Contract analysis

I. INTRODUCTION AND PURPOSE Defendant Aurelius Media Americas Inc. ("AMA") respectfully submits this combined mediation brief in advance of the September 8, 2023 mediation session before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc. This session will address both the Fuentes v. Aurelius Media Americas Inc. wage-and-hour class action (LASC Case No. 22STCV38214) and the Aldrich v. Aurelius Med

II. STATUS OF PROCEEDINGS A. Class Action — *Fuentes v. AMA* (Case No. 22STCV38214)

1. Partial Class Certification Order (August 11, 2023) On August 11, 2023, the Honorable Raymond Escobedo, sitting in Department 34 of the Los Angeles Superior Court, issued a detailed, 28-page Order on Plaintiffs' Motion for Class Certification. The Court granted certification in part and denied certification in part, significantly narrowing the scope of the certified class and the claims eligible for class-wide adj

2. Class Definition (as Certified) The Court defined the certified class as follows: "All current and former non-exempt, hourly employees of Aurelius Media Americas Inc. who worked in the State of California at any time from November 1, 2018 through the date of preliminary approval of any class settlement, who were subject to AMA's automatic meal period deduction in the NovaPay Solutions TimeTrack Pro timekeeping sys

3. Estimated Class Size Based on AMA's payroll records and TimeTrack Pro system data, the estimated class size is approximately 1,850 individuals. This figure has been confirmed by Meridian Settlement Services LLC through a preliminary analysis of AMA's HRIS data provided in July 2023.

4. Class Counsel Plaintiffs are represented by Castellano Byrne & Salas LLP (Marco Castellano, Diane Salas), serving as lead class counsel, and by Veltrano Employment Law Group PC (Sandra Higuera), serving as PAGA counsel. The three named Plaintiffs are Marisol Fuentes, Derek Halloran, and Yesenia Padilla.

5. Mediation Session #1 (August 25, 2023) The parties participated in approximately seven hours of negotiation before the Honorable Patricia Okoro (Ret.) on August 25, 2023. The session was devoted exclusively to the class action. The parties exchanged opening statements in joint session and then engaged in extensive caucus negotiations throughout the day. The session concluded with the following closing positions: •

1. Filing and Parties The Aldrich action was filed on December 9, 2022, by Gavin Aldrich, AMA's former Senior Vice President of Original Content and Executive Producer. Mr. Aldrich is represented by Cameron Whitfield and Julia Nazarian of Whitfield & Associates, located at 9465 Wilshire Boulevard, Suite 320, Beverly Hills, California 90212. The action was assigned to the Honorable Catherine Villanueva, sitting in Dep

2. Responsive Pleadings and Cross-Complaint AMA filed its Answer to the Aldrich Complaint on January 20, 2023, asserting eighteen affirmative defenses, including unclean hands, after-acquired evidence, justified termination, and failure to mitigate damages. On the same date, AMA filed a Cross-Complaint against Mr. Aldrich, asserting the following causes of action:

1. Breach of Employment Agreement (§ 9.4 — Confidentiality Obligations)

2. Misappropriation of Trade Secrets (Cal. Civ. Code § 3426 et seq. — California Uniform Trade Secrets Act ("CUTSA"))

3. Motion Practice On March 22, 2023, the Court ruled on Aldrich's Motion to Strike certain allegations in AMA's Cross-Complaint relating to the non-competition clause (§ 9.1 of the Employment Agreement). The motion was granted in part and denied in part. The Court struck allegations that could be construed as seeking enforcement of the non-competition clause, but denied the motion as to allegations relating to the c

4. Discovery. Discovery in the Aldrich matter is substantially complete. Written discovery has been exchanged, and document production has been completed by both sides. AMA's Motion to Compel Further Responses from Aldrich regarding communications with Halcyon Creek Productions LLC was granted in part by Judge Villanueva, resulting in the production of an additional 47 documents comprising emails and text messages be

5. Combined Mediation Format This is Mr. Aldrich's first mediation session in the Aldrich matter. Class counsel (Castellano Byrne & Salas LLP) has confirmed that they have no objection to the combined mediation format, and indeed have expressed support for a process that may facilitate a global resolution of all AMA employment disputes. Mr. Whitfield, counsel for Aldrich, has similarly indicated a willingness to part

III. CLASS ACTION — UPDATED ANALYSIS A. Significance of the Partial Certification Order The Court's August 11, 2023 Order on Class Certification is the single most significant development in the class action since its filing and fundamentally reshapes the litigation landscape for both parties. The denial of certification on five of seven causes of action — rest period, off-the-clock/overtime, minimum wage, second mea

IV. ALDRICH EXECUTIVE DISPUTE — FULL ANALYSIS A. Background Gavin Aldrich served as AMA's Senior Vice President of Original Content and Executive Producer from September 5, 2017 through October 14, 2022 — a tenure of approximately five years. In this role, Mr. Aldrich was one of AMA's most senior creative executives, reporting directly to AMA President Jonathan Mercer and responsible for overseeing the development, p

1. Wrongful Termination in Violation of Public Policy (*Tameny* Doctrine). Mr. Aldrich alleges that his termination was retaliatory, asserting that the true reason for his discharge was his objection to Mr. Mercer's restructuring plan, which Mr. Aldrich characterizes as an effort to misclassify certain employees from exempt to non-exempt status in order to reduce labor costs. Under the Tameny v. Tarrant Holdings (198

2. Breach of Contract. Mr. Aldrich contests the "for cause" designation as pretextual and contends that his termination was, in substance, a termination without cause, entitling him to the severance and benefits provided under Section 7.3 of the Employment Agreement: • Severance: $970,000 (24 months of base salary at $485,000 per year) • Pro-rata annual bonus for FY 2022: $168,750 ($225,000 × 9.5/12 months) • Acceler

3. Breach of Implied Covenant of Good Faith and Fair Dealing. Mr. Aldrich alleges that AMA manufactured the "for cause" designation in bad faith in order to avoid its severance obligations under Section 7.3 and to trigger the RSU forfeiture provision under the AGMG Restricted Stock Unit Agreement (which provides for automatic forfeiture of unvested RSUs upon a "for cause" termination).

4. Declaratory Relief. Mr. Aldrich seeks a judicial declaration that the non-competition clause (§ 9.1, imposing an 18-month post-termination non-competition restriction) and the non-solicitation clauses (§§ 9.2 and 9.3, imposing 24-month post-termination restrictions on solicitation of employees and business relationships, respectively) are void and unenforceable under California Business & Professions Code § 16600.

5. California Labor Code § 2802 — Failure to Reimburse Business Expenses. Mr. Aldrich seeks reimbursement of approximately $28,400 in unreimbursed business expenses, consisting primarily of travel expenses, entertainment costs, and mobile phone charges incurred during the last four months of his employment. C. AMA's Cross-Claims AMA's Amended Cross-Complaint, filed April 5, 2023, asserts the following causes of actio

1. Breach of Employment Agreement (§ 9.4 — Confidentiality). AMA alleges that Mr. Aldrich's unauthorized transmission of proprietary materials to his personal email account and to Halcyon Creek Productions LLC breached the confidentiality obligations set forth in Section 9.4 of the Employment Agreement, which requires Mr. Aldrich to maintain the confidentiality of all proprietary information during and after employme

2. Misappropriation of Trade Secrets (Cal. Civ. Code § 3426 et seq. — CUTSA). AMA alleges that the show format bibles (for "Apex Endurance," "The Remix," and "Untamed West"), the pilot sizzle reels, and the Summit Challenge revenue model constitute trade secrets under CUTSA, and that Mr. Aldrich's unauthorized acquisition and disclosure of these materials to Halcyon Creek constitutes misappropriation as defined in Ci

3. Breach of Fiduciary Duty. AMA alleges that Mr. Aldrich, as a senior executive officer of AMA, owed duties of loyalty and care to the company, and that his unauthorized disclosure of proprietary materials to a competitor breached those duties.

4. Conversion. AMA alleges that Mr. Aldrich's unauthorized appropriation and transmission of AMA's proprietary digital files — including the show format bibles, sizzle reels, and revenue model — constitutes conversion of AMA's property. D. AMA's Assessment of the Merits

1. AMA's Strengths Confidentiality Violation (Ground 1 of "For Cause" Termination). AMA's strongest position in the Aldrich matter is the documentary evidence of Mr. Aldrich's unauthorized transmission of confidential and proprietary materials. The IT forensic review conducted by AMA's Information Security team identified 340 emails forwarded by Mr. Aldrich from his corporate email account to his personal Northgate S

2. AMA's Vulnerabilities Insubordination (Ground 2 of "For Cause" Termination) — Cure-Period Deficiency. AMA's most significant vulnerability in the Aldrich matter is the cure-period deficiency associated with the insubordination ground. Section 7.2(b)(iv) of the Employment Agreement provides that "Cause" based on insubordination requires that AMA provide the employee with written notice of the conduct constituting i

3. Probability Assessment Based on the foregoing analysis, AMA's assessed probabilities on the key issues in the Aldrich matter are as follows: These assessments reflect AMA's view that the confidentiality violation provides a strong foundation for the "for cause" termination, but that the cure-period deficiency, the pretext narrative, and the timeline concerns introduce meaningful risk that a jury could reject the "

V. GLOBAL RESOLUTION PROPOSAL A. Combined Package AMA's global resolution proposal for both the class action and the Aldrich individual dispute is summarized in the following table: This combined package represents AMA's good-faith effort to achieve a comprehensive and final resolution of all pending employment litigation in a single mediation process. The combined total of $16.75 million to $17.25 million is a signi

1. Comprehensive Finality. A global resolution would allow AMA to resolve all pending employment litigation in one process, eliminating the organizational distraction and uncertainty of parallel proceedings. In particular, a simultaneous resolution would eliminate the overhang of the Aldrich dispute during the class settlement approval process. If the Aldrich matter were to remain pending during the class settlement