Contract analysis

I. Executive Summary This memorandum assesses whether our client, Aurelius Media Americas Inc. ("AMA"), should file a standalone motion to exclude or limit the expert testimony of Dr. Howard Rennick under Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, which establishes California's gatekeeping standard for expert testimony. The Sargon standard is functionally equivalent to the fe

II. Legal Standard — *Sargon* Gatekeeping Framework A. California Standard Under *Sargon* The governing framework for the admissibility of expert testimony in California state courts is set forth in Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747. In Sargon, the California Supreme Court confirmed that trial courts occupy a "gatekeeping" role with respect to expert testimony, obliga

III. Dr. Rennick's Report — Summary of Methodology and Opinions A. Report Overview Dr. Howard Rennick's expert report, dated April 28, 2023, was prepared through his consulting firm, Pinnacle Economic Consulting Group LLC, and submitted in support of Plaintiffs' motion for class certification. Dr. Rennick was retained by Plaintiffs' counsel at Castellano Byrne & Salas LLP (specifically, lead attorneys Marco Castellan

1. Meal Period Assumption (Critical) This is the single most consequential assumption in the report and the most vulnerable to challenge under Sargon. Dr. Rennick assumes that every shift during which the TimeTrack Pro auto-deduction feature was applied constitutes a "missed" meal period for which a one-hour premium is owed under California Labor Code section 226.7. The only exception he recognizes is where a Missed

2. Rest Period Assumption Dr. Rennick assumes a rest period violation rate of 50% across all eligible shifts during the class period. This violation rate is derived entirely from the declarations submitted by the three named plaintiffs: Maria Fuentes (Production Coordinator, Studio City facility), Kevin Halloran (Post-Production Assistant, Hollywood facility), and Sandra Padilla (Segment Coordinator, Burbank facility

3. Off-the-Clock Overtime Assumption Dr. Rennick assumes that each class member performed an average of 37.5 minutes of uncompensated off-the-clock work per shift, consisting of pre-shift setup and post-shift wrap activities. This figure is the arithmetic midpoint of the range alleged in Plaintiffs' consolidated complaint (30–45 minutes per shift). For shifts already exceeding eight hours, Dr. Rennick applied the ove

4. PAGA Penalty Assumption Dr. Rennick calculates PAGA penalties using the maximum statutory rates — $100 for the initial violation per pay period per aggrieved employee and $200 for each subsequent violation per pay period per aggrieved employee — without applying any discount for the court's well-established discretion to reduce PAGA penalties under California Labor Code section 2699(e)(2). His PAGA penalty calcula

Section 2699(e)(2) expressly authorizes the court to exercise discretion to reduce PAGA penalties where the amount would be "unjust, arbitrary and oppressive, or confiscatory." Courts routinely exercise this discretion, and PAGA penalty awards at trial or in settlement are typically reduced by 75–90% from the statutory maximum. Dr. Rennick's failure to account for this reduction mechanism is discussed in Section IV.D

5. No Facility-Level Differentiation Dr. Rennick treats all seven AMA California facilities and all 14 show units as a single homogeneous population for purposes of calculating class-wide damages. He does not adjust for the fact that the Missed Meal Attestation feature — the only correction he applies to his auto-deduction assumption — was activated at only four of seven facilities (West Hollywood HQ, Sherman Oaks, H

IV. Grounds for *Sargon* Challenge We have identified five principal grounds on which Dr. Rennick's testimony could be challenged under Sargon. Each ground is analyzed below with reference to the applicable legal standard and the factual record. A. Ground 1: Meal Period Assumption Lacks Evidentiary Foundation The Argument. Dr. Rennick's core assumption — that every auto-deducted meal period constitutes a "missed" or

Section 2699(e)(2) expressly provides that the court may exercise discretion to award a lesser amount where the "amount of the civil penalty . . . would be unjust, arbitrary and oppressive, or confiscatory." This provision reflects the Legislature's recognition that the maximum statutory penalties, when calculated across a large class over an extended period, can produce penalty figures that far exceed any reasonable

V. Assessment of Probability of Success A. Factors Favoring Exclusion (Supporting 30–35% Probability) Several features of Dr. Rennick's methodology would support a finding that his testimony should be excluded or limited under Sargon:

1. The meal period assumption is arguably the weakest element of the report. Treating auto-deduction as proof of a meal period violation conflates a recording method with a substantive violation, and Dr. Rennick provides no independent validation of this assumption. The resulting implication — that 97% of all meal periods were missed — is facially implausible and unsupported by any evidence beyond the auto-deduction

2. The rest period and off-the-clock overtime assumptions have virtually no empirical basis. Three declarations from three individuals, extrapolated to a class of 1,850 employees across diverse facilities and show units, do not provide a statistically valid or logically sound foundation for class-wide damages calculations totaling $8.4 million and $12.2 million, respectively.

3. The failure to disaggregate by facility or show unit in light of documented variation is a genuine methodological deficiency. Dr. Makhija's analysis of nine-fold variation in self-reported missed meal rates across show units establishes that the homogeneity assumption is empirically unfounded. A reliable damages model must account for known sources of variation, particularly when the variation is as dramatic as th

4. There is a reasonable argument that Rennick's model does not match Plaintiffs' theory of liability under *Northgate Enterprises*. Plaintiffs' theory is that AMA failed to provide compliant meal periods to individual employees — a question that inherently requires individualized inquiry into whether each employee was actually denied a compliant meal period on each shift. Dr. Rennick's model bypasses this individual

1. Judicial reluctance to exclude expert testimony at certification. California trial courts are generally reluctant to exclude expert testimony at the class certification stage. The prevailing judicial philosophy is that methodology disputes go to the weight of the evidence, not its admissibility, and that the certification hearing is not the appropriate forum for resolving contested expert methodology questions. Th

2. The *Sargon* standard sets a "range of reasonable" threshold. The Sargon framework does not require that an expert's methodology be optimal or unassailable — only that it fall within the "range of reasonable" expert opinions. Even a flawed methodology may be deemed "reasonable" if it is based on some data (here, the TimeTrack Pro records) and follows a logical structure (even if the key assumption linking auto-ded

3. The assigned judicial officer's tendencies. Hon. Raymond Escobedo, sitting in Department 34 of the LASC, is unlikely to exclude Dr. Rennick's testimony entirely at the certification stage. Based on our review of Judge Escobedo's rulings in comparable matters, the more probable outcome is that the Court acknowledges our criticisms, notes the competing expert analyses, but allows Rennick's testimony — reserving the

4. Risk of an adverse ruling being characterized as endorsement. An adverse ruling on a Sargon motion — i.e., a ruling denying the motion and permitting Rennick's testimony — could be characterized by Plaintiffs as the Court "endorsing" Rennick's methodology. This characterization, while not legally accurate (a denial of a Sargon motion is not a finding that the expert's methodology is correct), could nevertheless st

5. Resource allocation. Filing a standalone Sargon motion would consume significant briefing resources — estimated at approximately 40–60 attorney hours — that could be more effectively deployed in the certification opposition itself, where the same substantive arguments can be presented within a framework (predominance analysis) that is more favorable to AMA.

6. No controlling authority on the auto-deduction assumption. There is no California appellate authority squarely holding that an auto-deduction assumption like Rennick's is per se unreliable. The issue is factually contested, not legally settled. In the absence of controlling authority, the trial court has broad discretion to admit or exclude the testimony, and that discretion is more likely to be exercised in favor

VI. Recommended Approach A. Do Not File Standalone *Sargon* Motion at the Certification Stage For the reasons set forth in this memorandum, we recommend that AMA not file a standalone motion to exclude Dr. Rennick's testimony under Sargon at the certification stage. The risk-reward calculus does not favor such a motion: • The probability of success is modest (30–35%), reflecting the generally reluctant posture of Cal

VII. Coordination with Expert Team Effective presentation of the Sargon critique within the certification opposition requires close coordination with our expert team. The following outlines the current status of our expert engagement and the actions required in advance of the certification hearing. Dr. Catherine Lindstrom — Rebuttal Damages Expert. Dr. Lindstrom's rebuttal report is due on June 9, 2023. That report s

VIII. Conclusion For the reasons set forth in this memorandum, a standalone Sargon motion to exclude Dr. Howard Rennick's expert testimony is not recommended at the current stage of the proceedings. While Dr. Rennick's report contains identifiable and significant methodological deficiencies — most critically, the unsupported assumption that auto-deducted meal periods constitute substantive violations — the probabilit

1. Embed the *Sargon* critique within AMA's opposition to class certification (due June 16, 2023), presenting the methodological deficiencies as evidence that Rennick's model is not a viable common damages methodology under Northgate Enterprises and that individual questions regarding actual meal period compliance predominate over common questions.

2. File targeted evidentiary objections under California Evidence Code sections 801 and 802 to specific paragraphs of Rennick's declaration, preserving the Sargon arguments on the record without the downside risk of a denied standalone motion.

3. Reserve a formal *Sargon* motion for the trial stage (at summary judgment or in limine), when the stakes are higher, the Court is more likely to scrutinize expert methodology rigorously, the evidentiary record is more fully developed, and the probability of exclusion is commensurately greater. This approach preserves all arguments on the record, avoids the strategic downside of a denied motion that could be percei