Peter Schuman et al v. Microchip Technology Incorporated et al

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United States District Court
Northern District of California
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
PETER SCHUMAN, et al.,
Plaintiffs,
v.
MICROCHIP TECHNOLOGY
INCORPORATED, et al.,
Defendants.
Case No. 16-cv-05544-HSG
ORDER GRANTING MOTION FOR
PRELIMINARY APPROVAL
Re: Dkt. No. 251
Pending before the Court is Plaintiff’s motion for preliminary approval of class action
settlement. See Dkt. No. 251. The Court held a hearing on the motion. For the reasons detailed
below, the Court GRANTS the motion.
I. BACKGROUND
A. Factual Allegations and Procedural History
This is a long-running ERISA class action. The Court has previously detailed the lengthy
factual and procedural background in prior orders, and incorporates that background here. See,
e.g., Dkt. No. 241.
Plaintiffs Peter Schuman and William Coplin initially filed the case in September 2016.
Dkt. No. 1. Plaintiffs allege that Defendants (1) failed to pay severance benefits owed under the
Atmel Corporation U.S. Severance Guarantee Benefit Program (the “Atmel Plan” or “Plan”); and
(2) improperly solicited release of claims from class members in exchange for partial benefits
under the Plan. See Dkt. No. 29 (First Amended Complaint or “FAC”). Plaintiffs sought class
certification of two claims for relief: (1) equitable relief for breach of fiduciary duty under Section
502(a)(3), 29 U.S.C. § 1132(a)(3); and (2) improper denial of benefits under Section 502(a)(1)(B),
29 U.S.C. § 1132(a)(1)(B). See Dkt. No. 122 (“Class Cert. Order”) at 7. In February 2020, the
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Court certified a class of 220 former U.S. employees of Atmel who had been terminated by
Microchip without cause between April 4, 2016, and March 19, 2017. Id. at 7, 25. Unlike the
plaintiffs in the related case, Berman v. Microchip Technology Inc., Case No. 17-cv-01864-HSG,
215 of the 220 Class Members here signed a release in exchange for a portion of the severance
benefits provided under the Atmel Plan.1 See, e.g., Dkt. No. 176-2, Ex. S at 56–59, 78–80.
The validity of these releases has been a key issue in the case. In August 2023, the Court
granted in part Defendants’ motion for summary judgment based on the releases, holding that the
named Plaintiffs’ releases were enforceable as knowing and voluntary under a six-factor test
applied by several district courts in this Circuit.2 Dkt. No. 185 (“MSJ Order”) at 11–12.
Following additional briefing, the Court entered final judgment under Federal Rule of Civil
Procedure 54(b) in favor of all Defendants and against the two named Plaintiffs only. Dkt. No.
198 at 2. The Court reasoned that because “[o]ne of the threshold disputes in this case is what
legal test the Court should apply in determining the enforceability of the releases,” all parties and
the Court would “benefit from a prompt interlocutory review of the Court’s summary judgment
order to enable the Ninth Circuit to provide a definitive resolution of that issue, which could
materially affect how the remainder of this case will proceed.” Id. at 1.
In June 2025, the Ninth Circuit reversed the summary judgment order. See Schuman v.
Microchip Tech. Inc., 139 F.4th 1045, 1056 (9th Cir. 2025). The Ninth Circuit identified a non-
exhaustive, nine-factor test that courts should use to evaluate the knowledge or voluntariness of
the release or waiver. Id. at 1052–53. These factors include any “alleged improper conduct by the
fiduciary in obtaining a release,” and the court emphasized that this factor “warrants serious
consideration and may weigh particularly heavily against finding that the release was ‘knowing’ or
‘voluntary’ or both.” Id. at 1053–54.
1 Five class members in this case did not sign a release. See Dkt. No. 221 at 5.
2 The test the Court applied originated in the Second Circuit. See MSJ Order at 11–12 (citing
Rombeiro v. Unum Ins. Co. of Am., 761 F. Supp. 2d 862, 868–69 (N.D. Cal. 2010) (collecting
cases)). Those factors include: (1) plaintiff’s education and business sophistication; (2) the
respective roles of employer and employee in determining the provisions of the waiver; (3) the
clarity of the agreement; (4) the time plaintiff had to study the agreement; (5) whether plaintiff had
independent advice, such as that of counsel; and (6) the consideration for the waiver. Id.
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After the mandate issued and this Court reopened the case, Defendants filed a motion to
decertify the class and a motion to reopen discovery. Dkt. Nos. 218, 226. The Court denied the
motions, Dkt. Nos. 241 & 242, and trial was set to begin on July 9, 2026. The parties engaged in
further settlement discussions, and notified the Court on June 17, 2026, the day before the pretrial
conference, that they had reached a settlement. Dkt. No. 244.
B. Settlement Agreement
The parties ultimately entered into a memorandum of understanding, fully executed on
July 2, 2026. Dkt. No. 251-3, Ex. A (“MOU”). The key terms are as follows:
Settlement Benefits:
a. For each of the five Class Members who did not sign a release [],
Defendant shall pay an amount equal to (i) 100% of the unpaid
severance benefits that such Class Member would have received
under the Atmel Plan; plus (ii) interest compounded annually
accruing from the date of those Class Members’ termination
through the Effective Date, at the federal one-year T-Bill rate as
of the date the Parties sign this Memorandum of Understanding
(“MOU”);
b. For each of the two Plaintiffs and each of the remaining 213 Class
Members who did sign a Release, Defendant shall pay an amount
equal to: (i) 80% of the unpaid portion of the severance benefits
that such Plaintiff or Class Member would have received under
the Atmel Plan; plus (ii) interest compounded annually accruing
from the date of the Plaintiff ’s or Class Member ’s termination
through the Effective Date, at the federal one-year T-Bill rate as
of the date the Parties sign this MOU[.]
MOU ¶ 2(a)–(b).
Release: Plaintiffs and Class Members will release Defendants Microchip Technology,
Inc., Atmel Corporation, and Atmel Corporation U.S. Severance Guarantee Benefit Program from:
any and all claims for relief, damages, and remedies, including but
not limited to actual damages, statutory damages, statutory penalties,
punitive damages, exemplary damages, restitution, disgorgement,
equitable relief, injunctive relief, attorneys’ fees and costs,
prejudgment interest, and/or any other form of monetary or non-
monetary Consideration, relief, or payment whatsoever, for any and
all claims, causes of action, damages, or remedies by the Class
Members that were pleaded or alleged in the Complaint or Amended
Complaint in the Action or that could have been pleaded or alleged in
the Complaint or Amended Complaint based upon the factual
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allegations alleged therein, against Defendant and each of them
MOU ¶ 11. Following the hearing on the motion for preliminary approval, the parties confirmed
that the release only applies to “Class Members who do not timely and validly opt out” of the
settlement. Dkt. No. 254 at 2.
Incentive Award: Defendants shall pay the two named Plaintiffs an additional $10,000
“service award.” MOU ¶ 2(e).
Attorneys’ Fees and Costs: Class Counsel will file an application for attorneys’ fees not to
exceed $3.5 million. MOU ¶ 4.
Opt-Out Procedure: Subject to the Court’s approval, Class Members may submit a request
for exclusion or object to the settlement within 35 days after notice of the settlement is emailed to
the Class. See MOU ¶ 9; Dkt. No. 251-3 (“Rubin Decl.”) at ¶ 10.
II. CLASS CERTIFICATION
A court may preliminarily certify a settlement class if all of the prerequisites of Federal
Rule of Civil Procedure 23(a) have been met, and at least one of the requirements for Rule 23(b)
have also been met. See Fed. R. Civ. P. 23. As indicated above, however, the Court previously
certified a class defined as:
All former U.S.-based employees of defendant Atmel Corporation
who were employed as of the April 4, 2016 closing date of the Atmel-
Microchip merger and who were terminated by defendant Microchip
Technology Incorporated without cause between April 4, 2016 and
March 19, 2017.
See Class Cert. Order at 7. The Court also recently denied Defendants’ motion to decertify the
class. See Dkt. No. 241. Thus, “the only information ordinarily necessary is whether the proposed
settlement calls for any change in the class certified, or of the claims, defenses, or issues regarding
which certification was granted.” See Fed. R. Civ. P. 23 Advisory Committee’s Note to 2018
Amendment. The MOU adopts the same class definition. See MOU ¶ 2; see also Dkt. No. 252-1,
Ex. A (“Mot.”) at 5. Accordingly, there is no need to revisit the Court’s prior analysis, and the
Court provisionally certifies the settlement class. See Stiner v. Brookdale Senior Living, Inc., No.
17-CV-03962-HSG, 2025 WL 1676276, at *3 (N.D. Cal. June 13, 2025).
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III. PRELIMINARY SETTLEMENT APPROVAL
The Court next considers whether it should preliminarily approve the parties’ class action
settlement.
A. Legal Standard
Federal Rule of Civil Procedure 23(e) provides that “[t]he claims, issues, or defenses of a
certified class—or a class proposed to be certified for purposes of settlement—may be settled . . .
only with the court’s approval.” Fed. R. Civ. P. 23(e). “The purpose of Rule 23(e) is to protect
the unnamed members of the class from unjust or unfair settlements affecting their rights.” In re
Syncor ERISA Litig., 516 F.3d 1095, 1100 (9th Cir. 2008). Accordingly, before a district court
approves a class action settlement, it must conclude that the settlement is “fundamentally fair,
adequate and reasonable.” In re Heritage Bond Litig., 546 F.3d 667, 674–75 (9th Cir. 2008).
Courts may preliminarily approve a settlement and notice plan to the class if the proposed
settlement: (1) appears to be the product of serious, informed, non-collusive negotiations; (2) does
not grant improper preferential treatment to class representatives or other segments of the class;
(3) falls within the range of possible approval; and (4) has no obvious deficiencies. In re Lenovo
Adware Litig., No. 15-MD-02624-HSG, 2018 WL 6099948, at *7 (N.D. Cal. Nov. 21, 2018)
(citation omitted). Regardless of whether a settlement agreement has been negotiated before or
after a class has been certified, the district court must also review the settlement agreement for
more “subtle signs that class counsel have allowed pursuit of their own self-interests and that of
certain class members to infect the negotiations.” See Briseño v. Henderson, 998 F.3d 1014,
1023–25 (9th Cir. 2021) (holding that courts must apply heightened scrutiny even to post-class
certification settlement approvals) (citing In re Bluetooth Headset Prods. Liab. Litig., 654 F.3d
935, 947 (9th Cir. 2011)). Courts lack the authority, however, to “delete, modify or substitute
certain provisions. The settlement must stand or fall in its entirety.” Hanlon, 150 F.3d at 1026.
B. Analysis
i. Evidence of Conflicts and Signs of Collusion
The first factor the Court considers is whether there is evidence of collusion or other
conflicts of interest. See Roes, 944 F.3d at 1049. The Ninth Circuit has directed district courts to
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look for “subtle signs of collusion,” which include whether counsel will receive a disproportionate
distribution of the settlement, whether the parties negotiate a “‘clear sailing’ arrangement (i.e., an
arrangement where defendant will not object to a certain fee request by class counsel),” and
whether the parties agree to a reverter that returns unclaimed funds to the defendant. Id.
The Ninth Circuit has noted that clear sailing arrangements are “important warning signs
of collusion,” because “‘[t]he very existence of a clear sailing provision increases the likelihood
that class counsel will have bargained away something of value to the class.’” Roes, 944 F.3d at
1051 (quoting In re Bluetooth, 654 F.3d at 948). Accordingly, when confronted with a clear
sailing provision, the district court has a heightened duty to “scrutinize closely the relationship
between attorneys’ fees and benefit to the class, being careful to avoid awarding ‘unreasonably
high’ fees simply because they are uncontested.” Id. (quotations omitted).
Here, the MOU contains a clear sailing provision. The MOU states that Defendants “shall
pay [Plaintiffs’ counsel] $3.5 million, or such reduced attorneys’ fees and expenses award as the
Court may approve as reasonable . . . .” MOU ¶ 4. The parties engaged in “extended
negotiations” over attorneys’ fees and indicate that “Microchip agreed to pay these fees and
expenses to Class Counsel . . . .” Mot. at 9. In short, Defendants do not intend to object to Class
Counsel’s requested fees.
The Court is cognizant of its obligation to review class fee awards with rigor, and at the
final approval stage will scrutinize the circumstances and determine what fee award is appropriate
in this case. But at this preliminary stage, the Court does not find the proposed award so
disproportionate as to raise concerns. Counsel has indicated that the $3.5 million figure is below
their lodestar and was only negotiated after the other terms of the settlement were negotiated. See
Mot. at 9; Dkt. No. 252-2, Ex. B (“Ehrman Decl.”) at ¶ 58. Unlike a common fund, any award of
attorneys’ fees here will not reduce Class Members’ recovery. And as discussed further below,
Class Members’ recovery is 80 to 100% of unpaid severance benefits as well as interest. See
MOU ¶ 2(a)–(b). When accounting for interest, therefore, Class Members’ recovery will exceed
100% of their unpaid severance amounts. See Mot. at 9.
Additionally, the MOU does not contain a “reverter” provision or contemplate a cy pres
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recipient. See MOU ¶ 10. Instead, any funds that remain unclaimed nine months after the
settlement’s effective date will be paid into the California State Controller Unclaimed Property
Division. Id.
ii. Preferential Treatment
The Court next considers whether the settlement agreement provides preferential treatment
to any class member. The Ninth Circuit has instructed that district courts must be “particularly
vigilant” for signs that counsel have allowed the “self-interests” of “certain class members to
infect negotiations.” In re Bluetooth, 654 F.3d at 947. For that reason, courts in this district have
consistently stated that preliminary approval of a class action settlement is inappropriate where the
proposed agreement “improperly grant[s] preferential treatment to class representatives.” Lenovo,
2018 WL 6099948, at *8 (quotations omitted).
Although the settlement agreement authorizes Plaintiffs to receive an incentive award of
$10,000 each for their role in this long-running lawsuit, the Court will ultimately consider the
reasonableness of the amount requested. Incentive awards “are intended to compensate class
representatives for work done on behalf of the class, to make up for financial or reputational risk
undertaken in bringing the action.” Rodriguez v. West Publ’g Corp., 563 F.3d 948, 958–59 (9th
Cir. 2009). Plaintiffs must provide sufficient evidence to allow the Court to evaluate their awards
“individually, using ‘relevant factors includ[ing] the actions the plaintiff has taken to protect the
interests of the class, the degree to which the class has benefitted from those actions, . . . [and] the
amount of time and effort the plaintiff expended in pursuing the litigation . . . .’” Stanton v.
Boeing Co., 327 F.3d 938, 977 (9th Cir. 2003). The Court will consider the evidence presented at
the final fairness hearing and evaluate the reasonableness of any incentive award request.
Nevertheless, because incentive awards are not per se unreasonable, the Court finds that this factor
weighs in favor of preliminary approval. See Rodriguez, 563 F.3d at 958 (finding that “[i]ncentive
awards are fairly typical in class action cases” and “are discretionary” (emphasis omitted)).
iii. Settlement within Range of Possible Approval
The third factor the Court considers is whether the settlement is within the range of
possible approval. To evaluate whether the settlement amount is adequate, “courts primarily
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consider plaintiffs’ expected recovery balanced against the value of the settlement offer.” Lenovo,
2018 WL 6099948, at *8. This requires the Court to evaluate the strength of Plaintiffs’ case.
As an initial matter, the Court notes that the terms of the Schuman settlement here and the
Berman settlement are largely identical. As in Berman, for those Class Members here who did not
sign releases, the settlement provides for 100% of their unpaid severance benefits, as well as
nearly a decade of prejudgment interest. For the Class Members who did sign releases, the total
settlement amount constitutes 80% of their unpaid severance benefits, as well as prejudgment
interest. As Counsel explains, because an award of prejudgment interest is discretionary, the
settlement amounts actually constitute “more than what the class members would have been
guaranteed to receive if they had prevailed on all issues at trial.” See Mot. at 13 (emphasis in
original). And as for those Class Members who signed releases, “the settlement amounts are just
20% less than the most they might have recovered had they prevailed on all issues.” See id.
Counsel indicated that the range of possible recovery is $5,800 to $136,600.
As its extensive history indicates, this case is complicated, and Plaintiffs would face
substantial risk in continuing to litigate through trial and on appeal. The Ninth Circuit identified a
new multi-factor test for assessing the enforceability of the releases, which the parties would have
to address. And in denying Defendants’ motion to decertify the Class, the Court left open the
possibility of “reassess[ing] whether common issues continue to predominate so as to warrant
ongoing certification once the Court has developed the common factual record regarding
Defendants’ conduct in interpreting the Atmel Plan and communicating with class members.” See
Dkt. No. 241 at 16. The Court finds that the settlement amount, given these risks, weighs strongly
in favor of granting preliminary approval.
iv. Obvious Deficiencies
The Court also considers whether there are obvious deficiencies in the settlement
agreement. The Court finds no obvious deficiencies, and therefore finds that this factor weighs in
favor of preliminary approval.
* * *
Having weighed the relevant factors, the Court preliminarily finds that the settlement
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agreement is fair, reasonable, and adequate, and GRANTS preliminary approval. The Court
DIRECTS the parties to include both a joint proposed order and a joint proposed judgment when
submitting their motion for final approval.
IV. PROPOSED CLASS NOTICE PLAN
Under Federal Rule of Civil Procedure 23(e)(1)(B), “[t]he court must direct notice in a
reasonable manner to all class members who would be bound by the proposal.” With respect to
the content of the notice itself, the notice must clearly and concisely state in plain, easily
understood language:
(i) the nature of the action;
(ii) the definition of the class certified;
(iii) the class claims, issues, or defenses;
(iv) that a class member may enter an appearance through an attorney if
the member so desires;
(v) that the court will exclude from the class any member who requests
exclusion;
(vi) the time and manner for requesting exclusion; and
(vii) the binding effect of a class judgment on members[.]
Fed. R. Civ. P. 23(c)(2)(B).
Here, the parties have agreed that Class Notice will be sent by email to the last known
email address of each Class Member, or by U.S. mail to their last known address if a Class
Member cannot be reasonably located by email. See MOU ¶ 9. Class Counsel has indicated that
given the size of the Class, “Class Counsel have been in touch with most of them during the
course of this litigation” and are “currently updating the contact information for the others.” See
Mot. at 8. At the preliminary approval hearing, Counsel explained that they already have been in
touch with—and have good contact information for—all but 11 of the Class Members. If any
mailed notices are returned by the Post Office as undeliverable, Class Counsel will perform a skip-
trace or other search to try to identify a new mailing address or other means of contact. Rubin
Decl. at ¶ 11. To the extent new addresses are identified, the notices will be remailed. Id. The
Court finds that the proposed notice process is “reasonably calculated, under all the circumstances,
to apprise all class members of the proposed settlement.” Roes, 944 F.3d at 1045 (quotation
omitted).
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As to the substance of the notice, the parties have attached a copy of their proposed Class
Notice to the Settlement Agreement. See Rubin Decl., Ex. B. The notice will be individualized
and include information about the amount of unpaid severance benefits each Class Member is still
owed, as well as the process for receiving payment, which includes completing and submitting
IRS forms. See MOU ¶¶ 5–9; Rubin Decl., Ex. B. The notice explains how to opt out of or object
to the settlement. Id. The notice also informs Class Members that Class Counsel will file a
motion with the Court for attorneys’ fees, as well as reimbursement of litigation costs and
expenses advanced by Class Counsel. Id. It also provides that Plaintiffs may obtain up to $10,000
each for their services as class representatives. Id. Class Counsel has also indicated that it is in
the process of creating a settlement website, which will include the notice, procedures for
submitting required forms, opting out, and objecting, links to required forms, key deadlines, and
important case documents. See Rubin Decl. at ¶ 12.
To enable Class Members to review the motion for attorneys’ fees and the motion for
incentive awards, Class Counsel shall include language in the notice: (1) indicating the deadline
for filing the attorneys’ fees motion and request for Plaintiffs’ incentive awards; and
(2) specifically stating the deadline for any Class Member objections to these motions. See In re
Mercury Interactive Corp. Sec. Litig., 618 F.3d 988, 993–94 (9th Cir. 2010) (holding that under
Rule 23(h), class members must be given a full and fair opportunity to examine and object to
attorneys’ fees motion).
The Court therefore finds that with these changes, the content of the proposed Class Notice
provides sufficient information about the case and thus conforms with due process requirements.
See Hyundai II, 926 F.3d at 567 (“Notice is satisfactory if it generally describes the terms of the
settlement in sufficient detail to alert those with adverse viewpoints to investigate and to come
forward and be heard.” (quotation omitted)).
V. CONCLUSION
The Court GRANTS the motion for preliminary approval. Dkt. No. 251. The Court
acknowledges that the parties submitted a proposed timeline as part of their motion. See Mot. at
15. However, because the proposal included placeholder dates tied to the date of the Preliminary
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Approval Order, the parties are DIRECTED to meet and confer and stipulate to a schedule of
dates for each event listed below, which shall be submitted to the Court within seven days of the
date of this Order:
Event Date
Deadline for emailing notice to all Class Members
Filing deadline for attorneys’ fees and costs motion
Filing deadline for incentive awards motion
Deadline for Class Members to opt-out or object to
settlement and/or application for attorneys’ fees and
costs and incentive awards (at least 45 days after
the filing of the motion for attorneys’ fees and
incentive awards)
Filing deadline for final approval motion
Final fairness hearing and hearing on motions
The parties are further DIRECTED to implement the proposed class notice plan with the edits
identified above.
IT IS SO ORDERED.
Dated:
______________________________________
HAYWOOD S. GILLIAM, JR.
United States District Judge
8/3/2026
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