CONFIDENTIAL — SUBJECT TO PROTECTIVE ORDER
CALDERWOOD & HARKNESS LLP Renata Vasquez (SBN 224578) Devon Archer (SBN 301462) 777 South Flower Street, Suite 4200 Los Angeles, California 90017 Telephone: (213) 555-7200 Facsimile: (213) 555-7201
Email: rvasquez@calderwoodharkness.com
Email: darcher@calderwoodharkness.com
Attorneys for Defendant Aurelius Media Americas Inc.
SUPERIOR COURT OF THE STATE OF CALIFORNIA
COUNTY OF LOS ANGELES — CENTRAL DISTRICT
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I. INTRODUCTION
Defendant Aurelius Media Americas Inc. ("AMA" or "Defendant") respectfully joins Plaintiffs Marisol Fuentes, Derek Halloran, and Yesenia Padilla ("Plaintiffs" or "Named Plaintiffs") in seeking final approval of the class action settlement reached on September 15, 2023, following two full-day mediation sessions before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc. The settlement reflects a carefully negotiated resolution of complex and hard-fought wage-and-hour claims, achieved after extensive discovery, expert analysis, contested class certification proceedings, and adversarial arm's-length negotiations facilitated by a respected neutral.
The settlement establishes a non-reversionary Gross Settlement Amount ("GSA") of $14,750,000, which resolves all class and Private Attorneys General Act ("PAGA") claims asserted in this consolidated action. These claims include both the claims that this Court certified for class treatment — the first meal period auto-deduction claim, the derivative wage statement claim under California Labor Code section 226, and the unfair competition claim under California Business and Professions Code section 17200 — as well as claims that the Court declined to certify, including the rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalty claims. The settlement also resolves the PAGA representative claim at issue in this action.
The settlement class consists of all current and former non-exempt, hourly employees of AMA who worked in California from November 1, 2018 through October 31, 2023, and who were subject to the NovaPay Solutions TimeTrack Pro auto-deduction system — approximately 1,850 individuals. The class response to the settlement has been overwhelmingly favorable. Of the approximately 1,850 class members, 1,262 (68.2%) submitted valid claims, a claims rate that far exceeds the norm in class action settlements. Only 23 class members (1.24%) opted out, and only 4 objections were received — none of which raises a meritorious basis for denying or modifying the settlement.
After deductions for attorneys' fees, litigation costs, service awards to the Named Plaintiffs, settlement administration costs, and the PAGA payment, the Net Settlement Fund of $8,251,525 will be distributed to claiming class members on a pro rata basis, weighted 60% to weeks worked during the class period and 40% to recorded overtime hours. This distribution formula yields an estimated average individual payment of approximately $4,460 per participating class member.
The settlement is the product of extensive investigation, vigorous arm's-length negotiation, and an informed assessment of the litigation risks facing both sides. It represents a fair, adequate, and reasonable resolution of this action — one that provides meaningful compensation to the class while avoiding the costs, uncertainties, and delays of further litigation and trial. AMA respectfully requests that the Court grant final approval.
II. PROCEDURAL HISTORY
A. The Litigation
On November 1, 2022, Plaintiff Marisol Fuentes filed a putative class action complaint against AMA in this Court, initiating Case No. 22STCV38214. AMA is a Delaware corporation qualified to do business in California, with its principal office located at 8500 Sunset Boulevard, Suite 1400, West Hollywood, California 90069. AMA is a wholly owned subsidiary of Aurelius Global Media Group PLC, a publicly traded entertainment conglomerate organized under the laws of England and Wales. AMA operates as the North American production arm of the Aurelius Global Media enterprise, producing unscripted television programming at multiple California facilities.
On November 18, 2022, Plaintiff Derek Halloran filed a related putative class action complaint against AMA, initiating Case No. 22STCV39501. The Halloran action raised substantially similar allegations to those asserted in the Fuentes action.
On February 3, 2023, the Court consolidated both actions under lead Case No. 22STCV38214 and assigned them for all purposes to the Honorable Raymond Escobedo, Department 34. At that time, Yesenia Padilla was added as an additional named plaintiff in the consolidated action.
The operative complaint alleges seven causes of action arising from AMA's wage-and-hour practices with respect to its non-exempt, hourly production employees in California:
(1) Failure to provide compliant meal periods in violation of California Labor Code sections 226.7 and 512;
(2) Failure to provide compliant rest periods in violation of California Labor Code section 226.7;
(3) Failure to pay overtime wages in violation of California Labor Code sections 510 and 1194;
(4) Failure to pay minimum wages in violation of California Labor Code sections 1197 and 1197.1;
(5) Failure to furnish accurate itemized wage statements in violation of California Labor Code section 226;
(6) Failure to timely pay final wages (waiting time penalties) in violation of California Labor Code sections 201 through 203; and
(7) Unfair business practices in violation of the Unfair Competition Law, California Business and Professions Code section 17200, et seq.
In addition to the foregoing class claims, Plaintiffs asserted a PAGA representative claim seeking civil penalties on behalf of themselves and all aggrieved employees. Plaintiffs served their PAGA notice on the California Labor and Workforce Development Agency ("LWDA") on September 15, 2022. The LWDA took no action within the statutory 65-day period prescribed by California Labor Code section 2699.3, subdivision (a)(2), and Plaintiffs accordingly retained the right to pursue the PAGA claim.
AMA filed its Answer and Affirmative Defenses on February 17, 2023, denying all material allegations and asserting numerous affirmative defenses, including, among others, that AMA maintained lawful meal and rest period policies, that AMA's timekeeping system accurately recorded employee hours, that any missed or shortened meal periods were the result of employee choice rather than company policy or practice, and that AMA took prompt corrective action upon learning of any system configuration issues.
B. Discovery
Discovery in this action was extensive, reflecting the complexity of the wage-and-hour claims at issue and the volume of electronic records maintained by AMA and its third-party payroll and timekeeping vendor.
On January 13, 2023, the parties entered into a stipulated ESI Protocol governing the identification, preservation, collection, processing, review, and production of electronically stored information in the action. The ESI Protocol established agreed-upon procedures for the handling of privilege assertions, de-duplication, search term methodology, and production format.
AMA produced a total of 147,832 documents, comprising approximately 1.2 million pages of material. These productions included payroll records, timekeeping data, employee handbooks, internal policy memoranda, email correspondence, system configuration records for the NovaPay Solutions TimeTrack Pro platform, meal period attestation data, and corporate organizational documents. Plaintiffs produced 3,412 documents, consisting primarily of Named Plaintiffs' employment records, personal communications, and financial records.
The parties issued a third-party subpoena to NovaPay Solutions Inc. ("NovaPay"), AMA's payroll and timekeeping vendor headquartered in Emeryville, California, seeking production of TimeTrack Pro system configuration data, auto-deduction logs, attestation feature records, user manuals, and implementation correspondence. NovaPay produced responsive documents following negotiation of a subpoena compliance stipulation.
All electronic discovery was processed, hosted, and managed through Marlowe Asset Management Litigation Technology Inc., an e-discovery vendor located in Costa Mesa, California. The parties utilized Marlowe Asset Management's platform for document review, production tracking, and search analytics throughout the litigation.
The parties identified and collected documents from seven key custodians whose files were deemed most relevant to the claims and defenses at issue:
• Lorraine Okafor, Senior Vice President of Human Resources, AMA;
• Gregory Tanaka, Vice President of Legal and Compliance, AMA;
• Marcus Yee, Client Services Manager, NovaPay Solutions Inc. (third-party custodian);
• Jonathan Mercer, President, AMA;
• Celine Arroyo, Director of Production Operations, AMA;
• Dwayne Prescott, Vice President of Unscripted Programming, AMA; and
• Karen Fong, Payroll Manager, AMA.
The parties conducted a total of 18 depositions — 11 taken by Plaintiffs and 7 taken by the Defense. Plaintiffs' depositions included all three Named Plaintiffs (Fuentes, Halloran, and Padilla), AMA's person most knowledgeable ("PMK") witnesses (Okafor, Arroyo, and Fong), AMA's President (Mercer), the NovaPay witness (Yee), and additional fact witnesses employed by AMA during the class period. Defense depositions included the Named Plaintiffs and certain opt-in fact witnesses identified by Plaintiffs during discovery. In total, the deposition record encompasses several thousand pages of testimony.
C. Expert discovery
The parties exchanged expert reports from three retained experts, whose opinions addressed damages, liability, and class-wide variability.
Plaintiffs retained Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, located in Palo Alto, California, as their damages expert. Dr. Rennick served his initial expert report on April 28, 2023. In that report, Dr. Rennick opined that aggregate class-wide damages totaled approximately $38.6 million, inclusive of approximately $12.2 million in PAGA civil penalties. Dr. Rennick's damages model assumed, among other things, a uniform meal period violation rate based on the auto-deduction data, extrapolation of the violation rate across all class members and all class period weeks, and statutory penalty calculations for each derivative claim.
AMA retained Dr. Catherine Lindstrom of Hargrove Analytics Inc., located in Los Angeles, California, as its economics expert. Dr. Lindstrom served her rebuttal expert report on June 9, 2023. Dr. Lindstrom opined that aggregate class-wide damages, properly calculated, were approximately $5.8 million, exclusive of PAGA penalties. Dr. Lindstrom's analysis differed from Dr. Rennick's in several material respects, including her adjustment for meal periods that were voluntarily shortened or skipped by employees, her exclusion of damages for facilities where the Missed Meal Attestation feature was active and utilized, and her application of individualized offsets for employees who received premium pay during the class period.
AMA also retained Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC, located in Mountain View, California, as its industrial/organizational psychology expert. Dr. Makhija served his expert report on May 19, 2023. Dr. Makhija opined that there was significant variability in workplace conditions, scheduling practices, and meal period compliance across AMA's seven California facilities and 14 distinct show units (i.e., the individual production teams organized around specific television programs). Dr. Makhija's analysis supported AMA's position that individual inquiries would predominate over common questions on the non-certified claims, and that a class-wide liability finding on those claims would be inappropriate.
D. Class Certification
On April 14, 2023, Plaintiffs filed their motion for class certification, seeking certification of all seven causes of action under Code of Civil Procedure section 382. The motion was supported by declarations from the Named Plaintiffs, additional class member declarants, and Dr. Rennick.
AMA filed its opposition to class certification on June 16, 2023. The opposition was supported by declarations of Lorraine Okafor (SVP HR), Celine Arroyo (Director of Production Operations), Karen Fong (Payroll Manager), Dr. Rajesh Makhija, and Dr. Catherine Lindstrom. AMA argued, among other things, that the rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalty claims required individualized inquiries into each class member's particular circumstances that would overwhelm any common questions, and that Plaintiffs had failed to demonstrate a common policy or practice as to those claims.
Plaintiffs filed their reply in support of class certification on July 7, 2023. The Court held a hearing on the motion on July 28, 2023.
On August 11, 2023, the Court issued a detailed order granting class certification in part and denying it in part. Specifically, the Court's ruling was as follows:
Certified Claims:
• The first meal period auto-deduction claim (First Cause of Action, in part), on the ground that AMA's uniform use of the NovaPay TimeTrack Pro auto-deduction system presented a common question of law and fact susceptible to class-wide resolution;
• The derivative wage statement claim under California Labor Code section 226 (Fifth Cause of Action), as derivative of the certified first meal period claim; and
• The Unfair Competition Law claim under California Business and Professions Code section 17200 (Seventh Cause of Action), as derivative of the certified first meal period claim.
Denied Claims:
• The rest period claim (Second Cause of Action);
• The off-the-clock/overtime claim (Third Cause of Action);
• The minimum wage claim (Fourth Cause of Action);
• The second meal period claim (First Cause of Action, in part); and
• The waiting time penalty claim (Sixth Cause of Action).
The Court found that the denied claims required individualized inquiries into the circumstances of each class member's employment that were not amenable to class-wide adjudication, crediting Dr. Makhija's opinions regarding variability across AMA's facilities and show units. The PAGA claim continued to proceed as a representative action.
The Court designated Marisol Fuentes, Derek Halloran, and Yesenia Padilla as the Named Class Representatives. The Court designated Castellano Byrne & Salas LLP (lead counsel: Marco Castellano, Diane Salas, and Trevor Kim) as Lead Class Counsel and Veltrano Employment Law Group PC (Sandra Higuera) as PAGA Co-Counsel.
E. Mediation and Settlement
Following the Court's class certification order, the parties engaged in settlement discussions and agreed to mediation.
The first mediation session was held on August 25, 2023, before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc., located at 1925 Century Park East, Suite 1700, Los Angeles, California 90067. Judge Okoro is a retired Los Angeles Superior Court Judge who served on the bench for over 25 years and has extensive experience mediating complex employment class actions and PAGA disputes. The first session focused on the class action claims and lasted approximately eight hours.
The second mediation session was held on September 8, 2023, again before Judge Okoro at Westpark Dispute Resolution Inc. The second session addressed both the class action claims and a related executive employment dispute involving former AMA executive Grant Aldrich, which was being mediated concurrently but is not part of the instant settlement. The second session lasted approximately eight hours with respect to the class action component.
Over the course of the two sessions, totaling approximately 16 combined hours, the mediator conducted extended caucuses with each side, facilitated the exchange of detailed mediation briefs and supplemental analyses, and assisted the parties in narrowing their positions. The negotiations were adversarial, arm's-length, and hard-fought throughout. The parties' opening positions were far apart — Plaintiffs opened with a demand of $28 million, while AMA made an initial offer of $8 million. The parties exchanged multiple offers and counteroffers across both sessions before ultimately reaching agreement on the material settlement terms.
The Class Settlement Agreement and Release (the "Settlement Agreement") was executed by all parties on September 15, 2023.
F. Preliminary Approval and Notice
On September 22, 2023, the parties filed a joint motion for preliminary approval of the settlement, supported by the Settlement Agreement, the Declaration of Marco Castellano (class counsel), and related exhibits.
On October 18, 2023, the Court entered its Order Granting Preliminary Approval of Class Action Settlement (the "Preliminary Approval Order"). In the Preliminary Approval Order, the Court: (a) provisionally certified the settlement class for settlement purposes; (b) approved the form, content, and manner of class notice; (c) set the deadlines for opt-outs and objections (January 2, 2024); (d) set the final approval hearing for February 2, 2024; and (e) appointed Meridian Settlement Services LLC as the claims administrator.
Meridian Settlement Services LLC ("Meridian"), under the direction of its principal contact Angela Truong, is located at 1600 E. Fourth Street, Suite 240, Santa Ana, California 92701. Meridian is an experienced claims administration firm that has administered numerous wage-and-hour class action settlements in California.
On November 3, 2023, Meridian mailed individual class notices by first-class United States mail to 1,843 class members at their last known mailing addresses, as determined from AMA's employment records and available databases. Of the 1,843 notices mailed, 7 were initially returned as undeliverable. Meridian conducted skip-tracing to obtain updated addresses for each of these individuals and re-mailed the notices to the updated addresses. All 7 re-mailed notices were successfully delivered.
Meridian also established and maintained a dedicated settlement website at www.amaclasssettlement.com, which provided class members with access to the full text of the Settlement Agreement, the long-form class notice, answers to frequently asked questions, and instructions for submitting claims, opting out, or filing objections. The settlement website recorded 2,847 unique visits during the claims period. In addition, Meridian maintained a toll-free telephone number staffed by trained operators, which received 312 calls from class members seeking information about the settlement.
The deadline for class members to submit claims, opt out, or file objections was January 2, 2024. As of that date, Meridian received 1,262 valid claims, 23 requests for exclusion, and 4 written objections.
III. LEGAL STANDARD FOR FINAL APPROVAL
Under California law, a court asked to approve a class action settlement must determine that the settlement is "fair, adequate, and reasonable." (Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801.) The court's task is to "independently and objectively analyze the evidence and circumstances before it in order to determine whether the settlement is in the best interests of those whose claims will be extinguished." (Ibid.)
In evaluating the fairness and adequacy of a proposed class settlement, the court considers 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 action status throughout the 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. (Wershba v. Computer, Inc. (2001) 91 Cal.App.4th 224, 245; see also Dunk, supra, 48 Cal.App.4th at p. 1801.)
The court must have a "clear understanding" of the amount that is in controversy and the realistic range of outcomes of the litigation to evaluate whether the settlement falls within the range of reasonableness. (Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128.) The court should compare the settlement amount to the estimated range of potential recovery — not to the maximum theoretical exposure — in order to assess reasonableness. (Id. at pp. 128–129.)
A presumption of fairness is warranted where the settlement was reached through arm's-length, non-collusive negotiations between experienced counsel, facilitated by an experienced mediator. (Clark v. American Residential Services LLC (2009) 175 Cal.App.4th 785, 804.) The rationale for this presumption is that "the court has the benefit of the parties' evaluation of the risks and merits, which is informed by their substantial discovery and analysis of the case." (Ibid.)
Importantly, the court need not reach the ultimate question of liability or determine what the precise recovery would have been at trial. (Dunk, supra, 48 Cal.App.4th at p. 1801.) Rather, the court must evaluate the settlement as a whole, giving appropriate weight to the judgment of the parties and their counsel who have engaged in substantive negotiations and possess a deep understanding of the factual record and legal issues. The settlement need not be the best possible result for the class; it must merely fall within the range of what is reasonable. (Kullar, supra, 168 Cal.App.4th at p. 130.)
IV. ARGUMENT
A. The Settlement Is Fair, Adequate, and Reasonable
1. The Settlement Was the Product of Arm's-Length, Non-Collusive Negotiations
The settlement at issue was reached through two full-day mediation sessions, held on August 25 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 over 25 years and has extensive experience mediating complex employment class actions, PAGA representative actions, and related disputes in the entertainment, hospitality, and technology industries. Her reputation as a rigorous and impartial mediator is well known to the bench and bar.
Over the course of the two sessions, totaling approximately 16 combined hours, Judge Okoro conducted extended caucuses with each side, during which the parties presented their respective views on liability, damages, and litigation risk. The mediator challenged each side's assumptions and facilitated a thorough exchange of positions. The parties submitted detailed mediation briefs in advance of each session, and both sides supplemented their presentations with excerpts from the expert reports, deposition testimony, and documentary evidence.
The negotiations were adversarial throughout. The parties' opening positions were significantly apart: Plaintiffs made an initial settlement demand of $28 million, while AMA made an initial offer of $8 million. Over the course of the two sessions, the parties exchanged multiple offers and counteroffers, with each side narrowing its position incrementally. The settlement was reached only after extensive deliberation and substantial compromise on both sides, ultimately resulting in a GSA of $14,750,000 — a figure that neither party views as reflecting the full measure of its best-case litigation position, but that both parties accept as a fair and reasonable resolution given the risks and uncertainties of continued litigation.
There is no indication of collusion or any improper conduct in the negotiation of this settlement. The parties maintained their adversarial postures throughout the process, and the mediator independently assessed the merits and risks of the case in recommending the ultimate settlement range. Under Clark v. American Residential Services LLC, supra, 175 Cal.App.4th at page 804, these circumstances give rise to a presumption that the settlement is fair.
2. The Settlement Amount Is Within the Range of Reasonableness
The $14,750,000 GSA represents a substantial recovery for the class in light of the competing damages estimates, the partial certification ruling, and the significant defenses available to AMA.
Plaintiffs' damages expert, Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, opined in his report dated April 28, 2023, that aggregate class-wide damages totaled approximately $38.6 million, inclusive of approximately $12.2 million in PAGA civil penalties. Dr. Rennick's model assumed a uniform violation rate derived from the auto-deduction data and extrapolated that rate across the entire class for the full class period.
AMA's economics expert, Dr. Catherine Lindstrom of Hargrove Analytics Inc., opined in her rebuttal report dated June 9, 2023, that aggregate class-wide damages, properly calculated, were approximately $5.8 million, exclusive of PAGA penalties. Dr. Lindstrom's analysis differed from Dr. Rennick's in several material respects, including adjustments for voluntary meal period waivers, offsets for premium pay already received, and a narrower violation rate based on facility-specific attestation data.
Against this backdrop, the $14,750,000 GSA represents approximately 38.2% of Plaintiffs' claimed total exposure of $38.6 million. In California wage-and-hour class action settlements, courts routinely approve settlements in the range of 15% to 40% of the plaintiffs' claimed exposure. (See, e.g., Kullar, supra, 168 Cal.App.4th at pp. 128–129 [court should compare settlement to realistic range of outcomes].) This settlement falls at the upper end of that range, reflecting the strength of the certified first meal period claim and the genuine litigation risks faced by AMA on that claim.
After deduction of the following amounts from the GSA, the Net Settlement Fund available for distribution to claiming class members is $8,251,525:
Based on the approximately 1,850 class members, the estimated average individual payment is approximately $4,460 per class member. Actual individual payments will vary depending on each class member's weeks worked and recorded overtime hours during the class period.
The settlement amount fairly compensates class members for the certified first meal period auto-deduction claim — the claim that presented the greatest common question and the most significant litigation risk for AMA — while also providing meaningful consideration for the non-certified claims (rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalties) that Plaintiffs surrendered as part of the global resolution. The inclusion of the non-certified claims in the release was a negotiated component of the settlement and contributed to the overall GSA figure. As the Court in Kullar recognized, the appropriate benchmark for evaluating a settlement is the realistic range of potential recovery, not the maximum theoretical exposure. (Kullar, supra, 168 Cal.App.4th at pp. 128–129.)
3. The Settlement Reflects a Reasonable Assessment of Litigation Risk
The $14,750,000 GSA reflects each side's sober assessment of the risks and uncertainties that would attend continued litigation. Both sides faced substantial risks if the case were to proceed to trial.
Risks to Plaintiffs. Although the Court certified the first meal period claim for class treatment, certification was denied for five of seven causes of action, representing the majority of Plaintiffs' alleged damages. The non-certified claims — rest period violations, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalties — would have required Plaintiffs to pursue those claims on an individual or subclass basis, at significant additional expense and with uncertain prospects. The partial certification ruling substantially narrowed the scope of the claims that could proceed as a class action.
Moreover, even on the certified first meal period claim, AMA presented a credible defense. Dr. Lindstrom's alternative damages model calculated aggregate damages at only $5.8 million, and Dr. Makhija's industrial/organizational analysis demonstrated significant variability in workplace conditions, scheduling practices, and meal period compliance across AMA's 14 distinct show units and 7 California facilities. This variability undermined Plaintiffs' narrative of a uniform, class-wide meal period violation attributable solely to the auto-deduction system.
AMA's auto-deduction system, while presenting a common question of law and fact, was not tantamount to a finding of liability. AMA maintained a written meal period policy that was facially compliant with California Labor Code section 512 and Industrial Welfare Commission Wage Order No. 12 (the applicable wage order for the motion picture industry). AMA's position was that the auto-deduction feature of the TimeTrack Pro system — which automatically deducted 30 minutes for a meal period after a configurable threshold of hours worked — was a permissible timekeeping method so long as employees were provided the opportunity to report any missed or shortened meals through the Missed Meal Attestation feature.
The Missed Meal Attestation feature, a software module within the TimeTrack Pro platform that allowed employees to electronically report missed or shortened meal periods and trigger premium pay, was activated at 4 of AMA's 7 California facilities. At those facilities, utilization rates ranged from 2.1% to 4.1% of eligible shifts — figures that, while low, were consistent with AMA's defense theory that employees generally received compliant meal periods and did not need to utilize the attestation feature. The low attestation rates would have been presented to the trier of fact as evidence that the vast majority of employees took their meal periods as scheduled.
Additionally, the PAGA civil penalties claimed by Plaintiffs ($12.2 million) were subject to substantial judicial discretion and potential reduction under California Labor Code section 2699, subdivision (e)(2), which authorizes the court to "award a lesser amount than the maximum civil penalty" where "based on the facts and circumstances of the particular case, to do otherwise would result in an award that is unjust, arbitrary and oppressive, or confiscatory." Plaintiffs faced the risk that the Court would exercise that discretion and substantially reduce the PAGA penalty component of any trial verdict.
Risks to AMA. AMA likewise faced significant litigation risks if the case proceeded to trial. The auto-deduction system, as the Court recognized in its certification order, created a common question of law and fact applicable to all approximately 1,850 class members: whether AMA's uniform practice of automatically deducting 30 minutes for a meal period, without affirmatively confirming that each employee actually received a compliant meal period, violated California's meal period laws.
Compounding this risk, the Missed Meal Attestation feature was not activated at 3 of AMA's 7 California facilities: Studio City (Facility 2), Burbank (Facility 4), and El Segundo (Facility 7). Employees at those three facilities — representing a significant portion of the class — had no electronic mechanism to report missed or shortened meal periods within the TimeTrack Pro system. This gap in the attestation coverage undermined AMA's defense that employees were provided a meaningful opportunity to report meal period violations and receive premium pay.
Even at the four facilities where the Missed Meal Attestation feature was active, the low utilization rates (2.1% to 4.1%) raised questions about employee awareness of the feature, which the Court expressly noted in its certification order as a factor supporting certification of the first meal period claim. AMA faced the risk that a trier of fact would infer that low attestation utilization reflected a lack of employee awareness or management discouragement, rather than actual compliance.
Furthermore, a system configuration discrepancy in the TimeTrack Pro platform posed a significant litigation risk for AMA. The auto-deduction threshold — the number of hours worked after which the system automatically deducted 30 minutes for a meal period — was set at 6 hours rather than the 5-hour threshold required by IWC Wage Order No. 12. This meant that for shifts between 5 and 6 hours in duration, the system did not auto-deduct a meal period at all, potentially resulting in employees working more than 5 hours without a recorded meal period. Although AMA corrected this system configuration in December 2022, the discrepancy existed for a substantial portion of the class period and affected employees across all 7 facilities.
If the case proceeded to trial, AMA faced the risk of a substantially larger verdict than the $14,750,000 GSA, plus significant trial costs estimated at $1.2 million to $1.8 million in additional legal fees, expert fees, and related expenses. The settlement eliminates these risks and provides certainty to both sides.
In sum, the $14,750,000 GSA reflects a reasonable assessment of the litigation risks facing both parties and represents a fair compromise of competing positions on liability, damages, and penalties.
4. The Stage of Proceedings and Extent of discovery Support Informed Settlement
The settlement in this action was not reached in a vacuum. Rather, it was reached at an advanced stage of the litigation, after the parties had engaged in comprehensive discovery and obtained a detailed judicial assessment of the merits-related issues through the class certification process. Specifically, the settlement was reached after completion of the following:
• Full written discovery. The parties exchanged multiple rounds of interrogatories, requests for production, and requests for admissions, addressing all aspects of AMA's wage-and-hour practices, timekeeping systems, payroll procedures, and meal and rest period policies.
• Extensive document production. AMA produced 147,832 documents comprising approximately 1.2 million pages, including payroll records, timekeeping data, policy manuals, internal memoranda, and system configuration records. Plaintiffs produced 3,412 documents. Third-party documents were obtained from NovaPay Solutions Inc.
• 18 depositions. The parties deposed all three Named Plaintiffs (Fuentes, Halloran, and Padilla), AMA's PMK witnesses (Okafor, Arroyo, and Fong), AMA's President (Mercer), a NovaPay witness (Yee), and additional fact witnesses — a total of 18 depositions (11 by Plaintiffs, 7 by Defense).
• Complete expert discovery. The parties exchanged expert reports from Plaintiffs' damages expert Dr. Rennick, Defense economics expert Dr. Lindstrom, and Defense I/O expert Dr. Makhija, covering the full range of damages and class-wide variability issues.
• Full briefing on class certification. The parties briefed the class certification motion through opening, opposition, and reply papers, supported by extensive declarations and exhibits, and argued the motion at a hearing before the Court.
• Detailed judicial analysis. The Court's August 11, 2023 certification order analyzed the merits-related issues in considerable depth, providing both parties with a well-informed judicial assessment of the strengths and weaknesses of the various claims.
As a result of this comprehensive discovery and litigation record, counsel on both sides had a thorough understanding of the factual record, the applicable legal standards, the expert damages analyses, and the realistic range of outcomes at trial. The settlement was therefore the product of informed judgment, not speculation. (See Wershba, supra, 91 Cal.App.4th at p. 245 [extent of discovery completed and stage of proceedings are factors supporting approval].)
5. The Views and Experience of Counsel Support Approval
The experience and views of counsel on both sides of this litigation uniformly support approval of the settlement.
Class counsel — Castellano Byrne & Salas LLP and Veltrano Employment Law Group PC — are experienced wage-and-hour class action practitioners who specialize in representing employees in the entertainment and hospitality industries. Lead class counsel Marco Castellano and his colleagues Diane Salas and Trevor Kim have prosecuted numerous class actions in this Court and other courts throughout California. Sandra Higuera of Veltrano Employment Law Group PC has particular expertise in PAGA representative actions. Class counsel have endorsed the settlement as fair, adequate, and reasonable, as set forth in the Declaration of Marco Castellano filed in support of the motion for preliminary approval on September 22, 2023. Class counsel's endorsement is entitled to significant weight given their thorough knowledge of the case and their fiduciary obligations to the class.
Defense counsel Renata Vasquez, the responsible partner at Calderwood & Harkness LLP, has over 18 years of experience defending complex employment class actions in California state and federal courts, including numerous wage-and-hour class actions in the entertainment, media, and technology sectors. Ms. Vasquez and her associate Devon Archer have been actively involved in every phase of this litigation. Defense counsel likewise represents that, based on a thorough analysis of the claims, defenses, and litigation risks, the $14,750,000 GSA is within the range of reasonableness and represents a fair resolution of the action.
Additionally, the mediator, the Honorable Patricia Okoro (Ret.), independently assessed the case and recommended the settlement range based on her evaluation of the merits, the damages evidence, and the litigation risks facing both parties. Judge Okoro's recommendation carries particular weight given her extensive experience mediating complex employment disputes and her thorough review of the parties' mediation submissions.
The unanimous endorsement of the settlement by experienced class counsel, defense counsel, and the neutral mediator strongly supports a finding that the settlement is fair, adequate, and reasonable. (See Wershba, supra, 91 Cal.App.4th at p. 245 [experience and views of counsel are significant factors in the fairness analysis].)
B. The Settlement Treats Class Members Equitably
1. The Allocation Formula Is Reasonable
The Net Settlement Fund of $8,251,525 is allocated to claiming class members on a pro rata basis using a formula that weights 60% to weeks worked during the class period (November 1, 2018 through October 31, 2023) and 40% to recorded overtime hours during the class period.
The weeks-worked component of the allocation formula ensures that all class members receive compensation proportional to their tenure and exposure to the NovaPay TimeTrack Pro auto-deduction system. Because the core certified claim — the first meal period auto-deduction claim — affected all non-exempt employees in each week that they worked a qualifying shift, weeks worked serves as the most direct proxy for the duration of each class member's exposure to the alleged violation.
The overtime-hours component of the formula accounts for the fact that employees who worked more overtime hours had longer shifts, which in turn increased the likelihood that those employees experienced missed or shortened meal periods and suffered correspondingly greater harm. Employees who worked extended shifts were more likely to be affected by the auto-deduction system's 6-hour (rather than 5-hour) threshold discrepancy and were more likely to have experienced the practical difficulties of taking a timely, uninterrupted 30-minute meal period during intensive production schedules.
The 60/40 weighting was negotiated at arm's length between experienced class counsel and defense counsel, with the assistance of the mediator, and represents a reasonable approximation of relative harm within the class. While no allocation formula can perfectly capture the precise damages suffered by each individual class member, the formula employed here reflects the two most significant drivers of class-wide harm — tenure and shift length — and is a fair and reasonable method of distributing the Net Settlement Fund.
2. The Release Is Appropriate
The Settlement Agreement provides for a release of all class and PAGA claims arising from the operative facts alleged in the consolidated complaint. Specifically, the release encompasses:
• Meal period claims (both first and second meal periods) under California Labor Code sections 226.7 and 512;
• Rest period claims under California Labor Code section 226.7;
• Off-the-clock and overtime claims under California Labor Code sections 510 and 1194;
• Minimum wage claims under California Labor Code sections 1197 and 1197.1;
• Wage statement violation claims under California Labor Code section 226;
• Waiting time penalty claims under California Labor Code sections 201 through 203;
• Unfair Competition Law claims under California Business and Professions Code section 17200; and
• PAGA representative claims for civil penalties under California Labor Code section 2698, et seq.
The release also encompasses the PAGA representative claims, with a dedicated PAGA payment of $750,000 allocated from the GSA — of which 75% ($562,500) is payable to the LWDA and 25% ($187,500) is payable to aggrieved employees, in accordance with the statutory distribution prescribed by California Labor Code section 2699, subdivision (i).
Although the release covers claims that were not certified for class treatment — specifically, the rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalty claims — this is standard practice in California wage-and-hour class settlements. The non-certified claims were factored into the overall settlement negotiations and contributed to the GSA amount. In other words, the settlement premium above and beyond the value of the certified claims alone reflects the value attributed to the non-certified claims being released as part of the global resolution. Class members who did not wish to release their individual non-certified claims had the opportunity to opt out of the settlement and pursue those claims independently; only 23 of 1,850 class members (1.24%) exercised that right.
C. The Notice Program Was Adequate and Satisfies Due Process
The notice program implemented by Meridian Settlement Services LLC complied in all respects with the Preliminary Approval Order and satisfies the requirements of due process and the California Rules of Court.
Individual class notices were mailed by first-class United States mail on November 3, 2023 to 1,843 class members at their last known mailing addresses. Of the 1,843 notices mailed, only 7 were initially returned as undeliverable, and all 7 were successfully re-mailed to updated addresses obtained through skip-tracing by Meridian. The effective delivery rate was therefore 100%.
The long-form class notice, consisting of four pages of plain-language text, described: (a) the nature of the case and the claims asserted; (b) the material terms of the settlement, including the GSA, the Net Settlement Fund, and the allocation formula; (c) the estimated average individual payment; (d) the right to submit a claim; (e) the right to opt out of the settlement and the deadline for doing so; (f) the right to file an objection to the settlement and the deadline for doing so; (g) the identity and contact information of class counsel and the claims administrator; and (h) the date, time, and location of the final approval hearing.
In addition to the long-form notice, Meridian mailed a summary postcard notice directing class members to the settlement website at www.amaclasssettlement.com for additional information and access to the complete Settlement Agreement and related documents.
The settlement website was established and maintained by Meridian throughout the claims period. The website recorded 2,847 unique visits, indicating substantial engagement by class members. Meridian also maintained a toll-free telephone number staffed by trained operators, which received 312 calls from class members seeking information about the settlement, their rights, and the claims process.
The notice program satisfies the requirements of due process and California Rules of Court, Rule 3.769, subdivision (f), which requires that notice be given "in the manner specified by the court." The notice was "reasonably calculated" to apprise class members of the pendency of the settlement, their rights, and the opportunity to be heard. (Hypertouch, Inc. v. ValueClick, Inc. (2011) 192 Cal.App.4th 805, 831.) The 100% effective delivery rate, the 2,847 website visits, the 312 toll-free calls, and the 68.2% claims rate collectively demonstrate that the notice program successfully reached the class and conveyed the necessary information.
D. The Class Response Confirms the Settlement's Fairness
1. Claims Rate
Of the approximately 1,850 class members, 1,262 submitted valid claims, representing a claims rate of 68.2%. This claims rate is exceptionally high by the standards of class action settlements, where claims rates typically range from approximately 5% to 30% depending on the nature of the case and the claims process. (See, e.g., Federal Trade Commission, Consumers and Class Actions: A Retrospective and Analysis of Settlement Campaigns (Sept. 2019) [reporting median claims rate of approximately 9% across consumer class action settlements].)
The 68.2% claims rate demonstrates that the class was aware of the settlement, understood its terms, and chose to participate in the recovery. It also indicates that the notice program was effective in reaching class members and conveying the essential information about the settlement. The high claims rate provides strong evidence that the settlement is viewed favorably by the class and is consistent with a finding that the settlement is fair, adequate, and reasonable.
2. Opt-Outs. Only 23 class members submitted timely and valid requests for exclusion from the settlement, representing 1.24% of the approximately 1,850-member class. This opt-out rate is far below the contractual threshold of 5% (approximately 93 individuals) that would have triggered AMA's right to void the settlement under Section 8.3 of the Settlement Agreement. AMA has elected not to exercise that right and has confirmed its intent to proceed with the settlement.
The minimal opt-out rate confirms that the overwhelming majority of class members — approximately 98.76% — prefer to participate in the settlement rather than pursue individual claims against AMA. No discernible pattern is evident among the opt-outs: they come from multiple AMA facilities and show units, and no single attorney or law firm appears to be organizing or soliciting the opt-out requests. The low opt-out rate strongly supports a finding that the class approves of the settlement.
3. Objections. Only 4 objections were received, out of approximately 1,850 class members — an objection rate of approximately 0.22%. AMA and class counsel have addressed each objection in detail in the concurrently filed Response to Class Member Objections. A summary of the objections and responses is provided below.
(a) Objection of Carlos Vega. Mr. Vega objects to the attorneys' fee percentage of 33.33% as excessive, arguing that attorneys' fees should be limited to 25% of the GSA.
Response: The 33.33% percentage-of-fund fee sought by class counsel is well within the range routinely approved by California courts in common fund class action cases. In Laffitte v. Robert Half International Inc. (2016) 1 Cal.5th 480, the California Supreme Court endorsed the percentage-of-fund method as an appropriate method for calculating attorneys' fees in common fund cases and recognized that fee percentages of 33.33% are common and appropriate in complex class actions. (Id. at p. 503.) The fee was negotiated separately from the settlement amount and is commensurate with the complexity and duration of the litigation (spanning over 14 months of active litigation), the volume of discovery (147,832 documents, 18 depositions, 3 expert reports), the contingent nature of the representation, and the favorable result achieved for the class. Mr. Vega's objection should be overruled.
(b) Objection of Rachel Kimura. Ms. Kimura objects to the allocation formula, arguing that overtime hours should be weighted more heavily than 40% because employees who worked longer shifts suffered greater harm from the auto-deduction system.
Response: The 60/40 allocation formula (60% weeks worked, 40% overtime hours) was negotiated at arm's length between experienced class counsel and defense counsel, with the assistance of the mediator. The Court has broad discretion to approve any reasonable allocation formula, and there is no single "correct" formula for distributing a class action settlement fund. The current formula accounts for both tenure (weeks worked) and shift-length exposure (overtime hours), and both components are relevant to the nature and extent of each class member's potential harm. The 60% weighting on weeks worked reflects the fact that the core claim — the first meal period auto-deduction — affected employees on every qualifying shift, regardless of whether they worked overtime, and thus all class members were exposed to the violation in every week that they worked. Ms. Kimura's preference for a different weighting does not establish that the negotiated formula is unreasonable. Ms. Kimura's objection should be overruled.
(c) Objection of Samuel Torres. Mr. Torres objects that the settlement amount is too low, arguing that the class should have received at least $25 million.
Response: The $14,750,000 GSA represents approximately 38.2% of Plaintiffs' expert's total damages figure of $38.6 million, placing the settlement at the upper end of the range typically approved in California wage-and-hour class actions. The GSA reflects a careful and informed assessment of the litigation risks facing both sides, including: the partial certification order, which denied certification for five of seven causes of action; the competing expert damages analyses ($38.6 million vs. $5.8 million); the credible defenses available to AMA at trial, including its facially compliant written meal period policy, the Missed Meal Attestation feature, and the low attestation utilization rates suggesting general compliance; and the significant judicial discretion to reduce PAGA penalties under Labor Code section 2699, subdivision (e)(2). The Court need not determine that the settlement is the best possible outcome for the class; the Court need only find that the settlement falls within the range of reasonableness. (Kullar, supra, 168 Cal.App.4th at p. 130.) Mr. Torres's objection should be overruled.
(d) Objection of Dawn Prescott. Ms. Prescott (no relation to AMA Vice President Dwayne Prescott) objects to the release of non-certified claims without separate or additional compensation. Ms. Prescott argues that the settlement effectively extinguishes her individual claims for rest period violations, off-the-clock work, and waiting time penalties without providing adequate consideration for those claims.
Response: This is the most substantive of the four objections, but it does not warrant denial or modification of the settlement. The inclusion of a broad release encompassing both certified and non-certified claims is standard practice in California wage-and-hour class settlements. The non-certified claims were considered in the overall settlement negotiations and contributed to the GSA amount — the $14,750,000 figure reflects not only the value of the certified first meal period claim but also the release premium attributable to the non-certified claims. The settlement was structured to provide global peace to both parties by resolving all claims arising from the operative facts.
Critically, any class member who wished to preserve her individual non-certified claims had the opportunity to opt out of the settlement and pursue those claims independently. Ms. Prescott was informed of this right through the class notice and chose not to exercise it. Having elected to remain in the class, Ms. Prescott is bound by the terms of the settlement, including the release. (See Amchem Products, Inc. v. Windsor (1997) 521 U.S. 591, 617 [right to opt out is a critical procedural protection in class action settlements].) Ms. Prescott's objection should be overruled.
In summary, none of the four objections raises a meritorious basis for denying or modifying the settlement. All four objections should be overruled.
E. The Attorneys' Fees and Costs Are Reasonable
1. Attorneys' Fees — $4,916,175 (33.33% of GSA)
Class counsel seeks an award of attorneys' fees in the amount of $4,916,175, representing 33.33% of the $14,750,000 GSA, under the percentage-of-fund method. AMA does not oppose the fee request.
The California Supreme Court has endorsed the percentage-of-fund method as an appropriate method for calculating attorneys' fees in common fund class actions. (Laffitte v. Robert Half International Inc., supra, 1 Cal.5th at p. 503.) Under this method, the court awards fees as a percentage of the total common fund recovered for the benefit of the class, rather than calculating fees based on the attorneys' hourly rates and time expended. The percentage-of-fund method is widely used in California class action settlements because it aligns the interests of class counsel with those of the class — the larger the recovery, the larger the fee.
California courts regularly approve attorneys' fees in the range of 25% to 33.33% of the common fund in class action settlements. (Id. at p. 503.) The 33.33% fee requested here is at the upper end of that range but is justified by several factors:
• Complexity and duration of the litigation. This case was actively litigated for over 14 months, from the filing of the initial complaint in November 2022 through the settlement in September 2023. The case involved two consolidated actions, a complex wage-and-hour claims structure, seven causes of action, a PAGA representative claim, and contested class certification proceedings.
• Extent of discovery. Class counsel conducted and managed extensive discovery, including the review and analysis of 147,832 documents produced by AMA (approximately 1.2 million pages), 18 depositions, third-party discovery from NovaPay Solutions Inc., and the exchange of expert reports from three retained experts.
• Result achieved. Class counsel secured a $14,750,000 non-reversionary settlement for a class of approximately 1,850 individuals, representing approximately 38.2% of Plaintiffs' total claimed exposure — a result at the upper end of the typical range for California wage-and-hour class settlements.
• Contingent nature of the representation. Class counsel prosecuted this case on a fully contingent basis, bearing the risk that they would receive no compensation whatsoever if the case resulted in an unfavorable outcome. The contingent nature of the engagement justifies a fee at the higher end of the approved range.
• Quality of representation. Class counsel demonstrated a high degree of skill, diligence, and professionalism throughout the litigation. Their work product in discovery, briefing, and negotiation was of exceptional quality, and their strategic judgment contributed to the favorable settlement result.
If the Court elects to perform a lodestar cross-check, class counsel's billing records — submitted under seal with the fee motion — will confirm that the 33.33% fee is reasonable in relation to the time and effort expended by class counsel. AMA understands from class counsel's representations that the lodestar cross-check yields a multiplier within the range commonly approved by California courts.
2. Litigation Costs — $412,300
Class counsel seeks reimbursement of documented litigation costs in the amount of $412,300. These costs were incurred in the prosecution of this complex class action and include, among other categories, court filing fees, deposition transcript costs, expert witness fees and expenses (including fees for Dr. Rennick's initial report and deposition preparation), e-discovery processing and hosting costs (Marlowe Asset Management Litigation Technology Inc.), copy and printing costs, postage and courier fees, and travel expenses associated with depositions and mediation sessions. The costs are documented in the Declaration of Marco Castellano and supporting exhibits filed in connection with the fee motion.
The litigation costs incurred by class counsel are reasonable in amount and were necessarily incurred in the prosecution of this action. AMA does not oppose the costs request.
3. Service Awards — $35,000 Total
Class counsel seeks Court approval of service awards to the three Named Plaintiffs in the following amounts:
• Marisol Fuentes: $15,000
• Derek Halloran: $10,000
• Yesenia Padilla: $10,000
The Named Plaintiffs participated actively in the prosecution of this action, including by sitting for lengthy depositions, providing declarations in support of class certification, responding to written discovery, producing personal documents, and communicating regularly with class counsel throughout the litigation. Each Named Plaintiff undertook the risks and responsibilities inherent in serving as a class representative, including the expenditure of personal time and effort and the risk of reputational exposure associated with bringing claims against their employer.
Ms. Fuentes's higher service award ($15,000) reflects her role as the lead Named Plaintiff who initiated the first-filed action in November 2022, as well as the additional time and effort she expended in that capacity.
Service awards in the range of $5,000 to $15,000 per named plaintiff are routinely approved in California class action settlements, and the awards requested here are well within that range. (See Clark v. American Residential Services LLC, supra, 175 Cal.App.4th at p. 804 [approving service awards in comparable range].) AMA does not oppose the service awards.
F. The Settlement Administration Was Properly Conducted
The settlement notice and claims process was administered by Meridian Settlement Services LLC, under the direction of Angela Truong, in compliance with the Preliminary Approval Order and the Settlement Agreement. Ms. Truong's Declaration, filed concurrently with this memorandum, provides a detailed account of all administrative functions performed by Meridian. The key administrative milestones are summarized as follows:
• Class notice mailing: 1,843 individual class notices were mailed by first-class United States mail on November 3, 2023, within the timeframe specified in the Preliminary Approval Order.
• Re-mailing of returned notices: 7 notices were initially returned as undeliverable. Meridian conducted skip-tracing to obtain updated addresses for each individual and re-mailed the notices. All 7 re-mailed notices were successfully delivered.
• Settlement website: Meridian established and maintained the settlement website at www.amaclasssettlement.com throughout the claims period. The website recorded 2,847 unique visits.
• Toll-free telephone line: Meridian maintained a toll-free telephone number staffed by trained operators, which received 312 calls from class members.
• Claims processing: Meridian received and processed 1,262 valid claim submissions.
• Opt-out processing: Meridian received and processed 23 timely and valid requests for exclusion.