Norton v. Strategic Staffing Solutions, L.C.

Background

Paula Norton brought a wage-and-hour class action against Strategic Staffing Solutions-S3, LLC and Cynthia Pasky, S3’s chief executive officer. Norton alleged that the defendants systematically classified recruiters as exempt employees. Her claims included alleged failures to pay minimum and overtime wages, provide meal and rest periods or premiums, reimburse business expenses, maintain accurate payroll records, pay wages when due, and pay penalties under California’s Private Attorneys General Act (PAGA). She also alleged unfair business practices and later added a claim concerning noncompete agreements and a proposed class of non-exempt employees.

The defendants removed the case from state court under the Class Action Fairness Act. After the parties exchanged discovery and participated in mediation on September 6, 2024, they reached a classwide settlement. The Court preliminarily approved the settlement on January 27, 2025. Notice was mailed to 445 people, and email notice was later provided after the Court extended the deadline for exclusions and objections. Two people requested exclusion, and no objections were filed.

Settlement Terms

The agreement established a non-reversionary gross settlement fund of $5,250,000. The agreement allowed deductions for attorneys’ fees, litigation costs, a class representative incentive payment, settlement administration costs, and $550,000 for released PAGA claims. Of the PAGA amount, 75 percent, or $412,500, would be paid to the California Labor and Workforce Development Agency, and 25 percent, or $137,500, would be paid to class members.

The settlement classes covered California workers who worked at least one 3.5-hour shift during the release period. The non-exempt class covered people classified as non-exempt, and the exempt class covered people classified as exempt. Payments would be distributed pro rata based on workweeks, with exempt-class workweeks weighted five to one compared with non-exempt-class workweeks. Class members did not need to submit a claim, but they could dispute the workweek calculation. Class members who did not timely opt out would release specified wage-and-hour, PAGA, and related claims. Norton agreed to a broader release of claims arising from her employment.

Final Settlement Approval

The Court found that the notice plan complied with Federal Rule of Civil Procedure 23. It concluded that the settlement was fair, adequate, and reasonable after considering the strength of the claims, the risks and expense of continued litigation, the settlement amount, the discovery conducted, counsel’s experience, government notice, and the class members’ response.

The Court also examined warning signs of possible collusion in class settlements. It found that the requested fee percentage and a provision under which defendants agreed not to oppose fees up to $1,750,000 were warning signs, but found no provision allowing unawarded fees to return to defendants. The Court concluded that the settlement was not the product of collusion and resulted from arms-length negotiations. It therefore granted final approval of the class action settlement and finally approved the PAGA settlement.

Fees, Costs, and Service Award

The Court granted in part the motion for attorneys’ fees, costs, and a service award. Class counsel requested $1,750,000, or one-third of the gross settlement fund. Applying California law and using the 25 percent percentage-of-recovery benchmark, with a lodestar cross-check, the Court awarded 25 percent of the net settlement amount: $1,164,600.43 in attorneys’ fees. The Court also awarded $28,098.29 in litigation costs and $8,500 in settlement administration costs.

Norton requested a $35,000 service award. Although the Court questioned the asserted 120 hours of participation because Norton was not deposed and did not attend the mediation, it credited her evidence of professional reputational harm, difficulty finding work in the staffing industry, personal debt, and the broader employment-related release she gave. The Court awarded her $10,000.

Disposition

Judge Jacquelyn Corley granted the motion for final approval of the parties’ class action settlement. The Court granted in part the motion for attorneys’ fees and costs and awarded the amounts specified above. The order also required class counsel to file a post-distribution accounting within 21 days after distributing the settlement funds and paying attorneys’ fees, unless the parties filed a different agreed schedule.