First Published Sep 4, 2024, 6:00 AM IST | Last Updated Sep 4, 2024, 6:00 AM IST
In a significant development following the fallout from a faulty software update in July, Delta Airlines has announced plans to file a class-action lawsuit against cybersecurity firm CrowdStrike, seeking up to $500 million in damages. The lawsuit also names Microsoft as a co-defendant, as revealed in Delta’s recent filing with the US Securities and Exchange Commission (SEC).
The update, which was released by CrowdStrike, caused severe disruptions to Delta’s operations, leading to considerable financial losses for the airline. Delta contends that the update, which was intended to enhance cybersecurity, instead resulted in system malfunctions that had a cascading impact on their services.
The airline alleges that the incident was not merely an error but amounted to gross negligence or even willful misconduct on the part of CrowdStrike. This, they argue, could potentially void the standard contractual limitations on damages that are typically embedded in enterprise software agreements.
To lead its legal battle, Delta has retained David Boies, a high-profile attorney renowned for his work in complex litigation cases. Boies is expected to argue that CrowdStrike’s actions—or lack thereof—constituted a breach of duty to its clients, justifying the substantial damages being sought.
This lawsuit is part of a broader legal wave crashing down on CrowdStrike. Shareholders who held the company’s stock as of July 29 have also initiated legal proceedings against the cybersecurity firm. These shareholders claim they were misled about CrowdStrike’s software update procedures, raising serious concerns about the company’s transparency and its approach to risk management. The shareholder lawsuit may eventually be consolidated with other legal actions into a larger class-action suit, potentially leading to a “bellwether” trial. Such a trial could serve as a benchmark for future settlements, streamlining the legal process.
In anticipation of these legal battles, CrowdStrike has engaged Quinn Emanuel Urquhart & Sullivan, a law firm with a strong reputation in handling complex corporate litigation. The firm’s involvement signals CrowdStrike’s recognition of the serious financial and reputational risks it faces.
The implications of this legal turmoil extend beyond the courtroom. The faulty update and the subsequent lawsuits have significantly damaged CrowdStrike’s reputation, potentially jeopardizing its relationships with other major clients. The cybersecurity industry is intensely competitive, and such a high-profile failure could have long-lasting effects on CrowdStrike’s market position.
Microsoft, while less central to the update failure, is also named in the lawsuit, indicating that Delta sees the tech giant as having some level of responsibility in the debacle. The extent of Microsoft’s involvement and potential liability remains to be seen, but its inclusion in the lawsuit underscores the complexity and scale of the issue.
Download App:
