Conspiracy Alleged at Semiconductor Plant
MANHATTAN (CN) - A U.S.-based semiconductor manufacturer promoted a straw buyer for its largest and costliest European plant in order to shut the facility and duck its responsibility to pay as much as $700 million to laid-off union workers, a class action claims in Federal Court.
Named plaintiff Jean Yves Guerrini, one of 750 workers at the Lfoundry Rousset SAS in Rousset France, claims that the plant owner, the Atmel Corp. of San Jose, Calif., conspired to fraudulently sell the silicon wafer facility to a buyer that could ill afford the investment.
The desired result, Guerrini claims, was to bankrupt the unit so that Atmel could avoid making redundancy payments to union employees, as required by French law and the facility's collective bargaining agreement.
"To affect this plan, board members of Atmel designed a sophisticated scheme," Guerrini says in the lawsuit. "First, Atmel had to choose a co-conspirator that would pose as a serious and solvent buyer in order to lure the employees of the Rousset Wafer Unit into accepting to transfer."
This acceptance is a critical part of the firm's collective redundancy plan. To advance the scheme, Guerrini claims, Atmel retained the services of an advisory firm, nonparty ATREG, specializing in outsourcing in the semiconductor industry.
"Atmel selected the ideal candidate to be its co-conspirator: Lfoundry GMBH, a company with virtually no experience in the field of semiconductors and whose affiliate was on the verge of bankruptcy," Guerrini says.
Named as defendants are Atmel Corp., Atmel Rousset SAS, and Lfoundry GMBH.
To get the Lfoundry/Rousses workers to go along with the transfer agreement, Atmel misrepresented the supposed buyer's financial health, its ability to assume Atmel's obligations under the collective bargaining agreement, and promised that up to 180 of the plant's workers would be bought out after the jobs became redundant and eliminated, according to the 54-page lawsuit.
"In reality, as plaintiffs later discovered, Lfoundry GMBH had barely any record at all in the semiconductor field and was in a financially unsound position," Guerrini claims.
He says that in addition to avoiding the costly payments to the union members who lost their jobs - a number that would swell from 180 to 750 with the plant's closure - Atmel engaged in several illegal transactions with Lfoundry that would allow it to strip the shutter facility of all of its assets.
Why go to such lengths?
According to Guerrini, Atmel had taken several steps in recent years to streamline its manufacturing operations, by selling several fabricating facilities in the United Kingdom and Germany, the ultimate goal being to boost its share price and reward its shareholders.
Initially, he says, the plan was to keep the French manufacturing plant, which had received $82 million in support from French public authorities and had contracts with several French customers, including the French military.
But despite these sales, by the end of 2008, Atmel's stock price was still a pathetic $3.13. It was then, Guerrini claims, that the company's officers decided it needed to get the Rousset plant off its books.
"However, closing down the Rousset Wafer Unit would have been so costly that it would have defeated the purpose of a cost-cutting strategy to increase Atmel's stock price," according to the complaint.
"Atmel was faced with a dilemma. On the one hand if it shut down the wafer-manufacturing until it would have to pay a costly redundancy plan to the employees that would be terminated. On the other hand if it sold the Rousset Wafer Unit to a credible investor it would create a strong competitor," Guerrini claims.
"That is why Atmel chose not to pursue either of these routes. Instead Atmel designed a careful plan to dispose of the Rousset Wafer Unit by fraudulently conveying it to a third party hired to shut it down. ATREG's mission was to assist Atmel in finding an acquirer that could fool the employees of the Rousset Wafer Unit and lead it to bankruptcy.
"As a direct and proximate result of defendants' enterprise and wrongful conduct, Plaintiff Lfoundry Rousset (current name of the Rousset wafer unit) went bankrupt and the class action plaintiff and the class he seeks to represent have suffered or are about to suffer damages as a consequence of the termination of their employment ... without payment of a collective redundancy plan to which they were legally entitled."
Guerrini seeks class certification and damages for RICO fraud, illegal contract, common law fraud, intentional interference with contract and civil conspiracy.
He also seeks a declaration that the stock purchase agreement between the alleged conspirators is void because it was entered into for illegal purposes.
He is represented by Philippe Jean Joseph Pradal of Pradal & Associates.