1017-00004 · Entities. Aurelius Global Media Group · Pleadings/Aldrich

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CALDERWOOD & HARKNESS LLP

CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT

MEMORANDUM

TO: Renata Vasquez

FROM: Devon Archer

DATE: January 8, 2023

RE: Cross-Complaint Strategy and Factual Basis — AMA v. Aldrich, Case No. 22STCV41087

I. Purpose

This memorandum outlines the factual and strategic basis for Aurelius Media Americas, Inc.'s ("AMA") proposed Cross-Complaint against Gavin Aldrich ("Aldrich") in connection with Case No. 22STCV41087, currently assigned to the Honorable Catherine Villanueva, Department 52, Superior Court of the State of California, County of Los Angeles — Central District.

By way of background, Aldrich filed his complaint on December 9, 2022, asserting the following causes of action against AMA: (1) wrongful termination in violation of public policy; (2) breach of contract; (3) breach of the implied covenant of good faith and fair dealing; (4) declaratory relief regarding the enforceability of the restrictive covenant provisions set forth in Section 9 of his Employment Agreement; and (5) violation of California Labor Code Section 2802 (seeking reimbursement of allegedly unreimbursed business expenses totaling $28,400). Aldrich is represented by Cameron Whitfield of Whitfield & Associates, 9465 Wilshire Boulevard, Suite 320, Beverly Hills, California 90212.

AMA intends to file its Answer and Cross-Complaint on or about January 20, 2023. This memorandum sets forth the factual foundation supporting each proposed cross-claim, identifies the evidence currently in AMA's possession as well as additional evidence needed to support each cause of action, and addresses the strategic considerations and potential vulnerabilities that should inform our approach. The memorandum also situates the cross-complaint within the broader context of AMA's litigation posture, including coordination with the separate Fuentes class action matter pending before the same court.

II. Factual Foundation

A. Email Transmissions — Personal Account

AMA's IT security team, operating under the direction of Gregory Tanaka (Vice President, Legal & Compliance), initiated a routine data loss prevention ("DLP") audit in August 2022. This audit was part of AMA's standard, calendar-driven information security program, which calls for periodic reviews of email traffic and data exfiltration patterns across the organization. The audit was not triggered by any specific suspicion regarding Aldrich or any other individual employee.

During the course of the DLP audit, the system flagged anomalous email forwarding activity originating from Aldrich's AMA corporate email account (galdrich@aureliusmedia.com). Specifically, the automated monitoring tools detected a pattern of repeated forwarding of emails containing attachments and internal business communications to an external, non-corporate email address. Based on these flags, AMA's internal IT security team — notably, not an outside forensic vendor — conducted a more detailed forensic review of Aldrich's email activity.

The forensic review yielded the following findings regarding transmissions to Aldrich's personal email account:

Personal Email Forwarding: Between July 12, 2021 and September 29, 2022 — a period spanning approximately fifteen months — Aldrich forwarded a total of 340 emails from his AMA corporate account to his personal Northgate Software account at galdrich.private@Northgate Software.com. The content of these 340 emails, categorized by type, breaks down as follows:

• 47 emails containing show concept documents, including one-sheets, treatments, and format bibles for various unscripted programming concepts in active development at AMA;

• 22 emails containing audience analytics reports, including viewership data, demographic breakdowns, and competitive performance analyses compiled by AMA's research department;

• 18 emails containing revenue projections and profit-and-loss ("P&L") summaries for individual show units across AMA's unscripted programming portfolio;

• 14 emails containing talent deal terms and compensation information, including above-the-line talent agreements, host compensation packages, and producer fee structures;

• The remaining approximately 239 emails consisted of production schedules, internal strategy memoranda, divisional planning documents, and miscellaneous business correspondence.

The sheer volume and breadth of these transmissions is striking. Over a fifteen-month period, Aldrich systematically forwarded to his personal email account materials spanning virtually every category of proprietary business information within his purview as Senior Vice President and Executive Producer of AMA's Unscripted Programming Division. The pattern is not consistent with isolated, inadvertent forwarding; rather, it reflects a sustained and deliberate course of conduct.

B. Email Transmissions — Halcyon Creek Productions LLC (Third-Party Competitor)

The forensic review also identified a separate and more troubling pattern: seven emails sent directly from Aldrich's AMA corporate email account to info@halcyoncreekprod.com — the general contact address for Halcyon Creek Productions LLC ("Halcyon Creek"), a direct competitor of AMA in the unscripted and reality television space. These seven transmissions occurred during a discrete window between March 3, 2022 and August 18, 2022, a period of approximately five and a half months.

The contents of the seven emails sent to Halcyon Creek are as follows:

• Three unscripted show format bibles, covering concepts titled "Apex Endurance," "The Remix," and "Untamed West." Each of these format bibles is a comprehensive document that sets forth the show's creative premise, episode structure, casting framework, production methodology, competitive landscape analysis, and potential distribution strategy. These documents represent the culmination of substantial creative and financial investment by AMA's development team.

• Two pilot sizzle reels, for the concepts "Apex Endurance" and "The Remix." These sizzle reels were not transmitted as email attachments, but rather as Larkspur Technologies links generated from Aldrich's personal Larkspur Technologies account, suggesting a degree of operational sophistication and awareness that the transmissions would not be captured by standard email attachment monitoring. The use of a personal cloud storage account to facilitate the transfer of AMA's proprietary audiovisual content is particularly concerning.

• A detailed revenue model for "Summit Challenge," AMA's top-performing unscripted franchise, which generates approximately $42 million in annual revenue. This revenue model is among the most competitively sensitive documents in AMA's entire portfolio. It contains detailed, line-item financial projections including per-episode production costs, network license fees, international distribution revenues broken down by territory, advertising cost-per-thousand ("CPM") rates, and talent compensation structures across multiple seasons. Disclosure of this model to a competitor could provide that competitor with granular insight into AMA's cost structure, pricing strategy, and profit margins — information that would confer a significant competitive advantage in negotiations with networks, advertisers, and talent.

The transmission of the Summit Challenge revenue model is particularly alarming given the franchise's importance to AMA's business. At approximately $42 million in annual revenue, Summit Challenge is a cornerstone of AMA's unscripted programming portfolio, and the financial model underlying that franchise represents years of accumulated proprietary data and strategic analysis.

C. Halcyon Creek Productions LLC — Background

Public records obtained from the California Secretary of State indicate that Halcyon Creek Productions LLC was formed in the State of California on February 14, 2022. The entity's agent for service of process and sole organizer is listed as Nina Castellanos. We note for clarity that Ms. Castellanos bears no relation to Marco Castellano of Castellano Byrne & Salas LLP, plaintiffs' counsel in the Fuentes class action; the similarity in surnames is coincidental.

Nina Castellanos is a former AMA development executive who held the title of Director of Development during her tenure at AMA from 2018 through January 2022. Ms. Castellanos departed AMA voluntarily at the end of January 2022; her separation was not the result of a termination or any disciplinary action. Aldrich and Castellanos share a long-standing professional relationship that predates their respective tenures at AMA: both were previously employed at the same production company prior to joining AMA, and their professional networks have overlapped for a number of years.

Halcyon Creek operates as a competitor to AMA in the unscripted and reality television production space. Based on publicly available information, Halcyon Creek appears to be a relatively early-stage venture that has announced several development projects but has not yet achieved significant commercial traction.

At this time, AMA does not possess direct evidence that Halcyon Creek has produced, sold, or otherwise commercially exploited any programming based on the materials transmitted by Aldrich. However, the investigation into Halcyon Creek's activities is ongoing, and additional evidence may emerge during discovery.

The timeline is noteworthy: Halcyon Creek's formation on February 14, 2022 occurred approximately one month after Castellanos's departure from AMA in January 2022. Aldrich's email transmissions to Halcyon Creek commenced approximately one month after the entity's formation, with the first identified email dated March 3, 2022. This chronology suggests a coordinated sequence of events — Castellanos departed AMA, formed a competing entity, and within weeks began receiving proprietary AMA materials from Aldrich, who remained employed at AMA in a senior leadership role.

D. Insubordination — Contextual Background (Not Basis for Cross-Complaint)

It is important to note that the insubordination incident described below is not the basis for any proposed cross-claim. Rather, it provides essential context for understanding the circumstances of Aldrich's termination and for addressing the pretext argument that Aldrich will inevitably raise in opposition to AMA's "for cause" defense.

On October 10, 2022, Aldrich sent an email to Jonathan Mercer (President, AMA) in which he flatly refused to implement a restructuring directive applicable to the Unscripted Programming Division. The restructuring had been approved by AMA's parent company, Aurelius Global Media Group ("AGMG"), and communicated to divisional leadership as a mandatory corporate initiative. In his email, Aldrich characterized the restructuring as "creatively bankrupt and commercially idiotic" and stated that he would "not participate in dismantling [his] division." The tone and substance of this communication represented a direct and unambiguous refusal to carry out a lawful directive from AMA's president.

On October 11, 2022, Mercer responded by issuing a formal written warning to Aldrich, documenting the refusal and advising Aldrich that further insubordination could result in disciplinary action up to and including termination. Later that same day — October 11, 2022 — Aldrich forwarded the entire email chain (including Mercer's warning) to six of his subordinates within the Unscripted Programming Division, including three show-runners and two division heads. Aldrich appended the following comment to the forwarded chain: "For your awareness — the London suits are gutting our operation." This dissemination of confidential management communications to subordinate employees, accompanied by a characterization designed to undermine confidence in corporate leadership, compounded the original act of insubordination and introduced an element of organizational disruption.

On October 14, 2022, AMA terminated Aldrich's employment "for cause" under Section 7.2(b) of his Employment Agreement (dated September 5, 2017, as amended by the First Amendment dated August 1, 2020). The termination letter cited both the findings of the DLP audit and the insubordination as grounds for the "for cause" determination.

E. Timeline of DLP Audit and Termination Decision

The chronological relationship between the DLP audit, the insubordination incident, and the termination decision is critical and requires careful attention. The key dates are as follows:

• August 2022: DLP audit initiated as a routine, calendar-driven audit pursuant to AMA's standard information security protocols.

• September 6, 2022: Preliminary DLP findings — including the identification of the anomalous email forwarding pattern from Aldrich's account — reported to Gregory Tanaka, VP of Legal & Compliance. This date is significant because it predates the October 10 insubordination by more than one month.

• October 3, 2022: The more detailed forensic review of Aldrich's email activity was completed by AMA's IT security team. This review confirmed the scope and nature of the transmissions described above and identified the Halcyon Creek transmissions specifically.

• October 10, 2022: Aldrich sent his refusal email to Mercer (the insubordination).

• October 11, 2022: Mercer issued the formal written warning. Later the same day, Aldrich forwarded the email chain to six subordinates with his "London suits" comment.

• October 13, 2022: Mercer conferred with Tanaka regarding Aldrich's overall conduct. During this conversation, Tanaka informed Mercer of the DLP audit findings for the first time. Mercer had not previously been briefed on the DLP results.

• October 14, 2022: AMA terminated Aldrich's employment, effective immediately.

Critical observation: AMA did not confront Aldrich about the DLP findings, initiate any disciplinary process based on those findings, or take any other action in response to the email transmissions until after the insubordination incident of October 10–14, 2022. This is true despite the fact that preliminary DLP findings were available to Tanaka as early as September 6, 2022, and the completed forensic review was in hand by October 3, 2022. This gap — from September 6 through October 14 — creates a potential vulnerability in AMA's narrative that the termination was genuinely motivated by the confidentiality violations rather than by Aldrich's opposition to the restructuring. The pretext argument is addressed in detail in Section V below.

III. Proposed Cross-Claims

A. First Cause of Action — Breach of Employment Agreement (§§ 9.1, 9.2, 9.3, 9.4)

The first proposed cross-claim sounds in breach of contract, based on Aldrich's violations of the restrictive covenant and confidentiality provisions contained in Article 9 of his Employment Agreement dated September 5, 2017, as amended by the First Amendment dated August 1, 2020 (collectively, the "Agreement").

The primary operative basis for this claim is Section 9.4 (Confidentiality), which provides, in relevant part, that the employee shall not engage in the "disclosure, use, or transmission of Confidential Information to any person or entity other than in the furtherance of Employee's duties to the Company." The confidentiality obligation imposed by Section 9.4 expressly survives the termination of employment, regardless of the circumstances of termination.

The Agreement defines "Confidential Information" in Section 9.4 to include, without limitation, "proprietary content, show formats, audience data, revenue projections, talent agreements, and all information designated as confidential by the Company." This definition is broadly drafted and unambiguously encompasses the categories of information contained in the 340 emails forwarded to Aldrich's personal Northgate Software account and in the 7 emails transmitted to Halcyon Creek Productions LLC. Each of the specific categories identified in the forensic review — show concept documents, audience analytics reports, revenue projections and P&L summaries, talent deal terms, and the Summit Challenge revenue model — falls squarely within the contractual definition of Confidential Information.

The 340 emails transmitted to Aldrich's personal email account and the 7 emails transmitted to Halcyon Creek constitute clear, documented violations of Section 9.4. The transmissions were not made "in the furtherance of Employee's duties to the Company"; to the contrary, the transmissions to Halcyon Creek — a direct competitor — were antithetical to AMA's interests and to Aldrich's duties. The transmissions to Aldrich's personal email account served no legitimate business purpose and violated both the letter and spirit of the confidentiality obligation.

In addition to the Employment Agreement, AMA's Acceptable Use and Confidentiality Policy (last revised March 2021) expressly prohibits employees from transmitting Company proprietary information to personal email accounts, personal cloud storage services, or non-Company-approved third-party recipients. Aldrich signed an acknowledgment of this policy on April 12, 2021, confirming that he had received, read, and understood the policy and agreed to comply with its terms. The signed acknowledgment is in AMA's possession and will be attached as an exhibit to the Cross-Complaint.

The Cross-Complaint will also reference the remaining restrictive covenant provisions of Article 9: Section 9.1 (non-competition, 18-month post-termination period), Section 9.2 (employee non-solicitation, 24-month post-termination period), and Section 9.3 (business non-solicitation, 24-month post-termination period). However, these provisions are secondary to the Section 9.4 confidentiality claim for the purposes of the Cross-Complaint. In particular, Section 9.1 (non-compete) faces significant enforceability challenges under California Business and Professions Code Section 16600, which broadly prohibits contractual restraints on an individual's ability to engage in a lawful profession, trade, or business. While there is some authority suggesting that Section 16600 may not apply to certain narrow categories of non-compete provisions (e.g., in connection with the sale of a business), the weight of California authority disfavors enforcement of employee non-compete agreements, and we should not rely on Section 9.1 as a primary theory. Sections 9.2 and 9.3 (non-solicitation) are somewhat more defensible under California law, though they also face scrutiny, and their inclusion in the Cross-Complaint serves primarily to preserve AMA's rights and to enhance the overall narrative of Aldrich's contractual obligations.

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

The second proposed cross-claim asserts misappropriation of trade secrets under the California Uniform Trade Secrets Act ("CUTSA"), California Civil Code Section 3426 et seq.

The materials transmitted by Aldrich — specifically, the show format bibles for "Apex Endurance," "The Remix," and "Untamed West"; the pilot sizzle reels for "Apex Endurance" and "The Remix"; the Summit Challenge revenue model; the audience analytics reports; and the talent deal terms and compensation information — constitute "trade secrets" within the meaning of California Civil Code Section 3426.1(d). Under that section, a trade secret is information 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.

Both prongs are satisfied here:

(a) Independent Economic Value. The show format bibles represent the creative and commercial foundations of programming concepts in which AMA has invested substantial development resources. The development cost data for the three show concepts at issue is as follows: "Apex Endurance" (approximately $120,000), "The Remix" (approximately $85,000), and "Untamed West" (approximately $95,000) — representing a total development investment of approximately $300,000. These format bibles are not publicly available; they are shared only with potential network buyers and distribution partners under non-disclosure agreements, and they derive significant value from their non-public status. The Summit Challenge revenue model, as noted above, contains granular financial data — per-episode production costs, network license fees, international distribution revenues, advertising CPM rates, and talent compensation structures — that would provide a competitor with detailed insight into AMA's cost structure and profit margins. The audience analytics reports and talent deal terms are similarly non-public and competitively sensitive.

(b) Reasonable Efforts to Maintain Secrecy. AMA has implemented multiple layers of protection to safeguard the confidentiality of these materials, including: (i) the confidentiality provisions of the Employment Agreement (Section 9.4), which impose binding obligations on employees to protect Confidential Information; (ii) the Acceptable Use and Confidentiality Policy, which specifically prohibits external transmission of proprietary materials; (iii) AMA's internal content management system, which requires individual login credentials for access to development and financial documents; (iv) watermarking of confidential documents with the legend "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC."; and (v) a policy requiring prior written approval from the President or Vice President of Business Affairs before any external transmission of proprietary content. These measures, taken together, constitute reasonable efforts under the circumstances to maintain the secrecy of AMA's trade secrets.

Aldrich's transmission of these materials to his personal email account and to Halcyon Creek constitutes "misappropriation" under California Civil Code Section 3426.1(b)(2), which defines misappropriation to include the disclosure or use of a trade secret by a person who knew or had reason to know that the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. As SVP and Executive Producer, Aldrich was intimately aware of the confidential nature of the materials he transmitted, had signed the Acceptable Use Policy acknowledging his obligations, and was bound by the express confidentiality provisions of his Employment Agreement. His disclosure to Halcyon Creek — a direct competitor — was plainly unauthorized and constituted misappropriation within the meaning of CUTSA.

Under CUTSA, AMA is entitled to seek injunctive relief to prevent further misappropriation (Cal. Civ. Code § 3426.2), actual damages measured by the loss caused to AMA and/or the unjust enrichment caused by the misappropriation (Cal. Civ. Code § 3426.3(a)), and, if the misappropriation is shown to have been willful and malicious, exemplary damages in an amount not exceeding twice the award of actual damages (Cal. Civ. Code § 3426.3(c)). Given the deliberate and sustained nature of Aldrich's transmissions — particularly the transmissions to a competitor — there is a strong basis for seeking exemplary damages.

C. Third Cause of Action — Breach of Fiduciary Duty

The third proposed cross-claim asserts breach of fiduciary duty. As Senior Vice President and Executive Producer of AMA's Unscripted Programming Division, Aldrich occupied a senior officer position within AMA and, as such, owed fiduciary duties of loyalty and care to the company. These duties required Aldrich to act in the best interests of AMA, to refrain from self-dealing, and to avoid conflicts of interest that could compromise his obligations to AMA.

Aldrich's unauthorized disclosure of confidential and proprietary information to Halcyon Creek Productions — a direct competitor of AMA in the unscripted television space — constituted a clear breach of his fiduciary duty of loyalty. The transmissions were not made in furtherance of AMA's interests; rather, they served the interests of a competing entity and, by inference, Aldrich's own personal interests. The nature of the materials transmitted — including creative assets in active development and the revenue model for AMA's most profitable franchise — reflects a disregard for AMA's competitive position and a subordination of AMA's interests to those of Halcyon Creek and/or Aldrich personally.

The relationship between Aldrich and Nina Castellanos — the former AMA Director of Development who founded Halcyon Creek shortly after her departure from AMA — further supports this claim. Their long-standing professional relationship, dating to their prior employment at the same production company before either joined AMA, creates a reasonable inference that Aldrich was either positioning himself for post-AMA employment with Halcyon Creek or actively collaborating with Castellanos on competing programming projects while still employed by AMA. Either scenario constitutes a breach of fiduciary duty. In the former case, Aldrich was using AMA's proprietary assets to curry favor with a prospective future employer; in the latter, he was diverting business opportunities and creative assets away from AMA for the benefit of a competing enterprise in which he had a personal interest.

We acknowledge that the specific contours of this claim will depend on additional facts that may emerge during discovery, particularly with respect to the nature and extent of Aldrich's relationship with Castellanos and his involvement, if any, in Halcyon Creek's business activities. However, the existing evidence — the pattern of transmissions, the timing relative to Castellanos's departure and Halcyon Creek's formation, and the competitive sensitivity of the materials transmitted — provides a sufficient factual basis to plead this claim.

D. Fourth Cause of Action — Conversion

The fourth proposed cross-claim asserts conversion. AMA had ownership rights in the proprietary digital files transmitted by Aldrich, including the show format bibles for "Apex Endurance," "The Remix," and "Untamed West"; the pilot sizzle reels for "Apex Endurance" and "The Remix"; and the Summit Challenge revenue model. These materials are works of authorship and compilations of proprietary data created by AMA's employees in the course of their employment and are owned by AMA pursuant to both the work-made-for-hire doctrine and the assignment provisions of the Employment Agreement.

Aldrich's unauthorized appropriation and transmission of these files — both to his personal email and cloud storage accounts and to a third-party competitor — constitutes a wrongful exercise of dominion over AMA's property that is inconsistent with AMA's ownership rights. The conversion was intentional: Aldrich deliberately forwarded the files to external accounts without authorization, and his use of a personal Larkspur Technologies account to transmit the sizzle reels demonstrates awareness and intentionality in the exfiltration of AMA's property.

Damages for conversion may include the value of the converted property and consequential damages resulting from the conversion, including any competitive harm suffered by AMA as a result of the unauthorized dissemination of the materials. While the full measure of damages will depend on evidence developed during discovery — particularly regarding whether Halcyon Creek has commercially exploited any of the converted materials — the claim preserves AMA's right to recover for the loss of control over its proprietary assets.

IV. Evidentiary Needs

The following table summarizes the evidence required to support AMA's proposed Cross-Complaint, the source of each item, and its current status:

Additional Evidence to Pursue During discovery:

We will need to pursue the following categories of evidence through formal discovery:

• Aldrich's personal email communications with Halcyon Creek/Castellanos. The emails in AMA's possession show what Aldrich sent from his corporate account, but do not reveal the full scope of his communications with Halcyon Creek or Castellanos. These communications are likely maintained in Aldrich's personal Northgate Software account and/or in Halcyon Creek's email system. We will need to propound Requests for Production targeting these communications and should anticipate the need for a motion to compel if Aldrich resists on privacy or relevance grounds.

• Halcyon Creek's use of the transmitted materials. Determining whether Halcyon Creek has produced, developed, or sold any programming based on the materials transmitted by Aldrich is critical to quantifying AMA's damages and to establishing the competitive harm element of the trade secret and breach of fiduciary duty claims. This may require third-party subpoenas directed to Halcyon Creek, as well as subpoenas to networks and distributors with whom Halcyon Creek may have engaged.

• Aldrich's post-termination employment and activities. Evidence regarding Aldrich's employment and business activities following his October 14, 2022 termination is relevant to both the damages analysis and to compliance with the restrictive covenant provisions of the Employment Agreement (particularly Sections 9.2 and 9.3). We should propound interrogatories seeking information about Aldrich's current and post-termination employment, consulting arrangements, and any business relationships with Halcyon Creek or Castellanos.

V. Timeline Vulnerability — Pretext Argument

The most significant vulnerability in AMA's "for cause" narrative — and correspondingly, in the factual predicate underlying the Cross-Complaint — is the timeline of events between the DLP audit and the termination.

As detailed in Section II.E above, preliminary DLP findings identifying the anomalous email forwarding activity were available to Gregory Tanaka on September 6, 2022. A more detailed forensic review was completed on October 3, 2022. Yet AMA did not confront Aldrich about these findings, initiate any disciplinary process, or take any corrective action based on the DLP audit results until after the insubordination incident of October 10–14, 2022. Jonathan Mercer — who made the ultimate termination decision — did not review the DLP findings in detail until October 13, 2022, three days after the insubordination and ten days after the forensic review was completed. Aldrich was terminated the following day.

Aldrich will exploit this timeline aggressively. His anticipated arguments are as follows:

(a) The DLP audit was a "fishing expedition" initiated after AMA had already decided to terminate Aldrich for his opposition to the corporate restructuring. Aldrich will argue that the audit was not genuinely "routine" but was instead a pretext investigation designed to uncover any available basis for a "for cause" termination.

(b) AMA retroactively characterized what it knew were routine email practices — common among senior executives who regularly work from home and on personal devices — as "violations" of the Acceptable Use Policy in order to manufacture "for cause" grounds. The motivation for manufacturing "for cause" was financial: under the Employment Agreement, a termination "for cause" relieves AMA of the obligation to pay severance, which in Aldrich's case amounts to $970,000 (24 months' base salary at $485,000 per year).

(c) The first time Aldrich learned of the email forwarding issue was during the termination meeting on October 14, 2022. He was never given an opportunity to explain or remediate the conduct, which Aldrich will argue is inconsistent with AMA's purported concern about the confidentiality violations and more consistent with a pretextual post hoc rationalization.

Response and Mitigation:

To counter the pretext argument, we will need to develop a robust evidentiary record establishing the legitimate, independent basis for the DLP audit and the reasonable explanations for the timeline. Specifically, we need declarations from Gregory Tanaka and from the IT security team member who conducted the DLP audit (identity to be confirmed with Tanaka) establishing the following points:

1. The DLP audit was a routine, calendar-driven audit, consistent with AMA's standard information security protocols, and was not triggered by the dispute with Mercer, by any desire to terminate Aldrich, or by any instruction from management to investigate Aldrich specifically. Supporting documentation — such as AMA's IT security audit schedule, prior DLP audit reports for other divisions or employees, and internal communications initiating the August 2022 audit — should be assembled to corroborate this point.

2. The preliminary DLP findings were reported to Tanaka on September 6, 2022 — more than one month before the October 10 insubordination. This chronology demonstrates that the investigation predated the conflict between Aldrich and Mercer and was not initiated as a retaliatory measure.

3. The delay between September 6 and October 14 was attributable to the time needed to complete the forensic review (which was not finalized until October 3) and to consult with counsel regarding the appropriate response to the findings. AMA was being methodical and deliberate in its investigation, not retaliatory. The fact that AMA did not immediately act on preliminary findings reflects a responsible approach — particularly given the seriousness of the allegations and the seniority of the employee involved — rather than a lack of genuine concern.

4. The termination decision was made based on the cumulative evidence — both the DLP findings (which revealed a sustained pattern of unauthorized disclosure of confidential information to a personal account and a competitor) and the insubordination (which demonstrated a refusal to comply with lawful management directives and an effort to undermine corporate leadership). The termination was not based solely on either ground, but on their combination.

From a narrative standpoint, we should frame the insubordination incident as the event that prompted management to conduct a comprehensive review of Aldrich's overall conduct and performance. When Mercer consulted with Tanaka on October 13 — in the aftermath of Aldrich's refusal to implement the restructuring and his inflammatory communication to subordinates — it was natural and appropriate for Tanaka to inform Mercer of the DLP findings that had been developing over the preceding weeks. The insubordination did not create the DLP investigation, but it did create the context in which the DLP findings were elevated to the decision-maker. This framing acknowledges the reality of the timeline while countering the inference of pretext.

We should also emphasize that the substance of the DLP findings — 340 emails forwarded to a personal account and 7 emails containing highly sensitive proprietary materials transmitted to a direct competitor — would independently justify termination for cause regardless of the insubordination. The severity of the confidentiality violations speaks for itself.

VI. Strategic Considerations

A. Leverage. The Cross-Complaint is primarily a leverage tool for settlement negotiations. We should be candid about the fact that AMA's actual damages from Aldrich's email transmissions are, at present, difficult to quantify with precision. This is particularly true because there is no evidence — at this time — that Halcyon Creek Productions has produced, sold, or otherwise commercially exploited any programming based on the transmitted materials. Without evidence of actual competitive harm, AMA's damages theory rests on the development costs of the compromised show concepts (approximately $300,000), the potential for future harm, and the statutory framework for exemplary damages under CUTSA.

However, the Cross-Complaint serves several critical strategic purposes that extend well beyond the quantification of damages:

• Narrative reframing. The Cross-Complaint fundamentally shifts the narrative of this litigation. Without it, Aldrich controls the story: he is a successful, long-tenured executive who was wrongfully terminated in retaliation for standing up to corporate management. With the Cross-Complaint, the narrative becomes far more complicated for Aldrich. He is not merely a wrongfully terminated executive; he is an unfaithful senior officer who systematically extracted proprietary information from his employer and transmitted it to a competitor run by his former colleague. This reframing is powerful not only in settlement negotiations but also before the court and, if the case proceeds to trial, before a jury.

• Settlement leverage. The Cross-Complaint creates countervailing risk for Aldrich. He faces the possibility of an adverse judgment, potential exemplary damages under CUTSA (up to twice actual damages), and the reputational consequences of a public finding that he misappropriated trade secrets. This risk calculus should moderate his settlement demands and create pressure to resolve the case on terms favorable to AMA.

• Reinforcement of the "for cause" narrative. By pleading the confidentiality violations in a formal cross-complaint — with supporting exhibits — AMA establishes its "for cause" narrative in a way that goes beyond mere affirmative defenses in the Answer. The Cross-Complaint puts AMA's version of events before the court in a detailed, affirmative pleading, which carries greater weight and visibility than defensive allegations.

• Deterrence. The filing of the Cross-Complaint, particularly with the trade secret and fiduciary duty claims, signals to Aldrich and his counsel that AMA is prepared to litigate aggressively. This may deter Aldrich from pursuing overly aggressive litigation tactics, such as seeking broad discovery into AMA's corporate governance and management practices or filing motions designed to embarrass AMA publicly.

B. Potential Injunctive Relief (TRO / Preliminary Injunction)

We should also consider whether to seek a temporary restraining order ("TRO") or preliminary injunction against Aldrich and potentially against Halcyon Creek Productions LLC, prohibiting any further use, disclosure, or dissemination of AMA's trade secrets and confidential information.

The elements for obtaining a TRO or preliminary injunction under CUTSA are as follows:

• Likelihood of success on the merits. Strong. AMA possesses documentary evidence of the transmissions (email logs, DLP audit report, forensic review), Aldrich's signed acknowledgment of the Acceptable Use Policy, and the Employment Agreement's confidentiality provisions. The factual basis for the trade secret claim is well-documented.

• Irreparable harm absent injunction. The risk of irreparable competitive harm exists in the potential exploitation of AMA's show concepts, revenue models, and other proprietary materials by Halcyon Creek or other competitors. Trade secret misappropriation, by its nature, gives rise to irreparable harm because the competitive advantage derived from confidential information cannot be fully compensated through monetary damages.

• Balance of hardships favors AMA. The burden imposed on Aldrich by an injunction is modest: he would simply be required to refrain from using, disclosing, or disseminating materials that do not belong to him. AMA, by contrast, faces the potential loss of proprietary competitive advantages developed over years and at significant expense.

• Public interest. The protection of trade secrets is a recognized public interest under California law. An injunction furthers this interest by enforcing the statutory protections embodied in CUTSA.

Even if the TRO or preliminary injunction motion is not ultimately successful, the act of filing sends a strong signal to Aldrich's counsel, Cameron Whitfield of Whitfield & Associates, that AMA is prepared to litigate aggressively on the offensive. This signal carries independent strategic value in settlement negotiations.

There is, however, a practical consideration that warrants discussion before we proceed: filing a TRO motion will require AMA to make a strong evidentiary showing early in the case, including declarations and supporting exhibits that will be part of the public record. This accelerated disclosure may narrow AMA's strategic options by telegraphing its evidence to opposing counsel well in advance of discovery. It will also increase short-term litigation costs. I recommend discussing the advisability and timing of injunctive relief with Renata Vasquez and with the client contacts — Gregory Tanaka and Philippa Cartwright — before making a final determination.

C. Halcyon Creek as Non-Party

Halcyon Creek Productions LLC is not currently a party to this action. Whether and when to involve Halcyon Creek — whether through third-party discovery, joinder as a cross-defendant, or both — requires careful strategic assessment.

We may need to subpoena Halcyon Creek for documents showing what, if anything, it did with the materials transmitted by Aldrich. This inquiry is essential to AMA's damages theory under both the trade secret and breach of fiduciary duty claims. However, the results of such discovery are unpredictable and carry both upside and downside risk:

• upside scenario: If Halcyon Creek developed programming concepts, pitch materials, or business plans based on the stolen materials, the subpoena would significantly strengthen AMA's cross-claims. Evidence of actual exploitation would support actual damages quantification, bolster the case for exemplary damages under CUTSA, and dramatically enhance AMA's settlement leverage.

• Downside scenario: If Halcyon Creek has not exploited the materials — if, for example, the materials were received but never acted upon — the subpoena could reveal minimal competitive harm, which may undercut AMA's damages argument. That said, injunctive relief and CUTSA exemplary damages would still be available even absent evidence of actual exploitation, and the breach of contract and conversion claims do not require proof of competitive harm.

If evidence emerges — either from Aldrich's deposition or from third-party discovery — that Halcyon Creek knowingly received and used AMA's trade secrets, we should consider joining Halcyon Creek as a cross-defendant. Halcyon Creek's knowing receipt and use of misappropriated trade secrets would support a claim for misappropriation by receipt under CUTSA Section 3426.1(b)(1), which defines misappropriation to include 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.

As an alternative approach, we may elect to reserve third-party discovery of Halcyon Creek until after Aldrich's deposition. Aldrich's testimony regarding the purpose of his transmissions, the nature and extent of his relationship with Castellanos, and any communications regarding Halcyon Creek's use of the materials will be critical in determining the scope and timing of Halcyon Creek's involvement in the case. Deposing Aldrich first allows us to develop a factual foundation before engaging with Halcyon Creek and reduces the risk of premature or unfocused third-party discovery.

D. Coordination with Class Action

The Aldrich Cross-Complaint is legally and procedurally separate from the Fuentes class action (Case No. 22STCV38214, assigned to the Honorable Raymond Escobedo, Department 34), but both matters involve AMA as a defendant and are pending in the Los Angeles Superior Court. While the two cases involve different plaintiffs, different claims, and different factual predicates, there is a risk that positions taken or admissions made in one matter could be cited or used against AMA in the other.

Accordingly, we must ensure that the representations and positions taken in the Cross-Complaint are consistent with those in the class action, particularly with respect to the following topics:

• AMA's corporate culture and management practices;

• AMA's human resources policies and their enforcement;

• AMA's treatment of senior executives and the standards for "for cause" termination;

• AMA's information security practices and policies.

The Cross-Complaint should not contain any admissions — express or implied — that could be used against AMA in the class action. For example, we must avoid any language that could be construed as acknowledging management dysfunction, employee relations deficiencies, inconsistent policy enforcement, or systemic problems with AMA's workplace culture. All characterizations of AMA's policies and practices should be framed affirmatively and consistently with AMA's defenses in the Fuentes matter.

I recommend circulating the draft Cross-Complaint to the team handling the Fuentes class action for review before filing, to ensure alignment across both matters.

E. Settlement Implications

Based on the preliminary assessment set forth in Document 12, the estimated settlement range for the Aldrich matter is $1.5 million to $3.0 million. This range accounts for Aldrich's wrongful termination exposure, the contract claims, the unpaid expense reimbursement, and the litigation risk associated with the pretext timeline.

The Cross-Complaint is expected to enhance AMA's settlement leverage, potentially bringing Aldrich's expectations down from his initial demand of $4.15 million toward the lower end of the estimated range. The countervailing risk created by the trade secret and fiduciary duty claims — including the possibility of exemplary damages — fundamentally alters the settlement calculus for Aldrich and should moderate his posture in negotiations.

In any settlement of this matter, AMA should seek the following terms:

• Mutual general release of all claims and cross-claims arising out of or related to Aldrich's employment with AMA and the termination thereof;

• Modified restrictive covenant terms, specifically: voiding of Section 9.1 (non-compete), acknowledging its likely unenforceability under California Business and Professions Code Section 16600; retention of Section 9.4 (confidentiality) in perpetuity; and reduction of the non-solicitation periods under Sections 9.2 and 9.3 to a mutually agreed-upon duration;

• Return and deletion of all AMA proprietary materials in Aldrich's possession, custody, or control, including all copies on personal email accounts, cloud storage, personal devices, and any materials provided to Halcyon Creek or any other third party, with a certification of compliance;

• Mutual non-disparagement and neutral reference provisions;

• Confidentiality of settlement terms, with customary carve-outs for legal and tax advisors, immediate family, and as required by law.

VII. Recommended Next Steps

Based on the analysis set forth in this memorandum, I recommend the following next steps:

1. Finalize the Draft Answer and Cross-Complaint (Document 36) for client review by January 12, 2023. The draft should incorporate the four cross-claims outlined in Section III above, together with supporting factual allegations drawn from the evidence described in Section II.

2. Obtain client approval for the Answer and Cross-Complaint from Gregory Tanaka (VP, Legal & Compliance) and Philippa Cartwright (General Counsel, AGMG). Schedule a call or meeting to discuss the draft, the strategic considerations outlined in Section VI, and the pretext vulnerability addressed in Section V.

3. Prepare supporting declarations from the following individuals:

• Jonathan Mercer (President, AMA): regarding the restructuring directive, the insubordination incident, the October 13 conference with Tanaka, and the termination decision.

• Dwayne Prescott (VP, Unscripted Programming): regarding the proprietary value of the show format bibles, the development costs for "Apex Endurance," "The Remix," and "Untamed West," the competitive significance of the Summit Challenge revenue model, and the unauthorized nature of the transmissions to Halcyon Creek.

4. File the Answer and Cross-Complaint on or about January 20, 2023, consistent with AMA's responsive pleading deadline.

5. Assess timing for potential TRO/preliminary injunction motion. I recommend discussing the advisability, timing, and evidentiary requirements for injunctive relief at the next client strategy call, which should be scheduled promptly after client review of the draft pleading.

6. Identify and interview the IT security team member who conducted the DLP audit to prepare a declaration establishing the routine nature of the audit and the pre-insubordination timing of the preliminary findings. This declaration is critical to mitigating the pretext vulnerability.

7. Retain forensic IT evidence and document chain of custody for all email logs, DLP audit data, forensic review results, and laptop analysis. Ensure that all evidence is preserved in a manner that supports authentication at deposition and trial, including through testimony of the custodian of records.

8. Prepare a comprehensive discovery plan for the Aldrich matter, including:

• Requests for Production targeting Aldrich's communications with Halcyon Creek and Nina Castellanos, including communications from personal email accounts, messaging applications, and cloud storage platforms;

• Form and special interrogatories regarding Aldrich's post-termination employment, business relationships with Halcyon Creek, and the disposition of AMA proprietary materials;

• Aldrich's deposition, anticipated for late April or May 2023, with a focus on establishing the purpose and scope of his transmissions to Halcyon Creek, his relationship with Castellanos, and his knowledge of AMA's information security policies.

This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is intended solely for the use of Calderwood & Harkness LLP attorneys working on the AMA v. Aldrich matter and authorized representatives of Aurelius Media Americas, Inc. Do not copy, distribute, or disclose this memorandum or its contents without the prior written authorization of the undersigned.

CALDERWOOD & HARKNESS LLP

By: ________

Devon Archer Senior Associate Direct: (213) 555-8142

Email: darcher@calderwoodharkness.com

Evidence	Source	Status
DLP audit report and findings	AMA IT Security (Gregory Tanaka)	Obtained
Forensic review of Aldrich laptop	AMA IT Security	Obtained
Email logs (Aldrich → personal email, galdrich.private@Northgate Software.com)	AMA IT / Exchange Server	Obtained
Email logs (Aldrich → Halcyon Creek, info@halcyoncreekprod.com)	AMA IT / Exchange Server	Obtained
Halcyon Creek Productions LLC formation records	CA Secretary of State	Obtained (filed Feb. 14, 2022; agent: Nina Castellanos)
Show format bibles ("Apex Endurance," "The Remix," "Untamed West")	AMA Development Dept. (Dwayne Prescott, VP Unscripted Programming)	To be obtained
Revenue model for "Summit Challenge"	AMA Finance (Karen Fong, Payroll Manager / Malcolm Dunmore, CFO, AGMG)	To be obtained
Acceptable Use and Confidentiality Policy (March 2021 revision)	AMA HR (Lorraine Okafor, SVP Human Resources)	Obtained
Aldrich's signed acknowledgment of Policy (April 12, 2021)	AMA HR	Obtained
Mercer's written warning (October 11, 2022)	AMA HR / Jonathan Mercer	Obtained
Aldrich's email to subordinates ("London suits" comment, October 11, 2022)	AMA IT	Obtained
Aldrich's Employment Agreement (September 5, 2017) and First Amendment (August 1, 2020)	AMA Legal (Gregory Tanaka)	Obtained

CALDERWOOD & HARKNESS LLP
CONFIDENTIAL — ATTORNEY-CLIENT PRIVILEGED / ATTORNEY WORK PRODUCT
MEMORANDUM
TO: Renata Vasquez
FROM: Devon Archer
DATE: January 8, 2023
RE: Cross-Complaint Strategy and Factual Basis — AMA v. Aldrich, Case No. 22STCV41087
I. Purpose
This memorandum outlines the factual and strategic basis for Aurelius Media Americas, Inc.'s ("AMA") proposed Cross-Complaint against Gavin Aldrich ("Aldrich") in connection with Case No. 22STCV41087, currently assigned to the Honorable Catherine Villanueva, Department 52, Superior Court of the State of California, County of Los Angeles — Central District.
By way of background, Aldrich filed his complaint on December 9, 2022, asserting the following causes of action against AMA: (1) wrongful termination in violation of public policy; (2) breach of contract; (3) breach of the implied covenant of good faith and fair dealing; (4) declaratory relief regarding the enforceability of the restrictive covenant provisions set forth in Section 9 of his Employment Agreement; and (5) violation of California Labor Code Section 2802 (seeking reimbursement of allegedly unreimbursed business expenses totaling $28,400). Aldrich is represented by Cameron Whitfield of Whitfield & Associates, 9465 Wilshire Boulevard, Suite 320, Beverly Hills, California 90212.
AMA intends to file its Answer and Cross-Complaint on or about January 20, 2023. This memorandum sets forth the factual foundation supporting each proposed cross-claim, identifies the evidence currently in AMA's possession as well as additional evidence needed to support each cause of action, and addresses the strategic considerations and potential vulnerabilities that should inform our approach. The memorandum also situates the cross-complaint within the broader context of AMA's litigation posture, including coordination with the separate Fuentes class action matter pending before the same court.
II. Factual Foundation
A. Email Transmissions — Personal Account
AMA's IT security team, operating under the direction of Gregory Tanaka (Vice President, Legal & Compliance), initiated a routine data loss prevention ("DLP") audit in August 2022. This audit was part of AMA's standard, calendar-driven information security program, which calls for periodic reviews of email traffic and data exfiltration patterns across the organization. The audit was not triggered by any specific suspicion regarding Aldrich or any other individual employee.
During the course of the DLP audit, the system flagged anomalous email forwarding activity originating from Aldrich's AMA corporate email account (galdrich@aureliusmedia.com). Specifically, the automated monitoring tools detected a pattern of repeated forwarding of emails containing attachments and internal business communications to an external, non-corporate email address. Based on these flags, AMA's internal IT security team — notably, not an outside forensic vendor — conducted a more detailed forensic review of Aldrich's email activity.
The forensic review yielded the following findings regarding transmissions to Aldrich's personal email account:
Personal Email Forwarding: Between July 12, 2021 and September 29, 2022 — a period spanning approximately fifteen months — Aldrich forwarded a total of 340 emails from his AMA corporate account to his personal Northgate Software account at galdrich.private@Northgate Software.com. The content of these 340 emails, categorized by type, breaks down as follows:
• 47 emails containing show concept documents, including one-sheets, treatments, and format bibles for various unscripted programming concepts in active development at AMA;
• 22 emails containing audience analytics reports, including viewership data, demographic breakdowns, and competitive performance analyses compiled by AMA's research department;
• 18 emails containing revenue projections and profit-and-loss ("P&L") summaries for individual show units across AMA's unscripted programming portfolio;
• 14 emails containing talent deal terms and compensation information, including above-the-line talent agreements, host compensation packages, and producer fee structures;
• The remaining approximately 239 emails consisted of production schedules, internal strategy memoranda, divisional planning documents, and miscellaneous business correspondence.
The sheer volume and breadth of these transmissions is striking. Over a fifteen-month period, Aldrich systematically forwarded to his personal email account materials spanning virtually every category of proprietary business information within his purview as Senior Vice President and Executive Producer of AMA's Unscripted Programming Division. The pattern is not consistent with isolated, inadvertent forwarding; rather, it reflects a sustained and deliberate course of conduct.
B. Email Transmissions — Halcyon Creek Productions LLC (Third-Party Competitor)
The forensic review also identified a separate and more troubling pattern: seven emails sent directly from Aldrich's AMA corporate email account to info@halcyoncreekprod.com — the general contact address for Halcyon Creek Productions LLC ("Halcyon Creek"), a direct competitor of AMA in the unscripted and reality television space. These seven transmissions occurred during a discrete window between March 3, 2022 and August 18, 2022, a period of approximately five and a half months.
The contents of the seven emails sent to Halcyon Creek are as follows:
• Three unscripted show format bibles, covering concepts titled "Apex Endurance," "The Remix," and "Untamed West." Each of these format bibles is a comprehensive document that sets forth the show's creative premise, episode structure, casting framework, production methodology, competitive landscape analysis, and potential distribution strategy. These documents represent the culmination of substantial creative and financial investment by AMA's development team.
• Two pilot sizzle reels, for the concepts "Apex Endurance" and "The Remix." These sizzle reels were not transmitted as email attachments, but rather as Larkspur Technologies links generated from Aldrich's personal Larkspur Technologies account, suggesting a degree of operational sophistication and awareness that the transmissions would not be captured by standard email attachment monitoring. The use of a personal cloud storage account to facilitate the transfer of AMA's proprietary audiovisual content is particularly concerning.
• A detailed revenue model for "Summit Challenge," AMA's top-performing unscripted franchise, which generates approximately $42 million in annual revenue. This revenue model is among the most competitively sensitive documents in AMA's entire portfolio. It contains detailed, line-item financial projections including per-episode production costs, network license fees, international distribution revenues broken down by territory, advertising cost-per-thousand ("CPM") rates, and talent compensation structures across multiple seasons. Disclosure of this model to a competitor could provide that competitor with granular insight into AMA's cost structure, pricing strategy, and profit margins — information that would confer a significant competitive advantage in negotiations with networks, advertisers, and talent.
The transmission of the Summit Challenge revenue model is particularly alarming given the franchise's importance to AMA's business. At approximately $42 million in annual revenue, Summit Challenge is a cornerstone of AMA's unscripted programming portfolio, and the financial model underlying that franchise represents years of accumulated proprietary data and strategic analysis.
C. Halcyon Creek Productions LLC — Background
Public records obtained from the California Secretary of State indicate that Halcyon Creek Productions LLC was formed in the State of California on February 14, 2022. The entity's agent for service of process and sole organizer is listed as Nina Castellanos. We note for clarity that Ms. Castellanos bears no relation to Marco Castellano of Castellano Byrne & Salas LLP, plaintiffs' counsel in the Fuentes class action; the similarity in surnames is coincidental.
Nina Castellanos is a former AMA development executive who held the title of Director of Development during her tenure at AMA from 2018 through January 2022. Ms. Castellanos departed AMA voluntarily at the end of January 2022; her separation was not the result of a termination or any disciplinary action. Aldrich and Castellanos share a long-standing professional relationship that predates their respective tenures at AMA: both were previously employed at the same production company prior to joining AMA, and their professional networks have overlapped for a number of years.
Halcyon Creek operates as a competitor to AMA in the unscripted and reality television production space. Based on publicly available information, Halcyon Creek appears to be a relatively early-stage venture that has announced several development projects but has not yet achieved significant commercial traction.
At this time, AMA does not possess direct evidence that Halcyon Creek has produced, sold, or otherwise commercially exploited any programming based on the materials transmitted by Aldrich. However, the investigation into Halcyon Creek's activities is ongoing, and additional evidence may emerge during discovery.
The timeline is noteworthy: Halcyon Creek's formation on February 14, 2022 occurred approximately one month after Castellanos's departure from AMA in January 2022. Aldrich's email transmissions to Halcyon Creek commenced approximately one month after the entity's formation, with the first identified email dated March 3, 2022. This chronology suggests a coordinated sequence of events — Castellanos departed AMA, formed a competing entity, and within weeks began receiving proprietary AMA materials from Aldrich, who remained employed at AMA in a senior leadership role.
D. Insubordination — Contextual Background (Not Basis for Cross-Complaint)
It is important to note that the insubordination incident described below is not the basis for any proposed cross-claim. Rather, it provides essential context for understanding the circumstances of Aldrich's termination and for addressing the pretext argument that Aldrich will inevitably raise in opposition to AMA's "for cause" defense.
On October 10, 2022, Aldrich sent an email to Jonathan Mercer (President, AMA) in which he flatly refused to implement a restructuring directive applicable to the Unscripted Programming Division. The restructuring had been approved by AMA's parent company, Aurelius Global Media Group ("AGMG"), and communicated to divisional leadership as a mandatory corporate initiative. In his email, Aldrich characterized the restructuring as "creatively bankrupt and commercially idiotic" and stated that he would "not participate in dismantling [his] division." The tone and substance of this communication represented a direct and unambiguous refusal to carry out a lawful directive from AMA's president.
On October 11, 2022, Mercer responded by issuing a formal written warning to Aldrich, documenting the refusal and advising Aldrich that further insubordination could result in disciplinary action up to and including termination. Later that same day — October 11, 2022 — Aldrich forwarded the entire email chain (including Mercer's warning) to six of his subordinates within the Unscripted Programming Division, including three show-runners and two division heads. Aldrich appended the following comment to the forwarded chain: "For your awareness — the London suits are gutting our operation." This dissemination of confidential management communications to subordinate employees, accompanied by a characterization designed to undermine confidence in corporate leadership, compounded the original act of insubordination and introduced an element of organizational disruption.
On October 14, 2022, AMA terminated Aldrich's employment "for cause" under Section 7.2(b) of his Employment Agreement (dated September 5, 2017, as amended by the First Amendment dated August 1, 2020). The termination letter cited both the findings of the DLP audit and the insubordination as grounds for the "for cause" determination.
E. Timeline of DLP Audit and Termination Decision
The chronological relationship between the DLP audit, the insubordination incident, and the termination decision is critical and requires careful attention. The key dates are as follows:
• August 2022: DLP audit initiated as a routine, calendar-driven audit pursuant to AMA's standard information security protocols.
• September 6, 2022: Preliminary DLP findings — including the identification of the anomalous email forwarding pattern from Aldrich's account — reported to Gregory Tanaka, VP of Legal & Compliance. This date is significant because it predates the October 10 insubordination by more than one month.
• October 3, 2022: The more detailed forensic review of Aldrich's email activity was completed by AMA's IT security team. This review confirmed the scope and nature of the transmissions described above and identified the Halcyon Creek transmissions specifically.
• October 10, 2022: Aldrich sent his refusal email to Mercer (the insubordination).
• October 11, 2022: Mercer issued the formal written warning. Later the same day, Aldrich forwarded the email chain to six subordinates with his "London suits" comment.
• October 13, 2022: Mercer conferred with Tanaka regarding Aldrich's overall conduct. During this conversation, Tanaka informed Mercer of the DLP audit findings for the first time. Mercer had not previously been briefed on the DLP results.
• October 14, 2022: AMA terminated Aldrich's employment, effective immediately.
Critical observation: AMA did not confront Aldrich about the DLP findings, initiate any disciplinary process based on those findings, or take any other action in response to the email transmissions until after the insubordination incident of October 10–14, 2022. This is true despite the fact that preliminary DLP findings were available to Tanaka as early as September 6, 2022, and the completed forensic review was in hand by October 3, 2022. This gap — from September 6 through October 14 — creates a potential vulnerability in AMA's narrative that the termination was genuinely motivated by the confidentiality violations rather than by Aldrich's opposition to the restructuring. The pretext argument is addressed in detail in Section V below.
III. Proposed Cross-Claims
A. First Cause of Action — Breach of Employment Agreement (§§ 9.1, 9.2, 9.3, 9.4)
The first proposed cross-claim sounds in breach of contract, based on Aldrich's violations of the restrictive covenant and confidentiality provisions contained in Article 9 of his Employment Agreement dated September 5, 2017, as amended by the First Amendment dated August 1, 2020 (collectively, the "Agreement").
The primary operative basis for this claim is Section 9.4 (Confidentiality), which provides, in relevant part, that the employee shall not engage in the "disclosure, use, or transmission of Confidential Information to any person or entity other than in the furtherance of Employee's duties to the Company." The confidentiality obligation imposed by Section 9.4 expressly survives the termination of employment, regardless of the circumstances of termination.
The Agreement defines "Confidential Information" in Section 9.4 to include, without limitation, "proprietary content, show formats, audience data, revenue projections, talent agreements, and all information designated as confidential by the Company." This definition is broadly drafted and unambiguously encompasses the categories of information contained in the 340 emails forwarded to Aldrich's personal Northgate Software account and in the 7 emails transmitted to Halcyon Creek Productions LLC. Each of the specific categories identified in the forensic review — show concept documents, audience analytics reports, revenue projections and P&L summaries, talent deal terms, and the Summit Challenge revenue model — falls squarely within the contractual definition of Confidential Information.
The 340 emails transmitted to Aldrich's personal email account and the 7 emails transmitted to Halcyon Creek constitute clear, documented violations of Section 9.4. The transmissions were not made "in the furtherance of Employee's duties to the Company"; to the contrary, the transmissions to Halcyon Creek — a direct competitor — were antithetical to AMA's interests and to Aldrich's duties. The transmissions to Aldrich's personal email account served no legitimate business purpose and violated both the letter and spirit of the confidentiality obligation.
In addition to the Employment Agreement, AMA's Acceptable Use and Confidentiality Policy (last revised March 2021) expressly prohibits employees from transmitting Company proprietary information to personal email accounts, personal cloud storage services, or non-Company-approved third-party recipients. Aldrich signed an acknowledgment of this policy on April 12, 2021, confirming that he had received, read, and understood the policy and agreed to comply with its terms. The signed acknowledgment is in AMA's possession and will be attached as an exhibit to the Cross-Complaint.
The Cross-Complaint will also reference the remaining restrictive covenant provisions of Article 9: Section 9.1 (non-competition, 18-month post-termination period), Section 9.2 (employee non-solicitation, 24-month post-termination period), and Section 9.3 (business non-solicitation, 24-month post-termination period). However, these provisions are secondary to the Section 9.4 confidentiality claim for the purposes of the Cross-Complaint. In particular, Section 9.1 (non-compete) faces significant enforceability challenges under California Business and Professions Code Section 16600, which broadly prohibits contractual restraints on an individual's ability to engage in a lawful profession, trade, or business. While there is some authority suggesting that Section 16600 may not apply to certain narrow categories of non-compete provisions (e.g., in connection with the sale of a business), the weight of California authority disfavors enforcement of employee non-compete agreements, and we should not rely on Section 9.1 as a primary theory. Sections 9.2 and 9.3 (non-solicitation) are somewhat more defensible under California law, though they also face scrutiny, and their inclusion in the Cross-Complaint serves primarily to preserve AMA's rights and to enhance the overall narrative of Aldrich's contractual obligations.
B. Second Cause of Action — Misappropriation of Trade Secrets (Cal. Civ. Code § 3426 et seq. — CUTSA)
The second proposed cross-claim asserts misappropriation of trade secrets under the California Uniform Trade Secrets Act ("CUTSA"), California Civil Code Section 3426 et seq.
The materials transmitted by Aldrich — specifically, the show format bibles for "Apex Endurance," "The Remix," and "Untamed West"; the pilot sizzle reels for "Apex Endurance" and "The Remix"; the Summit Challenge revenue model; the audience analytics reports; and the talent deal terms and compensation information — constitute "trade secrets" within the meaning of California Civil Code Section 3426.1(d). Under that section, a trade secret is information 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.
Both prongs are satisfied here:
(a) Independent Economic Value. The show format bibles represent the creative and commercial foundations of programming concepts in which AMA has invested substantial development resources. The development cost data for the three show concepts at issue is as follows: "Apex Endurance" (approximately $120,000), "The Remix" (approximately $85,000), and "Untamed West" (approximately $95,000) — representing a total development investment of approximately $300,000. These format bibles are not publicly available; they are shared only with potential network buyers and distribution partners under non-disclosure agreements, and they derive significant value from their non-public status. The Summit Challenge revenue model, as noted above, contains granular financial data — per-episode production costs, network license fees, international distribution revenues, advertising CPM rates, and talent compensation structures — that would provide a competitor with detailed insight into AMA's cost structure and profit margins. The audience analytics reports and talent deal terms are similarly non-public and competitively sensitive.
(b) Reasonable Efforts to Maintain Secrecy. AMA has implemented multiple layers of protection to safeguard the confidentiality of these materials, including: (i) the confidentiality provisions of the Employment Agreement (Section 9.4), which impose binding obligations on employees to protect Confidential Information; (ii) the Acceptable Use and Confidentiality Policy, which specifically prohibits external transmission of proprietary materials; (iii) AMA's internal content management system, which requires individual login credentials for access to development and financial documents; (iv) watermarking of confidential documents with the legend "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC."; and (v) a policy requiring prior written approval from the President or Vice President of Business Affairs before any external transmission of proprietary content. These measures, taken together, constitute reasonable efforts under the circumstances to maintain the secrecy of AMA's trade secrets.
Aldrich's transmission of these materials to his personal email account and to Halcyon Creek constitutes "misappropriation" under California Civil Code Section 3426.1(b)(2), which defines misappropriation to include the disclosure or use of a trade secret by a person who knew or had reason to know that the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. As SVP and Executive Producer, Aldrich was intimately aware of the confidential nature of the materials he transmitted, had signed the Acceptable Use Policy acknowledging his obligations, and was bound by the express confidentiality provisions of his Employment Agreement. His disclosure to Halcyon Creek — a direct competitor — was plainly unauthorized and constituted misappropriation within the meaning of CUTSA.
Under CUTSA, AMA is entitled to seek injunctive relief to prevent further misappropriation (Cal. Civ. Code § 3426.2), actual damages measured by the loss caused to AMA and/or the unjust enrichment caused by the misappropriation (Cal. Civ. Code § 3426.3(a)), and, if the misappropriation is shown to have been willful and malicious, exemplary damages in an amount not exceeding twice the award of actual damages (Cal. Civ. Code § 3426.3(c)). Given the deliberate and sustained nature of Aldrich's transmissions — particularly the transmissions to a competitor — there is a strong basis for seeking exemplary damages.
C. Third Cause of Action — Breach of Fiduciary Duty
The third proposed cross-claim asserts breach of fiduciary duty. As Senior Vice President and Executive Producer of AMA's Unscripted Programming Division, Aldrich occupied a senior officer position within AMA and, as such, owed fiduciary duties of loyalty and care to the company. These duties required Aldrich to act in the best interests of AMA, to refrain from self-dealing, and to avoid conflicts of interest that could compromise his obligations to AMA.
Aldrich's unauthorized disclosure of confidential and proprietary information to Halcyon Creek Productions — a direct competitor of AMA in the unscripted television space — constituted a clear breach of his fiduciary duty of loyalty. The transmissions were not made in furtherance of AMA's interests; rather, they served the interests of a competing entity and, by inference, Aldrich's own personal interests. The nature of the materials transmitted — including creative assets in active development and the revenue model for AMA's most profitable franchise — reflects a disregard for AMA's competitive position and a subordination of AMA's interests to those of Halcyon Creek and/or Aldrich personally.
The relationship between Aldrich and Nina Castellanos — the former AMA Director of Development who founded Halcyon Creek shortly after her departure from AMA — further supports this claim. Their long-standing professional relationship, dating to their prior employment at the same production company before either joined AMA, creates a reasonable inference that Aldrich was either positioning himself for post-AMA employment with Halcyon Creek or actively collaborating with Castellanos on competing programming projects while still employed by AMA. Either scenario constitutes a breach of fiduciary duty. In the former case, Aldrich was using AMA's proprietary assets to curry favor with a prospective future employer; in the latter, he was diverting business opportunities and creative assets away from AMA for the benefit of a competing enterprise in which he had a personal interest.
We acknowledge that the specific contours of this claim will depend on additional facts that may emerge during discovery, particularly with respect to the nature and extent of Aldrich's relationship with Castellanos and his involvement, if any, in Halcyon Creek's business activities. However, the existing evidence — the pattern of transmissions, the timing relative to Castellanos's departure and Halcyon Creek's formation, and the competitive sensitivity of the materials transmitted — provides a sufficient factual basis to plead this claim.
D. Fourth Cause of Action — Conversion
The fourth proposed cross-claim asserts conversion. AMA had ownership rights in the proprietary digital files transmitted by Aldrich, including the show format bibles for "Apex Endurance," "The Remix," and "Untamed West"; the pilot sizzle reels for "Apex Endurance" and "The Remix"; and the Summit Challenge revenue model. These materials are works of authorship and compilations of proprietary data created by AMA's employees in the course of their employment and are owned by AMA pursuant to both the work-made-for-hire doctrine and the assignment provisions of the Employment Agreement.
Aldrich's unauthorized appropriation and transmission of these files — both to his personal email and cloud storage accounts and to a third-party competitor — constitutes a wrongful exercise of dominion over AMA's property that is inconsistent with AMA's ownership rights. The conversion was intentional: Aldrich deliberately forwarded the files to external accounts without authorization, and his use of a personal Larkspur Technologies account to transmit the sizzle reels demonstrates awareness and intentionality in the exfiltration of AMA's property.
Damages for conversion may include the value of the converted property and consequential damages resulting from the conversion, including any competitive harm suffered by AMA as a result of the unauthorized dissemination of the materials. While the full measure of damages will depend on evidence developed during discovery — particularly regarding whether Halcyon Creek has commercially exploited any of the converted materials — the claim preserves AMA's right to recover for the loss of control over its proprietary assets.
IV. Evidentiary Needs
The following table summarizes the evidence required to support AMA's proposed Cross-Complaint, the source of each item, and its current status:
Additional Evidence to Pursue During discovery:
We will need to pursue the following categories of evidence through formal discovery:
• Aldrich's personal email communications with Halcyon Creek/Castellanos. The emails in AMA's possession show what Aldrich sent from his corporate account, but do not reveal the full scope of his communications with Halcyon Creek or Castellanos. These communications are likely maintained in Aldrich's personal Northgate Software account and/or in Halcyon Creek's email system. We will need to propound Requests for Production targeting these communications and should anticipate the need for a motion to compel if Aldrich resists on privacy or relevance grounds.
• Halcyon Creek's use of the transmitted materials. Determining whether Halcyon Creek has produced, developed, or sold any programming based on the materials transmitted by Aldrich is critical to quantifying AMA's damages and to establishing the competitive harm element of the trade secret and breach of fiduciary duty claims. This may require third-party subpoenas directed to Halcyon Creek, as well as subpoenas to networks and distributors with whom Halcyon Creek may have engaged.
• Aldrich's post-termination employment and activities. Evidence regarding Aldrich's employment and business activities following his October 14, 2022 termination is relevant to both the damages analysis and to compliance with the restrictive covenant provisions of the Employment Agreement (particularly Sections 9.2 and 9.3). We should propound interrogatories seeking information about Aldrich's current and post-termination employment, consulting arrangements, and any business relationships with Halcyon Creek or Castellanos.
V. Timeline Vulnerability — Pretext Argument
The most significant vulnerability in AMA's "for cause" narrative — and correspondingly, in the factual predicate underlying the Cross-Complaint — is the timeline of events between the DLP audit and the termination.
As detailed in Section II.E above, preliminary DLP findings identifying the anomalous email forwarding activity were available to Gregory Tanaka on September 6, 2022. A more detailed forensic review was completed on October 3, 2022. Yet AMA did not confront Aldrich about these findings, initiate any disciplinary process, or take any corrective action based on the DLP audit results until after the insubordination incident of October 10–14, 2022. Jonathan Mercer — who made the ultimate termination decision — did not review the DLP findings in detail until October 13, 2022, three days after the insubordination and ten days after the forensic review was completed. Aldrich was terminated the following day.
Aldrich will exploit this timeline aggressively. His anticipated arguments are as follows:
(a) The DLP audit was a "fishing expedition" initiated after AMA had already decided to terminate Aldrich for his opposition to the corporate restructuring. Aldrich will argue that the audit was not genuinely "routine" but was instead a pretext investigation designed to uncover any available basis for a "for cause" termination.
(b) AMA retroactively characterized what it knew were routine email practices — common among senior executives who regularly work from home and on personal devices — as "violations" of the Acceptable Use Policy in order to manufacture "for cause" grounds. The motivation for manufacturing "for cause" was financial: under the Employment Agreement, a termination "for cause" relieves AMA of the obligation to pay severance, which in Aldrich's case amounts to $970,000 (24 months' base salary at $485,000 per year).
(c) The first time Aldrich learned of the email forwarding issue was during the termination meeting on October 14, 2022. He was never given an opportunity to explain or remediate the conduct, which Aldrich will argue is inconsistent with AMA's purported concern about the confidentiality violations and more consistent with a pretextual post hoc rationalization.
Response and Mitigation:
To counter the pretext argument, we will need to develop a robust evidentiary record establishing the legitimate, independent basis for the DLP audit and the reasonable explanations for the timeline. Specifically, we need declarations from Gregory Tanaka and from the IT security team member who conducted the DLP audit (identity to be confirmed with Tanaka) establishing the following points:
1. The DLP audit was a routine, calendar-driven audit, consistent with AMA's standard information security protocols, and was not triggered by the dispute with Mercer, by any desire to terminate Aldrich, or by any instruction from management to investigate Aldrich specifically. Supporting documentation — such as AMA's IT security audit schedule, prior DLP audit reports for other divisions or employees, and internal communications initiating the August 2022 audit — should be assembled to corroborate this point.
2. The preliminary DLP findings were reported to Tanaka on September 6, 2022 — more than one month before the October 10 insubordination. This chronology demonstrates that the investigation predated the conflict between Aldrich and Mercer and was not initiated as a retaliatory measure.
3. The delay between September 6 and October 14 was attributable to the time needed to complete the forensic review (which was not finalized until October 3) and to consult with counsel regarding the appropriate response to the findings. AMA was being methodical and deliberate in its investigation, not retaliatory. The fact that AMA did not immediately act on preliminary findings reflects a responsible approach — particularly given the seriousness of the allegations and the seniority of the employee involved — rather than a lack of genuine concern.
4. The termination decision was made based on the cumulative evidence — both the DLP findings (which revealed a sustained pattern of unauthorized disclosure of confidential information to a personal account and a competitor) and the insubordination (which demonstrated a refusal to comply with lawful management directives and an effort to undermine corporate leadership). The termination was not based solely on either ground, but on their combination.
From a narrative standpoint, we should frame the insubordination incident as the event that prompted management to conduct a comprehensive review of Aldrich's overall conduct and performance. When Mercer consulted with Tanaka on October 13 — in the aftermath of Aldrich's refusal to implement the restructuring and his inflammatory communication to subordinates — it was natural and appropriate for Tanaka to inform Mercer of the DLP findings that had been developing over the preceding weeks. The insubordination did not create the DLP investigation, but it did create the context in which the DLP findings were elevated to the decision-maker. This framing acknowledges the reality of the timeline while countering the inference of pretext.
We should also emphasize that the substance of the DLP findings — 340 emails forwarded to a personal account and 7 emails containing highly sensitive proprietary materials transmitted to a direct competitor — would independently justify termination for cause regardless of the insubordination. The severity of the confidentiality violations speaks for itself.
VI. Strategic Considerations
A. Leverage. The Cross-Complaint is primarily a leverage tool for settlement negotiations. We should be candid about the fact that AMA's actual damages from Aldrich's email transmissions are, at present, difficult to quantify with precision. This is particularly true because there is no evidence — at this time — that Halcyon Creek Productions has produced, sold, or otherwise commercially exploited any programming based on the transmitted materials. Without evidence of actual competitive harm, AMA's damages theory rests on the development costs of the compromised show concepts (approximately $300,000), the potential for future harm, and the statutory framework for exemplary damages under CUTSA.
However, the Cross-Complaint serves several critical strategic purposes that extend well beyond the quantification of damages:
• Narrative reframing. The Cross-Complaint fundamentally shifts the narrative of this litigation. Without it, Aldrich controls the story: he is a successful, long-tenured executive who was wrongfully terminated in retaliation for standing up to corporate management. With the Cross-Complaint, the narrative becomes far more complicated for Aldrich. He is not merely a wrongfully terminated executive; he is an unfaithful senior officer who systematically extracted proprietary information from his employer and transmitted it to a competitor run by his former colleague. This reframing is powerful not only in settlement negotiations but also before the court and, if the case proceeds to trial, before a jury.
• Settlement leverage. The Cross-Complaint creates countervailing risk for Aldrich. He faces the possibility of an adverse judgment, potential exemplary damages under CUTSA (up to twice actual damages), and the reputational consequences of a public finding that he misappropriated trade secrets. This risk calculus should moderate his settlement demands and create pressure to resolve the case on terms favorable to AMA.
• Reinforcement of the "for cause" narrative. By pleading the confidentiality violations in a formal cross-complaint — with supporting exhibits — AMA establishes its "for cause" narrative in a way that goes beyond mere affirmative defenses in the Answer. The Cross-Complaint puts AMA's version of events before the court in a detailed, affirmative pleading, which carries greater weight and visibility than defensive allegations.
• Deterrence. The filing of the Cross-Complaint, particularly with the trade secret and fiduciary duty claims, signals to Aldrich and his counsel that AMA is prepared to litigate aggressively. This may deter Aldrich from pursuing overly aggressive litigation tactics, such as seeking broad discovery into AMA's corporate governance and management practices or filing motions designed to embarrass AMA publicly.
B. Potential Injunctive Relief (TRO / Preliminary Injunction)
We should also consider whether to seek a temporary restraining order ("TRO") or preliminary injunction against Aldrich and potentially against Halcyon Creek Productions LLC, prohibiting any further use, disclosure, or dissemination of AMA's trade secrets and confidential information.
The elements for obtaining a TRO or preliminary injunction under CUTSA are as follows:
• Likelihood of success on the merits. Strong. AMA possesses documentary evidence of the transmissions (email logs, DLP audit report, forensic review), Aldrich's signed acknowledgment of the Acceptable Use Policy, and the Employment Agreement's confidentiality provisions. The factual basis for the trade secret claim is well-documented.
• Irreparable harm absent injunction. The risk of irreparable competitive harm exists in the potential exploitation of AMA's show concepts, revenue models, and other proprietary materials by Halcyon Creek or other competitors. Trade secret misappropriation, by its nature, gives rise to irreparable harm because the competitive advantage derived from confidential information cannot be fully compensated through monetary damages.
• Balance of hardships favors AMA. The burden imposed on Aldrich by an injunction is modest: he would simply be required to refrain from using, disclosing, or disseminating materials that do not belong to him. AMA, by contrast, faces the potential loss of proprietary competitive advantages developed over years and at significant expense.
• Public interest. The protection of trade secrets is a recognized public interest under California law. An injunction furthers this interest by enforcing the statutory protections embodied in CUTSA.
Even if the TRO or preliminary injunction motion is not ultimately successful, the act of filing sends a strong signal to Aldrich's counsel, Cameron Whitfield of Whitfield & Associates, that AMA is prepared to litigate aggressively on the offensive. This signal carries independent strategic value in settlement negotiations.
There is, however, a practical consideration that warrants discussion before we proceed: filing a TRO motion will require AMA to make a strong evidentiary showing early in the case, including declarations and supporting exhibits that will be part of the public record. This accelerated disclosure may narrow AMA's strategic options by telegraphing its evidence to opposing counsel well in advance of discovery. It will also increase short-term litigation costs. I recommend discussing the advisability and timing of injunctive relief with Renata Vasquez and with the client contacts — Gregory Tanaka and Philippa Cartwright — before making a final determination.
C. Halcyon Creek as Non-Party
Halcyon Creek Productions LLC is not currently a party to this action. Whether and when to involve Halcyon Creek — whether through third-party discovery, joinder as a cross-defendant, or both — requires careful strategic assessment.
We may need to subpoena Halcyon Creek for documents showing what, if anything, it did with the materials transmitted by Aldrich. This inquiry is essential to AMA's damages theory under both the trade secret and breach of fiduciary duty claims. However, the results of such discovery are unpredictable and carry both upside and downside risk:
• upside scenario: If Halcyon Creek developed programming concepts, pitch materials, or business plans based on the stolen materials, the subpoena would significantly strengthen AMA's cross-claims. Evidence of actual exploitation would support actual damages quantification, bolster the case for exemplary damages under CUTSA, and dramatically enhance AMA's settlement leverage.
• Downside scenario: If Halcyon Creek has not exploited the materials — if, for example, the materials were received but never acted upon — the subpoena could reveal minimal competitive harm, which may undercut AMA's damages argument. That said, injunctive relief and CUTSA exemplary damages would still be available even absent evidence of actual exploitation, and the breach of contract and conversion claims do not require proof of competitive harm.
If evidence emerges — either from Aldrich's deposition or from third-party discovery — that Halcyon Creek knowingly received and used AMA's trade secrets, we should consider joining Halcyon Creek as a cross-defendant. Halcyon Creek's knowing receipt and use of misappropriated trade secrets would support a claim for misappropriation by receipt under CUTSA Section 3426.1(b)(1), which defines misappropriation to include 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.
As an alternative approach, we may elect to reserve third-party discovery of Halcyon Creek until after Aldrich's deposition. Aldrich's testimony regarding the purpose of his transmissions, the nature and extent of his relationship with Castellanos, and any communications regarding Halcyon Creek's use of the materials will be critical in determining the scope and timing of Halcyon Creek's involvement in the case. Deposing Aldrich first allows us to develop a factual foundation before engaging with Halcyon Creek and reduces the risk of premature or unfocused third-party discovery.
D. Coordination with Class Action
The Aldrich Cross-Complaint is legally and procedurally separate from the Fuentes class action (Case No. 22STCV38214, assigned to the Honorable Raymond Escobedo, Department 34), but both matters involve AMA as a defendant and are pending in the Los Angeles Superior Court. While the two cases involve different plaintiffs, different claims, and different factual predicates, there is a risk that positions taken or admissions made in one matter could be cited or used against AMA in the other.
Accordingly, we must ensure that the representations and positions taken in the Cross-Complaint are consistent with those in the class action, particularly with respect to the following topics:
• AMA's corporate culture and management practices;
• AMA's human resources policies and their enforcement;
• AMA's treatment of senior executives and the standards for "for cause" termination;
• AMA's information security practices and policies.
The Cross-Complaint should not contain any admissions — express or implied — that could be used against AMA in the class action. For example, we must avoid any language that could be construed as acknowledging management dysfunction, employee relations deficiencies, inconsistent policy enforcement, or systemic problems with AMA's workplace culture. All characterizations of AMA's policies and practices should be framed affirmatively and consistently with AMA's defenses in the Fuentes matter.
I recommend circulating the draft Cross-Complaint to the team handling the Fuentes class action for review before filing, to ensure alignment across both matters.
E. Settlement Implications
Based on the preliminary assessment set forth in Document 12, the estimated settlement range for the Aldrich matter is $1.5 million to $3.0 million. This range accounts for Aldrich's wrongful termination exposure, the contract claims, the unpaid expense reimbursement, and the litigation risk associated with the pretext timeline.
The Cross-Complaint is expected to enhance AMA's settlement leverage, potentially bringing Aldrich's expectations down from his initial demand of $4.15 million toward the lower end of the estimated range. The countervailing risk created by the trade secret and fiduciary duty claims — including the possibility of exemplary damages — fundamentally alters the settlement calculus for Aldrich and should moderate his posture in negotiations.
In any settlement of this matter, AMA should seek the following terms:
• Mutual general release of all claims and cross-claims arising out of or related to Aldrich's employment with AMA and the termination thereof;
• Modified restrictive covenant terms, specifically: voiding of Section 9.1 (non-compete), acknowledging its likely unenforceability under California Business and Professions Code Section 16600; retention of Section 9.4 (confidentiality) in perpetuity; and reduction of the non-solicitation periods under Sections 9.2 and 9.3 to a mutually agreed-upon duration;
• Return and deletion of all AMA proprietary materials in Aldrich's possession, custody, or control, including all copies on personal email accounts, cloud storage, personal devices, and any materials provided to Halcyon Creek or any other third party, with a certification of compliance;
• Mutual non-disparagement and neutral reference provisions;
• Confidentiality of settlement terms, with customary carve-outs for legal and tax advisors, immediate family, and as required by law.
VII. Recommended Next Steps
Based on the analysis set forth in this memorandum, I recommend the following next steps:
1. Finalize the Draft Answer and Cross-Complaint (Document 36) for client review by January 12, 2023. The draft should incorporate the four cross-claims outlined in Section III above, together with supporting factual allegations drawn from the evidence described in Section II.
2. Obtain client approval for the Answer and Cross-Complaint from Gregory Tanaka (VP, Legal & Compliance) and Philippa Cartwright (General Counsel, AGMG). Schedule a call or meeting to discuss the draft, the strategic considerations outlined in Section VI, and the pretext vulnerability addressed in Section V.
3. Prepare supporting declarations from the following individuals:
• Jonathan Mercer (President, AMA): regarding the restructuring directive, the insubordination incident, the October 13 conference with Tanaka, and the termination decision.
• Dwayne Prescott (VP, Unscripted Programming): regarding the proprietary value of the show format bibles, the development costs for "Apex Endurance," "The Remix," and "Untamed West," the competitive significance of the Summit Challenge revenue model, and the unauthorized nature of the transmissions to Halcyon Creek.
4. File the Answer and Cross-Complaint on or about January 20, 2023, consistent with AMA's responsive pleading deadline.
5. Assess timing for potential TRO/preliminary injunction motion. I recommend discussing the advisability, timing, and evidentiary requirements for injunctive relief at the next client strategy call, which should be scheduled promptly after client review of the draft pleading.
6. Identify and interview the IT security team member who conducted the DLP audit to prepare a declaration establishing the routine nature of the audit and the pre-insubordination timing of the preliminary findings. This declaration is critical to mitigating the pretext vulnerability.
7. Retain forensic IT evidence and document chain of custody for all email logs, DLP audit data, forensic review results, and laptop analysis. Ensure that all evidence is preserved in a manner that supports authentication at deposition and trial, including through testimony of the custodian of records.
8. Prepare a comprehensive discovery plan for the Aldrich matter, including:
• Requests for Production targeting Aldrich's communications with Halcyon Creek and Nina Castellanos, including communications from personal email accounts, messaging applications, and cloud storage platforms;
• Form and special interrogatories regarding Aldrich's post-termination employment, business relationships with Halcyon Creek, and the disposition of AMA proprietary materials;
• Aldrich's deposition, anticipated for late April or May 2023, with a focus on establishing the purpose and scope of his transmissions to Halcyon Creek, his relationship with Castellanos, and his knowledge of AMA's information security policies.
This memorandum is protected by the attorney-client privilege and the attorney work product doctrine. It is intended solely for the use of Calderwood & Harkness LLP attorneys working on the AMA v. Aldrich matter and authorized representatives of Aurelius Media Americas, Inc. Do not copy, distribute, or disclose this memorandum or its contents without the prior written authorization of the undersigned.
CALDERWOOD & HARKNESS LLP
By: ________
Devon Archer Senior Associate Direct: (213) 555-8142
Email: darcher@calderwoodharkness.com
Evidence | Source | Status
DLP audit report and findings | AMA IT Security (Gregory Tanaka) | Obtained
Forensic review of Aldrich laptop | AMA IT Security | Obtained
Email logs (Aldrich → personal email, galdrich.private@Northgate Software.com) | AMA IT / Exchange Server | Obtained
Email logs (Aldrich → Halcyon Creek, info@halcyoncreekprod.com) | AMA IT / Exchange Server | Obtained
Halcyon Creek Productions LLC formation records | CA Secretary of State | Obtained (filed Feb. 14, 2022; agent: Nina Castellanos)
Show format bibles ("Apex Endurance," "The Remix," "Untamed West") | AMA Development Dept. (Dwayne Prescott, VP Unscripted Programming) | To be obtained
Revenue model for "Summit Challenge" | AMA Finance (Karen Fong, Payroll Manager / Malcolm Dunmore, CFO, AGMG) | To be obtained
Acceptable Use and Confidentiality Policy (March 2021 revision) | AMA HR (Lorraine Okafor, SVP Human Resources) | Obtained
Aldrich's signed acknowledgment of Policy (April 12, 2021) | AMA HR | Obtained
Mercer's written warning (October 11, 2022) | AMA HR / Jonathan Mercer | Obtained
Aldrich's email to subordinates ("London suits" comment, October 11, 2022) | AMA IT | Obtained
Aldrich's Employment Agreement (September 5, 2017) and First Amendment (August 1, 2020) | AMA Legal (Gregory Tanaka) | Obtained

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