1017-00004 · Entities. Aurelius Global Media Group · Experts

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CALDERWOOD & HARKNESS LLP 333 South Grand Avenue, Suite 4400 Los Angeles, California 90071 Telephone: (213) 555-7200

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Devon Archer, Senior Associate

FROM: Nadia Petrov, Associate

DATE: March 5, 2023

RE: Expert Engagement — Scope of Work Memorandum: Dr. Catherine Lindstrom, Hargrove Analytics Inc.

Matter No.: 1017-00004

Client: Aurelius Media Americas Inc.

Case: Fuentes v. Aurelius Media Americas Inc., LASC Case No. 22STCV38214 (Consolidated)

I. Purpose

This memorandum sets forth the detailed scope of work for Dr. Catherine Lindstrom of Hargrove Analytics Inc., located at 515 S. Figueroa Street, Suite 1100, Los Angeles, California 90071, who has been retained pursuant to the Expert Retention Letter dated March 1, 2023 (Document 94 in this matter's document management system). This memorandum is intended to serve as the operative reference document governing the substance, methodology, and deliverables expected of Dr. Lindstrom's engagement, and should be read in conjunction with the Expert Retention Letter, which addresses the formal terms and conditions of engagement.

Dr. Lindstrom has been retained as Aurelius Media Americas Inc.'s ("AMA") economics and damages expert in the above-captioned matter. Her engagement encompasses two principal objectives: (a) analyzing and rebutting the damages model anticipated from Plaintiffs' economics expert, Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC; and (b) developing an alternative, defensible damages calculation for the putative class claims asserted by Plaintiffs. These two tasks are complementary and should be undertaken in tandem so that the rebuttal analysis and the alternative model are consistent in their assumptions, data inputs, and methodological framework.

Dr. Lindstrom's engagement is governed by the fee schedule set forth in the Expert Retention Letter, which provides for the following hourly rates: $700 per hour for Dr. Lindstrom's professional time, and $375 per hour for Senior Analyst time. The total estimated fees for the engagement, inclusive of all data analysis, model development, report writing, and testimony preparation, are estimated at $150,000 to $200,000, subject to the qualifications set forth in Section VII below.

All work product generated by Dr. Lindstrom in connection with this engagement is protected by the attorney-client privilege and the work product doctrine. All materials provided to Dr. Lindstrom, including client documents, discovery materials, and data sets, are subject to the Stipulated Protective Order entered by the Honorable Raymond Escobedo on February 15, 2023, and must be handled in strict accordance with the terms of that Order, as further described in Section VIII of this memorandum.

II. Background and Context

A. Case Overview

Fuentes v. Aurelius Media Americas Inc. is a putative class action filed by approximately 1,850 current and former non-exempt, hourly employees of AMA. The case encompasses employees who worked across seven California production facilities and fourteen distinct show units during the class period. Plaintiffs allege systematic wage-and-hour violations under the California Labor Code and Industrial Welfare Commission ("IWC") Wage Order 12 (Motion Picture Industry), which governs the wages, hours, and working conditions of employees in the motion picture and related entertainment industries.

The operative complaint asserts seven causes of action:

1. Failure to Provide Compliant Meal Periods (Cal. Lab. Code §§ 226.7, 512) — Plaintiffs allege that AMA failed to provide timely, uninterrupted, and duty-free meal periods of not less than 30 minutes, as required by statute and Wage Order 12, and failed to pay the requisite one-hour premium for each noncompliant meal period.

2. Failure to Provide Compliant Rest Periods (Cal. Lab. Code § 226.7) — Plaintiffs allege that AMA failed to authorize and permit paid rest breaks of not less than 10 minutes per four hours of work (or major fraction thereof), and failed to pay the requisite one-hour premium for each missed or noncompliant rest period.

3. Failure to Pay Overtime (Cal. Lab. Code §§ 510, 1194) — Plaintiffs allege that AMA failed to compensate employees for all hours worked in excess of eight hours per day, forty hours per week, and for seventh-consecutive-day work, at the applicable overtime and double-time rates of pay.

4. Failure to Pay Minimum Wage (Cal. Lab. Code §§ 1197, 1197.1) — Plaintiffs allege that, as a result of the foregoing violations (particularly the failure to pay for off-the-clock work), AMA's effective hourly rate for certain shifts fell below the applicable state or local minimum wage.

5. Failure to Provide Accurate Wage Statements (Cal. Lab. Code § 226) — Plaintiffs allege that, as a derivative consequence of the unpaid wages and premiums described above, AMA's itemized wage statements failed to accurately reflect the total hours worked, gross wages earned, and all applicable deductions.

6. Waiting Time Penalties (Cal. Lab. Code §§ 201–203) — Plaintiffs allege that employees who separated from AMA during the class period were not timely paid all wages due at the time of separation, including unpaid meal and rest period premiums, entitling them to waiting time penalties of up to thirty days' wages.

7. Unfair Competition (Cal. Bus. & Prof. Code § 17200) — Plaintiffs assert an unfair competition claim predicated on the underlying wage-and-hour violations, seeking restitution and injunctive relief.

In addition to the class claims, Plaintiffs have asserted representative claims under the Private Attorneys General Act ("PAGA") (Cal. Lab. Code §§ 2698–2699.8). The PAGA notice was filed with the Labor and Workforce Development Agency ("LWDA") on September 15, 2022. Plaintiffs claim $12.2 million in aggregate PAGA penalties, calculated at the maximum statutory rate. The PAGA claims are particularly significant because they are not subject to class certification requirements and could independently generate substantial exposure for AMA.

The class period, as pled, runs from November 1, 2018 through the present. However, as discussed below, AMA's electronic timekeeping system was not implemented until January 1, 2019, which may limit the scope of available electronic records for the earliest portion of the class period.

B. AMA's Timekeeping System

AMA utilizes the "TimeTrack Pro" electronic timekeeping system, developed and hosted by NovaPay Solutions Inc. The TimeTrack Pro system has been in continuous use at all seven of AMA's California production facilities since its implementation on January 1, 2019. Prior to that date, AMA utilized a combination of manual timesheets and a legacy payroll system that is no longer in active use and for which historical electronic data may be limited or unavailable.

The TimeTrack Pro system includes an automatic meal period deduction feature (the "Auto-Deduction Feature"), which is central to this litigation. The Auto-Deduction Feature is configured to automatically deduct 30 minutes from any recorded shift of six hours or more. The deduction is applied to the employee's time record at the end of the shift, on the assumption that the employee took a compliant 30-minute, duty-free meal period during the shift.

It is important to note a known configuration discrepancy in the system: the Auto-Deduction Feature was configured with a six-hour threshold, meaning the automatic 30-minute deduction was triggered only for shifts of six hours or longer. However, under IWC Wage Order 12 and California Labor Code § 512, the first meal period must be provided no later than the end of the fifth hour of work, meaning the correct trigger threshold should have been five hours, not six hours. This discrepancy means that employees working shifts of between five and six hours were not receiving an automatic meal period deduction — but it also means they were not receiving a meal period reminder or any system-level prompt to take a meal break. This configuration error was identified in November 2022 and corrected on December 15, 2022, when the threshold was reduced to five hours across all seven facilities.

The TimeTrack Pro system also includes a "Missed Meal Attestation" feature, which allows employees to affirmatively report that they missed or were unable to take a compliant meal period during their shift. When an employee activates the Missed Meal Attestation, the system overrides the automatic 30-minute deduction for that shift and triggers a one-hour meal period premium payment, which is processed and paid in the employee's next regular payroll cycle.

Critically, the Missed Meal Attestation feature was not uniformly activated across all of AMA's California facilities. The feature was activated and available to employees at four of the seven facilities:

• Facility 1 — West Hollywood Headquarters: Activated. Attestation usage rate: 2.3% of eligible shifts.

• Facility 3 — Sherman Oaks: Activated. Attestation usage rate: 4.1% of eligible shifts.

• Facility 5 — Hollywood: Activated. Attestation usage rate: 1.8% of eligible shifts.

• Facility 6 — Santa Monica: Activated. Attestation usage rate: 3.7% of eligible shifts.

The Missed Meal Attestation feature was not activated at the remaining three facilities:

• Facility 2 — Studio City: Not activated.

• Facility 4 — Burbank: Not activated.

• Facility 7 — El Segundo: Not activated.

At the three facilities where the Missed Meal Attestation feature was not activated, employees who missed a meal period had no self-service mechanism to report the missed meal and trigger the premium payment. In those instances, the only available path to a premium payment was for a supervisor to manually initiate a payroll correction — a process that was, by all accounts, inconsistently applied and poorly documented.

The usage rates for the Missed Meal Attestation at the four facilities where it was activated are notably low, ranging from 1.8% to 4.1% of eligible shifts. These rates will be a key input for Dr. Lindstrom's analysis, as they may serve as a proxy (or baseline) for estimating the actual rate at which meal periods were missed across the class. However, as discussed further in Section IV below, the attestation rates may understate the true violation rate if employees were unaware of the feature, discouraged from using it, or simply failed to use it even when a meal period was missed.

C. Anticipated Opposing Expert

Plaintiffs are expected to rely on the expert opinions of Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, located at 3000 El Camino Real, Suite 500, Palo Alto, California 94306. Dr. Rennick is a labor economist who has testified on behalf of plaintiffs in numerous wage-and-hour class actions in California state and federal courts. Plaintiffs' expert report from Dr. Rennick is anticipated by April 28, 2023, consistent with the current case management schedule.

Plaintiffs' aggregate claimed damages in this matter total $38.6 million, inclusive of the $12.2 million in PAGA penalties referenced above. The remaining approximately $26.4 million in claimed damages encompasses meal period premiums, rest period premiums, unpaid overtime, wage statement penalties, and waiting time penalties.

Based on the discovery conducted to date, the deposition testimony of Plaintiffs' counsel at the February 2023 scheduling conference, and our review of Dr. Rennick's prior work in comparable cases, we anticipate that Dr. Rennick will present a damages model built on several key assumptions, including, most significantly, the assumption that every automatic meal period deduction recorded in the TimeTrack Pro system constitutes evidence of a "missed" meal period for which a one-hour premium is owed. This assumption — that the auto-deduction itself is evidence of a violation, rather than evidence of a compliant meal period — is the central point of dispute in the damages analysis and the primary target for Dr. Lindstrom's rebuttal.

We further anticipate that Dr. Rennick may assume a uniform daily amount of off-the-clock work (estimated at 30 to 45 minutes per shift, based on named plaintiff declarations), a rest period violation rate extrapolated from the experiences of the three named plaintiffs, and maximum statutory PAGA penalties without any reduction for good faith or other equitable considerations.

III. Data Sets to Be Provided

The following data sets will be compiled and provided to Dr. Lindstrom. Calderwood & Harkness will coordinate the collection and production of these materials and will endeavor to deliver a substantially complete initial data package by March 31, 2023. Dr. Lindstrom should review the materials as received and promptly identify any data gaps, quality issues, or additional data needs.

A. NovaPay Solutions / TimeTrack Pro Data

The following specific data extracts will be obtained from NovaPay Solutions Inc. pursuant to the third-party subpoena for business records issued on February 8, 2023. The designated NovaPay contact for all data requests is Marcus Yee, Director of Client Data Services. Calderwood & Harkness will coordinate directly with Mr. Yee and NovaPay's outside counsel regarding the timing and format of the data production.

1. Punch Records. All clock-in and clock-out records for AMA non-exempt employees at all seven California facilities for the period November 1, 2018 (or the earliest available date in TimeTrack Pro, which is January 1, 2019 — the system implementation date) through the present. This data set should include, at a minimum, the following fields for each punch event: employee ID, date, time of punch, punch type (clock-in, clock-out, meal-in, meal-out, if tracked separately), facility code, and any associated department or cost center codes. The estimated volume of this data set is approximately 12 million individual punch records.

2. Auto-Deduction Records. All records reflecting the application of the automatic 30-minute meal period deduction to employee time records, including the following fields: date of deduction, employee ID, facility code, shift start time, shift end time, deduction amount (in minutes and as a dollar value, if recorded), and a flag or indicator showing whether the deduction was overridden by a Missed Meal Attestation submitted by the employee. This data set is critical to Dr. Lindstrom's rebuttal analysis, as it will allow her to quantify the total number of auto-deductions applied during the class period and to distinguish between auto-deductions that were and were not overridden.

3. Missed Meal Attestation Records. All records reflecting the use of the Missed Meal Attestation feature by AMA employees, including the following fields: date of attestation, time of attestation submission, employee ID, facility code, reason code (if any), and a flag or indicator showing whether a meal period premium was subsequently paid as a result of the attestation. This data set will serve as the primary basis for Dr. Lindstrom's estimate of the actual meal period violation rate at the four facilities where the feature was activated.

4. System Configuration Logs. Historical system configuration logs showing when the Auto-Deduction Feature was initially configured, the threshold settings applied (six hours versus five hours), and when and where the Missed Meal Attestation feature was activated or deactivated at each facility. These logs should include dates of any changes to the configuration, the identity of the individual who made the change (if recorded), and any notes or comments associated with the change. This data is necessary to establish the precise time periods during which each feature was active at each facility.

5. Payroll Summary Reports. Aggregate payroll data for AMA's California non-exempt employees, broken down by pay period and by facility, including the following data fields: total gross wages, total overtime wages (at 1.5× and 2× rates, separately if available), total meal period premiums paid, total rest period premiums paid, total regular hours, and total overtime hours. These summary reports will provide a high-level check on the underlying punch and deduction data and will be used in Dr. Lindstrom's alternative damages model to calculate aggregate exposure under various scenarios.

B. AMA Internal Data

The following data sets will be obtained from AMA's in-house human resources, payroll, and legal teams. Key contacts for data collection are Lorraine Okafor, Senior Vice President of Human Resources; Karen Fong, Payroll Manager; and Gregory Tanaka, Vice President, Legal and Compliance. Calderwood & Harkness will work with Ms. Okafor and her team to compile these materials and will provide them to Dr. Lindstrom in a structured, analyzable format (preferably CSV or Excel) to the extent possible.

1. Employee Roster. A complete list of all non-exempt, hourly employees employed at any of AMA's seven California facilities at any time during the class period (November 1, 2018 through the present), including the following data fields for each employee: full legal name, employee ID number, date of hire, date of separation (if applicable), job title(s) held during the class period, hourly rate(s) of pay, facility assignment(s), and show unit assignment(s). Where an employee was assigned to multiple facilities or show units during the class period, the roster should reflect each assignment with applicable date ranges.

2. Hourly Rate History. Historical hourly wage rates for each non-exempt employee, by pay period, throughout the class period. This data is essential to enable accurate calculation of meal period and rest period premiums, which are computed at one hour of pay at the employee's "regular rate of pay" as defined under California law. To the extent employees received raises, shifted between job classifications, or were subject to different local minimum wage rates at different times, these changes must be reflected in the hourly rate history.

3. Overtime Records. Detailed records of overtime hours worked by each non-exempt employee, by pay period, throughout the class period. These records should distinguish between regular overtime (hours in excess of eight per day or forty per week, paid at 1.5× the regular rate), double-time (hours in excess of twelve per day, or hours worked on the seventh consecutive day in a workweek after the first eight hours, paid at 2× the regular rate), and seventh-day overtime (the first eight hours worked on the seventh consecutive day in a workweek, paid at 1.5× the regular rate). These records will be necessary for Dr. Lindstrom's analysis of Plaintiffs' overtime claims and for the blended rate calculations described in Section IV.

4. Meal Period Premium Payment Records. Complete records of all meal period premiums actually paid by AMA to non-exempt employees during the class period. This includes premiums triggered by the Missed Meal Attestation feature as well as premiums paid through manual, supervisor-initiated payroll corrections. This data is critical to ensure that Dr. Lindstrom's alternative damages model properly credits AMA for premiums already paid, and to support the rebuttal argument that Dr. Rennick's model (if it fails to account for premiums already paid) overstates AMA's damages exposure.

5. Rest Period Premium Payment Records. All records of rest period premiums paid to non-exempt employees during the class period. Although AMA's records of rest period compliance may be limited (rest periods are not typically tracked in the same manner as meal periods, as employers are required to authorize and permit rest periods but not to ensure they are taken), any records of premiums paid will be relevant to Dr. Lindstrom's analysis of the rest period claims.

6. Production Schedules / Call Sheets. A representative sample of daily production schedules (commonly referred to as "call sheets" in the motion picture industry) for each of AMA's fourteen show units. The sample should cover at least four representative weeks per show unit per year of the class period, selected to capture variation across different production phases and seasons. Call sheets are the primary documents governing daily work schedules in the motion picture industry and typically specify scheduled shift start and end times (call times and wrap times), scheduled meal break times, crew and department assignments, and the nature of the production activity (studio-based filming, field/location-based filming, live events, post-production work, etc.). These documents are essential to Dr. Lindstrom's analysis of facility-level and show-unit-level variation in working conditions and meal period practices, and will support the argument that a uniform violation rate cannot be applied across all facilities and show units.

7. Employee Separation Data. Dates and reasons for separation for all non-exempt employees who separated from AMA during the class period. Separation reasons should be categorized as voluntary resignation, involuntary termination (with or without cause), end of show/season (a common separation event in the entertainment industry, where employment is frequently tied to the duration of a particular production), layoff, retirement, or other. This data is necessary for Dr. Lindstrom's calculation of waiting time penalties under California Labor Code sections 201 through 203, which apply only to employees who have separated from employment and were owed unpaid wages at the time of separation.

C. Plaintiffs' discovery Productions

The following materials from Plaintiffs' discovery productions will be provided to Dr. Lindstrom as they become available:

1. Named plaintiffs' interrogatory responses regarding their individual damages calculations and work experiences, including any supplemental responses served during the course of discovery. These responses will provide insight into the factual bases for Plaintiffs' claims and may reveal the specific assumptions underlying their damages theories.

2. Any damages-related documents produced by Plaintiffs in response to AMA's discovery requests, including any spreadsheets, calculations, or summaries prepared by or on behalf of Plaintiffs in quantifying their claimed damages.

D. Expert Materials

The following expert materials will be provided to Dr. Lindstrom as they become available:

1. Dr. Howard Rennick's Expert Report. Dr. Rennick's expert report is anticipated to be served on or about April 28, 2023. This report will be the primary target of Dr. Lindstrom's rebuttal analysis and should be reviewed promptly upon receipt.

2. Dr. Rajesh Makhija's Expert Report. Dr. Makhija, of Workforce Dynamics Consulting LLC, has been separately retained as AMA's expert on commonality and typicality issues. His expert report is anticipated by May 19, 2023. Dr. Makhija's report will be provided to Dr. Lindstrom for coordination purposes, to ensure that Dr. Lindstrom's damages analysis is consistent with Dr. Makhija's findings regarding variability across AMA's facilities and show units.

3. Deposition Transcripts. Transcripts of the depositions of the three named plaintiffs — Maria Fuentes (scheduled May 2, 2023), Brian Halloran (scheduled May 9, 2023), and Jessica Padilla (scheduled May 16, 2023) — and the depositions of AMA's designated Person Most Knowledgeable ("PMK") witnesses (Lorraine Okafor, Robert Arroyo, and Karen Fong) will be provided to Dr. Lindstrom as they become available. These transcripts may contain testimony relevant to the damages analysis, including testimony regarding individual work experiences, meal and rest period practices, and AMA's timekeeping and payroll systems.

IV. Analytical Methodology

A. Primary Task: Rebuttal of Plaintiffs' Damages Model

Upon receipt of Dr. Rennick's expert report, Dr. Lindstrom should prepare a comprehensive, detailed critique of the damages model presented therein. Based on our anticipation of the methodological approach Dr. Rennick is likely to employ, we identify the following specific areas of focus for Dr. Lindstrom's rebuttal analysis. These areas may be supplemented or modified following actual review of Dr. Rennick's report.

1. Meal Period Auto-Deduction Assumption. The centerpiece of our anticipated rebuttal is the challenge to Dr. Rennick's expected assumption that every auto-deducted meal period in the TimeTrack Pro system constitutes a "missed" meal period for which a one-hour premium is owed. This assumption conflates the existence of an auto-deduction with evidence of a violation — a fundamental analytical error. The Auto-Deduction Feature is designed to record compliant meal periods: it deducts 30 minutes from the shift on the assumption that the employee took a compliant, duty-free meal break. An auto-deduction that accurately reflects the time the employee was on an unpaid meal break is not evidence of a violation; it is evidence of compliance. A violation occurs only when the employee did not, in fact, take a compliant meal period — i.e., when the employee worked through the meal break, took a shortened break, or was interrupted and recalled to duty before completing the break. In those cases, the auto-deduction would have been applied even though the employee continued working, resulting in an underpayment of 30 minutes of work time and a failure to pay the required one-hour premium.

Dr. Lindstrom should quantify the magnitude of the over-counting inherent in treating every auto-deducted shift as a violation. Specifically, she should use the actual Missed Meal Attestation data from the four facilities where the feature was activated to estimate the fraction of auto-deducted shifts that were, in fact, associated with a missed meal period. If the attestation rates (ranging from 1.8% to 4.1%) are reasonably representative of the true violation rate, then approximately 96% to 98% of auto-deductions reflected compliant meal periods, and Dr. Rennick's approach would overstate the number of violations by a factor of approximately 25 to 50 times.

2. Failure to Account for Premiums Already Paid. Dr. Lindstrom should verify whether Dr. Rennick's damages model properly credits AMA for meal period premiums already paid during the class period, both through the Missed Meal Attestation system (at the four facilities where it was active) and through manual supervisor-initiated payroll corrections. If Dr. Rennick does not credit these payments — either by failing to deduct them from the gross damages figure or by failing to acknowledge them at all — Dr. Lindstrom should calculate the total value of premiums already paid and present it as an offset that must be applied to any damages award. Failure to credit premiums already paid would result in a double recovery, which is impermissible under California law.

3. Rest Period Violation Rate. If Dr. Rennick assumes a rest period violation rate in his damages model, we anticipate that the rate will be derived primarily or exclusively from the declarations and deposition testimony of the three named plaintiffs, rather than from any systematic empirical analysis of class-wide rest period practices. Dr. Lindstrom should critique the statistical and methodological inadequacy of extrapolating from the self-reported experiences of three individuals — working at three different facilities, in three different divisions, with three different supervisors and three different sets of job responsibilities — to a putative class of approximately 1,850 employees. Dr. Lindstrom should address the sample size, the non-random selection of the sample (named plaintiffs are, by definition, individuals who believe they were harmed and are thus not representative of the class as a whole), and the absence of any external validation of the named plaintiffs' claims (e.g., corroborating time records, supervisor testimony, or co-worker declarations).

4. Off-the-Clock Work Assumption. If Dr. Rennick assumes a uniform amount of off-the-clock work per shift — and we anticipate he will assume 30 to 45 minutes of unpaid pre-shift and post-shift work per shift, based on named plaintiff declarations — Dr. Lindstrom should critique the absence of any empirical support for this assumption beyond the self-interested testimony of the named plaintiffs. Dr. Lindstrom should further demonstrate that pre-shift and post-shift activities vary enormously across different job roles (e.g., on-camera talent, production assistants, camera operators, lighting technicians, editors, sound engineers), different show units (e.g., scripted drama versus unscripted reality versus live events versus post-production), and different facility types (e.g., studio-based versus field/location-based). A uniform per-shift assumption for off-the-clock work cannot be applied across such a diverse workforce without introducing substantial and systematic error.

5. Facility-Level Variation. Dr. Lindstrom should analyze whether Dr. Rennick's model accounts for — or, more likely, ignores — the significant differences across AMA's seven facilities and fourteen show units. If Dr. Rennick treats all facilities and show units as homogeneous for purposes of his damages calculation, Dr. Lindstrom should demonstrate that this approach is analytically unsound. Specifically, Dr. Lindstrom should use the available data to show materially different patterns of (a) shift lengths, (b) meal period timing, (c) attestation rates (at facilities where the feature is available), (d) overtime frequency, and (e) job role distribution across the different facility types. The four general facility/operation types — studio-based production, field/location-based production, live events, and post-production — have fundamentally different scheduling demands, workflow patterns, and levels of supervisory oversight. These differences should manifest as statistically significant variation in the relevant metrics, undermining any model that treats the workforce as a uniform whole.

6. Overtime Rate Calculation. If Dr. Rennick uses an inflated overtime rate in his damages model — for example, by assuming that all off-the-clock work falls in overtime hours (i.e., hours in excess of eight per day), such that the unpaid time is valued at 1.5× or 2× the regular rate — Dr. Lindstrom should present the correct blended rate calculation. The correct approach requires determining, shift by shift, whether the claimed off-the-clock time would have resulted in a shift exceeding eight hours (and thus qualifying for overtime) or whether the shift, even with the additional time, remained at or below eight hours (in which case the time should be valued at the straight-time rate). Given the variability in shift lengths across AMA's facilities and show units, a significant proportion of shifts may not have exceeded eight hours even with the claimed off-the-clock time, resulting in a materially lower blended rate than the rate assumed by Dr. Rennick.

7. PAGA Penalty Calculation. If Dr. Rennick calculates PAGA penalties at the maximum statutory rate — $100 for the initial violation and $200 for each subsequent violation, per pay period, per employee — Dr. Lindstrom should present an alternative PAGA analysis that accounts for the court's broad discretion to reduce PAGA penalties. Under California Labor Code section 2699(e)(2), the court may, in its discretion, award a lesser amount than the maximum statutory penalty if the award would otherwise be "unjust, arbitrary and oppressive, or confiscatory." Dr. Lindstrom should compile and cite comparable cases in which California courts have exercised this discretion to reduce PAGA penalties by 75% to 90% of the maximum statutory amount. Dr. Lindstrom should also present the factual basis for a reduction in this case, including AMA's good-faith compliance efforts (e.g., the implementation of the Missed Meal Attestation system, the voluntary correction of the six-hour auto-deduction threshold to five hours, and any other remedial measures taken during the class period).

B. Secondary Task: Alternative Damages Model

In addition to the rebuttal analysis, Dr. Lindstrom should develop an independent, defensible damages model for AMA's use in connection with class certification briefing, mediation, and, if necessary, trial. The alternative model should be designed to provide the court and the parties with a reliable, data-driven estimate of AMA's actual damages exposure, in contrast to the inflated figure anticipated from Dr. Rennick. The alternative model should incorporate the following components:

1. Estimate Actual Meal Period Violation Rate. Using the Missed Meal Attestation data from the four facilities where the feature was activated, Dr. Lindstrom should extrapolate a defensible estimate of the actual rate at which employees missed compliant meal periods during the class period. We identify three potential methodological approaches, which should be presented as a range of estimates:

• Direct Use of Attestation Rates. The attestation rates at the four facilities (2.3%, 4.1%, 1.8%, and 3.7%, respectively) may be used as a direct proxy for the meal period violation rate at those facilities, on the theory that employees who missed a meal period had a readily available mechanism to report the missed meal and that the attestation rate therefore approximates the true violation rate. This approach yields a weighted average violation rate in the range of approximately 2% to 4%.

• Conservative Upward Adjustment. Because the attestation rates may understate the true violation rate — for example, if some employees were unaware of the feature, were discouraged from using it (whether explicitly or through workplace culture), or simply failed to use it even when a meal period was missed — Dr. Lindstrom should perform a sensitivity analysis applying upward adjustment factors of 1.5×, 2.0×, and 3.0× the observed attestation rate. At the 3.0× adjustment factor, the estimated violation rate would range from approximately 5.4% to 12.3%, which we believe represents a conservatively high estimate.

• Facilities Without the Attestation Feature. For the three facilities where the Missed Meal Attestation feature was not activated (Facilities 2, 4, and 7), Dr. Lindstrom should apply a higher assumed violation rate, on the theory that the absence of a self-reporting mechanism may have resulted in a higher incidence of unreported and uncompensated missed meal periods. The specific rate to be applied should be determined based on the available data, but we suggest using the upper bound of the sensitivity analysis (i.e., the 3.0× adjustment factor) as a starting point, with the possibility of further upward adjustment if warranted by the data or by testimony from employees at those facilities.

2. Calculate Meal Period Premiums. For each estimated meal period violation, Dr. Lindstrom should calculate the one-hour premium owed at the applicable employee's "regular rate of pay" as defined under California law. The regular rate calculation should use the historical hourly rate data obtained from AMA (as described in Section III.B.2 above) and should account for any changes in an employee's rate of pay during the class period. The total meal period premium damages should be presented on a per-facility, per-year, and aggregate basis.

3. Calculate Wage Statement Penalties. To the extent that meal period violations are established — and to the extent that the resulting unpaid premiums rendered AMA's itemized wage statements inaccurate — Dr. Lindstrom should calculate the derivative wage statement penalties under California Labor Code section 226. The statutory penalty is $50 for the initial violation and $100 for each subsequent violation, assessed per pay period in which an inaccurate statement was provided, and subject to a statutory cap of $4,000 per employee. Dr. Lindstrom's calculation should apply these statutory rates and caps, and should present the results by employee and in the aggregate.

4. Calculate Waiting Time Penalties. For employees who separated from AMA during the class period and who were owed unpaid meal period premiums at the time of their separation, Dr. Lindstrom should calculate waiting time penalties under California Labor Code sections 201 through 203. The maximum waiting time penalty is up to 30 days' wages, calculated at the employee's daily rate of pay at the time of separation. Dr. Lindstrom should use the employee separation data (described in Section III.B.7 above) to identify the relevant population of separated employees and should calculate the penalty for each such employee based on the amount of unpaid premiums owed at separation and the applicable daily rate.

5. Calculate PAGA Penalties. Dr. Lindstrom should calculate PAGA penalties at the statutory rate ($100 initial / $200 subsequent, per pay period, per employee) for each category of violation established by the damages model. However, consistent with the rebuttal analysis described in Section IV.A.7 above, the PAGA penalty calculation should be presented in a manner that facilitates and supports judicial discretion to reduce the penalties. Specifically, Dr. Lindstrom should present the PAGA calculation at 100%, 50%, 25%, and 10% of the maximum statutory amount, and should include a recommended reduction range based on applicable case law and AMA's demonstrated good-faith compliance efforts during the class period.

6. Exclude Non-Certified Claims (Contingency Analysis). The alternative damages model should be prepared in a modular format that allows individual categories of claims to be included or excluded depending on the outcome of the class certification ruling and any subsequent rulings on the scope of certified claims. Specifically, Dr. Lindstrom should prepare separate, independently calculable modules for each of the following claim categories:

(a) First meal period premiums only (i.e., the first meal period required for shifts exceeding five hours);

(b) First and second meal period premiums (i.e., the second meal period required for shifts exceeding ten hours);

(d) Off-the-clock overtime (if any claims of off-the-clock work are certified for class treatment);

(e) Wage statement penalties (Cal. Lab. Code § 226);

(f) Waiting time penalties (Cal. Lab. Code §§ 201–203);

(g) PAGA penalties (Cal. Lab. Code §§ 2698–2699.8).

This modular approach will allow AMA and its counsel to present damages calculations tailored to whatever claims are ultimately certified by the court, and will provide maximum flexibility for mediation and settlement discussions. Each module should be self-contained, with clearly identified inputs, assumptions, and outputs, so that any module can be added to or removed from the overall damages model without requiring recalculation of the remaining modules.

C. Statistical and Methodological Standards

All of Dr. Lindstrom's analyses — both the rebuttal of Dr. Rennick's model and the alternative damages model — should comply with generally accepted statistical and economic methodology, including recognized standards for data analysis, sampling, extrapolation, and economic modeling in the context of wage-and-hour class actions.

All assumptions underlying the analyses should be clearly stated, transparently documented, and supported by the data or by reference to authoritative sources. Where assumptions are uncertain or subject to reasonable dispute, Dr. Lindstrom should present sensitivity analyses showing the impact of alternative assumptions on the damages calculation. At a minimum, sensitivity analyses should be performed for the following key variables: the estimated meal period violation rate, the upward adjustment factor for underreporting, the assumed violation rate at facilities without the Missed Meal Attestation feature, and the PAGA penalty reduction factor.

The alternative damages model should be designed to withstand scrutiny under Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, which is California's gatekeeper standard for the admissibility of expert testimony. Under Sargon, the trial court acts as a gatekeeper to exclude expert opinion testimony that is (1) based on matter of a type on which an expert may not reasonably rely, (2) based on reasons unsupported by the material on which the expert relies, or (3) speculative. Dr. Lindstrom's opinions should be grounded in the data, supported by the application of recognized analytical methods, and free from speculative leaps or unsupported assumptions.

All calculations should be reproducible and fully supported by the underlying data and work papers, which should be preserved in their entirety and available for production if required by the court or by Plaintiffs' counsel. Dr. Lindstrom should maintain a complete record of all data inputs, analytical steps, coding or computational scripts, and intermediate calculations used in developing her opinions, so that any qualified expert reviewing her work can independently replicate her results.

V. Coordination with Defense Team

A. Coordination with Dr. Rajesh Makhija (Workforce Dynamics Consulting LLC)

Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC has been separately retained as AMA's industrial/organizational psychology expert on issues of commonality, typicality, and predominance in connection with the class certification motion. Dr. Makhija's retention is governed by a separate Expert Retention Letter dated March 1, 2023, and a separate Scope of Work Memorandum also dated March 5, 2023.

Dr. Makhija's analysis will focus on the variability of working conditions, scheduling practices, meal and rest period policies (both formal and as-applied), and supervisory practices across AMA's seven facilities and fourteen show units. His analysis is expected to demonstrate that the experiences of AMA's non-exempt workforce are not sufficiently uniform to support class-wide adjudication of the Plaintiffs' claims — or, at a minimum, that significant sub-class variation exists that must be accounted for in any damages model.

Dr. Lindstrom's damages analysis should be consistent with and complementary to Dr. Makhija's variability findings. Specifically, if Dr. Makhija's analysis demonstrates statistically significant facility-by-facility or show-unit-by-show-unit variation in the relevant working conditions — such as shift lengths, meal period timing and duration, rest period authorization practices, or the prevalence of off-the-clock work — then Dr. Lindstrom's alternative damages model should reflect that variation. In practical terms, this means that Dr. Lindstrom's model should not apply a single, uniform violation rate across all facilities and show units (unless the data supports such uniformity), but should instead use facility-specific or show-unit-specific rates where the data permits.

To preserve the integrity of the attorney-client privilege and work product protections, the two experts should not share draft reports, working papers, or preliminary findings directly with each other. All communications between Dr. Lindstrom and Dr. Makhija regarding methodology, assumptions, or findings should be channeled through counsel at Calderwood & Harkness. Devon Archer will serve as the primary point of coordination between the two experts.

B. Coordination with C&H Litigation Team

Dr. Lindstrom's primary point of contact at Calderwood & Harkness for all substantive matters related to this engagement is Devon Archer, Senior Associate (darcher@calderwoodharkness.com; telephone (213) 555-7238). Mr. Archer is responsible for the day-to-day management of the expert engagement, including data delivery, review of draft work product, and coordination of the expert's schedule with the case management deadlines.

The secondary point of contact is Nadia Petrov, Associate (npetrov@calderwoodharkness.com; telephone (213) 555-7251). Ms. Petrov will assist with data compilation, document production logistics, and administrative coordination.

During the active analysis and report preparation phase — anticipated to begin upon receipt of the initial data package (approximately March 31, 2023) and to continue through finalization of the rebuttal expert report (anticipated June 9, 2023) — Dr. Lindstrom should provide weekly status updates to Devon Archer. These updates may be provided by email or by brief telephone conference, as mutually convenient, and should address: (a) the status of data review and analysis; (b) any data gaps, quality issues, or additional data needs; (c) preliminary findings and emerging issues; (d) progress toward the deliverable deadlines set forth in Section VI; and (e) any budget or timeline concerns.

All draft reports, preliminary analyses, and work product should be submitted to Calderwood & Harkness for review and comment before finalization. No report, declaration, or other work product should be finalized or served on opposing counsel without prior approval from Devon Archer or Renata Vasquez.

VI. Deliverables and Timeline

The following table sets forth the deliverables expected of Dr. Lindstrom, together with the applicable due dates and relevant notes. All dates are subject to adjustment based on changes to the court's case management schedule, delays in data production, or other unforeseen circumstances. Any anticipated delay should be communicated to Devon Archer as promptly as possible.

VII. Budget and Administrative Matters

A. Fee Estimate

The following table summarizes the estimated fees for Dr. Lindstrom's engagement, broken down by personnel category:

This estimate is based on the assumption that Dr. Lindstrom will receive a substantially complete initial data set from NovaPay Solutions and AMA by approximately March 31, 2023, and that the data will be in a reasonably clean, analyzable format that does not require extensive reconciliation or reformatting. If data quality issues — such as missing records, inconsistent formatting, duplicate entries, or gaps in the historical record — require additional cleaning, reconciliation, or supplemental data requests, the estimated fees may increase. Dr. Lindstrom should notify Calderwood & Harkness promptly of any data issues encountered during the initial review that could affect the scope of work or the budget.

The fee estimate also does not include costs associated with trial preparation and testimony, which will be estimated separately if and when a trial date is set. Nor does it include costs for any supplemental analyses that may be required in response to unanticipated developments in the litigation (e.g., changes to the class definition, additional claims, or new data produced in discovery).

B. Invoicing. Monthly invoices should be submitted to Bernard Crawford, Billing Partner, via Calderwood & Harkness's accounting department. Invoices should be submitted by the tenth business day of each month for services rendered in the prior month.

Each invoice should include sufficient task-level detail to satisfy AMA's Outside Counsel Guidelines, which require that all professional time be described with specificity sufficient to allow the client to understand the nature of the work performed. In general, this means that each time entry should include a brief description of the task performed (e.g., "Review and analysis of NovaPay punch data for Facility 3, Q1 2020"), the date the work was performed, the professional who performed the work, and the number of hours billed. Expense items exceeding $5,000 individually require pre-approval, as described below.

C. Expense Pre-Approval

Any individual expense item exceeding $5,000 — including, but not limited to, specialized software licenses, additional data processing or hosting costs, travel expenses, and fees for sub-contracted data services — must be pre-approved in writing by Devon Archer or Renata Vasquez before the expense is incurred. Requests for pre-approval should include a description of the expense, the estimated amount, the business justification, and any available alternatives. Pre-approval requests may be submitted by email and will be processed within two business days.

VIII. Confidentiality and Privilege

All materials provided to Dr. Lindstrom in connection with this engagement — including client documents, discovery materials, data sets, deposition transcripts, expert reports, and communications with counsel — are subject to the attorney-client privilege, the work product doctrine, and the Stipulated Protective Order entered by the Honorable Raymond Escobedo on February 15, 2023, in the above-captioned matter.

Documents and data designated as "CONFIDENTIAL" under the Protective Order may be reviewed and used by Dr. Lindstrom and her staff at Hargrove Analytics Inc., subject to the restrictions set forth in the Order. Documents and data designated as "HIGHLY CONFIDENTIAL — ATTORNEYS' EYES ONLY" under the Protective Order are subject to additional restrictions and may be reviewed only by individuals who have signed the acknowledgment and agreement form required by the Order. Dr. Lindstrom and any staff members who will access Highly Confidential materials must execute the required acknowledgment form before reviewing such materials. Calderwood & Harkness will provide the necessary forms.

Dr. Lindstrom may not disclose any materials, data, analysis, findings, or other information received or developed in connection with this engagement to any third party — including other clients, academic colleagues, or professional contacts — without prior written consent from Calderwood & Harkness. This restriction applies during the engagement and survives the termination or completion of the engagement.

All draft reports, working papers, preliminary analyses, internal memoranda, notes, and communications between Dr. Lindstrom and Calderwood & Harkness are privileged attorney work product and should be clearly marked as such. Draft materials should bear the legend: "DRAFT — PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — PREPARED AT THE DIRECTION OF COUNSEL." Upon completion of the engagement, or upon request by Calderwood & Harkness, Dr. Lindstrom should return or securely destroy all confidential materials in her possession, in accordance with the terms of the Protective Order and the Expert Retention Letter.

IX. Conclusion

Dr. Lindstrom's engagement as AMA's economics and damages expert is a critical component of AMA's defense strategy in Fuentes v. Aurelius Media Americas Inc. Her work will be central to both the class certification phase — where the alternative damages model and the critique of Dr. Rennick's methodology will be essential to demonstrating that individualized damages issues predominate over common questions — and any subsequent settlement discussions or trial proceedings.

The overarching objective of Dr. Lindstrom's engagement is to demonstrate, through rigorous economic analysis and defensible statistical methodology, that Plaintiffs' claimed aggregate exposure of $38.6 million is grossly inflated and does not reflect AMA's actual liability. By accounting for (a) the actual rate at which meal periods were missed (as opposed to the inflated rate derived from treating every auto-deduction as a violation), (b) the meal period premiums already paid by AMA through the Missed Meal Attestation system and manual corrections, (c) the significant variation in working conditions across AMA's seven facilities and fourteen show units, and (d) the court's broad discretion to reduce PAGA penalties, Dr. Lindstrom's analysis should demonstrate that AMA's realistic damages exposure is significantly lower than Plaintiffs' claimed amount.

Our preliminary defense estimate of aggregate damages — based on an assumed actual violation rate in the range suggested by the attestation data, appropriate credits for premiums already paid, and a reasonable PAGA penalty reduction — is approximately $5.8 million. This figure is preliminary and subject to refinement following Dr. Lindstrom's data analysis and the receipt and review of Dr. Rennick's expert report.

We request that Dr. Lindstrom confirm receipt of this Scope of Work Memorandum at her earliest convenience and advise of any questions, concerns, or additional data needs. We look forward to working with Dr. Lindstrom and the Hargrove Analytics team on this important engagement.

cc: Renata Vasquez, Partner Bernard Crawford, Partner

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT This memorandum is a confidential communication protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressee(s) and those individuals identified in the distribution list. Any unauthorized review, use, disclosure, or distribution is strictly prohibited. If you have received this memorandum in error, please notify the sender immediately and destroy all copies.

Deliverable	Due Date	Notes
Initial Data Review and Preliminary Findings Memo	April 14, 2023	Informal memorandum (not for filing) identifying any data gaps or quality issues, summarizing preliminary observations from the initial review of the NovaPay and AMA data sets, and specifying any additional data needs. This memo should also include a preliminary assessment of whether the data is sufficient to support the intended analyses.
Review and Analysis of Dr. Rennick's Expert Report	Within 10 business days of receipt (anticipated receipt April 28, 2023; analysis due approximately May 12, 2023)	Written analysis (for internal use by counsel) identifying the key methodological assumptions, analytical errors, and factual shortcomings in Dr. Rennick's damages model, and outlining the specific points to be addressed in the rebuttal report.
Draft Rebuttal Expert Report	May 26, 2023	Complete draft of the rebuttal expert report, including both the critique of Dr. Rennick's model and the presentation of the alternative damages model. The draft should be in substantially final form, suitable for review and comment by C&H counsel.
Final Rebuttal Expert Report	June 9, 2023	Finalized rebuttal expert report, incorporating C&H's review comments and any additional data or analysis completed after the draft stage. This is the report that will be served on Plaintiffs' counsel pursuant to the case management schedule.
Expert Declaration in Opposition to Class Certification	June 14, 2023	Summary declaration for filing with the Court in connection with AMA's opposition to class certification, accompanied by the final rebuttal expert report as an exhibit. The declaration should summarize Dr. Lindstrom's qualifications, methodology, and principal opinions in a concise format suitable for judicial review.
Availability for Class Certification Hearing Testimony	Week of July 28, 2023	The class certification hearing is currently set for July 28, 2023, before the Honorable Raymond Escobedo, Department 34, Los Angeles Superior Court. Dr. Lindstrom should hold the entire week of July 24–28, 2023 available, as the hearing may extend beyond a single day.
Availability for Mediation Preparation	TBD (anticipated August 2023)	If the case proceeds to mediation (currently anticipated for August 2023, though no firm date has been set), Dr. Lindstrom should be available to prepare damages summary materials for use in mediation, including a concise presentation of the alternative damages model and a comparison to Plaintiffs' claimed damages.
Availability for Trial Testimony	TBD	If the case does not settle and proceeds to trial, Dr. Lindstrom should be available to testify as AMA's damages expert at trial. The trial date has not yet been set.
Component	Estimated Hours	Rate	Estimated Cost
Dr. Lindstrom — Data analysis, model development, report writing, testimony preparation	140–175 hours	$700/hr	$98,000–$122,500
Senior Analyst — Data processing, computational analysis, quality assurance, exhibit preparation	120–160 hours	$375/hr	$45,000–$60,000
Administrative / research support	Included in above	—	$7,000–$17,500
Total Estimated Fees	$150,000–$200,000

CALDERWOOD & HARKNESS LLP 333 South Grand Avenue, Suite 4400 Los Angeles, California 90071 Telephone: (213) 555-7200 | Facsimile: (213) 555-7201
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Devon Archer, Senior Associate
FROM: Nadia Petrov, Associate
DATE: March 5, 2023
RE: Expert Engagement — Scope of Work Memorandum: Dr. Catherine Lindstrom, Hargrove Analytics Inc.
Matter No.: 1017-00004
Client: Aurelius Media Americas Inc.
Case: Fuentes v. Aurelius Media Americas Inc., LASC Case No. 22STCV38214 (Consolidated)
I. Purpose
This memorandum sets forth the detailed scope of work for Dr. Catherine Lindstrom of Hargrove Analytics Inc., located at 515 S. Figueroa Street, Suite 1100, Los Angeles, California 90071, who has been retained pursuant to the Expert Retention Letter dated March 1, 2023 (Document 94 in this matter's document management system). This memorandum is intended to serve as the operative reference document governing the substance, methodology, and deliverables expected of Dr. Lindstrom's engagement, and should be read in conjunction with the Expert Retention Letter, which addresses the formal terms and conditions of engagement.
Dr. Lindstrom has been retained as Aurelius Media Americas Inc.'s ("AMA") economics and damages expert in the above-captioned matter. Her engagement encompasses two principal objectives: (a) analyzing and rebutting the damages model anticipated from Plaintiffs' economics expert, Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC; and (b) developing an alternative, defensible damages calculation for the putative class claims asserted by Plaintiffs. These two tasks are complementary and should be undertaken in tandem so that the rebuttal analysis and the alternative model are consistent in their assumptions, data inputs, and methodological framework.
Dr. Lindstrom's engagement is governed by the fee schedule set forth in the Expert Retention Letter, which provides for the following hourly rates: $700 per hour for Dr. Lindstrom's professional time, and $375 per hour for Senior Analyst time. The total estimated fees for the engagement, inclusive of all data analysis, model development, report writing, and testimony preparation, are estimated at $150,000 to $200,000, subject to the qualifications set forth in Section VII below.
All work product generated by Dr. Lindstrom in connection with this engagement is protected by the attorney-client privilege and the work product doctrine. All materials provided to Dr. Lindstrom, including client documents, discovery materials, and data sets, are subject to the Stipulated Protective Order entered by the Honorable Raymond Escobedo on February 15, 2023, and must be handled in strict accordance with the terms of that Order, as further described in Section VIII of this memorandum.
II. Background and Context
A. Case Overview
Fuentes v. Aurelius Media Americas Inc. is a putative class action filed by approximately 1,850 current and former non-exempt, hourly employees of AMA. The case encompasses employees who worked across seven California production facilities and fourteen distinct show units during the class period. Plaintiffs allege systematic wage-and-hour violations under the California Labor Code and Industrial Welfare Commission ("IWC") Wage Order 12 (Motion Picture Industry), which governs the wages, hours, and working conditions of employees in the motion picture and related entertainment industries.
The operative complaint asserts seven causes of action:
1. Failure to Provide Compliant Meal Periods (Cal. Lab. Code §§ 226.7, 512) — Plaintiffs allege that AMA failed to provide timely, uninterrupted, and duty-free meal periods of not less than 30 minutes, as required by statute and Wage Order 12, and failed to pay the requisite one-hour premium for each noncompliant meal period.
2. Failure to Provide Compliant Rest Periods (Cal. Lab. Code § 226.7) — Plaintiffs allege that AMA failed to authorize and permit paid rest breaks of not less than 10 minutes per four hours of work (or major fraction thereof), and failed to pay the requisite one-hour premium for each missed or noncompliant rest period.
3. Failure to Pay Overtime (Cal. Lab. Code §§ 510, 1194) — Plaintiffs allege that AMA failed to compensate employees for all hours worked in excess of eight hours per day, forty hours per week, and for seventh-consecutive-day work, at the applicable overtime and double-time rates of pay.
4. Failure to Pay Minimum Wage (Cal. Lab. Code §§ 1197, 1197.1) — Plaintiffs allege that, as a result of the foregoing violations (particularly the failure to pay for off-the-clock work), AMA's effective hourly rate for certain shifts fell below the applicable state or local minimum wage.
5. Failure to Provide Accurate Wage Statements (Cal. Lab. Code § 226) — Plaintiffs allege that, as a derivative consequence of the unpaid wages and premiums described above, AMA's itemized wage statements failed to accurately reflect the total hours worked, gross wages earned, and all applicable deductions.
6. Waiting Time Penalties (Cal. Lab. Code §§ 201–203) — Plaintiffs allege that employees who separated from AMA during the class period were not timely paid all wages due at the time of separation, including unpaid meal and rest period premiums, entitling them to waiting time penalties of up to thirty days' wages.
7. Unfair Competition (Cal. Bus. & Prof. Code § 17200) — Plaintiffs assert an unfair competition claim predicated on the underlying wage-and-hour violations, seeking restitution and injunctive relief.
In addition to the class claims, Plaintiffs have asserted representative claims under the Private Attorneys General Act ("PAGA") (Cal. Lab. Code §§ 2698–2699.8). The PAGA notice was filed with the Labor and Workforce Development Agency ("LWDA") on September 15, 2022. Plaintiffs claim $12.2 million in aggregate PAGA penalties, calculated at the maximum statutory rate. The PAGA claims are particularly significant because they are not subject to class certification requirements and could independently generate substantial exposure for AMA.
The class period, as pled, runs from November 1, 2018 through the present. However, as discussed below, AMA's electronic timekeeping system was not implemented until January 1, 2019, which may limit the scope of available electronic records for the earliest portion of the class period.
B. AMA's Timekeeping System
AMA utilizes the "TimeTrack Pro" electronic timekeeping system, developed and hosted by NovaPay Solutions Inc. The TimeTrack Pro system has been in continuous use at all seven of AMA's California production facilities since its implementation on January 1, 2019. Prior to that date, AMA utilized a combination of manual timesheets and a legacy payroll system that is no longer in active use and for which historical electronic data may be limited or unavailable.
The TimeTrack Pro system includes an automatic meal period deduction feature (the "Auto-Deduction Feature"), which is central to this litigation. The Auto-Deduction Feature is configured to automatically deduct 30 minutes from any recorded shift of six hours or more. The deduction is applied to the employee's time record at the end of the shift, on the assumption that the employee took a compliant 30-minute, duty-free meal period during the shift.
It is important to note a known configuration discrepancy in the system: the Auto-Deduction Feature was configured with a six-hour threshold, meaning the automatic 30-minute deduction was triggered only for shifts of six hours or longer. However, under IWC Wage Order 12 and California Labor Code § 512, the first meal period must be provided no later than the end of the fifth hour of work, meaning the correct trigger threshold should have been five hours, not six hours. This discrepancy means that employees working shifts of between five and six hours were not receiving an automatic meal period deduction — but it also means they were not receiving a meal period reminder or any system-level prompt to take a meal break. This configuration error was identified in November 2022 and corrected on December 15, 2022, when the threshold was reduced to five hours across all seven facilities.
The TimeTrack Pro system also includes a "Missed Meal Attestation" feature, which allows employees to affirmatively report that they missed or were unable to take a compliant meal period during their shift. When an employee activates the Missed Meal Attestation, the system overrides the automatic 30-minute deduction for that shift and triggers a one-hour meal period premium payment, which is processed and paid in the employee's next regular payroll cycle.
Critically, the Missed Meal Attestation feature was not uniformly activated across all of AMA's California facilities. The feature was activated and available to employees at four of the seven facilities:
• Facility 1 — West Hollywood Headquarters: Activated. Attestation usage rate: 2.3% of eligible shifts.
• Facility 3 — Sherman Oaks: Activated. Attestation usage rate: 4.1% of eligible shifts.
• Facility 5 — Hollywood: Activated. Attestation usage rate: 1.8% of eligible shifts.
• Facility 6 — Santa Monica: Activated. Attestation usage rate: 3.7% of eligible shifts.
The Missed Meal Attestation feature was not activated at the remaining three facilities:
• Facility 2 — Studio City: Not activated.
• Facility 4 — Burbank: Not activated.
• Facility 7 — El Segundo: Not activated.
At the three facilities where the Missed Meal Attestation feature was not activated, employees who missed a meal period had no self-service mechanism to report the missed meal and trigger the premium payment. In those instances, the only available path to a premium payment was for a supervisor to manually initiate a payroll correction — a process that was, by all accounts, inconsistently applied and poorly documented.
The usage rates for the Missed Meal Attestation at the four facilities where it was activated are notably low, ranging from 1.8% to 4.1% of eligible shifts. These rates will be a key input for Dr. Lindstrom's analysis, as they may serve as a proxy (or baseline) for estimating the actual rate at which meal periods were missed across the class. However, as discussed further in Section IV below, the attestation rates may understate the true violation rate if employees were unaware of the feature, discouraged from using it, or simply failed to use it even when a meal period was missed.
C. Anticipated Opposing Expert
Plaintiffs are expected to rely on the expert opinions of Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, located at 3000 El Camino Real, Suite 500, Palo Alto, California 94306. Dr. Rennick is a labor economist who has testified on behalf of plaintiffs in numerous wage-and-hour class actions in California state and federal courts. Plaintiffs' expert report from Dr. Rennick is anticipated by April 28, 2023, consistent with the current case management schedule.
Plaintiffs' aggregate claimed damages in this matter total $38.6 million, inclusive of the $12.2 million in PAGA penalties referenced above. The remaining approximately $26.4 million in claimed damages encompasses meal period premiums, rest period premiums, unpaid overtime, wage statement penalties, and waiting time penalties.
Based on the discovery conducted to date, the deposition testimony of Plaintiffs' counsel at the February 2023 scheduling conference, and our review of Dr. Rennick's prior work in comparable cases, we anticipate that Dr. Rennick will present a damages model built on several key assumptions, including, most significantly, the assumption that every automatic meal period deduction recorded in the TimeTrack Pro system constitutes evidence of a "missed" meal period for which a one-hour premium is owed. This assumption — that the auto-deduction itself is evidence of a violation, rather than evidence of a compliant meal period — is the central point of dispute in the damages analysis and the primary target for Dr. Lindstrom's rebuttal.
We further anticipate that Dr. Rennick may assume a uniform daily amount of off-the-clock work (estimated at 30 to 45 minutes per shift, based on named plaintiff declarations), a rest period violation rate extrapolated from the experiences of the three named plaintiffs, and maximum statutory PAGA penalties without any reduction for good faith or other equitable considerations.
III. Data Sets to Be Provided
The following data sets will be compiled and provided to Dr. Lindstrom. Calderwood & Harkness will coordinate the collection and production of these materials and will endeavor to deliver a substantially complete initial data package by March 31, 2023. Dr. Lindstrom should review the materials as received and promptly identify any data gaps, quality issues, or additional data needs.
A. NovaPay Solutions / TimeTrack Pro Data
The following specific data extracts will be obtained from NovaPay Solutions Inc. pursuant to the third-party subpoena for business records issued on February 8, 2023. The designated NovaPay contact for all data requests is Marcus Yee, Director of Client Data Services. Calderwood & Harkness will coordinate directly with Mr. Yee and NovaPay's outside counsel regarding the timing and format of the data production.
1. Punch Records. All clock-in and clock-out records for AMA non-exempt employees at all seven California facilities for the period November 1, 2018 (or the earliest available date in TimeTrack Pro, which is January 1, 2019 — the system implementation date) through the present. This data set should include, at a minimum, the following fields for each punch event: employee ID, date, time of punch, punch type (clock-in, clock-out, meal-in, meal-out, if tracked separately), facility code, and any associated department or cost center codes. The estimated volume of this data set is approximately 12 million individual punch records.
2. Auto-Deduction Records. All records reflecting the application of the automatic 30-minute meal period deduction to employee time records, including the following fields: date of deduction, employee ID, facility code, shift start time, shift end time, deduction amount (in minutes and as a dollar value, if recorded), and a flag or indicator showing whether the deduction was overridden by a Missed Meal Attestation submitted by the employee. This data set is critical to Dr. Lindstrom's rebuttal analysis, as it will allow her to quantify the total number of auto-deductions applied during the class period and to distinguish between auto-deductions that were and were not overridden.
3. Missed Meal Attestation Records. All records reflecting the use of the Missed Meal Attestation feature by AMA employees, including the following fields: date of attestation, time of attestation submission, employee ID, facility code, reason code (if any), and a flag or indicator showing whether a meal period premium was subsequently paid as a result of the attestation. This data set will serve as the primary basis for Dr. Lindstrom's estimate of the actual meal period violation rate at the four facilities where the feature was activated.
4. System Configuration Logs. Historical system configuration logs showing when the Auto-Deduction Feature was initially configured, the threshold settings applied (six hours versus five hours), and when and where the Missed Meal Attestation feature was activated or deactivated at each facility. These logs should include dates of any changes to the configuration, the identity of the individual who made the change (if recorded), and any notes or comments associated with the change. This data is necessary to establish the precise time periods during which each feature was active at each facility.
5. Payroll Summary Reports. Aggregate payroll data for AMA's California non-exempt employees, broken down by pay period and by facility, including the following data fields: total gross wages, total overtime wages (at 1.5× and 2× rates, separately if available), total meal period premiums paid, total rest period premiums paid, total regular hours, and total overtime hours. These summary reports will provide a high-level check on the underlying punch and deduction data and will be used in Dr. Lindstrom's alternative damages model to calculate aggregate exposure under various scenarios.
B. AMA Internal Data
The following data sets will be obtained from AMA's in-house human resources, payroll, and legal teams. Key contacts for data collection are Lorraine Okafor, Senior Vice President of Human Resources; Karen Fong, Payroll Manager; and Gregory Tanaka, Vice President, Legal and Compliance. Calderwood & Harkness will work with Ms. Okafor and her team to compile these materials and will provide them to Dr. Lindstrom in a structured, analyzable format (preferably CSV or Excel) to the extent possible.
1. Employee Roster. A complete list of all non-exempt, hourly employees employed at any of AMA's seven California facilities at any time during the class period (November 1, 2018 through the present), including the following data fields for each employee: full legal name, employee ID number, date of hire, date of separation (if applicable), job title(s) held during the class period, hourly rate(s) of pay, facility assignment(s), and show unit assignment(s). Where an employee was assigned to multiple facilities or show units during the class period, the roster should reflect each assignment with applicable date ranges.
2. Hourly Rate History. Historical hourly wage rates for each non-exempt employee, by pay period, throughout the class period. This data is essential to enable accurate calculation of meal period and rest period premiums, which are computed at one hour of pay at the employee's "regular rate of pay" as defined under California law. To the extent employees received raises, shifted between job classifications, or were subject to different local minimum wage rates at different times, these changes must be reflected in the hourly rate history.
3. Overtime Records. Detailed records of overtime hours worked by each non-exempt employee, by pay period, throughout the class period. These records should distinguish between regular overtime (hours in excess of eight per day or forty per week, paid at 1.5× the regular rate), double-time (hours in excess of twelve per day, or hours worked on the seventh consecutive day in a workweek after the first eight hours, paid at 2× the regular rate), and seventh-day overtime (the first eight hours worked on the seventh consecutive day in a workweek, paid at 1.5× the regular rate). These records will be necessary for Dr. Lindstrom's analysis of Plaintiffs' overtime claims and for the blended rate calculations described in Section IV.
4. Meal Period Premium Payment Records. Complete records of all meal period premiums actually paid by AMA to non-exempt employees during the class period. This includes premiums triggered by the Missed Meal Attestation feature as well as premiums paid through manual, supervisor-initiated payroll corrections. This data is critical to ensure that Dr. Lindstrom's alternative damages model properly credits AMA for premiums already paid, and to support the rebuttal argument that Dr. Rennick's model (if it fails to account for premiums already paid) overstates AMA's damages exposure.
5. Rest Period Premium Payment Records. All records of rest period premiums paid to non-exempt employees during the class period. Although AMA's records of rest period compliance may be limited (rest periods are not typically tracked in the same manner as meal periods, as employers are required to authorize and permit rest periods but not to ensure they are taken), any records of premiums paid will be relevant to Dr. Lindstrom's analysis of the rest period claims.
6. Production Schedules / Call Sheets. A representative sample of daily production schedules (commonly referred to as "call sheets" in the motion picture industry) for each of AMA's fourteen show units. The sample should cover at least four representative weeks per show unit per year of the class period, selected to capture variation across different production phases and seasons. Call sheets are the primary documents governing daily work schedules in the motion picture industry and typically specify scheduled shift start and end times (call times and wrap times), scheduled meal break times, crew and department assignments, and the nature of the production activity (studio-based filming, field/location-based filming, live events, post-production work, etc.). These documents are essential to Dr. Lindstrom's analysis of facility-level and show-unit-level variation in working conditions and meal period practices, and will support the argument that a uniform violation rate cannot be applied across all facilities and show units.
7. Employee Separation Data. Dates and reasons for separation for all non-exempt employees who separated from AMA during the class period. Separation reasons should be categorized as voluntary resignation, involuntary termination (with or without cause), end of show/season (a common separation event in the entertainment industry, where employment is frequently tied to the duration of a particular production), layoff, retirement, or other. This data is necessary for Dr. Lindstrom's calculation of waiting time penalties under California Labor Code sections 201 through 203, which apply only to employees who have separated from employment and were owed unpaid wages at the time of separation.
C. Plaintiffs' discovery Productions
The following materials from Plaintiffs' discovery productions will be provided to Dr. Lindstrom as they become available:
1. Named plaintiffs' interrogatory responses regarding their individual damages calculations and work experiences, including any supplemental responses served during the course of discovery. These responses will provide insight into the factual bases for Plaintiffs' claims and may reveal the specific assumptions underlying their damages theories.
2. Any damages-related documents produced by Plaintiffs in response to AMA's discovery requests, including any spreadsheets, calculations, or summaries prepared by or on behalf of Plaintiffs in quantifying their claimed damages.
D. Expert Materials
The following expert materials will be provided to Dr. Lindstrom as they become available:
1. Dr. Howard Rennick's Expert Report. Dr. Rennick's expert report is anticipated to be served on or about April 28, 2023. This report will be the primary target of Dr. Lindstrom's rebuttal analysis and should be reviewed promptly upon receipt.
2. Dr. Rajesh Makhija's Expert Report. Dr. Makhija, of Workforce Dynamics Consulting LLC, has been separately retained as AMA's expert on commonality and typicality issues. His expert report is anticipated by May 19, 2023. Dr. Makhija's report will be provided to Dr. Lindstrom for coordination purposes, to ensure that Dr. Lindstrom's damages analysis is consistent with Dr. Makhija's findings regarding variability across AMA's facilities and show units.
3. Deposition Transcripts. Transcripts of the depositions of the three named plaintiffs — Maria Fuentes (scheduled May 2, 2023), Brian Halloran (scheduled May 9, 2023), and Jessica Padilla (scheduled May 16, 2023) — and the depositions of AMA's designated Person Most Knowledgeable ("PMK") witnesses (Lorraine Okafor, Robert Arroyo, and Karen Fong) will be provided to Dr. Lindstrom as they become available. These transcripts may contain testimony relevant to the damages analysis, including testimony regarding individual work experiences, meal and rest period practices, and AMA's timekeeping and payroll systems.
IV. Analytical Methodology
A. Primary Task: Rebuttal of Plaintiffs' Damages Model
Upon receipt of Dr. Rennick's expert report, Dr. Lindstrom should prepare a comprehensive, detailed critique of the damages model presented therein. Based on our anticipation of the methodological approach Dr. Rennick is likely to employ, we identify the following specific areas of focus for Dr. Lindstrom's rebuttal analysis. These areas may be supplemented or modified following actual review of Dr. Rennick's report.
1. Meal Period Auto-Deduction Assumption. The centerpiece of our anticipated rebuttal is the challenge to Dr. Rennick's expected assumption that every auto-deducted meal period in the TimeTrack Pro system constitutes a "missed" meal period for which a one-hour premium is owed. This assumption conflates the existence of an auto-deduction with evidence of a violation — a fundamental analytical error. The Auto-Deduction Feature is designed to record compliant meal periods: it deducts 30 minutes from the shift on the assumption that the employee took a compliant, duty-free meal break. An auto-deduction that accurately reflects the time the employee was on an unpaid meal break is not evidence of a violation; it is evidence of compliance. A violation occurs only when the employee did not, in fact, take a compliant meal period — i.e., when the employee worked through the meal break, took a shortened break, or was interrupted and recalled to duty before completing the break. In those cases, the auto-deduction would have been applied even though the employee continued working, resulting in an underpayment of 30 minutes of work time and a failure to pay the required one-hour premium.
Dr. Lindstrom should quantify the magnitude of the over-counting inherent in treating every auto-deducted shift as a violation. Specifically, she should use the actual Missed Meal Attestation data from the four facilities where the feature was activated to estimate the fraction of auto-deducted shifts that were, in fact, associated with a missed meal period. If the attestation rates (ranging from 1.8% to 4.1%) are reasonably representative of the true violation rate, then approximately 96% to 98% of auto-deductions reflected compliant meal periods, and Dr. Rennick's approach would overstate the number of violations by a factor of approximately 25 to 50 times.
2. Failure to Account for Premiums Already Paid. Dr. Lindstrom should verify whether Dr. Rennick's damages model properly credits AMA for meal period premiums already paid during the class period, both through the Missed Meal Attestation system (at the four facilities where it was active) and through manual supervisor-initiated payroll corrections. If Dr. Rennick does not credit these payments — either by failing to deduct them from the gross damages figure or by failing to acknowledge them at all — Dr. Lindstrom should calculate the total value of premiums already paid and present it as an offset that must be applied to any damages award. Failure to credit premiums already paid would result in a double recovery, which is impermissible under California law.
3. Rest Period Violation Rate. If Dr. Rennick assumes a rest period violation rate in his damages model, we anticipate that the rate will be derived primarily or exclusively from the declarations and deposition testimony of the three named plaintiffs, rather than from any systematic empirical analysis of class-wide rest period practices. Dr. Lindstrom should critique the statistical and methodological inadequacy of extrapolating from the self-reported experiences of three individuals — working at three different facilities, in three different divisions, with three different supervisors and three different sets of job responsibilities — to a putative class of approximately 1,850 employees. Dr. Lindstrom should address the sample size, the non-random selection of the sample (named plaintiffs are, by definition, individuals who believe they were harmed and are thus not representative of the class as a whole), and the absence of any external validation of the named plaintiffs' claims (e.g., corroborating time records, supervisor testimony, or co-worker declarations).
4. Off-the-Clock Work Assumption. If Dr. Rennick assumes a uniform amount of off-the-clock work per shift — and we anticipate he will assume 30 to 45 minutes of unpaid pre-shift and post-shift work per shift, based on named plaintiff declarations — Dr. Lindstrom should critique the absence of any empirical support for this assumption beyond the self-interested testimony of the named plaintiffs. Dr. Lindstrom should further demonstrate that pre-shift and post-shift activities vary enormously across different job roles (e.g., on-camera talent, production assistants, camera operators, lighting technicians, editors, sound engineers), different show units (e.g., scripted drama versus unscripted reality versus live events versus post-production), and different facility types (e.g., studio-based versus field/location-based). A uniform per-shift assumption for off-the-clock work cannot be applied across such a diverse workforce without introducing substantial and systematic error.
5. Facility-Level Variation. Dr. Lindstrom should analyze whether Dr. Rennick's model accounts for — or, more likely, ignores — the significant differences across AMA's seven facilities and fourteen show units. If Dr. Rennick treats all facilities and show units as homogeneous for purposes of his damages calculation, Dr. Lindstrom should demonstrate that this approach is analytically unsound. Specifically, Dr. Lindstrom should use the available data to show materially different patterns of (a) shift lengths, (b) meal period timing, (c) attestation rates (at facilities where the feature is available), (d) overtime frequency, and (e) job role distribution across the different facility types. The four general facility/operation types — studio-based production, field/location-based production, live events, and post-production — have fundamentally different scheduling demands, workflow patterns, and levels of supervisory oversight. These differences should manifest as statistically significant variation in the relevant metrics, undermining any model that treats the workforce as a uniform whole.
6. Overtime Rate Calculation. If Dr. Rennick uses an inflated overtime rate in his damages model — for example, by assuming that all off-the-clock work falls in overtime hours (i.e., hours in excess of eight per day), such that the unpaid time is valued at 1.5× or 2× the regular rate — Dr. Lindstrom should present the correct blended rate calculation. The correct approach requires determining, shift by shift, whether the claimed off-the-clock time would have resulted in a shift exceeding eight hours (and thus qualifying for overtime) or whether the shift, even with the additional time, remained at or below eight hours (in which case the time should be valued at the straight-time rate). Given the variability in shift lengths across AMA's facilities and show units, a significant proportion of shifts may not have exceeded eight hours even with the claimed off-the-clock time, resulting in a materially lower blended rate than the rate assumed by Dr. Rennick.
7. PAGA Penalty Calculation. If Dr. Rennick calculates PAGA penalties at the maximum statutory rate — $100 for the initial violation and $200 for each subsequent violation, per pay period, per employee — Dr. Lindstrom should present an alternative PAGA analysis that accounts for the court's broad discretion to reduce PAGA penalties. Under California Labor Code section 2699(e)(2), the court may, in its discretion, award a lesser amount than the maximum statutory penalty if the award would otherwise be "unjust, arbitrary and oppressive, or confiscatory." Dr. Lindstrom should compile and cite comparable cases in which California courts have exercised this discretion to reduce PAGA penalties by 75% to 90% of the maximum statutory amount. Dr. Lindstrom should also present the factual basis for a reduction in this case, including AMA's good-faith compliance efforts (e.g., the implementation of the Missed Meal Attestation system, the voluntary correction of the six-hour auto-deduction threshold to five hours, and any other remedial measures taken during the class period).
B. Secondary Task: Alternative Damages Model
In addition to the rebuttal analysis, Dr. Lindstrom should develop an independent, defensible damages model for AMA's use in connection with class certification briefing, mediation, and, if necessary, trial. The alternative model should be designed to provide the court and the parties with a reliable, data-driven estimate of AMA's actual damages exposure, in contrast to the inflated figure anticipated from Dr. Rennick. The alternative model should incorporate the following components:
1. Estimate Actual Meal Period Violation Rate. Using the Missed Meal Attestation data from the four facilities where the feature was activated, Dr. Lindstrom should extrapolate a defensible estimate of the actual rate at which employees missed compliant meal periods during the class period. We identify three potential methodological approaches, which should be presented as a range of estimates:
• Direct Use of Attestation Rates. The attestation rates at the four facilities (2.3%, 4.1%, 1.8%, and 3.7%, respectively) may be used as a direct proxy for the meal period violation rate at those facilities, on the theory that employees who missed a meal period had a readily available mechanism to report the missed meal and that the attestation rate therefore approximates the true violation rate. This approach yields a weighted average violation rate in the range of approximately 2% to 4%.
• Conservative Upward Adjustment. Because the attestation rates may understate the true violation rate — for example, if some employees were unaware of the feature, were discouraged from using it (whether explicitly or through workplace culture), or simply failed to use it even when a meal period was missed — Dr. Lindstrom should perform a sensitivity analysis applying upward adjustment factors of 1.5×, 2.0×, and 3.0× the observed attestation rate. At the 3.0× adjustment factor, the estimated violation rate would range from approximately 5.4% to 12.3%, which we believe represents a conservatively high estimate.
• Facilities Without the Attestation Feature. For the three facilities where the Missed Meal Attestation feature was not activated (Facilities 2, 4, and 7), Dr. Lindstrom should apply a higher assumed violation rate, on the theory that the absence of a self-reporting mechanism may have resulted in a higher incidence of unreported and uncompensated missed meal periods. The specific rate to be applied should be determined based on the available data, but we suggest using the upper bound of the sensitivity analysis (i.e., the 3.0× adjustment factor) as a starting point, with the possibility of further upward adjustment if warranted by the data or by testimony from employees at those facilities.
2. Calculate Meal Period Premiums. For each estimated meal period violation, Dr. Lindstrom should calculate the one-hour premium owed at the applicable employee's "regular rate of pay" as defined under California law. The regular rate calculation should use the historical hourly rate data obtained from AMA (as described in Section III.B.2 above) and should account for any changes in an employee's rate of pay during the class period. The total meal period premium damages should be presented on a per-facility, per-year, and aggregate basis.
3. Calculate Wage Statement Penalties. To the extent that meal period violations are established — and to the extent that the resulting unpaid premiums rendered AMA's itemized wage statements inaccurate — Dr. Lindstrom should calculate the derivative wage statement penalties under California Labor Code section 226. The statutory penalty is $50 for the initial violation and $100 for each subsequent violation, assessed per pay period in which an inaccurate statement was provided, and subject to a statutory cap of $4,000 per employee. Dr. Lindstrom's calculation should apply these statutory rates and caps, and should present the results by employee and in the aggregate.
4. Calculate Waiting Time Penalties. For employees who separated from AMA during the class period and who were owed unpaid meal period premiums at the time of their separation, Dr. Lindstrom should calculate waiting time penalties under California Labor Code sections 201 through 203. The maximum waiting time penalty is up to 30 days' wages, calculated at the employee's daily rate of pay at the time of separation. Dr. Lindstrom should use the employee separation data (described in Section III.B.7 above) to identify the relevant population of separated employees and should calculate the penalty for each such employee based on the amount of unpaid premiums owed at separation and the applicable daily rate.
5. Calculate PAGA Penalties. Dr. Lindstrom should calculate PAGA penalties at the statutory rate ($100 initial / $200 subsequent, per pay period, per employee) for each category of violation established by the damages model. However, consistent with the rebuttal analysis described in Section IV.A.7 above, the PAGA penalty calculation should be presented in a manner that facilitates and supports judicial discretion to reduce the penalties. Specifically, Dr. Lindstrom should present the PAGA calculation at 100%, 50%, 25%, and 10% of the maximum statutory amount, and should include a recommended reduction range based on applicable case law and AMA's demonstrated good-faith compliance efforts during the class period.
6. Exclude Non-Certified Claims (Contingency Analysis). The alternative damages model should be prepared in a modular format that allows individual categories of claims to be included or excluded depending on the outcome of the class certification ruling and any subsequent rulings on the scope of certified claims. Specifically, Dr. Lindstrom should prepare separate, independently calculable modules for each of the following claim categories:
(a) First meal period premiums only (i.e., the first meal period required for shifts exceeding five hours);
(b) First and second meal period premiums (i.e., the second meal period required for shifts exceeding ten hours);
(c) Rest period premiums;
(d) Off-the-clock overtime (if any claims of off-the-clock work are certified for class treatment);
(e) Wage statement penalties (Cal. Lab. Code § 226);
(f) Waiting time penalties (Cal. Lab. Code §§ 201–203);
(g) PAGA penalties (Cal. Lab. Code §§ 2698–2699.8).
This modular approach will allow AMA and its counsel to present damages calculations tailored to whatever claims are ultimately certified by the court, and will provide maximum flexibility for mediation and settlement discussions. Each module should be self-contained, with clearly identified inputs, assumptions, and outputs, so that any module can be added to or removed from the overall damages model without requiring recalculation of the remaining modules.
C. Statistical and Methodological Standards
All of Dr. Lindstrom's analyses — both the rebuttal of Dr. Rennick's model and the alternative damages model — should comply with generally accepted statistical and economic methodology, including recognized standards for data analysis, sampling, extrapolation, and economic modeling in the context of wage-and-hour class actions.
All assumptions underlying the analyses should be clearly stated, transparently documented, and supported by the data or by reference to authoritative sources. Where assumptions are uncertain or subject to reasonable dispute, Dr. Lindstrom should present sensitivity analyses showing the impact of alternative assumptions on the damages calculation. At a minimum, sensitivity analyses should be performed for the following key variables: the estimated meal period violation rate, the upward adjustment factor for underreporting, the assumed violation rate at facilities without the Missed Meal Attestation feature, and the PAGA penalty reduction factor.
The alternative damages model should be designed to withstand scrutiny under Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, which is California's gatekeeper standard for the admissibility of expert testimony. Under Sargon, the trial court acts as a gatekeeper to exclude expert opinion testimony that is (1) based on matter of a type on which an expert may not reasonably rely, (2) based on reasons unsupported by the material on which the expert relies, or (3) speculative. Dr. Lindstrom's opinions should be grounded in the data, supported by the application of recognized analytical methods, and free from speculative leaps or unsupported assumptions.
All calculations should be reproducible and fully supported by the underlying data and work papers, which should be preserved in their entirety and available for production if required by the court or by Plaintiffs' counsel. Dr. Lindstrom should maintain a complete record of all data inputs, analytical steps, coding or computational scripts, and intermediate calculations used in developing her opinions, so that any qualified expert reviewing her work can independently replicate her results.
V. Coordination with Defense Team
A. Coordination with Dr. Rajesh Makhija (Workforce Dynamics Consulting LLC)
Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC has been separately retained as AMA's industrial/organizational psychology expert on issues of commonality, typicality, and predominance in connection with the class certification motion. Dr. Makhija's retention is governed by a separate Expert Retention Letter dated March 1, 2023, and a separate Scope of Work Memorandum also dated March 5, 2023.
Dr. Makhija's analysis will focus on the variability of working conditions, scheduling practices, meal and rest period policies (both formal and as-applied), and supervisory practices across AMA's seven facilities and fourteen show units. His analysis is expected to demonstrate that the experiences of AMA's non-exempt workforce are not sufficiently uniform to support class-wide adjudication of the Plaintiffs' claims — or, at a minimum, that significant sub-class variation exists that must be accounted for in any damages model.
Dr. Lindstrom's damages analysis should be consistent with and complementary to Dr. Makhija's variability findings. Specifically, if Dr. Makhija's analysis demonstrates statistically significant facility-by-facility or show-unit-by-show-unit variation in the relevant working conditions — such as shift lengths, meal period timing and duration, rest period authorization practices, or the prevalence of off-the-clock work — then Dr. Lindstrom's alternative damages model should reflect that variation. In practical terms, this means that Dr. Lindstrom's model should not apply a single, uniform violation rate across all facilities and show units (unless the data supports such uniformity), but should instead use facility-specific or show-unit-specific rates where the data permits.
To preserve the integrity of the attorney-client privilege and work product protections, the two experts should not share draft reports, working papers, or preliminary findings directly with each other. All communications between Dr. Lindstrom and Dr. Makhija regarding methodology, assumptions, or findings should be channeled through counsel at Calderwood & Harkness. Devon Archer will serve as the primary point of coordination between the two experts.
B. Coordination with C&H Litigation Team
Dr. Lindstrom's primary point of contact at Calderwood & Harkness for all substantive matters related to this engagement is Devon Archer, Senior Associate (darcher@calderwoodharkness.com; telephone (213) 555-7238). Mr. Archer is responsible for the day-to-day management of the expert engagement, including data delivery, review of draft work product, and coordination of the expert's schedule with the case management deadlines.
The secondary point of contact is Nadia Petrov, Associate (npetrov@calderwoodharkness.com; telephone (213) 555-7251). Ms. Petrov will assist with data compilation, document production logistics, and administrative coordination.
During the active analysis and report preparation phase — anticipated to begin upon receipt of the initial data package (approximately March 31, 2023) and to continue through finalization of the rebuttal expert report (anticipated June 9, 2023) — Dr. Lindstrom should provide weekly status updates to Devon Archer. These updates may be provided by email or by brief telephone conference, as mutually convenient, and should address: (a) the status of data review and analysis; (b) any data gaps, quality issues, or additional data needs; (c) preliminary findings and emerging issues; (d) progress toward the deliverable deadlines set forth in Section VI; and (e) any budget or timeline concerns.
All draft reports, preliminary analyses, and work product should be submitted to Calderwood & Harkness for review and comment before finalization. No report, declaration, or other work product should be finalized or served on opposing counsel without prior approval from Devon Archer or Renata Vasquez.
VI. Deliverables and Timeline
The following table sets forth the deliverables expected of Dr. Lindstrom, together with the applicable due dates and relevant notes. All dates are subject to adjustment based on changes to the court's case management schedule, delays in data production, or other unforeseen circumstances. Any anticipated delay should be communicated to Devon Archer as promptly as possible.
VII. Budget and Administrative Matters
A. Fee Estimate
The following table summarizes the estimated fees for Dr. Lindstrom's engagement, broken down by personnel category:
This estimate is based on the assumption that Dr. Lindstrom will receive a substantially complete initial data set from NovaPay Solutions and AMA by approximately March 31, 2023, and that the data will be in a reasonably clean, analyzable format that does not require extensive reconciliation or reformatting. If data quality issues — such as missing records, inconsistent formatting, duplicate entries, or gaps in the historical record — require additional cleaning, reconciliation, or supplemental data requests, the estimated fees may increase. Dr. Lindstrom should notify Calderwood & Harkness promptly of any data issues encountered during the initial review that could affect the scope of work or the budget.
The fee estimate also does not include costs associated with trial preparation and testimony, which will be estimated separately if and when a trial date is set. Nor does it include costs for any supplemental analyses that may be required in response to unanticipated developments in the litigation (e.g., changes to the class definition, additional claims, or new data produced in discovery).
B. Invoicing. Monthly invoices should be submitted to Bernard Crawford, Billing Partner, via Calderwood & Harkness's accounting department. Invoices should be submitted by the tenth business day of each month for services rendered in the prior month.
Each invoice should include sufficient task-level detail to satisfy AMA's Outside Counsel Guidelines, which require that all professional time be described with specificity sufficient to allow the client to understand the nature of the work performed. In general, this means that each time entry should include a brief description of the task performed (e.g., "Review and analysis of NovaPay punch data for Facility 3, Q1 2020"), the date the work was performed, the professional who performed the work, and the number of hours billed. Expense items exceeding $5,000 individually require pre-approval, as described below.
C. Expense Pre-Approval
Any individual expense item exceeding $5,000 — including, but not limited to, specialized software licenses, additional data processing or hosting costs, travel expenses, and fees for sub-contracted data services — must be pre-approved in writing by Devon Archer or Renata Vasquez before the expense is incurred. Requests for pre-approval should include a description of the expense, the estimated amount, the business justification, and any available alternatives. Pre-approval requests may be submitted by email and will be processed within two business days.
VIII. Confidentiality and Privilege
All materials provided to Dr. Lindstrom in connection with this engagement — including client documents, discovery materials, data sets, deposition transcripts, expert reports, and communications with counsel — are subject to the attorney-client privilege, the work product doctrine, and the Stipulated Protective Order entered by the Honorable Raymond Escobedo on February 15, 2023, in the above-captioned matter.
Documents and data designated as "CONFIDENTIAL" under the Protective Order may be reviewed and used by Dr. Lindstrom and her staff at Hargrove Analytics Inc., subject to the restrictions set forth in the Order. Documents and data designated as "HIGHLY CONFIDENTIAL — ATTORNEYS' EYES ONLY" under the Protective Order are subject to additional restrictions and may be reviewed only by individuals who have signed the acknowledgment and agreement form required by the Order. Dr. Lindstrom and any staff members who will access Highly Confidential materials must execute the required acknowledgment form before reviewing such materials. Calderwood & Harkness will provide the necessary forms.
Dr. Lindstrom may not disclose any materials, data, analysis, findings, or other information received or developed in connection with this engagement to any third party — including other clients, academic colleagues, or professional contacts — without prior written consent from Calderwood & Harkness. This restriction applies during the engagement and survives the termination or completion of the engagement.
All draft reports, working papers, preliminary analyses, internal memoranda, notes, and communications between Dr. Lindstrom and Calderwood & Harkness are privileged attorney work product and should be clearly marked as such. Draft materials should bear the legend: "DRAFT — PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT — PREPARED AT THE DIRECTION OF COUNSEL." Upon completion of the engagement, or upon request by Calderwood & Harkness, Dr. Lindstrom should return or securely destroy all confidential materials in her possession, in accordance with the terms of the Protective Order and the Expert Retention Letter.
IX. Conclusion
Dr. Lindstrom's engagement as AMA's economics and damages expert is a critical component of AMA's defense strategy in Fuentes v. Aurelius Media Americas Inc. Her work will be central to both the class certification phase — where the alternative damages model and the critique of Dr. Rennick's methodology will be essential to demonstrating that individualized damages issues predominate over common questions — and any subsequent settlement discussions or trial proceedings.
The overarching objective of Dr. Lindstrom's engagement is to demonstrate, through rigorous economic analysis and defensible statistical methodology, that Plaintiffs' claimed aggregate exposure of $38.6 million is grossly inflated and does not reflect AMA's actual liability. By accounting for (a) the actual rate at which meal periods were missed (as opposed to the inflated rate derived from treating every auto-deduction as a violation), (b) the meal period premiums already paid by AMA through the Missed Meal Attestation system and manual corrections, (c) the significant variation in working conditions across AMA's seven facilities and fourteen show units, and (d) the court's broad discretion to reduce PAGA penalties, Dr. Lindstrom's analysis should demonstrate that AMA's realistic damages exposure is significantly lower than Plaintiffs' claimed amount.
Our preliminary defense estimate of aggregate damages — based on an assumed actual violation rate in the range suggested by the attestation data, appropriate credits for premiums already paid, and a reasonable PAGA penalty reduction — is approximately $5.8 million. This figure is preliminary and subject to refinement following Dr. Lindstrom's data analysis and the receipt and review of Dr. Rennick's expert report.
We request that Dr. Lindstrom confirm receipt of this Scope of Work Memorandum at her earliest convenience and advise of any questions, concerns, or additional data needs. We look forward to working with Dr. Lindstrom and the Hargrove Analytics team on this important engagement.
cc: Renata Vasquez, Partner Bernard Crawford, Partner
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT This memorandum is a confidential communication protected by the attorney-client privilege and the work product doctrine. It is intended solely for the use of the addressee(s) and those individuals identified in the distribution list. Any unauthorized review, use, disclosure, or distribution is strictly prohibited. If you have received this memorandum in error, please notify the sender immediately and destroy all copies.
Deliverable | Due Date | Notes
Initial Data Review and Preliminary Findings Memo | April 14, 2023 | Informal memorandum (not for filing) identifying any data gaps or quality issues, summarizing preliminary observations from the initial review of the NovaPay and AMA data sets, and specifying any additional data needs. This memo should also include a preliminary assessment of whether the data is sufficient to support the intended analyses.
Review and Analysis of Dr. Rennick's Expert Report | Within 10 business days of receipt (anticipated receipt April 28, 2023; analysis due approximately May 12, 2023) | Written analysis (for internal use by counsel) identifying the key methodological assumptions, analytical errors, and factual shortcomings in Dr. Rennick's damages model, and outlining the specific points to be addressed in the rebuttal report.
Draft Rebuttal Expert Report | May 26, 2023 | Complete draft of the rebuttal expert report, including both the critique of Dr. Rennick's model and the presentation of the alternative damages model. The draft should be in substantially final form, suitable for review and comment by C&H counsel.
Final Rebuttal Expert Report | June 9, 2023 | Finalized rebuttal expert report, incorporating C&H's review comments and any additional data or analysis completed after the draft stage. This is the report that will be served on Plaintiffs' counsel pursuant to the case management schedule.
Expert Declaration in Opposition to Class Certification | June 14, 2023 | Summary declaration for filing with the Court in connection with AMA's opposition to class certification, accompanied by the final rebuttal expert report as an exhibit. The declaration should summarize Dr. Lindstrom's qualifications, methodology, and principal opinions in a concise format suitable for judicial review.
Availability for Class Certification Hearing Testimony | Week of July 28, 2023 | The class certification hearing is currently set for July 28, 2023, before the Honorable Raymond Escobedo, Department 34, Los Angeles Superior Court. Dr. Lindstrom should hold the entire week of July 24–28, 2023 available, as the hearing may extend beyond a single day.
Availability for Mediation Preparation | TBD (anticipated August 2023) | If the case proceeds to mediation (currently anticipated for August 2023, though no firm date has been set), Dr. Lindstrom should be available to prepare damages summary materials for use in mediation, including a concise presentation of the alternative damages model and a comparison to Plaintiffs' claimed damages.
Availability for Trial Testimony | TBD | If the case does not settle and proceeds to trial, Dr. Lindstrom should be available to testify as AMA's damages expert at trial. The trial date has not yet been set.
Component | Estimated Hours | Rate | Estimated Cost
Dr. Lindstrom — Data analysis, model development, report writing, testimony preparation | 140–175 hours | $700/hr | $98,000–$122,500
Senior Analyst — Data processing, computational analysis, quality assurance, exhibit preparation | 120–160 hours | $375/hr | $45,000–$60,000
Administrative / research support | Included in above | — | $7,000–$17,500
Total Estimated Fees | $150,000–$200,000

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

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