CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP
MEMORANDUM
TO: Renata Vasquez, Responsible Partner
FROM: Devon Archer, Lead Associate
DATE: January 10, 2023
RE: Litigation Strategy Outline — Combined Class and Executive Matters (Fuentes v. Aurelius Media Americas Inc., LASC Case No. 22STCV38214 (consolidated with 22STCV39501); Aldrich v. Aurelius Media Americas Inc., LASC Case No. 22STCV41087)
C&H Matter No.: 1017-00004
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I. Purpose and Scope
This memorandum sets forth the recommended litigation strategy for the combined defense of Fuentes v. Aurelius Media Americas Inc. (the "Class Action") and Aldrich v. Aurelius Media Americas Inc. (the "Aldrich Matter"). Both matters arise out of AMA's employment practices, though the underlying factual circumstances are largely unrelated. They are, however, linked by overlapping witnesses, common themes of corporate governance and compliance, and the practical imperative of achieving comprehensive resolution of AMA's California employment litigation exposure within a defined timeline and budget.
The goal of this combined strategy is to achieve the most favorable resolution for AMA in both matters while managing litigation costs within the total approved budget of $3,450,000. The firm's engagement was opened on November 1, 2022, and this memorandum contemplates resolution of both matters primarily through mediation and settlement, avoiding trial if possible. Our target outcomes are as follows:
• Class Action: Settlement in the range of $10–15 million (gross settlement amount, or "GSA"), structured as a non-reversionary common fund, with significant carrier contribution from Pemberton Mutual Assurance Co.
• Aldrich Matter: Settlement in the range of $1.5–3.0 million, structured as a lump-sum cash payment with partial RSU acceleration, mutual release of all claims and cross-claims, and restrictive covenant modifications.
This strategy is designed to resolve all pending employment litigation involving AMA within approximately fifteen months of engagement opening — that is, by approximately February 2024. The strategy prioritizes the Class Action given its higher exposure and broader corporate impact, while treating the Aldrich Matter as a secondary but significant engagement requiring aggressive cross-claim prosecution to generate settlement leverage.
The primary client contacts for both matters are Gregory Tanaka, Vice President, Legal & Compliance, Aurelius Media Americas Inc. ("AMA"), and Philippa Cartwright, General Counsel, Aurelius Global Media Group PLC ("AGMG"). Settlement authority protocols are discussed in detail in Section V.B and Section III.E below.
This memorandum should be read in conjunction with the Draft Answer and Affirmative Defenses Memorandum (dated January 5, 2023), the Preliminary Damages Assessment (dated December 15, 2022), and the Insurance Coverage Analysis (dated December 20, 2022), each of which has been provided to Renata Vasquez under separate cover.
II. Class Action Strategy — Overview
A. Parties and Corporate Structure
The defendant in the Class Action is Aurelius Media Americas Inc. ("AMA"), a Delaware corporation qualified to do business in California. AMA's principal office is located at 8500 Sunset Boulevard, Suite 1400, West Hollywood, California 90069. AMA is a wholly owned subsidiary of Aurelius Global Media Group PLC ("AGMG"), a public limited company organized under the laws of England and Wales and listed on the London Stock Exchange. AGMG acquired AMA (formerly Landmark Studios Inc.) in a 2016 acquisition and has since expanded AMA's operations significantly, adding unscripted programming, digital content, and live events divisions to the legacy scripted television production business. AMA currently employs approximately 2,400 individuals in California across seven facilities and fourteen active show units.
B. Putative Class
The putative class consists of approximately 1,850 current and former non-exempt, hourly employees of AMA in the State of California. The class period as pled in the operative complaint runs from November 1, 2018 through the date of preliminary approval of any class settlement. The class encompasses employees across all seven of AMA's California facilities and all fourteen active show units, spanning the Unscripted Programming, Post-Production/Digital Content, Live Events, and Scripted Programming divisions.
C. Named Plaintiffs
The named plaintiffs in the Class Action are:
1. Marisol Fuentes — Production Coordinator, Unscripted Programming Division, assigned to AMA's Studio City facility (Facility 2). Ms. Fuentes has been employed by AMA since March 2019 and is a current employee. She is the lead named plaintiff in the Fuentes action (22STCV38214).
2. Derek Halloran — Post-Production Assistant, Digital Content Division, assigned to AMA's Hollywood facility (Facility 5). Mr. Halloran was employed by AMA from June 2020 through August 2022 and is a former employee. He is the named plaintiff in the Halloran action (22STCV39501), which is anticipated to be consolidated with Fuentes as a related case.
3. Yesenia Padilla — Segment Coordinator, Live Events Division, assigned to AMA's Burbank facility (Facility 4). Ms. Padilla was employed by AMA from January 2019 through April 2022 and is a former employee who departed AMA more than six months before the complaint was filed.
D. Plaintiffs' Counsel
Plaintiffs are represented by two firms acting in coordination:
• Castellano Byrne & Salas LLP (lead class counsel) — Marco Castellano and Diane Salas are the attorneys of record. Castellano Byrne is a well-regarded plaintiffs'-side employment class action firm with a history of achieving significant class settlements in the entertainment and media industry. They are experienced, well-resourced, and aggressive in discovery but have demonstrated willingness to negotiate reasonable settlements when the economics justify it. Marco Castellano personally tried Gutierrez v. Nexus Broadcasting Corp. (LASC, 2019) to a $26.4 million verdict, which was subsequently affirmed on appeal.
• Veltrano Employment Law Group PC (PAGA co-counsel) — Sandra Higuera is the attorney of record for the PAGA claims. Veltrano is a smaller boutique firm that specializes in PAGA representative actions and was brought in specifically to handle the PAGA component. Their involvement suggests Plaintiffs view the PAGA penalties as a significant leverage point.
E. Causes of Action
The operative complaint asserts seven causes of action, all arising under the California Labor Code and the Unfair Competition Law:
1. First Cause of Action — Meal Period Violations (Cal. Lab. Code §§ 226.7, 512): Alleges AMA failed to provide compliant thirty-minute meal periods for shifts exceeding five hours and automatically deducted meal period time regardless of whether employees actually received duty-free meal breaks.
2. Second Cause of Action — Rest Period Violations (Cal. Lab. Code § 226.7): Alleges AMA failed to authorize and permit compliant ten-minute rest periods for every four hours worked, or major fraction thereof, particularly during extended production days.
3. Third Cause of Action — Overtime Violations (Cal. Lab. Code §§ 510, 1194): Alleges AMA failed to properly compensate employees for all overtime hours worked, in part as a consequence of the auto-deduction system's failure to capture actual hours worked.
4. Fourth Cause of Action — Minimum Wage Violations (Cal. Lab. Code §§ 1197, 1197.1): Alleges that the auto-deduction system effectively reduced certain employees' compensation below minimum wage for hours actually worked during meal periods.
5. Fifth Cause of Action — Wage Statement Violations (Cal. Lab. Code § 226): Alleges that AMA's wage statements were inaccurate because they failed to reflect actual hours worked and meal period premiums owed.
6. Sixth Cause of Action — Waiting Time Penalties (Cal. Lab. Code §§ 201–203): Alleges that AMA failed to timely pay all wages due to former employees upon separation, including unpaid meal and rest period premiums and overtime.
7. Seventh Cause of Action — Unfair Competition Law (Cal. Bus. & Prof. Code § 17200 et seq.): Alleges that AMA's Labor Code violations constitute "unlawful" business practices actionable under the UCL.
F. PAGA Claims
Plaintiffs filed a notice with the California Labor and Workforce Development Agency ("LWDA") on September 15, 2022, asserting PAGA claims on behalf of all aggrieved employees. The LWDA took no action by the November 14, 2022 statutory deadline, and Plaintiffs are therefore authorized to proceed with their PAGA representative action. Plaintiffs claim PAGA penalties of approximately $12.2 million, calculated at $100 per pay period per employee for initial violations and $200 per pay period per employee for subsequent violations across the class period. This figure is aggressive and, in our assessment, substantially inflated.
G. Damages Claims
Plaintiffs' aggregate claimed damages are $38.6 million, a figure we anticipate will be supported by an expert report from Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC. This figure includes the $12.2 million PAGA component. Our preliminary defense damages estimate, which will be refined and developed by defense expert Dr. Catherine Lindstrom of Hargrove Analytics Inc., is approximately $5.8 million on a reasonable, facility-by-facility, actualized basis.
H. Court and Assigned Judge
The Class Action is pending in the Superior Court of California, County of Los Angeles — Central District, and is assigned to the Honorable Raymond Escobedo, Department 34. Judge Escobedo has been on the bench for eleven years and has handled numerous employment class actions. He is regarded as fair and thorough but has a reputation for certifying class claims where the plaintiff demonstrates a common policy, even where individual variation exists. He disfavors premature summary adjudication motions in wage-and-hour cases and has publicly stated his preference for resolving contested certification motions on a fully developed record. The consolidated case is designated as 22STCV38214 (Fuentes, lead), consolidated with 22STCV39501 (Halloran), pursuant to a Consolidation Order that we anticipate will be entered on approximately February 3, 2023.
I. Key Vulnerability — NovaPay TimeTrack Pro Auto-Deduction System
The single most significant vulnerability in the Class Action is AMA's use of the NovaPay Solutions "TimeTrack Pro" timekeeping system and, specifically, its automatic meal period deduction feature. The TimeTrack Pro system, as configured for AMA, automatically deducted thirty minutes of paid time for any shift of six hours or more, on the assumption that the employee took a compliant duty-free meal break during that shift. This configuration presents two distinct problems:
First, the six-hour threshold is incorrect under the applicable Industrial Welfare Commission Wage Order. AMA's non-exempt employees are covered by Wage Order 12 (the Motion Picture Industry order), which requires a first meal period no later than the end of the fifth hour of work — not the sixth. The TimeTrack Pro system was configured to trigger the auto-deduction at six hours, creating a one-hour gap in which employees working shifts of five to six hours were auto-deducted a meal period without receiving one. This configuration error affects a meaningful subset of the class.
Second, and more critically, the Missed Meal Attestation feature — a module within TimeTrack Pro that permits employees to affirmatively report that they did not receive a compliant meal break — was not activated at three of AMA's seven California facilities: Facility 2 (Studio City), Facility 4 (Burbank), and Facility 7 (El Segundo). At these three facilities, employees had no mechanism within the timekeeping system to report a missed meal period, and any auto-deduction was applied without employee confirmation. At the four facilities where the Missed Meal Attestation feature was activated (Facilities 1, 3, 5, and 6), usage rates were extremely low, ranging from 2% to 4% of eligible shifts. This low usage rate is susceptible to two competing interpretations: either employees were, in fact, receiving compliant meal breaks and therefore had nothing to report, or the feature was so poorly publicized and inadequately supported by training that employees did not know it existed or how to use it. Plaintiffs will advance the latter interpretation. We must be prepared to counter with affirmative evidence of training and awareness, which at present is thin — there is an absence of formal, documented employee training on the attestation feature at any of the seven facilities.
The combination of the auto-deduction configuration, the non-activation of the attestation feature at three facilities, the low usage rates at the remaining four, and the absence of documented training creates a significant common question that will be the centerpiece of Plaintiffs' certification motion and the primary driver of settlement value.
III. Class Action Strategy — Phase-by-Phase
A. Phase 1: Pleadings and Early Motions (December 2022 – February 2023)
1. Answer. We will file AMA's Answer to the operative complaint with thirteen robust affirmative defenses. These defenses have been identified and developed in the separately prepared Draft Answer and Affirmative Defenses Memorandum (dated January 5, 2023) and include, among others: compliance with law; good faith reliance on timekeeping system; individual variation precluding class treatment; failure to state facts sufficient to constitute a cause of action as to each cause of action; no class certification; PAGA standing deficiencies; PAGA penalty reduction under Labor Code § 2699(e)(2); statute of limitations; laches; waiver and estoppel; failure to exhaust administrative remedies; and setoff and recoupment.
The Answer is drafted to preserve all available defenses while not overstating positions that could undermine AMA's credibility with the Court. We have carefully calibrated the affirmative defenses to avoid asserting frivolous or implausible positions that could alienate Judge Escobedo early in the proceedings.
2. Demurrer to Seventh Cause of Action (UCL)
We recommend filing a Demurrer to the Seventh Cause of Action (UCL, Bus. & Prof. Code § 17200) on standing and specificity grounds. While we assess the probability of sustaining the demurrer as moderate (approximately 40%), the filing serves important strategic purposes even if ultimately overruled:
• Standing under Proposition 64: The UCL claim is entirely derivative of the underlying Labor Code claims. Under Bus. & Prof. Code § 17204, as amended by Proposition 64, a private plaintiff must demonstrate that he or she has "suffered injury in fact and has lost money or property as a result of" the unfair competition. We will argue that Plaintiffs have not adequately alleged a particularized injury distinct from the Labor Code violations themselves and that the UCL claim is duplicative.
• Specificity: The complaint fails to identify which prong of the UCL — unlawful, unfair, or fraudulent — Plaintiffs are proceeding under. This ambiguity is prejudicial to AMA's ability to prepare a defense and should be remedied through a more definite statement or dismissal.
• Strategic value: Even if the demurrer is overruled, the motion frames our theory of the case early, forces Plaintiffs to sharpen their allegations, and signals to the Court that AMA intends to litigate vigorously. It also establishes a record that may support later arguments at the summary adjudication or settlement approval stages.
3. Consolidation. We will seek consolidation of the Fuentes action (22STCV38214) and the Halloran action (22STCV39501) via stipulation with Plaintiffs' counsel, with Fuentes designated as the lead case. Consolidation is in the interest of both parties, as it avoids duplicative proceedings, eliminates the risk of inconsistent rulings, and streamlines discovery and certification briefing. We anticipate that Plaintiffs' counsel will readily agree, and we expect a Consolidation Order to be entered on or about February 3, 2023.
4. Protective Order
We will negotiate and stipulate to a Protective Order governing the treatment of confidential business information produced in discovery. The proposed order will employ a two-tier designation system:
• CONFIDENTIAL: Information that is commercially sensitive or proprietary but may be disclosed to counsel for both parties and their retained experts.
• HIGHLY CONFIDENTIAL — ATTORNEYS' EYES ONLY: Information of the highest sensitivity, including personnel records, individual employee data, financial projections, trade secrets, and strategic business information. Access limited to outside counsel and retained experts; not to be disclosed to parties, putative class members, or third parties.
This Protective Order is essential to managing the disclosure of AMA's timekeeping data, payroll records, and HR policies, all of which will be the subject of extensive discovery.
5. Case Management Conference
The initial Case Management Conference is scheduled for March 10, 2023, before Judge Escobedo. At this conference, we will seek to establish a case management schedule that provides for class certification briefing in the spring and summer of 2023, with a certification hearing in late July or early August. This timeline is aggressive but achievable and supports our objective of reaching mediation in August or September 2023.
6. Budget. Phase 1 Budget Allocation: $243,000 (fees: $225,000; expenses: $18,000). Expenses include filing fees, service costs, and initial document management setup.
B. Phase 2: Discovery (January – June 2023)
1. Written discovery — Propounded by AMA
We will propound the following written discovery to each of the three named plaintiffs (Fuentes, Halloran, and Padilla):
• First Set of Form Interrogatories (standard employment form interrogatories pursuant to Cal. Code Civ. Proc. § 2030.010 et seq.);
• First Set of Special Interrogatories (Nos. 1–35), focusing on each named plaintiff's individual work experience, including: specific dates and shifts on which meal periods were allegedly missed; the identity of supervisors who allegedly required work through meal or rest breaks; whether the named plaintiff was aware of or used the Missed Meal Attestation feature; communications with other putative class members regarding meal and rest break practices; any complaints filed with HR or management regarding break practices; the factual basis for each named plaintiff's damages calculation; and any communications with Plaintiffs' counsel prior to the filing of the complaint.
• First Set of Requests for Production of Documents (Nos. 1–20), seeking: personal calendars, schedules, and time records maintained by each named plaintiff; text messages, emails, and other communications with other putative class members or Plaintiffs' counsel regarding the subject matter of the litigation; employment records, including offer letters, performance evaluations, and disciplinary records; any documents reflecting use or non-use of the Missed Meal Attestation feature; and any documents supporting each named plaintiff's damages claims.
The strategic focus of AMA's propounded discovery is to test the individual claims of each named plaintiff and develop evidence of individualized experiences that will undermine commonality and typicality at the class certification stage. We need to establish, through the named plaintiffs' own admissions, that their experiences varied significantly based on their respective divisions, facilities, supervisors, and day-to-day production schedules.
We will aggressively enforce discovery obligations through meet-and-confer correspondence and, if necessary, motions to compel. Plaintiffs' counsel in wage-and-hour class actions frequently provide vague or evasive responses to interrogatories seeking specific factual details about individual claims, and we must hold them to the statutory requirements.
2. Responding to Plaintiffs' discovery
We anticipate that Plaintiffs' counsel will propound extensive written discovery, including Form Interrogatories, Special Interrogatories, and Requests for Production directed to AMA. We will respond in a timely fashion, preserving appropriate objections — including overbreadth, undue burden, attorney-client privilege, and work product protection — while producing sufficient information to demonstrate AMA's good faith and compliance with its discovery obligations.
We will provide substantive responses to targeted Requests for Production seeking core categories of documents, including: TimeTrack Pro configuration records and system specifications; Missed Meal Attestation feature activation logs and usage data; AMA's written meal and rest break policies; employee handbooks and training materials; payroll records and timekeeping data for the putative class; and DLP audit communications (to the extent not privileged).
Supplemental responses will be served as additional documents are collected and reviewed through the e-discovery process.
The anticipated production volume is substantial. We expect to produce approximately 147,832 documents comprising roughly 1.2 million pages from seven key custodians:
1. Lorraine Okafor — Senior Vice President, Human Resources
2. Gregory Tanaka — Vice President, Legal & Compliance
3. Marcus Yee — Director, Client Data Services, NovaPay Solutions Inc. (third-party custodian)
4. Jonathan Mercer — President, AMA
5. Celine Arroyo — Director of Production Operations
6. Dwayne Prescott — Vice President, Unscripted Programming
7. Karen Fong — Payroll Manager
We will negotiate proportionality limitations on overbroad requests from Plaintiffs, including custodian limitations (restricting collection to the seven identified custodians unless Plaintiffs can demonstrate the relevance of additional custodians), time limitations (limiting production to the class period plus a six-month look-back for policy development), and search term protocols (agreed-upon search terms to filter electronically stored information for relevance).
3. ESI Protocol
We will stipulate to an ESI Protocol governing the collection, processing, review, and production of electronically stored information. The key provisions of the protocol include:
• Format: Native format for spreadsheets, databases, and structured data files; image format (TIFF or PDF) with extracted text and metadata for emails and other unstructured documents.
• Search Methodology: Agreed-upon search terms applied to collected data sets, with an iterative process for refining terms based on initial results and relevance sampling.
• De-duplication: Global de-duplication across custodians to eliminate duplicate copies of the same document, reducing review volume and cost.
• Privilege Logging: Detailed privilege log for all documents withheld on grounds of attorney-client privilege or work product protection, with sufficient information to permit meaningful challenge if disputed.
• Clawback Provisions: A robust clawback provision pursuant to California Evidence Code § 912 and Federal Rule of Evidence 502(d) (to the extent applicable), providing that inadvertent production of privileged materials does not constitute waiver.
We anticipate executing the ESI Protocol Stipulation on or about January 13, 2023. Our e-discovery vendor for this engagement is Marlowe Asset Management Litigation Technology Inc., located at 600 Anton Boulevard, Suite 900, Costa Mesa, California 92626. Marlowe Asset Management has handled multiple large-scale employment class action productions for Calderwood & Harkness and is familiar with AMA's document management systems from a prior regulatory matter. Estimated e-discovery costs (including collection, processing, hosting, review platform licensing, and production) range from $200,000 to $275,000.
4. Third-Party Subpoenas
We will issue the following third-party subpoenas:
• Subpoena Duces Tecum to NovaPay Solutions Inc. (2200 Powell Street, Suite 600, Emeryville, California 94608): This subpoena will seek all timekeeping records, payroll data, system configuration records, Missed Meal Attestation activation and usage records, and audit logs maintained by NovaPay for AMA's California operations during the class period. NovaPay's data is the critical data set for both the certification and merits analysis, as it will permit our defense experts to conduct facility-level and show-unit-level analysis of actual meal period compliance rates.
• Deposition Subpoena to Marcus Yee (Director, Client Data Services, NovaPay Solutions Inc.): Mr. Yee will be deposed as the person most knowledgeable regarding the TimeTrack Pro system configuration for AMA, including the auto-deduction parameters, the Missed Meal Attestation feature's activation history, and the system's ability to capture and record employee attestations. Mr. Yee is a cooperative third-party witness and we do not anticipate resistance to the subpoena, though NovaPay's outside counsel may interpose limited objections to protect NovaPay's proprietary system architecture information.
5. Budget. Phase 2 Budget Allocation: $755,000 (fees: $480,000; expenses: $275,000, including e-discovery costs). This phase represents the most expense-intensive portion of the Class Action strategy, driven primarily by the large-scale document production and e-discovery costs.
C. Phase 3: Depositions (April – June 2023)
1. Named Plaintiff Depositions (Taken by AMA)
We will take the depositions of all three named plaintiffs. Each deposition is strategically essential to developing the factual record necessary to oppose class certification and, if certification is granted, to undermine the class claims at trial or improve our settlement posture.
Marisol Fuentes: Ms. Fuentes worked at AMA's Studio City facility (Facility 2), which is one of the three facilities where the Missed Meal Attestation feature was not activated. Her deposition will focus on her individual meal and rest break experiences, including whether she was aware of the attestation feature's existence (or non-existence) at her facility; whether she ever filed HR complaints regarding missed breaks; and the critical distinction between her experience on shooting days (where production schedules are compressed and breaks may be difficult to schedule) versus office and preparation days (where standard break schedules are more readily implemented). We expect Ms. Fuentes to testify that her experience varied significantly depending on whether she was on set or in the office, which directly supports our individual variation argument.
Derek Halloran: Mr. Halloran worked at AMA's Hollywood facility (Facility 5), where the Missed Meal Attestation feature was activated. His deposition will explore whether he was trained on the feature, whether he used it, and if not, why not. In prior informal communications referenced in the complaint, Mr. Halloran acknowledged that he "usually" received his meal breaks — a significant admission that we will seek to develop and lock in at deposition. We will also explore the post-production work environment, which involves more regular, office-based schedules compared to field production, further undermining commonality with the experiences of production coordinators and segment coordinators.
Yesenia Padilla: Ms. Padilla worked at AMA's Burbank facility (Facility 4), where the Missed Meal Attestation feature was not activated. Her deposition will focus on the live events production environment, which involves highly irregular schedules driven by pre-show setup and post-show breakdown requirements, extended production days, and significant variation from event to event. Ms. Padilla's experience is likely to be the most sympathetic of the three named plaintiffs — live events production is physically demanding and schedule-intensive — but it is also the most individualized and least representative of the broader class experience. We note that Ms. Padilla departed AMA more than six months before the complaint was filed, which raises adequacy concerns that we will develop.
The strategic objective of these depositions is to develop evidence of individualized experiences that fundamentally undermine the commonality and typicality requirements of California Rule of Court 3.764 and Code of Civil Procedure § 382. If we can demonstrate through the named plaintiffs' own testimony that their break experiences varied by facility, division, show unit, supervisor, and production schedule, we significantly strengthen our opposition to certification.
2. AMA Witness Depositions (Defended by C&H)
We anticipate that Plaintiffs' counsel will notice the depositions of several AMA witnesses. We will defend the following depositions:
Lorraine Okafor (PMK — Timekeeping and Meal/Rest Break Policies): Ms. Okafor will testify as AMA's Person Most Knowledgeable regarding timekeeping systems and meal/rest break policies. Key topics will include AMA's written meal and rest break policies, the TimeTrack Pro auto-deduction configuration and its history, the Missed Meal Attestation feature's activation and deactivation history across the seven California facilities, employee training (or lack thereof) on break policies and the attestation feature, the fourteen formal HR complaints regarding meal and rest break practices received during the class period, and the six-hour versus five-hour threshold discrepancy. This will be the most critical defense deposition in the case. We will prepare Ms. Okafor extensively to provide clear, consistent testimony that demonstrates AMA's good-faith efforts to comply with California law while acknowledging, where necessary, the limitations of the TimeTrack Pro configuration.
Celine Arroyo (PMK — Production Scheduling and Staffing): Ms. Arroyo will testify regarding the operational variation across AMA's fourteen show units and seven facilities, including differences in production schedules, staffing models, and supervisory practices. She will describe the role of Unit Production Managers ("UPMs") in exercising supervisory discretion over break scheduling and the significant variation between shooting days and non-shooting days. Her testimony is critical to our predominance argument.
Karen Fong (Payroll Manager): Ms. Fong will testify regarding the technical operation of the TimeTrack Pro system, including the auto-deduction mechanics, the attestation feature functionality and user interface, payroll processing procedures, and the integration between TimeTrack Pro and AMA's payroll system. Her testimony will provide the technical foundation for our experts' analyses.
Jonathan Mercer (President): Mr. Mercer's deposition in the Class Action will be limited in scope — he has limited direct knowledge of timekeeping practices or meal and rest break policies. However, class counsel may attend and question him regarding corporate governance, compliance culture, and management oversight. Mr. Mercer is also a critical witness in the Aldrich Matter (see Section V below), and coordination of his deposition preparation across both matters is essential. We anticipate that his deposition will be noticed in both cases, and we will seek to coordinate scheduling to minimize the burden on Mr. Mercer and ensure consistency of testimony.
3. Other Depositions
• Marcus Yee (NovaPay Solutions): Third-party deposition regarding TimeTrack Pro system configuration, activation of features at AMA's direction, and system capabilities. This deposition may be taken by either party or both.
• Show Unit Production Managers (representative sample): We anticipate that Plaintiffs will seek depositions of two to four UPMs from different show units and facilities. These depositions will elicit testimony about supervisory practices and break scheduling at the show-unit level. We will defend these depositions and use them to reinforce the theme of operational variation.
• Former AMA employees (Plaintiffs' witnesses): Plaintiffs may designate several former AMA employees as percipient witnesses to testify about their individual break experiences. We anticipate mixed testimony — some witnesses will support Plaintiffs' narrative of systemic break denials, while others will testify that they regularly received compliant breaks.
We anticipate a total of approximately eighteen depositions in the Class Action: eleven taken by Plaintiffs and seven taken by the defense.
4. Budget. Phase 3 Budget Allocation: $405,000 (fees: $310,000; expenses: $95,000, including court reporter fees, transcript costs, and videographer expenses). All AMA witness depositions will be video-recorded for use at certification hearing and, if necessary, at trial.
D. Phase 4: Expert Engagement and Class Certification Opposition (March – August 2023)
1. Defense Expert Retention
We recommend retaining two defense experts:
Dr. Rajesh Makhija, Workforce Dynamics Consulting LLC (444 Castro Street, Suite 800, Mountain View, California 94041) — Dr. Makhija is an industrial and organizational psychology expert who specializes in analyzing workplace practices across multi-location employers. He will opine on the variability of working conditions across AMA's fourteen show units and seven California facilities, including differences in production schedules, staffing models, supervisory practices, and meal/rest break compliance rates. His analysis will be the cornerstone of our predominance argument at the certification stage. Dr. Makhija has testified in numerous California employment class actions and has been qualified as an expert by courts throughout the state. His hourly rate is $650 per hour, and estimated total fees for his engagement (including data analysis, report preparation, deposition, and hearing testimony) are $140,000 to $180,000. His expert report is due May 19, 2023.
Dr. Catherine Lindstrom, Hargrove Analytics Inc. (515 S. Figueroa Street, Suite 1100, Los Angeles, California 90071) — Dr. Lindstrom is an economist and damages expert who will rebut Plaintiffs' damages model (as set forth in Dr. Rennick's anticipated expert report) and provide an alternative damages calculation based on a more granular, facility-by-facility analysis of actual meal period compliance. She will also opine on the methodological flaws in Dr. Rennick's approach, including his likely assumption that every auto-deducted meal period constituted a "missed" meal period. Dr. Lindstrom's hourly rate is $700 per hour, and estimated total fees are $150,000 to $200,000. Her rebuttal expert report is due June 9, 2023.
Both experts should be formally retained with executed engagement letters no later than March 1, 2023, to ensure adequate time for data analysis and report preparation.
2. Analysis of Plaintiffs' Expert Report
Plaintiffs' damages expert, Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, is expected to submit his expert report on or about April 28, 2023. We anticipate that Dr. Rennick's report will set forth an aggregate damages figure of approximately $38.6 million, including $12.2 million in PAGA penalties.
Based on our experience with Dr. Rennick's methodology in prior matters (including Rodriguez v. Pacific Media Holdings (LASC, 2021), where his report was partially excluded), we anticipate the following key flaws in his approach:
• Auto-deduction assumption: Dr. Rennick's model will likely assume that every automatically deducted meal period was a "missed" meal period — that is, that no employee who was auto-deducted actually received a compliant thirty-minute duty-free break. This assumption lacks foundation and contradicts the common-sense inference (supported by the named plaintiffs' own testimony) that many employees actually took their breaks.
• No facility-level analysis: Dr. Rennick's model will likely aggregate damages across all seven facilities without accounting for the significant differences in attestation feature availability, production schedules, and supervisory practices across facilities. A facility-level analysis would produce dramatically different results.
• Rest period violation rate: Dr. Rennick will likely assume a 50% rest period violation rate across the class, a figure that is speculative and unsupported by any reliable data.
• Off-the-clock time assumption: Dr. Rennick will likely include a component for uncompensated off-the-clock work based on extrapolation from the named plaintiffs' allegations, without any class-wide data to support the extrapolation.
We will develop these critiques in Dr. Lindstrom's rebuttal report and in our certification briefing. We will also evaluate whether a Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747 challenge to Dr. Rennick's methodology is appropriate (the California analogue to the federal Daubert standard). While a Sargon challenge is a viable option, we assess the likelihood of full exclusion as relatively low given the current state of the law and Judge Escobedo's known reluctance to exclude expert testimony at the certification stage. We recommend reserving a Sargon motion for trial if the matter does not settle, where the evidentiary standard is more rigorously applied.
3. Class Certification Opposition
The opposition to Plaintiffs' motion for class certification is due June 16, 2023. This filing is the most consequential pleading in the Class Action and will receive commensurate attention and resources. Our opposition will address all four requirements of certification:
a. Commonality and Predominance. We will argue that individual questions predominate over common questions because:
• AMA does not have a uniform "policy" of denying meal or rest breaks. The auto-deduction is a timekeeping method, not a substantive break policy. AMA's written policies expressly require compliant meal and rest breaks and instruct supervisors to schedule breaks in accordance with California law.
• Whether each individual employee received a compliant meal break depends on individualized facts: the specific show unit, the supervisor on duty, the production schedule for that day, whether the employee was on a shooting day or an office/prep day, the facility at which the employee was assigned, and the employee's own actions (e.g., whether the employee chose to eat at his or her workstation rather than taking a duty-free break).
• The variation across AMA's fourteen show units and seven facilities is statistically significant, as Dr. Makhija's analysis will demonstrate. Break practices in the Unscripted Programming division differ materially from those in Post-Production/Digital Content and Live Events; practices at Studio City differ from those at Hollywood, Burbank, and El Segundo.
• The Missed Meal Attestation feature was not uniformly implemented — it was activated at four facilities and not activated at three — creating a bifurcated class that cannot be analyzed through a single, common framework.
b. Typicality. We will argue that the named plaintiffs' claims are not typical of the putative class because:
• The three named plaintiffs worked in three different divisions (Unscripted Programming, Post-Production/Digital Content, and Live Events), at three different facilities (Studio City, Hollywood, and Burbank), under different supervisors, with different job responsibilities and different daily schedules. Their experiences are not representative of the experiences of the 1,850-member putative class.
• Ms. Fuentes's experience as a Production Coordinator on unscripted television sets is fundamentally different from Mr. Halloran's experience as a Post-Production Assistant in an office environment, which is in turn fundamentally different from Ms. Padilla's experience as a Segment Coordinator for live events.
c. Adequacy. We will argue that the named plaintiffs are not adequate representatives because:
• There are inherent conflicts between current and former employees — current employees (Ms. Fuentes) may be reluctant to testify adversely to their employer, while former employees (Mr. Halloran and Ms. Padilla) may have different motivations and interests.
• Facility-based disparities in the availability of the attestation feature create intra-class conflicts. Employees at facilities where the feature was activated (and who could have used it but chose not to) have different claims than employees at facilities where the feature was never activated (and who had no opportunity to use it).
• Ms. Padilla departed AMA more than six months before the complaint was filed, raising questions about her connection to the class and her ability to adequately represent the interests of current employees and recently departed employees.
d. Superiority. We will argue that a class action is not the superior method of adjudication because:
• The case will devolve into mini-trials on the individualized question of whether each employee received a compliant break, requiring facility-specific, show-unit-specific, and day-specific factual findings that cannot be efficiently resolved on a class-wide basis.
• The PAGA representative action provides an alternative mechanism for addressing alleged systemic violations without the complexities and due process concerns inherent in class certification.
• Individual claims of the magnitude involved here (average individual claim value of approximately $3,100 before PAGA penalties) could be resolved through individual proceedings, particularly given the availability of Labor Code § 1194's fee-shifting provision.
e. Supporting Evidence. Our certification opposition will be supported by:
• Dr. Makhija's expert report demonstrating statistically significant facility-by-facility and show-by-show variation in working conditions and break practices;
• Dr. Lindstrom's expert critique of Dr. Rennick's damages model, demonstrating that the model is unreliable and that damages cannot be calculated on a class-wide basis without individualized inquiry;
• Declarations from Lorraine Okafor, Celine Arroyo, and Karen Fong demonstrating operational variation across AMA's California operations;
• Evidentiary objections to Dr. Rennick's declaration and the named plaintiffs' declarations.
f. Counter-Argument Preparation. We must anticipate Plaintiffs' strongest argument: that the auto-deduction itself creates a uniform common question — namely, whether AMA's practice of automatically deducting meal period time without verifying that employees actually received breaks constitutes a common policy that shifts the burden to AMA to prove compliance on an employee-by-employee basis. Plaintiffs will cite Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, Falk v. Children's Hospital Los Angeles (2015) 237 Cal.App.4th 1454, and other authorities for the proposition that an employer's rounding or deduction policy creates a common question suitable for class treatment.
Plaintiffs will further argue that the low attestation rates (2–4% at the four facilities where the feature was activated) suggest that the feature was universally inadequate — that employees did not use it because they did not know about it, not because they were receiving compliant breaks.
Our response must carefully distinguish between a "system feature" (the auto-deduction, which is a timekeeping mechanism) and a "substantive policy" (which would be an affirmative direction to deny breaks). AMA's written policies required compliant breaks; the auto-deduction was a default timekeeping entry that could be overridden. The auto-deduction does not itself prove that any employee was denied a break — it proves only that the system recorded a meal period deduction regardless of whether the employee actually took a break, worked through a break, or had a break but failed to attest to a missed one. This distinction is critical and must be clearly articulated.
4. Predicted Outcome
Based on our assessment of the record, the applicable law, and Judge Escobedo's known tendencies, we predict the following probabilities for the class certification motion:
• 35% probability: Certification denied entirely. This outcome is possible if Dr. Makhija's analysis is compelling and the Court finds that individual variation precludes any common question from predominating. However, Judge Escobedo's track record suggests he is more likely to certify at least a subset of claims where a common policy can be identified.
• 65% probability: At least partial certification. The most likely outcome is that the Court will certify a narrowed class on the meal period auto-deduction claim (the First Cause of Action), finding that the auto-deduction practice creates a common question regarding AMA's burden to demonstrate compliance. The Court will likely deny certification of the rest period, off-the-clock, overtime, wage statement, and waiting time claims as too individualized to be amenable to class treatment.
If partial certification is the outcome — which we believe is the most probable scenario — we should proceed immediately to mediation. Partial certification significantly narrows the class exposure while still providing Plaintiffs with sufficient leverage to negotiate a reasonable settlement. It also creates a window for a "global" settlement that releases all claims, including non-certified claims, in exchange for a settlement amount that reflects the narrowed certification.
5. Class Certification Hearing
The class certification hearing is scheduled for July 28, 2023, before the Honorable Raymond Escobedo in Department 34. We will prepare a detailed oral argument outline with anticipated judicial questions and proposed responses. Renata Vasquez will present the oral argument. We recommend a full-day preparation session on July 26, 2023, with a moot court exercise involving associates playing the role of opposing counsel and the Court.
6. Budget. Phase 4 Budget Allocation: $860,000 (expert fees: $515,000; certification briefing fees and expenses: $345,000). This is the most expensive phase of the Class Action strategy, reflecting the complexity of the certification opposition and the substantial expert engagement required.
E. Phase 5: Mediation and Settlement (August – September 2023)
1. Mediation Timing
We recommend scheduling mediation promptly following the certification ruling — ideally within two to three weeks of the Court's order. Regardless of whether certification is granted, denied, or partially granted, the certification ruling will provide both parties with a clearer picture of the case's value and create momentum toward settlement. Post-certification is the optimal settlement window: Plaintiffs have validated (or partially validated) their theory, and AMA has defined the scope of its exposure.
2. Mediator. We recommend engaging the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc., located at 1925 Century Park East, Suite 1700, Los Angeles, California 90067. Judge Okoro retired from the Los Angeles Superior Court after more than twenty-five years on the bench and is widely regarded as one of the leading mediators in Southern California for employment class actions. She has a reputation for candor, thorough preparation, and the ability to move parties toward realistic evaluations of their cases. She is familiar with wage-and-hour class action dynamics and has successfully mediated numerous settlements in the entertainment and media industry.
3. Session Planning
We recommend planning for two mediation sessions:
• Session #1 (target: late August 2023): Class Action only. This session will focus exclusively on the Class Action and will allow the parties to explore the realistic settlement range in light of the certification ruling. If the Court has granted partial certification (our most likely scenario), this session should produce meaningful progress toward a settlement in the $10–15 million range.
• Session #2 (target: early September 2023): Combined Class Action and Aldrich Matter. This session will seek to resolve both the Class Action and the Aldrich dispute simultaneously as a package deal. Combining the two matters at a single mediation session provides AMA with leverage — the ability to offer comprehensive resolution of all pending employment litigation in one process — and may facilitate concessions from both sets of plaintiffs' counsel.
4. Settlement Authority
Settlement authority must be obtained from the following individuals in sequence:
• Gregory Tanaka, Vice President, Legal & Compliance, AMA — authority to approve settlements up to $5 million on behalf of AMA.
• Philippa Cartwright, General Counsel, AGMG — authority to approve settlements between $5 million and $15 million on behalf of the AGMG group, in consultation with AGMG finance.
• Jonathan Mercer, President, AMA, and the AGMG Board's Audit and Risk Committee — required for settlements exceeding $5 million and for any settlement involving non-monetary terms that affect AMA's ongoing operations (e.g., policy changes, injunctive relief, monitoring).
We recommend preparing a detailed settlement authority memorandum for circulation to the authority chain no later than two weeks before the first mediation session, setting forth the recommended settlement range, the rationale for the range, and the proposed settlement structure.
5. Target Settlement Range (Class Action)
Our target settlement range for the Class Action is $10–15 million (gross settlement amount). The rationale for this range is as follows:
• If the Court grants partial certification of the meal period auto-deduction claim only, the realistic exposure on the certified claims is approximately $4–8 million, based on Dr. Lindstrom's preliminary analysis of actual meal period non-compliance rates extrapolated from the NovaPay data.
• PAGA penalties — even if substantially reduced from Plaintiffs' claimed $12.2 million — add approximately $500,000 to $1,500,000 to the realistic exposure.
• A trial risk premium of 20–30% should be factored in to account for the inherent unpredictability of trial outcomes and the potential for an adverse verdict on the full $38.6 million claim.
• A global settlement that releases all class, PAGA, and individual claims — including the non-certified rest period, overtime, wage statement, and waiting time claims — commands a premium beyond the value of the certified claims alone. This premium is offset by the benefit to AMA of achieving finality and eliminating the risk of subsequent individual actions.
Within this range, our target PAGA component is $500,000 to $1,000,000. This represents a substantial reduction from the $12.2 million claimed, and courts routinely exercise their discretion under Labor Code § 2699(e)(2) to reduce PAGA penalties where the employer demonstrates that an unreduced penalty would be "unjust, arbitrary and oppressive, or confiscatory." We will argue that AMA's good-faith reliance on the TimeTrack Pro system, its written compliance policies, and the remedial steps it has taken since discovering the auto-deduction configuration error all support a substantial reduction.
6. Settlement Structure
If settlement is reached, we recommend the following structure:
• Non-reversionary gross settlement fund: AMA establishes a fund of the agreed GSA amount. Any unclaimed funds are distributed pro rata to participating class members rather than reverting to AMA. This structure is favored by California courts and enhances the likelihood of final approval.
• Class counsel fee: We anticipate that class counsel will seek a fee award of 33.33% of the GSA (one-third). This is standard in California wage-and-hour class actions and is likely to be approved by the Court.
• Service awards for named plaintiffs: Typical range of $5,000 to $15,000 per named plaintiff. We should not object to reasonable service awards, as objections create unnecessary friction during the approval process.
• Claims administration: We propose Meridian Settlement Services LLC as the claims administrator. Meridian is an experienced class action settlement administrator with a track record of smooth administration and competitive pricing.
• Distribution formula: Individual distribution amounts calculated based on weeks worked during the class period and overtime hours recorded during the class period, with the specific formula to be negotiated with class counsel and approved by the Court.
• Broad release: The settlement agreement will include a broad release of all class, PAGA, and individual claims by participating class members, including claims that were not certified and claims that were not specifically pled in the complaint. The release will cover all potential wage-and-hour claims arising during the class period, including meal period, rest period, overtime, minimum wage, wage statement, waiting time, and UCL claims, as well as all PAGA claims.
• No admission of liability: The settlement agreement will contain an express provision that AMA does not admit liability or wrongdoing.