Greg, Philippa —
Below is a summary report on today's mediation session in *Fuentes v. AMA*, LASC Case No. 22STCV38214 (Consolidated), conducted before Hon. Patricia Okoro (Ret.) at Westpark Dispute Resolution Inc.
**Participants**
- *AMA side:* Greg Tanaka, Lorraine Okafor (by phone), Renata Vasquez, Devon Archer - *Plaintiffs' side:* Marco Castellano, Diane Salas, Trevor Kim (all of Castellano Byrne & Salas LLP); Marisol Fuentes (named plaintiff, attended in person) - *PAGA Co-Counsel:* Sandra Higuera of Veltrano Employment Law Group PC (joined by phone for the PAGA discussion portion)
**Opening Positions**
Plaintiffs opened at **$28 million (gross settlement amount)**. Castellano framed this as a "significant discount" from the $38.6 million damages figure set forth in Dr. Howard Rennick's expert report (Pinnacle Economic Consulting Group LLC), pointing to the strength of Judge Escobedo's August 11, 2023 partial certification order and what he characterized as the "systemic" nature of the auto-deduction practice across all seven California facilities.
AMA opened at **$8 million (GSA)**. We emphasized the limited scope of certification — only the first meal period auto-deduction claim, the derivative wage statement claim, and the UCL claim were certified; rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time claims were all denied. We also walked the mediator through Dr. Catherine Lindstrom's (Hargrove Analytics Inc.) $5.8 million damages valuation and the significant litigation risk Plaintiffs face at trial on the merits given the individualized issues that remain.
**Negotiation Brackets**
Over approximately seven hours of session time (including two extended caucuses), the parties exchanged the following brackets:
- Plaintiffs: $28M → $22M → $18M → $16.5M - AMA: $8M → $10.5M → $12.5M → $13.5M
At the close of the session, the gap had narrowed to **$16.5M (Plaintiffs) vs. $13.5M (AMA)** — a $3 million delta.
**Mediator's Assessment**
Hon. Okoro indicated she believes the case will settle in the **$14–16M range**. She noted that the certification order, while partial, was "a strong signal" and that AMA's auto-deduction practice "presents poorly." She did not mince words on that point. She recommended that both sides reflect on their positions and return for a second session.
Candidly, that assessment is consistent with our own internal analysis. The partial certification order changed the landscape, and the auto-deduction issue is a difficult one for AMA on the optics, even though our merits defenses remain viable.
**Aldrich Discussion**
Castellano indicated that class counsel has no objection to a **combined mediation session** addressing both the class action and the Aldrich individual matter (Case No. 22STCV41087). Cameron Whitfield of Whitfield & Associates (Aldrich's counsel) was not present today but had previously indicated willingness to participate in a combined session. This is strategically advantageous for AMA — it allows us to resolve all pending employment litigation in a single process and creates package-deal leverage that should benefit the overall numbers.
**Next Steps and Recommendations**
1. **Mediation Session #2** is scheduled for **September 8, 2023** (confirmed with Hon. Okoro at Westpark Dispute Resolution). Session #2 will address both the class action and the Aldrich matter.
2. **Settlement authority:** I recommend that AMA increase its settlement authority to **$15 million** for the class action component. Per the August 15, 2023 settlement authority memorandum, the current authorized range is $10–15M. Given where the mediator has bracketed the likely resolution ($14–16M), the $15M ceiling may need to be our realistic target, not simply a maximum we hope to stay well below. Having room to negotiate up to $15M will give us the flexibility to close a deal within the mediator's range without having to pause for re-authorization mid-session.
3. **Combined mediation brief:** We will prepare a combined mediation brief covering both the class action and the Aldrich matter for Session #2. We will circulate a draft to you in advance for review.
**Insurance Coordination**
Bernard Crawford has been coordinating with Pemberton Mutual Assurance Co. (EPL Policy No. PMA-EPL-2022-00837) regarding the carrier's willingness to contribute to a settlement in this range. Pemberton's authorized contribution level will be critical to determining AMA's self-funded share of any deal. We plan to send the formal letter requesting consent and contribution authorization to Pemberton following the second session, once the terms are more concrete and we have a clearer picture of the final number.
Happy to discuss any of the above before Session #2. I know September 8 will come up quickly, so if you want to set up a call early next week to talk through the authority question and overall strategy, Devon and I are available.
Best, Renata
Renata Vasquez