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CrowdStrike facing multiple lawsuits following July outage
Embattled cyber security firm CrowdStrike has been hit with a class action from a group of investors, as well as a likely lawsuit from Delta Airlines.
David Hollingworth
Editor’s note: This article originally appeared on Lawyers Weekly’s sister brand, Cyber Daily.
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While the entire cyber security industry is still talking about CrowdStrike’s disastrous update that caused more than 8 million Windows PCs to crash last month, causing chaos worldwide, the company’s woes are about to get even worse.
The Plymouth County Retirement Association in the United States has hired law firm Labaton Keller Sucharow to represent it in a class action, alleging that statements made to CrowdStrike’s investors were clearly untrue.
The class action – Plymouth County Retirement Association v CrowdStrike Holdings, Inc – alleges that CrowdStrike “repeatedly touted the efficacy of the Falcon platform while assuring investors that CrowdStrike’s technology was ‘validated, tested, and certified’”.
The complaint alleges that these claims were “false and misleading” as the company had failed to disclose that its internal controls were “deficient”, leading to the global outage and reputational loss and that, as a result, “CrowdStrike stock-traded at artificially high prices”.
The complaint notes the loss of share value following the initial incident, as well as stock losses following calls for CrowdStrike CEO George Kurtz to appear before Congress.
The class action also notes that Delta Airlines’ hiring of attorney David Boies to represent them in seeking damages from the company has caused CrowdStrike stock to fall even further.
CNBC revealed that Delta Airlines had hired Boies Schiller Flexner on 29 July, and while no lawsuit has yet been filed, it’s only a matter of time until the claim is evaluated and the lawsuit filed. The CrowdStrike outage cost Delta anywhere up to US$500 million, and the airline – whose operations were severely disrupted during the incident – is facing an investigation by the US Department of Transportation.
The lawsuit will target both CrowdStrike and Microsoft.
Boies is best known for representing the US government in its 1998 antitrust case against Microsoft.
The global outage is thought to have cost Fortune 500 companies up to US$5.4 billion, according to insurance specialists Parametrix.
