CALDERWOOD & HARKNESS LLP
Attorneys at Law
1999 Avenue of the Stars, Suite 2800 Los Angeles, California 90067
Telephone: (310) 556-8000
780 Seventh Avenue, 34th Floor New York, New York 10019
Telephone: (212) 848-1000
www.calderwoodharkness.com
August 19, 2023
PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT COMMUNICATION ATTORNEY WORK PRODUCT
Via Secure Email and International Courier
Fiona Blackwood, Esq. General Counsel Aurelius Global Media Group PLC 45 Aldwych House, Kingsway London WC2B 6AH United Kingdom
Re: Completion of Independent Workplace Investigation — Matter No. 1017-00005 Investigation of Allegations Against Marcus Hale, President, Aurelius Pacific Studios Inc.
Dear Ms. Blackwood:
I. Purpose and Formal Confirmation of Completion
Calderwood & Harkness LLP ("C&H" or the "Firm") writes to formally confirm the completion of the independent privileged workplace investigation (the "Investigation") conducted at the direction of the Board of Directors (the "Board") of Aurelius Global Media Group PLC ("AGMG" or the "Company"). This letter serves as the formal closing communication for this matter and summarizes the Investigation's scope, methodology, principal findings, recommendations, costs, and related administrative matters.
As you are aware, the Investigation was authorized jointly by the People & Culture Committee of the Board, chaired by Dame Cordelia Ashworth, Independent Non-Executive Director, and the Audit & Risk Committee of the Board, chaired by Raymond Okoro, Independent Non-Executive Director, on April 28, 2023 (together, the "Joint Committees"). Calderwood & Harkness was thereafter engaged on May 2, 2023 pursuant to the engagement letter of the same date, which was executed on behalf of AGMG by you in your capacity as General Counsel.
The Investigation was formally opened on May 2, 2023 and is formally closed as of the date of this letter, August 19, 2023. The matter has been conducted under C&H Matter Number 1017-00005.
The subject of the Investigation is Marcus Hale ("Mr. Hale"), who serves as President of Aurelius Pacific Studios Inc. ("APS"), a Delaware corporation and wholly owned subsidiary of AGMG headquartered at 3200 West Alameda Avenue, Suite 400, Burbank, California 91505. The Investigation examined allegations of sexual harassment, retaliation, and the creation of a hostile work environment in violation of the California Fair Employment and Housing Act, California Government Code sections 12940 et seq. (the "FEHA"), as well as violations of applicable company policies, as described in further detail below.
II. Confirmation of Deliverables
We confirm that the following deliverables have been transmitted to you on this date, August 19, 2023, via secure encrypted file transfer:
1. Final Privileged Investigation Report (the "Report"). This comprehensive written report incorporates feedback received from the Joint Committees during the presentation held via secure videoconference on Wednesday, August 16, 2023, which lasted approximately two hours and forty-five minutes. The Report builds upon and supersedes the draft report that was delivered to you on August 11, 2023 for preliminary review. The Report sets forth in detail the factual findings, credibility assessments, legal analysis, and conclusions of the Investigation.
2. Remedial Recommendations Memorandum (the "Recommendations Memorandum"). This is a separate memorandum addressed to the People & Culture Committee and the Audit & Risk Committee detailing the recommended corrective actions arising from the Investigation's findings.
We note for the record that the Board Committee Presentation slide deck used during the August 16, 2023 secure videoconference session was previously transmitted to you on August 14, 2023 in advance of that presentation and forms part of the privileged Investigation record. No additional copies of that slide deck are enclosed with this letter, but it should be maintained together with the other Investigation materials in accordance with the privilege preservation and document retention protocols described in Section VII of this letter.
III. Summary of Investigation Scope and Methodology
A. Scope. The Investigation examined allegations raised by three complainants against Mr. Hale in his capacity as President of APS:
• Jenna Morales, Vice President of Development, APS;
• Claire Ngo, Senior Director of Talent Relations, APS; and
• Darren Whitfield, Senior Vice President of Physical Production, APS.
Each complainant's allegations, the evidentiary basis for our findings, and detailed credibility assessments are set forth in the Report. A summary of our findings is provided in Section IV below.
In accordance with the direction of the Joint Committees and consistent with best practices for the independence and integrity of the Investigation, Elliot Vane, Chief Executive Officer of AGMG, was formally recused from all Investigation oversight due to his direct reporting relationship with Mr. Hale and Mr. Hale's reporting relationship to Mr. Vane within the APS organizational structure. Mr. Vane was informed of the recusal in writing on May 3, 2023 and confirmed his acknowledgment and cooperation on May 4, 2023.
B. Investigation Team
The C&H Investigation team consisted of the following attorneys and staff:
• Bernard Crawford, Partner — Responsible Partner and lead investigator
• Renata Vasquez, Partner — Billing Partner and senior advisor
• Devon Archer, Associate — Lead Associate
• Nadia Petrov, Associate — Working Associate
• Contract review attorneys engaged through the C&H contract attorney program
• Paralegals from the C&H Los Angeles office litigation support team
C. Methodology. The Investigation employed the following methodology, which is described in comprehensive detail in the Report:
Witness Interviews. The Investigation team conducted a total of twenty-seven (27) witness interviews between May 22, 2023 and July 14, 2023. These interviews encompassed the following categories of witnesses:
• Three (3) complainant interviews (Jenna Morales, Claire Ngo, and Darren Whitfield);
• Sixteen (16) interviews of current employees of APS and AGMG;
• Four (4) interviews of former employees of APS;
• Three (3) interviews of third-party production contractors who had relevant knowledge of events and conditions at APS; and
• One (1) subject interview of Marcus Hale, conducted on June 15, 2023 at C&H's Los Angeles office, with Mr. Hale's personal counsel, Graham Thornfield of Thornfield & Associates LLP, present and participating. The subject interview lasted approximately four hours and twenty minutes.
All witness interviews were conducted by Mr. Crawford and/or Mr. Archer, with Ms. Petrov assisting with notes and follow-up. Witnesses were provided with appropriate Upjohn advisements at the commencement of each interview, consistent with C&H's standard investigation protocols.
Electronic discovery and Forensic Collection. Calderwood & Harkness engaged Linden Forensics Group Inc. ("Linden") to conduct forensic collection and processing of electronic communications and documents. Forensic collections were executed between May 10 and May 12, 2023 from nine (9) custodians identified by the Investigation team in consultation with Ms. Blackwood and APS's information technology department. The forensic collection yielded the following:
• Approximately 847,000 documents collected across all custodians;
• Approximately 214,000 unique items remaining after de-duplication and processing by Linden;
• Approximately 38,600 items remaining after application of agreed-upon search terms and date-range filtering parameters.
Document Review. The document review was conducted between May 15 and July 21, 2023 using C&H's standard review platform. Of the approximately 38,600 filtered items, the review team identified 4,218 documents as relevant or responsive to the Investigation. Of those, 312 documents were designated as "hot" — that is, highly relevant to the core allegations and findings. These hot documents included, among other things, text messages, emails, calendar entries, and internal memoranda that bore directly on the conduct at issue.
Policy Review. The Investigation team reviewed the following applicable policies and governance documents:
• AGMG Global Code of Conduct, Version 4.2 (effective January 1, 2022);
• APS Employee Handbook (California Supplement), revised March 15, 2022, including:
• Section 5.3 (Anti-Harassment Policy);
• Section 5.7 (Anti-Retaliation Policy); and
• Section 8.1 (Complaint & Investigation Procedures);
• AGMG Board Corporate Governance Guidelines, Section 12 (Executive Conduct Standards).
Respondent's Written Submission. On June 5, 2023, Thornfield & Associates LLP submitted a fourteen (14) page written position statement on behalf of Mr. Hale (the "Hale Position Statement"). The Hale Position Statement was reviewed and considered by the Investigation team. Mr. Hale's positions, defenses, and explanations are addressed in detail in the credibility assessment and findings sections of the Report.
IV. Summary of Findings
Without repeating the full analysis contained in the Report, we provide the following summary of the Investigation's principal findings for purposes of this closing letter.
A. Substantiated Allegations
The Investigation substantiated the following allegations:
1. Sexual Harassment — Jenna Morales. The Investigation substantiated the sexual harassment allegations raised by Jenna Morales against Mr. Hale. Specifically, all four categories of alleged conduct were substantiated:
(a) Repeated, unwelcome invitations to Mr. Hale's hotel room during the October 2022 Vancouver production trip for Project Meridian;
(b) Sexually suggestive text messages sent by Mr. Hale to Ms. Morales on November 14, November 29, and December 8, 2022, which were recovered through the forensic collection process and confirmed through carrier records;
(c) An inappropriate and sexually suggestive comment made by Mr. Hale to Ms. Morales during a one-on-one meeting in Mr. Hale's office on January 11, 2023; and
(d) Unwanted physical contact initiated by Mr. Hale toward Ms. Morales at the company dinner held at Il Cielo restaurant on February 3, 2023.
These findings were supported by the testimony of seven (7) corroborating witnesses and by recovered electronic communications, including the text messages referenced above. Ms. Morales was found to be credible and consistent in her account. Mr. Hale denied or characterized the conduct differently in his subject interview and the Hale Position Statement; however, the Investigation team found these denials not credible for the reasons detailed in the Report.
2. Sexually Inappropriate Comments and Exclusion — Claire Ngo. The Investigation substantiated that Mr. Hale made sexually inappropriate comments to Claire Ngo during the company off-site retreat held at the Monarch Valley Resort in Ojai, California on February 17–18, 2023. Additionally, the Investigation substantiated that following the retreat, Ms. Ngo was excluded from key development meetings that she had previously attended as part of her regular duties. This exclusion was substantiated as retaliatory and part of a pattern of hostile work environment conduct. Two (2) corroborating witnesses supported Ms. Ngo's account of the comments made at the retreat.
3. Retaliation — Darren Whitfield. The Investigation substantiated that Mr. Hale retaliated against Darren Whitfield by reassigning two significant productions — Project Meridian and Project Halcyon, with combined budgets of approximately $187 million — from Mr. Whitfield to SVP Cameron Briggs on February 6, 2023. This reassignment occurred approximately two weeks after Mr. Whitfield raised concerns about Mr. Hale's conduct at the January 23, 2023 leadership team meeting. Email evidence recovered during the Investigation demonstrated that there was no documented performance-related or business justification for the reassignment. Mr. Hale's after-the-fact explanations regarding Mr. Whitfield's performance were inconsistent with contemporaneous records, including Mr. Whitfield's most recent performance evaluation dated December 15, 2022, which rated him as "Exceeds Expectations."
B. Additional Findings — Institutional Deficiencies
The Investigation also identified significant deficiencies in APS's complaint-handling procedures and human resources documentation practices. Of particular note, the Investigation determined that a prior verbal counseling was issued to Mr. Hale by Victor Gallegos, Vice President of Human Resources at APS, on or about August 2, 2021, in connection with an earlier informal complaint raised by Serena Whitcomb, Mr. Hale's former executive assistant. However, no written documentation of this verbal counseling was created or maintained in Mr. Hale's personnel file or in APS's human resources records. The absence of this documentation is inconsistent with APS Employee Handbook (California Supplement) Section 8.1 and represents a systemic gap in APS's complaint-handling and documentation practices.
C. Reference to Full Report
The full factual findings, detailed credibility assessments for each witness, legal analysis under the FEHA and applicable company policies, and the complete evidentiary record supporting each finding are set forth in the Final Privileged Investigation Report transmitted herewith. This summary is provided for convenience only and should be read in conjunction with the Report.
V. Recommendations (Summary Reference)
Detailed remedial recommendations arising from the Investigation's findings are set forth in the separate Remedial Recommendations Memorandum of even date, which is being transmitted concurrently with this letter and the Report. The Recommendations Memorandum should be reviewed in its entirety by the Joint Committees and the Board.
For purposes of this closing letter, we note that the recommendations include the following principal categories:
1. Termination of Marcus Hale for Cause. We recommend termination of Mr. Hale's employment for cause under Section 9.2(b) of his Employment Agreement dated January 7, 2019 (the "Hale Employment Agreement"), based on the substantiated findings of sexual harassment and retaliation. The Recommendations Memorandum includes a detailed analysis of the for-cause termination provisions of the Hale Employment Agreement and the evidentiary basis supporting such a determination.
2. Enhanced Anti-Harassment Training. We recommend the design and implementation of enhanced, interactive anti-harassment training for all senior leaders at APS, including vice president-level employees and above, supplementing and going beyond the mandatory training required under California Government Code section 12950.1.
3. Policy Revisions. We recommend substantive revision of APS Employee Handbook (California Supplement) Sections 5.3 (Anti-Harassment Policy), 5.7 (Anti-Retaliation Policy), and 8.1 (Complaint & Investigation Procedures) to address the procedural and documentation gaps identified during the Investigation.
4. Hotline Escalation Procedures. We recommend revision of the escalation protocols governing the Company's ethics and compliance hotline administered by Meridian Compliance Solutions LLC to ensure that complaints involving senior executives are automatically escalated to the General Counsel and, where appropriate, the relevant Board committees.
5. Independent Workplace Culture Assessment. We recommend the engagement of an independent third-party firm to conduct a comprehensive workplace culture assessment at APS, focusing on issues of harassment, retaliation, and psychological safety.
6. Remedial Measures for Affected Complainants. We recommend that the Company implement specific remedial measures for each of the three complainants, the details of which are set forth in the Recommendations Memorandum.
7. Improvement of HR Documentation Practices. We recommend that APS adopt enhanced documentation protocols for all complaints, counseling sessions, and disciplinary actions, with mandatory written records maintained in personnel files and the human resources information system.
Implementation of each of the foregoing recommendations remains at the discretion of the Board and the Joint Committees. Calderwood & Harkness is available to assist with implementation as described in Section IX below.
VI. Investigation Costs
The total professional fees and costs incurred in connection with the Investigation are summarized below.
A. Calderwood & Harkness LLP Fees
Total Calderwood & Harkness LLP fees for the Investigation period (May 2, 2023 through August 19, 2023) are $1,247,850.00, net of billing adjustments of ($6,795.00). The breakdown by timekeeper is as follows:
B. Linden Forensics Group Inc. Fees
Fees incurred by Linden Forensics Group Inc. for forensic collection, processing, hosting, and related services total $189,400.00.
C. Total Estimated Investigation Cost
The total estimated cost of the Investigation, inclusive of C&H professional fees and Linden forensic fees, is $1,437,250.00.
D. Insurance Coverage
We note that the Investigation costs have been submitted for coverage under the Company's Employment Practices Liability Insurance policy issued by Northbridge Mutual Insurance Co., Policy No. NM-EPLI-2023-00417 (policy period January 1, 2023 through December 31, 2023; per-claim limit of $10,000,000; aggregate limit of $25,000,000; self-insured retention of $500,000). Coverage is subject to carrier review and approval for amounts exceeding the $500,000 self-insured retention. We recommend that Ms. Blackwood continue to coordinate with Kessler & Dunn Insurance Brokers Ltd. and Northbridge Mutual regarding the status of coverage for Investigation costs and any subsequent related defense costs.
Final invoices detailing all fees and costs, including supporting time entries and vendor invoices, will be transmitted to Ms. Blackwood under separate cover.
VII. Privilege Preservation and Document Retention
A. Privileged Materials
We wish to emphasize that all Investigation materials are protected by the attorney-client privilege and the attorney work product doctrine. This protection extends to, without limitation, the following materials:
• The Final Privileged Investigation Report;
• The Remedial Recommendations Memorandum;
• The Board Committee Presentation slide deck;
• All witness interview memoranda and notes;
• The credibility assessment memorandum;
• The legal standards memorandum;
• The policy gap analysis memorandum;
• All correspondence between C&H and counsel for Marcus Hale (Thornfield & Associates LLP);
• All correspondence between C&H and counsel for Jenna Morales (Nakamura Reeves LLP);
• All internal working papers, research memoranda, timelines, and analytical documents generated by the Investigation team; and
• All communications between C&H and AGMG, including Ms. Blackwood and the Joint Committees, relating to the Investigation.
B. Ownership and Protection of Privilege
The attorney-client privilege with respect to the Investigation materials belongs to Aurelius Global Media Group PLC. We strongly caution the Board and all persons with access to these materials to take appropriate care not to inadvertently waive privilege through disclosure to third parties, including Mr. Hale, his counsel, counsel for any complainant, regulatory bodies, insurers, or the media, unless and until the Board makes a deliberate, informed decision to disclose specific materials following consultation with counsel. Any such disclosure decision should be made only after careful analysis of the implications for privilege, including under both United States and United Kingdom law.
C. Cross-Border Privilege Protocols
In this regard, we refer the Board to the Cross-Border Privilege Protocol Memorandum dated May 12, 2023, which was jointly prepared by Calderwood & Harkness and Pendleton & Warwick LLP (AGMG's UK corporate counsel, located at 20 Fenchurch Street, 8th Floor, London EC3M 3BY, United Kingdom). That memorandum addresses the protocols and procedures necessary for maintaining privilege across both United States and United Kingdom jurisdictions, including under the differing legal standards applicable to legal professional privilege in England and Wales. We recommend that the Board continue to adhere to the protocols described in that memorandum.
D. Secure Storage and Access Controls
We recommend that all privileged Investigation materials be maintained by AGMG in a segregated, access-restricted repository — whether physical or digital — with access limited to the following individuals:
• Fiona Blackwood, General Counsel;
• Dame Cordelia Ashworth, Chair, People & Culture Committee;
• Raymond Okoro, Chair, Audit & Risk Committee; and
• Such other Board members or advisors as the Board, in consultation with Ms. Blackwood, determines appropriate.
Access to these materials should not be provided to operational management of APS or AGMG, including Mr. Vane, without the express authorization of the Board following consultation with counsel.
E. Calderwood & Harkness File Retention
Calderwood & Harkness will maintain its Investigation files, including copies of all deliverables, working papers, and communications, in accordance with the Firm's document retention policies and applicable professional obligations under the California Rules of Professional Conduct and other relevant ethical rules.
F. Forensic Data Retention
We note that Linden Forensics Group Inc. currently holds forensic images of all data collected from the nine (9) custodians during the May 10–12, 2023 collection process. We recommend that AGMG instruct Linden, through C&H, regarding the retention, return, or destruction of this data, taking into account the litigation hold and any anticipated future proceedings.
G. Litigation Hold
The litigation hold notice issued on May 2, 2023 — which applies to all documents and electronically stored information potentially relevant to the matters investigated — should remain in effect until further notice. This recommendation is based on the potential for related litigation (including potential claims by the complainants, by Mr. Hale, or by third parties), regulatory inquiries (including by the California Civil Rights Department or other agencies), or claims arising under the Company's EPLI or Directors and Officers liability insurance policies. With respect to the latter, we note that the D&O policy is issued by Castlemaine Underwriters Ltd. under Policy No. CU-DO-2023-11283 with a tower limit of $50,000,000, and precautionary notice has already been provided to that carrier. The litigation hold should not be lifted or modified without prior consultation with C&H or other qualified counsel.
VIII. Coordination with Other Advisors
The following external advisors were notified or engaged during the course of the Investigation and may require further coordination by AGMG as the Company considers post-investigation steps:
• Pendleton & Warwick LLP — AGMG's UK corporate counsel, engaged in connection with UK corporate governance matters, cross-border privilege protocols, and Board-level advisory matters arising from the Investigation.
• Greystone Advisors LLP — AGMG's external auditor, which was notified during the Investigation regarding potential financial reporting implications related to provisions in Mr. Hale's employment agreement, including potential severance obligations and the accounting treatment thereof depending on the basis of any termination.
• Kessler & Dunn Insurance Brokers Ltd. — AGMG's insurance broker, which was notified regarding potential claims under the Company's D&O and EPLI policies and has been coordinating with the carriers on coverage matters.
• Northbridge Mutual Insurance Co. — EPLI carrier, to which a formal notice of claim letter was sent on May 5, 2023.
• Castlemaine Underwriters Ltd. — D&O carrier, to which a precautionary notice of circumstances letter was sent on May 5, 2023.
We recommend that Ms. Blackwood coordinate with each of these advisors as appropriate regarding post-investigation steps, including but not limited to the for-cause termination process, insurance coverage for defense costs and potential settlements or judgments, financial reporting considerations, and UK regulatory or governance obligations.
IX. Continued Availability
Calderwood & Harkness remains available to the Board, the Joint Committees, and Ms. Blackwood for any follow-up matters arising from the Investigation, including but not limited to:
• Assistance with the implementation of the remedial recommendations set forth in the Recommendations Memorandum, including drafting or reviewing revised policies, training program frameworks, and related documentation;
• Defense of or response to any employment claims, litigation, arbitration demands, or regulatory inquiries that may arise from or relate to the matters investigated, including claims by Mr. Hale, the complainants, or other current or former employees;
• Further factual or legal analysis as may be requested by the Board or the Joint Committees in connection with the Investigation findings;
• Guidance on the for-cause termination process under Section 9.2(b) of Mr. Hale's Employment Agreement, including preparation of termination documentation, board resolutions, and related communications; and
• Assistance with any disclosure obligations arising under applicable securities regulations or corporate governance requirements.
Any such follow-up engagement would be subject to the terms of the existing engagement letter dated May 2, 2023, unless the Board determines that a separate or amended engagement letter is appropriate for any particular matter or workstream. We are happy to discuss the scope and terms of any follow-up engagement at your convenience.
X. Acknowledgments
In closing, we wish to express our sincere appreciation for the cooperation and support provided throughout the Investigation by the Board, the Joint Committees, and the following individuals in particular: Ms. Blackwood, who served as the primary point of coordination and whose professionalism and responsiveness were invaluable to the Investigation's timely completion; Patricia Sung, Chief People Officer of AGMG, who facilitated access to personnel records, policies, and organizational information; Victor Gallegos, Vice President of Human Resources at APS, who cooperated fully in his capacity as both a source of institutional knowledge and a fact witness; and Ingrid Holt, Chief Compliance Officer of AGMG, who provided guidance on the Company's compliance infrastructure and hotline operations.
We also note that the professionalism and cooperation of all witnesses who participated in the Investigation — including those who came forward with difficult and sensitive information — contributed meaningfully to a thorough, fair, and credible investigation process. Their willingness to engage candidly with the Investigation team reflects well on the Company's culture of accountability.
Please do not hesitate to contact me directly if you have any questions regarding this letter, the enclosed Investigation materials, or any aspect of the matters addressed herein. I can be reached at the telephone number and email address listed below.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Bernard Crawford Partner, Labor & Employment
1999 Avenue of the Stars, Suite 2800 Los Angeles, California 90067 Direct: (310) 556-8147
Email: bcrawford@calderwoodharkness.com
cc: Dame Cordelia Ashworth, Chair, People & Culture Committee, AGMG Board of Directors (via Fiona Blackwood)
cc: Raymond Okoro, Chair, Audit & Risk Committee, AGMG Board of Directors (via Fiona Blackwood)
cc: Renata Vasquez, Partner, Calderwood & Harkness LLP
cc: Devon Archer, Associate, Calderwood & Harkness LLP
Enclosures:
(1) Final Privileged Investigation Report (dated August 19, 2023)
(2) Remedial Recommendations Memorandum (dated August 19, 2023)
| Timekeeper | Role | Hours | Rate ($/hr) | Total |
| Bernard Crawford | Responsible Partner | 82.0 | $1,350 | $110,700.00 |
| Renata Vasquez | Billing Partner | 47.0 | $1,275 | $59,925.00 |
| Devon Archer | Lead Associate | 438.0 | $875 | $383,250.00 |
| Nadia Petrov | Working Associate | 612.0 | $725 | $443,700.00 |
| Contract Review Attorneys | Document Review | 520.0 (combined) | $480 | $249,600.00 |
| Paralegals | Litigation Support | 18.0 | $415 | $7,470.00 |
| Subtotal (Pre-Adjustment): | $1,254,645.00 | |||
| Billing Adjustment: | ($6,795.00) | |||
| Net Total — C&H Fees: | $1,247,850.00 |