Contract analysis

I. INTRODUCTION Defendant Aurelius Media Americas Inc. ("AMA") respectfully submits this confidential mediation brief in advance of the August 25, 2023 mediation session before the Honorable Patricia Okoro (Ret.). This brief is intended to provide the mediator with a candid assessment of the case, including AMA's view of the merits, the damages exposure, the risks facing both sides, and AMA's settlement proposal. AMA

II. PROCEDURAL HISTORY AND CASE STATUS A. Filing and Consolidation This litigation commenced on November 1, 2022, when named plaintiff Marisol Fuentes filed a putative class action complaint against AMA in the Los Angeles Superior Court, Case No. 22STCV38214. The complaint alleged violations of the California Labor Code related to meal and rest periods, off-the-clock work, overtime compensation, minimum wage, wage st

III. THE PARTIES A. Named Plaintiffs Marisol Fuentes. Ms. Fuentes is a former Production Coordinator in AMA's Unscripted Programming Division. She was employed by AMA from March 14, 2019 through August 5, 2022, at which time she voluntarily resigned. Her hourly rate at the time of separation was $28.50 per hour. Ms. Fuentes worked primarily at AMA's Studio City facility (designated internally as Facility 2). During h

IV. AMA'S POSITION ON THE MERITS A. AMA's Meal Period Policies Comply with California Law AMA maintains a comprehensive written Meal and Rest Break Policy, which was most recently revised in January 2019. The policy facially complies with the requirements of California Labor Code Sections 226.7 and 512 and IWC Wage Order No. 12. Specifically, the policy provides that: (i) all non-exempt employees are entitled to an u

1. Attestation Feature Gap at Three Facilities. The Missed Meal Attestation feature was not activated at Facilities 2, 4, and 7 for a period of nearly four years, from approximately March 2019 through December 2022. This gap in AMA's compliance framework is the single most significant vulnerability in AMA's defense. At these three facilities, employees who missed a meal period had no mechanism within the TimeTrack Pr

2. Low Utilization Rates and Employee Awareness. At the four facilities where the Missed Meal Attestation feature was active, utilization rates ranged from only 1.8% to 4.1% of eligible shifts. While AMA contends that these rates reflect actual compliance — i.e., that most employees took their breaks — Plaintiffs will argue that the low rates reflect a lack of employee awareness of the feature. AMA acknowledges that

3. Auto-Deduction Threshold Configuration Error. The auto-deduction in the TimeTrack Pro system was configured to apply to shifts of six hours or more, rather than the five-hour threshold required by IWC Wage Order No. 12 and California Labor Code Section 512. This configuration error meant that employees working shifts of between five and six hours did not have a meal period auto-deduction applied — and, more critic

4. Production Environment Challenges. The realities of entertainment-industry production create inherent challenges to meal period compliance. AMA's employees frequently work long shooting days of twelve to sixteen hours, often in remote field locations or during live events where interrupting work for a full thirty-minute break is logistically difficult. While AMA's policy provides for meal periods regardless of pro

5. Lack of Formal Attestation Feature Training. AMA did not conduct formal, targeted training on the Missed Meal Attestation feature for its non-exempt employees. The employee handbook contains a general reference to the obligation to notify a supervisor if a meal period is missed, but it does not specifically describe the TimeTrack Pro attestation feature, explain how to use it, or advise employees of their right to

V. DAMAGES ANALYSIS A. Plaintiffs' Expert — Dr. Howard Rennick (Pinnacle Economic Consulting Group LLC) Dr. Rennick submitted his expert report on April 28, 2023. He opined that the aggregate damages exposure in this matter is approximately $38.6 million, inclusive of approximately $12.2 million in PAGA penalties. His methodology, which AMA submits is fundamentally flawed, is summarized as follows: • First Meal Perio

VI. RISK ANALYSIS A. AMA's Litigation Risks at Trial AMA has carefully evaluated its litigation risks and acknowledges the following areas of vulnerability: The Court's partial certification order, while limited in scope, represents a significant procedural achievement for Plaintiffs. The certification of the first meal period auto-deduction claim was a "strong signal" that the Court views the auto-deduction practice

VII. INSURANCE COVERAGE AMA maintains an Employment Practices Liability ("EPL") insurance policy with Pemberton Mutual Assurance Co., Policy No. PMA-EPL-2022-00837. The policy provides coverage for employment-related claims, including wage and hour class actions, subject to the terms and conditions of the policy. The key policy terms are as follows: • Self-Insured Retention (SIR): $5,000,000 • Aggregate Limit: $15,00

VIII. SETTLEMENT PROPOSAL A. Proposed Settlement Range AMA proposes a Gross Settlement Amount ("GSA") in the range of $10,000,000 to $14,000,000 as a fair and reasonable resolution of all class and PAGA claims in this matter. AMA submits that this range is well-supported by the risk analysis and damages assessment set forth above. In particular: • The proposed range of $10–14 million represents approximately 26% to 3

IX. RESOLUTION OF RELATED MATTERS AMA brings to the mediator's attention a separate individual action that is currently pending in the Los Angeles Superior Court: Aldrich v. Aurelius Media Americas Inc., Case No. 22STCV41087, assigned to the Honorable Catherine Villanueva in Department 52. Gavin Aldrich is a former Senior Vice President of Original Content and Executive Producer at AMA who was terminated on October 1

X. CONCLUSION Aurelius Media Americas Inc. approaches this mediation in good faith and with full authority to negotiate a fair resolution of the Fuentes class action and the related PAGA claims. AMA recognizes the legitimate interests of the class members and takes seriously the vulnerabilities in its position, including the failure to activate the Missed Meal Attestation feature at three facilities, the auto-deducti