CALDERWOOD & HARKNESS LLP Attorneys at Law 633 West Fifth Street, 48th Floor Los Angeles, California 90071
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT This memorandum is protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the individuals and entities identified herein. Any unauthorized disclosure, reproduction, or distribution of this memorandum or its contents is strictly prohibited.
MEMORANDUM
TO: Engagement File — Matter No. 1017-00004
FROM: Renata Vasquez, Partner
DATE: February 15, 2024
RE: Matter Closing Memorandum — Aurelius Media Americas Inc. / Fuentes v. AMA and Aldrich v. AMA
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I. ENGAGEMENT SUMMARY AND CLOSURE CONFIRMATION
Calderwood & Harkness LLP's ("C&H" or the "Firm") engagement on behalf of Aurelius Media Americas Inc. ("AMA"), a wholly owned United States subsidiary of Aurelius Global Media Group PLC ("AGMG"), in C&H Matter No. 1017-00004 is hereby closed effective February 15, 2024. This memorandum documents the scope of the engagement, the matters resolved, the key outcomes achieved, the financial terms of resolution, and the post-closing obligations that remain outstanding as of the date of closure. It is prepared for the permanent engagement file and for distribution to the client contacts and engagement team members identified below.
The engagement was opened on November 1, 2022, in response to the filing of a putative class action complaint by Marisol Fuentes against AMA in the Superior Court of the State of California, County of Los Angeles — Central District. The scope of the engagement was subsequently expanded to encompass a related class action complaint filed by Derek Halloran (later consolidated with the Fuentes action) and a separate executive employment dispute initiated by Gavin Aldrich, AMA's former Senior Vice President of Original Content & Executive Producer. The engagement is now closed as of February 15, 2024, following entry of the Final Approval Order in the class action on February 9, 2024, and the dismissal with prejudice of the Aldrich action on January 29, 2024. The total duration of the engagement was approximately 15.5 months.
The following individuals served as the primary client contacts throughout the engagement:
• Gregory Tanaka, Vice President, Legal & Compliance, Aurelius Media Americas Inc.
• Philippa Cartwright, General Counsel, Aurelius Global Media Group PLC
The C&H engagement team was comprised of the following attorneys and support professionals:
• Renata Vasquez, Partner — Responsible Partner
• Bernard Crawford, Partner — Billing Partner
• Devon Archer, Senior Associate — Lead Associate
• Nadia Petrov, Associate — Working Associate
• Sophia Meng, Paralegal
All members of the engagement team contributed materially to the successful resolution of both matters. The engagement team worked collaboratively with AMA's in-house legal department and, where necessary, coordinated with AGMG's London-based legal function on matters involving AGMG equity compensation (RSUs) and corporate governance considerations.
II. MATTERS RESOLVED
The engagement encompassed two distinct but related matters, both of which have been fully resolved as described below.
A. Class Action — *Fuentes v. Aurelius Media Americas Inc.*, LASC Case No. 22STCV38214 (Consolidated with *Halloran v. Aurelius Media Americas Inc.*, LASC Case No. 22STCV39501)
Court: Superior Court of the State of California, County of Los Angeles — Central District
Assigned Judge: Hon. Raymond Escobedo, Department 34
Named Plaintiffs: Marisol Fuentes (Lead Plaintiff and Class Representative), Derek Halloran, and Yesenia Padilla
Plaintiffs' Counsel:
• Lead Class Counsel: Castellano Byrne & Salas LLP (Marco Castellano, Diane Salas, and Trevor Kim)
• PAGA Co-Counsel: Veltrano Employment Law Group PC (Sandra Higuera)
Putative Class: Approximately 1,850 current and former non-exempt, hourly employees of AMA who worked in the State of California at any time during the period from November 1, 2018 through October 31, 2023 (the "Class Period").
Claims Asserted: The operative complaint alleged the following causes of action, all arising under the California Labor Code, the applicable IWC Wage Order, and the California Business and Professions Code:
1. Meal period violations (Cal. Lab. Code §§ 226.7, 510, 512), including claims that AMA applied an automatic 30-minute meal period deduction to employee time records without ensuring that compliant meal periods were actually provided;
2. Rest period violations (Cal. Lab. Code § 226.7), alleging that AMA failed to authorize and permit timely, uninterrupted rest periods;
3. Off-the-clock and overtime violations (Cal. Lab. Code §§ 510, 1194, 1198), alleging that AMA's timekeeping practices failed to capture all compensable working time;
4. Minimum wage violations (Cal. Lab. Code §§ 1194, 1197, 1197.1), derivative of the off-the-clock claims;
5. Wage statement violations (Cal. Lab. Code § 226), alleging that AMA's wage statements were inaccurate and did not contain all information required by law;
6. Unfair business practices (Cal. Bus. & Prof. Code § 17200 et seq.), derivative of the underlying wage-and-hour claims; and
7. PAGA representative claims (Cal. Lab. Code §§ 2698–2699.8), seeking civil penalties on behalf of all aggrieved employees for violations of the California Labor Code.
All claims were asserted under IWC Wage Order 12, which governs the motion picture industry. The application of Wage Order 12 presented unique factual and legal issues relating to the distinctive working conditions in the entertainment industry, including production schedules, on-set meal period practices, and the classification of employees across different production units.
Resolution: The class action was resolved through a court-approved class settlement. The Honorable Raymond Escobedo entered the Final Approval Order on February 9, 2024, following a Final Approval Hearing conducted on February 2, 2024. The Court found that the settlement was fair, reasonable, and adequate, and that it was the product of arm's-length, informed negotiations conducted under the supervision of an experienced, neutral mediator.
Gross Settlement Amount: $14,750,000 (non-reversionary)
The detailed terms of the class action settlement are set forth in Section IV.A below.
B. Executive Dispute — *Aldrich v. Aurelius Media Americas Inc.*, LASC Case No. 22STCV41087
Court: Superior Court of the State of California, County of Los Angeles — Central District
Assigned Judge: Hon. Catherine Villanueva, Department 52
Plaintiff/Cross-Defendant: Gavin Aldrich, former Senior Vice President of Original Content & Executive Producer, Aurelius Media Americas Inc.
Aldrich's Counsel: Whitfield & Associates (Cameron Whitfield and Julia Nazarian)
Aldrich's Claims: Mr. Aldrich asserted the following claims against AMA:
1. Wrongful termination in violation of public policy;
2. Breach of contract, specifically challenging AMA's designation of his termination as "for cause" under his Employment Agreement dated March 15, 2019;
3. Breach of the implied covenant of good faith and fair dealing;
4. Declaratory relief, seeking a judicial determination that the non-competition clause in Section 9.1 of his Employment Agreement was void and unenforceable under California Business and Professions Code Section 16600; and
5. Failure to reimburse necessary business expenses under California Labor Code Section 2802.
AMA's Cross-Claims: Following the initiation of the Aldrich action, C&H filed a Cross-Complaint on behalf of AMA on January 20, 2023, asserting the following affirmative claims against Mr. Aldrich:
1. Breach of Employment Agreement, specifically Section 9.4 (Confidentiality), based on Aldrich's unauthorized transmission of proprietary and confidential AMA materials to his personal email accounts and to a third-party entity, Halcyon Creek Productions LLC;
2. Misappropriation of trade secrets under the California Uniform Trade Secrets Act ("CUTSA"), California Civil Code Section 3426 et seq., relating to proprietary show format bibles, sizzle reels, and the "Summit Challenge" revenue model;
3. Breach of fiduciary duty, based on Aldrich's diversion of AMA intellectual property and business opportunities to Halcyon Creek Productions LLC during his tenure as SVP; and
4. Conversion, relating to the unauthorized possession and use of AMA proprietary materials.
The filing of the Cross-Complaint materially altered the dynamics of the Aldrich dispute by transforming AMA from a purely defensive posture into an offensive one. The Cross-Complaint created significant leverage in subsequent settlement negotiations, as the trade secret misappropriation and breach of fiduciary duty claims exposed Mr. Aldrich to substantial potential liability and reputational risk.
Resolution: The Aldrich dispute was resolved through a confidential settlement. The parties executed a comprehensive Settlement Agreement and Mutual Release on January 19, 2024. A Stipulation for Dismissal with Prejudice was filed with the Court on January 26, 2024, and a Request for Dismissal (Judicial Council Form CIV-110) was filed and entered on January 29, 2024.
Settlement Amount: $2,350,000 (lump sum, less applicable withholdings), plus acceleration of 10,200 RSUs (of 15,300 unvested AGMG RSUs previously granted to Mr. Aldrich). An additional 5,100 RSUs were forfeited by Mr. Aldrich and cancelled.
The detailed terms of the Aldrich settlement are set forth in Section IV.B below.
C. Total Resolution Value
The combined resolution value for both matters within the scope of this engagement is summarized as follows:
This total does not include the value of the RSU acceleration for Mr. Aldrich (10,200 RSUs) or the value of the RSUs forfeited and recovered by AMA (5,100 RSUs), which are addressed separately in the settlement terms.
III. KEY OUTCOMES AND ACHIEVEMENTS
A. Class Certification — Partial Victory
The class certification proceedings represented the most significant substantive milestone in the class action litigation. Plaintiffs' motion for class certification, filed on April 14, 2023, sought certification on all seven causes of action asserted in the operative complaint. C&H filed a comprehensive opposition brief on June 16, 2023, supported by two expert reports — one from Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC on commonality and typicality issues, and one from Dr. Catherine Lindstrom of Hargrove Analytics Inc. on damages — and a substantial evidentiary record drawn from the depositions of key AMA personnel and analysis of timekeeping data produced by NovaPay Solutions Inc.
Following a hearing on July 28, 2023, the Court issued its class certification order on August 11, 2023. The Court's ruling represented a meaningful partial victory for AMA. Specifically:
Certification Granted (2 of 7 Substantive Claims): The Court granted certification on the first meal period auto-deduction claim and the derivative wage statement claim under California Labor Code Section 226. The Court also certified the UCL cause of action as derivative of the certified meal period claim, and permitted the PAGA representative action to proceed on all claims. The Court found that the auto-deduction policy was a uniform practice applied to all non-exempt employees, satisfying the commonality and predominance requirements for class treatment.
Certification Denied (5 of 7 Substantive Claims): The Court denied certification on the following claims:
• Rest period violations — The Court found that rest period compliance varied significantly across AMA's 14 show production units and 7 facilities, requiring individualized inquiry into whether each unit's production schedule afforded rest opportunities;
• Off-the-clock/overtime violations — The Court credited Dr. Makhija's testimony that the nature and extent of alleged off-the-clock work varied by production unit, job function, and supervisor, and that common evidence could not establish liability on a classwide basis;
• Minimum wage violations — Denied as derivative of the off-the-clock claims;
• Second meal period violations — The Court found that second meal period obligations depended on individual shift lengths and production schedules that varied materially across units; and
• Waiting time penalty claims — Denied as requiring individualized determination of whether each class member was owed any unpaid wages at the time of separation.
The partial denial of certification was of critical strategic importance. It significantly reduced AMA's overall exposure by eliminating classwide liability on five of seven substantive claims, including the rest period and off-the-clock claims, which together accounted for a substantial portion of Plaintiffs' claimed aggregate damages. This outcome materially strengthened AMA's settlement position in the subsequent mediation sessions and was instrumental in achieving a settlement within C&H's targeted defense range.
B. Settlement Economics — Class Action
The class action settlement was achieved at a level that represented a favorable outcome for AMA relative to the range of potential outcomes at trial and the exposure reflected in the competing damages analyses.
Plaintiffs' Total Claimed Exposure (Class): $38,600,000, as calculated by Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC in his expert report dated April 28, 2023. This figure included approximately $12,200,000 in PAGA penalties, reflecting Plaintiffs' expansive theory of liability across all seven causes of action.
Defense Damages Estimate: $5,800,000, as calculated by Dr. Catherine Lindstrom of Hargrove Analytics Inc. in her rebuttal expert report dated June 9, 2023. Dr. Lindstrom's analysis accounted for the limited scope of viable classwide claims (principally the first meal period auto-deduction claim), applied a more conservative methodology for calculating premium payments, and excluded PAGA penalties on the uncertified claims.
Gross Settlement Amount of $14,750,000 represents 38.2% of Plaintiffs' total claimed exposure. This figure falls within the targeted defense settlement range of $10,000,000 to $15,000,000 that was communicated to and approved by the client during the August 25, 2023 mediation session. While the GSA is at the upper end of the defense range, it is well within the 15% to 40% range that is typical for California wage-and-hour class settlements, and is justified by the favorable release terms that extinguish all class, PAGA, and individual claims — including the non-certified rest period, off-the-clock, overtime, minimum wage, second meal period, and waiting time penalty claims. The breadth of the release was a key negotiating objective, as it eliminates the risk of follow-on litigation on the uncertified claims and provides AMA with comprehensive finality.
C. Settlement Economics — Aldrich
The Aldrich settlement was achieved at a level significantly below Mr. Aldrich's initial demand and reflects the substantial leverage created by AMA's Cross-Complaint.
Aldrich's Aggregate Demand: $4,150,000, comprised of the following components:
Settlement of $2,350,000 represents 56.6% of Aldrich's initial demand. While this percentage is higher than the resolution achieved in the class action, the outcome must be evaluated in context. Mr. Aldrich's wrongful termination and breach of contract claims carried non-trivial risk, particularly given the potential for a sympathetic jury reaction to the "for cause" designation and the inherent difficulties in defending "for cause" terminations in California. Additionally, the declaratory relief claim regarding the non-competition clause was strong on the merits under California Business and Professions Code Section 16600, particularly in light of the recent enactment of AB 1076 and SB 699. The settlement amount reflects a pragmatic evaluation of litigation risk balanced against the leverage provided by AMA's affirmative claims.
Key Non-Monetary Outcomes: The Aldrich settlement achieved several non-monetary outcomes of significant value to AMA:
• Non-competition clause voided: The non-competition provision in Section 9.1 of Aldrich's Employment Agreement was voided by mutual agreement, consistent with California Business and Professions Code Section 16600. While this outcome was largely inevitable given California law, the mutual agreement framework avoided an adverse judicial ruling that could have generated negative publicity or served as precedent in disputes with other former executives.
• Restrictive covenant modifications: The employee non-solicitation provision (Section 9.2) was reduced from 24 months to 12 months post-settlement (through January 19, 2025), and the business relationship non-solicitation provision (Section 9.3) was similarly reduced from 24 months to 12 months post-settlement (through January 19, 2025). These modified provisions remain enforceable and provide meaningful protection during the critical transition period.
• Confidentiality obligations preserved: The confidentiality provision in Section 9.4 of the Employment Agreement remains in full force and effect indefinitely, ensuring that AMA's proprietary information retains its protected status.
• RSU forfeiture: AMA recovered 5,100 forfeited RSUs, representing 33.3% of Aldrich's 15,300 unvested AGMG RSUs. The forfeiture was a direct consequence of AMA's strong leverage on the Cross-Complaint claims and represented a meaningful concession by Aldrich.
• Return of proprietary materials: Aldrich was required to return or permanently delete all AMA proprietary materials — including show format bibles, sizzle reels, and the Summit Challenge revenue model — within 10 business days of execution of the Settlement Agreement, accompanied by a written certification of compliance. This obligation directly addressed the core concern underlying AMA's trade secret misappropriation and conversion cross-claims.
• Mutual general release, neutral reference, and mutual non-disparagement: The Settlement Agreement includes a mutual general release encompassing all claims and cross-claims, a California Civil Code Section 1542 waiver, a neutral reference agreement, and a mutual non-disparagement covenant with a three-year term.
D. Insurance Recovery
The engagement involved significant insurance coverage coordination with AMA's employment practices liability ("EPL") carrier, Pemberton Mutual Assurance Co. C&H submitted insurance tender letters on November 8, 2022, within seven days of the engagement opening, to both Pemberton (EPL Policy No. PMA-EPL-2022-00837) and Redcliffe Specialty Insurance Ltd. (D&O Policy No. RSI-DO-2022-04419).
Class Action Coverage: Pemberton acknowledged coverage of the class action on December 22, 2022, subject to a full reservation of rights. After sustained negotiations between C&H, AMA's in-house counsel, and Pemberton's coverage counsel at Thornhill & Reade LLP in Hartford, Connecticut, Pemberton authorized a contribution of $9,250,000 toward the $14,750,000 class settlement on September 13, 2023. This contribution represents 62.7% of the Gross Settlement Amount and significantly reduced AMA's self-funded exposure. AMA's self-funded share of the class settlement was $5,500,000, representing 37.3% of the GSA.
Aldrich Coverage Denial: Pemberton denied coverage for the Aldrich executive dispute, characterizing AMA's Cross-Complaint as an affirmative action outside the scope of the EPL policy. Pemberton's position was that the policy's insuring agreement covers claims "made against" the insured, and that AMA's filing of the Cross-Complaint transformed the dispute from a defensive posture into an offensive one that fell outside the policy's coverage terms. C&H disputed this characterization in correspondence with Pemberton's coverage counsel, noting that Aldrich's claims against AMA — including the wrongful termination and breach of contract claims — clearly constituted covered "claims" under the policy, regardless of AMA's assertion of affirmative cross-claims. AMA's rights regarding Pemberton's denial of coverage for the Aldrich dispute have been expressly preserved by an C&H letter dated February 1, 2024. AMA may elect to pursue a coverage action against Pemberton in the future, though the cost-benefit analysis of such an action should be carefully evaluated in light of the relatively modest self-funded amount ($2,350,000) and the costs of coverage litigation.
As a result, the Aldrich settlement was entirely self-funded by AMA in the amount of $2,350,000.
D&O Policies: Precautionary notice was filed under AMA's primary D&O policy with Redcliffe Specialty Insurance Ltd. and excess D&O policy with Ashford Re Ltd. Neither policy was triggered, and no claims were made under either policy.
E. Trial Avoidance
The settlement of both matters eliminated the substantial costs and risks associated with trial. C&H estimated trial costs as follows:
• Class Action Trial: $1,200,000 to $1,800,000, reflecting the complexity of a multi-claim wage-and-hour class trial involving extensive lay and expert testimony, the need for demonstrative exhibits relating to production schedules and timekeeping data, and an estimated trial duration of 15 to 20 court days.
• Aldrich Trial: $300,000 to $500,000, reflecting a moderately complex employment dispute with claims and cross-claims, an estimated trial duration of 7 to 10 court days, and the need for expert testimony on damages and trade secret valuation.
The total estimated trial cost savings were approximately $1,500,000 to $2,300,000. Beyond the direct cost savings, the settlements eliminated the risk of adverse jury verdicts, which in the class action could have resulted in liability at or near Plaintiffs' claimed exposure of $38,600,000, and in the Aldrich matter could have resulted in a defense verdict on AMA's cross-claims combined with a substantial plaintiff's verdict on Aldrich's wrongful termination and breach of contract claims.
F. Overall Resolution as Percentage of Claimed Exposure
The following table summarizes the overall resolution economics across both matters:
Achieving a combined resolution at 40.0% of total claimed exposure represents a favorable result for AMA, particularly in light of the broad releases obtained, the non-monetary concessions secured in the Aldrich settlement, and the substantial insurance recovery in the class action. The resolution provides AMA with comprehensive finality on all claims and cross-claims encompassed within the engagement.
IV. DETAILED SETTLEMENT TERMS
A. Class Action Settlement
The class action was resolved pursuant to a Joint Stipulation of Class Action Settlement and Release (the "Class Settlement Agreement"), the key terms of which are summarized in the following table:
The claims rate of 68.2% is robust by the standards of California wage-and-hour class settlements, which typically range from 20% to 70%. The low opt-out rate of 1.24% and the fact that only four objections were filed — all of which were overruled — provide strong indications that the class received the settlement favorably and that the Court was satisfied with the fairness and adequacy of the resolution.
Settlement Funding and Sources:
• Pemberton Mutual Assurance Co. (EPL Carrier): $9,250,000
• AMA (self-funded): $5,500,000
• Total: $14,750,000
Key Dates and Procedural History:
• Class Settlement Agreement executed: September 15, 2023
• Preliminary Approval Motion filed: September 22, 2023
• Preliminary Approval Order entered: October 18, 2023 (Hon. Raymond Escobedo)
• Class Notice mailed by Settlement Administrator: November 3, 2023
• Opt-Out and Objection Deadline: January 2, 2024
• Final Approval Hearing: February 2, 2024
• Final Approval Order and Judgment entered: February 9, 2024
Settlement Administrator: Meridian Settlement Services LLC (primary contact: Angela Truong). Meridian was retained by joint agreement of the parties and was responsible for mailing class notice, processing claims and opt-out requests, calculating individual settlement payments pursuant to the distribution formula, and distributing settlement funds to eligible class members.
Mediator: The class action settlement was reached following two mediation sessions conducted under the supervision of the Honorable Patricia Okoro (Retired), of Westpark Dispute Resolution Inc. The first mediation session, held on August 25, 2023, focused exclusively on the class action. The second mediation session, held on September 8, 2023, addressed both the class action and the Aldrich dispute in a combined session. The class action settled at the conclusion of the September 8 session. Judge Okoro's experience with employment class actions in the entertainment industry was instrumental in bridging the gap between the parties' respective settlement positions.
Release: The Class Settlement Agreement includes a broad release of all claims, known and unknown, arising from or related to the facts alleged in the operative complaint, including all certified and uncertified class claims, PAGA claims, and individual claims. The release encompasses a waiver of rights under California Civil Code Section 1542 and is binding on all class members who did not timely opt out of the settlement.
B. Aldrich Executive Settlement
The Aldrich dispute was resolved pursuant to a Settlement Agreement and Mutual Release (the "Aldrich Settlement Agreement"), the key terms of which are summarized in the following table:
The tax allocation of 45% wages / 55% non-wage was negotiated between the parties and their respective tax advisors. The wage component reflects payments attributable to severance, pro-rata bonus, and back pay, while the non-wage component reflects payments attributable to emotional distress, attorneys' fees, and other non-wage claims. AMA should consult with its tax advisors to confirm appropriate withholding and reporting treatment.
Key Dates and Procedural History:
• Aldrich Settlement Agreement executed: January 19, 2024
• Stipulation for Dismissal with Prejudice filed: January 26, 2024
• Request for Dismissal (Judicial Council Form CIV-110) filed and entered: January 29, 2024
Funding: The Aldrich settlement was entirely self-funded by AMA in the amount of $2,350,000, as Pemberton denied EPL coverage for this matter as discussed in Section III.D above.
Mediator: The Aldrich dispute was mediated by the Honorable Patricia Okoro (Retired), of Westpark Dispute Resolution Inc. The Aldrich matter was initially addressed during the combined mediation session on September 8, 2023, but did not settle at that time. A standalone Aldrich mediation session was conducted on December 8, 2023, at which the parties reached a settlement in principle. The Settlement Agreement was negotiated and finalized over the ensuing weeks and executed on January 19, 2024.
V. FINANCIAL SUMMARY — TOTAL AMA EXPENDITURE
The following table provides a comprehensive summary of all financial expenditures incurred by AMA in connection with the matters resolved in this engagement:
Budget Performance: At the outset of the engagement, C&H provided AMA with a litigation budget of $3,450,000, comprised of estimated professional fees of $2,590,000 and estimated expenses of $860,000. The actual total fees and expenses of $3,279,700 came in $170,300 under budget, representing a favorable variance of 4.9%. This under-budget performance was achieved notwithstanding the expansion of the engagement scope to encompass the Aldrich dispute and the Cross-Complaint, the need to retain two separate experts for the class certification proceedings, and the conduct of 18 depositions across both matters.
Invoice Status: All invoices for professional fees and expenses have been submitted to AMA. Of the total $3,279,700 in fees and expenses, $3,141,200 has been paid to date. The remaining $138,500 is outstanding and represents the final two invoices submitted in January and February 2024, which are pending payment in the ordinary course. C&H requests that AMA process payment of these final invoices promptly following receipt of this memorandum.
VI. KEY LITIGATION MILESTONES
The following table sets forth the key litigation milestones in chronological order across both matters:
VII. DISCOVERY SUMMARY
Discovery in both matters was extensive and involved the collection, review, and production of a substantial volume of electronically stored information ("ESI") and paper documents.
AMA Document Production: AMA produced a total of 147,832 documents, comprising approximately 1.2 million pages. The production included timekeeping and payroll data extracted from AMA's TimeTrack Pro system, human resources records, production schedules, call sheets, daily production reports, meal period and rest period logs, employee handbooks and policy manuals, internal communications (email and messaging), and the proprietary materials at issue in the Aldrich Cross-Complaint (show format bibles, sizzle reels, and the Summit Challenge revenue model).
Plaintiffs' Document Production: Plaintiffs produced a total of 3,412 documents, consisting primarily of the named plaintiffs' personal records, employment-related communications, and damages documentation.
E-discovery Vendor: Marlowe Asset Management Litigation Technology Inc. was retained as the e-discovery vendor for the engagement. Marlowe Asset Management provided document collection, processing, hosting, analytics (including technology-assisted review), and production services. Marlowe Asset Management's fees are included in the C&H expenses reflected in Section V above.
ESI Protocol Stipulation: The parties entered into a stipulated ESI Protocol, which was filed with and entered by the Court on January 13, 2023. The protocol addressed the format, scope, and timing of ESI productions, the handling of privileged materials, and the procedures for asserting and resolving privilege disputes.
Key Custodians (AMA): The following individuals were identified as key custodians for purposes of document preservation and collection:
• Lorraine Okafor, Senior Vice President, Human Resources
• Gregory Tanaka, Vice President, Legal & Compliance
• Marcus Yee, NovaPay Solutions Inc. (third-party payroll vendor)
• Jonathan Mercer, Vice President, Production Operations
• Celine Arroyo, Director, Labor Relations
• Dwayne Prescott, Senior Director, Information Technology
• Karen Fong, Controller
Depositions: A total of 18 depositions were conducted across both matters — 11 depositions noticed and taken by Plaintiffs' counsel, and 7 depositions noticed and taken by C&H on behalf of AMA. The depositions included the three named plaintiffs (Fuentes, Halloran, and Padilla), key AMA personnel (Okafor, Tanaka, Mercer, Arroyo, Fong), Gavin Aldrich, and representatives of NovaPay Solutions Inc. and Halcyon Creek Productions LLC.
Third-Party Subpoena: C&H issued a third-party subpoena to NovaPay Solutions Inc. for timekeeping and payroll data covering the Class Period. NovaPay's production of electronic timekeeping data was central to the class certification proceedings and the damages analyses prepared by the parties' respective experts.
VIII. EXPERT ENGAGEMENT SUMMARY
C&H retained two testifying experts on behalf of AMA in connection with the class certification proceedings. Plaintiffs retained one testifying expert. The following table summarizes the expert engagements:
Dr. Makhija's testimony was particularly effective in persuading the Court to deny certification on five of seven claims. His detailed analysis of the variability in working conditions across AMA's production units directly supported the Court's finding that individualized inquiry predominated over common questions on the rest period, off-the-clock, overtime, minimum wage, second meal period, and waiting time claims.
Dr. Lindstrom's damages rebuttal effectively challenged Dr. Rennick's methodology and assumptions, reducing the perceived exposure by approximately 85% ($38,600,000 to $5,800,000). While the ultimate settlement amount ($14,750,000) exceeded Dr. Lindstrom's defense estimate, this differential reflects the litigation risk associated with the certified claims and the value of the broad release obtained.
Expert Fees:
• Dr. Rajesh Makhija (Workforce Dynamics Consulting LLC): $156,200
• Dr. Catherine Lindstrom (Hargrove Analytics Inc.): $172,400
• Total Expert Fees: $328,600
These expert fees are included in the C&H expenses reflected in Section V above.
IX. INSURANCE SUMMARY
The following table summarizes the insurance policies implicated by the engagement and the outcomes with respect to each:
Insurance Broker: Kestrel Risk Advisors Ltd. (primary contact: Samuel Okonkwo). Kestrel assisted with the initial tender process and provided ongoing coordination between AMA and its carriers throughout the engagement.
Pemberton Coverage Authorization: Pemberton's coverage counsel, Thornhill & Reade LLP of Hartford, Connecticut, authorized Pemberton's contribution of $9,250,000 to the class settlement on September 13, 2023, following review of the Class Settlement Agreement and confirmation that the settlement terms were within the policy's indemnity provisions.
Pemberton Coverage Denial — Aldrich: As discussed in Section III.D above, Pemberton denied coverage for the Aldrich executive dispute. The denial was based on Pemberton's characterization of AMA's Cross-Complaint as an affirmative action outside the scope of the EPL policy's insuring agreement. AMA's rights regarding this coverage denial have been expressly preserved by C&H's letter to Pemberton dated February 1, 2024. AMA should evaluate whether to pursue a coverage action against Pemberton, taking into account the amount at issue ($2,350,000), the strength of the coverage arguments, and the costs and duration of coverage litigation.
X. FILE RETENTION
All matter files, both physical and electronic, will be retained in accordance with C&H's Document Retention Policy. Under that policy, engagement files are generally retained for a period of seven (7) years from the date of matter closing, with certain categories of documents retained indefinitely as described below.
Key documents have been indexed and archived in the Firm's document management system under Matter No. 1017-00004. The archived materials include, without limitation:
1. Class Action Settlement Agreement and Release (Execution Version, dated September 15, 2023);
2. Aldrich Settlement Agreement and Mutual Release (Execution Version, dated January 19, 2024);
3. Final Approval Order and Judgment — Fuentes v. AMA (entered February 9, 2024);
4. Stipulation for Dismissal with Prejudice — Aldrich v. AMA (filed January 26, 2024);
5. Request for Dismissal (CIV-110) — Aldrich v. AMA (entered January 29, 2024);
6. All court filings, pleadings, motions, oppositions, replies, and orders in both matters;
7. Class Certification Order (August 11, 2023);
8. Preliminary Approval Order (October 18, 2023);
9. Expert reports: Dr. Howard Rennick (April 28, 2023), Dr. Rajesh Makhija (May 19, 2023), Dr. Catherine Lindstrom (June 9, 2023);
10. Deposition transcripts for all 18 depositions conducted in both matters;
11. Key correspondence with client contacts (Gregory Tanaka and Philippa Cartwright), opposing counsel (Castellano Byrne & Salas LLP, Veltrano Employment Law Group PC, and Whitfield & Associates), the mediator (Hon. Patricia Okoro, Ret.), insurers (Pemberton Mutual Assurance Co. and Redcliffe Specialty Insurance Ltd.), and vendors (Marlowe Asset Management Litigation Technology Inc., Meridian Settlement Services LLC, NovaPay Solutions Inc.);
12. Insurance tender letters, reservation of rights correspondence, coverage authorization, and coverage denial correspondence;
13. Billing records, invoices, and budget documentation; and
14. This Matter Closing Memorandum.
Documents in categories 1 through 5 and 7 through 8 (settlement agreements, court orders, and judgments) will be retained indefinitely in accordance with the Firm's policy for retention of final dispositive documents.
XI. POST-CLOSING OBLIGATIONS
The following post-closing obligations remain outstanding as of the date of this memorandum. While C&H's engagement is closed, the Firm remains available to assist AMA with any of these matters on a new or reopened engagement basis.
A. Settlement Funding
Class Action: AMA is required to fund its $5,500,000 share of the Gross Settlement Amount, and Pemberton Mutual Assurance Co. is required to fund its $9,250,000 share, to the Meridian Settlement Services LLC escrow account within 14 days of entry of the Final Approval Order. The Final Approval Order was entered on February 9, 2024, establishing a funding deadline of approximately February 23, 2024. AMA should coordinate with Pemberton and Meridian to ensure timely funding. Failure to fund within the stipulated period could result in interest accrual or other penalties under the terms of the Class Settlement Agreement.
Aldrich: AMA is required to fund the $2,350,000 settlement payment to Gavin Aldrich (less applicable withholdings) within 21 days of execution of the Aldrich Settlement Agreement. The Settlement Agreement was executed on January 19, 2024, establishing a funding deadline of approximately February 9, 2024. AMA should confirm that this payment has been processed and delivered to Mr. Aldrich or his counsel.
B. Class Administration
Meridian Settlement Services LLC (primary contact: Angela Truong) will be responsible for distributing individual settlement payments to claiming class members within 30 days of receipt of the fully funded settlement amount. C&H has no further role in the class settlement administration process. All inquiries from class members regarding the status of their payments should be directed to Meridian.
In the event that individual settlement checks remain uncashed after 180 days from the date of issuance, the unclaimed funds will be distributed cy pres to the Legal Aid Foundation of Los Angeles, as specified in the Class Settlement Agreement and approved by the Court in the Final Approval Order.
C. RSU Acceleration — Aldrich
AMA and AGMG must process the acceleration and vesting of 10,200 RSUs for Gavin Aldrich in accordance with the terms of the Aldrich Settlement Agreement. This requires coordination with AGMG's equity compensation team. The primary contact at AGMG for this purpose is Malcolm Dunmore, Chief Financial Officer, AGMG. The acceleration process must include appropriate tax withholding calculations and tax reporting under applicable United States and United Kingdom tax regulations. The remaining 5,100 RSUs that were forfeited by Mr. Aldrich must be formally cancelled on AGMG's share register.