Qimonda's $35 million class action settlement with ex-employees OK'd

By Jim Witters

Wilmington, Del., Oct. 7 - Qimonda Richmond, LLC and Qimonda North America Corp. received court approval for a $35 million settlement with former employees who claim the companies violated their rights or failed to meet severance obligations in terminating the workers in 2008 and 2009, according to documents filed Thursday in the U.S. Bankruptcy Court for the District of Delaware.

The settlement includes three groups of workers: about 1,280 who allege Qimonda violated the Worker Adjustment and Retraining Notification Act; a group that alleges the debtors terminated them in 2009 without providing severance benefits they were obligated to provide; and a group terminated by the debtors in 2009 who accepted new positions with the company in exchange for foregoing severance payments but either never commenced employment or worked briefly before being terminated again without severance.

Some of the parties also filed a lawsuit in U.S. District Court for the District of Delaware against Infineon Technologies AG and Qimonda AG. The district court has not certified a class in the Infineon action.

"After weighing the uncertainty related to establishing the claims that are or could be made in this litigation and the Infineon action ... the class representatives, by and through class counsel, have concluded this settlement agreement represents a fair, adequate and reasonable resolution to this matter," the settlement stated.

"Likewise, after weighing the uncertainty related to establishing their defenses and the inherent risks, costs and delays of litigation, defendants ... seek to settle the claims."

The settlement approved Oct. 6 grants members of the class:

• An allowed claim against Qimonda North America of $8 million, of which $4.5 million will be paid to the settlement administrator within five business days of the effective date;

• A $10 million allowed general unsecured claim against Qimonda Richmond; and

• A $17 million allowed general unsecured claim against Qimonda North America, provided that the first $1.75 million of gross distributions will be paid to the settlement administrator for the benefit of class members and any subsequent gross distributions will be split evenly between the class members and Qimonda Richmond.

Based on the likelihood of the competing claims, the common fund is being allocated by class counsel as 70% to the Worker Adjustment and Retraining Notification Act class and 30% to the severance act classes.

Qimonda North America and Qimonda Richmond, U.S. subsidiaries of Munich, Germany-based semiconductor chip producer Qimonda AG, filed for bankruptcy on Feb. 20, 2009. The Chapter 11 case number is 09-10589.

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