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.
Lead Case No. 22STCV38214 (Consolidated with Case No. 22STCV39501)
Assigned for All Purposes to the Hon. Raymond Escobedo, Dept. 34
MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF JOINT MOTION FOR PRELIMINARY APPROVAL OF CLASS ACTION SETTLEMENT
Filed by:
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
Attorneys for Defendant Aurelius Media Americas Inc.
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I. INTRODUCTION
Defendant Aurelius Media Americas Inc. ("AMA") and Plaintiffs Marisol Fuentes, Derek Halloran, and Yesenia Padilla ("Plaintiffs" or "Class Representatives") (collectively, the "Parties") respectfully submit this Memorandum of Points and Authorities in support of their Joint Motion for Preliminary Approval of Class Action Settlement. Through this motion, the Parties seek the Court's preliminary approval of the Settlement Agreement and Release (the "Settlement Agreement"), executed September 15, 2023, which resolves all claims asserted in this consolidated wage-and-hour class action and Private Attorneys General Act ("PAGA") representative action.
The Settlement Agreement provides for a non-reversionary Gross Settlement Amount ("GSA") of $14,750,000 to resolve claims brought on behalf of approximately 1,850 current and former non-exempt, hourly employees of AMA who worked in the State of California during the Class Period, defined as November 1, 2018 through October 31, 2023. Because the GSA is non-reversionary, the full $14,750,000 will be distributed for the benefit of the class, Class Counsel, the Claims Administrator, and the Labor and Workforce Development Agency ("LWDA"), with no reversion of any funds to AMA under any circumstances. After deducting the proposed attorneys' fees, litigation costs, service awards, claims administration costs, and the PAGA allocation, the resulting Net Settlement Fund of approximately $8,251,525 will be distributed automatically — without the need for class members to submit any claim form — to all participating class members based on a formula tied to weeks worked and recorded overtime hours during the Class Period. The estimated average payment per class member is approximately $4,460.
This settlement was not achieved easily or quickly. It was reached only after extensive adversarial litigation spanning more than ten months. During that time, the Parties engaged in comprehensive discovery, including the production of 147,832 documents by AMA and 3,412 documents by Plaintiffs, the service and enforcement of a third-party subpoena on NovaPay Solutions Inc. (AMA's timekeeping vendor), and the taking of 18 depositions of all key fact witnesses and corporate designees. Each side retained and submitted detailed reports from qualified experts: Plaintiffs presented the report of Dr. Howard Rennick, whose aggregate damages opinion totaled $38.6 million (inclusive of $12.2 million in PAGA penalties), while AMA presented the competing reports of Dr. Rajesh Makhija (an industrial/organizational psychologist who opined on operational variability across AMA's 14 show units and 7 California facilities) and Dr. Catherine Lindstrom (an economics and damages expert whose aggregate damages opinion totaled $5.8 million, exclusive of PAGA penalties). The Parties also fully briefed and argued a contested class certification motion, which culminated in this Court's August 11, 2023 Order granting partial class certification on the first meal period auto-deduction claim, the derivative wage statement claim (Cal. Lab. Code § 226), and the unfair competition law claim (Cal. Bus. & Prof. Code § 17200), while denying certification of five other causes of action.
Armed with a thorough understanding of the strengths and weaknesses of their respective positions — informed by the Court's certification ruling, the competing expert analyses, and the extensive factual record developed through discovery — the Parties participated in two full-day mediation sessions before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc. Judge Okoro is a retired Los Angeles Superior Court Judge with more than 25 years of judicial experience and recognized expertise in the mediation of complex employment class actions. The first mediation session, held on August 25, 2023, spanned approximately seven hours; the second session, held on September 8, 2023, spanned approximately nine hours. Over the course of these two sessions — totaling approximately sixteen hours of intensive negotiation — the Parties exchanged numerous offers, counteroffers, and bracketed proposals. Plaintiffs' opening demand was $28 million; AMA's opening position was $8 million. After extended arm's-length bargaining facilitated by Judge Okoro, the Parties reached agreement at a GSA of $14,750,000. Judge Okoro made a mediator's recommendation within the range ultimately agreed upon by the Parties.
The settlement resolves not only the certified claims but also the non-certified claims — including the rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalty claims — as well as all PAGA representative claims, through a broad release that provides comprehensive finality for both the class and AMA. In exchange for this release, class members receive substantial compensation without the need to file any claim form, incur any litigation costs, or bear any risk of an unfavorable verdict at trial.
As demonstrated below, the proposed settlement satisfies all requirements for preliminary approval under California law. The settlement falls well within the range of reasonableness, was produced by arm's-length negotiations between experienced counsel facilitated by a highly qualified mediator, and provides meaningful benefits to the class while eliminating the very real risks of continued litigation. AMA respectfully requests that the Court grant preliminary approval, provisionally certify the settlement class, approve the proposed notice plan, appoint Meridian Settlement Services LLC as Claims Administrator, and schedule a Final Approval Hearing.
II. STATEMENT OF FACTS
A. Background of the Litigation
AMA is a Delaware corporation qualified to do business in the State of 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 ("AGMG"), a publicly traded, United Kingdom-headquartered media, entertainment, and e-commerce conglomerate listed on the London Stock Exchange (LSE: AGMG). AMA employs approximately 3,200 employees in the United States, of whom approximately 2,400 are based in California. AMA operates seven California production facilities — located in West Hollywood, Sherman Oaks, Hollywood, Santa Monica, Studio City, Burbank, and El Segundo — and 14 distinct show units that produce unscripted and reality television programming, digital content, and live events programming. AMA's California operations are governed by Industrial Welfare Commission ("IWC") Wage Order 12, which applies to the Motion Picture Industry.
On November 1, 2022, Plaintiff Marisol Fuentes filed a putative class action complaint in this Court, initiating Case No. 22STCV38214. Ms. Fuentes is a former Production Coordinator in AMA's Unscripted Programming Division, where she was employed from March 14, 2019 through August 5, 2022, at an hourly rate of $28.50 per hour at the time of her separation. Her complaint alleged systematic wage-and-hour violations affecting non-exempt, hourly employees across AMA's California operations.
On November 18, 2022, Plaintiff Derek Halloran filed a related putative class action complaint, initiating Case No. 22STCV39501. Mr. Halloran is a former Post-Production Assistant in AMA's Digital Content Division, where he was employed from June 1, 2020 through November 30, 2022, at an hourly rate of $24.75 per hour at the time of his separation. His complaint asserted substantially similar allegations to those raised by Ms. Fuentes.
On February 3, 2023, the Court consolidated the two actions under lead Case No. 22STCV38214. At the same time, Yesenia Padilla was added as a third Named Plaintiff. Ms. Padilla is a former Segment Coordinator in AMA's Live Events Division, where she was employed from January 10, 2018 through May 17, 2022, at an hourly rate of $31.00 per hour at the time of her separation. Ms. Padilla's claims spanned the earliest portion of the Class Period and provided the class with a named representative who worked in a different division and at different facilities than Ms. Fuentes and Mr. Halloran, thereby broadening the representativeness of the class representatives as a whole.
Plaintiffs are represented by Castellano Byrne & Salas LLP (Marco Castellano, Diane Salas, and Trevor Kim), 11755 Wilshire Boulevard, Suite 900, Los Angeles, California 90025, serving as Lead Class Counsel, and by Veltrano Employment Law Group PC (Sandra Higuera), 350 South Grand Avenue, Suite 2800, Los Angeles, California 90071, serving as PAGA Co-Counsel. AMA is represented by Calderwood & Harkness LLP (Renata Vasquez and Devon Archer), 777 South Flower Street, Suite 4200, Los Angeles, California 90017.
B. The Claims
The Consolidated Complaint asserted seven causes of action against AMA, each rooted in California's Labor Code and Unfair Competition Law:
(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 provide accurate, itemized wage statements in violation of California Labor Code section 226;
(6) Waiting time penalties pursuant to California Labor Code sections 201 through 203; and
(7) Unfair business practices in violation of California Business and Professions Code section 17200 et seq.
In addition to the class action causes of action, Plaintiffs asserted PAGA representative claims pursuant to California Labor Code sections 2698 through 2699.8, premised on the same underlying allegations. Plaintiffs filed their PAGA notice with the Labor and Workforce Development Agency on September 15, 2022, as required by Labor Code section 2699.3(a). The LWDA took no action within the 65-day statutory response period, and Plaintiffs thereafter had standing to pursue the PAGA claims in court.
The central factual allegation underlying all claims was that AMA's NovaPay Solutions "TimeTrack Pro" electronic timekeeping system included an automatic 30-minute meal period deduction for all shifts of six hours or more. Plaintiffs contended that this auto-deduction threshold was itself erroneous under IWC Wage Order 12, which requires that an employer provide a meal period for any shift exceeding five hours. More fundamentally, Plaintiffs alleged that the auto-deduction systematically resulted in employees being denied meal period premium pay when their meal periods were missed, shortened, or interrupted, because the system automatically deducted meal period time from employees' recorded hours regardless of whether the employee actually took a full, uninterrupted 30-minute meal period.
Although the TimeTrack Pro system included a "Missed Meal Attestation" feature that allowed employees to electronically report missed or shortened meal periods, the evidence developed during discovery revealed that this feature was activated at only four of AMA's seven California facilities — specifically, the West Hollywood headquarters, the Sherman Oaks facility, the Hollywood facility, and the Santa Monica facility. The feature was not activated at the remaining three facilities: Studio City, Burbank, and El Segundo. Even at the four facilities where the feature was available, employee usage rates were low, with only approximately 2% to 4% of eligible shifts generating a missed meal attestation. Plaintiffs contended that the low attestation rates reflected systemic barriers to reporting, including inadequate training, cultural discouragement, and the burdensome nature of the attestation process itself. AMA maintained that the low attestation rates demonstrated that the vast majority of employees were in fact taking their meal periods as provided.
C. Discovery and Expert Reports
The Parties engaged in extensive, thorough discovery throughout the litigation. With respect to written discovery, AMA responded to Plaintiffs' First and Second Sets of Special Interrogatories (78 total interrogatories), Plaintiffs' First Set of Form Interrogatories, and Plaintiffs' First Set of Requests for Production of Documents (62 requests). Plaintiffs, in turn, responded to AMA's interrogatories and document requests propounded to each of the three Named Plaintiffs. The Parties negotiated and entered into a comprehensive ESI Protocol Stipulation, which was filed with the Court on January 13, 2023, governing the production, review, and use of electronically stored information.
Document production was voluminous. AMA produced 147,832 documents, comprising approximately 1.2 million pages of material. These productions included company-wide wage-and-hour policies, employee handbooks, timekeeping records, payroll data, internal correspondence regarding meal period practices, training materials, TimeTrack Pro system configuration records, and management memoranda relating to compliance with California wage-and-hour laws. Plaintiffs produced 3,412 documents, consisting primarily of personal employment records, communications with AMA management, and documents relating to their individual claims. Electronic discovery was processed by Marlowe Asset Management Litigation Technology Inc., 600 Anton Boulevard, Suite 900, Costa Mesa, California 92626, which provided hosting, processing, and document review support for both Parties.
In addition to inter-party discovery, AMA's timekeeping vendor — NovaPay Solutions Inc. — was served with a third-party subpoena. The subpoena, directed to Marcus Yee, NovaPay's Director of Client Data Services, at NovaPay's offices at 2200 Powell Street, Suite 600, Emeryville, California 94608, sought the production of timekeeping records, payroll data, system configuration records, audit logs, and attestation feature activation logs for all AMA California employees during the Class Period. NovaPay's production was a critical component of the evidentiary record, providing the raw data that both Parties' experts relied upon in forming their damages opinions.
The Parties took a total of 18 depositions over the course of the litigation — 11 noticed by Plaintiffs and 7 noticed by AMA. Plaintiffs deposed all three Named Plaintiffs, AMA's Person Most Knowledgeable ("PMK") witnesses, and a key NovaPay representative. AMA's PMK witnesses included Lorraine Okafor, Senior Vice President of Human Resources, who testified regarding AMA's wage-and-hour policies, training procedures, and compliance efforts; Celine Arroyo, Director of Production Operations, who testified regarding scheduling practices, meal period procedures, and the operational realities of AMA's production facilities; and Karen Fong, Payroll Manager, who testified regarding AMA's payroll practices, the configuration and operation of the TimeTrack Pro system, and the processing of meal period premium pay. Plaintiffs also deposed Jonathan Mercer, President of AMA, regarding corporate-level decision-making and AMA's overall compliance posture. Marcus Yee of NovaPay Solutions was deposed regarding the design, implementation, and configuration of the TimeTrack Pro system, the activation status of the Missed Meal Attestation feature at each AMA facility, and the data captured by the system. AMA deposed each of the three Named Plaintiffs — Ms. Fuentes, Mr. Halloran, and Ms. Padilla — regarding their individual employment histories, job duties, meal and rest period experiences, and the basis for their claims.
Each side retained qualified experts whose reports became central to the Parties' respective positions on damages and class-wide liability. Plaintiffs retained Dr. Howard Rennick of Pinnacle Economic Consulting Group LLC, located at 3000 El Camino Real, Suite 500, Palo Alto, California 94306. Dr. Rennick's expert report, dated April 28, 2023, set forth an aggregate damages opinion of $38.6 million, inclusive of $12.2 million in PAGA penalties. Dr. Rennick's methodology relied on an analysis of the TimeTrack Pro data produced by NovaPay, combined with payroll records, to calculate the number of auto-deducted meal periods for each class member during the Class Period and the corresponding premium pay, overtime, and penalty exposure.
AMA retained two experts. Dr. Rajesh Makhija of Workforce Dynamics Consulting LLC, located at 444 Castro Street, Suite 800, Mountain View, California 94041, is a recognized expert in industrial and organizational psychology. Dr. Makhija's expert report, dated May 19, 2023, opined that there was significant variability in meal period practices across AMA's 14 distinct show units and 7 California facilities, such that a class-wide analysis assuming uniform violations was fundamentally unreliable. Dr. Makhija's opinions supported AMA's argument that individualized inquiries — including the specific scheduling practices, supervisory culture, and operational demands of each show unit — would predominate over common questions if the case proceeded to trial on the non-certified claims. AMA also retained Dr. Catherine Lindstrom of Hargrove Analytics Inc., located at 515 S. Figueroa Street, Suite 1100, Los Angeles, California 90071, as its economics and damages expert. Dr. Lindstrom's report, dated June 9, 2023, set forth an aggregate damages opinion of $5.8 million, exclusive of PAGA penalties. Dr. Lindstrom's methodology differed from Dr. Rennick's in several material respects, including the treatment of attestation data, the calculation of overtime premium impacts, and the application of the statute of limitations.
The competing expert opinions — ranging from $5.8 million (defense) to $38.6 million (Plaintiffs) — illustrate the substantial uncertainty in the damages calculation and the genuine risk that either side faced at trial. These opinions, along with the extensive fact discovery, provided both Parties with a well-informed basis on which to evaluate the settlement.
D. Class Certification
Plaintiffs filed their Motion for Class Certification on April 14, 2023, seeking certification of all seven causes of action on behalf of a proposed class of all current and former non-exempt, hourly employees of AMA who worked in California at any time from November 1, 2018 through the date of trial. AMA filed its Opposition to the Motion for Class Certification on June 16, 2023, supported by five declarations — including declarations from Lorraine Okafor, Celine Arroyo, Karen Fong, and AMA's two retained experts — as well as the expert reports of Dr. Makhija and Dr. Lindstrom. Plaintiffs filed their Reply on July 7, 2023.
The Court held a hearing on the class certification motion on July 28, 2023, before the Honorable Raymond Escobedo. The hearing was contested and substantive, with both sides presenting oral argument on the disputed issues of commonality, predominance, and superiority.
On August 11, 2023, the Court issued a detailed written Order granting partial class certification. Specifically, the Court certified a class on three causes of action:
(1) The first meal period auto-deduction claim (Cal. Lab. Code §§ 226.7, 512), on the ground that the existence and application of the auto-deduction feature in the TimeTrack Pro system presented a common question susceptible to common proof;
(2) The derivative wage statement claim (Cal. Lab. Code § 226), on the ground that the alleged inaccuracies in wage statements flowed directly from the auto-deduction practice and could be established on a class-wide basis; and
(3) The UCL claim (Cal. Bus. & Prof. Code § 17200), on the ground that it was derivative of the certified meal period claim.
The Court denied certification of the remaining five causes of action — 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 — finding that individualized issues predominated with respect to each of these claims. In particular, the Court credited Dr. Makhija's opinions regarding the significant operational variability across AMA's 14 show units and 7 facilities, and concluded that common proof could not establish rest period violations, off-the-clock work, or second meal period violations on a class-wide basis.
The Court defined the certified class as follows:
"All current and former non-exempt, hourly employees of Aurelius Media Americas Inc. who worked in the State of California at any time from November 1, 2018 through the date of preliminary approval of any class settlement, who were subject to AMA's automatic meal period deduction in the NovaPay Solutions TimeTrack Pro timekeeping system."
The estimated size of the certified class is approximately 1,850 individuals.
E. Mediation and Settlement Negotiations
Following the Court's August 11, 2023 certification order, the Parties engaged in settlement negotiations facilitated by an experienced neutral mediator. The Parties selected 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 more than 25 years and is widely recognized as one of the leading mediators of complex employment class actions in California. Both Parties submitted extensive pre-mediation briefs to Judge Okoro, including summaries of the factual and legal issues, the competing expert analyses, the certification order, and the Parties' respective assessments of the risks and potential outcomes of continued litigation.
The first mediation session took place on August 25, 2023. This was a full-day session devoted to the class action claims, during which the Parties made opening presentations to Judge Okoro and exchanged multiple offers and counteroffers over approximately seven hours of intensive negotiation. Plaintiffs opened with a demand of $28 million; AMA opened with an offer of $8 million. Over the course of the session, the Parties significantly narrowed the gap, with Plaintiffs' position moving to $16.5 million and AMA's position moving to $13.5 million. Despite substantial progress, the Parties were unable to reach agreement during the first session.
The second mediation session took place on September 8, 2023. This session extended approximately nine hours and involved further rounds of bracketed offers, counteroffers, and detailed substantive discussions facilitated by Judge Okoro. Judge Okoro made a mediator's recommendation within the range that the Parties ultimately agreed upon. After extensive negotiation, the Parties reached agreement on a Gross Settlement Amount of $14,750,000.
The Settlement Agreement was executed on September 15, 2023, following a week of final drafting and review by counsel for both sides. The negotiations were adversarial, hard-fought, and conducted at arm's length throughout. At no point did the Parties engage in collusive or cooperative bargaining. Both sides were represented by experienced counsel with deep expertise in California wage-and-hour class action litigation. The involvement of Judge Okoro as a neutral mediator, the extended duration of the negotiations, and the trajectory of the offers and counteroffers all confirm that the settlement was the product of genuine, arm's-length bargaining between sophisticated parties with adverse interests.
III. TERMS OF THE PROPOSED SETTLEMENT
The material terms of the Settlement Agreement are summarized below. The complete Settlement Agreement is attached to the Declaration of Renata Vasquez as Exhibit 1 and is incorporated herein by reference.
A. Gross Settlement Amount
The Settlement Agreement provides for a non-reversionary Gross Settlement Amount of $14,750,000 (Fourteen Million Seven Hundred Fifty Thousand Dollars). Under the terms of the Settlement Agreement, AMA is obligated to fund the GSA in full within fourteen (14) calendar days of the entry of the Final Approval Order. No portion of the GSA reverts to AMA under any circumstances. If the Court does not approve the settlement, the GSA obligation is extinguished and the Parties revert to their pre-settlement positions.
The GSA will be funded from two sources: (1) $9,250,000 from AMA's Employment Practices Liability ("EPL") insurer, Pemberton Mutual Assurance Co., pursuant to Policy No. PMA-EPL-2022-00837; and (2) $5,500,000 self-funded by AMA from its own corporate funds. The participation of AMA's EPL carrier in funding the settlement confirms the insurer's independent assessment that the settlement is a reasonable resolution of AMA's exposure.
B. Settlement Class Definition
For purposes of the settlement, the Settlement Class is defined as:
All current and former non-exempt, hourly employees of Aurelius Media Americas Inc. who worked in the State of California at any time during the Class Period (November 1, 2018 through October 31, 2023) and who were subject to AMA's automatic meal period deduction in the NovaPay Solutions TimeTrack Pro timekeeping system.
The Class Period as defined in the Settlement Agreement runs from November 1, 2018 through October 31, 2023. The estimated size of the Settlement Class is approximately 1,850 individuals.
C. Deductions from the GSA
The Settlement Agreement provides for the following deductions from the GSA, each of which is subject to Court approval:
Attorneys' Fees (Class Counsel). Class Counsel will seek an award of attorneys' fees in the amount of 33.33% of the GSA, totaling $4,916,175. The fee request will be set forth in a separate motion for fees to be filed in advance of the Final Approval Hearing. The 33.33% percentage is within the range of fee percentages routinely approved by California courts in common fund class action settlements.
Litigation Costs Reimbursement. Class Counsel will seek reimbursement of documented, out-of-pocket litigation costs in the amount of $412,300, which were incurred during more than ten months of active litigation and include expert witness fees, deposition transcript costs, e-discovery processing and hosting fees, court reporter fees, filing fees, travel expenses, and other costs directly related to the prosecution of this action. Supporting documentation will be submitted with the motion for fees.
Class Representative Service Awards. The Settlement Agreement provides for service awards to the three Named Plaintiffs in recognition of their contributions to the litigation, including participation in discovery, deposition testimony, and ongoing consultation with Class Counsel throughout the case. The proposed service awards are as follows:
• Marisol Fuentes: $15,000
• Derek Halloran: $10,000
• Yesenia Padilla: $10,000
• Total Service Awards: $35,000
Settlement Administration Costs. The Settlement Agreement provides for a claims administration budget of $385,000, payable from the GSA, to Meridian Settlement Services LLC (Angela Truong, Principal Contact), located at 1600 E. Fourth Street, Suite 240, Santa Ana, California 92701. Meridian is an experienced class action settlement administrator and will perform all notice, claims processing, distribution, and reporting functions as described in Section III.H below.
PAGA Payment. The Settlement Agreement allocates $750,000 from the GSA to the resolution of the PAGA representative claims. In accordance with California Labor Code section 2699(i), this amount is allocated as follows: 75% ($562,500) to the LWDA and 25% ($187,500) to aggrieved employees. The PAGA aggrieved employee share ($187,500) is included in and distributed as part of the Net Settlement Fund to participating class members.
D. Net Settlement Fund
After deducting the amounts described in Section III.C above, the Net Settlement Fund ("NSF") available for distribution to participating class members is calculated as follows:
Based on an estimated Settlement Class of approximately 1,850 individuals, the estimated average individual payment is approximately $4,460 per class member. Actual individual payments will vary based on the allocation formula described in Section III.E below.
E. Distribution Formula
Individual settlement payments will be calculated using a weighted formula that accounts for each class member's actual work history during the Class Period. The formula is designed to ensure that class members who worked more extensively during the Class Period — and who were therefore subject to the auto-deduction for a greater number of shifts — receive proportionally larger payments. The allocation is as follows:
• 60% of each individual payment is based on the number of weeks worked by the class member during the Class Period, as reflected in AMA's and NovaPay's payroll records.
• 40% of each individual payment is based on the number of recorded overtime hours worked by the class member during the Class Period, as reflected in AMA's and NovaPay's payroll records.
Settlement payments will be distributed on a pro rata basis to all class members who do not submit a valid opt-out request. Importantly, no claims form is required. Distribution will be automatic, based on the payroll data maintained by AMA and NovaPay Solutions. This claims-free structure maximizes participation and ensures that the benefits of the settlement reach the broadest possible number of class members.
F. Tax Allocation
Individual settlement payments will be allocated for tax purposes as follows:
• 50% allocated as wages, subject to applicable withholding and reported on IRS Form W-2;
• 33.33% allocated as interest and penalties, reported on IRS Form 1099-MISC; and
• 16.67% allocated as non-wage damages, reported on IRS Form 1099-MISC.
The employer's share of payroll taxes on the wage portion of the settlement payments will be paid by AMA separate from and in addition to the GSA.
G. Release
In exchange for their individual settlement payments, all participating class members (i.e., all Settlement Class members who do not timely submit a valid request for exclusion) will execute a broad release of claims against AMA, its parent company AGMG, and their respective officers, directors, employees, agents, insurers, successors, and assigns. The release encompasses:
• All certified claims, including the first meal period auto-deduction claim, the derivative wage statement claim (Cal. Lab. Code § 226), and the UCL claim (Cal. Bus. & Prof. Code § 17200);
• All non-certified claims, including the rest period claim, off-the-clock/overtime claim, minimum wage claim, second meal period claim, and waiting time penalty claim;
• All PAGA representative claims premised on the underlying allegations in this action; and
• All individual claims, whether known or unknown, suspected or unsuspected, that arise from, are based upon, or are in any way related to the facts alleged in the Consolidated Complaint in this action.
The release includes an express 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."
All participating class members will be deemed to have waived the protections of section 1542 as to the released claims. The Settlement Agreement expressly provides that AMA does not admit any liability, wrongdoing, or violation of law in connection with the settlement.
H. Opt-Out and Objection Procedures
The Settlement Agreement provides class members with the right to opt out of or object to the settlement, consistent with due process requirements.
Opt-Out Procedure. Any class member who wishes to exclude himself or herself from the settlement may do so by submitting a written request for exclusion to the Claims Administrator, Meridian Settlement Services LLC, postmarked no later than sixty (60) calendar days after the date on which notice is mailed. The written exclusion request must include the class member's full name, address, telephone number, and a clear statement that the class member wishes to be excluded from the settlement. Class members who submit valid, timely exclusion requests will not receive any payment from the settlement, will not be bound by the release, and will retain all individual claims against AMA.
Objection Procedure. Any class member who wishes to object to any aspect of the proposed settlement may do so by submitting a written objection to the Claims Administrator and to the Court, postmarked or filed no later than the same deadline applicable to exclusion requests (i.e., sixty (60) calendar days after the date on which notice is mailed). Written objections must include the class member's full name, address, telephone number, and a statement of the basis for the objection.
AMA's Right to Void. The Settlement Agreement provides that if the number of valid, timely exclusion requests exceeds 5% of the Settlement Class (i.e., 93 or more individuals), AMA has the unilateral right, in its sole discretion, to void the settlement. This provision protects AMA against a settlement in which a disproportionate number of class members elect to exclude themselves and retain their individual claims, thereby undermining the finality that the settlement is designed to achieve.
I. Notice Plan
The proposed notice plan is designed to reach every identifiable class member and to provide clear, comprehensive information about the settlement and class members' rights. The notice plan includes the following components:
Individual Mail Notice. A notice packet will be mailed by first-class United States mail to each class member at his or her last known address. Class member addresses will be derived from AMA's payroll records, as maintained by NovaPay Solutions, and will be updated using the United States Postal Service's National Change of Address ("NCOA") database prior to mailing. The notice packet will include a four-page "long form" notice providing detailed information about the case, the settlement, and class members' rights, as well as a summary/postcard notice designed for ease of reference.
Settlement Website. Meridian Settlement Services will establish and maintain a dedicated settlement website containing the complete text of the Settlement Agreement, the long form notice, a list of frequently asked questions and answers, the Court's Preliminary Approval Order (once issued), and other relevant court filings. The website will also provide a mechanism for class members to update their mailing addresses.
Toll-Free Telephone Number. A toll-free telephone number will be established by Meridian Settlement Services and staffed by knowledgeable personnel who can answer class member inquiries in both English and Spanish.
The notice, in both long form and summary/postcard form, will describe in plain, non-technical language:
• The nature and procedural history of the case, including a description of the claims asserted, the Court's partial certification order, and the settlement;
• The material terms of the settlement, including the Gross Settlement Amount of $14,750,000, the estimated Net Settlement Fund, and the estimated average individual payment of approximately $4,460;
• The allocation formula (60% weeks worked / 40% overtime hours) and a general description of how individual payments are calculated;
• The right to opt out of the settlement, the procedure for doing so, and the deadline for submitting an exclusion request;
• The right to object to the settlement, the procedure for doing so, and the deadline for submitting a written objection;
• The date, time, and location of the Final Approval Hearing;
• Contact information for Class Counsel (Castellano Byrne & Salas LLP and Veltrano Employment Law Group PC) and the Claims Administrator (Meridian Settlement Services LLC); and
• A statement that class members who do not opt out will be bound by the settlement and the release of claims.
J. Cy Pres
The Settlement Agreement provides that any checks issued to class members that remain uncashed after 180 calendar days from the date of issuance will be voided, and the aggregate amount of the uncashed checks will be donated to the Legal Aid Foundation of Los Angeles, a qualified non-profit organization that provides free legal services to low-income individuals in the greater Los Angeles area, including representation in employment matters. This cy pres distribution ensures that any unclaimed settlement funds are directed to a charitable purpose reasonably related to the subject matter of the litigation and the interests of the class.
K. No Injunctive or Prospective Relief
The Settlement Agreement does not require AMA to implement any injunctive or prospective relief. This is because AMA has already voluntarily taken corrective action with respect to the practices at issue in this litigation. Specifically, as of December 2022, AMA took two significant remedial steps:
(1) AMA corrected the automatic meal period deduction threshold in the NovaPay Solutions TimeTrack Pro system from six hours to five hours, bringing the system into alignment with the requirements of IWC Wage Order 12; and
(2) AMA activated the Missed Meal Attestation feature at all seven of its California facilities, including the three facilities (Studio City, Burbank, and El Segundo) where the feature had previously not been activated.
These corrective measures were implemented before the settlement negotiations commenced and reflect AMA's good faith commitment to compliance with California wage-and-hour laws. Because these changes have already been made and are fully operational, no further injunctive or prospective relief is necessary.
IV. LEGAL STANDARD FOR PRELIMINARY APPROVAL
Under California law, judicial approval of a class action settlement is a two-step process. At the first step, the Court evaluates the proposed settlement to determine whether it is sufficiently fair, reasonable, and adequate to warrant sending notice to the class and scheduling a final approval hearing. If the Court grants preliminary approval, notice is disseminated to the class, and class members are afforded the opportunity to opt out or object. At the second step, the Court conducts a final approval hearing at which it evaluates the settlement in light of any objections, the results of the notice process, and the complete record, and determines whether to grant final approval. See Cal. Rules of Court, Rule 3.769(c)–(g).
At the preliminary approval stage, the Court's inquiry is whether the proposed settlement is "within the range of possible approval" — that is, whether it presents a sufficient basis for the Court to authorize notification to the class and set the matter for a final approval hearing. The settlement need not be proven to be optimal or ideal at this stage; rather, it need only be shown to fall within the "'ballpark' of reasonableness." Dunk v. Ford Motor Co. (1996) 48 Cal.App.4th 1794, 1801. Preliminary approval is appropriate where the proposed settlement "appears to be the product of serious, informed, non-collusive negotiations, has no obvious deficiencies, does not improperly grant preferential treatment to class representatives or segments of the class, and falls within the range of possible approval." Id. at 1801.
In evaluating whether a proposed settlement falls within this range, the Court considers the factors articulated in Kullar v. Foot Locker Retail, Inc. (2008) 168 Cal.App.4th 116, 128–29, including whether the settlement amount falls within the range of reasonableness in light of the plaintiffs' best possible recovery, the risks of continued litigation, and the overall value of the settlement to the class. As the Kullar court explained, "[t]he trial court should evaluate the settlement in light of the strengths and weaknesses of the plaintiffs' case" and must have sufficient information to "Intelligently and knowingly approve" the proposed settlement. Id. at 129.
The broader, multi-factor framework set forth in Wershba v. Computer, Inc. (2001) 91 Cal.App.4th 224, 244–45, directs the Court to consider:
(1) The strength of 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; and
(7) The presence of a governmental participant (relevant here given the PAGA component and the LWDA's statutory share of any PAGA recovery).
As demonstrated below, each of these factors supports preliminary approval of the proposed settlement.
V. ARGUMENT
A. The Settlement Is the Product of Serious, Informed, Arm's-Length Negotiations
The proposed settlement is entitled to a strong presumption of fairness because it was reached through serious, informed, arm's-length negotiations between experienced counsel, facilitated by a highly qualified neutral mediator, and only after the completion of extensive discovery and a contested partial class certification ruling.
The settlement was reached after more than ten months of active, adversarial litigation, during which the Parties developed a thorough factual and legal record that informed every aspect of the negotiations. The discovery conducted by the Parties was comprehensive. AMA produced 147,832 documents comprising approximately 1.2 million pages. Plaintiffs produced 3,412 documents. A third-party subpoena was served on NovaPay Solutions Inc., AMA's timekeeping vendor, yielding critical system configuration records, attestation feature activation logs, and class-wide timekeeping data. The Parties took 18 depositions of all key witnesses, including the three Named Plaintiffs, AMA's senior management and corporate designees, and NovaPay's Director of Client Data Services. Each side retained and submitted reports from qualified experts — Dr. Rennick for Plaintiffs, and Dr. Makhija and Dr. Lindstrom for AMA — whose competing damages analyses bracketed the range of potential recovery from $5.8 million to $38.6 million.
Beyond discovery, the Parties engaged in full briefing on class certification. Plaintiffs filed a comprehensive motion supported by declarations and expert analysis. AMA filed a detailed opposition supported by five declarations and two expert reports. Plaintiffs filed a reply. The Court held a contested hearing on July 28, 2023, and issued a detailed written order on August 11, 2023, granting partial certification and denying certification on five of seven claims. This certification order provided a definitive judicial assessment of the strengths and weaknesses of each side's position, further informing the Parties' evaluation of the case as they entered mediation.
With this extensive record in hand, the Parties participated in two full-day mediation sessions — totaling approximately 16 hours of negotiation — before the Honorable Patricia Okoro (Ret.) of Westpark Dispute Resolution Inc. Judge Okoro is a retired Los Angeles Superior Court Judge with more than 25 years of judicial experience and recognized expertise in mediating complex employment class actions. Both Parties submitted detailed mediation briefs addressing the factual record, the competing expert analyses, the certification order, and the Parties' assessment of the risks and value of the case.
The trajectory of the negotiations confirms that they were genuinely adversarial. Plaintiffs' opening demand of $28 million was more than three times AMA's opening offer of $8 million. Over the course of two full days of mediation, the Parties exchanged multiple brackets and counteroffers, narrowing the gap incrementally until agreement was reached at $14,750,000 during the second session. Judge Okoro made a mediator's recommendation within the range ultimately agreed upon, further supporting the reasonableness of the result.
California courts have consistently recognized that settlement negotiations conducted at arm's length, facilitated by an experienced mediator, and informed by substantial discovery are entitled to a presumption of fairness. See Dunk v. Ford Motor Co., supra, 48 Cal.App.4th at 1801 (settlement that "appears to be the product of serious, informed, non-collusive negotiations" warrants preliminary approval); see also In re Bluetooth Headset Products Liability Litigation (9th Cir. 2011) 654 F.3d 935, 948 (noting that "participation of an independent mediator" in settlement negotiations supports a finding of non-collusiveness and fairness); Kullar v. Foot Locker Retail, Inc., supra, 168 Cal.App.4th at 129 (evaluating whether parties had sufficient information to negotiate an informed settlement). The circumstances here — extensive discovery, competing expert reports, a contested certification ruling, and two full-day mediation sessions before a highly respected retired judge — demonstrate that this settlement is the product of exactly the kind of serious, informed, arm's-length negotiations that courts have recognized as supporting preliminary approval.
B. The Settlement Amount Is Fair, Reasonable, and Adequate
1. The GSA Represents a Substantial Recovery in Light of the Risks
The Gross Settlement Amount of $14,750,000 represents a substantial and meaningful recovery for the Settlement Class, particularly when evaluated against the backdrop of the competing damages analyses and the significant litigation risks confronting both sides.
Measured against Plaintiffs' expert's aggregate damages opinion of $38.6 million, the GSA represents approximately 38.2% of the total claimed exposure. Measured against the defense expert's aggregate damages opinion of $5.8 million (exclusive of PAGA penalties), the GSA represents approximately 254% of the defense valuation. The settlement thus falls squarely within the range defined by the competing expert opinions, and it does so at a point that reflects a meaningful compromise accounting for the genuine risks each side faced.
In the experience of defense counsel in this matter, California wage-and-hour class action settlements typically resolve within a range of approximately 15% to 40% of the plaintiff's total claimed exposure, depending on the strength of the claims, the extent of class certification, and the procedural posture of the case. See, e.g., Kullar v. Foot Locker Retail, Inc., supra, 168 Cal.App.4th at 133 (evaluating settlement percentage relative to claimed exposure); Munoz v. BCI Coca-Cola Bottling Co. of Los Angeles (2010) 186 Cal.App.4th 399 (approving settlement of wage-and-hour class action). The GSA of $14,750,000, at approximately 38.2% of Plaintiffs' claimed exposure, falls at the upper end of this range, reflecting the strength of the certified meal period auto-deduction claim while also accounting for the substantial risks associated with the non-certified claims.
After deducting attorneys' fees, costs, service awards, administration costs, and the PAGA payment, the Net Settlement Fund of $8,251,525 yields an estimated average individual payment of approximately $4,460 per class member. This is a meaningful sum that provides tangible compensation to class members for the alleged meal period violations during the Class Period.
Moreover, the settlement resolves not only the three certified claims but also the five non-certified claims — rest period, off-the-clock/overtime, minimum wage, second meal period, and waiting time penalties — as well as the PAGA representative claims. Had the case proceeded on the certified claims alone, Plaintiffs' recovery at trial would have been limited to the first meal period auto-deduction claim, the derivative wage statement claim, and the UCL claim. The non-certified claims, which constitute a substantial portion of the total claimed damages, would have required individual pursuit by class members at their own expense and risk. The settlement thus provides class members with compensation for claims that they might otherwise have been unable to pursue on a collective basis.
2. Significant Litigation Risks Warranted Settlement
The settlement must be evaluated not only by reference to Plaintiffs' best possible recovery, but also in light of the substantial risks that both sides faced in continued litigation. Kullar, 168 Cal.App.4th at 130. Those risks were considerable.
Merits Risk on the Certified Claims. While the Court's certification order found that common questions predominated with respect to the first meal period auto-deduction claim, AMA maintained meritorious defenses that could have resulted in a defense verdict at trial. AMA's written meal period policies facially complied with California law and provided for 30-minute uninterrupted meal periods for all shifts exceeding five hours. AMA maintained that the auto-deduction was a timekeeping methodology — a means of recording time — and not a substantive denial of meal periods. Under the California Supreme Court's decision in Brinker Restaurant Corp. v. Superior Court (2012) 53 Cal.4th 1004, an employer's obligation is to provide a meal period — i.e., to relieve the employee of all duties and relinquish control — not to ensure that the employee actually takes the meal period. AMA would have argued at trial that the auto-deduction system simply reflected the default expectation that employees would take their meal periods, and that the Missed Meal Attestation feature (available at four of seven facilities, and at all facilities since December 2022) provided an adequate mechanism for employees to report missed breaks and receive premium pay. Whether a jury would have accepted Plaintiffs' interpretation of the auto-deduction system — or AMA's — was a genuinely contested and uncertain question.
Damages Risk. The enormous gap between the competing expert opinions — $38.6 million (Plaintiffs) versus $5.8 million (defense) — underscores the profound uncertainty in the damages calculation. Plaintiffs' expert, Dr. Rennick, assumed that every auto-deducted meal period that was not affirmatively attested as "taken" constituted a missed meal period triggering premium pay. AMA's expert, Dr. Lindstrom, challenged this assumption as fundamentally flawed, arguing that the absence of a missed meal attestation was far more consistent with the meal period having been taken than with it having been missed. A trial could have produced a damages award at either end of this wide range — or anywhere in between.
Certification Risk. The Court denied certification of five of seven causes of action. Had the case proceeded to trial on only the three certified claims, Plaintiffs' total recovery — even in a best-case scenario — would have been significantly less than the $38.6 million total damages figure calculated by Dr. Rennick, which included damages attributable to the non-certified claims. Moreover, AMA retained the right to seek decertification at any time prior to trial if developments in the evidence undermined the commonality or predominance findings on which certification was based. The risk that the certified class could be narrowed or decertified before or during trial was real.
PAGA Risk. Plaintiffs claimed $12.2 million in PAGA penalties, a figure that assumed the maximum statutory penalty of $100 per employee per pay period for each initial violation and $200 for each subsequent violation, without any judicial reduction. However, California Labor Code section 2699(e)(2) grants the court broad discretion to reduce PAGA penalties if the award would be "unjust, arbitrary and oppressive, or confiscatory." California courts have routinely exercised this discretion to reduce PAGA penalties to a fraction of the maximum statutory amount. The $750,000 PAGA component of the settlement — representing approximately 6.1% of the claimed $12.2 million in PAGA penalties — reflects the substantial uncertainty and discretionary risk inherent in the PAGA claims.
Trial Cost and Delay Risk. Trial of the certified claims was estimated to require 15 to 20 court days. AMA estimated that it would incur an additional $1.2 to $1.8 million in defense costs through trial, and Plaintiffs would have faced comparable costs on their side. Moreover, any trial verdict — whether favorable to Plaintiffs or AMA — would have been subject to appellate review, potentially adding years of additional delay and uncertainty before class members received any recovery. The settlement eliminates all of these costs, risks, and delays.
As the court recognized in Kullar, 168 Cal.App.4th at 130, "the proposed settlement must stand or fall on its own merits" and should be evaluated in light of the "best possible recovery and the attendant risks of litigation." Similarly, in 7-Eleven Owners for Fair Franchising v. Southland Corp. (2000) 85 Cal.App.4th 1135, 1152, the court confirmed that litigation risks are a proper and important consideration in evaluating whether a settlement is fair, reasonable, and adequate. The substantial risks identified above — on the merits, on damages, on continued certification, on PAGA, and on trial costs — fully support the reasonableness of the $14,750,000 GSA.
3. Comparison to Other Settlements
The settlement compares favorably to other California wage-and-hour class settlements of similar size and scope, involving comparable industries and employee populations. While each case is unique and direct comparisons should be drawn with caution, the GSA of $14,750,000 for a class of approximately 1,850 employees — yielding an estimated average payment of approximately $4,460 per class member — represents a substantial recovery in the context of California employment class action settlements. Settlements of comparable size and scope have been approved by California courts in cases involving similar allegations of systematic meal and rest period violations in the entertainment, hospitality, and service industries. The per-class-member recovery here provides meaningful and tangible compensation for the alleged violations.
C. The Settlement Class Satisfies the Requirements for Provisional Certification
Provisional certification of the Settlement Class is appropriate for purposes of effectuating the settlement. The proposed Settlement Class is identical in scope and definition to the class previously certified by this Court in its August 11, 2023 Order, with the sole modification being that the Class Period has been extended to end on October 31, 2023 (rather than the date of preliminary approval, as stated in the certification order). This modification ensures that the settlement encompasses all work performed by class members through a date certain, facilitating the calculation of individual payments.
The Settlement Class satisfies the prerequisites for class certification under California Code of Civil Procedure section 382 and California Rules of Court, Rule 3.764:
Numerosity. The Settlement Class includes approximately 1,850 individuals, a number far too large for individual joinder to be practicable.
Commonality and Predominance. The Settlement Class members share common questions of law and fact, including whether AMA's auto-deduction system resulted in systematic denial of meal period premium pay. As this Court found in its August 11, 2023 certification order, the existence and application of the auto-deduction feature in the TimeTrack Pro system presents a common question susceptible to class-wide proof.
Typicality. The claims of the three Named Plaintiffs — Ms. Fuentes, Mr. Halloran, and Ms. Padilla — are typical of the claims of the Settlement Class. Each Named Plaintiff was a non-exempt, hourly employee of AMA who worked in California during the Class Period and was subject to the same TimeTrack Pro auto-deduction system as all other class members.
Adequacy. The Named Plaintiffs have no conflicts of interest with the Settlement Class and have demonstrated their commitment to the class throughout this litigation by participating in discovery, sitting for depositions, and consulting regularly with Class Counsel. Class Counsel — Castellano Byrne & Salas LLP and Veltrano Employment Law Group PC — are experienced employment class action litigators who have vigorously prosecuted this action on behalf of the class.
This Court has already evaluated these factors in granting partial certification. Because the Settlement Class is identical to the previously certified class (with only the minor end-date modification), provisional certification for settlement purposes is appropriate and well-supported.
D. The Proposed Notice Plan Satisfies Due Process
The proposed notice plan satisfies the requirements of due process as articulated in Mullane v. Central Hanover Bank & Trust Co. (1950) 339 U.S. 306, 314, which requires that notice in a class action be "reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections."
The proposed plan provides individual notice by first-class United States mail to every identifiable class member at his or her last known address. Class member addresses are derived from AMA's payroll records, as maintained by NovaPay Solutions, and will be updated through the National Change of Address database prior to mailing to maximize deliverability. Individual first-class mail notice is the "gold standard" for class action notice and is well-established as satisfying due process. See Eisen v. Carlisle & Jacquelin (1974) 417 U.S. 156, 173–75.
The notice plan is further supplemented by a dedicated settlement website administered by Meridian Settlement Services, which will contain the complete Settlement Agreement, all relevant court filings, and a list of frequently asked questions and answers. A toll-free telephone number will be staffed by knowledgeable representatives who can answer class member inquiries in both English and Spanish. These supplemental notice mechanisms ensure that class members who have questions or who wish to review the complete settlement documents have ready access to all relevant information.
The notice itself — provided in both a four-page long-form format and a summary/postcard format — is drafted in clear, plain, non-technical language that describes:
• The nature and procedural history of the case;
• The material terms of the settlement, including the GSA, the estimated Net Settlement Fund, and the estimated average individual payment;
• The allocation formula (60% weeks worked / 40% overtime hours);
• The right to opt out and the procedure and deadline for doing so;
• The right to object and the procedure and deadline for doing so;
• The date, time, and location of the Final Approval Hearing;
• Contact information for Class Counsel (Castell