Case Name: Eric Paton vs. Advanced Micro Devices, Inc.
Case No.: 1-07-CV-084838

This is a continued motion for preliminary approval of class action settlement.

Plaintiff Eric Paton (“Plaintiff”) brings this class action on behalf of himself and all persons formerly employed by defendant Advanced Micro Devices, Inc.’s (“AMD”) California locations who, on or after April 27, 2003, forfeited partially or fully accrued and unused vacation time in the form of a paid sabbatical upon termination of employment. According to the Complaint, AMD has a uniform written sabbatical policy that provides, in pertinent part, that “all regular salaried (exempt) employees who work at least 80 hours per pay period are eligible for an eight-week sabbatical at regular pay after every seven years of credited service. Employees normally working at least 40 hours a pay period are eligible for a prorated sabbatical.” AMD’s uniform sabbatical policy also provides, “employees who terminate and have not taken their sabbatical forfeit their eligibility.”

Plaintiff was an employee of AMD from June 6, 1997 until July 22, 2005 at AMD’s Sunnyvale, California location. For the majority of his employment he held the title of Senior Process Development Engineer. Plaintiff became eligible for an eight-week sabbatical on June 9, 2004, but it was delayed by AMD for “business reasons.” Plaintiff’s employment relationship with AMD ended prior to the start of the sabbatical and Plaintiff was not compensated for the sabbatical. Based on AMD’s uniform policies, Plaintiff believes that AMD, in each instance, refuses to compensate its employees for their fully or partially earned and unused vacation time in the form of sabbatical when an employee’s employment relationship with AMD ends prior to taking the sabbatical.

The Complaint, filed on April 27, 2007, sets forth the following causes of action: (1) Nonpayment of Wages (Violation of California Labor Code section 227.3); (2) Waiting Time Penalties (Violation of California Labor Code sections 202-203); (3) Unlawful Business Acts and Practices (Violation of California Business and Professions Code section 17200, et seq.); (4) Unfair Business Acts and Practices (Violation of California Business and Professions Code section 17200, et seq.); (5) Breach of Contract; (6) Unjust Enrichment; and (7) Declaratory and Injunctive Relief (California Code of Civil Procedure Sections 526 and 1060 and Civil Code section 3422).

On or about September 3, 2008, the Court certified the following class: “All salaried employees of Advanced Micro Devices, Inc. who (a) worked for AMD’s California locations while residing in California; (b) terminated on or after April 27, 2003; (c) did not sign a release; and (d) were not paid for a sabbatical benefit.” On November 12 and 25, 2008, the Court issued orders regarding notice to the class.

On May 8, 2009, AMD moved for summary judgment, or alternatively summary adjudication of all class claims and Plaintiff’s individual claims. On June 9, 2009, the Court denied the motion for summary judgment, but granted the motion for summary adjudication against the class claims on all causes of action and all of Plaintiff’s causes of action except for the fifth cause of action for breach of contract. Plaintiff appealed, and on August 5, 2011, the Court of Appeal reversed the grant of summary adjudication, holding that the record did not resolve, as a matter of law, whether the eight-week leave was intended as a sabbatical with a specific purpose or whether it was intended as additional vacation for longer term employees. (See Paton v. AMD (2011) 197 Cal.App.4th 1505, 1523-1525.)

On July 19, 2013, the Court granted Plaintiff’s motion to expand the class definition, extending the class period cutoff date from December 8, 2008 to September 1, 2013 and adding two subclasses.

Under the terms of the proposed settlement, AMD will pay $5.2 million (the “Maximum Settlement Amount”), which includes $1,733,333 in attorney’s fees, $88,550 in litigation costs, a $10,000 class representative payment, and $20,000 in claims administration expenses. The remaining $3,348,117 (“Net Settlement Proceeds”) will be distributed among Class Members who submit a timely, valid Claim Form based on information provided by AMD to the Settlement Administrator regarding unpaid sabbatical benefits for each claiming Class Member.

The terms of the settlement are set forth in the Stipulation of Settlement and Release (“Stipulation of Settlement”). Exhibit 1 to the Stipulation of Settlement is a sample Claim Form; Exhibit 2 is a sample of the Class Notice; Exhibit 3 is a sample reminder postcard; Exhibit 4 is the “Plan of Allocation” of settlement proceeds; Exhibit 5 is a “Remainder Schedule.” The Plan of Allocation has five steps: (1) determine individual claim amount by multiplying the final daily rate of pay by the number of earned but unused sabbatical days (the “Individual Claim Amount”); (2) adjust individual claim amounts for subclass members by multiplying their Individual Claim Amounts by 66 2/3% (the “Adjusted Subclass Member Individual Claim Amount”); (3) add all Individual Claim Amounts and Adjusted Subclass Member Individual Claim Amounts together (the “Total Claim Amount”); (4) divide each AMD Class Member’s Individual Claim Amount and Adjusted Subclass Member Individual Claim Amount by the Total Claim Amount to determine each Class Member’s “Percentage Share”; and (5) multiply each Class Member’s Percentage Share by the Net Settlement Proceeds to determine each “Estimated Individual Settlement Payment.”

To determine any remainder to AMD based on the Remainder Schedule, the Settlement Administrator will determine the “Claimant Claim Rate” (total Estimated Individual Settlement Payments claimed by Claimants divided by Net Settlement Proceeds) and apply the Claimant Claim Rate to the Remainder Schedule to determine the Remainder that will be subtracted from the Net Settlement Proceeds. According to Plaintiff, if the total of the Estimated Individual Settlement Payments is less than 50% of the Net Settlement Proceeds, a portion of the Remainder will be divided among and added to the Individual Settlement Payments, and the balance of the Remainder will be retained by AMD.

On April 4, 2014, the Court continued Plaintiff’s motion for preliminary approval of class action settlement and requested supplemental briefing on: (1) the strength of Plaintiff’s claims; and (2) the amount of time and energy Plaintiff expended in pursuit of the lawsuit in support of the class representative payment. The Court also ordered modification of the Notice to include the right of Class Members not opting-out to enter an appearance through counsel.

On April 24, 2014, Plaintiff filed supplemental papers. Regarding the strengths and weaknesses of his claims, Plaintiff submits that he faced substantial challenges to ultimately prevailing on his claims because the appellate decision in this case made the applicable DLSE test more flexible and added a fourth factor that brought into question whether he could establish that AMD’s sabbatical does not meet the “sabbatical test” as set forth in the decision. Plaintiff also submits that he faced serious obstacles to establishing his claim for waiting time penalties given the lack of reported decisions on the whether Labor Code section 227.3 is triggered upon transfer of employees to a spin-off entity. The Court finds that Plaintiff provides a sufficient basis to balance the amount offered in settlement against the strengths and weaknesses of the case for Plaintiff on the merits. (See Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 130.)

Regarding Plaintiff’s time, energy and risk in bringing the case, Plaintiff submits his declaration discussing the DLSE proceedings he initiated, his contact with his attorneys, attendance at meetings, review of materials, and assistance with investigation and discovery (including having his deposition taken). Plaintiff estimates having spent at least 40 hours participating in the matter. Plaintiff also discusses his concerns of being “blacklisted” by other prospective employers in the semiconductor engineering industry. The Court finds that Plaintiff provides sufficient support for preliminary approval of the $10,000 class representative payment.

Plaintiff’s supplemental papers include a redlined version of the Notice of Class Action Settlement showing modifications as ordered by the Court.

In conjunction with the papers originally submitted in support of the motion, the motion for preliminary approval is GRANTED. The matter is set for a final approval hearing on June 27, 2014 at 9 a.m.