ama-cross-claims-remedies-analysis.docx

1017-00004 · Entities. Aurelius Global Media Group · Mediation & Settlement/Aldrich

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CALDERWOOD & HARKNESS LLP 1900 Avenue of the Stars, Suite 2800 Los Angeles, California 90067 Telephone: (310) 555-4100 Facsimile: (310) 555-4101

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT This memorandum is a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the use of the addressees. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.

MEMORANDUM

TO: Gregory Tanaka, Vice President, Legal & Compliance, Aurelius Media Americas Inc.; Philippa Cartwright, General Counsel, Aurelius Global Media Group

FROM: Renata Vasquez and Devon Archer

DATE: November 20, 2023

RE: Enforceability and Remedies Analysis — AMA Cross-Claims Against Gavin Aldrich (Aldrich v. Aurelius Media Americas Inc., LASC Case No. 22STCV41087)

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I. Executive Summary

This memorandum provides a comprehensive analysis of the litigation prospects for each of the four cross-claims asserted by Aurelius Media Americas Inc. ("AMA") against Gavin Aldrich ("Aldrich") in the above-referenced action. The cross-claims were originally filed on January 20, 2023, and subsequently amended on April 5, 2023, following the Court's partial grant of Aldrich's Motion to Strike. We prepare this analysis in advance of the standalone mediation session scheduled for December 8, 2023, before the Honorable Patricia Okoro (Ret.) at Westpark Dispute Resolution Inc., and to support AMA's settlement strategy and overall case evaluation.

Overall Assessment. AMA has strong claims on confidentiality breach (First Cause of Action — Breach of Employment Agreement, § 9.4) and trade secret misappropriation (Second Cause of Action — CUTSA), moderate claims on breach of fiduciary duty (Third Cause of Action) and conversion (Fourth Cause of Action), but faces significant challenges in quantifying actual damages absent evidence that Halcyon Creek Productions LLC ("Halcyon Creek") commercially exploited the proprietary materials Aldrich transmitted. The documentary evidence of Aldrich's misconduct — including the email transmissions, policy acknowledgments, and his own deposition admissions — is compelling and largely undisputed. However, the lack of evidence of downstream exploitation limits AMA's ability to demonstrate the concrete monetary harm necessary to support a substantial damages award at trial.

Key Strategic Takeaway. The cross-claims serve primarily as leverage in settlement negotiations and as a vehicle for injunctive relief — specifically, the return and permanent deletion of proprietary materials — rather than as a path to substantial monetary recovery. In the context of the December 8 mediation, the cross-claims' most potent function is narrative: they reframe Aldrich from a sympathetic wrongfully-terminated executive into an unfaithful corporate officer who systematically extracted proprietary information and transmitted it to a competitor. This reframing is critical to AMA's settlement posture and to counterbalancing Aldrich's $4.15 million demand.

Summary Probability Assessments:

These assessments reflect our evaluation of the strength of the evidence, applicable legal standards, foreseeable defenses, and the risk of adverse procedural rulings (particularly CUTSA preemption of the Third and Fourth Causes of Action). Each assessment is discussed in detail below.

II. Procedural Background

Understanding the procedural history of the cross-claims is essential to framing the current posture of the litigation and identifying any procedural vulnerabilities that may affect AMA's position at mediation or trial. The following is a summary of the key procedural developments.

Filing of the Cross-Complaint. AMA filed its Cross-Complaint against Aldrich on January 20, 2023, asserting four causes of action: (1) Breach of Employment Agreement, originally citing Sections 9.1, 9.2, 9.3, and 9.4 of the Employment Agreement; (2) Misappropriation of Trade Secrets under the California Uniform Trade Secrets Act ("CUTSA"), California Civil Code § 3426 et seq.; (3) Breach of Fiduciary Duty; and (4) Conversion. The Cross-Complaint sought both monetary damages and injunctive relief, including an order requiring Aldrich to return or destroy all copies of AMA proprietary materials in his possession and to certify such return or destruction under penalty of perjury.

Aldrich's Motion to Strike. On February 15, 2023, Aldrich filed a Motion to Strike portions of the Cross-Complaint, specifically targeting all references to Section 9.1 of the Employment Agreement — the non-competition clause. Aldrich argued that § 9.1 is void and unenforceable under California Business and Professions Code § 16600, which prohibits contractual restraints on an individual's right to engage in a lawful profession, trade, or business, and that any reference to § 9.1 was irrelevant and prejudicial. Aldrich's motion sought to strike § 9.1 from the caption of the First Cause of Action, all allegations asserting that AMA was entitled to enforce § 9.1, and all references to the non-competition framework throughout the Cross-Complaint.

AMA's Opposition. AMA filed its Opposition to the Motion to Strike on March 1, 2023. In its Opposition, AMA offered to amend the Cross-Complaint to clarify that AMA does not seek to enforce § 9.1 as a basis for injunctive or monetary relief. AMA argued, however, that references to the broader restrictive covenant framework — including § 9.1 — should be preserved as factual context, because the existence of the non-competition provision was relevant to demonstrating AMA's reasonable efforts to maintain the secrecy of its trade secrets (an element of the CUTSA claim) and to establishing the full scope of Aldrich's contractual obligations to AMA.

Court's Ruling on the Motion to Strike. On March 22, 2023, the Court (the Honorable Catherine Villanueva, Department 52) granted the Motion to Strike in part. Specifically, the Court ordered the removal of § 9.1 from the caption of the First Cause of Action and directed AMA to include a clarification that AMA does not seek injunctive or monetary relief based on § 9.1. The Court denied the motion to the extent it sought to strike all references to the restrictive covenant framework as factual context, finding that AMA's references to the non-competition clause were relevant to contextualizing the employment relationship and AMA's trade secret protection efforts, provided AMA was not asserting § 9.1 as an independent basis for relief.

Filing of the Amended Cross-Complaint. AMA filed its Amended Cross-Complaint on April 5, 2023, incorporating the Court's ruling. The Amended Cross-Complaint removed § 9.1 from the caption of the First Cause of Action, added a clarifying paragraph stating that AMA does not seek to enforce the non-competition clause, and preserved references to the overall restrictive covenant framework as factual context. The four causes of action were otherwise unchanged in substance.

discovery. discovery on the cross-claims has been extensive and has proceeded largely in parallel with discovery on Aldrich's affirmative claims. Key discovery milestones include:

• AMA served its first set of Requests for Production of Documents (Nos. 1 through 28) and first set of Special Interrogatories (Nos. 1 through 30) on Aldrich in connection with the cross-claims.

• AMA filed a Motion to Compel Further Responses to RFP Nos. 8, 11, 12, 13, and 14 on April 14, 2023. These requests sought, among other things, all communications between Aldrich and Halcyon Creek Productions LLC (or any officer, director, member, or agent thereof), all documents relating to any co-production arrangement or business relationship between Aldrich and Halcyon Creek, and all documents reflecting any financial interest held by Aldrich in Halcyon Creek. Aldrich's initial responses to these requests were largely evasive, asserting various objections including relevance, overbreadth, and the attorney-client privilege (as to communications with Aldrich's own counsel regarding the formation of Halcyon Creek). The results of the compelled production, if any has been received, should be reviewed in advance of the mediation.

• Aldrich's deposition was taken on May 22, 2023 (approximately 7 hours of testimony). Key testimony from the Aldrich deposition is discussed throughout this memorandum.

• Key AMA witness depositions were completed in May 2023. In particular, the depositions of Victoria Mercer (President, AMA) and Ian Prescott (VP, Business Affairs, AMA) were taken by Aldrich's counsel. Ms. Mercer's testimony addressed the termination decision, the scope of Aldrich's authority, and AMA's trade secret protection policies. Mr. Prescott's testimony addressed the Acceptable Use and Confidentiality Policy, the process for authorizing external transmissions of proprietary materials, and the absence of any co-production approval for the Halcyon Creek transmissions.

Current Status. discovery is substantially complete. The case is currently on the Court's active docket, with the standalone mediation session scheduled for December 8, 2023, before Hon. Patricia Okoro (Ret.) at Westpark Dispute Resolution Inc. No trial date has been set as of the date of this memorandum.

III. Factual Foundation — Summary of Key Evidence

The strength of AMA's cross-claims rests on a substantial body of documentary and testimonial evidence. This section summarizes the key evidence supporting AMA's claims, Aldrich's principal defenses, and the critical evidentiary gaps that affect AMA's damages position.

A. Email Transmissions to Personal Account

Between approximately July 12, 2021, and September 29, 2022 — a period spanning approximately fifteen months — Aldrich forwarded approximately 340 emails from his AMA corporate email account (galdrich@aureliusmedia.com) to his personal Northgate Software account (galdrich.private@Northgate Software.com). This systematic pattern of forwarding was not a sporadic or isolated occurrence; rather, it represented an ongoing course of conduct throughout the latter portion of Aldrich's tenure at AMA.

The content of the forwarded emails spanned multiple categories of proprietary and sensitive business information. Specifically, the 340 forwarded emails included:

• Show concept documents (47 emails): One-sheets, treatments, and format bibles for unscripted television concepts in various stages of development. These documents represent the creative core of AMA's business — the ideas, structures, and commercial positioning of shows that AMA invests substantial resources to develop.

• Audience analytics reports (22 emails): Reports containing viewer demographic data, ratings performance analyses, and audience trend forecasts that AMA uses to position its programming to network and streaming platform buyers.

• Revenue projections and profit-and-loss summaries (18 emails): Financial analyses reflecting AMA's per-show economics, including production cost projections, network license fee expectations, advertising revenue estimates, and international distribution revenue forecasts. These documents contain some of AMA's most competitively sensitive financial data.

• Talent deal terms and compensation information (14 emails): Documents reflecting the terms of agreements with on-air talent, including compensation structures, backend participation arrangements, and exclusivity provisions.

• Miscellaneous business correspondence (approximately 239 emails): The remainder of the forwarded emails included production schedules, internal strategy memos, corporate communications, and general business correspondence of varying sensitivity.

The email forwarding pattern was discovered through a routine data loss prevention ("DLP") audit initiated by AMA's information technology department in August 2022. Preliminary findings were reported to Gregory Tanaka, VP of Legal & Compliance, on September 6, 2022. A detailed forensic review was completed on October 3, 2022, which confirmed the scope and content of the transmissions and provided the evidentiary basis for AMA's cross-claims.

Aldrich's Defense. At his deposition on May 22, 2023, Aldrich testified that he forwarded the emails "as a matter of convenience" because he frequently worked from home and needed access to AMA materials on his personal devices. Aldrich maintained that this was common practice among AMA employees and that he had no intention of misusing the information.

AMA's Rebuttal. AMA's rebuttal to the "convenience" defense is straightforward and well-supported. AMA provides all employees — particularly senior executives — with virtual private network ("VPN") access to its internal systems, enabling full remote access to email, the content management system, and other company resources from any device. Personal email forwarding was unnecessary for remote work purposes. Moreover, the Acceptable Use and Confidentiality Policy (discussed in Section III.C below) expressly prohibited the practice. Aldrich's argument that personal email forwarding was "common practice" among AMA employees is inconsistent with the policy and, if true, would demonstrate only that other employees may also have violated the policy — not that Aldrich's conduct was authorized or permissible.

B. Email Transmissions to Halcyon Creek Productions LLC

Far more damaging to Aldrich's position are the transmissions to Halcyon Creek Productions LLC. Between approximately March 3, 2022, and August 18, 2022 — a period of approximately five and a half months — Aldrich sent seven (7) emails from his AMA corporate email account to info@halcyoncreekprod.com containing proprietary AMA materials. These transmissions included:

• Three unscripted show format bibles: Complete format bibles for shows titled "Apex Endurance," "The Remix," and "Untamed West." Format bibles are comprehensive documents that describe every aspect of a show concept, including the format structure, episode arc, casting criteria, visual style, commercial positioning, and competitive landscape analysis. They represent the distillation of AMA's creative development process and are among the most proprietary documents a production company possesses.

• Two pilot sizzle reels: Sizzle reels for "Apex Endurance" and "The Remix" — short-form promotional videos used to pitch show concepts to network and streaming platform buyers. The sizzle reels were transmitted as Larkspur Technologies links from Aldrich's personal Larkspur Technologies account, indicating that Aldrich had separately uploaded the video files from AMA's internal systems to his personal cloud storage before sharing them with Halcyon Creek.

• A detailed revenue model for "Summit Challenge": "Summit Challenge" is AMA's flagship unscripted franchise, generating approximately $42 million in annual revenue. The transmitted revenue model contained detailed line-item financial projections, including per-episode production costs, network license fees, international distribution revenues, advertising cost-per-mille ("CPM") rates, and talent compensation structures. This document is among AMA's most competitively sensitive financial assets.

Halcyon Creek Productions LLC is a California limited liability company formed on February 14, 2022, by Nina Castellanos, a former AMA Director of Development who departed AMA voluntarily in January 2022 — just one month before forming Halcyon Creek. Aldrich and Castellanos had a long-standing professional relationship that predated their respective employment at AMA, having worked together at a prior production company. The timing of Castellanos's departure, the formation of Halcyon Creek, and the commencement of Aldrich's transmissions (within approximately six weeks of Halcyon Creek's formation) is circumstantially significant, although Aldrich has denied any coordinated plan.

Aldrich's Defense. At his deposition, Aldrich testified that he was "exploring a potential co-production opportunity" with Halcyon Creek on behalf of AMA and that the transmissions were made in furtherance of that exploration. Aldrich stated that he believed the format bibles and revenue model were relevant to the discussions and that he intended to present a formal co-production proposal to AMA's management once the discussions matured.

AMA's Rebuttal. AMA's rebuttal to the "co-production" defense is compelling and multi-faceted:

• Aldrich had no authorization to conduct co-production discussions with Halcyon Creek or any other third party. AMA's business development process requires that any external partnership or co-production arrangement be initiated or approved by the President (Victoria Mercer) or the VP of Business Affairs (Ian Prescott). Neither Mercer nor Prescott was informed of Aldrich's alleged discussions with Halcyon Creek. Mr. Prescott testified at his deposition that he had "no knowledge whatsoever" of any co-production discussions between Aldrich and Halcyon Creek.

• No co-production proposal, term sheet, letter of intent, or any written correspondence discussing the terms of a potential deal has been produced in discovery. If Aldrich were genuinely exploring a co-production on AMA's behalf, one would expect to see some documentation of the discussions — even informal emails or notes reflecting the scope, terms, or status of the exploration. No such documents exist.

• AMA's external transmission policy requires prior written approval from the President or VP of Business Affairs before any proprietary content, including development materials, may be transmitted to third parties. Aldrich did not obtain such approval.

• At his deposition, Aldrich admitted that the materials he transmitted were "confidential financial information" and proprietary to AMA. He further acknowledged that he was aware of the external transmission policy but stated that he believed the policy was "more of a guideline" than a binding requirement — a characterization that is inconsistent with the policy's express language and Aldrich's signed acknowledgment.

• The fact that Aldrich transmitted AMA's Summit Challenge revenue model — the financial blueprint for AMA's most profitable franchise — to a competing production company cannot be characterized as furthering AMA's interests under any reasonable interpretation. The revenue model had no plausible connection to a co-production discussion for unscripted show concepts; its disclosure provided Halcyon Creek with competitive intelligence about AMA's economics, pricing, and talent costs.

C. Policy Violations

AMA's Acceptable Use and Confidentiality Policy, as revised in March 2021, expressly prohibits employees from "transmitting, forwarding, or copying Company proprietary information, trade secrets, or confidential data to personal email accounts, personal cloud storage, or non-Company-approved third-party recipients." The policy further states that violations "may result in disciplinary action, up to and including termination of employment, and may give rise to civil and criminal liability."

Aldrich signed an acknowledgment of the Acceptable Use and Confidentiality Policy on April 12, 2021. The signed acknowledgment, which is in AMA's possession and has been produced in discovery, states that Aldrich "has read, understands, and agrees to comply with the Company's Acceptable Use and Confidentiality Policy" and "understands that violation of this Policy may result in disciplinary action, including termination."

Aldrich's conduct — both the personal email forwarding and the Halcyon Creek transmissions — directly and facially violates the policy. There is no ambiguity in the policy language, and Aldrich's signed acknowledgment eliminates any defense based on ignorance of the policy's requirements.

D. Proprietary Value of Transmitted Materials

The materials Aldrich transmitted to Halcyon Creek represent substantial proprietary value:

Show Format Bibles. Format bibles are the core intellectual property assets of an unscripted production company. They embody the creative concept, structural framework, and commercial positioning that enable a production company to sell a show concept to a network or streaming platform buyer. AMA's development investment per concept is significant: "Apex Endurance" required approximately $120,000 in development costs; "The Remix" required approximately $85,000; and "Untamed West" required approximately $95,000. The total development investment for the three transmitted format bibles is approximately $300,000. These figures reflect the direct costs of creative development — including writer fees, research, focus group testing, and sizzle reel production — and do not include overhead or the opportunity cost of AMA's executive and development staff time devoted to these concepts.

Notably, "Apex Endurance" was in preliminary discussions with two major streaming platforms for a potential series order at the time of Aldrich's termination in November 2022. These discussions represented a significant near-term revenue opportunity for AMA. "Untamed West" had a completed sizzle reel that was actively being used in pitch meetings with cable networks. The disclosure of these concepts to a competitor — particularly one formed by a former AMA employee with knowledge of AMA's development pipeline — could undermine AMA's ability to sell these shows if the competitor developed similar or derivative concepts.

Summit Challenge Revenue Model. The Summit Challenge revenue model is arguably the single most competitively sensitive document Aldrich transmitted. It contains detailed line-item financial projections including per-episode production costs, network license fees, international distribution revenues, advertising CPM rates, and talent compensation structures. This information, if made available to a competitor, would enable that competitor to undercut AMA's pricing in negotiations with network buyers, to structure competing concepts to exploit gaps in AMA's economic model, or to target AMA's on-air talent by offering compensation packages designed to poach them based on knowledge of their current terms. Summit Challenge generates approximately $42 million in annual revenue for AMA and is the company's marquee franchise.

Security Measures. All of the transmitted materials were stored on AMA's secure internal content management system, which requires individual login credentials for access. The documents were watermarked "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC." and were accessible only to authorized personnel. External transmission of development materials and financial data was subject to the prior written approval requirement described above. These security measures are relevant both to the breach of contract analysis (confirming the confidential status of the materials) and to the CUTSA analysis (demonstrating AMA's reasonable efforts to maintain secrecy).

E. Current Status of Halcyon Creek Exploitation

Critical Evidentiary Gap. AMA does not currently have evidence that Halcyon Creek Productions LLC has produced, sold, pitched, or otherwise commercially exploited any programming based on the transmitted materials. This absence of exploitation evidence is the principal impediment to quantifying actual damages on the cross-claims and is the single most important factual issue for AMA's damages position.

AMA's Motion to Compel (filed April 14, 2023) sought, among other things, all communications between Aldrich and Halcyon Creek and all documents relating to co-production arrangements or other business dealings. The results of the compelled production, if any has been received, should be carefully reviewed for any evidence of exploitation or downstream use of AMA's materials. As of the date of this memorandum, we have not received confirmation of whether Aldrich has complied with the Court's order compelling further responses.

A public records search conducted by AMA's counsel has not identified any announced projects by Halcyon Creek Productions matching the transmitted format bibles. No press releases, trade publication announcements, network development deal announcements, or social media postings have been located that would suggest Halcyon Creek has developed or pitched shows based on "Apex Endurance," "The Remix," or "Untamed West." Halcyon Creek does not appear to have an active website or public presence beyond its California Secretary of State filing.

The absence of exploitation evidence cuts in two directions. On the one hand, it limits AMA's ability to demonstrate concrete monetary harm, which is critical to any damages recovery at trial. On the other hand, it suggests that Aldrich's misconduct may not have resulted in downstream commercial harm — which could undercut AMA's narrative that Aldrich was engaged in purposeful competitive conduct. We address the damages implications of this gap in detail in Section VIII below.

IV. First Cause of Action — Breach of Employment Agreement (§ 9.4 — Confidentiality)

A. Elements

Under California law, a claim for breach of contract requires proof of four elements: (1) the existence of a valid contract between the parties; (2) the plaintiff's performance of its obligations under the contract, or a legally recognized excuse for nonperformance; (3) the defendant's breach of the contract; and (4) resulting damages to the plaintiff. Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821; Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186. The plaintiff bears the burden of proving each element by a preponderance of the evidence.

B. Analysis

Existence of Contract. Aldrich and AMA entered into an Employment Agreement dated September 5, 2017, which was subsequently amended on August 1, 2020 (the "Employment Agreement"). The Employment Agreement is a written, signed contract that sets forth the terms and conditions of Aldrich's employment as Senior Vice President of Original Content and Executive Producer. Aldrich has not disputed the existence or validity of the Employment Agreement, and the contract satisfies all requirements for enforceability under California law. This element is not in controversy.

AMA's Performance. AMA fully performed its obligations under the Employment Agreement throughout the term of Aldrich's employment. AMA compensated Aldrich at an annual base salary of $485,000, provided Restricted Stock Unit ("RSU") grants totaling 42,500 units over the course of his employment (vesting on a four-year schedule), and paid annual performance bonuses, the most recent of which was $225,000 for fiscal year 2021. AMA also provided Aldrich with all contractually required benefits, including health insurance, participation in the company's retirement plan, and the other perquisites specified in the Employment Agreement. There is no basis for Aldrich to contend that AMA failed to perform its contractual obligations prior to the events giving rise to the termination dispute. This element is satisfied.

Aldrich's Breach — Section 9.4 (Confidentiality). Section 9.4 of the Employment Agreement contains a comprehensive confidentiality provision that prohibits Aldrich from disclosing, using, or transmitting "Confidential Information" to any person or entity other than in furtherance of his duties to AMA. The provision defines "Confidential Information" broadly to include "proprietary content, show formats, audience data, revenue projections, talent agreements, and all information designated as confidential by the Company." The confidentiality obligation is expressly stated to survive the termination of Aldrich's employment indefinitely, regardless of the reason for termination.

The evidence of breach is compelling and largely uncontested. Aldrich transmitted approximately 340 emails containing proprietary AMA materials to his personal email account, and sent 7 emails containing AMA's most sensitive proprietary assets — including format bibles, sizzle reels, and the Summit Challenge revenue model — to Halcyon Creek Productions LLC. Each of these transmissions constitutes a disclosure of Confidential Information to a person or entity outside AMA, and none was made "in furtherance of" Aldrich's duties to AMA.

Aldrich's "convenience" defense — that he forwarded emails to his personal account because he needed access to AMA materials while working remotely — is inconsistent with the Acceptable Use and Confidentiality Policy, which expressly prohibits personal email forwarding, and with the availability of VPN access, which provided Aldrich with the ability to access all AMA systems from any location. The "convenience" defense does not establish that the forwarding was "in furtherance of" Aldrich's duties; at most, it suggests a benign motive, but motive is not an element of the breach analysis. The policy prohibition on personal email forwarding was clear, Aldrich acknowledged it in writing, and his violation of it constitutes a breach of § 9.4 regardless of his stated reasons.

Aldrich's "co-production" defense — that the Halcyon Creek transmissions were made in connection with a co-production exploration on behalf of AMA — fails for multiple reasons. First, no authorization for such discussions existed. Second, no co-production agreement, term sheet, proposal, or even informal correspondence discussing deal terms has been produced. Third, the transmission of AMA's most sensitive revenue model to a competitor is not "in furtherance of duties" under any reasonable interpretation of that phrase — the Summit Challenge revenue model had no plausible connection to a co-production discussion for unscripted show formats. Fourth, Aldrich's failure to report the alleged co-production discussions to Mercer, Prescott, or AMA's Business Affairs department is inconsistent with the claim that he was acting on AMA's behalf. Fifth, AMA's external transmission policy requires prior written approval from the President or VP of Business Affairs for any disclosure of proprietary content to third parties, and no such approval was sought or obtained.

Note on Section 9.1 (Non-Competition). Consistent with the Court's March 22, 2023 Order and with California Business and Professions Code § 16600, AMA does not assert breach of Section 9.1 as a basis for the First Cause of Action. The non-competition clause is void under California law, as confirmed by the California Supreme Court in Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937, which held that § 16600 invalidates contractual non-competition provisions except in the narrowly defined statutory exceptions (sale of goodwill, dissolution of partnership, and dissolution of LLC). AMA has expressly acknowledged the unenforceability of § 9.1 in the Amended Cross-Complaint. However, Section 9.4 is an independent, enforceable confidentiality obligation that is analytically and functionally distinct from the non-competition clause. California courts have consistently upheld confidentiality provisions in employment agreements, even when non-competition provisions in the same agreement are unenforceable, provided the confidentiality provisions do not effectively operate as de facto non-competes. See, e.g., Retirement Group v. Galante (2009) 176 Cal.App.4th 1226, 1237–38. Section 9.4 does not restrict Aldrich's ability to work for a competitor or to engage in any lawful business; it restricts only his ability to disclose or use AMA's confidential information, which is a legally permissible restraint.

Note on Sections 9.2 and 9.3 (Non-Solicitation). AMA has not alleged breach of the non-solicitation provisions (§§ 9.2 and 9.3) in the cross-complaint. These provisions are addressed separately in the settlement negotiation context, where AMA has proposed, as part of a potential settlement framework, a reduction of the non-solicitation period from twenty-four months to twelve months. The enforceability of the non-solicitation provisions under California law (particularly in light of recent legislative developments and the trend toward broader application of § 16600) is a separate question that does not affect the analysis of the First Cause of Action.

C. Strength Assessment

Overall: Strong (~70% likelihood of prevailing). The documentary evidence supporting breach is clear and largely undisputed. Aldrich admitted at deposition that the email transmissions occurred and that the materials were confidential. The Employment Agreement and Acceptable Use Policy are unambiguous, and Aldrich's signed acknowledgment eliminates any defense based on lack of notice. The breach of § 9.4 is, in our assessment, the strongest of AMA's four cross-claims.

The primary litigation risk on this cause of action arises not from the merits of the breach analysis, but from the broader narrative dynamics of the case. Aldrich's argument that the "for cause" termination was pretextual — that AMA used the email transmissions as a pretext to terminate Aldrich without paying severance, in the context of the London restructuring — could bleed into the jury's (or mediator's) assessment of the contract claim. If the factfinder sympathizes with Aldrich's narrative that AMA is an overreaching employer punishing a loyal executive for minor policy infractions, the strength of the contract claim could be undermined. However, as a matter of law, this narrative goes to AMA's separate termination defense on Aldrich's affirmative claims, not to Aldrich's independent breach of § 9.4. Aldrich's obligations under § 9.4 exist regardless of whether AMA had good cause to terminate him, and his violation of those obligations is independently actionable.

D. Damages

Damages for the First Cause of Action are discussed in the comprehensive damages analysis in Section VIII below.

V. Second Cause of Action — Misappropriation of Trade Secrets (Cal. Civ. Code § 3426 et seq. — CUTSA)

A. Elements

Under the California Uniform Trade Secrets Act ("CUTSA"), codified at California Civil Code § 3426 et seq., AMA must establish two principal elements to prevail on its misappropriation claim: (1) the existence of a "trade secret" as defined by the statute; and (2) "misappropriation" of that trade secret by the defendant.

A "trade secret" is defined by Section 3426.1(d) as information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (a) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.

"Misappropriation" is defined by Section 3426.1(b) and includes, among other things, the disclosure or use of a trade secret of another without express or implied consent by a person who, at the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. Misappropriation also includes the acquisition of a trade secret by a person who knows or has reason to know that the trade secret was acquired by improper means.

B. Analysis — Trade Secret Status

AMA's strongest CUTSA arguments relate to the show format bibles, the pilot sizzle reels, and the Summit Challenge revenue model. Each of these categories of information satisfies both prongs of the trade secret definition.

Independent Economic Value. The transmitted materials derive independent economic value, both actual and potential, from not being generally known to the public or to competitors who could obtain economic value from their disclosure or use.

Format bibles. Format bibles represent AMA's competitive advantage in the unscripted television market. They contain the creative and commercial blueprint for show concepts that AMA invests between $50,000 and $150,000 each to develop. A format bible describes not only the show's premise, but its structural architecture — episode format, casting methodology, narrative arc, visual design, and commercial positioning. This combination of elements is the product of substantial creative effort and market analysis and constitutes the kind of compilation that derives economic value from secrecy. If a competitor obtained AMA's format bibles, it could develop similar or derivative concepts without incurring the development costs, could pitch competing concepts to the same network buyers that AMA is targeting, or could use the bibles to identify and exploit gaps in AMA's development strategy.

Summit Challenge revenue model. The Summit Challenge revenue model contains line-item financial data that, if known to competitors, would provide significant competitive intelligence. A competitor with access to the revenue model could undercut AMA's pricing in negotiations with network buyers by offering similar content at lower license fees; could structure competing concepts to exploit profitable segments of the market that the revenue model identifies; or could target AMA's on-air talent by offering compensation packages designed to poach them, armed with knowledge of their current terms. The revenue model reflects the detailed financial architecture of AMA's most profitable franchise, and its secrecy is integral to AMA's negotiating position in the marketplace.

Audience analytics and talent deal terms. The audience analytics reports provide competitive intelligence about AMA's strategic positioning — what demographics AMA is targeting, how its shows perform relative to the market, and where AMA sees growth opportunities. The talent deal terms reveal the economics of AMA's relationships with on-air personalities, including compensation structures, backend participation, and exclusivity arrangements. Each of these categories derives value from its confidentiality.

Reasonable Efforts to Maintain Secrecy. AMA maintains reasonable secrecy measures with respect to the transmitted materials, satisfying the second prong of the trade secret definition:

• All materials were stored on AMA's secure internal content management system, which requires individual login credentials for access. The system tracks user access and maintains audit logs.

• Documents were watermarked "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC." — a clear and conspicuous designation of their confidential status.

• The Employment Agreement contains a comprehensive confidentiality provision (§ 9.4) that expressly identifies show formats, audience data, revenue projections, and talent agreements as "Confidential Information" and prohibits their disclosure or use outside the scope of employment duties. This provision survives termination indefinitely.

• The Acceptable Use and Confidentiality Policy (revised March 2021) expressly prohibits the transmission of proprietary information to personal email accounts, personal cloud storage, or non-approved third-party recipients. Aldrich signed an acknowledgment of this policy on April 12, 2021.

• The existence of the broader restrictive covenant framework — including the non-competition clause (§ 9.1, although unenforceable on its own terms), the non-solicitation provisions (§§ 9.2 and 9.3), and the confidentiality provision (§ 9.4) — demonstrates AMA's comprehensive approach to trade secret protection. Courts have recognized that the existence of restrictive covenants, even if individually unenforceable, is probative of the employer's intent and effort to protect proprietary information. See FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1278 (finding that employer's restrictive covenant framework supported the "reasonable efforts" element of a trade secret claim).

• Access to the materials was restricted to authorized personnel, and external transmission required prior written approval from the President or VP of Business Affairs. This approval requirement is a specific and meaningful secrecy measure that goes beyond general confidentiality policies.

C. Analysis — Misappropriation

Aldrich acquired the trade secrets through his employment with AMA as Senior Vice President of Original Content and Executive Producer. In that role, he was directly involved in the creation of the format bibles, had oversight of the development process, and had access to the Summit Challenge revenue model and other financial data as part of his management responsibilities. Aldrich was at all relevant times under both a contractual duty (§ 9.4 of the Employment Agreement) and a common-law duty of loyalty to maintain the secrecy of AMA's trade secrets and to use them only in furtherance of AMA's business interests.

Aldrich's transmission of trade secret materials to Halcyon Creek Productions LLC — a competitor in the unscripted and reality television production space — constitutes "disclosure" within the meaning of Section 3426.1(b)(2). The statute does not require that the disclosure result in commercial exploitation by the recipient; the act of disclosure itself constitutes misappropriation if the disclosing party knew or had reason to know that his knowledge of the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy.

There can be no serious dispute that Aldrich knew or had reason to know that the materials were trade secrets. He signed the confidentiality acknowledgment. The materials were watermarked "CONFIDENTIAL." He was a senior officer with direct involvement in the creation of the format bibles and intimate familiarity with the company's trade secret protection policies. Indeed, at his deposition, Aldrich admitted that the transmitted materials were "confidential financial information" and proprietary to AMA. This admission is significant and substantially narrows Aldrich's ability to contest the trade secret status of the materials at trial.

Aldrich's "co-production" defense is insufficient to rebut the misappropriation element. Even if Aldrich genuinely believed he was exploring a co-production opportunity, he had no authority to share AMA's trade secrets with a third party without prior written authorization from AMA's President or VP of Business Affairs. The absence of any documentation of the alleged co-production discussions — no proposal, no term sheet, no email chain discussing deal terms — is inconsistent with a good-faith business exploration. And Aldrich's failure to disclose the Halcyon Creek relationship to his superiors further undermines the claim that he was acting in AMA's interest. A senior executive acting in good faith would have informed his employer of a co-production discussion before transmitting the employer's most sensitive proprietary materials to the proposed co-production partner.

D. CUTSA Preemption

An important procedural issue must be addressed in connection with the CUTSA claim: the preemptive effect of CUTSA on AMA's Third and Fourth Causes of Action.

CUTSA provides the exclusive civil remedy for conduct that constitutes trade secret misappropriation and expressly supersedes all other causes of action "based upon misappropriation of a trade secret" (Cal. Civ. Code § 3426.7(b)). This preemption provision is broad and has been interpreted by California courts to displace common-law and statutory claims — including breach of fiduciary duty, conversion, unfair competition, and unjust enrichment — to the extent those claims are predicated on the same acts of misappropriation that form the basis of the CUTSA claim.

This preemption could affect AMA's Third Cause of Action (breach of fiduciary duty) and Fourth Cause of Action (conversion) to the extent they are based on the same underlying acts — Aldrich's unauthorized acquisition, retention, and disclosure of trade secret materials. If the Court determines that these claims are merely repackaged versions of the CUTSA claim, they will be dismissed.

However, CUTSA does not preempt claims based on conduct that is independently wrongful apart from the trade secret misappropriation. Halcyon Enterprises v. Bramwell Partners LLC (2010) 184 Cal.App.4th 210, 236 (disapproved on other grounds by Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310). Where a defendant's conduct constitutes both trade secret misappropriation and an independent wrong — such as a breach of loyalty that does not depend on the trade secret character of the information — the non-CUTSA claim may survive preemption.

AMA should argue that the breach of fiduciary duty and conversion claims are based on broader misconduct — breach of the general duty of loyalty, appropriation of company property regardless of its trade secret status, and interference with AMA's property rights in its digital assets — that goes beyond the core misappropriation allegations. However, we note candidly that there is a meaningful risk that the Court could find these claims preempted, particularly the conversion claim, which is most directly tied to the same acts of taking and transmitting proprietary materials. The preemption risk is discussed further in connection with each of the remaining causes of action and in the overall recovery analysis in Section IX.

E. Strength Assessment

Overall: Strong (~65% likelihood of prevailing). The evidence of trade secret status and misappropriation is compelling. The documentary record — the watermarked documents, the signed policy acknowledgment, the email transmissions, and Aldrich's own deposition admissions — provides a strong foundation for the claim. The primary litigation risks are twofold:

First, Aldrich may argue that the format bibles were not truly "trade secrets" because similar concepts exist in the marketplace. This is a common defense in entertainment industry trade secret cases, and it has some traction. Unscripted television is a competitive market in which similar concepts are frequently developed independently by multiple production companies. Aldrich's counsel may argue that the "general idea" of each show concept — an outdoor endurance competition, a music remix competition, a western-themed reality series — is not protectable as a trade secret because such ideas are commonplace. AMA's response must emphasize that the trade secret resides not in the general idea but in the specific combination of creative elements, structural design, and commercial positioning reflected in the format bibles — the particular compilation that distinguishes AMA's concept from a generic idea. This is a factual question that will depend on the specificity and uniqueness of the format bibles, and it introduces some uncertainty into the analysis.

Second, CUTSA preemption could narrow AMA's overall recovery to a single statutory cause of action, eliminating the Third and Fourth Causes of Action and reducing AMA's available theories of recovery. While CUTSA provides a comprehensive remedial framework (including actual damages, unjust enrichment, reasonable royalty, exemplary damages, and injunctive relief), the loss of additional causes of action reduces AMA's flexibility at trial and eliminates backup theories that could be valuable if the CUTSA claim encounters difficulties.

VI. Third Cause of Action — Breach of Fiduciary Duty

A. Elements

As a senior corporate officer of AMA, Aldrich owed fiduciary duties of loyalty and care to the company. A claim for breach of fiduciary duty under California law requires proof of three elements: (1) the existence of a fiduciary relationship between the parties; (2) a breach of the fiduciary duty; and (3) resulting damage to the plaintiff. City of Atascadero v. Aldermere Securities, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 483; Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1086.

B. Analysis

Fiduciary Relationship. Aldrich served as Senior Vice President of Original Content and Executive Producer at AMA. In that capacity, he was a corporate officer with significant authority over AMA's creative and business operations. He had direct oversight of AMA's unscripted content development pipeline, managed relationships with network and streaming platform buyers, supervised development teams, and had access to AMA's most sensitive proprietary information, including show concepts in active development, financial models, and talent compensation data. He reported directly to the President of AMA, Victoria Mercer.

California courts have consistently held that corporate officers owe fiduciary duties of loyalty and care to their employers. See, e.g., GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc. (2000) 83 Cal.App.4th 409, 420–21 ("An employee owes a duty of loyalty to the employer. The employee must act in the utmost good faith in the discharge of his or her obligations and must not act in a manner which would prejudice the employer's interests."). The duty is heightened for senior officers who occupy positions of trust and have access to confidential information. Aldrich's role placed him squarely within the category of fiduciaries who owe the most stringent duties of loyalty to their employers.

Breach. Aldrich's unauthorized disclosure of proprietary materials to Halcyon Creek Productions LLC — a company formed by his former colleague Nina Castellanos just one month after Castellanos's departure from AMA — breaches the duty of loyalty. The fiduciary duty of loyalty requires, at minimum, that a corporate officer refrain from acting in a manner that is adverse to the employer's interests, that the officer not divert corporate opportunities or assets to third parties for personal benefit, and that the officer disclose any material conflicts of interest.

The circumstantial evidence surrounding the Halcyon Creek transmissions is troubling. Castellanos departed AMA in January 2022 and formed Halcyon Creek one month later, in February 2022. Aldrich began transmitting AMA's proprietary materials to Halcyon Creek in March 2022 — within approximately six weeks of the company's formation. The materials transmitted were not routine correspondence; they were AMA's most valuable development assets and its most competitively sensitive financial data. The pattern of conduct — the timing, the nature of the materials, the relationship between Aldrich and Castellanos, and the absence of any internal authorization or disclosure — suggests that Aldrich may have been positioning himself for future employment with or investment in Halcyon Creek, although AMA does not yet have direct evidence of this.

Self-Dealing Concern. At his deposition, Aldrich denied having any financial interest in Halcyon Creek Productions. AMA's RFP No. 14 requested all documents reflecting any financial interest, ownership stake, membership interest, or investment held by Aldrich in Halcyon Creek. Aldrich responded that he holds no such interest. If this representation is truthful, the self-dealing theory — that Aldrich transmitted materials to Halcyon Creek for his own personal financial benefit — is weakened. However, the absence of a direct financial interest does not eliminate the breach of fiduciary duty claim. Even if Aldrich had no ownership stake in Halcyon Creek, his unauthorized disclosure of proprietary materials to a competitor, without authorization and without disclosure to AMA, constitutes a breach of the duty of loyalty. The duty of loyalty is not limited to prohibiting self-dealing; it encompasses a broader obligation to act in the employer's interest and to refrain from conduct that is adverse to the employer, regardless of whether the officer personally profits from the misconduct.

Furthermore, the absence of a current financial interest does not preclude the possibility that Aldrich expected to receive a future benefit — such as a consulting arrangement, employment offer, or deferred equity stake — from Halcyon Creek. The timing and pattern of Aldrich's conduct are consistent with such an expectation, even if no formal agreement has been documented.

C. CUTSA Preemption Risk

As discussed in Section V.D above, this claim faces a meaningful risk of preemption under CUTSA if the Court finds that it is "based upon misappropriation of a trade secret." Because the primary evidentiary basis for the breach of fiduciary duty claim — the unauthorized transmission of proprietary materials to Halcyon Creek — is the same conduct that underlies the CUTSA claim, the preemption argument has force.

AMA's argument to preserve the claim rests on the contention that breach of fiduciary duty is broader than trade secret misappropriation and encompasses conduct that is independently wrongful. Specifically, AMA should argue that the fiduciary duty claim is based on:

• Aldrich's general disloyalty in failing to disclose the Halcyon Creek relationship and in conducting undisclosed business dealings with a competitor while serving as a senior AMA officer;

• Aldrich's failure to disclose a material conflict of interest (his relationship with Castellanos and the Halcyon Creek connection) to AMA's management;

• Aldrich's dissemination of the restructuring email to subordinates (the so-called "London suits" email of October 10, 2022), in which Aldrich forwarded an internal restructuring communication from AGMG leadership to members of his team with commentary that undermined AMA's management and the chain of command. This insubordination conduct is factually distinct from the trade secret claims and provides an independent basis for breach of fiduciary duty.

The insubordination conduct — the "London suits" email and Aldrich's subsequent actions from October 10 through October 14, 2022 — provides a separate factual predicate for the fiduciary duty claim that does not depend on the trade secret character of any information. If the Court finds that the fiduciary duty claim encompasses both trade-secret-based and non-trade-secret-based conduct, the claim may survive preemption as to the independent conduct, even if the trade-secret-based component is preempted.

D. Strength Assessment

Overall: Moderate (~55% likelihood of prevailing). The fiduciary relationship is clearly established, and the breach is supported by the documentary evidence and the circumstantial pattern of Aldrich's conduct. However, CUTSA preemption is a real risk that could eliminate this cause of action entirely, and damages are difficult to quantify on an independent basis — the economic harm from the breach of fiduciary duty largely overlaps with the harm from the trade secret misappropriation and the breach of contract.

The insubordination element strengthens the claim by providing an independent factual basis that is not subject to CUTSA preemption. However, the insubordination conduct may not independently support significant damages — the "London suits" email, while undermining the chain of command, did not directly result in quantifiable economic harm to AMA (although it contributed to the deterioration of Aldrich's employment relationship and was one of the grounds for the termination decision).

VII. Fourth Cause of Action — Conversion

A. Elements

Under California law, conversion is the wrongful exercise of dominion over the personal property of another. To establish a claim for conversion, AMA must prove: (1) AMA's ownership or right to possession of personal property; (2) Aldrich's wrongful act of dominion or disposition over the property inconsistent with AMA's rights; and (3) resulting damages. Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 208; Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.

B. Analysis

Property Interest. AMA owns the show format bibles, sizzle reels, and revenue model as works created within the scope of Aldrich's employment. The Employment Agreement contains a work-for-hire provision (Section 7) that vests ownership of all creative and business materials developed by Aldrich during the course of his employment in AMA. Additionally, under California Labor Code § 2860 and applicable copyright law principles, works created by an employee within the scope of employment are generally owned by the employer. AMA has a clear and undisputed ownership interest in the transmitted materials.

Wrongful Dominion. Aldrich's unauthorized copying of AMA's proprietary materials to his personal email account and personal Larkspur Technologies storage, his retention of those materials on personal devices and accounts beyond the scope of his employment duties, and his transmission of the materials to Halcyon Creek Productions LLC together constitute an exercise of dominion over AMA's property that is inconsistent with AMA's rights. Aldrich treated AMA's proprietary assets as his own — extracting them from AMA's secure systems, storing them on personal platforms, and distributing them to a third party without authorization. This conduct satisfies the "wrongful dominion" element.

Intangible Property Issue. The most significant legal challenge to the conversion claim is the uncertain application of conversion doctrine to intangible and digital property. California conversion law has traditionally applied to tangible personal property — physical objects that can be taken, used, and returned. The extension of conversion to intangible property, including digital files and intellectual property, is unsettled in California law and is the subject of conflicting authority.

Some courts have extended the conversion doctrine to intangible property where there is a "specific, identifiable" intangible right that is capable of being converted. The Ninth Circuit, applying California law, held in Kremen v. Cohen (9th Cir. 2003) 337 F.3d 1024 that conversion can apply to domain names — a form of intangible property — reasoning that the tort should not be limited to tangible chattels where the plaintiff has an identifiable property interest and the defendant has wrongfully exercised dominion over it. Other courts, however, have maintained the traditional limitation of conversion to tangible property or its close equivalent, declining to extend the doctrine to intellectual property claims that are more appropriately addressed through statutory frameworks such as copyright law or trade secret law.

AMA's claim is strengthened by the fact that the converted materials exist as discrete digital files — format bible documents, video sizzle reels, and financial spreadsheets — that are analogous to physical documents in their specificity and identifiability. These are not abstract ideas or amorphous intellectual property concepts; they are specific, identifiable files that were stored on AMA's systems, copied by Aldrich, and transmitted to third parties. The Court may find this specificity sufficient to bring the claim within the scope of the conversion doctrine. Nevertheless, the legal uncertainty on this point introduces meaningful risk to the conversion claim, and AMA should be prepared for the possibility that the Court may dismiss the claim on legal grounds, regardless of the strength of the factual evidence.

C. CUTSA Preemption Risk

The conversion claim faces the highest preemption risk of any of AMA's four cross-claims. The conversion claim is based on precisely the same acts — Aldrich's taking and transmitting of proprietary materials — that form the core of the CUTSA claim. If the Court finds that the conversion claim is "based upon misappropriation of a trade secret," it will be preempted by CUTSA and dismissed.

AMA's argument for preserving the claim rests on the distinction between property rights and trade secret rights. AMA should argue that the conversion claim protects AMA's property rights in the digital files as property — that is, AMA's right to exclusive possession and control of its files — regardless of whether the information contained in the files qualifies as a trade secret. Even if the information in the files were publicly known and therefore did not constitute a trade secret, AMA would still have a property interest in the f

CALDERWOOD & HARKNESS LLP 1900 Avenue of the Stars, Suite 2800 Los Angeles, California 90067 Telephone: (310) 555-4100 Facsimile: (310) 555-4101
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT This memorandum is a privileged and confidential attorney-client communication and attorney work product. It is intended solely for the use of the addressees. Any unauthorized review, use, disclosure, or distribution is strictly prohibited.
MEMORANDUM
TO: Gregory Tanaka, Vice President, Legal & Compliance, Aurelius Media Americas Inc.; Philippa Cartwright, General Counsel, Aurelius Global Media Group
FROM: Renata Vasquez and Devon Archer
DATE: November 20, 2023
RE: Enforceability and Remedies Analysis — AMA Cross-Claims Against Gavin Aldrich (Aldrich v. Aurelius Media Americas Inc., LASC Case No. 22STCV41087)
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I. Executive Summary
This memorandum provides a comprehensive analysis of the litigation prospects for each of the four cross-claims asserted by Aurelius Media Americas Inc. ("AMA") against Gavin Aldrich ("Aldrich") in the above-referenced action. The cross-claims were originally filed on January 20, 2023, and subsequently amended on April 5, 2023, following the Court's partial grant of Aldrich's Motion to Strike. We prepare this analysis in advance of the standalone mediation session scheduled for December 8, 2023, before the Honorable Patricia Okoro (Ret.) at Westpark Dispute Resolution Inc., and to support AMA's settlement strategy and overall case evaluation.
Overall Assessment. AMA has strong claims on confidentiality breach (First Cause of Action — Breach of Employment Agreement, § 9.4) and trade secret misappropriation (Second Cause of Action — CUTSA), moderate claims on breach of fiduciary duty (Third Cause of Action) and conversion (Fourth Cause of Action), but faces significant challenges in quantifying actual damages absent evidence that Halcyon Creek Productions LLC ("Halcyon Creek") commercially exploited the proprietary materials Aldrich transmitted. The documentary evidence of Aldrich's misconduct — including the email transmissions, policy acknowledgments, and his own deposition admissions — is compelling and largely undisputed. However, the lack of evidence of downstream exploitation limits AMA's ability to demonstrate the concrete monetary harm necessary to support a substantial damages award at trial.
Key Strategic Takeaway. The cross-claims serve primarily as leverage in settlement negotiations and as a vehicle for injunctive relief — specifically, the return and permanent deletion of proprietary materials — rather than as a path to substantial monetary recovery. In the context of the December 8 mediation, the cross-claims' most potent function is narrative: they reframe Aldrich from a sympathetic wrongfully-terminated executive into an unfaithful corporate officer who systematically extracted proprietary information and transmitted it to a competitor. This reframing is critical to AMA's settlement posture and to counterbalancing Aldrich's $4.15 million demand.
Summary Probability Assessments:
These assessments reflect our evaluation of the strength of the evidence, applicable legal standards, foreseeable defenses, and the risk of adverse procedural rulings (particularly CUTSA preemption of the Third and Fourth Causes of Action). Each assessment is discussed in detail below.
II. Procedural Background
Understanding the procedural history of the cross-claims is essential to framing the current posture of the litigation and identifying any procedural vulnerabilities that may affect AMA's position at mediation or trial. The following is a summary of the key procedural developments.
Filing of the Cross-Complaint. AMA filed its Cross-Complaint against Aldrich on January 20, 2023, asserting four causes of action: (1) Breach of Employment Agreement, originally citing Sections 9.1, 9.2, 9.3, and 9.4 of the Employment Agreement; (2) Misappropriation of Trade Secrets under the California Uniform Trade Secrets Act ("CUTSA"), California Civil Code § 3426 et seq.; (3) Breach of Fiduciary Duty; and (4) Conversion. The Cross-Complaint sought both monetary damages and injunctive relief, including an order requiring Aldrich to return or destroy all copies of AMA proprietary materials in his possession and to certify such return or destruction under penalty of perjury.
Aldrich's Motion to Strike. On February 15, 2023, Aldrich filed a Motion to Strike portions of the Cross-Complaint, specifically targeting all references to Section 9.1 of the Employment Agreement — the non-competition clause. Aldrich argued that § 9.1 is void and unenforceable under California Business and Professions Code § 16600, which prohibits contractual restraints on an individual's right to engage in a lawful profession, trade, or business, and that any reference to § 9.1 was irrelevant and prejudicial. Aldrich's motion sought to strike § 9.1 from the caption of the First Cause of Action, all allegations asserting that AMA was entitled to enforce § 9.1, and all references to the non-competition framework throughout the Cross-Complaint.
AMA's Opposition. AMA filed its Opposition to the Motion to Strike on March 1, 2023. In its Opposition, AMA offered to amend the Cross-Complaint to clarify that AMA does not seek to enforce § 9.1 as a basis for injunctive or monetary relief. AMA argued, however, that references to the broader restrictive covenant framework — including § 9.1 — should be preserved as factual context, because the existence of the non-competition provision was relevant to demonstrating AMA's reasonable efforts to maintain the secrecy of its trade secrets (an element of the CUTSA claim) and to establishing the full scope of Aldrich's contractual obligations to AMA.
Court's Ruling on the Motion to Strike. On March 22, 2023, the Court (the Honorable Catherine Villanueva, Department 52) granted the Motion to Strike in part. Specifically, the Court ordered the removal of § 9.1 from the caption of the First Cause of Action and directed AMA to include a clarification that AMA does not seek injunctive or monetary relief based on § 9.1. The Court denied the motion to the extent it sought to strike all references to the restrictive covenant framework as factual context, finding that AMA's references to the non-competition clause were relevant to contextualizing the employment relationship and AMA's trade secret protection efforts, provided AMA was not asserting § 9.1 as an independent basis for relief.
Filing of the Amended Cross-Complaint. AMA filed its Amended Cross-Complaint on April 5, 2023, incorporating the Court's ruling. The Amended Cross-Complaint removed § 9.1 from the caption of the First Cause of Action, added a clarifying paragraph stating that AMA does not seek to enforce the non-competition clause, and preserved references to the overall restrictive covenant framework as factual context. The four causes of action were otherwise unchanged in substance.
discovery. discovery on the cross-claims has been extensive and has proceeded largely in parallel with discovery on Aldrich's affirmative claims. Key discovery milestones include:
• AMA served its first set of Requests for Production of Documents (Nos. 1 through 28) and first set of Special Interrogatories (Nos. 1 through 30) on Aldrich in connection with the cross-claims.
• AMA filed a Motion to Compel Further Responses to RFP Nos. 8, 11, 12, 13, and 14 on April 14, 2023. These requests sought, among other things, all communications between Aldrich and Halcyon Creek Productions LLC (or any officer, director, member, or agent thereof), all documents relating to any co-production arrangement or business relationship between Aldrich and Halcyon Creek, and all documents reflecting any financial interest held by Aldrich in Halcyon Creek. Aldrich's initial responses to these requests were largely evasive, asserting various objections including relevance, overbreadth, and the attorney-client privilege (as to communications with Aldrich's own counsel regarding the formation of Halcyon Creek). The results of the compelled production, if any has been received, should be reviewed in advance of the mediation.
• Aldrich's deposition was taken on May 22, 2023 (approximately 7 hours of testimony). Key testimony from the Aldrich deposition is discussed throughout this memorandum.
• Key AMA witness depositions were completed in May 2023. In particular, the depositions of Victoria Mercer (President, AMA) and Ian Prescott (VP, Business Affairs, AMA) were taken by Aldrich's counsel. Ms. Mercer's testimony addressed the termination decision, the scope of Aldrich's authority, and AMA's trade secret protection policies. Mr. Prescott's testimony addressed the Acceptable Use and Confidentiality Policy, the process for authorizing external transmissions of proprietary materials, and the absence of any co-production approval for the Halcyon Creek transmissions.
Current Status. discovery is substantially complete. The case is currently on the Court's active docket, with the standalone mediation session scheduled for December 8, 2023, before Hon. Patricia Okoro (Ret.) at Westpark Dispute Resolution Inc. No trial date has been set as of the date of this memorandum.
III. Factual Foundation — Summary of Key Evidence
The strength of AMA's cross-claims rests on a substantial body of documentary and testimonial evidence. This section summarizes the key evidence supporting AMA's claims, Aldrich's principal defenses, and the critical evidentiary gaps that affect AMA's damages position.
A. Email Transmissions to Personal Account
Between approximately July 12, 2021, and September 29, 2022 — a period spanning approximately fifteen months — Aldrich forwarded approximately 340 emails from his AMA corporate email account (galdrich@aureliusmedia.com) to his personal Northgate Software account (galdrich.private@Northgate Software.com). This systematic pattern of forwarding was not a sporadic or isolated occurrence; rather, it represented an ongoing course of conduct throughout the latter portion of Aldrich's tenure at AMA.
The content of the forwarded emails spanned multiple categories of proprietary and sensitive business information. Specifically, the 340 forwarded emails included:
• Show concept documents (47 emails): One-sheets, treatments, and format bibles for unscripted television concepts in various stages of development. These documents represent the creative core of AMA's business — the ideas, structures, and commercial positioning of shows that AMA invests substantial resources to develop.
• Audience analytics reports (22 emails): Reports containing viewer demographic data, ratings performance analyses, and audience trend forecasts that AMA uses to position its programming to network and streaming platform buyers.
• Revenue projections and profit-and-loss summaries (18 emails): Financial analyses reflecting AMA's per-show economics, including production cost projections, network license fee expectations, advertising revenue estimates, and international distribution revenue forecasts. These documents contain some of AMA's most competitively sensitive financial data.
• Talent deal terms and compensation information (14 emails): Documents reflecting the terms of agreements with on-air talent, including compensation structures, backend participation arrangements, and exclusivity provisions.
• Miscellaneous business correspondence (approximately 239 emails): The remainder of the forwarded emails included production schedules, internal strategy memos, corporate communications, and general business correspondence of varying sensitivity.
The email forwarding pattern was discovered through a routine data loss prevention ("DLP") audit initiated by AMA's information technology department in August 2022. Preliminary findings were reported to Gregory Tanaka, VP of Legal & Compliance, on September 6, 2022. A detailed forensic review was completed on October 3, 2022, which confirmed the scope and content of the transmissions and provided the evidentiary basis for AMA's cross-claims.
Aldrich's Defense. At his deposition on May 22, 2023, Aldrich testified that he forwarded the emails "as a matter of convenience" because he frequently worked from home and needed access to AMA materials on his personal devices. Aldrich maintained that this was common practice among AMA employees and that he had no intention of misusing the information.
AMA's Rebuttal. AMA's rebuttal to the "convenience" defense is straightforward and well-supported. AMA provides all employees — particularly senior executives — with virtual private network ("VPN") access to its internal systems, enabling full remote access to email, the content management system, and other company resources from any device. Personal email forwarding was unnecessary for remote work purposes. Moreover, the Acceptable Use and Confidentiality Policy (discussed in Section III.C below) expressly prohibited the practice. Aldrich's argument that personal email forwarding was "common practice" among AMA employees is inconsistent with the policy and, if true, would demonstrate only that other employees may also have violated the policy — not that Aldrich's conduct was authorized or permissible.
B. Email Transmissions to Halcyon Creek Productions LLC
Far more damaging to Aldrich's position are the transmissions to Halcyon Creek Productions LLC. Between approximately March 3, 2022, and August 18, 2022 — a period of approximately five and a half months — Aldrich sent seven (7) emails from his AMA corporate email account to info@halcyoncreekprod.com containing proprietary AMA materials. These transmissions included:
• Three unscripted show format bibles: Complete format bibles for shows titled "Apex Endurance," "The Remix," and "Untamed West." Format bibles are comprehensive documents that describe every aspect of a show concept, including the format structure, episode arc, casting criteria, visual style, commercial positioning, and competitive landscape analysis. They represent the distillation of AMA's creative development process and are among the most proprietary documents a production company possesses.
• Two pilot sizzle reels: Sizzle reels for "Apex Endurance" and "The Remix" — short-form promotional videos used to pitch show concepts to network and streaming platform buyers. The sizzle reels were transmitted as Larkspur Technologies links from Aldrich's personal Larkspur Technologies account, indicating that Aldrich had separately uploaded the video files from AMA's internal systems to his personal cloud storage before sharing them with Halcyon Creek.
• A detailed revenue model for "Summit Challenge": "Summit Challenge" is AMA's flagship unscripted franchise, generating approximately $42 million in annual revenue. The transmitted revenue model contained detailed line-item financial projections, including per-episode production costs, network license fees, international distribution revenues, advertising cost-per-mille ("CPM") rates, and talent compensation structures. This document is among AMA's most competitively sensitive financial assets.
Halcyon Creek Productions LLC is a California limited liability company formed on February 14, 2022, by Nina Castellanos, a former AMA Director of Development who departed AMA voluntarily in January 2022 — just one month before forming Halcyon Creek. Aldrich and Castellanos had a long-standing professional relationship that predated their respective employment at AMA, having worked together at a prior production company. The timing of Castellanos's departure, the formation of Halcyon Creek, and the commencement of Aldrich's transmissions (within approximately six weeks of Halcyon Creek's formation) is circumstantially significant, although Aldrich has denied any coordinated plan.
Aldrich's Defense. At his deposition, Aldrich testified that he was "exploring a potential co-production opportunity" with Halcyon Creek on behalf of AMA and that the transmissions were made in furtherance of that exploration. Aldrich stated that he believed the format bibles and revenue model were relevant to the discussions and that he intended to present a formal co-production proposal to AMA's management once the discussions matured.
AMA's Rebuttal. AMA's rebuttal to the "co-production" defense is compelling and multi-faceted:
• Aldrich had no authorization to conduct co-production discussions with Halcyon Creek or any other third party. AMA's business development process requires that any external partnership or co-production arrangement be initiated or approved by the President (Victoria Mercer) or the VP of Business Affairs (Ian Prescott). Neither Mercer nor Prescott was informed of Aldrich's alleged discussions with Halcyon Creek. Mr. Prescott testified at his deposition that he had "no knowledge whatsoever" of any co-production discussions between Aldrich and Halcyon Creek.
• No co-production proposal, term sheet, letter of intent, or any written correspondence discussing the terms of a potential deal has been produced in discovery. If Aldrich were genuinely exploring a co-production on AMA's behalf, one would expect to see some documentation of the discussions — even informal emails or notes reflecting the scope, terms, or status of the exploration. No such documents exist.
• AMA's external transmission policy requires prior written approval from the President or VP of Business Affairs before any proprietary content, including development materials, may be transmitted to third parties. Aldrich did not obtain such approval.
• At his deposition, Aldrich admitted that the materials he transmitted were "confidential financial information" and proprietary to AMA. He further acknowledged that he was aware of the external transmission policy but stated that he believed the policy was "more of a guideline" than a binding requirement — a characterization that is inconsistent with the policy's express language and Aldrich's signed acknowledgment.
• The fact that Aldrich transmitted AMA's Summit Challenge revenue model — the financial blueprint for AMA's most profitable franchise — to a competing production company cannot be characterized as furthering AMA's interests under any reasonable interpretation. The revenue model had no plausible connection to a co-production discussion for unscripted show concepts; its disclosure provided Halcyon Creek with competitive intelligence about AMA's economics, pricing, and talent costs.
C. Policy Violations
AMA's Acceptable Use and Confidentiality Policy, as revised in March 2021, expressly prohibits employees from "transmitting, forwarding, or copying Company proprietary information, trade secrets, or confidential data to personal email accounts, personal cloud storage, or non-Company-approved third-party recipients." The policy further states that violations "may result in disciplinary action, up to and including termination of employment, and may give rise to civil and criminal liability."
Aldrich signed an acknowledgment of the Acceptable Use and Confidentiality Policy on April 12, 2021. The signed acknowledgment, which is in AMA's possession and has been produced in discovery, states that Aldrich "has read, understands, and agrees to comply with the Company's Acceptable Use and Confidentiality Policy" and "understands that violation of this Policy may result in disciplinary action, including termination."
Aldrich's conduct — both the personal email forwarding and the Halcyon Creek transmissions — directly and facially violates the policy. There is no ambiguity in the policy language, and Aldrich's signed acknowledgment eliminates any defense based on ignorance of the policy's requirements.
D. Proprietary Value of Transmitted Materials
The materials Aldrich transmitted to Halcyon Creek represent substantial proprietary value:
Show Format Bibles. Format bibles are the core intellectual property assets of an unscripted production company. They embody the creative concept, structural framework, and commercial positioning that enable a production company to sell a show concept to a network or streaming platform buyer. AMA's development investment per concept is significant: "Apex Endurance" required approximately $120,000 in development costs; "The Remix" required approximately $85,000; and "Untamed West" required approximately $95,000. The total development investment for the three transmitted format bibles is approximately $300,000. These figures reflect the direct costs of creative development — including writer fees, research, focus group testing, and sizzle reel production — and do not include overhead or the opportunity cost of AMA's executive and development staff time devoted to these concepts.
Notably, "Apex Endurance" was in preliminary discussions with two major streaming platforms for a potential series order at the time of Aldrich's termination in November 2022. These discussions represented a significant near-term revenue opportunity for AMA. "Untamed West" had a completed sizzle reel that was actively being used in pitch meetings with cable networks. The disclosure of these concepts to a competitor — particularly one formed by a former AMA employee with knowledge of AMA's development pipeline — could undermine AMA's ability to sell these shows if the competitor developed similar or derivative concepts.
Summit Challenge Revenue Model. The Summit Challenge revenue model is arguably the single most competitively sensitive document Aldrich transmitted. It contains detailed line-item financial projections including per-episode production costs, network license fees, international distribution revenues, advertising CPM rates, and talent compensation structures. This information, if made available to a competitor, would enable that competitor to undercut AMA's pricing in negotiations with network buyers, to structure competing concepts to exploit gaps in AMA's economic model, or to target AMA's on-air talent by offering compensation packages designed to poach them based on knowledge of their current terms. Summit Challenge generates approximately $42 million in annual revenue for AMA and is the company's marquee franchise.
Security Measures. All of the transmitted materials were stored on AMA's secure internal content management system, which requires individual login credentials for access. The documents were watermarked "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC." and were accessible only to authorized personnel. External transmission of development materials and financial data was subject to the prior written approval requirement described above. These security measures are relevant both to the breach of contract analysis (confirming the confidential status of the materials) and to the CUTSA analysis (demonstrating AMA's reasonable efforts to maintain secrecy).
E. Current Status of Halcyon Creek Exploitation
Critical Evidentiary Gap. AMA does not currently have evidence that Halcyon Creek Productions LLC has produced, sold, pitched, or otherwise commercially exploited any programming based on the transmitted materials. This absence of exploitation evidence is the principal impediment to quantifying actual damages on the cross-claims and is the single most important factual issue for AMA's damages position.
AMA's Motion to Compel (filed April 14, 2023) sought, among other things, all communications between Aldrich and Halcyon Creek and all documents relating to co-production arrangements or other business dealings. The results of the compelled production, if any has been received, should be carefully reviewed for any evidence of exploitation or downstream use of AMA's materials. As of the date of this memorandum, we have not received confirmation of whether Aldrich has complied with the Court's order compelling further responses.
A public records search conducted by AMA's counsel has not identified any announced projects by Halcyon Creek Productions matching the transmitted format bibles. No press releases, trade publication announcements, network development deal announcements, or social media postings have been located that would suggest Halcyon Creek has developed or pitched shows based on "Apex Endurance," "The Remix," or "Untamed West." Halcyon Creek does not appear to have an active website or public presence beyond its California Secretary of State filing.
The absence of exploitation evidence cuts in two directions. On the one hand, it limits AMA's ability to demonstrate concrete monetary harm, which is critical to any damages recovery at trial. On the other hand, it suggests that Aldrich's misconduct may not have resulted in downstream commercial harm — which could undercut AMA's narrative that Aldrich was engaged in purposeful competitive conduct. We address the damages implications of this gap in detail in Section VIII below.
IV. First Cause of Action — Breach of Employment Agreement (§ 9.4 — Confidentiality)
A. Elements
Under California law, a claim for breach of contract requires proof of four elements: (1) the existence of a valid contract between the parties; (2) the plaintiff's performance of its obligations under the contract, or a legally recognized excuse for nonperformance; (3) the defendant's breach of the contract; and (4) resulting damages to the plaintiff. Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 821; Richman v. Hartley (2014) 224 Cal.App.4th 1182, 1186. The plaintiff bears the burden of proving each element by a preponderance of the evidence.
B. Analysis
Existence of Contract. Aldrich and AMA entered into an Employment Agreement dated September 5, 2017, which was subsequently amended on August 1, 2020 (the "Employment Agreement"). The Employment Agreement is a written, signed contract that sets forth the terms and conditions of Aldrich's employment as Senior Vice President of Original Content and Executive Producer. Aldrich has not disputed the existence or validity of the Employment Agreement, and the contract satisfies all requirements for enforceability under California law. This element is not in controversy.
AMA's Performance. AMA fully performed its obligations under the Employment Agreement throughout the term of Aldrich's employment. AMA compensated Aldrich at an annual base salary of $485,000, provided Restricted Stock Unit ("RSU") grants totaling 42,500 units over the course of his employment (vesting on a four-year schedule), and paid annual performance bonuses, the most recent of which was $225,000 for fiscal year 2021. AMA also provided Aldrich with all contractually required benefits, including health insurance, participation in the company's retirement plan, and the other perquisites specified in the Employment Agreement. There is no basis for Aldrich to contend that AMA failed to perform its contractual obligations prior to the events giving rise to the termination dispute. This element is satisfied.
Aldrich's Breach — Section 9.4 (Confidentiality). Section 9.4 of the Employment Agreement contains a comprehensive confidentiality provision that prohibits Aldrich from disclosing, using, or transmitting "Confidential Information" to any person or entity other than in furtherance of his duties to AMA. The provision defines "Confidential Information" broadly to include "proprietary content, show formats, audience data, revenue projections, talent agreements, and all information designated as confidential by the Company." The confidentiality obligation is expressly stated to survive the termination of Aldrich's employment indefinitely, regardless of the reason for termination.
The evidence of breach is compelling and largely uncontested. Aldrich transmitted approximately 340 emails containing proprietary AMA materials to his personal email account, and sent 7 emails containing AMA's most sensitive proprietary assets — including format bibles, sizzle reels, and the Summit Challenge revenue model — to Halcyon Creek Productions LLC. Each of these transmissions constitutes a disclosure of Confidential Information to a person or entity outside AMA, and none was made "in furtherance of" Aldrich's duties to AMA.
Aldrich's "convenience" defense — that he forwarded emails to his personal account because he needed access to AMA materials while working remotely — is inconsistent with the Acceptable Use and Confidentiality Policy, which expressly prohibits personal email forwarding, and with the availability of VPN access, which provided Aldrich with the ability to access all AMA systems from any location. The "convenience" defense does not establish that the forwarding was "in furtherance of" Aldrich's duties; at most, it suggests a benign motive, but motive is not an element of the breach analysis. The policy prohibition on personal email forwarding was clear, Aldrich acknowledged it in writing, and his violation of it constitutes a breach of § 9.4 regardless of his stated reasons.
Aldrich's "co-production" defense — that the Halcyon Creek transmissions were made in connection with a co-production exploration on behalf of AMA — fails for multiple reasons. First, no authorization for such discussions existed. Second, no co-production agreement, term sheet, proposal, or even informal correspondence discussing deal terms has been produced. Third, the transmission of AMA's most sensitive revenue model to a competitor is not "in furtherance of duties" under any reasonable interpretation of that phrase — the Summit Challenge revenue model had no plausible connection to a co-production discussion for unscripted show formats. Fourth, Aldrich's failure to report the alleged co-production discussions to Mercer, Prescott, or AMA's Business Affairs department is inconsistent with the claim that he was acting on AMA's behalf. Fifth, AMA's external transmission policy requires prior written approval from the President or VP of Business Affairs for any disclosure of proprietary content to third parties, and no such approval was sought or obtained.
Note on Section 9.1 (Non-Competition). Consistent with the Court's March 22, 2023 Order and with California Business and Professions Code § 16600, AMA does not assert breach of Section 9.1 as a basis for the First Cause of Action. The non-competition clause is void under California law, as confirmed by the California Supreme Court in Edwards v. Kraft Quill CPAs LLP (2008) 44 Cal.4th 937, which held that § 16600 invalidates contractual non-competition provisions except in the narrowly defined statutory exceptions (sale of goodwill, dissolution of partnership, and dissolution of LLC). AMA has expressly acknowledged the unenforceability of § 9.1 in the Amended Cross-Complaint. However, Section 9.4 is an independent, enforceable confidentiality obligation that is analytically and functionally distinct from the non-competition clause. California courts have consistently upheld confidentiality provisions in employment agreements, even when non-competition provisions in the same agreement are unenforceable, provided the confidentiality provisions do not effectively operate as de facto non-competes. See, e.g., Retirement Group v. Galante (2009) 176 Cal.App.4th 1226, 1237–38. Section 9.4 does not restrict Aldrich's ability to work for a competitor or to engage in any lawful business; it restricts only his ability to disclose or use AMA's confidential information, which is a legally permissible restraint.
Note on Sections 9.2 and 9.3 (Non-Solicitation). AMA has not alleged breach of the non-solicitation provisions (§§ 9.2 and 9.3) in the cross-complaint. These provisions are addressed separately in the settlement negotiation context, where AMA has proposed, as part of a potential settlement framework, a reduction of the non-solicitation period from twenty-four months to twelve months. The enforceability of the non-solicitation provisions under California law (particularly in light of recent legislative developments and the trend toward broader application of § 16600) is a separate question that does not affect the analysis of the First Cause of Action.
C. Strength Assessment
Overall: Strong (~70% likelihood of prevailing). The documentary evidence supporting breach is clear and largely undisputed. Aldrich admitted at deposition that the email transmissions occurred and that the materials were confidential. The Employment Agreement and Acceptable Use Policy are unambiguous, and Aldrich's signed acknowledgment eliminates any defense based on lack of notice. The breach of § 9.4 is, in our assessment, the strongest of AMA's four cross-claims.
The primary litigation risk on this cause of action arises not from the merits of the breach analysis, but from the broader narrative dynamics of the case. Aldrich's argument that the "for cause" termination was pretextual — that AMA used the email transmissions as a pretext to terminate Aldrich without paying severance, in the context of the London restructuring — could bleed into the jury's (or mediator's) assessment of the contract claim. If the factfinder sympathizes with Aldrich's narrative that AMA is an overreaching employer punishing a loyal executive for minor policy infractions, the strength of the contract claim could be undermined. However, as a matter of law, this narrative goes to AMA's separate termination defense on Aldrich's affirmative claims, not to Aldrich's independent breach of § 9.4. Aldrich's obligations under § 9.4 exist regardless of whether AMA had good cause to terminate him, and his violation of those obligations is independently actionable.
D. Damages
Damages for the First Cause of Action are discussed in the comprehensive damages analysis in Section VIII below.
V. Second Cause of Action — Misappropriation of Trade Secrets (Cal. Civ. Code § 3426 et seq. — CUTSA)
A. Elements
Under the California Uniform Trade Secrets Act ("CUTSA"), codified at California Civil Code § 3426 et seq., AMA must establish two principal elements to prevail on its misappropriation claim: (1) the existence of a "trade secret" as defined by the statute; and (2) "misappropriation" of that trade secret by the defendant.
A "trade secret" is defined by Section 3426.1(d) as information, including a formula, pattern, compilation, program, device, method, technique, or process, that: (a) derives independent economic value, actual or potential, from not being generally known to the public or to other persons who can obtain economic value from its disclosure or use; and (b) is the subject of efforts that are reasonable under the circumstances to maintain its secrecy.
"Misappropriation" is defined by Section 3426.1(b) and includes, among other things, the disclosure or use of a trade secret of another without express or implied consent by a person who, at the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. Misappropriation also includes the acquisition of a trade secret by a person who knows or has reason to know that the trade secret was acquired by improper means.
B. Analysis — Trade Secret Status
AMA's strongest CUTSA arguments relate to the show format bibles, the pilot sizzle reels, and the Summit Challenge revenue model. Each of these categories of information satisfies both prongs of the trade secret definition.
Independent Economic Value. The transmitted materials derive independent economic value, both actual and potential, from not being generally known to the public or to competitors who could obtain economic value from their disclosure or use.
Format bibles. Format bibles represent AMA's competitive advantage in the unscripted television market. They contain the creative and commercial blueprint for show concepts that AMA invests between $50,000 and $150,000 each to develop. A format bible describes not only the show's premise, but its structural architecture — episode format, casting methodology, narrative arc, visual design, and commercial positioning. This combination of elements is the product of substantial creative effort and market analysis and constitutes the kind of compilation that derives economic value from secrecy. If a competitor obtained AMA's format bibles, it could develop similar or derivative concepts without incurring the development costs, could pitch competing concepts to the same network buyers that AMA is targeting, or could use the bibles to identify and exploit gaps in AMA's development strategy.
Summit Challenge revenue model. The Summit Challenge revenue model contains line-item financial data that, if known to competitors, would provide significant competitive intelligence. A competitor with access to the revenue model could undercut AMA's pricing in negotiations with network buyers by offering similar content at lower license fees; could structure competing concepts to exploit profitable segments of the market that the revenue model identifies; or could target AMA's on-air talent by offering compensation packages designed to poach them, armed with knowledge of their current terms. The revenue model reflects the detailed financial architecture of AMA's most profitable franchise, and its secrecy is integral to AMA's negotiating position in the marketplace.
Audience analytics and talent deal terms. The audience analytics reports provide competitive intelligence about AMA's strategic positioning — what demographics AMA is targeting, how its shows perform relative to the market, and where AMA sees growth opportunities. The talent deal terms reveal the economics of AMA's relationships with on-air personalities, including compensation structures, backend participation, and exclusivity arrangements. Each of these categories derives value from its confidentiality.
Reasonable Efforts to Maintain Secrecy. AMA maintains reasonable secrecy measures with respect to the transmitted materials, satisfying the second prong of the trade secret definition:
• All materials were stored on AMA's secure internal content management system, which requires individual login credentials for access. The system tracks user access and maintains audit logs.
• Documents were watermarked "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC." — a clear and conspicuous designation of their confidential status.
• The Employment Agreement contains a comprehensive confidentiality provision (§ 9.4) that expressly identifies show formats, audience data, revenue projections, and talent agreements as "Confidential Information" and prohibits their disclosure or use outside the scope of employment duties. This provision survives termination indefinitely.
• The Acceptable Use and Confidentiality Policy (revised March 2021) expressly prohibits the transmission of proprietary information to personal email accounts, personal cloud storage, or non-approved third-party recipients. Aldrich signed an acknowledgment of this policy on April 12, 2021.
• The existence of the broader restrictive covenant framework — including the non-competition clause (§ 9.1, although unenforceable on its own terms), the non-solicitation provisions (§§ 9.2 and 9.3), and the confidentiality provision (§ 9.4) — demonstrates AMA's comprehensive approach to trade secret protection. Courts have recognized that the existence of restrictive covenants, even if individually unenforceable, is probative of the employer's intent and effort to protect proprietary information. See FLIR Systems, Inc. v. Parrish (2009) 174 Cal.App.4th 1270, 1278 (finding that employer's restrictive covenant framework supported the "reasonable efforts" element of a trade secret claim).
• Access to the materials was restricted to authorized personnel, and external transmission required prior written approval from the President or VP of Business Affairs. This approval requirement is a specific and meaningful secrecy measure that goes beyond general confidentiality policies.
C. Analysis — Misappropriation
Aldrich acquired the trade secrets through his employment with AMA as Senior Vice President of Original Content and Executive Producer. In that role, he was directly involved in the creation of the format bibles, had oversight of the development process, and had access to the Summit Challenge revenue model and other financial data as part of his management responsibilities. Aldrich was at all relevant times under both a contractual duty (§ 9.4 of the Employment Agreement) and a common-law duty of loyalty to maintain the secrecy of AMA's trade secrets and to use them only in furtherance of AMA's business interests.
Aldrich's transmission of trade secret materials to Halcyon Creek Productions LLC — a competitor in the unscripted and reality television production space — constitutes "disclosure" within the meaning of Section 3426.1(b)(2). The statute does not require that the disclosure result in commercial exploitation by the recipient; the act of disclosure itself constitutes misappropriation if the disclosing party knew or had reason to know that his knowledge of the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy.
There can be no serious dispute that Aldrich knew or had reason to know that the materials were trade secrets. He signed the confidentiality acknowledgment. The materials were watermarked "CONFIDENTIAL." He was a senior officer with direct involvement in the creation of the format bibles and intimate familiarity with the company's trade secret protection policies. Indeed, at his deposition, Aldrich admitted that the transmitted materials were "confidential financial information" and proprietary to AMA. This admission is significant and substantially narrows Aldrich's ability to contest the trade secret status of the materials at trial.
Aldrich's "co-production" defense is insufficient to rebut the misappropriation element. Even if Aldrich genuinely believed he was exploring a co-production opportunity, he had no authority to share AMA's trade secrets with a third party without prior written authorization from AMA's President or VP of Business Affairs. The absence of any documentation of the alleged co-production discussions — no proposal, no term sheet, no email chain discussing deal terms — is inconsistent with a good-faith business exploration. And Aldrich's failure to disclose the Halcyon Creek relationship to his superiors further undermines the claim that he was acting in AMA's interest. A senior executive acting in good faith would have informed his employer of a co-production discussion before transmitting the employer's most sensitive proprietary materials to the proposed co-production partner.
D. CUTSA Preemption
An important procedural issue must be addressed in connection with the CUTSA claim: the preemptive effect of CUTSA on AMA's Third and Fourth Causes of Action.
CUTSA provides the exclusive civil remedy for conduct that constitutes trade secret misappropriation and expressly supersedes all other causes of action "based upon misappropriation of a trade secret" (Cal. Civ. Code § 3426.7(b)). This preemption provision is broad and has been interpreted by California courts to displace common-law and statutory claims — including breach of fiduciary duty, conversion, unfair competition, and unjust enrichment — to the extent those claims are predicated on the same acts of misappropriation that form the basis of the CUTSA claim.
This preemption could affect AMA's Third Cause of Action (breach of fiduciary duty) and Fourth Cause of Action (conversion) to the extent they are based on the same underlying acts — Aldrich's unauthorized acquisition, retention, and disclosure of trade secret materials. If the Court determines that these claims are merely repackaged versions of the CUTSA claim, they will be dismissed.
However, CUTSA does not preempt claims based on conduct that is independently wrongful apart from the trade secret misappropriation. Halcyon Enterprises v. Bramwell Partners LLC (2010) 184 Cal.App.4th 210, 236 (disapproved on other grounds by Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310). Where a defendant's conduct constitutes both trade secret misappropriation and an independent wrong — such as a breach of loyalty that does not depend on the trade secret character of the information — the non-CUTSA claim may survive preemption.
AMA should argue that the breach of fiduciary duty and conversion claims are based on broader misconduct — breach of the general duty of loyalty, appropriation of company property regardless of its trade secret status, and interference with AMA's property rights in its digital assets — that goes beyond the core misappropriation allegations. However, we note candidly that there is a meaningful risk that the Court could find these claims preempted, particularly the conversion claim, which is most directly tied to the same acts of taking and transmitting proprietary materials. The preemption risk is discussed further in connection with each of the remaining causes of action and in the overall recovery analysis in Section IX.
E. Strength Assessment
Overall: Strong (~65% likelihood of prevailing). The evidence of trade secret status and misappropriation is compelling. The documentary record — the watermarked documents, the signed policy acknowledgment, the email transmissions, and Aldrich's own deposition admissions — provides a strong foundation for the claim. The primary litigation risks are twofold:
First, Aldrich may argue that the format bibles were not truly "trade secrets" because similar concepts exist in the marketplace. This is a common defense in entertainment industry trade secret cases, and it has some traction. Unscripted television is a competitive market in which similar concepts are frequently developed independently by multiple production companies. Aldrich's counsel may argue that the "general idea" of each show concept — an outdoor endurance competition, a music remix competition, a western-themed reality series — is not protectable as a trade secret because such ideas are commonplace. AMA's response must emphasize that the trade secret resides not in the general idea but in the specific combination of creative elements, structural design, and commercial positioning reflected in the format bibles — the particular compilation that distinguishes AMA's concept from a generic idea. This is a factual question that will depend on the specificity and uniqueness of the format bibles, and it introduces some uncertainty into the analysis.
Second, CUTSA preemption could narrow AMA's overall recovery to a single statutory cause of action, eliminating the Third and Fourth Causes of Action and reducing AMA's available theories of recovery. While CUTSA provides a comprehensive remedial framework (including actual damages, unjust enrichment, reasonable royalty, exemplary damages, and injunctive relief), the loss of additional causes of action reduces AMA's flexibility at trial and eliminates backup theories that could be valuable if the CUTSA claim encounters difficulties.
VI. Third Cause of Action — Breach of Fiduciary Duty
A. Elements
As a senior corporate officer of AMA, Aldrich owed fiduciary duties of loyalty and care to the company. A claim for breach of fiduciary duty under California law requires proof of three elements: (1) the existence of a fiduciary relationship between the parties; (2) a breach of the fiduciary duty; and (3) resulting damage to the plaintiff. City of Atascadero v. Aldermere Securities, Pierce, Fenner & Smith, Inc. (1998) 68 Cal.App.4th 445, 483; Stanley v. Richmond (1995) 35 Cal.App.4th 1070, 1086.
B. Analysis
Fiduciary Relationship. Aldrich served as Senior Vice President of Original Content and Executive Producer at AMA. In that capacity, he was a corporate officer with significant authority over AMA's creative and business operations. He had direct oversight of AMA's unscripted content development pipeline, managed relationships with network and streaming platform buyers, supervised development teams, and had access to AMA's most sensitive proprietary information, including show concepts in active development, financial models, and talent compensation data. He reported directly to the President of AMA, Victoria Mercer.
California courts have consistently held that corporate officers owe fiduciary duties of loyalty and care to their employers. See, e.g., GAB Business Services, Inc. v. Lindsey & Newsom Claim Services, Inc. (2000) 83 Cal.App.4th 409, 420–21 ("An employee owes a duty of loyalty to the employer. The employee must act in the utmost good faith in the discharge of his or her obligations and must not act in a manner which would prejudice the employer's interests."). The duty is heightened for senior officers who occupy positions of trust and have access to confidential information. Aldrich's role placed him squarely within the category of fiduciaries who owe the most stringent duties of loyalty to their employers.
Breach. Aldrich's unauthorized disclosure of proprietary materials to Halcyon Creek Productions LLC — a company formed by his former colleague Nina Castellanos just one month after Castellanos's departure from AMA — breaches the duty of loyalty. The fiduciary duty of loyalty requires, at minimum, that a corporate officer refrain from acting in a manner that is adverse to the employer's interests, that the officer not divert corporate opportunities or assets to third parties for personal benefit, and that the officer disclose any material conflicts of interest.
The circumstantial evidence surrounding the Halcyon Creek transmissions is troubling. Castellanos departed AMA in January 2022 and formed Halcyon Creek one month later, in February 2022. Aldrich began transmitting AMA's proprietary materials to Halcyon Creek in March 2022 — within approximately six weeks of the company's formation. The materials transmitted were not routine correspondence; they were AMA's most valuable development assets and its most competitively sensitive financial data. The pattern of conduct — the timing, the nature of the materials, the relationship between Aldrich and Castellanos, and the absence of any internal authorization or disclosure — suggests that Aldrich may have been positioning himself for future employment with or investment in Halcyon Creek, although AMA does not yet have direct evidence of this.
Self-Dealing Concern. At his deposition, Aldrich denied having any financial interest in Halcyon Creek Productions. AMA's RFP No. 14 requested all documents reflecting any financial interest, ownership stake, membership interest, or investment held by Aldrich in Halcyon Creek. Aldrich responded that he holds no such interest. If this representation is truthful, the self-dealing theory — that Aldrich transmitted materials to Halcyon Creek for his own personal financial benefit — is weakened. However, the absence of a direct financial interest does not eliminate the breach of fiduciary duty claim. Even if Aldrich had no ownership stake in Halcyon Creek, his unauthorized disclosure of proprietary materials to a competitor, without authorization and without disclosure to AMA, constitutes a breach of the duty of loyalty. The duty of loyalty is not limited to prohibiting self-dealing; it encompasses a broader obligation to act in the employer's interest and to refrain from conduct that is adverse to the employer, regardless of whether the officer personally profits from the misconduct.
Furthermore, the absence of a current financial interest does not preclude the possibility that Aldrich expected to receive a future benefit — such as a consulting arrangement, employment offer, or deferred equity stake — from Halcyon Creek. The timing and pattern of Aldrich's conduct are consistent with such an expectation, even if no formal agreement has been documented.
C. CUTSA Preemption Risk
As discussed in Section V.D above, this claim faces a meaningful risk of preemption under CUTSA if the Court finds that it is "based upon misappropriation of a trade secret." Because the primary evidentiary basis for the breach of fiduciary duty claim — the unauthorized transmission of proprietary materials to Halcyon Creek — is the same conduct that underlies the CUTSA claim, the preemption argument has force.
AMA's argument to preserve the claim rests on the contention that breach of fiduciary duty is broader than trade secret misappropriation and encompasses conduct that is independently wrongful. Specifically, AMA should argue that the fiduciary duty claim is based on:
• Aldrich's general disloyalty in failing to disclose the Halcyon Creek relationship and in conducting undisclosed business dealings with a competitor while serving as a senior AMA officer;
• Aldrich's failure to disclose a material conflict of interest (his relationship with Castellanos and the Halcyon Creek connection) to AMA's management;
• Aldrich's dissemination of the restructuring email to subordinates (the so-called "London suits" email of October 10, 2022), in which Aldrich forwarded an internal restructuring communication from AGMG leadership to members of his team with commentary that undermined AMA's management and the chain of command. This insubordination conduct is factually distinct from the trade secret claims and provides an independent basis for breach of fiduciary duty.
The insubordination conduct — the "London suits" email and Aldrich's subsequent actions from October 10 through October 14, 2022 — provides a separate factual predicate for the fiduciary duty claim that does not depend on the trade secret character of any information. If the Court finds that the fiduciary duty claim encompasses both trade-secret-based and non-trade-secret-based conduct, the claim may survive preemption as to the independent conduct, even if the trade-secret-based component is preempted.
D. Strength Assessment
Overall: Moderate (~55% likelihood of prevailing). The fiduciary relationship is clearly established, and the breach is supported by the documentary evidence and the circumstantial pattern of Aldrich's conduct. However, CUTSA preemption is a real risk that could eliminate this cause of action entirely, and damages are difficult to quantify on an independent basis — the economic harm from the breach of fiduciary duty largely overlaps with the harm from the trade secret misappropriation and the breach of contract.
The insubordination element strengthens the claim by providing an independent factual basis that is not subject to CUTSA preemption. However, the insubordination conduct may not independently support significant damages — the "London suits" email, while undermining the chain of command, did not directly result in quantifiable economic harm to AMA (although it contributed to the deterioration of Aldrich's employment relationship and was one of the grounds for the termination decision).
VII. Fourth Cause of Action — Conversion
A. Elements
Under California law, conversion is the wrongful exercise of dominion over the personal property of another. To establish a claim for conversion, AMA must prove: (1) AMA's ownership or right to possession of personal property; (2) Aldrich's wrongful act of dominion or disposition over the property inconsistent with AMA's rights; and (3) resulting damages. Welco Electronics, Inc. v. Mora (2014) 223 Cal.App.4th 202, 208; Lee v. Hanley (2015) 61 Cal.4th 1225, 1240.
B. Analysis
Property Interest. AMA owns the show format bibles, sizzle reels, and revenue model as works created within the scope of Aldrich's employment. The Employment Agreement contains a work-for-hire provision (Section 7) that vests ownership of all creative and business materials developed by Aldrich during the course of his employment in AMA. Additionally, under California Labor Code § 2860 and applicable copyright law principles, works created by an employee within the scope of employment are generally owned by the employer. AMA has a clear and undisputed ownership interest in the transmitted materials.
Wrongful Dominion. Aldrich's unauthorized copying of AMA's proprietary materials to his personal email account and personal Larkspur Technologies storage, his retention of those materials on personal devices and accounts beyond the scope of his employment duties, and his transmission of the materials to Halcyon Creek Productions LLC together constitute an exercise of dominion over AMA's property that is inconsistent with AMA's rights. Aldrich treated AMA's proprietary assets as his own — extracting them from AMA's secure systems, storing them on personal platforms, and distributing them to a third party without authorization. This conduct satisfies the "wrongful dominion" element.
Intangible Property Issue. The most significant legal challenge to the conversion claim is the uncertain application of conversion doctrine to intangible and digital property. California conversion law has traditionally applied to tangible personal property — physical objects that can be taken, used, and returned. The extension of conversion to intangible property, including digital files and intellectual property, is unsettled in California law and is the subject of conflicting authority.
Some courts have extended the conversion doctrine to intangible property where there is a "specific, identifiable" intangible right that is capable of being converted. The Ninth Circuit, applying California law, held in Kremen v. Cohen (9th Cir. 2003) 337 F.3d 1024 that conversion can apply to domain names — a form of intangible property — reasoning that the tort should not be limited to tangible chattels where the plaintiff has an identifiable property interest and the defendant has wrongfully exercised dominion over it. Other courts, however, have maintained the traditional limitation of conversion to tangible property or its close equivalent, declining to extend the doctrine to intellectual property claims that are more appropriately addressed through statutory frameworks such as copyright law or trade secret law.
AMA's claim is strengthened by the fact that the converted materials exist as discrete digital files — format bible documents, video sizzle reels, and financial spreadsheets — that are analogous to physical documents in their specificity and identifiability. These are not abstract ideas or amorphous intellectual property concepts; they are specific, identifiable files that were stored on AMA's systems, copied by Aldrich, and transmitted to third parties. The Court may find this specificity sufficient to bring the claim within the scope of the conversion doctrine. Nevertheless, the legal uncertainty on this point introduces meaningful risk to the conversion claim, and AMA should be prepared for the possibility that the Court may dismiss the claim on legal grounds, regardless of the strength of the factual evidence.
C. CUTSA Preemption Risk
The conversion claim faces the highest preemption risk of any of AMA's four cross-claims. The conversion claim is based on precisely the same acts — Aldrich's taking and transmitting of proprietary materials — that form the core of the CUTSA claim. If the Court finds that the conversion claim is "based upon misappropriation of a trade secret," it will be preempted by CUTSA and dismissed.
AMA's argument for preserving the claim rests on the distinction between property rights and trade secret rights. AMA should argue that the conversion claim protects AMA's property rights in the digital files as property — that is, AMA's right to exclusive possession and control of its files — regardless of whether the information contained in the files qualifies as a trade secret. Even if the information in the files were publicly known and therefore did not constitute a trade secret, AMA would still have a property interest in the f

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