Northern California Record

Sunday, December 15, 2019

Plaintiffs never agreed not to sue in Microchip Technology benefits case, court rules


By Charmaine Little | Apr 2, 2019

U.S. District Judge Haywood S. Gilliam, Jr. | Wikipedia

OAKLAND – A group of plaintiffs were granted motions to dismiss counterclaims against them in litigation with Microchip Technology Inc. over allegations the company violated the Employee Retirement Income Security Act (ERISA).

The U.S. District Court for the Northern District of California granted the motion on March 12. U.S. District Judge Haywood S. Gilliam Jr. ruled on the case.

Plaintiffs Peter Schuman and William Coplin filed a lawsuit in 2017 against Microchip, which is a merging partner with their employer, Atmel Corp. They claimed the Atmel Corp. U.S. Severance Guarantee Benefit Program didn’t honor the terms of the employee severance agreement. Atmel and Microchip filed a counterclaim against them and the plaintiffs then field the current motion to dismiss.

“Because defendants are statutorily limited to pursuing only equitable relief and restitution requires traceability, if plaintiffs dissipate the funds they received under the Second Atmel Plan, defendants will be left without remedy,” wrote Gilliam. "Thus, defendants seek an injunction to forbid plaintiffs from dissipating the benefits they received from the Second Atmel Plan so that the funds remain traceable in the event that defendants are entitled to an equitable remedy."

Gilliam wrote there was a "fundamental flaw" in this theory. The defendants would have to prove that there was a remedial wrong, but the court pointed out that the agreement didn’t provide a promise that the plaintiffs would never sue.

“Because the second Atmel Plan does not bar plaintiffs from filing suit, they have not violated its terms by doing so. Thus, defendants have not satisfied the first element ... because there is no wrong to remedy,” Gilliam wrote.

The ruling states that the agreement the plaintiffs signed simply is a release from lawsuits, not a vow that plaintiffs would bring future lawsuits. 

“Had defendants wanted to bar plaintiffs from bringing suit, they could have added such a term to the agreement,” Gilliam wrote.

In the agreement, the ruling states Atmel promised its workers that they would receive severance benefits if certain conditions were met in the event they were fired under the Atmel Plan. Microchip then obtained Atmel, and when some of the workers said they were entitled to benefits packages under the plan, Microchip countered that and said the plan expired. In turn, it provided employees the chance to get a different plan of benefits if they were fired, known in the ruling as the Second Atmel Plan. Anyone who agreed had to also agree to dismiss any claims against Microchip and its related companies, including Atmel, the ruling states.

The plaintiffs signed the new agreement and release and they were later fired. While they were paid based on the second agreement, they still sued over allegations the defendants violated ERISA. The defendants then filed a counterclaim for equitable relief asking for an injunction that would stop the plaintiffs from suing and attempting to get attorneys’ fees and other costs.

A case management conference is scheduled for April 2 at 2 p.m. in Oakland.

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