Norton v. Strategic Staffing Solutions, L.C.

Background

Paula Norton brought this wage-and-hour action against Strategic Staffing Solutions-S3, LLC and Cynthia Pasky, identified in the opinion as S3’s Chief Executive Officer. Norton alleged that the defendants systematically classified recruiters as exempt employees and violated California labor laws. The claims included unpaid minimum and overtime wages, meal and rest period violations, unreimbursed business expenses, inaccurate payroll records and wage statements, late payment of wages, penalties under the Private Attorneys General Act, unfair business practices, and an additional claim concerning noncompete agreements. The amended complaint also added a proposed class of nonexempt employees asserting many of the same labor-law claims.

The parties engaged in formal and informal discovery, attended a full-day mediation on September 6, 2024, and reached a classwide settlement. Norton then moved for preliminary approval.

Settlement Terms

The agreement establishes two settlement classes:

- The Non-Exempt Class consists of nonexempt people who worked at least one 3.5-hour shift for the defendants, as direct-hire or agency employees, in California during the release period. - The Exempt Class consists of people who worked at least one 3.5-hour shift for the defendants in California and were classified as exempt during the release period.

Class counsel estimated that the classes included 441 members. The agreement provides for a non-reverting gross settlement fund of $5,250,000. Subject to court approval, deductions may include $1,700,000 in attorneys’ fees, $50,000 in litigation costs, $8,500 in estimated settlement-administration costs, and $550,000 for released PAGA claims. Of the PAGA amount, 75 percent, or $412,500, would go to the California Labor and Workforce Development Agency, and 25 percent, or $137,500, would go to class members.

The remaining net fund, stated to be at least $2,856,500, will be distributed pro rata according to workweeks. Workweeks for exempt employees will be weighted at 5:1 compared with nonexempt employees. The minimum payment to any class member will be $25. Class members who do not timely opt out will release claims asserted in, or reasonably based on the factual allegations of, the operative complaint or related PAGA materials. Norton, as class representative, will release a broader set of claims arising from her employment.

Court’s Analysis

The court found that the proposed settlement classes conditionally satisfied Federal Rule of Civil Procedure 23. The court found sufficient numerosity, commonality, typicality, and adequacy of representation. It also found that common questions predominated, including whether the defendants properly classified employees as exempt, failed to provide meal periods, failed to pay overtime, failed to reimburse expenses, failed to provide accurate pay statements, and used illegal noncompete provisions. The court concluded that a class action was superior to individual litigation.

For preliminary approval, the court evaluated whether the settlement appeared to result from serious and informed negotiations, lacked improper preferential treatment, fell within the range of possible approval, and had no obvious deficiencies. The court found that the parties had investigated the claims, analyzed records and potential damages, conducted discovery, and participated in mediation. It found the $5,250,000 settlement to be within the possible range of approval because it represented about 23.6 percent of the estimated $22,252,525 maximum exposure before accounting for litigation risks and other discounts.

The court noted concerns about the proposed $35,000 service award to Norton because it was substantially higher than amounts typically awarded in the circuit, but concluded that the award did not defeat preliminary approval. The court also expressed concerns about the proposed attorneys’ fees. Norton indicated that she intended to seek $1,750,000, while counsel’s current lodestar—the hours reasonably worked multiplied by reasonable hourly rates—was $281,667.40, producing a 6.2 multiplier. The court deferred deciding the appropriate fee amount and required a later fee motion with declarations and detailed billing records.

The court separately found the PAGA settlement fair, adequate, and reasonable at the preliminary-approval stage. The PAGA allocation represented about 10 percent of the potential PAGA recovery and about 10 percent of the overall settlement recovery.

Notice and Orders

The court found that the revised notice generally complied with Rule 23. It described the claims and classes, summarized the settlement and estimated payments, explained exclusion and objection procedures, and provided information about appearing at the final approval hearing. However, the court found that the proposed 10-day period for class members to review and object to the attorneys’ fee and cost request was insufficient. The court ordered Norton to file the fee-and-cost motion and the class representative incentive-award motion within 21 days.

The court GRANTS preliminary approval of the class action settlement. It provisionally certified the two classes for settlement purposes only, appointed specified counsel to act for the class, appointed Norton as class representative, appointed Apex Class Action LLC as settlement administrator, required filing of the notice and share form after notice was disseminated, set March 27, 2025, as the deadline for the motion for final settlement approval, and set an in-person final approval hearing for April 24, 2025, at 10:00 a.m. The order did not finally approve the settlement, attorneys’ fees, costs, or incentive award.