Contract analysis

I. Purpose This memorandum provides a detailed analysis of the expert report of Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, located at 3000 El Camino Real, Suite 500, Palo Alto, California 94306, submitted on behalf of Plaintiffs on April 28, 2023, in support of Plaintiffs' motion for class certification filed on April 14, 2023. Dr. Rennick was retained by Plaintiffs' counsel, Cohen Briar & Associat

II. Summary of Dr. Rennick's Methodology and Conclusions A. Overall Damages Calculation Dr. Rennick's report presents a five-component damages model purporting to calculate aggregate, class-wide damages for the putative class. The following table summarizes the aggregate damages by claim category as presented in his report: It should be noted that the $12.2 million off-the-clock damages figure reflects Dr. Rennick's

1. NovaPay Solutions "TimeTrack Pro" Punch-in/Punch-out Records. Dr. Rennick obtained time and attendance records from the TimeTrack Pro system maintained by NovaPay Solutions Inc., AMA's third-party payroll processing vendor. These records were extracted pursuant to a third-party subpoena issued on February 8, 2023, and were produced by data custodian Marcus Yee, Director of Client Data Services, NovaPay Solutions I

2. Payroll Records Produced by AMA. AMA produced payroll records through Karen Fong, Payroll Manager, including wage rates, pay period dates, hours paid, overtime hours, and premium payments. Dr. Rennick used these records to calculate average hourly rates for the putative class and to cross-reference against TimeTrack Pro data.

3. Missed Meal Attestation Feature Records from TimeTrack Pro. TimeTrack Pro includes an optional feature — the Missed Meal Attestation — that permits employees to report a missed meal period directly through the time clock terminal at the end of their shift. When an employee activates this feature, the system overrides the auto-deduction for that shift and triggers an automatic one-hour premium payment on the employ

4. Declarations of Named Plaintiffs. Dr. Rennick relied on declarations submitted by named plaintiffs Marisol Fuentes, Derek Halloran, and Yesenia Padilla in connection with the class certification motion. These declarations describe the named plaintiffs' individual experiences with meal and rest period practices at their respective facilities.

5. AMA's Employee Handbook (Revised March 2021). The handbook contains AMA's general employment policies, including its meal and rest break policies, timekeeping procedures, and overtime policies.

6. AMA's Meal and Rest Break Policy (Effective January 1, 2019). This standalone policy document sets forth AMA's specific procedures for providing and documenting meal and rest periods for non-exempt employees.

7. Production Schedules and Call Sheets for Select Show Units. Dr. Rennick reviewed production schedules and call sheets for certain show units (not identified by name in the report) to contextualize the working conditions of class members in the entertainment production environment. Notably, Dr. Rennick did not conduct any survey or sampling of class members, did not interview any class members (other than reviewing

III. Critical Flaws in Dr. Rennick's Report Having reviewed Dr. Rennick's report in detail and consulted with Dr. Lindstrom regarding her preliminary analysis, we have identified seven critical flaws in the report. These flaws, individually and collectively, render the report unreliable as a basis for calculating class-wide damages and undermine its utility as a "common methodology" for purposes of class certificatio

Section 2699(e)(2) provides that the court may exercise its discretion to award a lesser amount than the maximum statutory penalty "if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory." This discretionary authority is routinely exercised by California courts, and penalty reductions of seventy-five to ninety

IV. Comparison to Defense Damages Analysis Our defense expert, Dr. Catherine Lindstrom of Hargrove Analytics Inc. (515 S. Figueroa Street, Suite 1100, Los Angeles, California 90071), is preparing a rebuttal report, which is due on June 9, 2023. Dr. Lindstrom has completed a preliminary review of the TimeTrack Pro data, AMA's payroll records, and the relevant policy documents, and has provided initial indications of h

V. Impact on Class Certification Dr. Rennick's report is submitted in support of Plaintiffs' motion for class certification filed on April 14, 2023. Plaintiffs rely on the report to argue that Dr. Rennick has developed a "common methodology" that can measure damages across the entire putative class using common proof — specifically, the TimeTrack Pro time and attendance data maintained by NovaPay Solutions. Under Cal

VI. *Sargon*/*Daubert* Challenge Considerations A separate memorandum assessing the viability of a Sargon challenge to Dr. Rennick's report is being prepared and will be circulated by June 5, 2023. The following is a preliminary assessment of the key considerations. Under Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 770–72, the trial court acts as a gatekeeper with respect to e

1. Meal Period Auto-Deduction Assumption. The assumption that every auto-deducted meal period is a "missed" meal period lacks evidentiary foundation. It is a logical non sequitur that transforms a neutral timekeeping mechanism into proof of a violation. This assumption is not supported by any evidence in the record, any industry standard, or any recognized methodology for estimating meal period violation rates.

2. Rest Period Fifty Percent Violation Rate. The extrapolation of a fifty percent violation rate from three individual declarations to a class of approximately 1,850 people is speculative under any recognized statistical standard. Three data points from self-selected individuals (the named plaintiffs in a lawsuit, who have a financial interest in maximizing the violation rate) cannot support a reliable class-wide inf

3. Off-the-Clock 37.5-Minute Assumption. The use of an arithmetic midpoint of an alleged range, with no empirical basis and no effort to account for the obvious variability in pre-shift and post-shift activities across roles and show units, is precisely the type of speculative assumption that Sargon was designed to exclude. Our preliminary assessment is that there is approximately a thirty to thirty-five percent chan

VII. Recommendations for Rebuttal Strategy Based on the analysis set forth above, we recommend the following coordinated rebuttal strategy, encompassing Dr. Lindstrom's rebuttal report, Dr. Makhija's expert report on commonality and typicality, evidentiary objections, and the opposition to class certification. A. Dr. Lindstrom's Rebuttal Report (Due June 9, 2023) Dr. Lindstrom's rebuttal report should address each co

1. Challenge the Meal Period Assumption Head-On. Dr. Lindstrom should demonstrate clearly and persuasively that the auto-deduction is a timekeeping method — not proof of a violation. Her report should include illustrative examples (similar to the one set forth in Section III.A above) showing that the auto-deduction accurately captures meal period time for employees who take compliant breaks. She should present an alt

2. Disaggregate by Facility. Dr. Lindstrom should present a facility-by-facility analysis showing the different attestation rates, shift-length distributions, and working conditions at each of AMA's seven California facilities. The analysis should clearly distinguish between the four facilities where the Missed Meal Attestation feature was active (Facilities 1, 3, 5, and 6) and the three facilities where it was not (

3. Present an Alternative Damages Figure. Dr. Lindstrom should present a defensible aggregate damages figure. The preliminary target of approximately $5.8 million (excluding PAGA penalties, which are subject to significant judicial discretion reduction) should be supported by a transparent, reproducible methodology. This figure will serve as a credible counterpoint to Dr. Rennick's $38.6 million calculation and will

4. Address the Rest Period Claim. Dr. Lindstrom should note the complete absence of any systematic data supporting a class-wide rest period violation rate and explain why the fifty percent assumption is statistically unsupportable. If feasible, she should present an analysis of shift-length data showing that many shifts did not exceed the threshold at which rest period violations become more likely (e.g., shorter shi

5. Address Off-the-Clock Claims. Dr. Lindstrom should present an analysis of TimeTrack Pro punch-in times relative to call times from production schedules and call sheets, to test whether there is evidence of systematic pre-shift work reflected in the data. If employees generally punched in at or near their scheduled call times, this is inconsistent with a 37.5-minute pre-shift work assumption. Dr. Lindstrom should a

VIII. Next Steps The following table summarizes the key action items, responsible attorneys, and deadlines arising from this analysis: Please let me know if you would like to discuss any aspect of this analysis or the recommended rebuttal strategy in greater detail. I am available to meet at your convenience to review the preliminary findings from Dr. Lindstrom and to discuss coordination with Dr. Makhija's team. End