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Deloitte’s $4.95 Million Website Weakness Deal Wins Initial Nod

Aug. 30, 2021, 3:27 PM

Deloitte Consulting LLP’s $4.95 million deal to resolve claims that websites it designed for state employment agencies in Illinois, Ohio, and Colorado were unreasonably vulnerable to security breaches has won preliminary approval.

U.S. District Court for the Southern District of New York Judge Lewis J. Liman signed off on the proposed settlement Aug. 27. The final fairness hearing is scheduled for January of next year.

If finally approved, the settlement will release claims for 237,675 people who, between roughly May 18, 2020, and May 21, 2020, received letters notifying them that personal information they supplied to claim pandemic-related unemployment assistance may have been exposed as a result of a security incident.

The preliminarily approved terms are what the parties proposed, with the exception of certain language imposing additional objection requirements on settlement class members represented by counsel intending to seek fees from anyone other than their settlement class member clients.

Liman presumed the requirements were included to identify objections that weren’t made in good faith, but said they “could have the effect of deterring a party with a valid objection from making such objection.”

The language struck would have required objections to identify all counsel who may be entitled to compensation for any reason related to the objection along with “all instances in which the counsel or the counsel’s law firm have objected to a class action settlement within the preceding five years,” among other things.

It would have also required a statement regarding how the lawyers intended to calculate fees, including an estimate and “the factual and legal justification for any fees to be sought.”

The parties were invited to either submit briefing to justify the objection requirements or to delete it, and the parties ultimately elected to delete it.

Liman said he issued the order explaining this point “only to identify the issue and to advise that it has not prejudged it.”

The agreement contemplates up to $1.64 million in attorney fees, or one-third of the total settlement fund, plus expenses up to $25,000.

Lead counsel for the settlement class is Goldenberg Schneider LPA. Settlement class counsel also includes Morgan & Morgan Complex Litigation Group; Levin Sedran & Berman LLP; Kaplan Fox & Kilsheimer LLP; Carlson Lynch LLP; Mason Lietz & Klinger LLP; Consumer Protection Legal LLC; Pearson, Simon & Warshaw LLP; and Zimmerman Law Offices PC.

Deloitte is represented by King & Spalding LLP.

The case is Culbertson v. Deloitte Consulting LLP, S.D.N.Y., No. 1:20-cv-3962, 8/27/21.

To contact the reporter on this story: Holly Barker in Washington at hbarker@bloombergindustry.com

To contact the editors responsible for this story: Rob Tricchinelli at rtricchinelli@bloomberglaw.com; Patrick L. Gregory at pgregory@bloomberglaw.com

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