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Qualcomm opts to settle options lawsuit

Qualcomm agrees to pay a group of former employees $11 million to settle a class action lawsuit claiming the telephone software maker cheated them out of stock options.

Qualcomm has agreed to pay a group of former employees $11 million to settle a class-action lawsuit claiming the telephone software maker cheated them out of stock options.

Last March, the two sides had reached a tentative settlement the employees claimed was worth more than $500 million. But that settlement, for $8.9 million to be shared by about 400 former employees, was voided when the former employees didn't approve it.

Qualcomm spokesman Christine Trimble said the San Diego-based company won't be paying any of the $11 million settlement. Instead, the money will come from a "third party" that the company refused to name.

Qualcomm opted to settle the case instead of risking a trial and even more possible damages, she said.

"We believe we had an extremely strong case," Trimble said. "But there is always risk associated with litigation."

The former employees were mostly engineers who worked in Qualcomm's wireless Web division, which was bought by rival Ericsson last May.

When it was sold, Trimble said Qualcomm tried to compensate the employees that were going to Ericsson. The plan provided several benefits, including cash compensation based on a portion of the value of the employees' unvested options, Qualcomm said in its annual report filed last November.

While Ericsson's stock experienced a strong 1999, Qualcomm was one of the best-performing stocks of the year, splitting twice and prompting rampant enthusiasm for the company on Wall Street.

Most of the former employees agreed to receive the cash compensation. Those employees, about 800, will divide a total of $1.55 million of the settlement. This group agreed not to file any more appeals in the case.

But 35 of the employees did not choose to take part in the plan, believing they were owed much more money. They will get the bulk of the settlement, a total of $9.5 million, according to their attorney Paul Howes.