Big 4 Lawsuits: Illinois Resident vs. Deloitte, Gridsum Investors vs. PwC, Ryan LLC vs. EY

Illinois Unemployment Data Breach Leads to ID Theft, Class-Action Lawsuit Claims [Illinois Policy]
Deloitte—already being sued by two groups of Ohioans who claim their personal information was exposed on state websites the firm built to administer coronavirus unemployment benefits to independent contractors—is now being sued by an Illinois woman who said she was a victim of identity theft because of a data breach of an Illinois unemployment system built by Big D.

A data breach that exposed Social Security numbers and other private information of 32,483 Illinois unemployment applicants resulted in at least one case of identity theft, according to a class-action federal lawsuit.

Briana Julius is suing Deloitte Consulting, alleging the contractor failed to secure personally identifying information which led to fraudulent charges on her bank account and her debit card being shut off. Deloitte was paid $22 million to build and manage the system for the Illinois Department of Employment Security to handle claims from self-employed and gig workers, but soon after the system went online May 11 it was found to be publicly exposing private applicant information.

Julius is from St. Clair County. She is suing in the U.S. District Court for the Southern District of Illinois, with St. Louis attorney Tiffany Yiatras representing her, according to the Madison-St. Clair Record.

Idk anything about law, but to me, here’s the most damning part for Deloitte:

Deloitte notified Julius of the potential breach, but stated that after an investigation they found there was no likelihood her “personal information was improperly used or is likely to be misused,” according to the complaint. After fraud issues on her bank account, Julius found grounds to sue after spending significant personal time dealing with the issue.

Oof, Deloitte.

Meanwhile, in Florida …

Deloitte Distances Itself From Florida’s Overwhelmed CONNECT Jobless System [CBS Miami]
Deloitte’s lawyers are doing work trying to protect the Green Machine in a lawsuit against the firm and the Florida Department of Economic Opportunity for the crappy unemployment system Deloitte Consulting built for the state.

After facing weeks of criticism because of Florida’s troubled unemployment system, Deloitte Consulting LLP said in a newly filed court document that it has had “no connection” to the online system in more than five years.

Deloitte filed the document Monday [June 8] in Leon County circuit court as it and the Florida Department of Economic Opportunity argue for the dismissal of a potential class-action lawsuit filed on behalf of residents who have faced trouble getting benefits amid the COVID-19 pandemic. Deloitte had a state contract to develop the CONNECT unemployment system, which began operating in 2013.

“Deloitte has had no involvement in the implementation, maintenance or upgrade of the CONNECT system for more than five years,” the company’s attorneys wrote in a motion to dismiss the lawsuit. “And it has never had any involvement in processing or adjudicating the state’s unemployment benefit claims, including during the COVID-19 pandemic. Despite plaintiffs’ frustrations given the current circumstances, a private software consulting firm is an improper target for claims arising from denied or delayed unemployment benefits. Simply put, Deloitte should not be in this case.”

Deloitte finished building the CONNECT system in 2015, and according to spokesman Jonathan Gandal, it was “vastly outperforming the systems it replaced and processing claims more efficiently and accurately than ever before.” In 2015, Florida’s unemployment rate was 5.5%. But because of the coronavirus pandemic, Florida’s unemployment rate skyrocketed from 4.3% in March 2020 to 12.9% in April 2020. So all of a sudden, Deloitte went from bragging about how great the unemployment system was to “you can’t blame us, we’ve had nothing to do with it for five years.”

Oh Deloitte, just admit you built a system that couldn’t handle a large spike in unemployment claims.

PwC Asks to Be Dropped From Suit on Startup’s Tax Info [Law360]
A PwC unit in China requested that a New York federal court on June 9 drop the firm from a stock-drop lawsuit against a Beijing-based data startup, contending it had nothing to do with what investors say was that company’s understatement of tax expenses.

A judge had already dismissed PricewaterhouseCoopers Zhong Tian LLP from an earlier version of the lawsuit in March, but …

A group of investors who claim they were misled about the financial situation of the data analytics firm Gridsum Holding Inc. refiled the class action lawsuit in May, adding an allegation that the company had understated tax expenses involved in unwinding an offshore tax structure in order to inflate its profits.

Peifa Xu, the lead plaintiff, argued in the revised May complaint that 28.4 million yuan ($4 million) in income tax expenses for 2016 should have been revealed in the company’s 2016 prospectus. Had the prospectus included that amount, it would have increased the company’s net losses by 47.78%, “making the company far less appealing to investors,” the complaint stated.

In a motion filed Tuesday, PwC said the issue related to unaudited financial information, which by definition would not be its responsibility.

EY Accused Of Taking Ryan LLC’s Energy Tax Trade Secrets [Law360]
Cool, one accounting firm suing another!

Ryan LLC is accusing Ernst & Young LLP in a new lawsuit of trying to reverse engineer a proprietary process and steal clients by demanding that the firm’s energy clients turn over trade secrets and confidential methodologies Ryan developed.

Ryan, a Texas-based accounting and consulting firm, sued Ernst & Young Monday [June 15] in Harris County District Court, claiming breach of contract, trade secret misappropriation and tortious interference. Ryan also sued S.K. Thakkar, a senior manager at EY who formerly worked for a Ryan subsidiary, who it claims violated several employment agreements by working for a direct competitor and stealing confidential information.

Ryan, which says it counts among its clients “most of the oil and gas companies in the Fortune 500,” says it has created a successful business by helping its customers “navigate a patchwork of disparate state and federal laws” related to severance taxes and federal royalties.

“Ryan recently learned that EY’s audit group has repeatedly demanded from energy clients — who are also Ryan’s severance tax and royalty clients — Ryan’s work papers that include Ryan’s trade secrets and are subject to a confidentiality agreement underlying these clients’ severance tax and royalty filings,” the company said.

The lawsuit also states that Ryan became aware in November 2019 that Thakkar was pitching EY’s federal royalty services to Ryan’s own clients, representing that he could do the work better than Ryan—and for an hourly rate.

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