CrowdStrike, the software company behind the infamous faulty software update that caused widespread disruptions in July, is now facing a barrage of lawsuits. One of the highest-profile cases is Delta’s $500 million lawsuit against CrowdStrike, with lawyer David Boies leading the charge. Boies has represented several high-profile clients, including Theranos, Harvey Weinstein, and Al Gore. Additionally, shareholders have filed a class action lawsuit alleging that CrowdStrike misled them about its software update procedures.
To defend itself against the legal onslaught, CrowdStrike has hired the law firm Quinn Emanuel Urquhart & Sullivan. This move suggests that lawyers are poised to profit from the company’s mistake. While Microsoft has also been dragged into the battle due to the faulty update affecting Windows machines, the bulk of the legal challenge falls on CrowdStrike. Rob Wilkins, a lawyer at Jones Foster, believes that contractual limits on damages, which are typically included in enterprise software contracts, could potentially save CrowdStrike.
Delta, however, claims that the software update was a result of gross negligence or willful misconduct on CrowdStrike’s part, potentially voiding any contractual cap on damages. CrowdStrike, on the other hand, argues that Delta has had issues with its own internal systems, and the entire outage cannot be attributed solely to the faulty update. Wilkins believes that Delta and the shareholders will face challenges in proving their claims in court. Delta would need to prove gross negligence or willful misconduct, while shareholders would need to demonstrate that CrowdStrike misled and defrauded them by not disclosing its software testing regimen.
Wilkins predicts that the individual companies suing CrowdStrike will eventually join forces to file a class action lawsuit. This consolidation would streamline the process, preventing individual suits from becoming too costly and unwieldy. Insurance companies, which cover CrowdStrike and its customers against potential damages, could also become involved in the legal proceedings. They may seek reimbursement from CrowdStrike for the payments they made to the customers. Reputational damage is another concern for CrowdStrike, and resolving the lawsuits quickly will be crucial in maintaining positive relationships with shareholders and customers.
Ultimately, CrowdStrike will need to fight the lawsuits while also seeking resolution to move forward. Though the company has assembled a strong legal team, it will need to reach a settlement with shareholders and customers to restore trust and ensure its future success.