SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES — CENTRAL DISTRICT
MARISOL FUENTES, DEREK HALLORAN, and YESENIA PADILLA, individually and on behalf of all others similarly situated,
Plaintiffs,
v.
AURELIUS MEDIA AMERICAS INC., a Delaware corporation; and DOES 1 through 50, inclusive,
Defendant.
DEFENDANT AURELIUS MEDIA AMERICAS INC.'S NOTICE OF MOTION AND MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT; MEMORANDUM OF POINTS AND AUTHORITIES
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NOTICE OF MOTION
TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:
PLEASE TAKE NOTICE that Defendant Aurelius Media Americas Inc. ("AMA"), by and through its counsel of record, Calderwood & Harkness LLP, and Plaintiffs Marisol Fuentes, Derek Halloran, and Yesenia Padilla (collectively, "Plaintiffs" or "Class Representatives"), by and through their counsel of record, Castellano Byrne & Salas LLP and Veltrano Employment Law Group PC, jointly move this Court, pursuant to California Rules of Court, Rule 3.769, for an order:
1. Granting preliminary approval of the Class Action Settlement Agreement and Release dated September 15, 2023 (the "Settlement Agreement"), a true and correct copy of which is attached as Exhibit 1 to the concurrently filed Declaration of Renata Vasquez in Support of Motion for Preliminary Approval of Class Action Settlement (the "Vasquez Declaration");
2. Provisionally certifying the Settlement Class, as defined in the Settlement Agreement, for settlement purposes only;
3. Appointing Plaintiffs Marisol Fuentes, Derek Halloran, and Yesenia Padilla as Class Representatives of the Settlement Class;
4. Appointing Castellano Byrne & Salas LLP as Lead Class Counsel and Veltrano Employment Law Group PC as PAGA Co-Counsel;
5. Approving the proposed Class Notice plan, including the Long Form Notice attached as Exhibit A to the Settlement Agreement, and the Summary/Postcard Notice attached as Exhibit B to the Settlement Agreement;
6. Appointing Meridian Settlement Services LLC as the Claims Administrator;
7. Setting the schedule for the notice period, opt-out and objection deadlines, and the Final Approval Hearing; and
8. Staying all proceedings in this action pending the Court's ruling on the motion for final approval of the settlement.
This Motion is based upon this Notice of Motion; the accompanying Memorandum of Points and Authorities; the Declaration of Renata Vasquez, filed concurrently herewith, and the exhibits attached thereto; the Declaration of Marco Castellano in Support of Preliminary Approval, filed concurrently herewith; all pleadings, records, and papers on file in this action; and such further argument and evidence as this Court may consider at the hearing on this Motion.
(Memorandum of Points and Authorities follows)
MEMORANDUM OF POINTS AND AUTHORITIES
I. INTRODUCTION
After nearly one year of hard-fought litigation, extensive discovery, competing expert analyses, contested class certification proceedings, and two full-day mediation sessions before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc., the parties in this employment class action and representative Private Attorneys General Act ("PAGA") matter have reached a comprehensive settlement that resolves all claims asserted in this consolidated action. The Settlement Agreement provides substantial monetary relief to an estimated 1,850 current and former non-exempt, hourly production-support employees of Aurelius Media Americas Inc. who were subject to an automatic meal period deduction policy implemented through the NovaPay Solutions TimeTrack Pro timekeeping system at AMA's seven California production facilities.
The Settlement Agreement establishes a non-reversionary Gross Settlement Amount ("GSA") of $14,750,000 — a significant recovery representing approximately 38.2% of Plaintiffs' expert's aggregate damages calculation of $38.6 million. This percentage places the settlement at the upper end of the range typically approved in comparable California wage-and-hour class action settlements. The settlement resolves the totality of the claims at issue in this action, including both the certified claims (first meal period auto-deduction, derivative wage statement violations under California Labor Code section 226, and Unfair Competition Law claims under California Business and Professions Code section 17200) and the non-certified claims (rest period violations, off-the-clock work and overtime violations, minimum wage violations, second meal period violations, and waiting time penalties under California Labor Code sections 201–203), as well as all PAGA representative claims.
Importantly, the settlement was not reached in a vacuum. The parties engaged in extensive pre-settlement litigation, including the production and review of 147,832 documents by AMA comprising approximately 1.2 million pages; the production of 3,412 documents by Plaintiffs; a third-party subpoena to NovaPay Solutions Inc. for TimeTrack Pro system data; eighteen depositions (eleven taken by Plaintiffs and seven by the Defense), including depositions of all three named Plaintiffs, AMA's Person Most Knowledgeable witnesses, AMA's President, and key production management personnel; the exchange of expert reports from three experts — Plaintiffs' economics expert, Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, and AMA's industrial/organizational psychology expert, Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC, and economics expert, Dr. Catherine Lindstrom of Hargrove Analytics Inc.; and a fully briefed and contested class certification motion that resulted in a partial certification order by this Court on August 11, 2023. In short, the parties negotiated the settlement with a thorough understanding of the factual and legal landscape, the strengths and weaknesses of their respective positions, and the significant risks attendant to continued litigation.
The settlement was negotiated at arm's length, in good faith, and over the course of two full-day mediation sessions totaling approximately sixteen hours before the Honorable Patricia Okoro (Ret.), a retired Los Angeles Superior Court Judge with more than twenty-five years on the bench and extensive experience mediating employment class actions. The fact that the settlement was reached only after multiple rounds of offers and counteroffers, against the backdrop of substantial pre-settlement litigation, underscores the arm's-length nature of the negotiations and supports a presumption of fairness.
A brief summary of the relevant procedural history is instructive. Plaintiff Marisol Fuentes filed the initial Complaint in this action on November 1, 2022. Plaintiff Derek Halloran filed a related Complaint on November 18, 2022. On February 3, 2023, this Court entered a Consolidation Order designating Case No. 22STCV38214 as the lead case and assigning the consolidated action to the Honorable Raymond Escobedo in Department 34. AMA filed its Answer and Affirmative Defenses on February 17, 2023. The parties then engaged in intensive discovery from January through June 2023. Plaintiffs filed their Motion for Class Certification on April 14, 2023. AMA filed its Opposition on June 16, 2023, and Plaintiffs filed their Reply on July 7, 2023. Following a hearing on July 28, 2023, the Court entered its Class Certification Order on August 11, 2023, granting certification in part and denying it in part. The parties thereafter proceeded to mediation and, after two sessions, reached the settlement now before the Court.
The parties respectfully submit that this settlement is fair, adequate, and reasonable, and that it falls well within the range of possible approval. The parties therefore request that the Court enter the Preliminary Approval Order so that class members may receive notice of the settlement and be afforded the opportunity to participate, object, or opt out, as provided under California Rules of Court, Rule 3.769.
II. PROCEDURAL HISTORY
A detailed chronology of this litigation demonstrates that the settlement was reached only after thorough investigation, discovery, and adjudication of contested issues, providing both parties — and the Court — with the information necessary to evaluate the settlement's fairness.
A. Pre-Suit Investigation and PAGA Notice
Prior to filing suit, Plaintiffs' counsel conducted an extensive pre-litigation investigation of AMA's timekeeping and meal period practices at its seven California production facilities. That investigation included interviews with current and former employees, review of publicly available information regarding AMA's operations, and analysis of AMA's written policies. On September 15, 2022, Plaintiffs served the requisite notice on the California Labor and Workforce Development Agency ("LWDA") pursuant to California Labor Code section 2699.3, identifying the specific Labor Code violations alleged and the facts supporting those allegations. The LWDA did not respond or take action by the sixty-five-day deadline of November 14, 2022, thereby permitting Plaintiffs to proceed with PAGA claims.
B. Filing of Complaints and Consolidation
On November 1, 2022, Plaintiff Marisol Fuentes filed the initial Complaint in this action, Case No. 22STCV38214, alleging wage-and-hour violations on behalf of a putative class of approximately 1,850 non-exempt, hourly production-support employees who worked at AMA's seven California production facilities. The Fuentes Complaint asserted claims for: (1) failure to provide compliant meal periods (Cal. Lab. Code §§ 226.7, 512); (2) failure to provide compliant rest periods (Cal. Lab. Code § 226.7); (3) failure to pay overtime wages (Cal. Lab. Code §§ 510, 1194); (4) failure to pay minimum wages (Cal. Lab. Code §§ 1197, 1197.1); (5) failure to provide accurate itemized wage statements (Cal. Lab. Code § 226); (6) failure to timely pay wages upon separation (Cal. Lab. Code §§ 201–203); (7) violations of the Unfair Competition Law (Cal. Bus. & Prof. Code § 17200 et seq.); and (8) civil penalties under PAGA (Cal. Lab. Code §§ 2698–2699.8).
On November 18, 2022, Plaintiff Derek Halloran filed a related Complaint, Case No. 22STCV39501, asserting substantially similar claims and arising from the same underlying factual allegations.
On February 3, 2023, the Court entered an Order Consolidating Related Cases, designating Case No. 22STCV38214 as the lead case and assigning the consolidated action to the Honorable Raymond Escobedo in Department 34 for all purposes. Plaintiff Yesenia Padilla was subsequently added as a named Plaintiff in the operative First Amended Consolidated Complaint.
On February 17, 2023, AMA filed its Answer and Affirmative Defenses, denying all material allegations and asserting numerous affirmative defenses, including that AMA maintained compliant written meal and rest period policies, that employees were provided with meal and rest period opportunities in accordance with California law, and that individual issues predominated over common questions.
C. Discovery
The parties engaged in extensive written and deposition discovery from January 2023 through June 2023. On January 13, 2023, the parties entered into an ESI Protocol Stipulation governing the production, review, and handling of electronically stored information, which was entered by the Court.
AMA produced 147,832 documents in response to Plaintiffs' requests for production, comprising approximately 1.2 million pages. These productions included timekeeping records from the NovaPay Solutions TimeTrack Pro system for all putative class members during the class period, payroll records, personnel files for named Plaintiffs and sample class members, AMA's written meal and rest period policies across all seven California facilities and all fourteen show units, production schedules, internal memoranda and communications regarding meal period practices, training materials, and corporate organizational charts.
Plaintiffs produced 3,412 documents, including their own employment records, personal time logs, communications with AMA personnel regarding work schedules and meal and rest periods, and documents supporting their individual claims.
In addition, the parties issued and responded to a third-party subpoena to NovaPay Solutions Inc., AMA's payroll processing and timekeeping vendor, for records relating to the TimeTrack Pro timekeeping system's configuration, including the automatic meal period deduction settings, the Missed Meal Attestation feature, and system-wide data for all AMA California employees during the class period. The third-party discovery was managed and processed by Marlowe Asset Management Litigation Technology Inc.
The parties took a total of eighteen depositions — eleven by Plaintiffs and seven by AMA — covering a comprehensive cross-section of the relevant witnesses. Plaintiffs deposed AMA's designated Person Most Knowledgeable witnesses, including Lorraine Okafor, Senior Vice President of Human Resources; Celine Arroyo, Director of Production Operations; and Karen Fong, Payroll Manager. Plaintiffs also deposed Jonathan Mercer, President of AMA; Marcus Yee, the designated representative of NovaPay Solutions Inc.; and several production managers at AMA's California facilities. AMA deposed all three named Plaintiffs — Marisol Fuentes, Derek Halloran, and Yesenia Padilla — each of whom sat for depositions lasting between five and seven hours, as well as several additional putative class members.
D. Expert discovery
On April 28, 2023, Plaintiffs served the expert report of Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, Plaintiffs' economics and damages expert. Dr. Rennick opined that the aggregate damages for all class members and aggrieved employees totaled approximately $38.6 million, including approximately $12.2 million in PAGA civil penalties. Dr. Rennick's calculations were based on an analysis of the TimeTrack Pro data produced by AMA and NovaPay, payroll records, and certain assumptions regarding the frequency and duration of meal period violations across the class.
On May 19, 2023, AMA served the expert report of Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC, an industrial/organizational psychology expert. Dr. Makhija's report analyzed the significant variability in meal and rest period practices across AMA's fourteen active show units and seven California production facilities. Dr. Makhija opined that the differences in production schedules, staffing levels, supervisory practices, and operational demands across the various show units and facilities meant that individual inquiry into each class member's circumstances would predominate over any common questions, thereby defeating class certification.
On June 9, 2023, AMA served the rebuttal expert report of Dr. Catherine Lindstrom of Hargrove Analytics Inc., AMA's economics and damages expert. Dr. Lindstrom's report critiqued several of the methodological assumptions underlying Dr. Rennick's analysis and offered an alternative damages estimate of approximately $5.8 million, reflecting her opinion that a substantial number of class members received compliant meal periods and that the auto-deduction system did not, in fact, result in lost wages for a significant portion of the class.
E. Class Certification Proceedings
On April 14, 2023, Plaintiffs filed their Motion for Class Certification, seeking certification of a class of all current and former non-exempt, hourly employees of AMA who worked in the State of California at any time from November 1, 2018 through the date of preliminary approval of any class settlement and who were subject to AMA's automatic meal period deduction in the NovaPay Solutions TimeTrack Pro timekeeping system.
On June 16, 2023, AMA filed its Opposition to Class Certification, supported by the declarations of Lorraine Okafor, Celine Arroyo, Karen Fong, Dr. Rajesh Makhija, and Dr. Catherine Lindstrom. AMA argued, among other things, that individual issues predominated with respect to the rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalty claims, and that even the meal period claims were subject to individualized defenses based on the variability of practices across AMA's facilities and show units.
On July 7, 2023, Plaintiffs filed their Reply in support of class certification.
On July 28, 2023, this Court conducted a hearing on the Motion for Class Certification. Following extensive argument and questioning of the parties, the Court took the matter under submission.
On August 11, 2023, this Court entered its Class Certification Order, granting certification in part and denying certification in part:
• Certified: The first meal period auto-deduction claim (first meal period only), on the ground that the automatic deduction applied uniformly to all class members through the TimeTrack Pro system and raised common questions regarding AMA's meal period policies and practices; the derivative wage statement claim under California Labor Code section 226; and the UCL claim under California Business and Professions Code section 17200, both of which flowed from the certified meal period claim.
• Denied: The rest period claim, the off-the-clock/overtime claim, the minimum wage claim, the second meal period claim, and the waiting time penalty claim, on the ground that individual issues predominated with respect to each of these claims.
• The PAGA representative claim was permitted to proceed as a representative action irrespective of the class certification ruling.
The Court defined the certified class as:
"All current and former non-exempt, hourly employees of Aurelius Media Americas Inc. who worked in the State of California at any time from November 1, 2018 through the date of preliminary approval of any class settlement, who were subject to AMA's automatic meal period deduction in the NovaPay Solutions TimeTrack Pro timekeeping system."
The Court appointed Marisol Fuentes, Derek Halloran, and Yesenia Padilla as named class representatives, and appointed Castellano Byrne & Salas LLP as Lead Class Counsel and Veltrano Employment Law Group PC as PAGA Co-Counsel.
F. Mediation and Settlement
Following the entry of the Class Certification Order, the parties agreed to participate in mediation before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc. Judge Okoro is a retired Los Angeles Superior Court Judge who served on the bench for over twenty-five years and has extensive experience mediating complex employment class actions and PAGA matters.
On August 25, 2023, the parties participated in the first full-day mediation session. The session focused on the class action claims. The parties exchanged comprehensive mediation briefs in advance of the session, including detailed damages analyses, legal arguments regarding the strengths and weaknesses of each side's position, and proposed settlement frameworks. After approximately eight hours of negotiations, the parties narrowed the gap between their respective positions but did not reach agreement.
On September 8, 2023, the parties participated in a second full-day mediation session before Judge Okoro. This session addressed both the class action claims and a related but separate executive dispute involving former AMA executive Gregory Aldrich. After an additional approximately eight hours of negotiations — totaling approximately sixteen hours of mediated negotiations across the two sessions — the parties reached a settlement of the class action and PAGA claims. The Aldrich executive matter was not resolved at this session and remains pending.
On September 15, 2023, the parties executed the Class Action Settlement Agreement and Release (the "Settlement Agreement"), a true and correct copy of which is attached as Exhibit 1 to the Vasquez Declaration.
III. TERMS OF THE PROPOSED SETTLEMENT
The material terms of the Settlement Agreement are summarized below. The Court is respectfully referred to the Settlement Agreement itself for the complete terms and conditions.
A. Settlement Class Definition
The Settlement Agreement defines the "Settlement Class" as:
"All current and former non-exempt, hourly employees of Aurelius Media Americas Inc. who worked in the State of California at any time from November 1, 2018 through October 31, 2023, who were subject to AMA's automatic meal period deduction in the NovaPay Solutions TimeTrack Pro timekeeping system."
The Settlement Class definition is consistent with the class certified by this Court's August 11, 2023 Class Certification Order. The sole modification is that the class period end date has been fixed at October 31, 2023, rather than the open-ended "date of preliminary approval" language used in the certification order. This modification ensures certainty and administrability, as the class data can be finalized before the notice process begins.
The estimated size of the Settlement Class is approximately 1,850 individuals, based on AMA's employment records and the NovaPay Solutions TimeTrack Pro data produced in discovery.
B. Gross Settlement Amount
AMA has agreed to pay a non-reversionary Gross Settlement Amount ("GSA") of $14,750,000 to resolve all claims in this action. The non-reversionary nature of the GSA means that the entire amount will be distributed — no portion of the GSA will revert to AMA under any circumstances, regardless of the number of class members who opt out, fail to cash their checks, or take any other action.
C. Deductions from the Gross Settlement Amount
The following amounts are to be deducted from the GSA prior to distribution to class members. Each deduction is subject to the Court's approval at the Final Approval Hearing:
1. Attorneys' Fees (Class Counsel)
Class Counsel will apply for an award of attorneys' fees in the amount of 33.33% of the GSA, totaling $4,916,175. This fee application will be filed in connection with the Motion for Final Approval and will be supported by detailed lodestar and billing records. The requested percentage is consistent with the percentage typically approved in California wage-and-hour class action settlements and reflects the risk-based nature of Class Counsel's representation on a contingency basis.
2. Litigation Costs Reimbursement
Class Counsel will apply for reimbursement of documented litigation costs in an amount not to exceed $412,300. These costs were incurred in connection with the prosecution of this action and include, among other things, expert fees (Dr. Rennick), e-discovery and document review costs (Marlowe Asset Management Litigation Technology Inc.), deposition transcript and videography costs, court reporter fees, filing fees, mediation fees (Westpark Dispute Resolution Inc.), and other reasonable litigation expenses. Class Counsel will provide detailed documentation of all costs in connection with the Motion for Final Approval.
3. Class Representative Service Awards
The parties have agreed to the following service awards for the named Class Representatives, in recognition of their substantial contributions to the prosecution of this action:
• Marisol Fuentes: $15,000
• Derek Halloran: $10,000
• Yesenia Padilla: $10,000
• Total: $35,000
These service awards reflect the significant time and effort that each named Plaintiff devoted to this litigation, including participation in extensive discovery, document production, depositions (each was deposed for between five and seven hours), multiple consultations with counsel, review of mediation materials, and active participation in both mediation sessions. The differential between Ms. Fuentes's award and those of Mr. Halloran and Ms. Padilla reflects Ms. Fuentes's role as the lead named plaintiff and the original filer of the Complaint in this action. These awards are well within the range approved by California courts in comparable cases and are subject to Court approval.
4. Settlement Administration Costs
The Settlement Agreement allocates $385,000 from the GSA for the costs of settlement administration, to be paid to Meridian Settlement Services LLC. This amount covers all costs associated with the administration of the settlement, including class member address verification and skip tracing, notice printing and mailing, creation and maintenance of the settlement website, operation of a toll-free telephone hotline, processing of opt-out requests and objections, calculation of individual settlement payments under the allocation formula, tax calculations and withholding, check printing and distribution, handling of returned and uncashed checks, fund accounting, and tax reporting to relevant federal and state authorities.
5. PAGA Payment
The Settlement Agreement allocates $750,000 from the GSA for the resolution of PAGA claims. Pursuant to California Labor Code section 2699(i), this amount is apportioned as follows:
• 75% to the LWDA: $562,500
• 25% to aggrieved employees: $187,500
The aggrieved employee portion of the PAGA payment ($187,500) will be distributed to all Settlement Class members who do not opt out, on a pro rata basis, in addition to each class member's individual settlement payment from the Net Settlement Fund. The PAGA component of $750,000 represents a 93.9% reduction from Plaintiffs' expert's claimed PAGA penalty exposure of $12.2 million, reflecting the significant litigation risk on PAGA penalty calculations, the Court's broad discretion to reduce PAGA penalties under California Labor Code section 2699(e)(2), and the practical realities of PAGA penalty enforcement.
D. Net Settlement Fund
After deduction of the foregoing amounts, the Net Settlement Fund available for distribution to Settlement Class members who do not opt out is calculated as follows:
Based on the estimated class size of approximately 1,850 individuals, the estimated average individual settlement payment is approximately $4,460 per class member. Actual individual payments will vary based on each class member's weeks worked during the class period and recorded overtime hours, as described below.
E. Allocation and Distribution Formula
The Net Settlement Fund will be distributed to all Settlement Class members who do not opt out on a pro rata basis. No class member is required to submit a claim form or take any affirmative action to receive a settlement payment. This pro rata, non-claims-made distribution structure ensures maximum participation and avoids the risk of low claims rates that can undermine the fairness of a settlement.
Individual settlement payments are calculated using a two-factor allocation formula:
• 60% of each class member's share is based on the number of weeks worked during the class period (November 1, 2018 through October 31, 2023), as compared to the total weeks worked by all Settlement Class members during the same period; and
• 40% of each class member's share is based on the number of recorded overtime hours worked during the class period, as compared to the total recorded overtime hours worked by all Settlement Class members during the same period.
This formula is designed to allocate settlement proceeds proportionally to each class member's exposure to the practices at issue in this litigation. Class members who worked more weeks during the class period had greater exposure to the automatic meal period deduction system and, therefore, a greater likelihood of experiencing meal period violations. Class members who worked more overtime hours worked longer shifts, which were more likely to implicate meal period compliance issues. The 60/40 weighting reflects the relative predominance of the meal period auto-deduction claim (the sole certified class claim) while also accounting for the overtime-related claims resolved by the settlement.
F. Tax Treatment
Settlement payments to class members will be allocated as follows for tax purposes:
• 50% as wages, subject to applicable federal, state, and local tax withholdings (W-2 reporting);
• 33.33% as interest and penalties, reported on IRS Form 1099-MISC; and
• 16.67% as non-wage damages (e.g., restitution, UCL disgorgement), reported on IRS Form 1099-MISC.
The employer's share of payroll taxes on the wage portion will be paid by AMA separately and is not deducted from the GSA.
G. Released Claims
In exchange for the settlement consideration, all Settlement Class members who do not opt out will release AMA, its parent companies, subsidiaries, affiliates, officers, directors, employees, agents, attorneys, insurers, successors, and assigns (collectively, the "Released Parties") from all claims, demands, rights, liabilities, and causes of action of every kind and nature whatsoever, whether known or unknown, suspected or unsuspected, that arise from or relate to the facts alleged in the First Amended Consolidated Complaint, including but not limited to:
• Certified claims: meal period auto-deduction (first meal period) under California Labor Code sections 226.7 and 512; wage statement violations under California Labor Code section 226; and Unfair Competition Law claims under California Business and Professions Code section 17200 et seq.;
• Non-certified claims: rest period violations under California Labor Code section 226.7; off-the-clock work and overtime violations under California Labor Code sections 510 and 1194; minimum wage violations under California Labor Code sections 1197 and 1197.1; second meal period violations; and waiting time penalties under California Labor Code sections 201–203;
• PAGA representative claims under California Labor Code sections 2698–2699.8; and
• All individual claims that could have been asserted based on the facts alleged in the First Amended Consolidated Complaint.
The release includes a waiver of the protections of California Civil Code section 1542, which provides:
"A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release and that, if known by him or her, would have materially affected his or her settlement with the debtor or released party."
Each Settlement Class member who does not opt out will be deemed to have waived the protections of section 1542 with respect to the Released Claims.
H. No Admission of Liability
AMA has at all times denied, and continues to deny, all allegations of wrongdoing asserted in this action. The Settlement Agreement expressly provides that AMA admits no liability of any kind, and the settlement constitutes a compromise of disputed claims to avoid the further costs, burden, distraction, and uncertainty of continued litigation. Nothing in the Settlement Agreement or in this Motion shall be construed as an admission by AMA of any liability, wrongdoing, or violation of any law, regulation, or contractual obligation.
I. Opt-Out and Objection Procedures
The Settlement Agreement provides Settlement Class members with meaningful opportunities to exclude themselves from the settlement or to voice objections:
Opt-Out Procedure. Any Settlement Class member who wishes to exclude himself or herself from the settlement may do so by submitting a written request for exclusion to Meridian Settlement Services LLC, postmarked no later than the opt-out deadline — sixty (60) days after the date of mailing of the Class Notice. The written exclusion request must include the class member's name, address, telephone number, the last four digits of the class member's Social Security number, and a clear statement that the class member wishes to be excluded from the settlement. Class members who opt out will not receive any payment from the settlement and will not be bound by the release, but will retain the right to pursue their claims individually.
Walk-Away Provision. If the number of opt-outs equals or exceeds 5% of Settlement Class members (i.e., ninety-three (93) or more individuals), AMA has the right, but not the obligation, to void the Settlement Agreement in its entirety. This provision protects AMA's interest in achieving comprehensive resolution of the claims and provides AMA with a reasonable mechanism to reassess the settlement if a significant number of class members decline to participate.
Objection Procedure. Any Settlement Class member who does not opt out may object to the settlement by submitting a written objection to Meridian Settlement Services LLC, postmarked no later than the objection deadline — sixty (60) days after the date of mailing of the Class Notice. The written objection must include the class member's name, address, telephone number, a statement of the grounds for the objection, and whether the class member intends to appear at the Final Approval Hearing. Class members who object but do not opt out remain members of the Settlement Class and will receive a settlement payment if the Court grants final approval.
J. Uncashed Checks and Cy Pres Distribution
Settlement checks will be valid for 180 days after issuance. Settlement Class members who fail to cash their checks within this period will forfeit their settlement payments. Any funds remaining from uncashed checks will be donated to the Legal Aid Foundation of Los Angeles as a cy pres distribution, consistent with the requirements of California Code of Civil Procedure section 384. The Legal Aid Foundation of Los Angeles is a qualified nonprofit organization whose mission of providing free legal services to low-income residents of Los Angeles County is reasonably related to the interests of the Settlement Class.
K. Injunctive and Prospective Relief
The Settlement Agreement does not include injunctive or prospective relief, as AMA has already voluntarily implemented corrective measures that address the practices at issue in this litigation. Specifically, in December 2022, AMA corrected the automatic meal period deduction threshold in the NovaPay Solutions TimeTrack Pro timekeeping system from six hours to five hours at all seven California production facilities, thereby aligning the system with the requirements of California Labor Code section 512(a). In addition, AMA activated the Missed Meal Attestation feature in the TimeTrack Pro system at all seven California facilities, which prompts employees to affirmatively attest at the end of each shift whether they received a compliant meal period. Prior to the filing of this action, the Missed Meal Attestation feature had been activated at only four of AMA's seven California facilities.
L. Claims Administrator
The parties have jointly selected Meridian Settlement Services LLC to serve as the Claims Administrator for this settlement. Meridian's principal office is located at 1600 E. Fourth Street, Suite 240, Santa Ana, California 92701, and the principal contact for this matter is Angela Truong. Meridian is an experienced class action settlement administrator with extensive experience administering California wage-and-hour class action settlements in both state and federal courts.
The Claims Administrator's responsibilities include, but are not limited to: distributing the Class Notice to all Settlement Class members by first-class mail; creating and maintaining a dedicated settlement website; operating a toll-free telephone hotline; processing opt-out requests and objections; obtaining and verifying class member mailing addresses using the National Change of Address ("NCOA") database and skip-tracing services; calculating individual settlement payments; performing tax withholding calculations; printing and mailing settlement checks; tracking and reporting on undeliverable notices and uncashed checks; and preparing a declaration summarizing the administration process for submission in connection with the Motion for Final Approval.
The total administration budget is $385,000, to be paid from the GSA.
IV. LEGAL STANDARD FOR PRELIMINARY APPROVAL
California Rules of Court, Rule 3.769, governs the approval of class action settlements in California state courts. Rule 3.769(c) provides that any party to a class action settlement must file a motion for preliminary approval of the settlement. Upon receipt of such a motion, the Court must conduct a preliminary evaluation of the settlement to determine whether it is sufficiently fair, adequate, and reasonable to warrant sending notice to the class. (Cal. Rules of Court, Rule 3.769(c)–(f).)
Preliminary approval is the first step in a two-step process. At the preliminary approval stage, the Court is not required to make a final determination regarding the fairness or adequacy of the settlement. Rather, the Court need only determine that the proposed settlement falls "within the range of possible approval" — that is, whether it is within the "ballpark" of reasonableness — such that it warrants dissemination of notice to the class and further proceedings. (See Weil & Brown, Cal. Practice Guide: Civil Procedure Before Trial (The Rutter Group) ¶ 14:139.) The more rigorous fairness analysis occurs at the final approval stage, after class members have been given notice and an opportunity to opt out or object.
In evaluating whether a class action settlement merits approval, California courts consider a number of factors, including: (1) the strength of the plaintiffs' case; (2) the risk, expense, complexity, and likely duration of further litigation; (3) the risk of maintaining class certification through trial; (4) the amount offered in settlement; (5) the extent of discovery completed and the stage of the proceedings; (6) the experience and views of counsel; (7) the presence of a governmental participant; and (8) the reaction of the class members to the proposed settlement. (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801.)
Additionally, the Court must be provided with sufficient information to independently evaluate the reasonableness of the settlement. (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.) The Court "cannot determine whether a settlement is fair, adequate, and reasonable unless the settlement is understood within the context of the case." (Id. at p. 130.) Here, the extensive discovery, expert analyses, contested class certification proceedings, and detailed terms of the Settlement Agreement provide the Court with more than adequate information to make this threshold determination.
V. THE SETTLEMENT MERITS PRELIMINARY APPROVAL
Application of the relevant factors demonstrates that the proposed settlement is fair, adequate, and reasonable and falls well within the range of possible approval.
A. The Settlement Was Reached Through Arm's-Length Negotiations Facilitated by an Experienced Mediator
A presumption of fairness attaches to a class action settlement reached through arm's-length negotiations by experienced counsel, particularly where the negotiations were facilitated by an independent, experienced mediator. (Dunk v. Ford Motor Co., supra, 48 Cal.App.4th at p. 1801; In re Bluetooth Headset Products Liability Litigation (9th Cir. 2011) 654 F.3d 935, 948 [settlement presumed fair where it "was the product of arm's-length, informed negotiations by capable counsel, aided by an experienced mediator"].)
Here, the settlement was negotiated over the course of two full-day mediation sessions — on August 25, 2023 and September 8, 2023 — before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc. Judge Okoro is a retired Los Angeles Superior Court Judge who served on the bench for more than twenty-five years and has extensive experience mediating complex employment class actions and PAGA matters. The mediation sessions totaled approximately sixteen hours of adversarial negotiations, with multiple rounds of written offers, counteroffers, and mediator's proposals.
The negotiations were anything but perfunctory. At the first session on August 25, 2023, the parties failed to reach agreement, despite a full day of intensive negotiations. It was only at the second session on September 8, 2023, after additional analysis and reflection, that the parties were able to bridge the gap between their respective positions. The fact that the settlement was not reached until the second mediation session — and only after approximately sixteen hours of negotiations — underscores the arm's-length nature of the process.
Critically, the parties entered the mediation process with the benefit of comprehensive knowledge of the case. By the time the first mediation session took place, the parties had completed extensive document and data discovery (147,832 documents produced by AMA; 3,412 documents produced by Plaintiffs; third-party data obtained from NovaPay Solutions), taken eighteen depositions, exchanged expert reports from three separate experts, fully briefed and argued a contested motion for class certification, and received the Court's ruling granting certification in part and denying it in part. Both sides thus entered mediation with a thorough understanding of the factual record, the legal landscape, and the strengths and weaknesses of their respective positions. This informed negotiation process further supports the presumption of fairness that attaches to the resulting settlement.
B. The Settlement Amount Is Fair, Adequate, and Reasonable in Light of the Litigation Risks
The GSA of $14,750,000 represents a substantial monetary recovery for the Settlement Class that is fair and reasonable when evaluated in the context of the claims asserted, the litigation risks, and the competing damages analyses.
1. Comparison to Plaintiffs' Claimed Exposure
The GSA of $14,750,000 represents approximately 38.2% of Plaintiffs' expert's aggregate damages calculation of $38.6 million. In the experience of counsel and based on published surveys and reported decisions, California wage-and-hour class action settlements typically fall in the range of 15–40% of the plaintiff's claimed damages exposure. (See, e.g., 4 Newberg & Rubenstein on Class Actions § 13:56 (6th ed.) [noting that class action settlements across all case types frequently settle for a fraction of the maximum potential recovery].) This settlement falls at the upper end of that range, which is particularly notable given the significant litigation risks described below.
2. Comparison to Defense Valuation
AMA's rebuttal economics expert, Dr. Catherine Lindstrom of Hargrove Analytics Inc., valued the claims at approximately $5.8 million — less than 40% of the settlement amount. The GSA of $14,750,000 is more than two-and-a-half times the defense valuation. This disparity reflects the fact that the settlement was the product of genuine compromise, with both parties making meaningful concessions from their respective starting positions.
3. Risks on Certified Claims
Although this Court certified the first meal period auto-deduction claim, AMA maintained meritorious defenses that posed significant risks to Plaintiffs' recovery at trial. Under Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, an employer's obligation with respect to meal periods is to provide the meal period — that is, to make it available and not impede or discourage employees from taking the break — not to ensure that employees actually take the break. (Id. at p. 1040.) AMA maintained written policies at all seven California facilities that facially complied with the requirements of California Labor Code section 512 and the Brinker decision. AMA further maintained that the TimeTrack Pro system's Missed Meal Attestation feature — which was activated at four of seven facilities before the litigation commenced and at all seven facilities by December 2022 — provided employees with a meaningful mechanism to report missed meal periods and receive premium pay when warranted.
Dr. Makhija's expert analysis demonstrated significant variability in meal period practices across AMA's fourteen active show units and seven California production facilities. This variability meant that even at trial on the certified claim, AMA could have presented substantial evidence that many class members received compliant meal periods and were not harmed by the auto-deduction system. There was a realistic possibility that a jury could find in AMA's favor with respect to a substantial portion of the class, dramatically reducing the recovery below the $38.6 million figure calculated by Dr. Rennick.
Additionally, AMA had preserved its right to seek decertification based on trial management concerns and individualized defenses that might emerge as the case progressed toward trial. The risk of decertification — or the risk of an adverse jury verdict on the merits — was real and significant. The settlement eliminates these risks for the class.
4. Risks on Non-Certified Claims
This Court denied class certification for the rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalty claims, finding that individual issues predominated. While these claims were not certified, they remained available to individual class members. The settlement resolves all such claims through the broad release, providing AMA with comprehensive finality and eliminating the risk of follow-on individual litigation that could otherwise consume substantial judicial and party resources.
For class members, the resolution of non-certified claims in the settlement provides significant value: it allows class members to receive compensation for claims that they would otherwise have been required to pursue individually, with all the attendant costs, delays, and risks of individual litigation. Many class members, particularly lower-wage production-support employees, would likely never pursue individual claims absent the class action mechanism. The settlement thus ensures that all class members receive meaningful compensation for the full range of claims at issue.
5. PAGA Exposure
Plaintiffs claimed $12.2 million in PAGA civil penalties based on Dr. Rennick's calculations. The PAGA component of $750,000 represents a 93.9% reduction from the claimed amount. While this reduction is substantial, it is consistent with the significant discretion that courts exercise in assessing PAGA penalties and the well-established principle that maximum statutory penalties are rarely awarded. Under California Labor Code section 2699(e)(2), the Court has discretion to reduce PAGA penalties if an award of the maximum statutory amount "would be unjust, arbitrary and oppressive, or confiscatory." Courts routinely reduce PAGA penalties to a fraction of the statutory maximum, particularly where the employer has taken corrective action. (See, e.g., Fenmore Group (N.D. Cal. 2015) 2015 WL 1089643, at 4 [reducing PAGA penalties by 75%]; Bellinghausen v. Tractor Supply Co. (N.D. Cal. 2015) 2015 WL 4539338, at 6 [similar reduction].) Here, AMA's voluntary correction of the auto-deduction threshold and activation of the Missed Meal Attestation feature further support the reasonableness of the negotiated PAGA amount.
6. Avoidance of Trial Costs and Delay
If the case proceeded to trial, both sides would incur substantial additional litigation costs. The parties estimate that trial preparation and a jury trial on the certified claims would cost each side approximately $1.2 million to $1.8 million, including expert witness fees, trial graphics and demonstratives, jury consultant fees, and attorney time. The trial itself would likely last two to three weeks, followed by post-trial motions and potential appellate proceedings that could extend the case for years. The settlement eliminates these costs and provides prompt, certain relief to class members.
C. The Settlement Treats Class Members Equitably
The distribution formula of 60% based on weeks worked during the class period and 40% based on recorded overtime hours is rationally related to the claims asserted and ensures that class members are compensated proportionally to their exposure to the practices at issue. Class members who worked more weeks during the class period were subject to AMA's automatic meal period deduction system for a longer period of time and, therefore, had a greater likelihood of experiencing meal period violations. Class members who worked more overtime hours during the class period worked longer shifts, which were more likely to implicate meal period compliance concerns — particularly given the nature of production-support work in media and entertainment, where extended shifts are common.
The pro rata, non-claims-made distribution structure is particularly well-suited to this case. Because all Settlement Class members were subject to the same automatic meal period deduction system during their employment with AMA, every class member has a cognizable claim, and there is no reason to require class members to affirmatively submit a claim form in order to participate. Pro rata distribution ensures maximum class participation and avoids the historically low claims rates that have been observed in claims-made settlements. (See Consumer Financial Protection Bureau, Study of Consumer Class Action Settlements (2019) [observing average claims rates of approximately 4–9% in consumer class action settlements with claims-made processes].)
The proposed service awards for the named Class Representatives — $15,000 for Marisol Fuentes and $10,000 each for Derek Halloran and Yesenia Padilla — are reasonable and within the range approved by California courts in comparable cases. (See, e.g., Cellphone Termination Fee Cases (2010) 186 Cal.App.4th 1380, 1394 [affirming service awards]; Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 804–806 [same].) Each named Plaintiff made significant contributions to the prosecution of this action, including: reviewing and producing documents in response to discovery requests; sitting for depositions lasting between five and seven hours each; meeting with counsel on multiple occasions to discuss case strategy and prepare for depositions and mediation; reviewing mediation briefs and settlement proposals; and attending both mediation sessions. Ms. Fuentes, as the lead named Plaintiff and the original filer of the Complaint, assumed additional responsibilities and risks, which warrant the modestly higher service award of $15,000.
D. The Proposed Class Notice Satisfies Due Process
The proposed Class Notice plan is designed to provide Settlement Class members with the best notice practicable under the circumstances and to satisfy the requirements of due process. (Mullane v. Central Hanover Bank & Trust Co. (1950) 339 U.S. 306, 314; Cal. Rules of Court, Rule 3.769(f).)
Long Form Notice (Exhibit A to the Settlement Agreement). The Long Form Notice is a four-page, plain-language document that describes in clear and accessible terms:
• The nature and claims of the case, including a summary of the allegations and the procedural history;
• The material terms of the Settlement Agreement, including the GSA, the Net Settlement Fund, the estimated average payment of approximately $4,460 per class member, and the allocation formula (60% weeks worked / 40% overtime hours);
• The right to opt out of the settlement, with instructions for submitting a written exclusion request and the applicable deadline;
• The right to object to the settlement, with instructions for submitting a written objection and the applicable deadline;
• The date, time, and location of the Final Approval Hearing;
• Contact information for Class Counsel: Castellano Byrne & Salas LLP, 11755 Wilshire Boulevard, Suite 900, Los Angeles, California 90025;
• Contact information for the Claims Administrator: Meridian Settlement Services LLC, 1600 E. Fourth Street, Suite 240, Santa Ana, California 92701;
• The URL for the dedicated settlement website; and
• A toll-free telephone number for class member inquiries.
Summary/Postcard Notice (Exhibit B to the Settlement Agreement). The Summary/Postcard Notice is a double-sided postcard that provides a concise summary of the settlement and directs class members to the settlement website and the Long Form Notice for more detailed information. The postcard format is designed to increase the likelihood that class members will review the notice, as it does not require class members to open an envelope.
Method of Distribution. The Class Notice will be distributed as follows:
• First-Class Mail: The Summary/Postcard Notice will be mailed by first-class mail to the last known address of each Settlement Class member. Class member addresses will be obtained from AMA's employment records and cross-referenced with the United States Postal Service's National Change of Address ("NCOA") database to ensure accuracy. For any notices returned as undeliverable, Meridian Settlement Services will conduct skip-tracing to identify updated addresses and will re-mail the notice.
• Settlement Website: The Long Form Notice, the Settlement Agreement, and other relevant documents will be posted on a dedicated settlement website created and maintained by Meridian Settlement Services. The website will also include a frequently asked questions section, contact information for Class Counsel and the Claims Administrator, and downloadable forms for opt-out requests and objections.
• Timeline: Notice distribution will be completed within fifteen (15) days of the entry of the Preliminary Approval Order.
This notice plan — combining individual mailed notice with a dedicated settlement website — is consistent with the methods routinely approved by California courts in class action settlements and provides class members with the best practicable notice under the circumstances.
E. The Claims Administrator Is Qualified
Meridian Settlement Services LLC is an experienced and reputable class action settlement administration firm with extensive experience administering California wage-and-hour class action settlements. The firm has administered hundreds of class action settlements in California state and federal courts, involving a wide range of case types and class sizes. Angela Truong, the principal contact for this matter, has personally overseen the administration of numerous California employment class action settlements. Further details regarding Meridian's qualifications and experience will be provided in the Declaration of Angela Truong, to be filed in connection with the Motion for Final Approval or as otherwise directed by the Court.
The administration budget of $385,000 is reasonable and reflects the scope of the administrative tasks involved in this settlement, including notice distribution to approximately 1,850 class members, address verification and skip tracing, settlement website creation and maintenance, toll-free telephone hotline operation, individual payment calculations under the two-factor allocation formula, tax calculations and withholding, check printing and distribution, handling of returned and uncashed checks, and comprehensive fund accounting and reporting.
VI. PROVISIONAL CERTIFICATION OF THE SETTLEMENT CLASS
The parties request that the Court provisionally certify the Settlement Class for settlement purposes only. The Settlement Class is defined consistently with the class certified by this Court's August 11, 2023 Class Certification Order, with the class period end date fixed at October 31, 2023.
Provisional certification for settlement purposes does not require the same rigorous analysis as contested class certification, because the settlement eliminates the need for trial and the manageability concerns that attend contested certification. (See Amchem Products, Inc. v. Windsor (1997) 521 U.S. 591, 620 ["Confronted with a request for settlement-only class certification, a district court need not inquire whether the case, if tried, would present intractable management problems . . . for the proposal is that there be no trial."].) Nevertheless, the Settlement Class satisfies all of the prerequisites for class certification.
This Court has already determined — in its August 11, 2023 Class Certification Order following full briefing, expert submissions, and oral argument — that the certified class satisfies the requirements of commonality, typicality, adequacy, and superiority with respect to the first meal period auto-deduction claim, the derivative wage statement claim, and the UCL claim. The Settlement Class is defined in substantially the same terms as the certified class, with the sole modification being the fixed end date of October 31, 2023. The named Class Representatives — Marisol Fuentes, Derek Halloran, and Yesenia Padilla — have been found by this Court to be adequate representatives of the class. Class Counsel — Castellano Byrne & Salas LLP and Veltrano Employment Law Group PC — have been found by this Court to be experienced and qualified to represent the interests of the class.
Provisional certification is further appropriate because the Settlement Class encompasses the same individuals and the same core claims as the certified class. The broader release — which extends to both certified and non-certified claims — does not undermine the propriety of provisional certification, as the settlement provides class members with the opportunity to opt out if they wish to pursue non-certified claims individually.
The parties therefore respectfully request that the Court provisionally certify the Settlement Class, confirm the appointments of Fuentes, Halloran, and Padilla as Class Representatives, and confirm the appointments of Castellano Byrne & Salas LLP as Lead Class Counsel and Veltrano Employment Law Group PC as PAGA Co-Counsel.
VII. PROPOSED SCHEDULE
The parties propose the following schedule for the notice period, opt-out and objection deadlines, and the Final Approval Hearing:
The parties respectfully request that the Court set these dates or, alternatively, set dates that the Court deems appropriate in light of its calendar and the interests of the Settlement Class.
VIII. REQUEST TO STAY PROCEEDINGS
The parties jointly request that all proceedings in this action be stayed pending the Final Approval Hearing and the Court's ruling on the Motion for Final Approval. A stay of proceedings is appropriate to conserve the resources of the Court and the parties while the settlement approval process is pending, and to avoid any prejudice that might result from continued litigation activity during the notice period. Continued litigation activity — including potential discovery disputes, pre-trial motions, or trial preparation — would be unnecessarily duplicative and wasteful in light of the pending settlement.