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CALDERWOOD & HARKNESS LLP 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200
CONFIDENTIAL — FOR MEDIATION ONLY SUBJECT TO CAL. EVID. CODE § 1119
MEDIATION BRIEF — DEFENDANT AURELIUS MEDIA AMERICAS INC.
Fuentes v. Aurelius Media Americas Inc. LASC Case No. 22STCV38214 (Consolidated)
Mediation Session #1 — August 25, 2023
Before the Honorable Patricia Okoro (Ret.) Westpark Dispute Resolution Inc. 1925 Century Park East, Suite 1700 Los Angeles, California 90067
Prepared by: Calderwood & Harkness LLP Renata Vasquez, Responsible Partner Devon Archer, Lead Associate
Date Submitted: August 18, 2023 C&H Matter No.: 1017-00004
NOTICE: This brief is submitted for the exclusive use of the mediator, the Honorable Patricia Okoro (Ret.), and is confidential and inadmissible pursuant to California Evidence Code §§ 1115–1128. No portion of this brief may be disclosed to any party, counsel, or other person without the express written consent of Aurelius Media Americas Inc. ("AMA"). This brief contains privileged attorney work product and confidential settlement communications. All statements herein are made solely for purposes of settlement negotiations and may not be used for any other purpose.
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I. INTRODUCTION
Defendant Aurelius Media Americas Inc. ("AMA") respectfully submits this confidential mediation brief in advance of the August 25, 2023 mediation session before the Honorable Patricia Okoro (Ret.). This brief is intended to provide the mediator with a candid assessment of the case, including AMA's view of the merits, the damages exposure, the risks facing both sides, and AMA's settlement proposal. AMA submits this brief with the understanding that all of its contents are protected by the mediation confidentiality provisions of California Evidence Code Sections 1115 through 1128 and will not be disclosed to opposing counsel or the named plaintiffs absent AMA's express written authorization.
AMA approaches this mediation in good faith and with a genuine interest in achieving a fair and reasonable resolution of this class action and the related PAGA claims. AMA recognizes that mediation offers both sides an opportunity to avoid the costs, uncertainties, and disruptions of continued litigation and trial. At the same time, AMA is mindful that any resolution must account for the legitimate interests of the putative class members, the practical realities of entertainment-industry production environments, and the litigation risks faced by both sides. AMA does not approach this mediation from a position of intransigence, but neither does it believe that the inflated damages figures advanced by Plaintiffs' expert bear any reasonable relationship to the actual harm, if any, suffered by class members.
By way of brief background, AMA is a wholly owned United States subsidiary of Aurelius Global Media Group PLC ("AGMG"), a United Kingdom-headquartered public limited company listed on the London Stock Exchange (LSE: AGMG). AMA is a Delaware corporation qualified to do business in California, with its principal office located at 8500 Sunset Boulevard, Suite 1400, West Hollywood, California 90069. AMA is a leading producer of unscripted television content, digital media, and live entertainment programming, employing approximately 3,200 employees in the United States, of whom approximately 2,400 are based in California. AMA operates seven California production facilities and manages fourteen distinct show units, all of which are subject to Industrial Welfare Commission ("IWC") Wage Order No. 12, governing the Motion Picture Industry. AMA's United States revenue for fiscal year 2022 was approximately $687.4 million.
In this litigation, AMA is represented by Calderwood & Harkness LLP. The defense team consists of Renata Vasquez (responsible partner), Bernard Crawford (billing partner), Devon Archer (lead associate), and Nadia Petrov (associate). Plaintiffs are represented by Castellano Byrne & Salas LLP, with Marco Castellano and Diane Salas serving as lead class counsel, and by Veltrano Employment Law Group PC, with Sandra Higuera serving as PAGA co-counsel.
As set forth in detail below, AMA believes that a settlement in the range of $10 million to $14 million represents a fair and reasonable resolution of this matter, accounting for the partial certification order, AMA's acknowledged vulnerabilities, and the significant defenses that AMA would assert at trial. AMA is prepared to negotiate in good faith within this framework and looks forward to a productive mediation session.
II. PROCEDURAL HISTORY AND CASE STATUS
A. Filing and Consolidation
This litigation commenced on November 1, 2022, when named plaintiff Marisol Fuentes filed a putative class action complaint against AMA in the Los Angeles Superior Court, Case No. 22STCV38214. The complaint alleged violations of the California Labor Code related to meal and rest periods, off-the-clock work, overtime compensation, minimum wage, wage statement accuracy, and waiting time penalties, as well as claims under the California Unfair Competition Law ("UCL"), Business and Professions Code Section 17200 et seq., and the Private Attorneys General Act of 2004 ("PAGA"), Labor Code Section 2698 et seq.
On November 18, 2022, a related action was filed by Derek Halloran, Case No. 22STCV39501, asserting substantially similar class and PAGA claims arising from the same core allegations regarding AMA's timekeeping practices and meal period policies.
On February 3, 2023, the Court entered an order consolidating the two actions under Case No. 22STCV38214 as the lead case, and the consolidated action was assigned to the Honorable Raymond Escobedo in Department 34. Following consolidation, Yesenia Padilla was added as a third named plaintiff.
On February 17, 2023, AMA filed its Answer to the consolidated complaint, asserting thirteen affirmative defenses, including, among others, compliance with applicable wage and hour laws, good faith, failure to exhaust administrative remedies (as to certain claims), statute of limitations, and lack of commonality and typicality (as to class certification).
With respect to PAGA standing, Plaintiffs' counsel served a PAGA notice on the California Labor and Workforce Development Agency ("LWDA") on September 15, 2022. The statutory sixty-five-day response period expired on November 14, 2022, and the LWDA took no action, thereby permitting Plaintiffs to proceed with their PAGA claims in court.
B. Discovery.  The parties have conducted extensive discovery over the past nine months, including both written and deposition discovery. The scope and volume of discovery reflects the breadth of the claims asserted and the complexity of AMA's multi-facility, multi-show-unit operations.
With respect to document production, AMA produced 147,832 documents comprising approximately 1.2 million pages. This production included, among other categories, AMA's timekeeping records, payroll data, employee handbooks and policy manuals, human resources files for the named plaintiffs and a statistically significant sample of putative class members, internal communications regarding meal period policies and the TimeTrack Pro system, training materials, facility-specific operational protocols, and NovaPay Solutions system configuration records. Plaintiffs produced 3,412 documents in response to AMA's discovery requests, consisting primarily of the named plaintiffs' personal records, communications, and employment-related documents.
The parties entered into an ESI Protocol Stipulation on January 13, 2023, which governs the collection, processing, review, and production of electronically stored information. AMA retained Marlowe Asset Management Litigation Technology Inc. as its e-discovery vendor for purposes of this matter.
AMA served a third-party subpoena on NovaPay Solutions Inc. ("NovaPay"), the developer and provider of the TimeTrack Pro timekeeping system used at AMA's California facilities. NovaPay produced detailed system configuration records, attestation feature activation logs, and punch-level timekeeping data for the class period, which has been critical to both the class certification briefing and the damages analysis.
The parties have taken a total of eighteen depositions to date: eleven by Plaintiffs and seven by AMA. All three named plaintiffs — Marisol Fuentes, Derek Halloran, and Yesenia Padilla — were deposed by AMA's counsel. Plaintiffs deposed AMA's persons most knowledgeable ("PMK") witnesses, including Lorraine Okafor (Senior Vice President of Human Resources), Celine Arroyo (Director of Production Operations), and Karen Fong (Payroll Manager). Plaintiffs also deposed Jonathan Mercer, AMA's President, who testified regarding AMA's corporate structure, operational priorities, and knowledge of the timekeeping system configuration.
Key custodians in this matter include Lorraine Okafor (SVP HR), Gregory Tanaka (VP Legal & Compliance), Marcus Yee (NovaPay representative), Jonathan Mercer (President), Celine Arroyo (Director of Production Operations), Dwayne Prescott (VP of Unscripted Programming), and Karen Fong (Payroll Manager). Their testimony and documents form the core evidentiary record.
C. Expert Reports
The parties have exchanged expert reports addressing both liability and damages.
On April 28, 2023, Plaintiffs served the expert report of Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC. Dr. Rennick opined that the aggregate damages exposure in this matter is approximately $38.6 million, inclusive of approximately $12.2 million in PAGA penalties. AMA's critique of Dr. Rennick's methodology, which AMA submits is fundamentally flawed in its core assumptions, is set forth in Section V below.
On May 19, 2023, AMA served the expert report of Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC. Dr. Makhija conducted a detailed commonality and typicality analysis examining the variation in work conditions, scheduling practices, and meal period compliance across AMA's seven California facilities and fourteen show units. His analysis demonstrated statistically significant variability in meal period attestation rates and work patterns across these subgroups, supporting AMA's position that class-wide generalization is inappropriate.
On June 9, 2023, AMA served the rebuttal expert report of Dr. Catherine Lindstrom of Hargrove Analytics Inc. Dr. Lindstrom conducted an independent damages analysis and concluded that reasonable aggregate damages in this matter are approximately $5.8 million, exclusive of PAGA penalties, which she opined are subject to significant judicial reduction. Dr. Lindstrom's methodology and conclusions are discussed in detail in Section V below.
D. Class Certification
On April 14, 2023, Plaintiffs filed a motion for class certification, seeking certification of a broad class encompassing all seven causes of action asserted in the consolidated complaint.
On June 16, 2023, AMA filed its opposition to class certification, supported by the declarations of Lorraine Okafor, Celine Arroyo, Karen Fong, Dr. Rajesh Makhija, and Dr. Catherine Lindstrom. AMA's opposition argued, among other things, that the significant variation across facilities and show units defeated the commonality, typicality, and predominance requirements for most of the asserted claims, and that individualized inquiries into whether each employee actually received a compliant meal or rest period precluded class-wide adjudication.
Plaintiffs filed their reply brief on July 7, 2023. The Court heard oral argument on the motion on July 28, 2023, before the Honorable Raymond Escobedo.
On August 11, 2023, the Court issued its written order on class certification, granting the motion in part and denying it in part. The Court's rulings were as follows:
Claims Certified for Class Treatment:
•  First Meal Period Auto-Deduction Claim (Cal. Lab. Code §§ 226.7, 512): The Court found that the common question of whether AMA's use of the TimeTrack Pro auto-deduction system, without adequate employee notice of the attestation override mechanism, constituted a systemic failure to "provide" compliant first meal periods predominated over individual issues.
•  Derivative Wage Statement Claim (Cal. Lab. Code § 226): The Court found that the wage statement claim was derivative of the meal period claim and therefore appropriate for class treatment.
•  UCL Claim (Cal. Bus. & Prof. Code § 17200): The Court found that the UCL claim, predicated on the same underlying meal period violations, was appropriate for class treatment.
•  PAGA Claim: The Court permitted the PAGA claim to proceed as a representative action, consistent with the statutory framework.
Claims Denied Class Certification:
•  Second Meal Period Claim: Denied for lack of commonality, as the evidence showed that second meal period practices varied significantly across show units and were highly dependent on individual shift lengths and production schedules.
•  Rest Period Claim: Denied for lack of predominance, as the Court found that rest period practices were subject to individualized supervisor discretion and varied across facilities and show units.
•  Overtime/Off-the-Clock Claim: Denied for lack of commonality and predominance, as the evidence showed that off-the-clock work, to the extent it occurred, was highly individualized and not the product of a uniform policy.
•  Minimum Wage Claim: Denied as derivative of the overtime/off-the-clock claim.
•  Waiting Time Penalties Claim (Cal. Lab. Code § 203): Denied as requiring individualized determination of "willfulness."
The certified class is defined as follows:
"All current and former non-exempt, hourly employees of Aurelius Media Americas Inc. who worked in the State of California at any time from November 1, 2018 through the date of preliminary approval of any class settlement, who were subject to AMA's automatic meal period deduction in the NovaPay Solutions TimeTrack Pro timekeeping system."
The estimated size of the certified class is approximately 1,850 individuals.
III. THE PARTIES
A. Named Plaintiffs
Marisol Fuentes. Ms. Fuentes is a former Production Coordinator in AMA's Unscripted Programming Division. She was employed by AMA from March 14, 2019 through August 5, 2022, at which time she voluntarily resigned. Her hourly rate at the time of separation was $28.50 per hour. Ms. Fuentes worked primarily at AMA's Studio City facility (designated internally as Facility 2). During her deposition, Ms. Fuentes testified that she "rarely" received full thirty-minute meal periods on shooting days, asserting that production schedules made it impractical to take uninterrupted breaks. Significantly, Ms. Fuentes also testified that she was unaware of the Missed Meal Attestation feature in the TimeTrack Pro system. This testimony is consistent with the undisputed fact that the attestation feature was not activated at the Studio City facility during Ms. Fuentes's entire period of employment.
Derek Halloran. Mr. Halloran is a former Post-Production Assistant in AMA's Digital Content Division. He was employed by AMA from June 1, 2020 through November 30, 2022, when his position was eliminated as part of a division restructuring. His hourly rate at the time of separation was $24.75 per hour. Mr. Halloran worked at AMA's Hollywood facility (designated internally as Facility 5). During his deposition, Mr. Halloran testified that he "usually" received meal breaks, except during what he described as "crunch periods" associated with post-production deadlines. Notably, Mr. Halloran further testified that he was aware of the attestation feature — the feature was activated at Facility 5 — but that he never used it because he "didn't think it mattered." Mr. Halloran's testimony is, in AMA's view, the weakest of the three named plaintiffs' testimony, as it undercuts the class narrative of systemic meal period deprivation.
Yesenia Padilla. Ms. Padilla is a former Segment Coordinator in AMA's Live Events Division. She was employed by AMA from January 10, 2018 through May 17, 2022, when she resigned to accept a position at a competitor. Her hourly rate at the time of separation was $31.00 per hour. Ms. Padilla worked at AMA's Burbank facility (designated internally as Facility 4). During her deposition, Ms. Padilla testified that meal breaks were "practically impossible" during live productions, describing a production environment in which stopping work for a full thirty-minute break would disrupt live broadcast schedules and was actively discouraged by supervisors. Ms. Padilla's testimony is the most compelling of the three named plaintiffs, particularly given that the attestation feature was not activated at the Burbank facility during her employment. AMA acknowledges that Ms. Padilla is the strongest plaintiff witness and that her testimony, if credited by a jury, presents a meaningful liability risk.
B. Putative Class
The certified class consists of approximately 1,850 current and former non-exempt, hourly employees across AMA's seven California production facilities and fourteen show units. The class period runs from November 1, 2018 through the date of preliminary approval of any class settlement. All class members are or were employed in positions governed by IWC Wage Order No. 12 (Motion Picture Industry). The class encompasses a range of job titles and production roles, including production coordinators, production assistants, post-production assistants, segment coordinators, field coordinators, edit assistants, camera operators (non-union), audio technicians (non-union), and various other non-exempt positions.
C. Defendant.  Aurelius Media Americas Inc. is a Delaware corporation qualified to do business in California, with its principal place of business at 8500 Sunset Boulevard, Suite 1400, West Hollywood, California 90069. AMA is a wholly owned subsidiary of Aurelius Global Media Group PLC. AMA's current executive leadership includes Jonathan Mercer (President), Lorraine Okafor (Senior Vice President of Human Resources), and Gregory Tanaka (Vice President of Legal & Compliance). AMA is represented in this matter by Calderwood & Harkness LLP, as described above.
IV. AMA'S POSITION ON THE MERITS
A. AMA's Meal Period Policies Comply with California Law
AMA maintains a comprehensive written Meal and Rest Break Policy, which was most recently revised in January 2019. The policy facially complies with the requirements of California Labor Code Sections 226.7 and 512 and IWC Wage Order No. 12. Specifically, the policy provides that: (i) all non-exempt employees are entitled to an uninterrupted meal period of not less than thirty minutes for any work period exceeding five hours; (ii) all non-exempt employees who work in excess of ten hours in a single work period are entitled to a second uninterrupted meal period of not less than thirty minutes; and (iii) employees who are unable to take a timely and uninterrupted meal period for any reason are required to notify their supervisor immediately so that appropriate corrective action can be taken and meal period premium pay can be authorized.
Under the California Supreme Court's landmark decision in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, 1040, an employer's obligation with respect to meal periods is to provide the employee with the opportunity to take an uninterrupted meal break — not to ensure that the employee actually takes one. As the Court stated, an employer "satisfies this obligation if it relieves its employees of all duty, relinquishes control over their activities and permits them a reasonable opportunity to take an uninterrupted 30-minute break, and does not impede or discourage them from doing so." Id. at 1040. AMA's written policy, on its face, satisfies this standard. The policy authorizes and encourages employees to take their full meal periods, and it establishes a mechanism for reporting any instance in which a meal period is missed or shortened.
The question in this case is not whether AMA had a compliant policy — it did — but whether AMA's implementation of that policy, through the TimeTrack Pro auto-deduction system, effectively impeded employees' ability to exercise their meal period rights. AMA maintains that the auto-deduction, properly understood, does not constitute a failure to "provide" a meal period within the meaning of Brinker.
B. The TimeTrack Pro Auto-Deduction Accurately Reflects Compliant Meal Periods
AMA uses the NovaPay Solutions "TimeTrack Pro" electronic timekeeping system at all of its California facilities. The TimeTrack Pro system has been in use since January 1, 2019, when AMA transitioned from its prior timekeeping platform. The system is configured to automatically deduct thirty minutes for a meal period for all shifts of six hours or more.
AMA's position is that the auto-deduction is a recording mechanism — it records the expected time taken for a compliant meal period, consistent with AMA's policy and applicable law. The auto-deduction does not, in and of itself, deny any employee a meal period. Rather, it reflects the reality that, for the overwhelming majority of shifts, employees do take a compliant thirty-minute meal break, and the auto-deduction accurately captures that time.
It is important to emphasize that the auto-deduction is not unique to AMA; it is a common timekeeping practice across the entertainment industry and many other industries, and courts have not held that the use of an auto-deduction is per se unlawful. The critical question is whether the employer provides an adequate mechanism for employees to report exceptions — i.e., instances in which the auto-deduction does not accurately reflect the time actually worked. AMA's position is that it did provide such a mechanism through the Missed Meal Attestation feature, as discussed in the following subsection.
C. The Missed Meal Attestation Feature Provides a Safeguard
The TimeTrack Pro system includes a "Missed Meal Attestation" feature that allows employees to report, at the end of each shift, that they missed or received a shortened meal period. When an employee activates the Missed Meal Attestation, the system overrides the automatic thirty-minute deduction and triggers payment of a one-hour meal period premium at the employee's regular rate of pay, as required by California Labor Code Section 226.7.
The Missed Meal Attestation feature was activated at four of AMA's seven California production facilities: the West Hollywood headquarters facility (Facility 1), the Sherman Oaks facility (Facility 3), the Hollywood facility (Facility 5), and the Santa Monica facility (Facility 6). At these four facilities, the feature was operational from the date of the TimeTrack Pro system launch on January 1, 2019.
However, AMA candidly acknowledges that the Missed Meal Attestation feature was not activated at three of its seven California facilities: the Studio City facility (Facility 2), the Burbank facility (Facility 4), and the El Segundo facility (Facility 7). This omission occurred during the second wave of the TimeTrack Pro system rollout in March 2019 and was the result of an administrative oversight by AMA's IT and operations team during the configuration process. The oversight was not discovered until late 2022, during the course of this litigation, and was corrected in December 2022 when the attestation feature was activated at all remaining facilities.
At the four facilities where the Missed Meal Attestation feature was active throughout the class period, utilization rates ranged from approximately 1.8% to 4.1% of eligible shifts. AMA submits that these low utilization rates are consistent with the conclusion that the vast majority of employees at those facilities actually received compliant thirty-minute meal breaks and had no need to report a missed meal. Plaintiffs contend that the low utilization rates reflect lack of awareness of the feature rather than compliance. AMA addresses this competing inference below.
D. Acknowledged Vulnerabilities
In the spirit of candor and to promote productive mediation discussions, AMA acknowledges certain vulnerabilities in its position. AMA's counsel has advised AMA that full transparency regarding these issues will facilitate the mediator's evaluation of the case and contribute to a more efficient and productive mediation session.
1.  Attestation Feature Gap at Three Facilities. The Missed Meal Attestation feature was not activated at Facilities 2, 4, and 7 for a period of nearly four years, from approximately March 2019 through December 2022. This gap in AMA's compliance framework is the single most significant vulnerability in AMA's defense. At these three facilities, employees who missed a meal period had no mechanism within the TimeTrack Pro system to report the missed meal and trigger premium pay. While AMA's written policy directed employees to notify their supervisors, the absence of the system-level attestation feature at these facilities undermines AMA's ability to argue that employees had a meaningful and accessible means to correct the auto-deduction. Approximately 780 of the estimated 1,850 class members worked at the three affected facilities.
2.  Low Utilization Rates and Employee Awareness. At the four facilities where the Missed Meal Attestation feature was active, utilization rates ranged from only 1.8% to 4.1% of eligible shifts. While AMA contends that these rates reflect actual compliance — i.e., that most employees took their breaks — Plaintiffs will argue that the low rates reflect a lack of employee awareness of the feature. AMA acknowledges that the evidence on this point is ambiguous. The low utilization rates are consistent with either interpretation, and a jury could credit Plaintiffs' argument, particularly in light of the fact that AMA did not conduct targeted training on the attestation feature (as discussed below).
3.  Auto-Deduction Threshold Configuration Error. The auto-deduction in the TimeTrack Pro system was configured to apply to shifts of six hours or more, rather than the five-hour threshold required by IWC Wage Order No. 12 and California Labor Code Section 512. This configuration error meant that employees working shifts of between five and six hours did not have a meal period auto-deduction applied — and, more critically, did not receive the attestation prompt that would have alerted them to their meal period rights for those shifts. This error was also corrected in December 2022.
4.  Production Environment Challenges. The realities of entertainment-industry production create inherent challenges to meal period compliance. AMA's employees frequently work long shooting days of twelve to sixteen hours, often in remote field locations or during live events where interrupting work for a full thirty-minute break is logistically difficult. While AMA's policy provides for meal periods regardless of production conditions, the cultural expectation in the industry — that production does not stop for breaks — creates a narrative that a jury may find compelling, particularly with respect to field and live production crews.
5.  Lack of Formal Attestation Feature Training. AMA did not conduct formal, targeted training on the Missed Meal Attestation feature for its non-exempt employees. The employee handbook contains a general reference to the obligation to notify a supervisor if a meal period is missed, but it does not specifically describe the TimeTrack Pro attestation feature, explain how to use it, or advise employees of their right to premium pay for missed meal periods. AMA acknowledges that this lack of training weakens its argument that low attestation utilization rates reflect actual compliance rather than lack of awareness.
E. The Certification Order Does Not Determine the Merits
AMA respectfully submits that the Court's August 11, 2023 partial certification order, while an important procedural milestone, does not constitute a finding on the merits of Plaintiffs' claims. Class certification addresses whether common questions of law or fact predominate over individual issues — not whether the defendant is liable. See Brinker, 53 Cal.4th at 1021–22; Sav-On Drug Stores, Inc. v. Superior Court (2004) 34 Cal.4th 319, 326.
Moreover, the Court's certification ruling is notable as much for what it denied as for what it granted. The Court denied certification on five of the seven causes of action asserted by Plaintiffs — the rest period claim, the off-the-clock and overtime claim, the minimum wage claim, the second meal period claim, and the waiting time penalties claim — finding that each of those claims was too individualized for class-wide adjudication. The denial of certification on these five claims significantly limits the scope of the class action and substantially reduces Plaintiffs' damages exposure.
The certified class is limited to the first meal period auto-deduction claim, together with the derivative wage statement and UCL claims. Even on this narrowed set of claims, AMA has strong defenses at trial, including: the Brinker "provide" standard and the adequacy of AMA's written policy; the availability of the Missed Meal Attestation feature at four of seven facilities; the evidence from the attestation data that the vast majority of employees at those facilities actually received compliant meal breaks; and the individualized nature of the inquiry into whether each class member's meal period was in fact missed, shortened, or interrupted.
V. DAMAGES ANALYSIS
A. Plaintiffs' Expert — Dr. Howard Rennick (Pinnacle Economic Consulting Group LLC)
Dr. Rennick submitted his expert report on April 28, 2023. He opined that the aggregate damages exposure in this matter is approximately $38.6 million, inclusive of approximately $12.2 million in PAGA penalties. His methodology, which AMA submits is fundamentally flawed, is summarized as follows:
•  First Meal Period Premiums ($16.3 million): Dr. Rennick treats every shift in which the TimeTrack Pro auto-deduction was applied as a "missed" meal period, on the theory that the auto-deduction itself constitutes evidence that no meal period was affirmatively recorded and therefore no compliant meal period can be presumed. He then subtracts only those shifts in which a Missed Meal Attestation was recorded — a small number, given that the feature was inactive at three facilities. This methodology yields approximately 593,600 net "missed" meals across the class period. Multiplying by an average hourly rate of approximately $27.50, Dr. Rennick calculates first meal period premium damages of approximately $16.3 million.
•  Rest Period Premiums ($8.4 million): Although the rest period claim was ultimately denied class certification, Dr. Rennick's report (submitted prior to the certification ruling) included a calculation of rest period premium damages. He assumed a fifty percent violation rate based on the declarations of the three named plaintiffs and calculated rest period premiums of approximately $8.4 million. This figure should be excluded from any settlement valuation, as the rest period claim was not certified for class treatment.
•  Off-the-Clock Overtime ($12.2 million, adjusted): Dr. Rennick estimated that class members performed an average of 37.5 minutes of uncompensated work per shift, based on self-reported estimates from the named plaintiff declarations. He calculated overtime damages at 1.5 times the regular rate, arriving at a figure of approximately $12.2 million. This claim was also denied class certification.
•  Wage Statement Penalties ($1.5 million): Dr. Rennick calculated aggregate statutory penalties under Labor Code Section 226 of approximately $1.5 million, applying the maximum statutory penalty per pay period across the class.
•  PAGA Penalties ($12.2 million): Dr. Rennick calculated PAGA penalties at the maximum statutory rate of $100 per employee per pay period for initial violations and $200 per employee per pay period for subsequent violations, aggregating to approximately $12.2 million.
B. Defense Expert — Dr. Catherine Lindstrom (Hargrove Analytics Inc.)
Dr. Lindstrom submitted her rebuttal expert report on June 9, 2023. She opined that reasonable aggregate damages in this matter are approximately $5.8 million, exclusive of PAGA penalties, which she concluded are subject to significant reduction within the Court's discretion.
Dr. Lindstrom's methodology differs from Dr. Rennick's in several critical respects:
•  Dr. Lindstrom uses actual Missed Meal Attestation data from the four facilities where the feature was active as a baseline for estimating the true meal period violation rate. She then applies a conservative extrapolation methodology to estimate violation rates at the three facilities where the feature was not active, accounting for differences in production type, show unit, and workforce demographics.
•  Dr. Lindstrom's analysis accounts for the undisputed fact that the vast majority of employees at facilities with active attestation features did not report missed meals. She treats only those shifts for which affirmative evidence of a missed meal exists — or for which a reasonable extrapolation from the available data suggests a likely violation — as compensable violations.
•  Based on this methodology, Dr. Lindstrom estimates that the actual first meal period violation rate across all facilities and show units is approximately 6% to 9% of eligible shifts. This stands in stark contrast to Dr. Rennick's implicit assumption of an approximately 97% violation rate (the percentage of shifts without a recorded attestation).
•  Dr. Lindstrom does not calculate rest period or off-the-clock damages, as those claims were denied class certification and are not at issue in the certified class action.
•  With respect to PAGA penalties, Dr. Lindstrom opined that the Court has broad discretion under Labor Code Section 2699(e)(2) to reduce PAGA penalties where the employer has taken reasonable steps to comply and where the full statutory penalty would be unjust or confiscatory. She estimated that a reasonable PAGA penalty in this matter, after judicial reduction, would be in the range of $500,000 to $1,000,000.
C. Critique of Dr. Rennick's Model
AMA submits that Dr. Rennick's damages model suffers from several critical flaws that render it unreliable as a basis for settlement valuation.
Critical Flaw — Meal Period Assumption. The foundational premise of Dr. Rennick's model is that every shift in which the auto-deduction was applied constitutes a "missed" meal period. This assumption is facially implausible. The auto-deduction is a timekeeping recording mechanism designed to reflect the time taken for a compliant meal break — not a device intended to deprive employees of meal periods. At the four facilities where the Missed Meal Attestation feature was active, between 96% and 98% of employees did not report a missed meal on any given shift. Dr. Rennick's model effectively assumes that all of those employees were denied meal periods but simply failed to report it — a conclusion that is not supported by any evidence in the record and that defies common sense.
Rest Period and Off-the-Clock Claims. Dr. Rennick's calculations include approximately $8.4 million in rest period premium damages and approximately $12.2 million in off-the-clock overtime damages. These claims were not certified for class treatment. They should be excluded entirely from any settlement valuation. Together, these non-certified claims account for more than $20 million of Dr. Rennick's $38.6 million total — more than half of his aggregate figure.
No Facility-Level Analysis. Dr. Rennick treats all seven facilities and fourteen show units as a homogeneous group, applying a single violation rate and a single average hourly rate across the entire class. This approach ignores the statistically significant variation documented by Dr. Makhija's analysis, which showed that missed-meal attestation rates ranged from as low as 2.1% for the studio-based show "Kitchen Clash" to as high as 18.7% for the field-based show "Summit Challenge." The failure to account for this variation inflates the aggregate damages figure and produces a result that does not reflect the actual experiences of the class members.
PAGA Penalties Inflated. Dr. Rennick's $12.2 million PAGA penalty calculation assumes application of the maximum statutory penalties without any reduction. This is contrary to established precedent. Courts in California routinely exercise their discretion under Labor Code Section 2699(e)(2) to reduce PAGA penalties by 75% to 90% where, as here, the employer has taken steps to comply and the full statutory penalty would be disproportionate to the harm. See, e.g., Carrington v. Starbucks Corp. (2018) 30 Cal.App.5th 504, 527–28 (affirming trial court's reduction of PAGA penalties); Fenmore Group (N.D. Cal. 2015) 2015 WL 3609482 (reducing PAGA penalties by 80%). A reasonable PAGA penalty in this case is in the range of $500,000 to $1,000,000.
D. AMA's Internal Damages Assessment
Based on the analysis set forth above, AMA's internal assessment of the reasonable damages exposure in this matter is as follows:
AMA recognizes that its internal assessment represents a defense-favorable view of the damages, and that a mediator or court may view the reasonable exposure as somewhat higher. The settlement range proposed in Section VIII below reflects this recognition.
VI. RISK ANALYSIS
A. AMA's Litigation Risks at Trial
AMA has carefully evaluated its litigation risks and acknowledges the following areas of vulnerability:
The Court's partial certification order, while limited in scope, represents a significant procedural achievement for Plaintiffs. The certification of the first meal period auto-deduction claim was a "strong signal" that the Court views the auto-deduction practice as susceptible to class-wide proof. The Court specifically rejected AMA's argument that the class should be divided into subclasses based on whether the Missed Meal Attestation feature was active at a given facility. In its ruling, the Court found that the low utilization rates at the attestation-active facilities rendered the distinction between the two groups of facilities "functionally irrelevant" to the question of whether AMA's auto-deduction system, as implemented, constituted a systemic failure to provide compliant meal periods.
A jury could reasonably find that the use of the auto-deduction without adequate employee notice of the Missed Meal Attestation mechanism — and particularly the failure to activate the attestation feature at three facilities — constituted a systemic failure to "provide" compliant meal periods within the meaning of Brinker. Even at the facilities where the feature was active, the absence of formal training on the feature and its omission from the employee handbook could support an inference that employees were unaware of their ability to override the auto-deduction and claim premium pay.
The production-day culture in the entertainment industry — where stopping work for a full thirty-minute break is widely understood to disrupt filming schedules and may be discouraged by supervisors and production managers — creates a powerful narrative for Plaintiffs. A jury drawn from the Los Angeles community is likely to be familiar with the demanding work conditions in the entertainment industry and may be sympathetic to the argument that production pressures effectively prevented employees from exercising their meal period rights, regardless of what AMA's written policies stated.
The three facilities at which the Missed Meal Attestation feature was not activated — Facilities 2, 4, and 7 — present a particularly strong case for Plaintiffs. The approximately 780 class members who worked at those facilities had no system-level mechanism to report missed meals and trigger premium pay. AMA's defense with respect to these employees rests primarily on the written policy's directive to notify a supervisor, which a jury may find inadequate as a practical matter.
Finally, AMA has estimated that taking this case to trial would cost an additional $1.2 million to $1.8 million in legal fees and expenses, exclusive of management time and disruption to AMA's business operations. The depositions of AMA's senior executives — including President Jonathan Mercer — and the presentation of detailed timekeeping data to a jury would also entail significant reputational and operational costs.
B. Plaintiffs' Litigation Risks at Trial
Notwithstanding the foregoing, Plaintiffs face their own substantial litigation risks.
AMA's written Meal and Rest Break Policy facially complies with California law. The dispute in this case is fundamentally about the implementation of that policy, not about the policy itself. Under Brinker, an employer that maintains a compliant written policy and does not actively impede or discourage employees from taking breaks has satisfied its legal obligation. AMA will argue at trial that it met this standard and that the auto-deduction was merely a timekeeping convenience that did not prevent any employee from taking a meal break.
The Missed Meal Attestation data from the four facilities where the feature was active provides affirmative evidence that the vast majority of employees at those facilities received compliant meal breaks. At those facilities, between 96% and 98% of employees did not report a missed meal on any given shift. Dr. Rennick's model, which improperly assumes near-universal violations, is fundamentally inconsistent with this data. A jury presented with the attestation data may conclude that the auto-deduction accurately reflected the time employees actually took for meal breaks.
Dr. Makhija's analysis further undermines Plaintiffs' class-wide narrative. His work demonstrates statistically significant variation across AMA's fourteen show units, with missed-meal attestation rates ranging from 2.1% for studio-based productions (such as "Kitchen Clash") to 18.7% for field-based productions (such as "Summit Challenge"). Even within the certified class, this variation suggests that the meal period experience was not uniform and that some show units and work environments presented far fewer compliance concerns than others.
The Court's denial of certification on five of seven causes of action is itself a significant indicator of the weaknesses in Plaintiffs' case. The denial reflects the Court's finding that the rest period, off-the-clock, overtime, minimum wage, and waiting time penalty claims could not be adjudicated on a class-wide basis. While the certification denial does not foreclose individual claims on these theories, it materially limits the value of the class action and signals that Plaintiffs' evidence of systemic, company-wide violations is insufficient on most of their theories.
Named plaintiff Derek Halloran's deposition testimony — that he "usually" received meal breaks — directly undercuts the class narrative of pervasive and systemic meal period deprivation. If Halloran, a named class representative, admits that he generally received compliant breaks, a jury may question whether the experience of the broader class was as dire as Plaintiffs contend.
PAGA penalties, which constitute $12.2 million of Dr. Rennick's $38.6 million figure, are subject to substantial judicial discretion and reduction. Courts have repeatedly held that PAGA penalties may be reduced where the employer acted in good faith and where the full statutory penalty would be disproportionate to the harm. AMA will argue that its post-litigation corrective actions — activating the attestation feature at all facilities and correcting the threshold configuration error, both in December 2022 — demonstrate good faith and support a substantial reduction in PAGA penalties.
Finally, Plaintiffs face the risk of an adverse trial verdict or a judgment significantly below their expert's valuation. A defense verdict is a realistic possibility, and even a plaintiff verdict is unlikely to approach Dr. Rennick's $38.6 million figure given the narrowing of the case through the certification process.
C. Risk-Adjusted Valuation
Based on the foregoing analysis, AMA has conducted an internal risk-adjusted valuation of this case.
AMA's assessed "trial value" — defined as the expected value of the case accounting for the probability of an adverse outcome at trial and the likely damages range in the event of a plaintiff verdict — is approximately $7.2 million. This figure reflects AMA's assessment that the probability of an adverse verdict on the certified first meal period claim is approximately 55–65%, with a probable damages range (inclusive of PAGA penalties and wage statement penalties) of approximately $10–13 million in the event of a plaintiff verdict.
AMA estimates that Plaintiffs' assessed trial value — based on their expert's figures, adjusted for the certification denial on five claims and the risk of an adverse verdict — is in the range of approximately $20–25 million.
The midpoint of the competing risk-adjusted valuations is approximately $13–16 million. AMA submits that this midpoint range provides a reasonable framework for settlement negotiations, though AMA believes that a settlement at or below the midpoint is justified given the strength of AMA's merits defenses and the significant reduction in scope effected by the partial certification order.
AMA proposes a settlement range that reflects both parties' legitimate risks and accounts for the cost and uncertainty of continued litigation: $10–16 million, with AMA's opening proposal at the lower end of this range, as discussed in Section VIII below.
VII. INSURANCE COVERAGE
AMA maintains an Employment Practices Liability ("EPL") insurance policy with Pemberton Mutual Assurance Co., Policy No. PMA-EPL-2022-00837. The policy provides coverage for employment-related claims, including wage and hour class actions, subject to the terms and conditions of the policy.
The key policy terms are as follows:
•  Self-Insured Retention (SIR): $5,000,000
•  Aggregate Limit: $15,000,000
•  Policy Period: January 1, 2022 through January 1, 2023 (with discovery period extension)
AMA tendered the Fuentes class action to Pemberton on November 8, 2022. Pemberton acknowledged coverage by letter dated December 22, 2022, subject to a reservation of rights. The reservation of rights letter identifies two areas of potential coverage exclusion: (i) PAGA penalties, which Pemberton contends may constitute "fines or penalties" excluded under the policy; and (ii) claims alleging "willful" violations, which may fall outside the scope of covered "wrongful employment practices." Notwithstanding these reservations, Pemberton has participated in the defense of this matter and has indicated a willingness to contribute to a class settlement.
As of August 2023, AMA has incurred approximately $2.8 million in defense costs. Under the policy terms, defense costs erode the SIR. AMA's SIR has therefore been substantially depleted, with approximately $2.2 million remaining before Pemberton's indemnity obligation is triggered.
Based on discussions with Pemberton's claims team and coverage counsel, AMA expects that Pemberton's maximum authorized contribution to a class settlement would be approximately $9.25 million, representing the policy's share of a settlement in excess of the substantially exhausted SIR, net of the carrier's allocation for its reservation of rights on PAGA penalties and willful violation claims. The precise amount of Pemberton's contribution will depend on the structure and allocation of any settlement, and AMA's counsel will work with the mediator to structure a settlement in a manner that maximizes the allocation to covered wage-and-hour claims and minimizes the allocation to PAGA penalties, thereby facilitating full carrier participation.
AMA also maintains Directors' and Officers' ("D&O") liability coverage through Redcliffe Specialty Insurance Ltd., Policy No. RSI-DO-2022-04419, with a $10 million primary layer and a $25 million excess layer provided by Ashford Re Ltd. The D&O coverage is not expected to be responsive to the class action claims, as the class action does not assert claims against individual directors or officers, and the underlying claims are employment-related wage and hour violations rather than management liability claims within the scope of the D&O tower.
AMA's insurance broker is Kestrel Risk Advisors Ltd. (Samuel Okonkwo, Managing Director), which has been coordinating communications between AMA, Calderwood & Harkness, and Pemberton regarding coverage and settlement authority.
VIII. SETTLEMENT PROPOSAL
A. Proposed Settlement Range
AMA proposes a Gross Settlement Amount ("GSA") in the range of $10,000,000 to $14,000,000 as a fair and reasonable resolution of all class and PAGA claims in this matter.
AMA submits that this range is well-supported by the risk analysis and damages assessment set forth above. In particular:
•  The proposed range of $10–14 million represents approximately 26% to 36% of Plaintiffs' claimed total exposure of $38.6 million (as calculated by Dr. Rennick). However, when the non-certified claims are excluded from Dr. Rennick's model (as they should be, given the Court's denial of certification on five of seven causes of action), the proposed range represents a significantly higher percentage of the realistic exposure.
•  The proposed range represents approximately 172% to 241% of the defense expert's $5.8 million valuation. AMA's willingness to settle at a level significantly above Dr. Lindstrom's valuation reflects AMA's recognition of the litigation risks described in Section VI and its genuine desire to achieve a resolution that is fair to the class.
•  The proposed range reflects: (i) the partial certification order, which limits the certified claims to the first meal period auto-deduction, derivative wage statement, and UCL claims; (ii) AMA's strong merits defenses under Brinker and the attestation data; (iii) AMA's acknowledged vulnerabilities regarding the three facilities without the attestation feature, the auto-deduction threshold error, and the lack of formal training; and (iv) the significant litigation costs and management disruption that both parties would incur if this matter proceeds to trial.
B. Proposed Settlement Structure
AMA proposes the following framework for settlement:
Gross Settlement Amount. A non-reversionary GSA of $10–14 million, to be funded as described in subsection C below. The non-reversionary structure means that any uncashed settlement checks will be distributed to a cy pres recipient or redistributed to class members, rather than reverting to AMA — a feature that courts typically require and that enhances the likelihood of preliminary and final approval.
PAGA Payment. A PAGA allocation of approximately $500,000 to $750,000 from the GSA, allocated as follows: 75% to the LWDA (approximately $375,000 to $562,500) and 25% to aggrieved employees (approximately $125,000 to $187,500), consistent with the statutory allocation under Labor Code Section 2699(i). AMA submits that this PAGA allocation is reasonable in light of the Court's broad discretion to reduce PAGA penalties and the significant corrective actions AMA has already taken.
Release. A broad release of all class and PAGA claims, including both certified and non-certified claims — rest period, off-the-clock, overtime, waiting time, and minimum wage — in exchange for the settlement consideration. AMA views a comprehensive release as essential to achieving finality and avoiding the prospect of further litigation on the non-certified claims. AMA recognizes that Plaintiffs may seek to negotiate the scope of the release, and AMA is open to discussion on this point, but AMA's strong preference is for a release that provides complete finality on all employment claims arising from the timekeeping practices at issue.
Distribution. Pro rata distribution to all class members who do not opt out, based on an allocation formula to be negotiated between the parties. AMA suggests weighting the distribution based on (i) the number of weeks worked during the class period and (ii) the number of overtime hours worked, as these factors are reasonable proxies for the relative exposure of individual class members to the alleged meal period violations.
Attorneys' Fees. Plaintiffs' counsel's attorneys' fees are subject to Court approval. AMA does not object to a reasonable fee percentage of up to one-third (33.33%) of the GSA, which is the standard benchmark in California class action settlements. AMA reserves the right to object to fees in excess of this benchmark.
Service Awards. Reasonable service awards for the three named plaintiffs — Marisol Fuentes, Derek Halloran, and Yesenia Padilla — in recognition of their participation in the litigation, including their depositions and involvement in discovery. The amount of the service awards is subject to Court approval, and AMA defers to the mediator's guidance on an appropriate range.
Claims Administrator. AMA proposes Meridian Settlement Services LLC as the claims administrator. Meridian is an experienced class settlement administration firm with extensive experience in California wage and hour class actions. The principal contact at Meridian is Angela Truong, and the firm's offices are located at 1600 E. Fourth Street, Suite 240, Santa Ana, California 92701. AMA has obtained a preliminary quote from Meridian for administration of the settlement, and the estimated administration costs would be paid from the GSA.
No Admission of Liability. The settlement would contain no admission of liability or wrongdoing by AMA. The settlement would recite that AMA denies all allegations and enters into the settlement solely to avoid the expense, burden, and uncertainty of continued litigation.
No Injunctive Relief Required. AMA has already implemented the corrective actions that would be the subject of any injunctive relief: the Missed Meal Attestation feature was activated at all seven facilities in December 2022, and the auto-deduction threshold was corrected from six hours to five hours at the same time. Because these corrections have already been made, AMA submits that injunctive relief is unnecessary and should not be a component of any settlement.
C. Funding.  AMA anticipates that a settlement at the proposed GSA level would be funded as follows:
•  Pemberton's Authorized Contribution: Up to approximately $9.25 million, representing Pemberton's share of the settlement above the substantially exhausted SIR and subject to the allocation framework described in Section VII above.
•  AMA's Self-Funded Share: At a GSA of $14 million (the top of AMA's proposed range), AMA's self-funded share would be approximately $4.75 million. AMA is prepared to fund its share promptly upon receipt of a final approval order from the Court.
AMA is confident that Pemberton's participation can be secured at these levels, provided that the settlement allocation is structured to maximize the portion allocated to covered wage-and-hour claims and minimize the PAGA allocation. AMA's counsel will work with the mediator to ensure that the settlement structure is acceptable to Pemberton.
IX. RESOLUTION OF RELATED MATTERS
AMA brings to the mediator's attention a separate individual action that is currently pending in the Los Angeles Superior Court: Aldrich v. Aurelius Media Americas Inc., Case No. 22STCV41087, assigned to the Honorable Catherine Villanueva in Department 52.
Gavin Aldrich is a former Senior Vice President of Original Content and Executive Producer at AMA who was terminated on October 14, 2022, for cause, following an internal investigation into violations of AMA's confidentiality and conflict-of-interest policies. Mr. Aldrich has filed claims against AMA for wrongful termination in violation of public policy, breach of his employment agreement, declaratory relief regarding the enforceability of a post-employment restrictive covenant contained in his employment agreement, and expense reimbursement under Labor Code Section 2802. AMA has filed cross-claims against Mr. Aldrich for breach of the confidentiality provisions of his employment agreement, misappropriation of trade secrets under the California Uniform Trade Secrets Act ("CUTSA"), breach of fiduciary duty, and conversion of AMA property.
Mr. Aldrich is represented by Cameron Whitfield of Whitfield & Associates, located at 9465 Wilshire Boulevard, Suite 320, Beverly Hills, California 90212.
While the Aldrich matter involves different claims and different factual issues than the Fuentes class action, AMA would welcome the opportunity to resolve the Aldrich matter in conjunction with the class action at a future mediation session before Judge Okoro. A combined resolution would allow AMA to achieve comprehensive finality on all pending employment litigation and would eliminate the ongoing costs and management distraction associated with the Aldrich matter. If Plaintiffs' counsel and Mr. Aldrich's counsel are amenable, AMA proposes that the second mediation session — should one be needed — be structured to address both the Fuentes class action and the Aldrich individual action.
AMA raises this topic at the outset to allow the mediator sufficient time to evaluate whether a combined session would be productive and to coordinate with all counsel accordingly.
X. CONCLUSION
Aurelius Media Americas Inc. approaches this mediation in good faith and with full authority to negotiate a fair resolution of the Fuentes class action and the related PAGA claims. AMA recognizes the legitimate interests of the class members and takes seriously the vulnerabilities in its position, including the failure to activate the Missed Meal Attestation feature at three facilities, the auto-deduction threshold configuration error, and the lack of formal training on the attestation feature.
At the same time, AMA maintains that its written meal period policies comply with California law, that the vast majority of class members actually received compliant meal breaks, and that Plaintiffs' damages model is fundamentally flawed in its assumption that every auto-deducted meal period was a missed meal period. The Court's denial of certification on five of seven causes of action reflects the significant weaknesses in Plaintiffs' case and materially limits the realistic damages exposure.
AMA believes that its proposed settlement range of $10 million to $14 million fairly accounts for the litigation risks faced by both sides, the partial certification order, the acknowledged vulnerabilities, and the strong defenses that AMA would present at trial. This range represents a significant premium over the defense expert's valuation and provides meaningful compensation to class members while reflecting the substantial likelihood that AMA would prevail on many of the claims at issue.
AMA is represented at the mediation by counsel with full authority to negotiate: Renata Vasquez, responsible partner, and Devon Archer, lead associate, of Calderwood & Harkness LLP. AMA's Vice President of Legal & Compliance, Gregory Tanaka, and Senior Vice President of Human Resources, Lorraine Okafor, will be available by telephone throughout the mediation session to provide input and authorization as needed.
AMA respectfully requests that the mediator treat this brief and all of its contents as strictly confidential and not disclose any portion of this brief, or AMA's settlement positions, to Plaintiffs or Plaintiffs' counsel without AMA's express prior consent. AMA looks forward to a productive mediation session on August 25, 2023.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
Attorneys for D