CALDERWOOD & HARKNESS LLP
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Renata Vasquez, Partner
FROM: Devon Archer, Senior Associate
DATE: May 3, 2023
RE: Review and Analysis of Plaintiffs' Expert Report — Dr. Howard Rennick, Pinnacle Economic Consulting Group LLC (Report dated April 28, 2023)
Matter: Fuentes v. Aurelius Media Americas Inc., LASC Case No. 22STCV38214 (Consolidated)
C&H Matter No.: 1017-00004
I. Purpose
This memorandum provides a detailed analysis of the expert report of Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, located at 3000 El Camino Real, Suite 500, Palo Alto, California 94306, submitted on behalf of Plaintiffs on April 28, 2023, in support of Plaintiffs' motion for class certification filed on April 14, 2023. Dr. Rennick was retained by Plaintiffs' counsel, Cohen Briar & Associates LLP, to calculate aggregate damages on behalf of the putative class of current and former non-exempt, hourly employees of Aurelius Media Americas Inc. ("AMA") who worked at AMA's California facilities during the proposed class period.
Dr. Rennick's report calculates aggregate damages of approximately $38.6 million, inclusive of approximately $12.2 million in penalties under the Private Attorneys General Act ("PAGA"), Cal. Lab. Code § 2698 et seq. The report purports to cover a putative class of approximately 1,850 current and former non-exempt, hourly employees across seven California production facilities and fourteen show units during the class period of November 1, 2018 through the present. The damages are organized across five categories of alleged violations: meal period premiums, rest period premiums, off-the-clock overtime, wage statement penalties, and PAGA penalties.
The purpose of this memorandum is threefold. First, it summarizes Dr. Rennick's methodology and conclusions in sufficient detail for the defense team to understand the structure and assumptions underlying his damages model. Second, it identifies critical methodological flaws and unsupported assumptions in the report that can be exploited in our opposition to class certification and, ultimately, at trial. Third, it recommends a comprehensive rebuttal strategy for our defense expert, Dr. Catherine Lindstrom of Hargrove Analytics Inc., located at 515 S. Figueroa Street, Suite 1100, Los Angeles, California 90071, whose rebuttal report is due on June 9, 2023.
As detailed below, Dr. Rennick's report suffers from fundamental methodological deficiencies — most critically, the assumption that every auto-deducted meal period constitutes a "missed" meal period for which a premium is owed. This assumption alone accounts for over $16 million of the claimed damages and is demonstrably incorrect as a matter of both fact and law. The remaining components of the report are similarly flawed, relying on speculative violation rates, unsupported assumptions about off-the-clock work, and maximum penalty calculations that ignore well-established judicial discretion to reduce PAGA penalties.
II. Summary of Dr. Rennick's Methodology and Conclusions
A. Overall Damages Calculation
Dr. Rennick's report presents a five-component damages model purporting to calculate aggregate, class-wide damages for the putative class. The following table summarizes the aggregate damages by claim category as presented in his report:
It should be noted that the $12.2 million off-the-clock damages figure reflects Dr. Rennick's own adjustments for shifts not exceeding eight hours, where unrecorded time would be compensated at the regular rate rather than the overtime rate. The unadjusted figure for the off-the-clock overtime component was approximately $15.8 million. Dr. Rennick's report does not provide a transparent, shift-by-shift accounting of this adjustment; rather, it applies an aggregate correction factor based on what he describes as a "weighted average shift length analysis" that reduces the off-the-clock figure by approximately 22.8%.
Each component of the damages model is discussed in greater detail below.
B. Data Sources
Dr. Rennick relied on the following data sources in constructing his damages model:
1. NovaPay Solutions "TimeTrack Pro" Punch-in/Punch-out Records. Dr. Rennick obtained time and attendance records from the TimeTrack Pro system maintained by NovaPay Solutions Inc., AMA's third-party payroll processing vendor. These records were extracted pursuant to a third-party subpoena issued on February 8, 2023, and were produced by data custodian Marcus Yee, Director of Client Data Services, NovaPay Solutions Inc., located at 2200 Powell Street, Suite 600, Emeryville, California 94608. The TimeTrack Pro records include clock-in and clock-out times, shift duration calculations, auto-deduction flags, and Missed Meal Attestation records (where available). Dr. Rennick identifies this data set as the "primary quantitative basis" for his damages calculations.
2. Payroll Records Produced by AMA. AMA produced payroll records through Karen Fong, Payroll Manager, including wage rates, pay period dates, hours paid, overtime hours, and premium payments. Dr. Rennick used these records to calculate average hourly rates for the putative class and to cross-reference against TimeTrack Pro data.
3. Missed Meal Attestation Feature Records from TimeTrack Pro. TimeTrack Pro includes an optional feature — the Missed Meal Attestation — that permits employees to report a missed meal period directly through the time clock terminal at the end of their shift. When an employee activates this feature, the system overrides the auto-deduction for that shift and triggers an automatic one-hour premium payment on the employee's next paycheck. Dr. Rennick acknowledges that this feature was activated at only four of AMA's seven California facilities.
4. Declarations of Named Plaintiffs. Dr. Rennick relied on declarations submitted by named plaintiffs Marisol Fuentes, Derek Halloran, and Yesenia Padilla in connection with the class certification motion. These declarations describe the named plaintiffs' individual experiences with meal and rest period practices at their respective facilities.
5. AMA's Employee Handbook (Revised March 2021). The handbook contains AMA's general employment policies, including its meal and rest break policies, timekeeping procedures, and overtime policies.
6. AMA's Meal and Rest Break Policy (Effective January 1, 2019). This standalone policy document sets forth AMA's specific procedures for providing and documenting meal and rest periods for non-exempt employees.
7. Production Schedules and Call Sheets for Select Show Units. Dr. Rennick reviewed production schedules and call sheets for certain show units (not identified by name in the report) to contextualize the working conditions of class members in the entertainment production environment.
Notably, Dr. Rennick did not conduct any survey or sampling of class members, did not interview any class members (other than reviewing the three named plaintiff declarations), and did not depose or interview any AMA supervisors or managers regarding meal and rest period practices. His analysis is based entirely on documentary evidence and the assumptions described below.
C. Meal Period Damages Model — Detailed Methodology
The meal period damages component is the largest single category in Dr. Rennick's model, accounting for approximately $16.3 million of the claimed $38.6 million in total damages. Dr. Rennick's methodology for calculating meal period premiums proceeds as follows.
Dr. Rennick identifies that during the class period, AMA's TimeTrack Pro system was configured to automatically deduct thirty minutes from every shift of six hours or more. This auto-deduction was applied uniformly across all seven California facilities and all fourteen show units. Dr. Rennick notes — correctly — that AMA set the auto-deduction threshold at six hours, rather than the five-hour threshold required by Wage Order 12 (applicable to the motion picture industry) and California Labor Code § 512(a). This means that employees working shifts between five and six hours were neither provided a meal period nor had time deducted from their shift records. However, the damages model does not separately quantify this discrete category of violation (shifts between five and six hours without a meal period); instead, it treats all auto-deducted shifts uniformly.
The total number of auto-deducted shifts during the class period was approximately 612,000. Dr. Rennick's core assumption — and the single most consequential assumption in the entire report — is that every auto-deducted meal period is treated as a "missed" meal period for which a one-hour premium is owed under California Labor Code § 226.7, unless a Missed Meal Attestation record in TimeTrack Pro shows that the employee affirmatively reported the missed break and was already compensated with a premium payment.
Under this framework, the only shifts excluded from the damages calculation are those where the employee used the Missed Meal Attestation feature to report a missed break and was already paid a premium. The total number of shifts with a Missed Meal Attestation recorded (and a premium already paid) during the class period was approximately 18,400. Dr. Rennick subtracts these 18,400 shifts from the total to arrive at a net figure of approximately 593,600 "missed" meal periods.
The average hourly rate across the putative class, calculated from AMA's payroll records, is approximately $27.50. Under California Labor Code § 226.7(c), the meal period premium is equal to one additional hour of pay at the employee's regular rate of compensation. Accordingly, Dr. Rennick calculates meal period premiums as follows:
593,600 net "missed" meal periods × $27.50 average hourly rate = approximately $16,324,000
This figure represents approximately 42% of the total claimed damages.
D. Rest Period Damages Model
The rest period damages component accounts for approximately $8.4 million of the total claimed damages. Unlike meal periods, rest periods are not tracked in the TimeTrack Pro system. This is consistent with standard practice in California: because rest periods are compensable paid time (employees remain "on the clock" during rest periods), there is no timekeeping event associated with the beginning or end of a rest period. AMA's TimeTrack Pro configuration reflects this standard approach.
Because there is no electronic data source for rest period compliance, Dr. Rennick assumes a fifty percent rest period violation rate — that is, he assumes that on fifty percent of all shifts where employees were eligible for a rest period, employees did not receive a compliant ten-minute paid rest period for every four hours worked or major fraction thereof, as required by Wage Order 12, Section 12(A) and California Labor Code § 226.7.
The sole basis cited for the fifty percent assumption is the declarations of the three named plaintiffs — Marisol Fuentes, Derek Halloran, and Yesenia Padilla — each of whom described frequent denial of rest periods during production days. Dr. Rennick characterizes the fifty percent figure as a "conservative estimate" based on the named plaintiffs' descriptions of their experiences, although his report does not explain the methodology by which he derived this specific percentage from those declarations or why fifty percent, rather than some other figure, is appropriate.
The total number of rest period-eligible shifts during the class period is approximately 612,000 (the same figure used for the meal period calculation). Dr. Rennick calculates rest period premiums as follows:
612,000 eligible shifts × 50% assumed violation rate = 306,000 missed rest periods
306,000 missed rest periods × $27.50 average hourly rate = approximately $8,415,000
This calculation assumes one rest period violation per eligible shift, which may understate or overstate actual violations depending on shift length (employees working shifts of more than six hours are generally entitled to two rest periods under Wage Order 12). Dr. Rennick does not address this issue in his report.
E. Off-the-Clock Overtime Model
The off-the-clock overtime component accounts for approximately $12.2 million of the total claimed damages (as adjusted). Dr. Rennick's model is based on the Plaintiffs' allegation that AMA required non-exempt employees to perform uncompensated pre-shift setup and post-shift wrap activities that were not captured in the TimeTrack Pro punch records. The named plaintiffs allege that these activities consumed between thirty and forty-five minutes per shift.
Dr. Rennick assumes 37.5 minutes of off-the-clock work per shift, which is the arithmetic midpoint of the Plaintiffs' alleged range. He converts this to a decimal figure of 0.625 hours per shift. Dr. Rennick further assumes that this off-the-clock time should be compensated at the overtime rate of 1.5 times the regular rate, on the theory that the majority of AMA production shifts already exceeded eight hours, such that any additional unrecorded time would fall within overtime hours.
The unadjusted calculation is as follows:
612,000 eligible shifts × 0.625 hours × $41.25 (1.5 × $27.50) = approximately $15,806,250
Dr. Rennick acknowledges that not all shifts exceeded eight hours, and accordingly applies a downward adjustment for shifts where the off-the-clock time would bring total hours to slightly above, at, or below eight hours (where time would be compensated at the regular rate rather than the overtime rate). After applying this aggregate adjustment, Dr. Rennick arrives at a reduced figure of approximately $12.2 million.
The report does not disclose the precise mechanics of this adjustment in detail. Dr. Rennick states that he performed a "weighted average shift length analysis" to determine the proportion of shifts exceeding eight hours and the proportion that did not, and applied the adjustment accordingly. He does not provide a shift-by-shift accounting or disclose the specific proportion of shifts in each category.
F. Wage Statement Penalties
Dr. Rennick calculates wage statement penalties under California Labor Code § 226(e), which provides for a penalty of $50.00 for the initial violation and $100.00 for each subsequent violation, per employee, per pay period. The penalty is capped at $4,000.00 per employee. Dr. Rennick applies these penalties across the approximately 1,850 putative class members over approximately thirteen bi-weekly pay periods per year during the class period. His report asserts that AMA's wage statements during the class period were deficient because they did not accurately reflect total hours worked (due to the auto-deduction) and did not include meal period premiums that were allegedly owed.
Dr. Rennick's aggregate calculation for wage statement penalties is approximately $1.5 million. The report does not provide a detailed breakdown of how this figure accounts for the per-employee cap or for employees who worked for only a portion of the class period. It appears that Dr. Rennick applies the penalty uniformly to all class members for the full class period, which may overstate the figure for employees who were employed for shorter durations.
G. PAGA Penalties
Dr. Rennick calculates PAGA penalties under California Labor Code § 2699(f), which provides for a civil penalty of $100.00 per aggrieved employee per pay period for the initial violation and $200.00 for each subsequent violation. Dr. Rennick applies these penalties broadly across all categories of alleged violations (meal period, rest period, overtime, and wage statement) and across all putative class members for the full class period.
Dr. Rennick's aggregate PAGA penalty calculation is approximately $12.2 million. This figure is consistent with the PAGA notice served on the California Labor and Workforce Development Agency ("LWDA") on September 15, 2022, which identified the same violation categories and a substantially similar penalty estimate. Under California Labor Code § 2699(i), seventy-five percent of any PAGA penalty recovery is distributed to the LWDA and twenty-five percent is distributed to the aggrieved employees. Dr. Rennick notes this allocation in his report but calculates the total penalty figure without applying the allocation.
The PAGA penalty calculation assumes the maximum statutory penalty for every pay period for every aggrieved employee, without any reduction for judicial discretion under California Labor Code § 2699(e)(2) or for the possibility that the court may "stack" penalties (i.e., assess only a single penalty per pay period per violation category, rather than per underlying occurrence).
III. Critical Flaws in Dr. Rennick's Report
Having reviewed Dr. Rennick's report in detail and consulted with Dr. Lindstrom regarding her preliminary analysis, we have identified seven critical flaws in the report. These flaws, individually and collectively, render the report unreliable as a basis for calculating class-wide damages and undermine its utility as a "common methodology" for purposes of class certification. Each flaw is discussed below in order of significance.
A. Flaw #1 — Meal Period Auto-Deduction Assumption (Most Critical)
The fundamental flaw in Dr. Rennick's report is his treatment of every auto-deducted meal period as a "missed" meal period. This assumption is demonstrably incorrect, both as a matter of logic and as a matter of law, and it is the single most consequential error in the report — responsible for over $16 million of the claimed $38.6 million in aggregate damages.
The auto-deduction feature in TimeTrack Pro is a timekeeping mechanism designed to accurately record the time taken for a compliant meal period. When an employee works a shift of six hours or more (as configured by AMA), the system automatically deducts thirty minutes from the employee's total recorded hours. This deduction is intended to account for the thirty-minute unpaid meal period that the employee is required to take under AMA's Meal and Rest Break Policy and California law. For an employee who actually takes a full, compliant thirty-minute meal period, the auto-deduction accurately reflects the time the employee spent on an unpaid break and correctly reduces the employee's compensable hours accordingly.
Consider the following illustrative example: An employee clocks in at 8:00 a.m., takes a compliant thirty-minute meal period at noon (from 12:00 p.m. to 12:30 p.m.), and clocks out at 5:00 p.m. The employee's gross clock-in-to-clock-out time is nine hours. The auto-deduction subtracts thirty minutes, resulting in 8.5 hours of paid time. This accurately reflects the employee's eight and one-half hours of compensable work. In this scenario, the auto-deduction is not evidence of a violation — it is evidence of accurate timekeeping for a compliant meal period. No premium is owed.
Dr. Rennick's model treats this employee's shift as a meal period violation and assesses a one-hour premium of $27.50. But there is no violation. The employee received a compliant meal period. The auto-deduction correctly captured the thirty minutes of unpaid break time. To treat this as a violation is to confuse the timekeeping mechanism with the substantive question of whether a meal period was provided.
The auto-deduction is problematic — and gives rise to a potential violation — only in cases where an employee did not actually take a full thirty-minute meal period. In those cases, the auto-deduction results in the employee being underpaid, because thirty minutes is deducted even though the employee worked through the break. But this scenario requires individualized proof that the specific employee did not, in fact, take a compliant meal period on the specific shift in question. The mere existence of the auto-deduction tells us nothing about whether the employee took the break or not.
Dr. Rennick's model conflates the timekeeping mechanism with a substantive violation. Under Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1040, the employer's obligation with respect to meal periods is to provide them — to make them available to the employee and to relieve the employee of all duties for thirty minutes. The employer does not have an obligation to ensure that the employee actually takes the break. Whether a particular employee was "provided" a compliant meal period on a particular shift is an inherently individualized inquiry that cannot be resolved by pointing to the existence of an auto-deduction in the timekeeping system.
Dr. Rennick's model produces an absurd result that should be highlighted in both our rebuttal report and our opposition to class certification. Under his methodology, essentially zero compliant meal periods were taken during the entire class period — outside the 18,400 shifts (approximately 3% of the total) where employees used the Missed Meal Attestation feature to report a missed break and receive a premium. This means that, according to Dr. Rennick, 97% of all meal periods during the class period were "missed" — even though AMA maintained compliant written policies requiring meal periods, operated fourteen show units with vastly different working conditions (ranging from studio-based production to post-production offices), and employed approximately 1,850 people over a multi-year period. The proposition that 97% of meal periods were violated is facially implausible and unsupported by any evidence in the record.
This flaw alone accounts for the majority of the difference between Dr. Rennick's $38.6 million figure and Dr. Lindstrom's preliminary estimate of approximately $5.8 million.
B. Flaw #2 — Failure to Account for Facility-by-Facility Variation in Attestation Feature
Dr. Rennick's model treats all seven of AMA's California facilities identically, making no distinction between facilities where the Missed Meal Attestation feature in TimeTrack Pro was activated and facilities where it was not. This failure to disaggregate the analysis by facility introduces a significant and unacknowledged source of error into the damages calculation.
The Missed Meal Attestation feature was activated at only four of AMA's seven California facilities:
Facilities where the Attestation Feature was Activated:
• Facility 1 — West Hollywood Headquarters, 8500 Sunset Boulevard, West Hollywood, CA
• Facility 3 — Sherman Oaks Production Office, 15301 Ventura Boulevard, Sherman Oaks, CA
• Facility 5 — Hollywood Production Center, 1438 N. Gower Street, Hollywood, CA
• Facility 6 — Santa Monica Content Studio, 2120 Colorado Avenue, Santa Monica, CA
Facilities where the Attestation Feature was NOT Activated:
• Facility 2 — Studio City Production Lot, 4024 Penmark Strategy Partners Avenue, Studio City, CA
• Facility 4 — Burbank Production Campus, 3800 W. Alameda Avenue, Burbank, CA
• Facility 7 — El Segundo Post-Production Annex, 888 N. Sepulveda Boulevard, El Segundo, CA
At the four facilities where the Missed Meal Attestation feature was active, employees who missed a meal period had a readily available electronic mechanism to report the missed break directly through the TimeTrack Pro time clock terminal at the end of their shift. When an employee used this feature, the system automatically overrode the auto-deduction for that shift and triggered a one-hour premium payment on the employee's next paycheck. The feature was designed to function as a self-reporting tool that would correct the auto-deduction in cases of actual missed meal periods.
The fact that employees at these four facilities chose not to use the feature in the overwhelming majority of shifts is at least as consistent with employees actually taking compliant meal breaks as it is with employees being unaware of, or deterred from using, the feature. The usage rates at the four active facilities were as follows:
• West Hollywood (Facility 1): 2.3% of eligible shifts
• Sherman Oaks (Facility 3): 4.1% of eligible shifts
• Hollywood (Facility 5): 1.8% of eligible shifts
• Santa Monica (Facility 6): 3.7% of eligible shifts
These low usage rates — averaging approximately 3.0% across the four facilities — suggest that the vast majority of employees at these facilities either took compliant meal breaks (and therefore had no reason to report a missed break) or, at minimum, did not perceive their meal periods as having been missed. Dr. Rennick's report acknowledges these usage rates but dismisses them, arguing that low attestation rates may reflect employee ignorance of the feature, fear of retaliation, or the inconvenience of using the feature. However, he provides no evidence to support any of these alternative explanations and does not address the obvious inference that most employees did not use the feature because they did not need to — because they took their meal breaks.
A proper damages model would need to disaggregate the analysis by facility and account for the fundamentally different evidentiary landscape at each facility type. At facilities where the attestation feature was active, the low usage rate provides affirmative evidence that compliant meal periods were taken. At facilities where the feature was not active, the absence of self-reporting data means that the question of whether meal periods were taken cannot be resolved through the TimeTrack Pro data alone and requires individualized evidence.
Dr. Rennick's failure to make this distinction renders his damages model unreliable as a class-wide methodology.
C. Flaw #3 — Rest Period Violation Rate Is Entirely Speculative
The fifty percent rest period violation rate assumed by Dr. Rennick has no empirical basis whatsoever. It is not derived from the TimeTrack Pro data (which does not track rest periods, as they are paid time), from a survey or sampling of class members, from a statistical analysis of any kind, or from any recognized methodology for estimating violation rates in the absence of direct data.
The sole basis for the fifty percent assumption is the declarations of three named plaintiffs — Marisol Fuentes, Derek Halloran, and Yesenia Padilla. Each of these individuals worked at a different AMA facility, in a different division, and under different supervisory structures:
• Marisol Fuentes — Studio City (Facility 2), Unscripted Programming Division
• Derek Halloran — Hollywood (Facility 5), Post-Production Division
• Yesenia Padilla — Burbank (Facility 4), Live Events Division
Extrapolating a fifty percent violation rate from the self-reported experiences of three individuals to a putative class of approximately 1,850 people across fourteen show units and seven facilities is statistically unsupportable. Three data points cannot establish a reliable class-wide violation rate for a population of this size and heterogeneity. The three named plaintiffs represent approximately 0.16% of the putative class. No statistician would treat a convenience sample of three self-selected individuals (the named plaintiffs in a lawsuit) as representative of a class of 1,850 people with diverse job functions, work locations, shift patterns, and supervisory environments.
Moreover, the declarations themselves do not uniformly support a fifty percent violation rate. Derek Halloran testified at his deposition on May 9, 2023 (transcript pages 87–89) that he was "usually" able to take meal breaks during post-production shifts. While this testimony relates to meal breaks rather than rest breaks, it undermines the assumption that violations were pervasive even among the named plaintiffs themselves and raises questions about the reliability of the declarations as a basis for class-wide extrapolation.
Dr. Makhija's expert report, due May 19, 2023, from Workforce Dynamics Consulting LLC (444 Castro Street, Suite 800, Mountain View, California 94041), is expected to demonstrate statistically significant variability in working conditions across AMA's fourteen show units. This variability — including differences in shift patterns, supervisory practices, break scheduling protocols, and the nature of the work itself — makes any class-wide violation rate assumption unreliable. A fifty percent violation rate may be plausible for a specific show unit with particularly demanding production schedules; it is implausible for a post-production office where employees work regular daytime hours with structured break schedules.
D. Flaw #4 — Off-the-Clock Time Assumption Lacks Empirical Basis
The 37.5-minute off-the-clock time assumption suffers from the same fundamental problem as the rest period violation rate: it is not derived from any empirical data or recognized methodology. It is simply the arithmetic midpoint of the Plaintiffs' alleged range of thirty to forty-five minutes, selected without any analysis of actual pre-shift or post-shift activities, the time those activities require, or the variability of those activities across different roles, facilities, and show units.
Different employees in different roles performed fundamentally different pre-shift and post-shift tasks. A camera operator or production coordinator on an active studio shooting day may have significant equipment setup and teardown duties that require meaningful pre-shift and post-shift time. By contrast, a post-production assistant working regular office hours at the El Segundo Post-Production Annex (Facility 7) may have no pre-shift setup duties at all — the employee arrives, logs into a workstation, and begins editing. A digital content coordinator working in an office environment at the Santa Monica Content Studio (Facility 6) may similarly have minimal or no pre-shift or post-shift duties beyond routine personal preparation.
Dr. Rennick does not account for this variability. He applies the same 37.5-minute assumption to every shift for every employee in every role at every facility, regardless of whether the employee's actual pre-shift and post-shift activities were compensable work or non-compensable personal preparation.
Additionally, Dr. Rennick does not address the distinction between compensable and non-compensable pre-shift activities. Not all time spent at the workplace before a shift begins constitutes compensable "suffered or permitted" work. Arriving early, getting coffee, socializing with coworkers, and changing into work attire are generally non-compensable personal activities. Only activities that are "integral and indispensable" to the employee's principal work activities — such as setting up production equipment, reviewing call sheets, or logging footage — constitute compensable work time. Dr. Rennick's model makes no effort to distinguish between these categories and simply assumes that all pre-shift and post-shift time is compensable.
The off-the-clock claim is inherently individualized and cannot be reliably modeled on a class-wide basis using a single assumed figure. Each employee's pre-shift and post-shift activities depend on the employee's specific role, the show unit, the type of production (studio versus field versus live event versus post-production), and the particular day's production schedule.
E. Flaw #5 — No Accounting for AMA's Compliant Written Policies
AMA's Employee Handbook (revised March 2021) and its standalone Meal and Rest Break Policy (effective January 1, 2019) facially comply with California law and Wage Order 12 (applicable to the motion picture industry). These policies expressly require:
• A thirty-minute uninterrupted, duty-free meal period for every shift exceeding five hours;
• A second thirty-minute meal period for every shift exceeding ten hours;
• A ten-minute paid rest period for every four hours worked or major fraction thereof;
• That employees are relieved of all duties during meal and rest periods;
• That employees who are unable to take a compliant meal period must report the missed break to their supervisor and are entitled to a one-hour premium payment.
Under Brinker, the employer's obligation is to provide meal periods — not to ensure that employees take them. Brinker, 53 Cal.4th at 1040 ("An employer's duty with respect to meal breaks . . . is an obligation to provide a meal period to its employees. The employer satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so."). The existence of facially compliant policies that require meal and rest periods and establish a procedure for reporting missed breaks is relevant — and arguably dispositive in many cases — to the question of whether AMA fulfilled its obligation to provide compliant breaks.
Dr. Rennick's model does not factor in the existence of these policies. It treats the auto-deduction as a violation without considering whether AMA's policies provided employees with the opportunity to take compliant meal periods and a mechanism to report instances where they did not. This omission is particularly significant in the context of class certification, where the question is whether there is a common methodology for determining liability and damages. A model that ignores the employer's compliant policies and treats every shift as a violation regardless of the employer's actual practices cannot serve as a reliable common methodology.
F. Flaw #6 — PAGA Penalties Assume Maximum Assessment Without Discretion Reduction
Dr. Rennick calculates PAGA penalties of $12.2 million at the maximum statutory rate — $100.00 per aggrieved employee per pay period for the initial violation and $200.00 per aggrieved employee per pay period for each subsequent violation — without accounting for the trial court's broad discretion to reduce penalties under California Labor Code § 2699(e)(2).
Section 2699(e)(2) provides that the court may exercise its discretion to award a lesser amount than the maximum statutory penalty "if, based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory." This discretionary authority is routinely exercised by California courts, and penalty reductions of seventy-five to ninety percent or more are common in PAGA cases, particularly where:
• The employer's violations were not willful or the result of a deliberate scheme to deprive employees of wages;
• The employer maintained facially compliant policies and made good-faith efforts to comply with the law;
• The employer took corrective action after becoming aware of the violations; or
• The total penalty amount, if assessed at the maximum rate, would be disproportionate to the employer's culpability.
Several of these factors weigh strongly in AMA's favor. AMA maintained compliant written policies throughout the class period. Moreover, AMA took corrective action after the lawsuit was filed: it corrected the auto-deduction threshold from six hours to five hours in December 2022, and it activated the Missed Meal Attestation feature at all seven California facilities (it had previously been active at only four). These corrective actions demonstrate good faith and weigh heavily in favor of a substantial penalty reduction under Section 2699(e)(2).
A realistic PAGA settlement or judgment component, based on comparable cases and the specific facts of this matter, would be in the range of $500,000 to $1,500,000 — a fraction of Dr. Rennick's $12.2 million figure. Dr. Rennick's failure to account for judicial discretion renders his PAGA penalty calculation grossly inflated and unreliable as a measure of realistic exposure.
G. Flaw #7 — Overtime Rate Assumption for Off-the-Clock Time
Dr. Rennick assumes that all off-the-clock time should be compensated at the overtime rate of 1.5 times the regular rate, based on the theory that the majority of AMA production shifts already exceeded eight hours such that any additional unrecorded pre-shift or post-shift time would fall within overtime hours.
While it is true that many AMA production shifts — particularly in the Unscripted Programming, Live Events, and Studio Production divisions — regularly exceed eight hours (entertainment-industry shoots frequently run twelve to sixteen hours under Wage Order 12's extended daily schedule provisions), this assumption does not hold universally across all employees, all facilities, and all show units. Specifically:
• Post-production employees (such as named plaintiff Halloran at Facility 5) typically work eight- to ten-hour shifts. For many of these shifts, the addition of 37.5 minutes of pre-shift time would bring total daily hours to only slightly above eight hours, meaning the added time would be compensated at the regular rate (or, for the first portion, not at the overtime rate at all).
• Digital content employees at the Santa Monica Content Studio (Facility 6) typically work regular eight-hour shifts with structured schedules that do not regularly extend into overtime.
• Administrative and support staff across multiple facilities work standard business hours that rarely, if ever, exceed eight hours.
Dr. Rennick acknowledges this issue and applies a partial downward adjustment, reducing his off-the-clock damages figure from approximately $15.8 million to approximately $12.2 million. However, this adjustment is applied as a crude aggregate correction — a single reduction factor applied to the entire data set — rather than as a shift-by-shift analysis that would account for the actual shift lengths of individual employees in specific roles and show units. The resulting figure remains significantly overstated because it does not accurately reflect the proportion of off-the-clock time that would be compensable at the regular rate versus the overtime rate for the diverse population of employees in the putative class.
IV. Comparison to Defense Damages Analysis
Our defense expert, Dr. Catherine Lindstrom of Hargrove Analytics Inc. (515 S. Figueroa Street, Suite 1100, Los Angeles, California 90071), is preparing a rebuttal report, which is due on June 9, 2023. Dr. Lindstrom has completed a preliminary review of the TimeTrack Pro data, AMA's payroll records, and the relevant policy documents, and has provided initial indications of her anticipated conclusions.
Based on Dr. Lindstrom's preliminary analysis, the defense damages estimate is approximately $5.8 million in aggregate — roughly fifteen percent of Dr. Rennick's $38.6 million figure. This substantial disparity is driven primarily by fundamental differences in the assumptions and methodologies applied to the same underlying data. The following table summarizes the key differences:
Dr. Lindstrom's approach to meal period damages begins with the premise that the auto-deduction is a timekeeping mechanism, not proof of a violation. At facilities where the Missed Meal Attestation feature was active, Dr. Lindstrom proposes to use the attestation rates (averaging approximately 3.0%) as a direct measure of the minimum violation rate at those facilities, with a conservative upward adjustment to account for possible under-reporting (resulting in an estimated violation rate of 8–15%). At facilities where the feature was not active, Dr. Lindstrom proposes to apply the adjusted violation rates from the active-feature facilities, further adjusted upward to account for the absence of a self-reporting mechanism.
For rest period damages, Dr. Lindstrom has indicated that the available data does not support any reliable class-wide violation rate calculation. She may either exclude the rest period component from her rebuttal analysis (on the ground that no reliable methodology exists to calculate rest period violations on a class-wide basis using the available data) or estimate a violation rate of five to ten percent based on industry benchmarks and the specific working conditions at AMA's facilities.
For off-the-clock damages, Dr. Lindstrom proposes to analyze TimeTrack Pro punch-in times relative to call times from the production schedules and call sheets to determine whether there is evidence of systematic pre-shift work. Her preliminary review suggests that many employees punched in at or very close to their scheduled call times, which is inconsistent with a 37.5-minute pre-shift work assumption.
The $5.8 million defense estimate is a preliminary figure and may be refined as Dr. Lindstrom completes her analysis. However, it provides a credible anchor for settlement discussions and a defensible alternative to Dr. Rennick's inflated figure.
V. Impact on Class Certification
Dr. Rennick's report is submitted in support of Plaintiffs' motion for class certification filed on April 14, 2023. Plaintiffs rely on the report to argue that Dr. Rennick has developed a "common methodology" that can measure damages across the entire putative class using common proof — specifically, the TimeTrack Pro time and attendance data maintained by NovaPay Solutions. Under California class certification standards, Plaintiffs must demonstrate, among other things, that common issues predominate over individual issues (Brinker, 53 Cal.4th at 1021–22). The availability of a common damages methodology is a significant factor in the predominance analysis.
Under Granite Harbor Partners LLC v. Behrend (2013) 569 U.S. 27, 35, a damages model at the class certification stage must be consistent with the plaintiff's theory of liability. Specifically, the model must measure only those damages attributable to the theory of liability on which the class is certified. If the model sweeps in damages that are not attributable to the certified theory — or if it rests on assumptions that conflict with the substantive legal standard — then it fails to establish that damages can be proven on a class-wide basis.
Dr. Rennick's model does not satisfy this requirement. The substantive theory of liability for the meal period claims is that AMA failed to provide compliant meal periods, as required under Brinker and California Labor Code § 512. Under Brinker, the employer fulfills its obligation by relieving the employee of all duty, relinquishing control over the employee's activities, and permitting a reasonable opportunity to take an uninterrupted thirty-minute break. Brinker, 53 Cal.4th at 1040. Whether a particular employee was provided a compliant meal period on a particular shift is a fact-specific inquiry that depends on the employee's actual experience — not on the existence of an auto-deduction in the timekeeping system.
Dr. Rennick's model does not measure damages attributable to AMA's failure to provide meal periods. Instead, it measures damages attributable to the existence of the auto-deduction feature — treating every auto-deducted shift as a violation regardless of whether the employee actually took a compliant meal period. This disconnect between the damages model and the substantive theory of liability is precisely the type of mismatch that Northgate Enterprises holds is fatal at the certification stage.
However, we must acknowledge that California state courts have generally been more liberal than federal courts in applying the Northgate Enterprises standard. The California Supreme Court has not adopted the full rigor of Northgate Enterprises's requirement that the damages model "match" the theory of liability with precision. California courts tend to treat disputes over expert methodology as going to the weight, not the admissibility, of the evidence at the certification stage. See, e.g., Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 332–33 (disputes about the strength or weakness of the plaintiffs' evidence should not be resolved at the certification stage).
The case is assigned to the Honorable Raymond Escobedo, Department 34, of the Los Angeles Superior Court. Judge Escobedo has handled several wage-and-hour class certification motions in recent years, and his rulings suggest a moderate approach that gives some weight to methodological criticisms but is generally reluctant to deny certification solely on the basis of disputed expert assumptions.
Given this landscape, our most effective strategy for opposing class certification on expert-methodology grounds may be to focus on the rest period and off-the-clock components of Dr. Rennick's model, which lack any systematic data basis, rather than on the meal period component, which at least uses TimeTrack Pro data (even if Dr. Rennick's interpretation of that data is fundamentally flawed). The rest period claim relies entirely on a speculative fifty percent violation rate derived from three declarations — this is exactly the type of "trial by formula" that cannot satisfy predominance. The off-the-clock claim relies on an unsupported assumption about the duration of pre-shift and post-shift activities that varies dramatically across roles and show units — this is inherently individualized and not susceptible to class-wide proof.
For the meal period claims, our primary argument should be that Dr. Rennick's model is not a reliable "common methodology" because it conflates the auto-deduction with a violation and therefore does not measure what it purports to measure. Even if the court declines to exclude the model on this basis at the certification stage, the argument positions us to challenge the model at summary judgment and trial.
VI. *Sargon*/*Daubert* Challenge Considerations
A separate memorandum assessing the viability of a Sargon challenge to Dr. Rennick's report is being prepared and will be circulated by June 5, 2023. The following is a preliminary assessment of the key considerations.
Under Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, 770–72, the trial court acts as a gatekeeper with respect to expert testimony and has a duty to exclude expert opinion that is based on assumptions that are "speculative, or based on matter of conjecture," or that relies on "factors that have too attenuated a connection to the pertinent facts to provide a reasonable basis for the opinion." Sargon affirmed that California trial courts have the authority to evaluate the foundational basis of an expert's opinion before allowing it to be considered by the trier of fact.
The strongest grounds for a Sargon challenge to Dr. Rennick's report are as follows:
1. Meal Period Auto-Deduction Assumption. The assumption that every auto-deducted meal period is a "missed" meal period lacks evidentiary foundation. It is a logical non sequitur that transforms a neutral timekeeping mechanism into proof of a violation. This assumption is not supported by any evidence in the record, any industry standard, or any recognized methodology for estimating meal period violation rates.
2. Rest Period Fifty Percent Violation Rate. The extrapolation of a fifty percent violation rate from three individual declarations to a class of approximately 1,850 people is speculative under any recognized statistical standard. Three data points from self-selected individuals (the named plaintiffs in a lawsuit, who have a financial interest in maximizing the violation rate) cannot support a reliable class-wide inference.
3. Off-the-Clock 37.5-Minute Assumption. The use of an arithmetic midpoint of an alleged range, with no empirical basis and no effort to account for the obvious variability in pre-shift and post-shift activities across roles and show units, is precisely the type of speculative assumption that Sargon was designed to exclude.
Our preliminary assessment is that there is approximately a thirty to thirty-five percent chance of success on a standalone Sargon motion at the class certification stage. California trial courts, as a general matter, prefer to address expert methodology disputes at trial rather than at the certification stage. Judge Escobedo has not, to our knowledge, granted a Sargon motion to exclude a damages expert at the certification stage in a wage-and-hour class action, although he has sustained specific evidentiary objections to portions of expert declarations.
Accordingly, our recommendation is to present Sargon arguments within our opposition to class certification rather than filing a standalone Sargon motion. We should file targeted evidentiary objections to specific paragraphs of Dr. Rennick's declaration under California Evidence Code sections 801 and 802, challenging the foundational basis of his key assumptions. This approach preserves the Sargon arguments for the record while avoiding the risk of a denied standalone motion that could be perceived by the court as an overreach.
VII. Recommendations for Rebuttal Strategy
Based on the analysis set forth above, we recommend the following coordinated rebuttal strategy, encompassing Dr. Lindstrom's rebuttal report, Dr. Makhija's expert report on commonality and typicality, evidentiary objections, and the opposition to class certification.
A. Dr. Lindstrom's Rebuttal Report (Due June 9, 2023)
Dr. Lindstrom's rebuttal report should address each component of Dr. Rennick's damages model and present a credible, defensible alternative analysis. We recommend that the rebuttal report focus on the following five areas:
1. Challenge the Meal Period Assumption Head-On. Dr. Lindstrom should demonstrate clearly and persuasively that the auto-deduction is a timekeeping method — not proof of a violation. Her report should include illustrative examples (similar to the one set forth in Section III.A above) showing that the auto-deduction accurately captures meal period time for employees who take compliant breaks. She should present an alternative analysis using the actual attestation data from the four facilities where the Missed Meal Attestation feature was active, and conservatively extrapolate from those data to estimate the true meal period violation rate across all seven facilities. The preliminary estimated violation rate of eight to fifteen percent should be supported by a detailed statistical methodology, including confidence intervals and sensitivity analyses, to demonstrate that the estimate is robust and not dependent on a single assumption.
2. Disaggregate by Facility. Dr. Lindstrom should present a facility-by-facility analysis showing the different attestation rates, shift-length distributions, and working conditions at each of AMA's seven California facilities. The analysis should clearly distinguish between the four facilities where the Missed Meal Attestation feature was active (Facilities 1, 3, 5, and 6) and the three facilities where it was not (Facilities 2, 4, and 7). For the active-feature facilities, Dr. Lindstrom should present the attestation rates as affirmative evidence of high meal period compliance. For the non-active facilities, she should discuss the limitations of the available data and present a range of plausible violation rates based on conservative extrapolation.
3. Present an Alternative Damages Figure. Dr. Lindstrom should present a defensible aggregate damages figure. The preliminary target of approximately $5.8 million (excluding PAGA penalties, which are subject to significant judicial discretion reduction) should be supported by a transparent, reproducible methodology. This figure will serve as a credible counterpoint to Dr. Rennick's $38.6 million calculation and will provide a realistic anchor for any settlement discussions.
4. Address the Rest Period Claim. Dr. Lindstrom should note the complete absence of any systematic data supporting a class-wide rest period violation rate and explain why the fifty percent assumption is statistically unsupportable. If feasible, she should present an analysis of shift-length data showing that many shifts did not exceed the threshold at which rest period violations become more likely (e.g., shorter shifts where employees have fewer rest period entitlements and where the pace of work may be less intense). If Dr. Lindstrom includes a rest period violation estimate, it should be clearly labeled as a conservative range (five to ten percent) and should be accompanied by a discussion of the limitations of the available data.
5. Address Off-the-Clock Claims. Dr. Lindstrom should present an analysis of TimeTrack Pro punch-in times relative to call times from production schedules and call sheets, to test whether there is evidence of systematic pre-shift work reflected in the data. If employees generally punched in at or near their scheduled call times, this is inconsistent with a 37.5-minute pre-shift work assumption. Dr. Lindstrom should also present role-specific analyses showing the variability in pre-shift and post-shift activities across different job categories and show units.
B. Dr. Makhija's Expert Report (Due May 19, 2023)
Coordination with Dr. Vikram Makhija of Workforce Dynamics Consulting LLC (444 Castro Street, Suite 800, Mountain View, California 94041) is essential to ensure that his commonality/typicality analysis complements Dr. Lindstrom's damages rebuttal. Dr. Makhija's report should focus on demonstrating the substantial variability across AMA's fourteen show units that renders Dr. Rennick's class-wide assumptions unreliable for class certification purposes.
Key data points that Dr. Makhija should address include:
• Statistically significant differences in shift-length distributions across show units, demonstrating that the "average" shift length assumed by Dr. Rennick masks substantial heterogeneity. For example, studio-based productions may have average shift lengths of ten to twelve hours, while post-production units may average eight to nine hours and digital content units may average seven to eight hours.
• Differences in overtime frequency across show units, demonstrating that the assumption that off-the-clock time falls in overtime hours is inapplicable to many employees in many show units.
• Differences in self-reported missed meal rates (based on Missed Meal Attestation data at facilities where the feature was active), demonstrating the variability of actual meal period experiences. The range across show units is substantial — from approximately 2.1% for the studio-based show "Kitchen Clash" to approximately 18.7% for the field-based show "Summit Challenge." This range undermines the premise that a single class-wide violation rate can reliably measure damages.
• Differences in production types — studio versus field versus live event versus post-production versus digital content — and the corresponding differences in break scheduling, supervisory practices, and the physical demands of the work.
• Differences in supervisory practices across show units, including whether line producers or unit production managers actively monitored and facilitated meal and rest periods.
Dr. Makhija's analysis should be coordinated with Dr. Lindstrom's to avoid inconsistencies and to present a unified defense narrative: the putative class is too heterogeneous for any single damages model to reliably measure class-wide damages, and Dr. Rennick's model papers over this heterogeneity with assumptions that are unsupported by the data.
C. Evidentiary Objections
We should prepare targeted evidentiary objections to Dr. Rennick's declaration under California Evidence Code sections 801 and 802, focusing on the following:
• The meal period assumption (paragraphs 18–26 of Rennick's declaration) as lacking foundation under Evidence Code section 801(b) (opinion must be based on "matter . . . that is of a type that reasonably may be relied upon by an expert in forming an opinion upon the subject to which his testimony relates"). The assumption that every auto-deduction constitutes a missed meal period is not a type of assumption that a reasonable economist or damages expert would rely upon, because it conflates a timekeeping mechanism with a substantive violation.
• The fifty percent rest period violation rate (paragraphs 27–33 of Rennick's declaration) as speculative and lacking foundation. An assumed violation rate extrapolated from three individuals to a class of 1,850 is not based on "matter . . . that is of a type that reasonably may be relied upon" by an expert.
• The PAGA penalty calculation (paragraphs 40–45 of Rennick's declaration) as assuming maximum penalties without accounting for the well-established judicial discretion to reduce penalties under California Labor Code section 2699(e)(2). While this is arguably a legal question rather than a methodological one, the failure to account for judicial discretion renders the PAGA penalty figure unreliable as a measure of realistic damages exposure.
These evidentiary objections should be filed concurrently with our opposition to class certification, due June 16, 2023. The preparation of the objections should be assigned to Nadia Petrov, with a target completion date of June 14, 2023.
D. Certification Opposition
In our opposition to class certification, we should advance the following arguments regarding Dr. Rennick's damages model:
First, Dr. Rennick's model is not a viable "common methodology" under Northgate Enterprises because it does not match the substantive theory of liability. The substantive question under Brinker is whether AMA provided compliant meal periods to its employees — not whether the TimeTrack Pro system applied an auto-deduction to their shift records. Answering the Brinker question requires individualized proof for each class member: Did this employee, on this shift, receive an opportunity to take a thirty-minute uninterrupted meal period? Was the employee relieved of all duties? Was the employee free to leave the premises? These are fact-specific inquiries that cannot be resolved by pointing to the existence of a system-wide auto-deduction.
Second, even if the auto-deduction issue presents a common question (which we contest), Dr. Rennick's model cannot reliably measure damages on a class-wide basis because it treats the auto-deduction as synonymous with a violation, thereby ignoring the vast majority of employees who actually took compliant meal breaks. A damages model that systematically overstates violations by a factor of six to twelve times (comparing Rennick's 97% violation rate to Lindstrom's estimated 8–15%) is not a reliable common methodology — it is an exercise in assuming the answer.
Third, the rest period and off-the-clock components of Dr. Rennick's model are not based on common proof at all. The rest period violation rate is derived from three individual declarations, not from class-wide data. The off-the-clock time assumption is an arithmetic midpoint of an alleged range, with no data basis and no effort to account for the variability of pre-shift and post-shift activities across the class. These components cannot satisfy the predominance requirement because they do not demonstrate that damages can be proven using evidence common to the class.
VIII. Next Steps
The following table summarizes the key action items, responsible attorneys, and deadlines arising from this analysis:
Please let me know if you would like to discuss any aspect of this analysis or the recommended rebuttal strategy in greater detail. I am available to meet at your convenience to review the preliminary findings from Dr. Lindstrom and to discuss coordination with Dr. Makhija's team.
End of Memorandum
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT This memorandum was prepared in anticipation of litigation and reflects the mental impressions, conclusions, opinions, and legal theories of counsel. It is protected from disclosure under the attorney-client privilege and the attorney work product doctrine.
| Claim Category | Rennick's Calculation | Amount |
| First Meal Period Premiums | ~593,600 net "missed" meal periods × avg. $27.50/hr | ~$16.3 million |
| Rest Period Premiums | ~306,000 violations (50% assumed rate) × avg. $27.50/hr | ~$8.4 million |
| Off-the-Clock Overtime | ~612,000 shift |