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

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CALDERWOOD & HARKNESS LLP — CONFIDENTIAL — ATTORNEY WORK PRODUCT — DRAFT

[Working Draft — For Internal Review and Client Comment — Not for Filing]

Draft Date: January 12, 2023

SUPERIOR COURT OF THE STATE OF CALIFORNIA

COUNTY OF LOS ANGELES — CENTRAL DISTRICT

Defendant and Cross-Complainant AURELIUS MEDIA AMERICAS INC. ("AMA" or "Defendant"), by and through its attorneys of record, Calderwood & Harkness LLP, hereby answers the Complaint filed by Plaintiff GAVIN ALDRICH ("Aldrich" or "Plaintiff") on December 9, 2022, and contemporaneously files this Cross-Complaint against Cross-Defendant GAVIN ALDRICH. AMA responds and alleges as follows:

PART I

ANSWER TO COMPLAINT

GENERAL DENIAL

1. Pursuant to California Code of Civil Procedure Section 431.30(d), Defendant AMA generally denies each and every allegation set forth in the Complaint filed by Plaintiff Gavin Aldrich on December 9, 2022. AMA denies that Aldrich has been damaged in any amount whatsoever, or that he is entitled to any relief, whether legal, equitable, or otherwise, as alleged in the Complaint or at all.

2. Without waiving the foregoing general denial, and in order to bring certain specific matters to the attention of this Court, AMA responds to certain allegations of the Complaint as follows:

SPECIFIC RESPONSES TO KEY ALLEGATIONS

Paragraphs 1 Through 10 (Background Allegations)

3. Responding to the allegations contained in Paragraphs 1 through 10 of the Complaint, AMA admits that Plaintiff Gavin Aldrich was employed by AMA from approximately September 5, 2017 through October 14, 2022. AMA further admits that, at the time of his termination, Aldrich held the title of Senior Vice President of Original Content & Executive Producer. AMA denies the remaining allegations set forth in Paragraphs 1 through 10 to the extent such allegations are inconsistent with the terms of Aldrich's Employment Agreement dated September 5, 2017, as amended by the First Amendment to Employment Agreement dated August 1, 2020 (collectively, the "Employment Agreement").

4. AMA admits that it is a corporation organized and existing under the laws of the State of Delaware, and that it is a wholly owned subsidiary of Aurelius Global Media Group PLC, a public limited company organized and existing under the laws of England and Wales, registered at Companies House under Company Number 08412667. AMA further admits that it is qualified to do business in the State of California and maintains its principal office at 8500 Sunset Boulevard, Suite 1400, West Hollywood, California 90069.

Paragraphs 11 Through 18 (Termination Allegations)

5. Responding to the allegations contained in Paragraphs 11 through 18 of the Complaint, AMA admits that it terminated Aldrich's employment on October 14, 2022. AMA further admits that the termination was designated as "for cause" under Section 7.2(b) of the Employment Agreement.

6. AMA denies that the "for cause" designation was pretextual, retaliatory, or otherwise improper in any respect. AMA affirmatively alleges that Aldrich's termination was based on Aldrich's material breach of the Employment Agreement, including but not limited to violations of the confidentiality provisions set forth in Section 9.4 thereof, and Aldrich's material violation of AMA's Acceptable Use and Confidentiality Policy (last revised March 2021).

7. Specifically, and without limitation, AMA affirmatively alleges that the "for cause" termination was justified on the following grounds:

(i) Unauthorized Transmission of Confidential Information. Between approximately July 12, 2021 and September 29, 2022, Aldrich forwarded approximately 340 emails from his AMA corporate email account (galdrich@aureliusmedia.com) to his personal email account (galdrich.private@Northgate Software.com), which emails contained confidential and proprietary information belonging to AMA. Additionally, between approximately March 3, 2022 and August 18, 2022, Aldrich transmitted proprietary materials — including three unscripted show format bibles, two pilot sizzle reels, and a detailed revenue model for AMA's flagship program "Summit Challenge" — to Halcyon Creek Productions LLC, a competitor of AMA, via the email address info@halcyoncreekprod.com. None of these transmissions was authorized by AMA.

(ii) Insubordination. In early October 2022, Aldrich refused to comply with a restructuring directive issued by AMA's President, Jonathan Mercer, characterizing the directive as "creatively bankrupt and commercially idiotic" in a written communication to Mercer, and subsequently forwarding the email chain to six subordinate employees with the comment: "For your awareness — the London suits are gutting our operation." These actions constituted willful insubordination and disparagement in violation of the Employment Agreement.

Paragraphs 19 Through 26 (Restrictive Covenant Allegations)

8. Responding to the allegations contained in Paragraphs 19 through 26 of the Complaint, AMA admits that Section 9 of the Employment Agreement contains restrictive covenant provisions, including:

(a) Section 9.1 (Non-Competition): A non-competition covenant of 18 months following termination of employment, applicable to any "Competing Enterprise," defined in the Employment Agreement as any entity deriving 25% or more of its revenue from the production, licensing, or distribution of unscripted or reality television programming in North America;

(b) Section 9.2 (Non-Solicitation of Employees): A non-solicitation covenant of 24 months following termination of employment, prohibiting Aldrich from soliciting, recruiting, or inducing any employee of AMA with whom Aldrich worked within the 12 months preceding termination to leave AMA's employ;

(c) Section 9.3 (Non-Solicitation of Business Relationships): A non-solicitation covenant of 24 months following termination of employment, prohibiting Aldrich from soliciting or diverting any network, platform, or advertiser client of AMA with whom Aldrich had material contact during the 24 months preceding termination; and

(d) Section 9.4 (Confidentiality): An indefinite confidentiality covenant prohibiting the disclosure, use, or transmission of Confidential Information, including but not limited to proprietary content, show formats, revenue data, audience analytics, and talent agreements.

9. AMA denies that any of the restrictive covenant provisions contained in Section 9 of the Employment Agreement are void, unenforceable, or otherwise invalid. AMA affirmatively alleges that the restrictive covenant provisions are reasonable in scope, duration, and geographic reach, are narrowly tailored to protect AMA's legitimate business interests, and are enforceable under applicable law.

10. AMA further affirmatively alleges that the Employment Agreement is governed by the laws of the State of New York, without regard to conflict-of-law principles, pursuant to the choice-of-law clause set forth in Section 14.3 of the Employment Agreement. To the extent that California law applies to any aspect of this dispute, AMA reserves all arguments regarding the enforceability of the restrictive covenant provisions under applicable California law.

Paragraphs 27 Through 32 (Damages Claims)

11. Responding to the allegations contained in Paragraphs 27 through 32 of the Complaint, AMA denies that Aldrich is entitled to severance pay in the amount of $970,000 (representing 24 months of Aldrich's base salary of $485,000 per year), or in any amount. AMA denies that Aldrich is entitled to a pro-rata bonus in the amount of $168,750, or in any amount. AMA denies that Aldrich is entitled to accelerated vesting of 15,300 restricted stock units of Aurelius Global Media Group PLC (with an estimated value of approximately $332,200 at the time of termination), or any accelerated vesting of any RSUs.

12. AMA further denies that Aldrich is entitled to any COBRA premium subsidy, expense reimbursement in the amount of $28,400 (or in any amount), emotional distress damages in the amount of $500,000 (or in any amount), lost future compensation in the amount of $1,200,000 (or in any amount), attorneys' fees in the amount of $750,000 (or in any amount), or punitive damages in the amount of $200,000 (or in any amount).

13. AMA denies that Aldrich is entitled to any damages in the total aggregate amount of $4,150,000 as alleged in the Complaint, or in any amount whatsoever.

Paragraphs 33 Through 38 (Wrongful Termination in Violation of Public Policy)

14. Responding to the allegations contained in Paragraphs 33 through 38 of the Complaint, AMA denies that Aldrich's termination was in retaliation for any protected activity, or that the termination was otherwise wrongful or in violation of any public policy of the State of California or any other jurisdiction.

15. AMA denies Aldrich's allegation that the restructuring directive issued by Jonathan Mercer was an effort to misclassify employees or to reduce overtime costs through improper means. AMA affirmatively alleges that the restructuring of the Unscripted Programming Division was a legitimate cost-efficiency measure driven by declining advertising revenues experienced by AMA during the third quarter of fiscal year 2022, and was consistent with similar restructuring initiatives undertaken across multiple divisions of Aurelius Global Media Group PLC during the same period.

Paragraphs 39 Through 43 (Expense Reimbursement — Cal. Lab. Code § 2802)

16. Responding to the allegations contained in Paragraphs 39 through 43 of the Complaint, AMA denies that it failed to reimburse Aldrich for $28,400 in business expenses, or that it failed to reimburse any properly documented business expense incurred by Aldrich in connection with his employment.

17. To the extent that any business expenses incurred by Aldrich were not reimbursed, AMA affirmatively alleges that Aldrich failed to submit proper documentation in support of such expenses and/or failed to follow AMA's established expense reimbursement procedures, including the requirement that all expenses exceeding $500 be submitted with receipts and managerial approval within 60 days of incurrence.

AFFIRMATIVE DEFENSES

AMA asserts the following affirmative defenses, without assuming any burden of proof that would otherwise rest with Aldrich:

FIRST AFFIRMATIVE DEFENSE

(Unclean Hands).

18. Aldrich's claims are barred, in whole or in part, by the equitable doctrine of unclean hands. Aldrich engaged in material breaches of his Employment Agreement and of the fiduciary duties owed to AMA during his employment, including the unauthorized transmission of confidential and proprietary information to his personal email account and to Halcyon Creek Productions LLC, a California limited liability company owned and operated by Aldrich's former business associate, Nina Castellanos. Aldrich's own inequitable conduct in connection with the very subject matter of this litigation precludes him from obtaining the relief he seeks.

SECOND AFFIRMATIVE DEFENSE

("For Cause" Termination)

19. Aldrich's breach of contract and wrongful termination claims are barred because AMA terminated Aldrich's employment "for cause" within the meaning of Section 7.2(b) of the Employment Agreement. The termination was based on documented policy violations and material breach of the Employment Agreement, and was supported by the following specific grounds:

(i) Material breach of the Employment Agreement under Section 7.2(b)(i), specifically the confidentiality obligations set forth in Section 9.4;

(ii) Material violation of AMA's written Acceptable Use and Confidentiality Policy under Section 7.2(b)(vi);

(iii) Misappropriation of AMA's proprietary materials and trade secrets under Section 7.2(b)(ii); and

(iv) Willful misconduct materially injurious to AMA under Section 7.2(b)(v), including the transmission of proprietary information to a competitor and the dissemination of disparaging communications to subordinate employees.

20. Because AMA's termination of Aldrich was for cause, Aldrich is not entitled to severance pay, pro-rata bonus, accelerated vesting of RSUs, COBRA subsidy, or any other benefits conditioned upon a termination without cause under the Employment Agreement.

THIRD AFFIRMATIVE DEFENSE

(Failure to Mitigate)

21. To the extent Aldrich claims damages for lost compensation, lost future earnings, or any other economic loss, Aldrich's recovery, if any, must be reduced by the amount he could have earned through the exercise of reasonable diligence in seeking and obtaining comparable employment. Upon information and belief, Aldrich has failed to mitigate his damages by failing to seek and obtain employment comparable to his position at AMA, or by unreasonably rejecting or failing to pursue available opportunities.

FOURTH AFFIRMATIVE DEFENSE

(Waiver and Estoppel)

22. Aldrich's claims regarding the restrictive covenant provisions of the Employment Agreement are barred, in whole or in part, by the doctrines of waiver and estoppel. Aldrich voluntarily entered into the Employment Agreement, including the First Amendment dated August 1, 2020, which Aldrich negotiated through his own independent legal counsel, with full knowledge of and consent to the restrictive covenant provisions set forth in Section 9. Aldrich received substantial consideration in exchange for his agreement to be bound by such provisions, including an increase in base salary, a promotion in title, and the grant of additional RSUs. Having knowingly and voluntarily accepted the benefits of the Employment Agreement, Aldrich is estopped from challenging the enforceability of its restrictive covenant provisions.

FIFTH AFFIRMATIVE DEFENSE

(Setoff and Recoupment)

23. Any damages to which Aldrich may be found entitled in this action are subject to offset and recoupment based on AMA's affirmative claims against Aldrich, as set forth in the Cross-Complaint filed herewith. Such affirmative claims include damages for breach of the Employment Agreement, misappropriation of trade secrets, breach of fiduciary duty, and conversion, the amounts of which are to be proven at trial.

SIXTH AFFIRMATIVE DEFENSE

(Statute of Limitations)

24. Certain of Aldrich's claims, or portions thereof, are barred, in whole or in part, by the applicable statutes of limitations, including but not limited to California Code of Civil Procedure Sections 335.1, 337, 338, and 339, and any other applicable limitations periods. AMA reserves the right to identify the specific claims and limitations periods at issue upon completion of discovery.

SEVENTH AFFIRMATIVE DEFENSE

(Choice of Law)

25. The Employment Agreement is governed by the laws of the State of New York pursuant to the choice-of-law clause set forth in Section 14.3. To the extent that the Court determines that California law applies to any aspect of this dispute, AMA reserves all arguments regarding the enforceability of the restrictive covenant provisions and any other contractual provisions under applicable California law, including but not limited to California Business and Professions Code Section 16600 and related authority.

EIGHTH AFFIRMATIVE DEFENSE

(Reservation of Rights)

26. AMA reserves the right to amend this Answer to assert additional affirmative defenses as they become known through the course of discovery, further investigation, or otherwise. AMA has not yet had the opportunity to conduct discovery in this action and expressly reserves the right to supplement its affirmative defenses as warranted by the facts and circumstances revealed through the discovery process.

PART II

CROSS-COMPLAINT

Cross-Complainant AURELIUS MEDIA AMERICAS INC. ("AMA" or "Cross-Complainant") hereby alleges and cross-complains against Cross-Defendant GAVIN ALDRICH ("Aldrich" or "Cross-Defendant") as follows:

INTRODUCTORY ALLEGATIONS

27. AMA is a corporation organized and existing under the laws of the State of Delaware. AMA is a wholly owned subsidiary of Aurelius Global Media Group PLC ("AGMG"), a public limited company organized under the laws of England and Wales and listed on the London Stock Exchange under the ticker symbol AGMG. AMA's principal office is located at 8500 Sunset Boulevard, Suite 1400, West Hollywood, California 90069. AMA is qualified to do business in the State of California.

28. AMA employs approximately 3,200 employees in the United States, of whom approximately 2,400 are based in California. AMA operates seven California production facilities and 14 distinct show units engaged in the production of unscripted and reality television content, digital content, and live events programming. For fiscal year 2022, AMA's United States revenue was approximately $687.4 million.

29. AMA's President is Jonathan Mercer. AMA's Senior Vice President of Human Resources is Lorraine Okafor. AMA's Vice President of Legal & Compliance is Gregory Tanaka.

30. On information and belief, Cross-Defendant Gavin Aldrich is an individual residing in the County of Los Angeles, State of California. Aldrich is the Plaintiff in the above-captioned action and is subject to the jurisdiction of this Court.

31. AMA brings this Cross-Complaint against Aldrich for breach of the Employment Agreement, misappropriation of trade secrets, breach of fiduciary duty, and conversion, arising out of Aldrich's unauthorized transmission of AMA's confidential and proprietary information to his personal email account and to a competitor, Halcyon Creek Productions LLC, during and following his employment with AMA.

COMMON FACTUAL ALLEGATIONS

The following factual allegations are common to all causes of action set forth in this Cross-Complaint and are incorporated by reference in each cause of action.

A. Employment and Position

32. AMA employed Gavin Aldrich from September 5, 2017 through October 14, 2022. Aldrich's initial title upon hire was Vice President of Original Content. Effective January 1, 2020, in connection with the First Amendment to Employment Agreement dated August 1, 2020, Aldrich was promoted to the position of Senior Vice President of Original Content & Executive Producer.

33. At the time of his termination, Aldrich's base salary was $485,000 per year. Aldrich's last annual bonus, paid for fiscal year 2021, was $225,000. In connection with his employment, Aldrich was granted a total of 42,500 restricted stock units ("RSUs") of AGMG, of which 15,300 remained unvested at the time of his termination.

34. Aldrich reported directly to Jonathan Mercer, President of AMA. Aldrich oversaw AMA's Unscripted Programming Division, which encompassed multiple show units responsible for the development, production, and post-production of AMA's unscripted and reality television programming. Among Aldrich's direct reports was Dwayne Prescott, Vice President of Unscripted Programming.

35. By virtue of his senior executive position, Aldrich had broad access to AMA's most sensitive and competitively valuable confidential information, including show concepts and format bibles in various stages of development, audience analytics and viewership data, revenue projections and financial models for individual show units, talent compensation structures and deal terms, production budgets and cost models, network and platform relationship strategies, and advertising pricing and CPM data.

B. Employment Agreement and Policies

36. The terms and conditions of Aldrich's employment with AMA were governed by the Employment Agreement dated September 5, 2017, as amended by the First Amendment to Employment Agreement dated August 1, 2020 (collectively, the "Employment Agreement"). The Employment Agreement was negotiated at arm's length and, with respect to the August 1, 2020 amendment, Aldrich was represented by his own independent legal counsel.

37. Section 9 of the Employment Agreement contains restrictive covenant provisions, including:

(a) Section 9.1 (Non-Competition): For a period of 18 months following the termination of Aldrich's employment for any reason, Aldrich agreed not to render services, directly or indirectly, to any "Competing Enterprise." The Employment Agreement defines "Competing Enterprise" as any entity deriving 25% or more of its revenue from the production, licensing, or distribution of unscripted or reality television programming in North America.

(b) Section 9.2 (Non-Solicitation of Employees): For a period of 24 months following the termination of Aldrich's employment, Aldrich agreed not to solicit, recruit, hire, or induce to leave the employ of AMA any employee of AMA with whom Aldrich worked within the 12 months preceding termination.

(c) Section 9.3 (Non-Solicitation of Business Relationships): For a period of 24 months following the termination of Aldrich's employment, Aldrich agreed not to solicit, divert, or appropriate any network, platform, or advertiser client of AMA with whom Aldrich had material contact during the 24 months preceding termination.

(d) Section 9.4 (Confidentiality): Aldrich agreed, for an indefinite period surviving the termination of his employment, not to disclose, use, or transmit "Confidential Information" to any person or entity other than in the furtherance of his duties to AMA. The Employment Agreement defines "Confidential Information" to include, without limitation, "proprietary content, show formats, audience data, revenue projections, talent agreements, and all information designated as confidential by the Company."

38. Section 14.3 of the Employment Agreement provides that the Employment Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflict of laws.

39. In addition to the Employment Agreement, Aldrich was subject to AMA's Acceptable Use and Confidentiality Policy (last revised March 2021) (the "AUC Policy"). The AUC Policy expressly prohibits employees from "transmitting, forwarding, or copying Company proprietary information, trade secrets, or confidential data to personal email accounts, personal cloud storage, or non-Company-approved third-party recipients." The AUC Policy further requires that any external transmission of proprietary information be approved in advance by the employee's supervisor and the VP of Business Affairs.

40. Aldrich signed a written acknowledgment of the AUC Policy on April 12, 2021, confirming that he had read, understood, and agreed to comply with the policy's terms and conditions.

C. DLP Audit and discovery of Confidentiality Violations

41. In August 2022, AMA's Information Technology security team, under the direction of Gregory Tanaka, VP of Legal & Compliance, initiated a routine data loss prevention ("DLP") audit of email and file-sharing activity across AMA's corporate systems. DLP audits are conducted periodically by AMA as part of its information security program and are designed to detect unauthorized transmission of confidential and proprietary data.

42. During the course of the DLP audit, AMA's IT security team identified anomalous email forwarding activity originating from Aldrich's AMA corporate email account (galdrich@aureliusmedia.com). The audit revealed a pattern of significant volumes of emails being forwarded to an external personal email address, as well as a smaller number of transmissions to a third-party corporate email address.

43. The preliminary findings of the DLP audit were reported to Gregory Tanaka on September 6, 2022. Based on the severity and scope of the anomalous activity, Tanaka authorized a more detailed forensic review of Aldrich's AMA-issued laptop and email account. The forensic review was completed on October 3, 2022, and confirmed the full scope of Aldrich's unauthorized transmissions as set forth below.

D. Unauthorized Transmissions to Personal Email Account

44. The forensic review established that, between approximately July 12, 2021 and September 29, 2022, Aldrich forwarded approximately 340 emails from his AMA corporate email account (galdrich@aureliusmedia.com) to his personal email account (galdrich.private@Northgate Software.com). These emails contained a wide range of confidential and proprietary AMA information, including but not limited to:

(a) Forty-seven (47) emails containing show concept documents, including one-sheets, treatments, and format bibles for programs in various stages of development;

(b) Twenty-two (22) emails containing audience analytics reports, including viewership data, demographic breakdowns, and platform performance metrics;

(d) Fourteen (14) emails containing talent deal terms and compensation information, including per-episode fees, backend participation structures, and exclusivity arrangements; and

(e) The remainder consisting of production schedules, internal strategy memoranda, executive communications, and miscellaneous business correspondence containing confidential business information.

45. None of these transmissions was authorized by AMA. At no time did Aldrich request or obtain prior written approval from the President of AMA, the VP of Business Affairs, or any other authorized individual for the transmission of confidential information to his personal email account. Aldrich's forwarding of these emails was in direct violation of Section 9.4 of the Employment Agreement and the AUC Policy.

E. Unauthorized Transmissions to Halcyon Creek Productions LLC

46. The forensic review further established that, between approximately March 3, 2022 and August 18, 2022, Aldrich sent seven (7) emails from his AMA corporate email account to info@halcyoncreekprod.com, the email address of Halcyon Creek Productions LLC ("Halcyon Creek"), a California limited liability company.

47. According to records of the California Secretary of State, Halcyon Creek Productions LLC was formed in the State of California on February 14, 2022. Halcyon Creek was formed by Nina Castellanos, a former AMA development executive who left AMA's employ voluntarily in January 2022. On information and belief, Castellanos is the sole or managing member of Halcyon Creek. Aldrich and Castellanos have a long-standing professional relationship predating their respective employment with AMA, having previously worked together at a prior production company.

48. Halcyon Creek operates in the unscripted and reality television space and is, on information and belief, a competitor of AMA within the meaning of the Employment Agreement's definition of "Competing Enterprise."

49. The seven emails transmitted by Aldrich to Halcyon Creek contained the following proprietary materials belonging to AMA:

(a) Three (3) unscripted show format bibles, for concepts titled "Apex Endurance," "The Remix," and "Untamed West";

(b) Two (2) pilot sizzle reels, for "Apex Endurance" and "The Remix," transmitted as Larkspur Technologies download links from Aldrich's personal Larkspur Technologies account (indicating that Aldrich had previously copied the sizzle reel files from AMA's secure systems to his personal cloud storage); and

(c) A detailed revenue model for "Summit Challenge," AMA's top-performing unscripted franchise, which generates approximately $42 million in annual revenue.

50. The revenue model for "Summit Challenge" is among the most competitively sensitive documents in AMA's portfolio. It contains line-item financial projections including per-episode production costs, network license fees, international distribution revenues, advertising cost-per-thousand (CPM) rates, and talent compensation structures. Disclosure of this information to a competitor could cause substantial competitive harm to AMA by revealing AMA's pricing strategies, cost structures, and profit margins.

F. Proprietary Value of Transmitted Materials

51. Show format bibles are a core component of AMA's intellectual property. The development of a show format bible requires significant creative effort and financial investment, with a typical development investment ranging from $50,000 to $150,000 per concept, encompassing concept research, creative development, format design, competitive analysis, pilot scripting, and market testing.

52. "Apex Endurance" is an outdoor adventure competition format. AMA invested approximately $120,000 in development costs for this concept. At the time of Aldrich's termination, AMA was engaged in preliminary discussions with two major streaming platforms regarding the potential production and licensing of the program.

53. "The Remix" is a music-driven talent competition format. AMA invested approximately $85,000 in development costs for this concept, which was in early-stage development at the time of Aldrich's termination.

54. "Untamed West" is a docu-series format set in rural and frontier communities. AMA invested approximately $95,000 in development costs for this concept. A sizzle reel had been produced for "Untamed West," and AMA's business affairs team was engaged in active pitch meetings with cable networks at the time of Aldrich's termination.

55. "Summit Challenge" is AMA's flagship unscripted program, currently in its fifth season. The program generates approximately $42 million in annual revenue for AMA across network license fees, international distribution, advertising, and ancillary revenue streams. The revenue model transmitted by Aldrich to Halcyon Creek is among the most competitively sensitive financial documents produced by AMA, and its disclosure to a competitor poses a significant risk of competitive harm.

56. All of the materials described above were stored on AMA's secure internal content management system, which requires individual login credentials for access. All such materials were watermarked with the legend "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC." The external transmission of development materials, including show format bibles, sizzle reels, and revenue models, requires prior written approval from either the President of AMA or the VP of Business Affairs. No such approval was given or sought by Aldrich for any of the transmissions described herein.

G. Insubordination.

57. Although the insubordination described below is not the primary basis for the Cross-Complaint, it provides relevant context for Aldrich's termination and the events giving rise to this action.

58. In early October 2022, Jonathan Mercer, President of AMA, directed Aldrich to restructure the Unscripted Programming Division by consolidating two underperforming show units and reducing divisional headcount by approximately 15%. The restructuring was driven by declining advertising revenues experienced in the third quarter of 2022 and was consistent with cost-efficiency measures being implemented across multiple AGMG subsidiaries.

59. On October 10, 2022, Aldrich sent an email to Mercer refusing to comply with the restructuring directive, characterizing it as "creatively bankrupt and commercially idiotic." On October 11, 2022, Mercer issued a formal written warning to Aldrich, directing him to comply with the restructuring plan. Later on October 11, 2022, Aldrich forwarded the email chain between himself and Mercer to six subordinate employees, including three show-runners and two division heads, accompanied by the comment: "For your awareness — the London suits are gutting our operation."

60. On October 14, 2022, AMA terminated Aldrich's employment for cause, citing both the findings of the DLP audit (including the unauthorized transmissions to his personal email account and to Halcyon Creek Productions LLC) and his insubordination in refusing to comply with the restructuring directive and disseminating disparaging communications to subordinates.

FIRST CAUSE OF ACTION

Breach of Employment Agreement (Sections 9.1, 9.2, 9.3, and 9.4)

(Against Cross-Defendant Gavin Aldrich)

61. AMA incorporates by reference and realleges each and every allegation set forth in Paragraphs 27 through 60, inclusive, as though fully set forth herein.

62. On or about September 5, 2017, AMA and Aldrich entered into the Employment Agreement, which was subsequently amended by the First Amendment to Employment Agreement dated August 1, 2020. The Employment Agreement is a valid, binding, and enforceable contract between AMA and Aldrich.

63. Section 9.4 of the Employment Agreement prohibits 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." This obligation survives the termination of Aldrich's employment for any reason.

64. Aldrich materially breached Section 9.4 of the Employment Agreement by:

(a) Forwarding approximately 340 emails containing Confidential Information from his AMA corporate email account to his personal email account (galdrich.private@Northgate Software.com) between approximately July 12, 2021 and September 29, 2022; and

(b) Transmitting three unscripted show format bibles (for "Apex Endurance," "The Remix," and "Untamed West"), two pilot sizzle reels (for "Apex Endurance" and "The Remix"), and the "Summit Challenge" revenue model to Halcyon Creek Productions LLC, a competitor of AMA, between approximately March 3, 2022 and August 18, 2022.

65. Aldrich's conduct also constitutes a breach of Section 9.1 (Non-Competition), Section 9.2 (Non-Solicitation of Employees), and Section 9.3 (Non-Solicitation of Business Relationships) of the Employment Agreement, to the extent that his unauthorized transmission of Confidential Information to Halcyon Creek Productions LLC facilitated, or was undertaken in furtherance of, competitive activity, employee solicitation, or the diversion of business relationships during the term of his employment.

66. AMA performed all conditions, covenants, and obligations required of it under the Employment Agreement, or was excused from such performance by reason of Aldrich's material breach.

67. As a direct and proximate result of Aldrich's breach of the Employment Agreement, AMA has been damaged in an amount to be proven at trial, but not less than the value of the proprietary information transmitted by Aldrich and the competitive harm resulting from the disclosure of such information to Aldrich's personal account and to Halcyon Creek Productions LLC. AMA's damages include, without limitation, the development costs invested in the three show format concepts (totaling approximately $300,000), the competitive harm arising from the disclosure of the "Summit Challenge" revenue model, and the costs of remediation, investigation, and enhanced security measures undertaken by AMA as a result of Aldrich's breach.

SECOND CAUSE OF ACTION

Misappropriation of Trade Secrets (Cal. Civ. Code § 3426 et seq. — California Uniform Trade Secrets Act)

(Against Cross-Defendant Gavin Aldrich)

68. AMA incorporates by reference and realleges each and every allegation set forth in Paragraphs 27 through 60, inclusive, as though fully set forth herein.

69. 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 transmitted by Aldrich constitute "trade secrets" within the meaning of California Civil Code Section 3426.1(d).

70. Specifically, these materials satisfy both elements of the statutory definition of "trade secret":

(a) Independent Economic Value. The materials described herein derive independent economic value, actual and potential, from not being generally known to the public or to other persons who can obtain economic value from their disclosure or use. Show format bibles embody the creative concepts, structural frameworks, and competitive differentiators that form the foundation of AMA's programming pipeline. The "Summit Challenge" revenue model contains detailed financial projections, pricing strategies, and cost structures that are not publicly available and that would provide a significant competitive advantage to any competitor obtaining access to them. Audience analytics, viewership data, and talent compensation structures are similarly confidential and commercially valuable.

(b) Reasonable Efforts to Maintain Secrecy. AMA has taken reasonable measures under the circumstances to maintain the secrecy of these materials, including: (i) the confidentiality provisions of Section 9.4 of the Employment Agreement; (ii) the AUC Policy, which expressly prohibits unauthorized transmission of proprietary information; (iii) the use of secure internal content management systems requiring individual login credentials for access; (iv) the watermarking of proprietary documents with the legend "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC."; (v) access controls limiting access to confidential materials to authorized personnel on a need-to-know basis; and (vi) the requirement of prior written approval from the President of AMA or the VP of Business Affairs for any external transmission of development materials.

71. Aldrich acquired access to these trade secrets through his employment with AMA and the position of trust and confidence he occupied as Senior Vice President and Executive Producer. At all relevant times, Aldrich was under an obligation to maintain the secrecy of these trade secrets pursuant to the Employment Agreement, the AUC Policy, and his fiduciary duties to AMA.

72. Aldrich's unauthorized transmission of these trade secrets to his personal email account (galdrich.private@Northgate Software.com) and to Halcyon Creek Productions LLC (info@halcyoncreekprod.com) constitutes "misappropriation" within the meaning of California Civil Code Section 3426.1(b)(2). Specifically, Aldrich's conduct constitutes the disclosure or use of a trade secret by a person who, at the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. Aldrich was at all relevant times fully aware of his confidentiality obligations under the Employment Agreement and the AUC Policy, having signed a written acknowledgment of the AUC Policy on April 12, 2021.

73. AMA has been damaged by Aldrich's misappropriation of its trade secrets. AMA's damages include, without limitation, the actual loss caused by the misappropriation, the unjust enrichment caused by the misappropriation that is not taken into account in computing the actual loss, and a reasonable royalty for the unauthorized disclosure and use of AMA's trade secrets.

74. AMA is entitled to injunctive relief under California Civil Code Section 3426.2 to prevent further misappropriation by Aldrich, including but not limited to an order (a) prohibiting Aldrich from using, disclosing, or exploiting any of AMA's trade secrets, (b) requiring Aldrich to return or destroy all copies of AMA's trade secrets in his possession, custody, or control, and (c) prohibiting Halcyon Creek Productions LLC (if joined as a party to this action or any related proceeding) from using, disclosing, or exploiting any of AMA's trade secrets received from Aldrich.

75. AMA is entitled to actual damages under California Civil Code Section 3426.3, including both the actual loss caused by the misappropriation and the unjust enrichment caused by the misappropriation.

76. Upon information and belief, Aldrich's misappropriation of AMA's trade secrets was willful and malicious. Aldrich deliberately and knowingly transmitted AMA's most sensitive proprietary materials to a competitor over a period of approximately five months, in direct violation of his contractual and fiduciary obligations, and without any legitimate business purpose. Accordingly, AMA is entitled to exemplary damages in an amount not exceeding twice the amount of any award of actual damages, pursuant to California Civil Code Section 3426.3(c).

THIRD CAUSE OF ACTION

Breach of Fiduciary Duty

(Against Cross-Defendant Gavin Aldrich)

77. AMA incorporates by reference and realleges each and every allegation set forth in Paragraphs 27 through 60, inclusive, as though fully set forth herein.

78. As Senior Vice President of Original Content & Executive Producer of AMA, Aldrich occupied a senior executive position of trust and confidence. By virtue of his position, Aldrich owed fiduciary duties of loyalty and care to AMA, including the duty to act in AMA's best interests, to refrain from self-dealing and conflicts of interest, to protect AMA's confidential information, and to refrain from unauthorized disclosure of proprietary materials.

79. Aldrich breached his fiduciary duties to AMA by engaging in the following conduct:

(a) Transmitting AMA's confidential and proprietary information — including show format bibles, pilot sizzle reels, and the "Summit Challenge" revenue model — to Halcyon Creek Productions LLC, a competitor of AMA, for the purpose of advancing Aldrich's personal interests and/or the business interests of Halcyon Creek;

(b) Failing to disclose to AMA's management his relationship with Halcyon Creek and with Nina Castellanos, a former AMA employee who founded Halcyon Creek shortly after leaving AMA, despite the obvious conflict of interest created by such relationship;

(c) Forwarding approximately 340 emails containing confidential AMA information to his personal email account, outside the scope of his duties and without authorization, thereby undermining AMA's information security and exposing AMA's proprietary data to risk of further unauthorized disclosure or use; and

(d) Engaging in activities that created a direct conflict of interest between Aldrich's personal interests and his duties to AMA, including the apparent facilitation of a competing venture by a former AMA employee using AMA's own proprietary content and financial data.

80. Aldrich's breaches of fiduciary duty were knowing, intentional, and in disregard of his obligations to AMA. Aldrich was fully aware of the confidential nature of the materials he transmitted, the competitive implications of providing such materials to Halcyon Creek, and the conflict of interest inherent in his relationship with Nina Castellanos and Halcyon Creek.

81. As a direct and proximate result of Aldrich's breach of fiduciary duty, AMA has been damaged in an amount to be proven at trial, including but not limited to the loss of competitive advantage, the diminished value of proprietary content, the costs of investigation and remediation, and any unjust enrichment obtained by Aldrich or Halcyon Creek as a result of the misappropriated materials.

FOURTH CAUSE OF ACTION

Conversion

(Against Cross-Defendant Gavin Aldrich)

82. AMA incorporates by reference and realleges each and every allegation set forth in Paragraphs 27 through 60, inclusive, as though fully set forth herein.

83. AMA had and has exclusive 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 were created by AMA employees within the scope of their employment, are owned by AMA pursuant to the work-for-hire provisions of the Employment Agreement and applicable law, and were stored on AMA's secure internal content management systems.

84. Aldrich's unauthorized appropriation of these files — by copying them from AMA's secure systems to his personal email account and personal Larkspur Technologies account, and by transmitting them to Halcyon Creek Productions LLC — constitutes conversion of AMA's property. Aldrich's conduct constituted a knowing and intentional exercise of dominion and control over AMA's property in a manner inconsistent with AMA's ownership rights, and was without AMA's authorization or consent.

85. Aldrich's conversion of AMA's property was intentional, deliberate, and undertaken without any colorable claim of right. Aldrich knew that the materials in question were the exclusive property of AMA, that their external transmission required prior written authorization, and that no such authorization had been given.

86. As a direct and proximate result of Aldrich's conversion, AMA has suffered damages in an amount to be proven at trial, including but not limited to the value of the converted property, the diminished commercial value of proprietary content that has been disclosed to a competitor, and the consequential damages resulting from the conversion, including lost business opportunities, competitive harm, and the costs of investigation and remedial measures.

PRAYER FOR RELIEF

WHEREFORE, Cross-Complainant Aurelius Media Americas Inc. prays for judgment against Cross-Defendant Gavin Aldrich as follows:

1. On the First Cause of Action (Breach of Employment Agreement): For compensatory damages in an amount to be proven at trial, but not less than the value of the proprietary information transmitted and the competitive harm resulting from its disclosure;

2. On the Second Cause of Action (Misappropriation of Trade Secrets): For injunctive relief pursuant to California Civil Code Section 3426.2, prohibiting Aldrich (and Halcyon Creek Productions LLC, if joined as a party) from any further use, disclosure, or exploitation of AMA's trade secrets; for compensatory damages pursuant to California Civil Code Section 3426.3, including actual loss and unjust enrichment; and for exemplary damages in an amount not exceeding twice the amount of any actual damages award, pursuant to California Civil Code Section 3426.3(c), if the Court finds that Aldrich's misappropriation was willful and malicious;

3. On the Third Cause of Action (Breach of Fiduciary Duty): For compensatory damages in an amount to be proven at trial;

4. On the Fourth Cause of Action (Conversion): For compensatory and consequential damages in an amount to be proven at trial;

5. For attorneys' fees and costs of suit as permitted by law and/or by the terms of the Employment Agreement;

6. For pre-judgment and post-judgment interest at the maximum rate permitted by law;

7. For such other and further relief as this Court deems just and proper.

Dated: ___, 2023

CALDERWOOD & HARKNESS LLP

By: ________

Renata Vasquez (SBN 224578) Devon Archer (SBN 301462) 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200

Attorneys for Defendant and Cross-Complainant AURELIUS MEDIA AMERICAS INC.

[DRAFT — pending client review. Expected filing date: January 20, 2023. Client contacts for review: Gregory Tanaka (VP Legal & Compliance, AMA) and Philippa Cartwright (General Counsel, AGMG).]

[Note to team: Confirm with Greg Tanaka whether AMA intends to seek a TRO/preliminary injunction against Aldrich and Halcyon Creek in connection with the CUTSA claim. If so, we should prepare a separate motion and supporting declarations (Tanaka, IT forensics lead) on an expedited basis. — DA]

C&H Matter No.: 1017-00004

GAVIN ALDRICH,	Case No. 22STCV41087
Plaintiff,	Assigned to Hon. Catherine Villanueva, Dept. 52
v.	DEFENDANT AND CROSS-COMPLAINANT AURELIUS MEDIA AMERICAS INC.'S ANSWER TO COMPLAINT AND CROSS-COMPLAINT

AURELIUS MEDIA AMERICAS INC.,

Defendant.

AND RELATED CROSS-ACTION.

CALDERWOOD & HARKNESS LLP — CONFIDENTIAL — ATTORNEY WORK PRODUCT — DRAFT
[Working Draft — For Internal Review and Client Comment — Not for Filing]
Draft Date: January 12, 2023
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES — CENTRAL DISTRICT
Defendant and Cross-Complainant AURELIUS MEDIA AMERICAS INC. ("AMA" or "Defendant"), by and through its attorneys of record, Calderwood & Harkness LLP, hereby answers the Complaint filed by Plaintiff GAVIN ALDRICH ("Aldrich" or "Plaintiff") on December 9, 2022, and contemporaneously files this Cross-Complaint against Cross-Defendant GAVIN ALDRICH. AMA responds and alleges as follows:
PART I
ANSWER TO COMPLAINT
GENERAL DENIAL
1. Pursuant to California Code of Civil Procedure Section 431.30(d), Defendant AMA generally denies each and every allegation set forth in the Complaint filed by Plaintiff Gavin Aldrich on December 9, 2022. AMA denies that Aldrich has been damaged in any amount whatsoever, or that he is entitled to any relief, whether legal, equitable, or otherwise, as alleged in the Complaint or at all.
2. Without waiving the foregoing general denial, and in order to bring certain specific matters to the attention of this Court, AMA responds to certain allegations of the Complaint as follows:
SPECIFIC RESPONSES TO KEY ALLEGATIONS
Paragraphs 1 Through 10 (Background Allegations)
3. Responding to the allegations contained in Paragraphs 1 through 10 of the Complaint, AMA admits that Plaintiff Gavin Aldrich was employed by AMA from approximately September 5, 2017 through October 14, 2022. AMA further admits that, at the time of his termination, Aldrich held the title of Senior Vice President of Original Content & Executive Producer. AMA denies the remaining allegations set forth in Paragraphs 1 through 10 to the extent such allegations are inconsistent with the terms of Aldrich's Employment Agreement dated September 5, 2017, as amended by the First Amendment to Employment Agreement dated August 1, 2020 (collectively, the "Employment Agreement").
4. AMA admits that it is a corporation organized and existing under the laws of the State of Delaware, and that it is a wholly owned subsidiary of Aurelius Global Media Group PLC, a public limited company organized and existing under the laws of England and Wales, registered at Companies House under Company Number 08412667. AMA further admits that it is qualified to do business in the State of California and maintains its principal office at 8500 Sunset Boulevard, Suite 1400, West Hollywood, California 90069.
Paragraphs 11 Through 18 (Termination Allegations)
5. Responding to the allegations contained in Paragraphs 11 through 18 of the Complaint, AMA admits that it terminated Aldrich's employment on October 14, 2022. AMA further admits that the termination was designated as "for cause" under Section 7.2(b) of the Employment Agreement.
6. AMA denies that the "for cause" designation was pretextual, retaliatory, or otherwise improper in any respect. AMA affirmatively alleges that Aldrich's termination was based on Aldrich's material breach of the Employment Agreement, including but not limited to violations of the confidentiality provisions set forth in Section 9.4 thereof, and Aldrich's material violation of AMA's Acceptable Use and Confidentiality Policy (last revised March 2021).
7. Specifically, and without limitation, AMA affirmatively alleges that the "for cause" termination was justified on the following grounds:
(i) Unauthorized Transmission of Confidential Information. Between approximately July 12, 2021 and September 29, 2022, Aldrich forwarded approximately 340 emails from his AMA corporate email account (galdrich@aureliusmedia.com) to his personal email account (galdrich.private@Northgate Software.com), which emails contained confidential and proprietary information belonging to AMA. Additionally, between approximately March 3, 2022 and August 18, 2022, Aldrich transmitted proprietary materials — including three unscripted show format bibles, two pilot sizzle reels, and a detailed revenue model for AMA's flagship program "Summit Challenge" — to Halcyon Creek Productions LLC, a competitor of AMA, via the email address info@halcyoncreekprod.com. None of these transmissions was authorized by AMA.
(ii) Insubordination. In early October 2022, Aldrich refused to comply with a restructuring directive issued by AMA's President, Jonathan Mercer, characterizing the directive as "creatively bankrupt and commercially idiotic" in a written communication to Mercer, and subsequently forwarding the email chain to six subordinate employees with the comment: "For your awareness — the London suits are gutting our operation." These actions constituted willful insubordination and disparagement in violation of the Employment Agreement.
Paragraphs 19 Through 26 (Restrictive Covenant Allegations)
8. Responding to the allegations contained in Paragraphs 19 through 26 of the Complaint, AMA admits that Section 9 of the Employment Agreement contains restrictive covenant provisions, including:
(a) Section 9.1 (Non-Competition): A non-competition covenant of 18 months following termination of employment, applicable to any "Competing Enterprise," defined in the Employment Agreement as any entity deriving 25% or more of its revenue from the production, licensing, or distribution of unscripted or reality television programming in North America;
(b) Section 9.2 (Non-Solicitation of Employees): A non-solicitation covenant of 24 months following termination of employment, prohibiting Aldrich from soliciting, recruiting, or inducing any employee of AMA with whom Aldrich worked within the 12 months preceding termination to leave AMA's employ;
(c) Section 9.3 (Non-Solicitation of Business Relationships): A non-solicitation covenant of 24 months following termination of employment, prohibiting Aldrich from soliciting or diverting any network, platform, or advertiser client of AMA with whom Aldrich had material contact during the 24 months preceding termination; and
(d) Section 9.4 (Confidentiality): An indefinite confidentiality covenant prohibiting the disclosure, use, or transmission of Confidential Information, including but not limited to proprietary content, show formats, revenue data, audience analytics, and talent agreements.
9. AMA denies that any of the restrictive covenant provisions contained in Section 9 of the Employment Agreement are void, unenforceable, or otherwise invalid. AMA affirmatively alleges that the restrictive covenant provisions are reasonable in scope, duration, and geographic reach, are narrowly tailored to protect AMA's legitimate business interests, and are enforceable under applicable law.
10. AMA further affirmatively alleges that the Employment Agreement is governed by the laws of the State of New York, without regard to conflict-of-law principles, pursuant to the choice-of-law clause set forth in Section 14.3 of the Employment Agreement. To the extent that California law applies to any aspect of this dispute, AMA reserves all arguments regarding the enforceability of the restrictive covenant provisions under applicable California law.
Paragraphs 27 Through 32 (Damages Claims)
11. Responding to the allegations contained in Paragraphs 27 through 32 of the Complaint, AMA denies that Aldrich is entitled to severance pay in the amount of $970,000 (representing 24 months of Aldrich's base salary of $485,000 per year), or in any amount. AMA denies that Aldrich is entitled to a pro-rata bonus in the amount of $168,750, or in any amount. AMA denies that Aldrich is entitled to accelerated vesting of 15,300 restricted stock units of Aurelius Global Media Group PLC (with an estimated value of approximately $332,200 at the time of termination), or any accelerated vesting of any RSUs.
12. AMA further denies that Aldrich is entitled to any COBRA premium subsidy, expense reimbursement in the amount of $28,400 (or in any amount), emotional distress damages in the amount of $500,000 (or in any amount), lost future compensation in the amount of $1,200,000 (or in any amount), attorneys' fees in the amount of $750,000 (or in any amount), or punitive damages in the amount of $200,000 (or in any amount).
13. AMA denies that Aldrich is entitled to any damages in the total aggregate amount of $4,150,000 as alleged in the Complaint, or in any amount whatsoever.
Paragraphs 33 Through 38 (Wrongful Termination in Violation of Public Policy)
14. Responding to the allegations contained in Paragraphs 33 through 38 of the Complaint, AMA denies that Aldrich's termination was in retaliation for any protected activity, or that the termination was otherwise wrongful or in violation of any public policy of the State of California or any other jurisdiction.
15. AMA denies Aldrich's allegation that the restructuring directive issued by Jonathan Mercer was an effort to misclassify employees or to reduce overtime costs through improper means. AMA affirmatively alleges that the restructuring of the Unscripted Programming Division was a legitimate cost-efficiency measure driven by declining advertising revenues experienced by AMA during the third quarter of fiscal year 2022, and was consistent with similar restructuring initiatives undertaken across multiple divisions of Aurelius Global Media Group PLC during the same period.
Paragraphs 39 Through 43 (Expense Reimbursement — Cal. Lab. Code § 2802)
16. Responding to the allegations contained in Paragraphs 39 through 43 of the Complaint, AMA denies that it failed to reimburse Aldrich for $28,400 in business expenses, or that it failed to reimburse any properly documented business expense incurred by Aldrich in connection with his employment.
17. To the extent that any business expenses incurred by Aldrich were not reimbursed, AMA affirmatively alleges that Aldrich failed to submit proper documentation in support of such expenses and/or failed to follow AMA's established expense reimbursement procedures, including the requirement that all expenses exceeding $500 be submitted with receipts and managerial approval within 60 days of incurrence.
AFFIRMATIVE DEFENSES
AMA asserts the following affirmative defenses, without assuming any burden of proof that would otherwise rest with Aldrich:
FIRST AFFIRMATIVE DEFENSE
(Unclean Hands).
18. Aldrich's claims are barred, in whole or in part, by the equitable doctrine of unclean hands. Aldrich engaged in material breaches of his Employment Agreement and of the fiduciary duties owed to AMA during his employment, including the unauthorized transmission of confidential and proprietary information to his personal email account and to Halcyon Creek Productions LLC, a California limited liability company owned and operated by Aldrich's former business associate, Nina Castellanos. Aldrich's own inequitable conduct in connection with the very subject matter of this litigation precludes him from obtaining the relief he seeks.
SECOND AFFIRMATIVE DEFENSE
("For Cause" Termination)
19. Aldrich's breach of contract and wrongful termination claims are barred because AMA terminated Aldrich's employment "for cause" within the meaning of Section 7.2(b) of the Employment Agreement. The termination was based on documented policy violations and material breach of the Employment Agreement, and was supported by the following specific grounds:
(i) Material breach of the Employment Agreement under Section 7.2(b)(i), specifically the confidentiality obligations set forth in Section 9.4;
(ii) Material violation of AMA's written Acceptable Use and Confidentiality Policy under Section 7.2(b)(vi);
(iii) Misappropriation of AMA's proprietary materials and trade secrets under Section 7.2(b)(ii); and
(iv) Willful misconduct materially injurious to AMA under Section 7.2(b)(v), including the transmission of proprietary information to a competitor and the dissemination of disparaging communications to subordinate employees.
20. Because AMA's termination of Aldrich was for cause, Aldrich is not entitled to severance pay, pro-rata bonus, accelerated vesting of RSUs, COBRA subsidy, or any other benefits conditioned upon a termination without cause under the Employment Agreement.
THIRD AFFIRMATIVE DEFENSE
(Failure to Mitigate)
21. To the extent Aldrich claims damages for lost compensation, lost future earnings, or any other economic loss, Aldrich's recovery, if any, must be reduced by the amount he could have earned through the exercise of reasonable diligence in seeking and obtaining comparable employment. Upon information and belief, Aldrich has failed to mitigate his damages by failing to seek and obtain employment comparable to his position at AMA, or by unreasonably rejecting or failing to pursue available opportunities.
FOURTH AFFIRMATIVE DEFENSE
(Waiver and Estoppel)
22. Aldrich's claims regarding the restrictive covenant provisions of the Employment Agreement are barred, in whole or in part, by the doctrines of waiver and estoppel. Aldrich voluntarily entered into the Employment Agreement, including the First Amendment dated August 1, 2020, which Aldrich negotiated through his own independent legal counsel, with full knowledge of and consent to the restrictive covenant provisions set forth in Section 9. Aldrich received substantial consideration in exchange for his agreement to be bound by such provisions, including an increase in base salary, a promotion in title, and the grant of additional RSUs. Having knowingly and voluntarily accepted the benefits of the Employment Agreement, Aldrich is estopped from challenging the enforceability of its restrictive covenant provisions.
FIFTH AFFIRMATIVE DEFENSE
(Setoff and Recoupment)
23. Any damages to which Aldrich may be found entitled in this action are subject to offset and recoupment based on AMA's affirmative claims against Aldrich, as set forth in the Cross-Complaint filed herewith. Such affirmative claims include damages for breach of the Employment Agreement, misappropriation of trade secrets, breach of fiduciary duty, and conversion, the amounts of which are to be proven at trial.
SIXTH AFFIRMATIVE DEFENSE
(Statute of Limitations)
24. Certain of Aldrich's claims, or portions thereof, are barred, in whole or in part, by the applicable statutes of limitations, including but not limited to California Code of Civil Procedure Sections 335.1, 337, 338, and 339, and any other applicable limitations periods. AMA reserves the right to identify the specific claims and limitations periods at issue upon completion of discovery.
SEVENTH AFFIRMATIVE DEFENSE
(Choice of Law)
25. The Employment Agreement is governed by the laws of the State of New York pursuant to the choice-of-law clause set forth in Section 14.3. To the extent that the Court determines that California law applies to any aspect of this dispute, AMA reserves all arguments regarding the enforceability of the restrictive covenant provisions and any other contractual provisions under applicable California law, including but not limited to California Business and Professions Code Section 16600 and related authority.
EIGHTH AFFIRMATIVE DEFENSE
(Reservation of Rights)
26. AMA reserves the right to amend this Answer to assert additional affirmative defenses as they become known through the course of discovery, further investigation, or otherwise. AMA has not yet had the opportunity to conduct discovery in this action and expressly reserves the right to supplement its affirmative defenses as warranted by the facts and circumstances revealed through the discovery process.
PART II
CROSS-COMPLAINT
Cross-Complainant AURELIUS MEDIA AMERICAS INC. ("AMA" or "Cross-Complainant") hereby alleges and cross-complains against Cross-Defendant GAVIN ALDRICH ("Aldrich" or "Cross-Defendant") as follows:
INTRODUCTORY ALLEGATIONS
27. AMA is a corporation organized and existing under the laws of the State of Delaware. AMA is a wholly owned subsidiary of Aurelius Global Media Group PLC ("AGMG"), a public limited company organized under the laws of England and Wales and listed on the London Stock Exchange under the ticker symbol AGMG. AMA's principal office is located at 8500 Sunset Boulevard, Suite 1400, West Hollywood, California 90069. AMA is qualified to do business in the State of California.
28. AMA employs approximately 3,200 employees in the United States, of whom approximately 2,400 are based in California. AMA operates seven California production facilities and 14 distinct show units engaged in the production of unscripted and reality television content, digital content, and live events programming. For fiscal year 2022, AMA's United States revenue was approximately $687.4 million.
29. AMA's President is Jonathan Mercer. AMA's Senior Vice President of Human Resources is Lorraine Okafor. AMA's Vice President of Legal & Compliance is Gregory Tanaka.
30. On information and belief, Cross-Defendant Gavin Aldrich is an individual residing in the County of Los Angeles, State of California. Aldrich is the Plaintiff in the above-captioned action and is subject to the jurisdiction of this Court.
31. AMA brings this Cross-Complaint against Aldrich for breach of the Employment Agreement, misappropriation of trade secrets, breach of fiduciary duty, and conversion, arising out of Aldrich's unauthorized transmission of AMA's confidential and proprietary information to his personal email account and to a competitor, Halcyon Creek Productions LLC, during and following his employment with AMA.
COMMON FACTUAL ALLEGATIONS
The following factual allegations are common to all causes of action set forth in this Cross-Complaint and are incorporated by reference in each cause of action.
A. Employment and Position
32. AMA employed Gavin Aldrich from September 5, 2017 through October 14, 2022. Aldrich's initial title upon hire was Vice President of Original Content. Effective January 1, 2020, in connection with the First Amendment to Employment Agreement dated August 1, 2020, Aldrich was promoted to the position of Senior Vice President of Original Content & Executive Producer.
33. At the time of his termination, Aldrich's base salary was $485,000 per year. Aldrich's last annual bonus, paid for fiscal year 2021, was $225,000. In connection with his employment, Aldrich was granted a total of 42,500 restricted stock units ("RSUs") of AGMG, of which 15,300 remained unvested at the time of his termination.
34. Aldrich reported directly to Jonathan Mercer, President of AMA. Aldrich oversaw AMA's Unscripted Programming Division, which encompassed multiple show units responsible for the development, production, and post-production of AMA's unscripted and reality television programming. Among Aldrich's direct reports was Dwayne Prescott, Vice President of Unscripted Programming.
35. By virtue of his senior executive position, Aldrich had broad access to AMA's most sensitive and competitively valuable confidential information, including show concepts and format bibles in various stages of development, audience analytics and viewership data, revenue projections and financial models for individual show units, talent compensation structures and deal terms, production budgets and cost models, network and platform relationship strategies, and advertising pricing and CPM data.
B. Employment Agreement and Policies
36. The terms and conditions of Aldrich's employment with AMA were governed by the Employment Agreement dated September 5, 2017, as amended by the First Amendment to Employment Agreement dated August 1, 2020 (collectively, the "Employment Agreement"). The Employment Agreement was negotiated at arm's length and, with respect to the August 1, 2020 amendment, Aldrich was represented by his own independent legal counsel.
37. Section 9 of the Employment Agreement contains restrictive covenant provisions, including:
(a) Section 9.1 (Non-Competition): For a period of 18 months following the termination of Aldrich's employment for any reason, Aldrich agreed not to render services, directly or indirectly, to any "Competing Enterprise." The Employment Agreement defines "Competing Enterprise" as any entity deriving 25% or more of its revenue from the production, licensing, or distribution of unscripted or reality television programming in North America.
(b) Section 9.2 (Non-Solicitation of Employees): For a period of 24 months following the termination of Aldrich's employment, Aldrich agreed not to solicit, recruit, hire, or induce to leave the employ of AMA any employee of AMA with whom Aldrich worked within the 12 months preceding termination.
(c) Section 9.3 (Non-Solicitation of Business Relationships): For a period of 24 months following the termination of Aldrich's employment, Aldrich agreed not to solicit, divert, or appropriate any network, platform, or advertiser client of AMA with whom Aldrich had material contact during the 24 months preceding termination.
(d) Section 9.4 (Confidentiality): Aldrich agreed, for an indefinite period surviving the termination of his employment, not to disclose, use, or transmit "Confidential Information" to any person or entity other than in the furtherance of his duties to AMA. The Employment Agreement defines "Confidential Information" to include, without limitation, "proprietary content, show formats, audience data, revenue projections, talent agreements, and all information designated as confidential by the Company."
38. Section 14.3 of the Employment Agreement provides that the Employment Agreement shall be governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflict of laws.
39. In addition to the Employment Agreement, Aldrich was subject to AMA's Acceptable Use and Confidentiality Policy (last revised March 2021) (the "AUC Policy"). The AUC Policy expressly prohibits employees from "transmitting, forwarding, or copying Company proprietary information, trade secrets, or confidential data to personal email accounts, personal cloud storage, or non-Company-approved third-party recipients." The AUC Policy further requires that any external transmission of proprietary information be approved in advance by the employee's supervisor and the VP of Business Affairs.
40. Aldrich signed a written acknowledgment of the AUC Policy on April 12, 2021, confirming that he had read, understood, and agreed to comply with the policy's terms and conditions.
C. DLP Audit and discovery of Confidentiality Violations
41. In August 2022, AMA's Information Technology security team, under the direction of Gregory Tanaka, VP of Legal & Compliance, initiated a routine data loss prevention ("DLP") audit of email and file-sharing activity across AMA's corporate systems. DLP audits are conducted periodically by AMA as part of its information security program and are designed to detect unauthorized transmission of confidential and proprietary data.
42. During the course of the DLP audit, AMA's IT security team identified anomalous email forwarding activity originating from Aldrich's AMA corporate email account (galdrich@aureliusmedia.com). The audit revealed a pattern of significant volumes of emails being forwarded to an external personal email address, as well as a smaller number of transmissions to a third-party corporate email address.
43. The preliminary findings of the DLP audit were reported to Gregory Tanaka on September 6, 2022. Based on the severity and scope of the anomalous activity, Tanaka authorized a more detailed forensic review of Aldrich's AMA-issued laptop and email account. The forensic review was completed on October 3, 2022, and confirmed the full scope of Aldrich's unauthorized transmissions as set forth below.
D. Unauthorized Transmissions to Personal Email Account
44. The forensic review established that, between approximately July 12, 2021 and September 29, 2022, Aldrich forwarded approximately 340 emails from his AMA corporate email account (galdrich@aureliusmedia.com) to his personal email account (galdrich.private@Northgate Software.com). These emails contained a wide range of confidential and proprietary AMA information, including but not limited to:
(a) Forty-seven (47) emails containing show concept documents, including one-sheets, treatments, and format bibles for programs in various stages of development;
(b) Twenty-two (22) emails containing audience analytics reports, including viewership data, demographic breakdowns, and platform performance metrics;
(c) Eighteen (18) emails containing revenue projections and profit-and-loss summaries for individual show units;
(d) Fourteen (14) emails containing talent deal terms and compensation information, including per-episode fees, backend participation structures, and exclusivity arrangements; and
(e) The remainder consisting of production schedules, internal strategy memoranda, executive communications, and miscellaneous business correspondence containing confidential business information.
45. None of these transmissions was authorized by AMA. At no time did Aldrich request or obtain prior written approval from the President of AMA, the VP of Business Affairs, or any other authorized individual for the transmission of confidential information to his personal email account. Aldrich's forwarding of these emails was in direct violation of Section 9.4 of the Employment Agreement and the AUC Policy.
E. Unauthorized Transmissions to Halcyon Creek Productions LLC
46. The forensic review further established that, between approximately March 3, 2022 and August 18, 2022, Aldrich sent seven (7) emails from his AMA corporate email account to info@halcyoncreekprod.com, the email address of Halcyon Creek Productions LLC ("Halcyon Creek"), a California limited liability company.
47. According to records of the California Secretary of State, Halcyon Creek Productions LLC was formed in the State of California on February 14, 2022. Halcyon Creek was formed by Nina Castellanos, a former AMA development executive who left AMA's employ voluntarily in January 2022. On information and belief, Castellanos is the sole or managing member of Halcyon Creek. Aldrich and Castellanos have a long-standing professional relationship predating their respective employment with AMA, having previously worked together at a prior production company.
48. Halcyon Creek operates in the unscripted and reality television space and is, on information and belief, a competitor of AMA within the meaning of the Employment Agreement's definition of "Competing Enterprise."
49. The seven emails transmitted by Aldrich to Halcyon Creek contained the following proprietary materials belonging to AMA:
(a) Three (3) unscripted show format bibles, for concepts titled "Apex Endurance," "The Remix," and "Untamed West";
(b) Two (2) pilot sizzle reels, for "Apex Endurance" and "The Remix," transmitted as Larkspur Technologies download links from Aldrich's personal Larkspur Technologies account (indicating that Aldrich had previously copied the sizzle reel files from AMA's secure systems to his personal cloud storage); and
(c) A detailed revenue model for "Summit Challenge," AMA's top-performing unscripted franchise, which generates approximately $42 million in annual revenue.
50. The revenue model for "Summit Challenge" is among the most competitively sensitive documents in AMA's portfolio. It contains line-item financial projections including per-episode production costs, network license fees, international distribution revenues, advertising cost-per-thousand (CPM) rates, and talent compensation structures. Disclosure of this information to a competitor could cause substantial competitive harm to AMA by revealing AMA's pricing strategies, cost structures, and profit margins.
F. Proprietary Value of Transmitted Materials
51. Show format bibles are a core component of AMA's intellectual property. The development of a show format bible requires significant creative effort and financial investment, with a typical development investment ranging from $50,000 to $150,000 per concept, encompassing concept research, creative development, format design, competitive analysis, pilot scripting, and market testing.
52. "Apex Endurance" is an outdoor adventure competition format. AMA invested approximately $120,000 in development costs for this concept. At the time of Aldrich's termination, AMA was engaged in preliminary discussions with two major streaming platforms regarding the potential production and licensing of the program.
53. "The Remix" is a music-driven talent competition format. AMA invested approximately $85,000 in development costs for this concept, which was in early-stage development at the time of Aldrich's termination.
54. "Untamed West" is a docu-series format set in rural and frontier communities. AMA invested approximately $95,000 in development costs for this concept. A sizzle reel had been produced for "Untamed West," and AMA's business affairs team was engaged in active pitch meetings with cable networks at the time of Aldrich's termination.
55. "Summit Challenge" is AMA's flagship unscripted program, currently in its fifth season. The program generates approximately $42 million in annual revenue for AMA across network license fees, international distribution, advertising, and ancillary revenue streams. The revenue model transmitted by Aldrich to Halcyon Creek is among the most competitively sensitive financial documents produced by AMA, and its disclosure to a competitor poses a significant risk of competitive harm.
56. All of the materials described above were stored on AMA's secure internal content management system, which requires individual login credentials for access. All such materials were watermarked with the legend "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC." The external transmission of development materials, including show format bibles, sizzle reels, and revenue models, requires prior written approval from either the President of AMA or the VP of Business Affairs. No such approval was given or sought by Aldrich for any of the transmissions described herein.
G. Insubordination.
57. Although the insubordination described below is not the primary basis for the Cross-Complaint, it provides relevant context for Aldrich's termination and the events giving rise to this action.
58. In early October 2022, Jonathan Mercer, President of AMA, directed Aldrich to restructure the Unscripted Programming Division by consolidating two underperforming show units and reducing divisional headcount by approximately 15%. The restructuring was driven by declining advertising revenues experienced in the third quarter of 2022 and was consistent with cost-efficiency measures being implemented across multiple AGMG subsidiaries.
59. On October 10, 2022, Aldrich sent an email to Mercer refusing to comply with the restructuring directive, characterizing it as "creatively bankrupt and commercially idiotic." On October 11, 2022, Mercer issued a formal written warning to Aldrich, directing him to comply with the restructuring plan. Later on October 11, 2022, Aldrich forwarded the email chain between himself and Mercer to six subordinate employees, including three show-runners and two division heads, accompanied by the comment: "For your awareness — the London suits are gutting our operation."
60. On October 14, 2022, AMA terminated Aldrich's employment for cause, citing both the findings of the DLP audit (including the unauthorized transmissions to his personal email account and to Halcyon Creek Productions LLC) and his insubordination in refusing to comply with the restructuring directive and disseminating disparaging communications to subordinates.
FIRST CAUSE OF ACTION
Breach of Employment Agreement (Sections 9.1, 9.2, 9.3, and 9.4)
(Against Cross-Defendant Gavin Aldrich)
61. AMA incorporates by reference and realleges each and every allegation set forth in Paragraphs 27 through 60, inclusive, as though fully set forth herein.
62. On or about September 5, 2017, AMA and Aldrich entered into the Employment Agreement, which was subsequently amended by the First Amendment to Employment Agreement dated August 1, 2020. The Employment Agreement is a valid, binding, and enforceable contract between AMA and Aldrich.
63. Section 9.4 of the Employment Agreement prohibits 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." This obligation survives the termination of Aldrich's employment for any reason.
64. Aldrich materially breached Section 9.4 of the Employment Agreement by:
(a) Forwarding approximately 340 emails containing Confidential Information from his AMA corporate email account to his personal email account (galdrich.private@Northgate Software.com) between approximately July 12, 2021 and September 29, 2022; and
(b) Transmitting three unscripted show format bibles (for "Apex Endurance," "The Remix," and "Untamed West"), two pilot sizzle reels (for "Apex Endurance" and "The Remix"), and the "Summit Challenge" revenue model to Halcyon Creek Productions LLC, a competitor of AMA, between approximately March 3, 2022 and August 18, 2022.
65. Aldrich's conduct also constitutes a breach of Section 9.1 (Non-Competition), Section 9.2 (Non-Solicitation of Employees), and Section 9.3 (Non-Solicitation of Business Relationships) of the Employment Agreement, to the extent that his unauthorized transmission of Confidential Information to Halcyon Creek Productions LLC facilitated, or was undertaken in furtherance of, competitive activity, employee solicitation, or the diversion of business relationships during the term of his employment.
66. AMA performed all conditions, covenants, and obligations required of it under the Employment Agreement, or was excused from such performance by reason of Aldrich's material breach.
67. As a direct and proximate result of Aldrich's breach of the Employment Agreement, AMA has been damaged in an amount to be proven at trial, but not less than the value of the proprietary information transmitted by Aldrich and the competitive harm resulting from the disclosure of such information to Aldrich's personal account and to Halcyon Creek Productions LLC. AMA's damages include, without limitation, the development costs invested in the three show format concepts (totaling approximately $300,000), the competitive harm arising from the disclosure of the "Summit Challenge" revenue model, and the costs of remediation, investigation, and enhanced security measures undertaken by AMA as a result of Aldrich's breach.
SECOND CAUSE OF ACTION
Misappropriation of Trade Secrets (Cal. Civ. Code § 3426 et seq. — California Uniform Trade Secrets Act)
(Against Cross-Defendant Gavin Aldrich)
68. AMA incorporates by reference and realleges each and every allegation set forth in Paragraphs 27 through 60, inclusive, as though fully set forth herein.
69. 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 transmitted by Aldrich constitute "trade secrets" within the meaning of California Civil Code Section 3426.1(d).
70. Specifically, these materials satisfy both elements of the statutory definition of "trade secret":
(a) Independent Economic Value. The materials described herein derive independent economic value, actual and potential, from not being generally known to the public or to other persons who can obtain economic value from their disclosure or use. Show format bibles embody the creative concepts, structural frameworks, and competitive differentiators that form the foundation of AMA's programming pipeline. The "Summit Challenge" revenue model contains detailed financial projections, pricing strategies, and cost structures that are not publicly available and that would provide a significant competitive advantage to any competitor obtaining access to them. Audience analytics, viewership data, and talent compensation structures are similarly confidential and commercially valuable.
(b) Reasonable Efforts to Maintain Secrecy. AMA has taken reasonable measures under the circumstances to maintain the secrecy of these materials, including: (i) the confidentiality provisions of Section 9.4 of the Employment Agreement; (ii) the AUC Policy, which expressly prohibits unauthorized transmission of proprietary information; (iii) the use of secure internal content management systems requiring individual login credentials for access; (iv) the watermarking of proprietary documents with the legend "CONFIDENTIAL — AURELIUS MEDIA AMERICAS INC."; (v) access controls limiting access to confidential materials to authorized personnel on a need-to-know basis; and (vi) the requirement of prior written approval from the President of AMA or the VP of Business Affairs for any external transmission of development materials.
71. Aldrich acquired access to these trade secrets through his employment with AMA and the position of trust and confidence he occupied as Senior Vice President and Executive Producer. At all relevant times, Aldrich was under an obligation to maintain the secrecy of these trade secrets pursuant to the Employment Agreement, the AUC Policy, and his fiduciary duties to AMA.
72. Aldrich's unauthorized transmission of these trade secrets to his personal email account (galdrich.private@Northgate Software.com) and to Halcyon Creek Productions LLC (info@halcyoncreekprod.com) constitutes "misappropriation" within the meaning of California Civil Code Section 3426.1(b)(2). Specifically, Aldrich's conduct constitutes the disclosure or use of a trade secret by a person who, at the time of disclosure or use, knew or had reason to know that his or her knowledge of the trade secret was acquired under circumstances giving rise to a duty to maintain its secrecy or limit its use. Aldrich was at all relevant times fully aware of his confidentiality obligations under the Employment Agreement and the AUC Policy, having signed a written acknowledgment of the AUC Policy on April 12, 2021.
73. AMA has been damaged by Aldrich's misappropriation of its trade secrets. AMA's damages include, without limitation, the actual loss caused by the misappropriation, the unjust enrichment caused by the misappropriation that is not taken into account in computing the actual loss, and a reasonable royalty for the unauthorized disclosure and use of AMA's trade secrets.
74. AMA is entitled to injunctive relief under California Civil Code Section 3426.2 to prevent further misappropriation by Aldrich, including but not limited to an order (a) prohibiting Aldrich from using, disclosing, or exploiting any of AMA's trade secrets, (b) requiring Aldrich to return or destroy all copies of AMA's trade secrets in his possession, custody, or control, and (c) prohibiting Halcyon Creek Productions LLC (if joined as a party to this action or any related proceeding) from using, disclosing, or exploiting any of AMA's trade secrets received from Aldrich.
75. AMA is entitled to actual damages under California Civil Code Section 3426.3, including both the actual loss caused by the misappropriation and the unjust enrichment caused by the misappropriation.
76. Upon information and belief, Aldrich's misappropriation of AMA's trade secrets was willful and malicious. Aldrich deliberately and knowingly transmitted AMA's most sensitive proprietary materials to a competitor over a period of approximately five months, in direct violation of his contractual and fiduciary obligations, and without any legitimate business purpose. Accordingly, AMA is entitled to exemplary damages in an amount not exceeding twice the amount of any award of actual damages, pursuant to California Civil Code Section 3426.3(c).
THIRD CAUSE OF ACTION
Breach of Fiduciary Duty
(Against Cross-Defendant Gavin Aldrich)
77. AMA incorporates by reference and realleges each and every allegation set forth in Paragraphs 27 through 60, inclusive, as though fully set forth herein.
78. As Senior Vice President of Original Content & Executive Producer of AMA, Aldrich occupied a senior executive position of trust and confidence. By virtue of his position, Aldrich owed fiduciary duties of loyalty and care to AMA, including the duty to act in AMA's best interests, to refrain from self-dealing and conflicts of interest, to protect AMA's confidential information, and to refrain from unauthorized disclosure of proprietary materials.
79. Aldrich breached his fiduciary duties to AMA by engaging in the following conduct:
(a) Transmitting AMA's confidential and proprietary information — including show format bibles, pilot sizzle reels, and the "Summit Challenge" revenue model — to Halcyon Creek Productions LLC, a competitor of AMA, for the purpose of advancing Aldrich's personal interests and/or the business interests of Halcyon Creek;
(b) Failing to disclose to AMA's management his relationship with Halcyon Creek and with Nina Castellanos, a former AMA employee who founded Halcyon Creek shortly after leaving AMA, despite the obvious conflict of interest created by such relationship;
(c) Forwarding approximately 340 emails containing confidential AMA information to his personal email account, outside the scope of his duties and without authorization, thereby undermining AMA's information security and exposing AMA's proprietary data to risk of further unauthorized disclosure or use; and
(d) Engaging in activities that created a direct conflict of interest between Aldrich's personal interests and his duties to AMA, including the apparent facilitation of a competing venture by a former AMA employee using AMA's own proprietary content and financial data.
80. Aldrich's breaches of fiduciary duty were knowing, intentional, and in disregard of his obligations to AMA. Aldrich was fully aware of the confidential nature of the materials he transmitted, the competitive implications of providing such materials to Halcyon Creek, and the conflict of interest inherent in his relationship with Nina Castellanos and Halcyon Creek.
81. As a direct and proximate result of Aldrich's breach of fiduciary duty, AMA has been damaged in an amount to be proven at trial, including but not limited to the loss of competitive advantage, the diminished value of proprietary content, the costs of investigation and remediation, and any unjust enrichment obtained by Aldrich or Halcyon Creek as a result of the misappropriated materials.
FOURTH CAUSE OF ACTION
Conversion
(Against Cross-Defendant Gavin Aldrich)
82. AMA incorporates by reference and realleges each and every allegation set forth in Paragraphs 27 through 60, inclusive, as though fully set forth herein.
83. AMA had and has exclusive 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 were created by AMA employees within the scope of their employment, are owned by AMA pursuant to the work-for-hire provisions of the Employment Agreement and applicable law, and were stored on AMA's secure internal content management systems.
84. Aldrich's unauthorized appropriation of these files — by copying them from AMA's secure systems to his personal email account and personal Larkspur Technologies account, and by transmitting them to Halcyon Creek Productions LLC — constitutes conversion of AMA's property. Aldrich's conduct constituted a knowing and intentional exercise of dominion and control over AMA's property in a manner inconsistent with AMA's ownership rights, and was without AMA's authorization or consent.
85. Aldrich's conversion of AMA's property was intentional, deliberate, and undertaken without any colorable claim of right. Aldrich knew that the materials in question were the exclusive property of AMA, that their external transmission required prior written authorization, and that no such authorization had been given.
86. As a direct and proximate result of Aldrich's conversion, AMA has suffered damages in an amount to be proven at trial, including but not limited to the value of the converted property, the diminished commercial value of proprietary content that has been disclosed to a competitor, and the consequential damages resulting from the conversion, including lost business opportunities, competitive harm, and the costs of investigation and remedial measures.
PRAYER FOR RELIEF
WHEREFORE, Cross-Complainant Aurelius Media Americas Inc. prays for judgment against Cross-Defendant Gavin Aldrich as follows:
1. On the First Cause of Action (Breach of Employment Agreement): For compensatory damages in an amount to be proven at trial, but not less than the value of the proprietary information transmitted and the competitive harm resulting from its disclosure;
2. On the Second Cause of Action (Misappropriation of Trade Secrets): For injunctive relief pursuant to California Civil Code Section 3426.2, prohibiting Aldrich (and Halcyon Creek Productions LLC, if joined as a party) from any further use, disclosure, or exploitation of AMA's trade secrets; for compensatory damages pursuant to California Civil Code Section 3426.3, including actual loss and unjust enrichment; and for exemplary damages in an amount not exceeding twice the amount of any actual damages award, pursuant to California Civil Code Section 3426.3(c), if the Court finds that Aldrich's misappropriation was willful and malicious;
3. On the Third Cause of Action (Breach of Fiduciary Duty): For compensatory damages in an amount to be proven at trial;
4. On the Fourth Cause of Action (Conversion): For compensatory and consequential damages in an amount to be proven at trial;
5. For attorneys' fees and costs of suit as permitted by law and/or by the terms of the Employment Agreement;
6. For pre-judgment and post-judgment interest at the maximum rate permitted by law;
7. For such other and further relief as this Court deems just and proper.
Dated: ___, 2023
CALDERWOOD & HARKNESS LLP
By: ________
Renata Vasquez (SBN 224578) Devon Archer (SBN 301462) 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200
Attorneys for Defendant and Cross-Complainant AURELIUS MEDIA AMERICAS INC.
[DRAFT — pending client review. Expected filing date: January 20, 2023. Client contacts for review: Gregory Tanaka (VP Legal & Compliance, AMA) and Philippa Cartwright (General Counsel, AGMG).]
[Note to team: Confirm with Greg Tanaka whether AMA intends to seek a TRO/preliminary injunction against Aldrich and Halcyon Creek in connection with the CUTSA claim. If so, we should prepare a separate motion and supporting declarations (Tanaka, IT forensics lead) on an expedited basis. — DA]
C&H Matter No.: 1017-00004
GAVIN ALDRICH, | Case No. 22STCV41087
Plaintiff, | Assigned to Hon. Catherine Villanueva, Dept. 52
v. | DEFENDANT AND CROSS-COMPLAINANT AURELIUS MEDIA AMERICAS INC.'S ANSWER TO COMPLAINT AND CROSS-COMPLAINT
AURELIUS MEDIA AMERICAS INC.,
Defendant.
AND RELATED CROSS-ACTION.

CALDERWOOD & HARKNESS LLP — CONFIDENTIAL — ATTORNEY WORK PRODUCT — DRAFT

SUPERIOR COURT OF THE STATE OF CALIFORNIA

ANSWER TO COMPLAINT

GENERAL DENIAL

SPECIFIC RESPONSES TO KEY ALLEGATIONS

AFFIRMATIVE DEFENSES

FIRST AFFIRMATIVE DEFENSE

SECOND AFFIRMATIVE DEFENSE

THIRD AFFIRMATIVE DEFENSE

FOURTH AFFIRMATIVE DEFENSE

FIFTH AFFIRMATIVE DEFENSE

SIXTH AFFIRMATIVE DEFENSE

SEVENTH AFFIRMATIVE DEFENSE

EIGHTH AFFIRMATIVE DEFENSE

PART II

CROSS-COMPLAINT

INTRODUCTORY ALLEGATIONS

COMMON FACTUAL ALLEGATIONS

FIRST CAUSE OF ACTION

SECOND CAUSE OF ACTION

THIRD CAUSE OF ACTION

FOURTH CAUSE OF ACTION

PRAYER FOR RELIEF

CALDERWOOD & HARKNESS LLP

AURELIUS MEDIA AMERICAS INC.,

AND RELATED CROSS-ACTION.

Record

Parties

Dates

Amounts