DialAmerica Hit With $600K Attorney Fee Award After $2.3M Data Breach Settlement
America ı By Rihem Akkouche
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In a case that reads like a courtroom chess match over both numbers and negligence, a Connecticut federal judge has granted $600,000 in legal fees to three law firms that secured a $2.3 million settlement with DialAmerica Marketing Inc. after a massive data breach.
U.S. District Judge Omar A. Williams signed off Monday on the award — benefiting Markovits Stock & Demarco LLC, Milberg Coleman Bryson Phillips Grossman PLLC, and Federman & Sherwood — while candidly noting “shortcomings and overstatements” in the attorneys’ billing. Despite reservations, the judge dismissed the case from the District of Connecticut, effectively closing the chapter on the class action.
Lodestar Dispute and Fee Multipliers
The decision follows U.S. Magistrate Judge Thomas O. Farrish’s July 22 recommendation, which endorsed the $600,000 award along with $24,000 in expenses and $2,000 service payments for each of the three class representatives. Farrish, however, was far from uncritical.
The attorneys claimed a lodestar of $330,440, inflated by a multiplier of 1.69. Farrish’s review pegged the true lodestar closer to $157,000 — meaning the real multiplier was nearly 4. While skeptical of the high hourly rates — as steep as $1,545 for partners — he acknowledged that Second Circuit courts have allowed multipliers up to 6 and tend to avoid dismantling negotiated fee agreements that don’t shrink payouts for the class.
The Breach and Delayed Disclosure
Lead plaintiff Allen Moure filed suit in May 2022, accusing Mahwah, New Jersey-based DialAmerica of waiting months to alert employees after an “unauthorized actor” infiltrated company servers between February and July 2021. The stolen data reportedly included names, Social Security numbers, addresses, and internal IDs.
Although the company investigated from July 2021 to February 2022, it didn’t notify affected employees or authorities until April 2022. Moure’s claims ranged from negligence to unjust enrichment.
Settlement Terms and Cybersecurity Overhaul
Judge Williams approved the settlement in April. The deal provides up to $1.3 million in direct monetary relief, free two-year identity protection for roughly 214,000 affected individuals, and binding commitments by DialAmerica to bolster cybersecurity defenses.
DialAmerica’s early bid to dismiss the case — arguing lack of jurisdiction and absence of a concrete injury — was denied once the parties reported the settlement.
Legal Teams on Both Sides
The plaintiffs were represented by Gary M. Klinger and David K. Lietz of Milberg Coleman Bryson Phillips Grossman PLLC, Terrence R. Coates of Markovits Stock & Demarco LLC, William B. Federman of Federman & Sherwood, and attorneys from Scott + Scott Attorneys at Law LLP.
DialAmerica was defended by Richard M. Dighello and William S. Shapiro of Updike Kelly & Spellacy PC and Claudia D. McCarron and Jordan S. O’Donnell of Mullen Coughlin LLC.
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