sargon-challenge-assessment-memo.docx

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

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CALDERWOOD & HARKNESS LLP 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-8400 Facsimile: (213) 555-8401

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Renata Vasquez, Responsible Partner

FROM: Devon Archer, Lead Associate

DATE: June 5, 2023

RE: Daubert/Sargon Challenge Assessment — Expert Report of Dr. Howard Rennick (Pinnacle Economic Consulting Group LLC)

MATTER: Fuentes v. Aurelius Media Americas Inc., LASC Case No. 22STCV38214 (Consolidated); C&H Matter No. 1017-00004

I. Executive Summary

This memorandum assesses whether our client, Aurelius Media Americas Inc. ("AMA"), should file a standalone motion to exclude or limit the expert testimony of Dr. Howard Rennick under Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, which establishes California's gatekeeping standard for expert testimony. The Sargon standard is functionally equivalent to the federal gatekeeping framework set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc. (1993) 509 U.S. 579, although it retains certain distinct features under California law that are discussed in greater detail in Section II below.

Dr. Rennick's expert report, dated April 28, 2023, was submitted on behalf of Plaintiffs through his firm, Pinnacle Economic Consulting Group LLC, located at 3000 El Camino Real, Suite 500, Palo Alto, California 94306. The report calculates aggregate class damages of approximately $38.6 million, inclusive of $12.2 million in penalties under the Private Attorneys General Act ("PAGA"), Cal. Lab. Code § 2698 et seq. These figures are derived from a methodology that, as discussed in detail herein, rests on several assumptions that are vulnerable to challenge under the Sargon framework.

After thorough analysis of the report, relevant case law, the likely judicial posture of the assigned bench officer (Hon. Raymond Escobedo, Dept. 34), and the strategic implications of various courses of action, this memorandum reaches the following conclusions:

Recommendation: We recommend against filing a standalone Sargon motion to exclude Dr. Rennick's testimony at the current stage of the proceedings. Instead, we recommend that AMA incorporate Sargon-based arguments into its opposition to Plaintiffs' motion for class certification (due June 16, 2023) and file targeted evidentiary objections to specific paragraphs of Rennick's supporting declaration.

Assessed Probability of Success on Standalone Motion: Approximately 30–35%. While Dr. Rennick's report contains identifiable methodological deficiencies — most critically, the unsupported assumption that every auto-deducted meal period constitutes a substantive violation — the Sargon standard as applied at the certification stage presents a high threshold for exclusion, and California trial courts consistently favor resolving methodology disputes through the weight of the evidence rather than outright exclusion.

Strategic Rationale: The risk-reward calculus does not favor a standalone motion. The probability of exclusion is modest, and an adverse ruling on such a motion could be characterized by Plaintiffs as a judicial endorsement of Rennick's methodology, thereby strengthening their negotiating position and their certification arguments. The more prudent strategy is to present the substance of the Sargon critique within the certification opposition — where the same arguments support a finding that Rennick's model fails to establish a viable common methodology under Granite Harbor Partners LLC v. Behrend (2013) 569 U.S. 27 — and to reserve a formal Sargon motion for the trial stage, when the Court is more likely to engage in rigorous scrutiny of expert methodology and the stakes of an adverse ruling are higher.

This approach preserves all arguments on the record, avoids the strategic downside of a denied standalone motion, and allocates limited briefing resources to the highest-impact filing in the near term.

II. Legal Standard — *Sargon* Gatekeeping Framework

A. California Standard Under *Sargon*

The governing framework for the admissibility of expert testimony in California state courts is set forth in Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747. In Sargon, the California Supreme Court confirmed that trial courts occupy a "gatekeeping" role with respect to expert testimony, obligating them 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. (Id. at 770–72.)

The Sargon Court identified three categories of excludable expert testimony, each of which is potentially implicated by the methodological choices reflected in Dr. Rennick's report:

First, an expert opinion may be excluded where it is based on assumptions of fact without evidentiary support. An expert who predicates an opinion on facts that have no basis in the evidentiary record — or that are contrary to the evidence — offers testimony that the trial court may properly exclude as lacking a sufficient foundation. (Sargon, 55 Cal.4th at 770.)

Second, an expert opinion may be excluded where it is based on speculative or conjectural factors. An expert who relies on guesswork, unsupported extrapolation, or assumptions that lack empirical or analytical grounding does not provide the reliable opinion testimony contemplated by the Evidence Code. (Id. at 770–71.)

Third, an expert opinion may be excluded where it is based on factors that are so attenuated from the specific case that they provide no reasonable basis for the opinion. (Id. at 771–72.) This prong addresses situations in which the expert's reasoning, even if internally logical, is insufficiently connected to the facts of the particular dispute to provide meaningful guidance to the trier of fact.

Critically, the Sargon Court was careful to delineate the boundaries of the gatekeeping function. The trial court must evaluate whether the expert's opinion is based on "matter of a type that reasonably may be relied upon by an expert in forming an opinion upon the subject to which his testimony relates" within the meaning of California Evidence Code section 801, subdivision (b). (Sargon, 55 Cal.4th at 771.) This inquiry examines whether the expert's opinion is reasonably grounded — not whether the opinion is correct. The distinction is fundamental: the gatekeeping function is not a license for the court to choose between competing expert opinions or to substitute its own judgment for that of the expert on contested factual or analytical questions.

As the Sargon Court explained: "The trial court's preliminary determination whether the expert opinion is founded on sound logic is not a decision on the ultimate merits of the opinion." (Id. at 772.) The court's role is to ensure that the expert's reasoning is within the range of what a reasonable expert in the field might rely upon, leaving ultimate credibility and weight determinations to the trier of fact.

This standard is also informed by California Evidence Code section 802, which permits an expert to state on direct examination the reasons for an opinion and the matter upon which it is based, and by section 801, which requires that the expert's opinion be "[b]ased on matter . . . that is of a type that reasonably may be relied upon by an expert in forming an opinion upon the subject to which his testimony relates."

B. Relationship to Federal *Daubert* Standard

California has not formally adopted the Daubert framework established in Daubert v. Merrell Dow Pharmaceuticals, Inc. (1993) 509 U.S. 579, and its progeny, including General Electric Co. v. Joiner (1997) 522 U.S. 136 and Kumho Tire Co. v. Carmichael (1999) 526 U.S. 137. However, the Sargon decision imposes a functionally similar gatekeeping role on California trial courts, and courts and practitioners frequently draw on Daubert principles as informative — though not controlling — authority in evaluating expert testimony under Sargon.

The four Daubert factors — (1) whether the theory or technique can be and has been tested, (2) whether the theory or technique has been subjected to peer review and publication, (3) the known or potential rate of error and the existence and maintenance of standards controlling the technique's operation, and (4) general acceptance of the methodology within the relevant scientific community — are relevant considerations under the Sargon analysis, but they do not constitute a rigid checklist. California courts instead emphasize the logical nexus between the expert's methodology and the conclusions drawn from it, as reflected in the Sargon opinion and in the statutory framework of Evidence Code sections 801 and 802.

This distinction has practical significance for the present matter. In federal court, a Daubert motion challenging Rennick's methodology would focus heavily on whether his assumptions have been empirically validated, whether his approach to extrapolation is consistent with accepted statistical practice, and whether his error rate is quantifiable. In California state court, while these considerations remain relevant, the inquiry is somewhat more forgiving — the question is whether the expert's methodology is within the range of what a reasonable expert in the field might employ, not whether it satisfies the full rigor of Daubert's multi-factor test.

C. Application at the Certification Stage

The practical application of the Sargon gatekeeping function at the class certification stage presents distinctive challenges. California courts are generally reluctant to exclude expert testimony at the certification stage, preferring to resolve methodology disputes through the weight of the evidence rather than through outright exclusion. This judicial tendency reflects a broader principle: at certification, the court's focus is on whether common questions of law or fact predominate over individual questions — not on the ultimate reliability of any particular damages model.

The California Supreme Court's decision in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, while primarily addressing the substantive requirements for meal and rest period claims, noted that a rigorous merits analysis at the certification stage may overlap with, but is not identical to, the admissibility inquiry. Courts conducting a predominance analysis may need to evaluate whether a plaintiff's proposed damages model is amenable to class-wide proof, but this evaluation does not necessarily require the full Sargon gatekeeping inquiry that would be appropriate at trial.

The federal analogue is instructive. In Granite Harbor Partners LLC v. Behrend (2013) 569 U.S. 27, the United States Supreme Court held that a class may not be certified unless the damages model measures damages attributable to the specific theory of liability on which the class proceeds. Northgate Enterprises requires a nexus between the damages methodology and the theory of liability — a principle that California courts have acknowledged but have applied with greater liberality at the certification stage than their federal counterparts. California courts have generally been more willing to certify classes even where the damages model is imperfect, provided that common questions predominate and the model is at least plausibly linked to the theory of liability.

As a practical matter, the judicial officer assigned to this matter — Hon. Raymond Escobedo, sitting in Department 34 of the Los Angeles Superior Court — has historically tended to defer expert admissibility battles to the trial phase absent a clear and fundamental methodological deficiency. In our review of Judge Escobedo's recent rulings in comparable wage-and-hour class actions, we have not identified a case in which he granted a standalone Sargon motion at the certification stage. This judicial tendency is consistent with the broader pattern among LASC judges and counsels in favor of presenting Sargon arguments as part of the certification briefing rather than through standalone motions.

III. Dr. Rennick's Report — Summary of Methodology and Opinions

A. Report Overview

Dr. Howard Rennick's expert report, dated April 28, 2023, was prepared through his consulting firm, Pinnacle Economic Consulting Group LLC, and submitted in support of Plaintiffs' motion for class certification. Dr. Rennick was retained by Plaintiffs' counsel at Castellano Byrne & Salas LLP (specifically, lead attorneys Marco Castellano and Diane Salas) to calculate aggregate class damages across all causes of action alleged in the consolidated complaint.

Dr. Rennick's report presents an aggregate damages opinion of $38.6 million across all causes of action, broken down as follows:

It is important to note that the $12.2 million in PAGA penalties is a subset of the $38.6 million total and overlaps with the meal period, rest period, and overtime categories — the PAGA penalties are derivative of the underlying substantive violations. Dr. Rennick's raw, unadjusted overtime calculation was approximately $15.8 million, which he adjusted downward to $12.2 million to account for shifts that did not exceed eight hours (and thus would not trigger overtime obligations).

The report spans 47 pages, plus 12 appendices containing data tables, formulae, and supporting calculations. Dr. Rennick holds a Ph.D. in Economics from Stanford University and has been retained as a damages expert in approximately 85 wage-and-hour class actions over the past 15 years. His qualifications are not at issue for purposes of this assessment — the challenge is directed at methodology, not expertise.

B. Key Methodological Assumptions

The strength — and the vulnerability — of Dr. Rennick's report lies in five core methodological assumptions that drive the aggregate damages figure. Each is summarized below.

1. Meal Period Assumption (Critical)

This is the single most consequential assumption in the report and the most vulnerable to challenge under Sargon.

Dr. Rennick assumes that every shift during which the TimeTrack Pro auto-deduction feature was applied constitutes a "missed" meal period for which a one-hour premium is owed under California Labor Code section 226.7. The only exception he recognizes is where a Missed Meal Attestation record exists in AMA's system showing that the employee self-reported the missed break and was already compensated with a premium payment.

The data inputs underlying this assumption are as follows:

• Total auto-deducted shifts during the class period (November 1, 2018 – present): Approximately 612,000 shifts across all seven AMA California facilities and all 14 show units.

• Shifts with corresponding Missed Meal Attestation records (premium already paid): Approximately 18,400 shifts, representing instances in which employees affirmatively reported a missed meal period through AMA's attestation system and received a premium payment.

• Net "missed" meal periods (per Rennick's methodology): Approximately 593,600 shifts (612,000 minus 18,400).

• Average hourly rate applied across the class: Approximately $27.50.

• Resulting meal period premium calculation: ~593,600 × $27.50 = approximately $16.3 million.

The critical logical flaw in this assumption is discussed in detail in Section IV.A below. In brief, the auto-deduction feature in AMA's TimeTrack Pro system is a recording mechanism designed to deduct 30 minutes from gross clock time to reflect compliant meal periods — it is not evidence of a violation. Dr. Rennick's methodology treats the normal functioning of the timekeeping system as evidence of non-compliance, which conflates the purpose of the auto-deduction with the substantive question of whether employees actually received compliant meal periods.

2. Rest Period Assumption

Dr. Rennick assumes a rest period violation rate of 50% across all eligible shifts during the class period. This violation rate is derived entirely from the declarations submitted by the three named plaintiffs: Maria Fuentes (Production Coordinator, Studio City facility), Kevin Halloran (Post-Production Assistant, Hollywood facility), and Sandra Padilla (Segment Coordinator, Burbank facility). Each of the three declarants stated, in substance, that they were denied rest periods on approximately half of their shifts.

The data inputs are as follows:

• Total rest period-eligible shifts during the class period: Approximately 612,000.

• Assumed class-wide violation rate: 50%.

• Resulting rest period violations: Approximately 306,000.

• Average hourly rate applied: Approximately $27.50.

• Total rest period premiums: ~306,000 × $27.50 = approximately $8.4 million.

The vulnerability of this assumption lies in its evidentiary foundation: three individual declarations, from three employees working at three different facilities in three different job classifications, are extrapolated to represent the experience of approximately 1,850 class members across seven facilities and 14 show units.

3. Off-the-Clock Overtime Assumption

Dr. Rennick assumes that each class member performed an average of 37.5 minutes of uncompensated off-the-clock work per shift, consisting of pre-shift setup and post-shift wrap activities. This figure is the arithmetic midpoint of the range alleged in Plaintiffs' consolidated complaint (30–45 minutes per shift). For shifts already exceeding eight hours, Dr. Rennick applied the overtime multiplier of 1.5× the regular rate.

After adjusting for shifts that did not exceed eight hours (and thus would not generate overtime liability), Dr. Rennick's off-the-clock overtime calculation totals approximately $12.2 million (reduced from a raw calculation of approximately $15.8 million).

The assumption of a uniform 37.5 minutes of off-the-clock work per shift across all class members, job classifications, facilities, and show units is discussed in Section IV.C below.

4. PAGA Penalty Assumption

Dr. Rennick calculates PAGA penalties using the maximum statutory rates — $100 for the initial violation per pay period per aggrieved employee and $200 for each subsequent violation per pay period per aggrieved employee — without applying any discount for the court's well-established discretion to reduce PAGA penalties under California Labor Code section 2699(e)(2). His PAGA penalty calculation totals approximately $12.2 million.

Section 2699(e)(2) expressly authorizes the court to exercise discretion to reduce PAGA penalties where the amount would be "unjust, arbitrary and oppressive, or confiscatory." Courts routinely exercise this discretion, and PAGA penalty awards at trial or in settlement are typically reduced by 75–90% from the statutory maximum. Dr. Rennick's failure to account for this reduction mechanism is discussed in Section IV.D below.

5. No Facility-Level Differentiation

Dr. Rennick treats all seven AMA California facilities and all 14 show units as a single homogeneous population for purposes of calculating class-wide damages. He does not adjust for the fact that the Missed Meal Attestation feature — the only correction he applies to his auto-deduction assumption — was activated at only four of seven facilities (West Hollywood HQ, Sherman Oaks, Hollywood, and Santa Monica) and was not activated at the remaining three facilities (Studio City, Burbank, and El Segundo).

This failure to differentiate between facilities with and without the attestation system, and between show units with dramatically different working conditions, is discussed in Section IV.E below.

IV. Grounds for *Sargon* Challenge

We have identified five principal grounds on which Dr. Rennick's testimony could be challenged under Sargon. Each ground is analyzed below with reference to the applicable legal standard and the factual record.

A. Ground 1: Meal Period Assumption Lacks Evidentiary Foundation

The Argument. Dr. Rennick's core assumption — that every auto-deducted meal period constitutes a "missed" or non-compliant meal period — lacks evidentiary support and is contrary to the purpose and function of AMA's auto-deduction system. This is the single most impactful assumption in the report, as it drives the $16.3 million meal period premium calculation, which in turn accounts for approximately 42% of the total damages figure.

The auto-deduction feature within AMA's TimeTrack Pro timekeeping system is designed to record compliant meal periods, not to mask violations. The system functions as follows: when an employee clocks in and clocks out, the system records gross clock time. If the employee's shift exceeds a threshold duration (typically five hours), the system automatically deducts 30 minutes from gross clock time to reflect the 30-minute meal period that the employee was provided during the shift. The resulting figure — net hours worked — is the basis for wage calculations.

To illustrate: an employee who clocks in at 8:00 a.m., takes a compliant 30-minute meal break at noon, and clocks out at 5:00 p.m. will show 9.0 hours of gross clock time minus 0.5 hours (the auto-deduction) = 8.5 hours of net paid time. The auto-deduction accurately captures the fact that the employee worked 8.5 compensable hours. In this scenario, the auto-deduction is evidence of a compliant meal period, not a missed one.

Dr. Rennick's methodology inverts this logic entirely. By treating every auto-deducted shift as a "missed" meal period, he assumes that the auto-deduction was applied instead of the employee receiving an actual meal break — i.e., that the employee worked through the meal period and was not compensated for it. But the auto-deduction, standing alone, says nothing about whether the employee actually took a meal break. It is a recording mechanism, not evidence of a violation. Dr. Rennick provides no independent evidence — no survey data, no sampling analysis, no statistical analysis of punch patterns or clock-in/clock-out times — to support the assumption that auto-deducted shifts correspond to actual missed meals.

The only "correction" Dr. Rennick applies is subtracting the approximately 18,400 shifts for which Missed Meal Attestation records exist in AMA's system — shifts where the employee affirmatively reported a missed meal and received a premium payment. These 18,400 shifts represent approximately 3% of the total 612,000 auto-deducted shifts. The necessary implication of Rennick's methodology is that the remaining 97% of all meal periods during the class period were missed — a figure that is facially implausible and unsupported by any evidence in the record.

Our defense expert, Dr. Catherine Lindstrom of Hargrove Analytics Inc. (515 S. Figueroa Street, Suite 1100, Los Angeles, CA 90071), whose rebuttal report is due June 9, 2023, provides an alternative damages calculation of approximately $5.8 million in aggregate damages using actual missed-meal attestation data supplemented by a conservative extrapolation methodology. Dr. Lindstrom's figure is approximately 85% lower than Dr. Rennick's $38.6 million calculation. The magnitude of this discrepancy underscores the degree to which Rennick's damages figure is driven by his unsupported auto-deduction assumption rather than by objective evidence of actual violations.

*Sargon* Relevance. Dr. Rennick's meal period assumption is "based on assumptions of fact without evidentiary support" within the meaning of Sargon, 55 Cal.4th at 770. An auto-deduction record is a recording mechanism; it is not evidence that the employee was denied a meal period. Treating the former as the latter is a logical leap that lacks the necessary factual nexus between the data relied upon and the conclusion drawn. The Sargon framework requires that the expert's opinion be grounded in matter "of a type that reasonably may be relied upon" — and an auto-deduction record, without more, is not a reasonable basis for concluding that a meal period violation occurred.

B. Ground 2: Rest Period Violation Rate Is Speculative

The Argument. Dr. Rennick's assumed rest period violation rate of 50% is derived entirely from the declarations of the three named plaintiffs — Maria Fuentes (Production Coordinator at the Studio City facility), Kevin Halloran (Post-Production Assistant at the Hollywood facility), and Sandra Padilla (Segment Coordinator at the Burbank facility) — and has no empirical or statistical basis. Each declarant stated, in general terms, that she or he was denied rest periods on approximately half of her or his shifts. Dr. Rennick applied this 50% figure uniformly to all 612,000 rest period-eligible shifts across the entire class.

This extrapolation is fundamentally unreliable. Three individuals from three different facilities, three different divisions, and three different job classifications cannot form a statistically valid or logically sound basis for a class-wide extrapolation to 1,850 employees across 14 show units. The named plaintiffs occupy only three of the numerous job classifications within the putative class, work at only three of seven facilities, and are associated with a subset of AMA's show units. Their experiences, however genuine, are not representative of the class as a whole — and Dr. Rennick makes no effort to demonstrate representativeness through sampling, surveys, or any other accepted methodology.

This deficiency is amplified by the documented variation in working conditions across AMA's operations. Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC (444 Castro Street, Suite 800, Mountain View, CA 94041), our defense industrial/organizational psychology expert, issued a report on May 19, 2023, documenting statistically significant differences in working conditions, scheduling practices, and supervisory structures across AMA's 14 show units and seven facilities. Dr. Makhija's analysis demonstrates that the nature of work, the degree of schedule predictability, the number and length of shifts, and the supervisory oversight of break compliance vary materially across the different show units and facilities. This variation fundamentally undermines the assumption that a 50% violation rate observed (or, more precisely, self-reported) by three individuals is representative of class-wide experience.

Furthermore, rest periods are not tracked in AMA's TimeTrack Pro system. This is consistent with industry practice — rest periods are paid time under California law and thus are not typically recorded through clock-in/clock-out mechanisms. As a result, there is no objective data set from which a reliable class-wide rest period violation rate can be derived. Absent such data, Dr. Rennick had two options: (1) conduct independent empirical research (such as surveys, sampling, or time studies) to estimate a class-wide violation rate, or (2) acknowledge the absence of data and refrain from opining on a specific rate. He chose neither, instead relying on three anecdotal declarations as the sole basis for a class-wide damages calculation of $8.4 million.

*Sargon* Relevance. Dr. Rennick's rest period assumption is "based on speculative or conjectural factors" within the meaning of Sargon, 55 Cal.4th at 770. Extrapolating from three individual declarations to a class of 1,850 employees across seven facilities and 14 show units — without any statistical analysis, sampling methodology, or other empirical basis — is speculative. The assumption lacks the evidentiary foundation required by the Sargon standard and by California Evidence Code sections 801 and 802.

C. Ground 3: Off-the-Clock Overtime Assumption Is Unsupported

The Argument. Dr. Rennick's assumption of 37.5 minutes of uncompensated off-the-clock work per shift is not derived from any data analysis, time study, or empirical observation. Rather, it is the simple arithmetic midpoint of the range alleged in Plaintiffs' consolidated complaint, which asserts that class members performed between 30 and 45 minutes of uncompensated pre-shift setup and post-shift wrap activities per shift. The midpoint of this range — 37.5 minutes — is not an independently derived figure; it is a placeholder that tracks the complaint's allegations rather than the evidence.

The assumption of a uniform 37.5 minutes of off-the-clock work per shift across all class members is additionally unsupported because different employees in different roles performed different pre-shift and post-shift tasks — or no such tasks at all. Production coordinators, post-production assistants, segment coordinators, production assistants, and other job classifications within the putative class have different job responsibilities, different physical workspaces, and different operational demands. Some roles may require meaningful pre-shift preparation (such as equipment setup for field-based production units), while others (such as office-based post-production roles) may require little or no pre-shift activity. Dr. Rennick does not differentiate among these roles or account for the variation in off-the-clock demands across job classifications, facilities, or show units.

As with rest periods, there is no TimeTrack Pro data for off-the-clock time, because by definition, such time is unrecorded — it falls outside the clock-in/clock-out window. Dr. Rennick does not offer any independent methodology for estimating off-the-clock time, such as employee surveys, observational time studies, or regression analysis of clock-in times relative to scheduled shift start times. The 37.5-minute figure is simply adopted from the complaint without independent validation.

*Sargon* Relevance. This assumption is "so attenuated from the specific case" that it provides no reasonable basis for the opinion, within the meaning of Sargon, 55 Cal.4th at 771–72. The figure is not derived from the evidence; it is derived from the allegations. An expert who adopts a complaint's factual assertions as the inputs for a damages model — without independently verifying those assertions through data analysis or empirical inquiry — does not provide a reliable opinion grounded in the factual record of the case.

D. Ground 4: PAGA Penalty Calculation Assumes Maximum Penalties Without Judicial Discretion Reduction

The Argument. Dr. Rennick's PAGA penalty calculation of $12.2 million assumes maximum statutory penalty rates — $100 for the initial violation per pay period per aggrieved employee, and $200 for each subsequent violation — without any discount or adjustment for the court's well-established discretion to reduce PAGA penalties under California Labor Code section 2699(e)(2).

Section 2699(e)(2) expressly provides that the court may exercise discretion to award a lesser amount where the "amount of the civil penalty . . . would be unjust, arbitrary and oppressive, or confiscatory." This provision reflects the Legislature's recognition that the maximum statutory penalties, when calculated across a large class over an extended period, can produce penalty figures that far exceed any reasonable measure of the employer's culpability or the employees' harm.

Courts routinely exercise this discretion. In practice, PAGA penalty awards at trial or in court-approved settlements are typically reduced by 75–90% from the statutory maximum. This judicial practice is well-documented and represents a predictable feature of PAGA litigation — not an aberration. An expert who presents only the maximum penalty figure without acknowledging the statutory reduction mechanism, or without providing a range of likely outcomes that reflects the court's discretion, fails to provide a reliable opinion on the actual PAGA exposure confronting the defendant.

Our own preliminary assessment of realistic PAGA settlement exposure, based on comparable settlements in the media and entertainment industry and in cases with similar class sizes and violation allegations, places the PAGA component in the range of $500,000 to $1,500,000 — a figure that is approximately 88–96% lower than Dr. Rennick's calculation.

*Sargon* Relevance. While this ground is somewhat less potent as a basis for full exclusion — a court might view the maximum-penalty calculation as representing one end of a range rather than an unreliable methodology — it reinforces the broader theme that Dr. Rennick's report systematically overstates damages at every turn. The failure to acknowledge and incorporate the statutory reduction mechanism is a methodological choice that renders the PAGA component of the opinion unreliable as a measure of actual exposure.

E. Ground 5: Failure to Account for Facility-Level Variation

The Argument. Dr. Rennick's damages model treats all seven AMA California facilities and all 14 show units as a single homogeneous population, without differentiating between:

• Facilities where the Missed Meal Attestation feature was activated (Facility 1 — West Hollywood HQ, Facility 3 — Sherman Oaks, Facility 5 — Hollywood, and Facility 6 — Santa Monica) versus facilities where it was not activated (Facility 2 — Studio City, Facility 4 — Burbank, and Facility 7 — El Segundo);

• Studio-based show units (such as "Kitchen Clash," which operates on predictable 9-hour production days in a controlled studio environment) versus field-based show units (such as "Summit Challenge," which involves on-location shooting with 14–16 hour production days in remote settings);

• Post-production operations (office-based, regular business hours, predictable scheduling) versus live events production (unpredictable scheduling, extended hours, variable locations).

The failure to differentiate between facilities with and without the attestation system is particularly significant because the attestation system provides the only data that Dr. Rennick uses to "correct" his auto-deduction assumption. At facilities where the attestation system was not activated, employees who missed meal periods had no mechanism through which to self-report the missed break — meaning that the absence of attestation records at those facilities says nothing about whether meals were actually missed. Dr. Rennick's methodology treats the absence of attestation records uniformly across all facilities, which is analytically unsound because the absence means different things depending on whether the attestation system was available.

Dr. Makhija's analysis provides compelling evidence of the degree of variation across AMA's operations. His report documents that the percentage of shifts with self-reported missed meal periods ranged from 2.1% at the studio-based "Kitchen Clash" show unit to 18.7% at the field-based "Summit Challenge" show unit — a variation of nearly nine-fold. This documented variation demonstrates that working conditions, scheduling, and break compliance differ materially across show units. A damages model that ignores this variation and applies a single set of assumptions to all class members is not reliably connected to the facts of this case.

*Sargon* Relevance. The homogeneity assumption renders the opinion "based on factors that are so attenuated from the specific case" — specifically, from the heterogeneous working conditions across AMA's facilities and show units — that it provides no reasonable basis for the aggregate damages figure. The Sargon standard requires that expert testimony be grounded in the particular facts of the case, and a model that ignores documented nine-fold variation in the key metric fails this requirement.

V. Assessment of Probability of Success

A. Factors Favoring Exclusion (Supporting 30–35% Probability)

Several features of Dr. Rennick's methodology would support a finding that his testimony should be excluded or limited under Sargon:

1. The meal period assumption is arguably the weakest element of the report. Treating auto-deduction as proof of a meal period violation conflates a recording method with a substantive violation, and Dr. Rennick provides no independent validation of this assumption. The resulting implication — that 97% of all meal periods were missed — is facially implausible and unsupported by any evidence beyond the auto-deduction records themselves.

2. The rest period and off-the-clock overtime assumptions have virtually no empirical basis. Three declarations from three individuals, extrapolated to a class of 1,850 employees across diverse facilities and show units, do not provide a statistically valid or logically sound foundation for class-wide damages calculations totaling $8.4 million and $12.2 million, respectively.

3. The failure to disaggregate by facility or show unit in light of documented variation is a genuine methodological deficiency. Dr. Makhija's analysis of nine-fold variation in self-reported missed meal rates across show units establishes that the homogeneity assumption is empirically unfounded. A reliable damages model must account for known sources of variation, particularly when the variation is as dramatic as the evidence here demonstrates.

4. There is a reasonable argument that Rennick's model does not match Plaintiffs' theory of liability under *Northgate Enterprises*. Plaintiffs' theory is that AMA failed to provide compliant meal periods to individual employees — a question that inherently requires individualized inquiry into whether each employee was actually denied a compliant meal period on each shift. Dr. Rennick's model bypasses this individualized inquiry entirely by assuming a 97% violation rate without individual evidence, which arguably fails to "measure only those damages attributable to" the theory of liability on which the class proceeds. (Northgate Enterprises, 569 U.S. at 35.)

B. Factors Against Exclusion (Supporting 65–70% Probability of Denial)

Notwithstanding the identified deficiencies, several factors weigh against the likelihood of exclusion on a standalone Sargon motion at the certification stage:

1. Judicial reluctance to exclude expert testimony at certification. California trial courts are generally reluctant to exclude expert testimony at the class certification stage. The prevailing judicial philosophy is that methodology disputes go to the weight of the evidence, not its admissibility, and that the certification hearing is not the appropriate forum for resolving contested expert methodology questions. This reluctance is particularly pronounced in wage-and-hour cases, where courts have extensive experience managing competing expert opinions.

2. The *Sargon* standard sets a "range of reasonable" threshold. The Sargon framework does not require that an expert's methodology be optimal or unassailable — only that it fall within the "range of reasonable" expert opinions. Even a flawed methodology may be deemed "reasonable" if it is based on some data (here, the TimeTrack Pro records) and follows a logical structure (even if the key assumption linking auto-deduction to missed meals is disputed). A court could plausibly conclude that Rennick's approach, while aggressive, is not so unreasonable as to warrant exclusion under Sargon.

3. The assigned judicial officer's tendencies. Hon. Raymond Escobedo, sitting in Department 34 of the LASC, is unlikely to exclude Dr. Rennick's testimony entirely at the certification stage. Based on our review of Judge Escobedo's rulings in comparable matters, the more probable outcome is that the Court acknowledges our criticisms, notes the competing expert analyses, but allows Rennick's testimony — reserving the methodology dispute for trial or settlement evaluation. Judge Escobedo has demonstrated a preference for resolving expert disputes through cross-examination and competing testimony rather than through pre-trial exclusion.

4. Risk of an adverse ruling being characterized as endorsement. An adverse ruling on a Sargon motion — i.e., a ruling denying the motion and permitting Rennick's testimony — could be characterized by Plaintiffs as the Court "endorsing" Rennick's methodology. This characterization, while not legally accurate (a denial of a Sargon motion is not a finding that the expert's methodology is correct), could nevertheless strengthen Plaintiffs' negotiating position in settlement discussions and could be used by Plaintiffs in subsequent briefing to argue that the Court has already considered and rejected AMA's methodology criticisms.

5. Resource allocation. Filing a standalone Sargon motion would consume significant briefing resources — estimated at approximately 40–60 attorney hours — that could be more effectively deployed in the certification opposition itself, where the same substantive arguments can be presented within a framework (predominance analysis) that is more favorable to AMA.

6. No controlling authority on the auto-deduction assumption. There is no California appellate authority squarely holding that an auto-deduction assumption like Rennick's is per se unreliable. The issue is factually contested, not legally settled. In the absence of controlling authority, the trial court has broad discretion to admit or exclude the testimony, and that discretion is more likely to be exercised in favor of admission at the certification stage.

C. Net Assessment

Taking into account the factors identified above, we assess the overall probability of obtaining full or partial exclusion of Dr. Rennick's testimony on a standalone Sargon motion at the certification stage at approximately 30–35%. This probability reflects the genuine methodological deficiencies in Rennick's report, discounted by the significant headwinds that any standalone Sargon motion would face at this stage of the proceedings.

A 30–35% probability of success does not justify the strategic risk and resource expenditure of a standalone motion. The expected value of the motion — measured in terms of the probability-weighted benefit of exclusion versus the probability-weighted cost of denial — is negative when the adverse signaling effect of a denied motion is factored into the analysis.

VI. Recommended Approach

A. Do Not File Standalone *Sargon* Motion at the Certification Stage

For the reasons set forth in this memorandum, we recommend that AMA not file a standalone motion to exclude Dr. Rennick's testimony under Sargon at the certification stage. The risk-reward calculus does not favor such a motion:

• The probability of success is modest (30–35%), reflecting the generally reluctant posture of California trial courts toward expert exclusion at certification and the broad discretion afforded to the assigned judicial officer.

• The risk of an adverse ruling is significant. A denied Sargon motion could be characterized by Plaintiffs as judicial endorsement of Rennick's methodology, strengthening their negotiating position and their certification arguments.

• The resource expenditure required for a standalone motion (estimated 40–60 attorney hours) can be more effectively redirected to the certification opposition, where the same arguments carry greater strategic weight.

B. Instead: Present *Sargon* Arguments Within the Certification Opposition

We recommend incorporating the substance of the Sargon critique into the predominance analysis of AMA's opposition to Plaintiffs' motion for class certification, which is due on June 16, 2023. Specifically, we recommend the following approach:

• Argue that Dr. Rennick's damages model is not a viable "common methodology" under Granite Harbor Partners LLC v. Behrend because it does not match the substantive theory of liability. Plaintiffs' theory is that AMA failed to provide compliant meal periods to individual employees — a claim that requires proof that each individual employee was actually denied a compliant break on each specific shift. Rennick's model bypasses this individualized inquiry entirely by assuming a 97% violation rate derived from auto-deduction records, which do not constitute evidence of actual violations.

• Present the meal period assumption flaw as evidence that common questions do not predominate. If the determination of whether a meal period was "missed" requires examination of each employee's individual circumstances on each shift, then individual questions predominate over common questions, defeating certification under Code of Civil Procedure section 382.

• Highlight the lack of facility-level differentiation as further evidence that Rennick's model fails to account for the heterogeneity of AMA's operations. The documented nine-fold variation in missed meal rates across show units (per Dr. Makhija's analysis) demonstrates that a single set of assumptions cannot reliably capture the diverse experiences of 1,850 employees across seven facilities and 14 show units.

• Present Dr. Lindstrom's alternative damages calculation ($5.8 million) as evidence that Rennick's model dramatically overstates damages and is unreliable as a basis for certification. The 85% discrepancy between the two experts' figures — driven primarily by the auto-deduction assumption — underscores the degree to which Rennick's model is speculative rather than grounded in actual evidence of violations.

• Address the speculative rest period violation rate (50% based on three declarations) and the unsupported off-the-clock overtime assumption (37.5 minutes adopted from the complaint) as additional examples of methodological deficiencies that render Rennick's model incapable of serving as a reliable common damages framework.

This approach presents the same substantive arguments that would appear in a standalone Sargon motion, but within a framework — the predominance analysis — that is both more favorable to AMA and more likely to influence the Court's certification ruling.

C. File Targeted Evidentiary Objections

In addition to incorporating Sargon arguments into the certification opposition, we recommend filing targeted evidentiary objections under California Evidence Code sections 801 and 802 to specific paragraphs of Dr. Rennick's declaration submitted in support of Plaintiffs' certification motion. These objections should address the following:

• Object to the foundational assumption that auto-deduction equals a missed meal period (Rennick Declaration, ¶¶ 24–31): The assumption lacks evidentiary support. Auto-deduction records are not evidence of meal period violations, and Dr. Rennick provides no independent data validating this assumption. The testimony is inadmissible under Evidence Code section 801(b) because it is not based on matter of a type that reasonably may be relied upon by an expert in forming an opinion on this subject.

• Object to the 50% rest period violation rate (Rennick Declaration, ¶¶ 32–38): The assumption is speculative and lacks a sufficient foundation for class-wide extrapolation. Three anecdotal declarations from three employees do not constitute a reasonable basis for a class-wide violation rate applicable to 1,850 employees across seven facilities and 14 show units. The testimony is inadmissible under Evidence Code sections 801(b) and 802 as speculative.

• Object to the PAGA penalty calculation (Rennick Declaration, ¶¶ 44–49): The calculation assumes maximum statutory penalties without accounting for the court's statutory discretion to reduce penalties under Labor Code section 2699(e)(2), rendering the opinion unreliable as a measure of actual PAGA exposure.

These targeted objections serve several strategic purposes. First, they preserve our Sargon arguments on the record without the downside risk of a denied standalone motion. Second, they create a record that can be referenced in post-certification briefing or at trial if the case proceeds. Third, they signal to the Court that AMA has identified specific methodological deficiencies in Rennick's report — deficiencies that the Court may consider in evaluating whether common questions predominate, even if the Court does not formally exclude the testimony at the certification stage.

D. Reserve *Sargon* Motion for Trial

If the case does not settle and proceeds to trial, we recommend filing a formal Sargon motion to exclude or limit Dr. Rennick's testimony at the summary judgment or in limine stage. At that juncture, the strategic calculus shifts in favor of a standalone motion for several reasons:

• Higher stakes. At trial, the consequence of unreliable expert testimony is a potentially inflated jury verdict, not merely a certification order. The stakes are sufficiently high to justify the resource expenditure and the risk of an adverse ruling.

• More rigorous scrutiny. Courts are more likely to engage in rigorous scrutiny of expert methodology at the trial stage, where the gatekeeping function serves its core purpose of ensuring that only reliable testimony reaches the jury. The judicial reluctance to exclude expert testimony that characterizes the certification stage is significantly diminished at trial.

• More fully developed evidentiary record. By the trial stage, the evidentiary record will be more fully developed, including discovery data (depositions, interrogatory responses, document production) that may further undermine Dr. Rennick's assumptions. For example, deposition testimony from class members regarding their actual meal period practices, or additional data analysis by Dr. Lindstrom, may provide a stronger factual foundation for the Sargon challenge.

• Greater judicial attention. An adverse ruling on a Sargon motion at trial is more consequential — and thus more likely to receive careful judicial attention — than a ruling at the certification stage. The trial court is more likely to engage in a thorough analysis of the expert's methodology when the ruling directly affects the evidence that the jury will consider.

VII. Coordination with Expert Team

Effective presentation of the Sargon critique within the certification opposition requires close coordination with our expert team. The following outlines the current status of our expert engagement and the actions required in advance of the certification hearing.

Dr. Catherine Lindstrom — Rebuttal Damages Expert. Dr. Lindstrom's rebuttal report is due on June 9, 2023. That report should directly address each of the methodological flaws identified in Sections IV.A through IV.E of this memorandum. In particular, Dr. Lindstrom should:

• Present her alternative damages calculation of approximately $5.8 million, grounded in actual missed-meal attestation data supplemented by a conservative extrapolation methodology for facilities where the attestation system was not activated.

• Explain why the auto-deduction assumption is unsupported, providing a detailed analysis of TimeTrack Pro records showing that auto-deductions are applied to compliant meal periods and do not indicate violations.

• Provide facility-level and show unit-level breakdowns of her damages analysis, demonstrating that a disaggregated approach produces dramatically different results from Rennick's homogeneous model.

• Address the PAGA penalty calculation, providing a range of likely PAGA exposure that accounts for the court's discretion to reduce penalties under Labor Code section 2699(e)(2).

Dr. Rajesh Makhija — Defense I/O Expert. Dr. Makhija's report, issued on May 19, 2023, provides the factual foundation for the facility-level variation critique. His analysis of variability across AMA's 14 show units and 7 facilities — including the documented nine-fold variation in self-reported missed meal rates — is essential to undermining Rennick's homogeneity assumption. Dr. Makhija's report also documents statistically significant differences in scheduling practices, supervisory structures, and working conditions that support AMA's argument that individual questions predominate over common questions.

Hearing Preparation. Both Dr. Lindstrom and Dr. Makhija should be prepared to testify at the class certification hearing, currently scheduled for July 28, 2023, before Hon. Raymond Escobedo in Department 34 of the Los Angeles Superior Court. We anticipate that Plaintiffs' counsel will call Dr. Rennick to testify regarding his methodology, and we should be prepared to cross-examine Rennick on the deficiencies identified in this memorandum. Dr. Lindstrom and Dr. Makhija should each be prepared for direct examination regarding their alternative analyses and rebuttal opinions.

We should schedule preparation sessions with both experts no later than the week of July 17, 2023, to ensure that their testimony is aligned with our certification opposition arguments and that they are prepared to address anticipated cross-examination by Plaintiffs' counsel.

VIII. Conclusion

For the reasons set forth in this memorandum, a standalone Sargon motion to exclude Dr. Howard Rennick's expert testimony is not recommended at the current stage of the proceedings. While Dr. Rennick's report contains identifiable and significant methodological deficiencies — most critically, the unsupported assumption that auto-deducted meal periods constitute substantive violations — the probability of obtaining exclusion on a standalone motion at the certification stage is approximately 30–35%, which does not justify the strategic risk and resource expenditure associated with such a motion.

The most effective strategy is a three-part approach:

1. Embed the *Sargon* critique within AMA's opposition to class certification (due June 16, 2023), presenting the methodological deficiencies as evidence that Rennick's model is not a viable common damages methodology under Northgate Enterprises and that individual questions regarding actual meal period compliance predominate over common questions.

2. File targeted evidentiary objections under California Evidence Code sections 801 and 802 to specific paragraphs of Rennick's declaration, preserving the Sargon arguments on the record without the downside risk of a denied standalone motion.

3. Reserve a formal *Sargon* motion for the trial stage (at summary judgment or in limine), when the stakes are higher, the Court is more likely to scrutinize expert methodology rigorously, the evidentiary record is more fully developed, and the probability of exclusion is commensurately greater.

This approach preserves all arguments on the record, avoids the strategic downside of a denied motion that could be perceived as judicial endorsement of Rennick's methodology, and allocates AMA's limited briefing resources to the highest-impact filing in the near term.

I am available to discuss this assessment at your convenience and to begin drafting the relevant sections of the certification opposition consistent with these recommendations.

Respectfully submitted,

DEVON ARCHER Lead Associate Calderwood & Harkness LLP

________________________________________

Devon Archer

cc: Case File (C&H Matter No. 1017-00004) This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is intended solely for the use of the addressee in connection with the above-referenced matter and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.

Damages Category	Amount
First meal period premiums	~$16.3 million
Rest period premiums	~$8.4 million
Off-the-clock overtime (adjusted)	~$12.2 million
Wage statement penalties	Included in aggregate
PAGA penalties	$12.2 million (subset of total; overlapping categories)
Total aggregate damages	~$38.6 million

CALDERWOOD & HARKNESS LLP 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-8400 Facsimile: (213) 555-8401
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Renata Vasquez, Responsible Partner
FROM: Devon Archer, Lead Associate
DATE: June 5, 2023
RE: Daubert/Sargon Challenge Assessment — Expert Report of Dr. Howard Rennick (Pinnacle Economic Consulting Group LLC)
MATTER: Fuentes v. Aurelius Media Americas Inc., LASC Case No. 22STCV38214 (Consolidated); C&H Matter No. 1017-00004
I. Executive Summary
This memorandum assesses whether our client, Aurelius Media Americas Inc. ("AMA"), should file a standalone motion to exclude or limit the expert testimony of Dr. Howard Rennick under Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747, which establishes California's gatekeeping standard for expert testimony. The Sargon standard is functionally equivalent to the federal gatekeeping framework set forth in Daubert v. Merrell Dow Pharmaceuticals, Inc. (1993) 509 U.S. 579, although it retains certain distinct features under California law that are discussed in greater detail in Section II below.
Dr. Rennick's expert report, dated April 28, 2023, was submitted on behalf of Plaintiffs through his firm, Pinnacle Economic Consulting Group LLC, located at 3000 El Camino Real, Suite 500, Palo Alto, California 94306. The report calculates aggregate class damages of approximately $38.6 million, inclusive of $12.2 million in penalties under the Private Attorneys General Act ("PAGA"), Cal. Lab. Code § 2698 et seq. These figures are derived from a methodology that, as discussed in detail herein, rests on several assumptions that are vulnerable to challenge under the Sargon framework.
After thorough analysis of the report, relevant case law, the likely judicial posture of the assigned bench officer (Hon. Raymond Escobedo, Dept. 34), and the strategic implications of various courses of action, this memorandum reaches the following conclusions:
Recommendation: We recommend against filing a standalone Sargon motion to exclude Dr. Rennick's testimony at the current stage of the proceedings. Instead, we recommend that AMA incorporate Sargon-based arguments into its opposition to Plaintiffs' motion for class certification (due June 16, 2023) and file targeted evidentiary objections to specific paragraphs of Rennick's supporting declaration.
Assessed Probability of Success on Standalone Motion: Approximately 30–35%. While Dr. Rennick's report contains identifiable methodological deficiencies — most critically, the unsupported assumption that every auto-deducted meal period constitutes a substantive violation — the Sargon standard as applied at the certification stage presents a high threshold for exclusion, and California trial courts consistently favor resolving methodology disputes through the weight of the evidence rather than outright exclusion.
Strategic Rationale: The risk-reward calculus does not favor a standalone motion. The probability of exclusion is modest, and an adverse ruling on such a motion could be characterized by Plaintiffs as a judicial endorsement of Rennick's methodology, thereby strengthening their negotiating position and their certification arguments. The more prudent strategy is to present the substance of the Sargon critique within the certification opposition — where the same arguments support a finding that Rennick's model fails to establish a viable common methodology under Granite Harbor Partners LLC v. Behrend (2013) 569 U.S. 27 — and to reserve a formal Sargon motion for the trial stage, when the Court is more likely to engage in rigorous scrutiny of expert methodology and the stakes of an adverse ruling are higher.
This approach preserves all arguments on the record, avoids the strategic downside of a denied standalone motion, and allocates limited briefing resources to the highest-impact filing in the near term.
II. Legal Standard — *Sargon* Gatekeeping Framework
A. California Standard Under *Sargon*
The governing framework for the admissibility of expert testimony in California state courts is set forth in Sargon Enterprises, Inc. v. University of Southern California (2012) 55 Cal.4th 747. In Sargon, the California Supreme Court confirmed that trial courts occupy a "gatekeeping" role with respect to expert testimony, obligating them 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. (Id. at 770–72.)
The Sargon Court identified three categories of excludable expert testimony, each of which is potentially implicated by the methodological choices reflected in Dr. Rennick's report:
First, an expert opinion may be excluded where it is based on assumptions of fact without evidentiary support. An expert who predicates an opinion on facts that have no basis in the evidentiary record — or that are contrary to the evidence — offers testimony that the trial court may properly exclude as lacking a sufficient foundation. (Sargon, 55 Cal.4th at 770.)
Second, an expert opinion may be excluded where it is based on speculative or conjectural factors. An expert who relies on guesswork, unsupported extrapolation, or assumptions that lack empirical or analytical grounding does not provide the reliable opinion testimony contemplated by the Evidence Code. (Id. at 770–71.)
Third, an expert opinion may be excluded where it is based on factors that are so attenuated from the specific case that they provide no reasonable basis for the opinion. (Id. at 771–72.) This prong addresses situations in which the expert's reasoning, even if internally logical, is insufficiently connected to the facts of the particular dispute to provide meaningful guidance to the trier of fact.
Critically, the Sargon Court was careful to delineate the boundaries of the gatekeeping function. The trial court must evaluate whether the expert's opinion is based on "matter of a type that reasonably may be relied upon by an expert in forming an opinion upon the subject to which his testimony relates" within the meaning of California Evidence Code section 801, subdivision (b). (Sargon, 55 Cal.4th at 771.) This inquiry examines whether the expert's opinion is reasonably grounded — not whether the opinion is correct. The distinction is fundamental: the gatekeeping function is not a license for the court to choose between competing expert opinions or to substitute its own judgment for that of the expert on contested factual or analytical questions.
As the Sargon Court explained: "The trial court's preliminary determination whether the expert opinion is founded on sound logic is not a decision on the ultimate merits of the opinion." (Id. at 772.) The court's role is to ensure that the expert's reasoning is within the range of what a reasonable expert in the field might rely upon, leaving ultimate credibility and weight determinations to the trier of fact.
This standard is also informed by California Evidence Code section 802, which permits an expert to state on direct examination the reasons for an opinion and the matter upon which it is based, and by section 801, which requires that the expert's opinion be "[b]ased on matter . . . that is of a type that reasonably may be relied upon by an expert in forming an opinion upon the subject to which his testimony relates."
B. Relationship to Federal *Daubert* Standard
California has not formally adopted the Daubert framework established in Daubert v. Merrell Dow Pharmaceuticals, Inc. (1993) 509 U.S. 579, and its progeny, including General Electric Co. v. Joiner (1997) 522 U.S. 136 and Kumho Tire Co. v. Carmichael (1999) 526 U.S. 137. However, the Sargon decision imposes a functionally similar gatekeeping role on California trial courts, and courts and practitioners frequently draw on Daubert principles as informative — though not controlling — authority in evaluating expert testimony under Sargon.
The four Daubert factors — (1) whether the theory or technique can be and has been tested, (2) whether the theory or technique has been subjected to peer review and publication, (3) the known or potential rate of error and the existence and maintenance of standards controlling the technique's operation, and (4) general acceptance of the methodology within the relevant scientific community — are relevant considerations under the Sargon analysis, but they do not constitute a rigid checklist. California courts instead emphasize the logical nexus between the expert's methodology and the conclusions drawn from it, as reflected in the Sargon opinion and in the statutory framework of Evidence Code sections 801 and 802.
This distinction has practical significance for the present matter. In federal court, a Daubert motion challenging Rennick's methodology would focus heavily on whether his assumptions have been empirically validated, whether his approach to extrapolation is consistent with accepted statistical practice, and whether his error rate is quantifiable. In California state court, while these considerations remain relevant, the inquiry is somewhat more forgiving — the question is whether the expert's methodology is within the range of what a reasonable expert in the field might employ, not whether it satisfies the full rigor of Daubert's multi-factor test.
C. Application at the Certification Stage
The practical application of the Sargon gatekeeping function at the class certification stage presents distinctive challenges. California courts are generally reluctant to exclude expert testimony at the certification stage, preferring to resolve methodology disputes through the weight of the evidence rather than through outright exclusion. This judicial tendency reflects a broader principle: at certification, the court's focus is on whether common questions of law or fact predominate over individual questions — not on the ultimate reliability of any particular damages model.
The California Supreme Court's decision in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, while primarily addressing the substantive requirements for meal and rest period claims, noted that a rigorous merits analysis at the certification stage may overlap with, but is not identical to, the admissibility inquiry. Courts conducting a predominance analysis may need to evaluate whether a plaintiff's proposed damages model is amenable to class-wide proof, but this evaluation does not necessarily require the full Sargon gatekeeping inquiry that would be appropriate at trial.
The federal analogue is instructive. In Granite Harbor Partners LLC v. Behrend (2013) 569 U.S. 27, the United States Supreme Court held that a class may not be certified unless the damages model measures damages attributable to the specific theory of liability on which the class proceeds. Northgate Enterprises requires a nexus between the damages methodology and the theory of liability — a principle that California courts have acknowledged but have applied with greater liberality at the certification stage than their federal counterparts. California courts have generally been more willing to certify classes even where the damages model is imperfect, provided that common questions predominate and the model is at least plausibly linked to the theory of liability.
As a practical matter, the judicial officer assigned to this matter — Hon. Raymond Escobedo, sitting in Department 34 of the Los Angeles Superior Court — has historically tended to defer expert admissibility battles to the trial phase absent a clear and fundamental methodological deficiency. In our review of Judge Escobedo's recent rulings in comparable wage-and-hour class actions, we have not identified a case in which he granted a standalone Sargon motion at the certification stage. This judicial tendency is consistent with the broader pattern among LASC judges and counsels in favor of presenting Sargon arguments as part of the certification briefing rather than through standalone motions.
III. Dr. Rennick's Report — Summary of Methodology and Opinions
A. Report Overview
Dr. Howard Rennick's expert report, dated April 28, 2023, was prepared through his consulting firm, Pinnacle Economic Consulting Group LLC, and submitted in support of Plaintiffs' motion for class certification. Dr. Rennick was retained by Plaintiffs' counsel at Castellano Byrne & Salas LLP (specifically, lead attorneys Marco Castellano and Diane Salas) to calculate aggregate class damages across all causes of action alleged in the consolidated complaint.
Dr. Rennick's report presents an aggregate damages opinion of $38.6 million across all causes of action, broken down as follows:
It is important to note that the $12.2 million in PAGA penalties is a subset of the $38.6 million total and overlaps with the meal period, rest period, and overtime categories — the PAGA penalties are derivative of the underlying substantive violations. Dr. Rennick's raw, unadjusted overtime calculation was approximately $15.8 million, which he adjusted downward to $12.2 million to account for shifts that did not exceed eight hours (and thus would not trigger overtime obligations).
The report spans 47 pages, plus 12 appendices containing data tables, formulae, and supporting calculations. Dr. Rennick holds a Ph.D. in Economics from Stanford University and has been retained as a damages expert in approximately 85 wage-and-hour class actions over the past 15 years. His qualifications are not at issue for purposes of this assessment — the challenge is directed at methodology, not expertise.
B. Key Methodological Assumptions
The strength — and the vulnerability — of Dr. Rennick's report lies in five core methodological assumptions that drive the aggregate damages figure. Each is summarized below.
1. Meal Period Assumption (Critical)
This is the single most consequential assumption in the report and the most vulnerable to challenge under Sargon.
Dr. Rennick assumes that every shift during which the TimeTrack Pro auto-deduction feature was applied constitutes a "missed" meal period for which a one-hour premium is owed under California Labor Code section 226.7. The only exception he recognizes is where a Missed Meal Attestation record exists in AMA's system showing that the employee self-reported the missed break and was already compensated with a premium payment.
The data inputs underlying this assumption are as follows:
• Total auto-deducted shifts during the class period (November 1, 2018 – present): Approximately 612,000 shifts across all seven AMA California facilities and all 14 show units.
• Shifts with corresponding Missed Meal Attestation records (premium already paid): Approximately 18,400 shifts, representing instances in which employees affirmatively reported a missed meal period through AMA's attestation system and received a premium payment.
• Net "missed" meal periods (per Rennick's methodology): Approximately 593,600 shifts (612,000 minus 18,400).
• Average hourly rate applied across the class: Approximately $27.50.
• Resulting meal period premium calculation: ~593,600 × $27.50 = approximately $16.3 million.
The critical logical flaw in this assumption is discussed in detail in Section IV.A below. In brief, the auto-deduction feature in AMA's TimeTrack Pro system is a recording mechanism designed to deduct 30 minutes from gross clock time to reflect compliant meal periods — it is not evidence of a violation. Dr. Rennick's methodology treats the normal functioning of the timekeeping system as evidence of non-compliance, which conflates the purpose of the auto-deduction with the substantive question of whether employees actually received compliant meal periods.
2. Rest Period Assumption
Dr. Rennick assumes a rest period violation rate of 50% across all eligible shifts during the class period. This violation rate is derived entirely from the declarations submitted by the three named plaintiffs: Maria Fuentes (Production Coordinator, Studio City facility), Kevin Halloran (Post-Production Assistant, Hollywood facility), and Sandra Padilla (Segment Coordinator, Burbank facility). Each of the three declarants stated, in substance, that they were denied rest periods on approximately half of their shifts.
The data inputs are as follows:
• Total rest period-eligible shifts during the class period: Approximately 612,000.
• Assumed class-wide violation rate: 50%.
• Resulting rest period violations: Approximately 306,000.
• Average hourly rate applied: Approximately $27.50.
• Total rest period premiums: ~306,000 × $27.50 = approximately $8.4 million.
The vulnerability of this assumption lies in its evidentiary foundation: three individual declarations, from three employees working at three different facilities in three different job classifications, are extrapolated to represent the experience of approximately 1,850 class members across seven facilities and 14 show units.
3. Off-the-Clock Overtime Assumption
Dr. Rennick assumes that each class member performed an average of 37.5 minutes of uncompensated off-the-clock work per shift, consisting of pre-shift setup and post-shift wrap activities. This figure is the arithmetic midpoint of the range alleged in Plaintiffs' consolidated complaint (30–45 minutes per shift). For shifts already exceeding eight hours, Dr. Rennick applied the overtime multiplier of 1.5× the regular rate.
After adjusting for shifts that did not exceed eight hours (and thus would not generate overtime liability), Dr. Rennick's off-the-clock overtime calculation totals approximately $12.2 million (reduced from a raw calculation of approximately $15.8 million).
The assumption of a uniform 37.5 minutes of off-the-clock work per shift across all class members, job classifications, facilities, and show units is discussed in Section IV.C below.
4. PAGA Penalty Assumption
Dr. Rennick calculates PAGA penalties using the maximum statutory rates — $100 for the initial violation per pay period per aggrieved employee and $200 for each subsequent violation per pay period per aggrieved employee — without applying any discount for the court's well-established discretion to reduce PAGA penalties under California Labor Code section 2699(e)(2). His PAGA penalty calculation totals approximately $12.2 million.
Section 2699(e)(2) expressly authorizes the court to exercise discretion to reduce PAGA penalties where the amount would be "unjust, arbitrary and oppressive, or confiscatory." Courts routinely exercise this discretion, and PAGA penalty awards at trial or in settlement are typically reduced by 75–90% from the statutory maximum. Dr. Rennick's failure to account for this reduction mechanism is discussed in Section IV.D below.
5. No Facility-Level Differentiation
Dr. Rennick treats all seven AMA California facilities and all 14 show units as a single homogeneous population for purposes of calculating class-wide damages. He does not adjust for the fact that the Missed Meal Attestation feature — the only correction he applies to his auto-deduction assumption — was activated at only four of seven facilities (West Hollywood HQ, Sherman Oaks, Hollywood, and Santa Monica) and was not activated at the remaining three facilities (Studio City, Burbank, and El Segundo).
This failure to differentiate between facilities with and without the attestation system, and between show units with dramatically different working conditions, is discussed in Section IV.E below.
IV. Grounds for *Sargon* Challenge
We have identified five principal grounds on which Dr. Rennick's testimony could be challenged under Sargon. Each ground is analyzed below with reference to the applicable legal standard and the factual record.
A. Ground 1: Meal Period Assumption Lacks Evidentiary Foundation
The Argument. Dr. Rennick's core assumption — that every auto-deducted meal period constitutes a "missed" or non-compliant meal period — lacks evidentiary support and is contrary to the purpose and function of AMA's auto-deduction system. This is the single most impactful assumption in the report, as it drives the $16.3 million meal period premium calculation, which in turn accounts for approximately 42% of the total damages figure.
The auto-deduction feature within AMA's TimeTrack Pro timekeeping system is designed to record compliant meal periods, not to mask violations. The system functions as follows: when an employee clocks in and clocks out, the system records gross clock time. If the employee's shift exceeds a threshold duration (typically five hours), the system automatically deducts 30 minutes from gross clock time to reflect the 30-minute meal period that the employee was provided during the shift. The resulting figure — net hours worked — is the basis for wage calculations.
To illustrate: an employee who clocks in at 8:00 a.m., takes a compliant 30-minute meal break at noon, and clocks out at 5:00 p.m. will show 9.0 hours of gross clock time minus 0.5 hours (the auto-deduction) = 8.5 hours of net paid time. The auto-deduction accurately captures the fact that the employee worked 8.5 compensable hours. In this scenario, the auto-deduction is evidence of a compliant meal period, not a missed one.
Dr. Rennick's methodology inverts this logic entirely. By treating every auto-deducted shift as a "missed" meal period, he assumes that the auto-deduction was applied instead of the employee receiving an actual meal break — i.e., that the employee worked through the meal period and was not compensated for it. But the auto-deduction, standing alone, says nothing about whether the employee actually took a meal break. It is a recording mechanism, not evidence of a violation. Dr. Rennick provides no independent evidence — no survey data, no sampling analysis, no statistical analysis of punch patterns or clock-in/clock-out times — to support the assumption that auto-deducted shifts correspond to actual missed meals.
The only "correction" Dr. Rennick applies is subtracting the approximately 18,400 shifts for which Missed Meal Attestation records exist in AMA's system — shifts where the employee affirmatively reported a missed meal and received a premium payment. These 18,400 shifts represent approximately 3% of the total 612,000 auto-deducted shifts. The necessary implication of Rennick's methodology is that the remaining 97% of all meal periods during the class period were missed — a figure that is facially implausible and unsupported by any evidence in the record.
Our defense expert, Dr. Catherine Lindstrom of Hargrove Analytics Inc. (515 S. Figueroa Street, Suite 1100, Los Angeles, CA 90071), whose rebuttal report is due June 9, 2023, provides an alternative damages calculation of approximately $5.8 million in aggregate damages using actual missed-meal attestation data supplemented by a conservative extrapolation methodology. Dr. Lindstrom's figure is approximately 85% lower than Dr. Rennick's $38.6 million calculation. The magnitude of this discrepancy underscores the degree to which Rennick's damages figure is driven by his unsupported auto-deduction assumption rather than by objective evidence of actual violations.
*Sargon* Relevance. Dr. Rennick's meal period assumption is "based on assumptions of fact without evidentiary support" within the meaning of Sargon, 55 Cal.4th at 770. An auto-deduction record is a recording mechanism; it is not evidence that the employee was denied a meal period. Treating the former as the latter is a logical leap that lacks the necessary factual nexus between the data relied upon and the conclusion drawn. The Sargon framework requires that the expert's opinion be grounded in matter "of a type that reasonably may be relied upon" — and an auto-deduction record, without more, is not a reasonable basis for concluding that a meal period violation occurred.
B. Ground 2: Rest Period Violation Rate Is Speculative
The Argument. Dr. Rennick's assumed rest period violation rate of 50% is derived entirely from the declarations of the three named plaintiffs — Maria Fuentes (Production Coordinator at the Studio City facility), Kevin Halloran (Post-Production Assistant at the Hollywood facility), and Sandra Padilla (Segment Coordinator at the Burbank facility) — and has no empirical or statistical basis. Each declarant stated, in general terms, that she or he was denied rest periods on approximately half of her or his shifts. Dr. Rennick applied this 50% figure uniformly to all 612,000 rest period-eligible shifts across the entire class.
This extrapolation is fundamentally unreliable. Three individuals from three different facilities, three different divisions, and three different job classifications cannot form a statistically valid or logically sound basis for a class-wide extrapolation to 1,850 employees across 14 show units. The named plaintiffs occupy only three of the numerous job classifications within the putative class, work at only three of seven facilities, and are associated with a subset of AMA's show units. Their experiences, however genuine, are not representative of the class as a whole — and Dr. Rennick makes no effort to demonstrate representativeness through sampling, surveys, or any other accepted methodology.
This deficiency is amplified by the documented variation in working conditions across AMA's operations. Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC (444 Castro Street, Suite 800, Mountain View, CA 94041), our defense industrial/organizational psychology expert, issued a report on May 19, 2023, documenting statistically significant differences in working conditions, scheduling practices, and supervisory structures across AMA's 14 show units and seven facilities. Dr. Makhija's analysis demonstrates that the nature of work, the degree of schedule predictability, the number and length of shifts, and the supervisory oversight of break compliance vary materially across the different show units and facilities. This variation fundamentally undermines the assumption that a 50% violation rate observed (or, more precisely, self-reported) by three individuals is representative of class-wide experience.
Furthermore, rest periods are not tracked in AMA's TimeTrack Pro system. This is consistent with industry practice — rest periods are paid time under California law and thus are not typically recorded through clock-in/clock-out mechanisms. As a result, there is no objective data set from which a reliable class-wide rest period violation rate can be derived. Absent such data, Dr. Rennick had two options: (1) conduct independent empirical research (such as surveys, sampling, or time studies) to estimate a class-wide violation rate, or (2) acknowledge the absence of data and refrain from opining on a specific rate. He chose neither, instead relying on three anecdotal declarations as the sole basis for a class-wide damages calculation of $8.4 million.
*Sargon* Relevance. Dr. Rennick's rest period assumption is "based on speculative or conjectural factors" within the meaning of Sargon, 55 Cal.4th at 770. Extrapolating from three individual declarations to a class of 1,850 employees across seven facilities and 14 show units — without any statistical analysis, sampling methodology, or other empirical basis — is speculative. The assumption lacks the evidentiary foundation required by the Sargon standard and by California Evidence Code sections 801 and 802.
C. Ground 3: Off-the-Clock Overtime Assumption Is Unsupported
The Argument. Dr. Rennick's assumption of 37.5 minutes of uncompensated off-the-clock work per shift is not derived from any data analysis, time study, or empirical observation. Rather, it is the simple arithmetic midpoint of the range alleged in Plaintiffs' consolidated complaint, which asserts that class members performed between 30 and 45 minutes of uncompensated pre-shift setup and post-shift wrap activities per shift. The midpoint of this range — 37.5 minutes — is not an independently derived figure; it is a placeholder that tracks the complaint's allegations rather than the evidence.
The assumption of a uniform 37.5 minutes of off-the-clock work per shift across all class members is additionally unsupported because different employees in different roles performed different pre-shift and post-shift tasks — or no such tasks at all. Production coordinators, post-production assistants, segment coordinators, production assistants, and other job classifications within the putative class have different job responsibilities, different physical workspaces, and different operational demands. Some roles may require meaningful pre-shift preparation (such as equipment setup for field-based production units), while others (such as office-based post-production roles) may require little or no pre-shift activity. Dr. Rennick does not differentiate among these roles or account for the variation in off-the-clock demands across job classifications, facilities, or show units.
As with rest periods, there is no TimeTrack Pro data for off-the-clock time, because by definition, such time is unrecorded — it falls outside the clock-in/clock-out window. Dr. Rennick does not offer any independent methodology for estimating off-the-clock time, such as employee surveys, observational time studies, or regression analysis of clock-in times relative to scheduled shift start times. The 37.5-minute figure is simply adopted from the complaint without independent validation.
*Sargon* Relevance. This assumption is "so attenuated from the specific case" that it provides no reasonable basis for the opinion, within the meaning of Sargon, 55 Cal.4th at 771–72. The figure is not derived from the evidence; it is derived from the allegations. An expert who adopts a complaint's factual assertions as the inputs for a damages model — without independently verifying those assertions through data analysis or empirical inquiry — does not provide a reliable opinion grounded in the factual record of the case.
D. Ground 4: PAGA Penalty Calculation Assumes Maximum Penalties Without Judicial Discretion Reduction
The Argument. Dr. Rennick's PAGA penalty calculation of $12.2 million assumes maximum statutory penalty rates — $100 for the initial violation per pay period per aggrieved employee, and $200 for each subsequent violation — without any discount or adjustment for the court's well-established discretion to reduce PAGA penalties under California Labor Code section 2699(e)(2).
Section 2699(e)(2) expressly provides that the court may exercise discretion to award a lesser amount where the "amount of the civil penalty . . . would be unjust, arbitrary and oppressive, or confiscatory." This provision reflects the Legislature's recognition that the maximum statutory penalties, when calculated across a large class over an extended period, can produce penalty figures that far exceed any reasonable measure of the employer's culpability or the employees' harm.
Courts routinely exercise this discretion. In practice, PAGA penalty awards at trial or in court-approved settlements are typically reduced by 75–90% from the statutory maximum. This judicial practice is well-documented and represents a predictable feature of PAGA litigation — not an aberration. An expert who presents only the maximum penalty figure without acknowledging the statutory reduction mechanism, or without providing a range of likely outcomes that reflects the court's discretion, fails to provide a reliable opinion on the actual PAGA exposure confronting the defendant.
Our own preliminary assessment of realistic PAGA settlement exposure, based on comparable settlements in the media and entertainment industry and in cases with similar class sizes and violation allegations, places the PAGA component in the range of $500,000 to $1,500,000 — a figure that is approximately 88–96% lower than Dr. Rennick's calculation.
*Sargon* Relevance. While this ground is somewhat less potent as a basis for full exclusion — a court might view the maximum-penalty calculation as representing one end of a range rather than an unreliable methodology — it reinforces the broader theme that Dr. Rennick's report systematically overstates damages at every turn. The failure to acknowledge and incorporate the statutory reduction mechanism is a methodological choice that renders the PAGA component of the opinion unreliable as a measure of actual exposure.
E. Ground 5: Failure to Account for Facility-Level Variation
The Argument. Dr. Rennick's damages model treats all seven AMA California facilities and all 14 show units as a single homogeneous population, without differentiating between:
• Facilities where the Missed Meal Attestation feature was activated (Facility 1 — West Hollywood HQ, Facility 3 — Sherman Oaks, Facility 5 — Hollywood, and Facility 6 — Santa Monica) versus facilities where it was not activated (Facility 2 — Studio City, Facility 4 — Burbank, and Facility 7 — El Segundo);
• Studio-based show units (such as "Kitchen Clash," which operates on predictable 9-hour production days in a controlled studio environment) versus field-based show units (such as "Summit Challenge," which involves on-location shooting with 14–16 hour production days in remote settings);
• Post-production operations (office-based, regular business hours, predictable scheduling) versus live events production (unpredictable scheduling, extended hours, variable locations).
The failure to differentiate between facilities with and without the attestation system is particularly significant because the attestation system provides the only data that Dr. Rennick uses to "correct" his auto-deduction assumption. At facilities where the attestation system was not activated, employees who missed meal periods had no mechanism through which to self-report the missed break — meaning that the absence of attestation records at those facilities says nothing about whether meals were actually missed. Dr. Rennick's methodology treats the absence of attestation records uniformly across all facilities, which is analytically unsound because the absence means different things depending on whether the attestation system was available.
Dr. Makhija's analysis provides compelling evidence of the degree of variation across AMA's operations. His report documents that the percentage of shifts with self-reported missed meal periods ranged from 2.1% at the studio-based "Kitchen Clash" show unit to 18.7% at the field-based "Summit Challenge" show unit — a variation of nearly nine-fold. This documented variation demonstrates that working conditions, scheduling, and break compliance differ materially across show units. A damages model that ignores this variation and applies a single set of assumptions to all class members is not reliably connected to the facts of this case.
*Sargon* Relevance. The homogeneity assumption renders the opinion "based on factors that are so attenuated from the specific case" — specifically, from the heterogeneous working conditions across AMA's facilities and show units — that it provides no reasonable basis for the aggregate damages figure. The Sargon standard requires that expert testimony be grounded in the particular facts of the case, and a model that ignores documented nine-fold variation in the key metric fails this requirement.
V. Assessment of Probability of Success
A. Factors Favoring Exclusion (Supporting 30–35% Probability)
Several features of Dr. Rennick's methodology would support a finding that his testimony should be excluded or limited under Sargon:
1. The meal period assumption is arguably the weakest element of the report. Treating auto-deduction as proof of a meal period violation conflates a recording method with a substantive violation, and Dr. Rennick provides no independent validation of this assumption. The resulting implication — that 97% of all meal periods were missed — is facially implausible and unsupported by any evidence beyond the auto-deduction records themselves.
2. The rest period and off-the-clock overtime assumptions have virtually no empirical basis. Three declarations from three individuals, extrapolated to a class of 1,850 employees across diverse facilities and show units, do not provide a statistically valid or logically sound foundation for class-wide damages calculations totaling $8.4 million and $12.2 million, respectively.
3. The failure to disaggregate by facility or show unit in light of documented variation is a genuine methodological deficiency. Dr. Makhija's analysis of nine-fold variation in self-reported missed meal rates across show units establishes that the homogeneity assumption is empirically unfounded. A reliable damages model must account for known sources of variation, particularly when the variation is as dramatic as the evidence here demonstrates.
4. There is a reasonable argument that Rennick's model does not match Plaintiffs' theory of liability under *Northgate Enterprises*. Plaintiffs' theory is that AMA failed to provide compliant meal periods to individual employees — a question that inherently requires individualized inquiry into whether each employee was actually denied a compliant meal period on each shift. Dr. Rennick's model bypasses this individualized inquiry entirely by assuming a 97% violation rate without individual evidence, which arguably fails to "measure only those damages attributable to" the theory of liability on which the class proceeds. (Northgate Enterprises, 569 U.S. at 35.)
B. Factors Against Exclusion (Supporting 65–70% Probability of Denial)
Notwithstanding the identified deficiencies, several factors weigh against the likelihood of exclusion on a standalone Sargon motion at the certification stage:
1. Judicial reluctance to exclude expert testimony at certification. California trial courts are generally reluctant to exclude expert testimony at the class certification stage. The prevailing judicial philosophy is that methodology disputes go to the weight of the evidence, not its admissibility, and that the certification hearing is not the appropriate forum for resolving contested expert methodology questions. This reluctance is particularly pronounced in wage-and-hour cases, where courts have extensive experience managing competing expert opinions.
2. The *Sargon* standard sets a "range of reasonable" threshold. The Sargon framework does not require that an expert's methodology be optimal or unassailable — only that it fall within the "range of reasonable" expert opinions. Even a flawed methodology may be deemed "reasonable" if it is based on some data (here, the TimeTrack Pro records) and follows a logical structure (even if the key assumption linking auto-deduction to missed meals is disputed). A court could plausibly conclude that Rennick's approach, while aggressive, is not so unreasonable as to warrant exclusion under Sargon.
3. The assigned judicial officer's tendencies. Hon. Raymond Escobedo, sitting in Department 34 of the LASC, is unlikely to exclude Dr. Rennick's testimony entirely at the certification stage. Based on our review of Judge Escobedo's rulings in comparable matters, the more probable outcome is that the Court acknowledges our criticisms, notes the competing expert analyses, but allows Rennick's testimony — reserving the methodology dispute for trial or settlement evaluation. Judge Escobedo has demonstrated a preference for resolving expert disputes through cross-examination and competing testimony rather than through pre-trial exclusion.
4. Risk of an adverse ruling being characterized as endorsement. An adverse ruling on a Sargon motion — i.e., a ruling denying the motion and permitting Rennick's testimony — could be characterized by Plaintiffs as the Court "endorsing" Rennick's methodology. This characterization, while not legally accurate (a denial of a Sargon motion is not a finding that the expert's methodology is correct), could nevertheless strengthen Plaintiffs' negotiating position in settlement discussions and could be used by Plaintiffs in subsequent briefing to argue that the Court has already considered and rejected AMA's methodology criticisms.
5. Resource allocation. Filing a standalone Sargon motion would consume significant briefing resources — estimated at approximately 40–60 attorney hours — that could be more effectively deployed in the certification opposition itself, where the same substantive arguments can be presented within a framework (predominance analysis) that is more favorable to AMA.
6. No controlling authority on the auto-deduction assumption. There is no California appellate authority squarely holding that an auto-deduction assumption like Rennick's is per se unreliable. The issue is factually contested, not legally settled. In the absence of controlling authority, the trial court has broad discretion to admit or exclude the testimony, and that discretion is more likely to be exercised in favor of admission at the certification stage.
C. Net Assessment
Taking into account the factors identified above, we assess the overall probability of obtaining full or partial exclusion of Dr. Rennick's testimony on a standalone Sargon motion at the certification stage at approximately 30–35%. This probability reflects the genuine methodological deficiencies in Rennick's report, discounted by the significant headwinds that any standalone Sargon motion would face at this stage of the proceedings.
A 30–35% probability of success does not justify the strategic risk and resource expenditure of a standalone motion. The expected value of the motion — measured in terms of the probability-weighted benefit of exclusion versus the probability-weighted cost of denial — is negative when the adverse signaling effect of a denied motion is factored into the analysis.
VI. Recommended Approach
A. Do Not File Standalone *Sargon* Motion at the Certification Stage
For the reasons set forth in this memorandum, we recommend that AMA not file a standalone motion to exclude Dr. Rennick's testimony under Sargon at the certification stage. The risk-reward calculus does not favor such a motion:
• The probability of success is modest (30–35%), reflecting the generally reluctant posture of California trial courts toward expert exclusion at certification and the broad discretion afforded to the assigned judicial officer.
• The risk of an adverse ruling is significant. A denied Sargon motion could be characterized by Plaintiffs as judicial endorsement of Rennick's methodology, strengthening their negotiating position and their certification arguments.
• The resource expenditure required for a standalone motion (estimated 40–60 attorney hours) can be more effectively redirected to the certification opposition, where the same arguments carry greater strategic weight.
B. Instead: Present *Sargon* Arguments Within the Certification Opposition
We recommend incorporating the substance of the Sargon critique into the predominance analysis of AMA's opposition to Plaintiffs' motion for class certification, which is due on June 16, 2023. Specifically, we recommend the following approach:
• Argue that Dr. Rennick's damages model is not a viable "common methodology" under Granite Harbor Partners LLC v. Behrend because it does not match the substantive theory of liability. Plaintiffs' theory is that AMA failed to provide compliant meal periods to individual employees — a claim that requires proof that each individual employee was actually denied a compliant break on each specific shift. Rennick's model bypasses this individualized inquiry entirely by assuming a 97% violation rate derived from auto-deduction records, which do not constitute evidence of actual violations.
• Present the meal period assumption flaw as evidence that common questions do not predominate. If the determination of whether a meal period was "missed" requires examination of each employee's individual circumstances on each shift, then individual questions predominate over common questions, defeating certification under Code of Civil Procedure section 382.
• Highlight the lack of facility-level differentiation as further evidence that Rennick's model fails to account for the heterogeneity of AMA's operations. The documented nine-fold variation in missed meal rates across show units (per Dr. Makhija's analysis) demonstrates that a single set of assumptions cannot reliably capture the diverse experiences of 1,850 employees across seven facilities and 14 show units.
• Present Dr. Lindstrom's alternative damages calculation ($5.8 million) as evidence that Rennick's model dramatically overstates damages and is unreliable as a basis for certification. The 85% discrepancy between the two experts' figures — driven primarily by the auto-deduction assumption — underscores the degree to which Rennick's model is speculative rather than grounded in actual evidence of violations.
• Address the speculative rest period violation rate (50% based on three declarations) and the unsupported off-the-clock overtime assumption (37.5 minutes adopted from the complaint) as additional examples of methodological deficiencies that render Rennick's model incapable of serving as a reliable common damages framework.
This approach presents the same substantive arguments that would appear in a standalone Sargon motion, but within a framework — the predominance analysis — that is both more favorable to AMA and more likely to influence the Court's certification ruling.
C. File Targeted Evidentiary Objections
In addition to incorporating Sargon arguments into the certification opposition, we recommend filing targeted evidentiary objections under California Evidence Code sections 801 and 802 to specific paragraphs of Dr. Rennick's declaration submitted in support of Plaintiffs' certification motion. These objections should address the following:
• Object to the foundational assumption that auto-deduction equals a missed meal period (Rennick Declaration, ¶¶ 24–31): The assumption lacks evidentiary support. Auto-deduction records are not evidence of meal period violations, and Dr. Rennick provides no independent data validating this assumption. The testimony is inadmissible under Evidence Code section 801(b) because it is not based on matter of a type that reasonably may be relied upon by an expert in forming an opinion on this subject.
• Object to the 50% rest period violation rate (Rennick Declaration, ¶¶ 32–38): The assumption is speculative and lacks a sufficient foundation for class-wide extrapolation. Three anecdotal declarations from three employees do not constitute a reasonable basis for a class-wide violation rate applicable to 1,850 employees across seven facilities and 14 show units. The testimony is inadmissible under Evidence Code sections 801(b) and 802 as speculative.
• Object to the PAGA penalty calculation (Rennick Declaration, ¶¶ 44–49): The calculation assumes maximum statutory penalties without accounting for the court's statutory discretion to reduce penalties under Labor Code section 2699(e)(2), rendering the opinion unreliable as a measure of actual PAGA exposure.
These targeted objections serve several strategic purposes. First, they preserve our Sargon arguments on the record without the downside risk of a denied standalone motion. Second, they create a record that can be referenced in post-certification briefing or at trial if the case proceeds. Third, they signal to the Court that AMA has identified specific methodological deficiencies in Rennick's report — deficiencies that the Court may consider in evaluating whether common questions predominate, even if the Court does not formally exclude the testimony at the certification stage.
D. Reserve *Sargon* Motion for Trial
If the case does not settle and proceeds to trial, we recommend filing a formal Sargon motion to exclude or limit Dr. Rennick's testimony at the summary judgment or in limine stage. At that juncture, the strategic calculus shifts in favor of a standalone motion for several reasons:
• Higher stakes. At trial, the consequence of unreliable expert testimony is a potentially inflated jury verdict, not merely a certification order. The stakes are sufficiently high to justify the resource expenditure and the risk of an adverse ruling.
• More rigorous scrutiny. Courts are more likely to engage in rigorous scrutiny of expert methodology at the trial stage, where the gatekeeping function serves its core purpose of ensuring that only reliable testimony reaches the jury. The judicial reluctance to exclude expert testimony that characterizes the certification stage is significantly diminished at trial.
• More fully developed evidentiary record. By the trial stage, the evidentiary record will be more fully developed, including discovery data (depositions, interrogatory responses, document production) that may further undermine Dr. Rennick's assumptions. For example, deposition testimony from class members regarding their actual meal period practices, or additional data analysis by Dr. Lindstrom, may provide a stronger factual foundation for the Sargon challenge.
• Greater judicial attention. An adverse ruling on a Sargon motion at trial is more consequential — and thus more likely to receive careful judicial attention — than a ruling at the certification stage. The trial court is more likely to engage in a thorough analysis of the expert's methodology when the ruling directly affects the evidence that the jury will consider.
VII. Coordination with Expert Team
Effective presentation of the Sargon critique within the certification opposition requires close coordination with our expert team. The following outlines the current status of our expert engagement and the actions required in advance of the certification hearing.
Dr. Catherine Lindstrom — Rebuttal Damages Expert. Dr. Lindstrom's rebuttal report is due on June 9, 2023. That report should directly address each of the methodological flaws identified in Sections IV.A through IV.E of this memorandum. In particular, Dr. Lindstrom should:
• Present her alternative damages calculation of approximately $5.8 million, grounded in actual missed-meal attestation data supplemented by a conservative extrapolation methodology for facilities where the attestation system was not activated.
• Explain why the auto-deduction assumption is unsupported, providing a detailed analysis of TimeTrack Pro records showing that auto-deductions are applied to compliant meal periods and do not indicate violations.
• Provide facility-level and show unit-level breakdowns of her damages analysis, demonstrating that a disaggregated approach produces dramatically different results from Rennick's homogeneous model.
• Address the PAGA penalty calculation, providing a range of likely PAGA exposure that accounts for the court's discretion to reduce penalties under Labor Code section 2699(e)(2).
Dr. Rajesh Makhija — Defense I/O Expert. Dr. Makhija's report, issued on May 19, 2023, provides the factual foundation for the facility-level variation critique. His analysis of variability across AMA's 14 show units and 7 facilities — including the documented nine-fold variation in self-reported missed meal rates — is essential to undermining Rennick's homogeneity assumption. Dr. Makhija's report also documents statistically significant differences in scheduling practices, supervisory structures, and working conditions that support AMA's argument that individual questions predominate over common questions.
Hearing Preparation. Both Dr. Lindstrom and Dr. Makhija should be prepared to testify at the class certification hearing, currently scheduled for July 28, 2023, before Hon. Raymond Escobedo in Department 34 of the Los Angeles Superior Court. We anticipate that Plaintiffs' counsel will call Dr. Rennick to testify regarding his methodology, and we should be prepared to cross-examine Rennick on the deficiencies identified in this memorandum. Dr. Lindstrom and Dr. Makhija should each be prepared for direct examination regarding their alternative analyses and rebuttal opinions.
We should schedule preparation sessions with both experts no later than the week of July 17, 2023, to ensure that their testimony is aligned with our certification opposition arguments and that they are prepared to address anticipated cross-examination by Plaintiffs' counsel.
VIII. Conclusion
For the reasons set forth in this memorandum, a standalone Sargon motion to exclude Dr. Howard Rennick's expert testimony is not recommended at the current stage of the proceedings. While Dr. Rennick's report contains identifiable and significant methodological deficiencies — most critically, the unsupported assumption that auto-deducted meal periods constitute substantive violations — the probability of obtaining exclusion on a standalone motion at the certification stage is approximately 30–35%, which does not justify the strategic risk and resource expenditure associated with such a motion.
The most effective strategy is a three-part approach:
1. Embed the *Sargon* critique within AMA's opposition to class certification (due June 16, 2023), presenting the methodological deficiencies as evidence that Rennick's model is not a viable common damages methodology under Northgate Enterprises and that individual questions regarding actual meal period compliance predominate over common questions.
2. File targeted evidentiary objections under California Evidence Code sections 801 and 802 to specific paragraphs of Rennick's declaration, preserving the Sargon arguments on the record without the downside risk of a denied standalone motion.
3. Reserve a formal *Sargon* motion for the trial stage (at summary judgment or in limine), when the stakes are higher, the Court is more likely to scrutinize expert methodology rigorously, the evidentiary record is more fully developed, and the probability of exclusion is commensurately greater.
This approach preserves all arguments on the record, avoids the strategic downside of a denied motion that could be perceived as judicial endorsement of Rennick's methodology, and allocates AMA's limited briefing resources to the highest-impact filing in the near term.
I am available to discuss this assessment at your convenience and to begin drafting the relevant sections of the certification opposition consistent with these recommendations.
Respectfully submitted,
DEVON ARCHER Lead Associate Calderwood & Harkness LLP
________________________________________
Devon Archer
cc: Case File (C&H Matter No. 1017-00004) This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is intended solely for the use of the addressee in connection with the above-referenced matter and should not be disclosed to any third party without the prior written consent of Calderwood & Harkness LLP.
Damages Category | Amount
First meal period premiums | ~$16.3 million
Rest period premiums | ~$8.4 million
Off-the-clock overtime (adjusted) | ~$12.2 million
Wage statement penalties | Included in aggregate
PAGA penalties | $12.2 million (subset of total; overlapping categories)
Total aggregate damages | ~$38.6 million

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