Contract analysis

From: Renata Vasquez <rvasquez@calderwoodharkness.com> To: Gregory Tanaka <gtanaka@aureliusmedia.com> Cc: Bernard Crawford <bcrawford@calderwoodharkness.com> Date: Sat, 09 Sep 2023 06:42:00 -0000 Subject: Mediation #2 Report-Back — Class Settlement Reached; Aldrich Deferred

Excellent news on the class action. After approximately nine hours of negotiation at our second mediation session yesterday (September 8) before Hon. Patricia Okoro (Ret.) at Westpark Dispute Resolution Inc., we reached a full class action settlement. The Aldrich matter, unfortunately, remains open — more on that below — but the class resolution is a significant milestone and, in my view, a strong result for AMA.

1. **Gross Settlement Amount (GSA):** $14,750,000

2. **Attorneys' Fees (Class Counsel):** 33.33% of GSA = $4,916,175 (subject to Court approval)

3. **Litigation Costs:** Up to $412,300 (to be documented and submitted to the Court)

4. **Service Awards:** Fuentes — $15,000; Halloran — $10,000; Padilla — $10,000 (total: $35,000)

5. **Settlement Administration:** Meridian Settlement Services LLC — $385,000

6. **PAGA Payment:** $750,000 (75% to LWDA = $562,500; 25% to aggrieved employees = $187,500)

7. **Net Settlement Fund (NSF):** $8,251,525 (calculated as $14,750,000 GSA minus $4,916,175 fees, $412,300 costs, $35,000 service awards, $385,000 administration, and $750,000 PAGA)

8. **Distribution:** Pro rata to all class members who do not opt out. Allocation formula: 60% based on weeks worked during the class period, 40% based on recorded overtime hours.

9. **Release:** Broad release of all class, PAGA, and individual claims arising from the operative facts, including non-certified claims (rest period, off-the-clock, overtime, waiting time, and minimum wage).

10. **No Admission:** AMA admits no liability.

Pemberton Mutual Assurance Co. has authorized a contribution of $9,250,000. AMA's self-funded share is therefore $5,500,000 ($14,750,000 minus $9,250,000). This is consistent with the range we discussed heading into mediation, and I believe it reflects a reasonable allocation given Pemberton's coverage position.

- **Settlement Agreement and Release:** Prepared and fully executed by **September 15, 2023**. - **Preliminary Approval Motion:** Filed by **September 22, 2023**.

Devon is already working with class counsel on the draft agreement. I will flag any issues that arise during the drafting process, but I do not anticipate material disputes over documentation given the level of detail we nailed down in the session.

The Aldrich matter was addressed during the combined session but did not settle. Gavin Aldrich attended with his counsel Cameron Whitfield and Julia Nazarian of Whitfield & Associates. While the discussions were productive in narrowing some issues, the gap at the close of the day remained substantial:

- Aldrich opened at **$3.8M** and came down to **$3.2M**. - AMA offered **$1.75M** and moved to **$2.0M**. - Gap at close: **$3.2M (Aldrich) vs. $2.0M (AMA)**.

Beyond the headline numbers, three specific issues are driving the impasse:

1. **RSU Treatment:** Aldrich is demanding full acceleration of all **15,300 unvested RSUs**. AMA offered acceleration of **8,000 RSUs**. This remains a significant gap, and it is one of the primary drivers of the overall dollar-value spread.

2. **Restrictive Covenant:** Aldrich wants a **complete release of all restrictive covenant obligations**, including the confidentiality provision at **§ 9.4** of his employment agreement. As we discussed, AMA is not willing to release confidentiality — § 9.4 must remain in force. We held firm on this and I believe that is the correct position.

3. **Non-Disparagement:** Aldrich is insisting on **mutual non-disparagement that is unlimited in duration**. AMA proposed a **3-year term**. This is a meaningful difference, though I view it as more bridgeable than the RSU and confidentiality issues.

**F. MEDIATOR RECOMMENDATION ON ALDRICH**

Hon. Okoro recommended scheduling a **standalone Aldrich mediation session in December 2023**, after the class settlement has cleared preliminary approval and the parties have had time to reflect. I agree with this recommendation. Separating the two matters at this stage removes the leverage dynamic Whitfield was attempting to create, and a cooling-off period may bring Aldrich's expectations closer to reality — parti

I will send a more detailed analysis and recommendation on the Aldrich posture early next week. In the meantime, please don't hesitate to reach out with any questions on the class terms.

Renata Vasquez | Partner Calderwood & Harkness LLP 777 South Flower Street, Suite 4200 | Los Angeles, CA 90017 T: (213) 555-7200 | rvasquez@calderwoodharkness.com