettled enforceability of the releases and the possibility of revisiting class certification. Larger recoveries for members who signed releases were equitable because those releases could have barred any further recovery. The lack of objections and a single opt-out supported approval.
The unopposed fee motion was granted in full. Under ERISA's fee-shifting provision, 29 U.S.C. § 1132(g)(1), and the hybrid lodestar approach, the court found reasonable the 3,823 hours worked by three firms and hourly rates of $640 to $1,465, producing a lodestar above $3.9 million. It approved $3.5 million in fees and expenses, which include $13,897 in costs, and applied no multiplier. The opinion states the award will not reduce class members' recovery. The court also approved $10,000 service awards for Peter Schuman and William Coplin, citing years of depositions and discovery and noting each award is under a quarter of the average class recovery.
Class Counsel must file a Post-Distribution Accounting within 21 days after settlement checks become stale or funds are fully paid out, addressing recurring class member concerns and administration issues in a chart posted on the settlement website. The court may hold a hearing afterward. The order directs implementation under the memorandum of understanding and does not itself describe entry of a separate judgment or dismissal.
Key Takeaways
- The court approved a non-reversionary settlement of more than $9 million for 220 former Atmel employees, with fees and service awards approved separately from class relief.
- Counsel represented that every class member nets more than the severance originally owed once interest is counted, and the court relied on that representation.
- The $3.5 million award for fees and expenses was below a lodestar exceeding $3.9 million, and the court applied no multiplier.
- Members who signed releases received somewhat less than a full recovery, which the court treated as equitable because those releases carried real enforceability risk.
- Seven class members remain unreached, and the accounting requirement keeps the distribution under court supervision.
Why It Matters
This is a district court order, not binding precedent, and it rests on case-specific findings. It shows how a Northern District of California judge applies post-Briseño scrutiny to a settlement whose fees are paid apart from class relief, and how risk from release enforceability can justify differing recoveries among class members.
Practitioners may note the court's emphasis on non-reversion, independent fee analysis, and post-distribution reporting. The order refers only to 'any' clear-sailing provision, so it does not establish whether one existed.