Delta Air Lines has hired prominent attorney David Boies to seek compensation from CrowdStrike and Microsoft over a failed software update the airline now says cost it up to $500 million.
David Boies Hired By Delta Air Lines To Collect Hundreds of Millions In Compensation Over Meltdown
Delta is the most profitable airline in the USA, but a fatal CrowdStrike security update coupled with its dated crew scheduling technology led to an epic six-day meltdown earlier this month, standarding millions of passengers and leading to thousands of flight cancellations.
> Read More: Delta Air Lines Offers Olive Branch To Stranded Passengers, But It Must Do More To Take Accountability For Meltdown
From the very start, Delta has maintained that it is an innocent party even though other airlines faced the same CrowdStrike issues and were able to quickly recover. Delta calculates the incident will cost it $350 -$500 million when calculating compensation, rebooking, and lost profits.
Boies is a prominent attorney who represented Al Gore in the 2000 Bush v. Gore case, helped to overturn California’s ban on gay marriage, defended Harvey Weinstein, and perhaps most importantly, represented the US government in its antitrust case against Microsoft.
The news, first reported by CNBC, sent CrowdStrike shares down 5%, though if others follow Delta’s lead the compensation could end up bankrupting the software company. Parametrix estimates that the collective damage to Fortune 500 companies (not including Microsoft) was $5.4 billion.
CONCLUSION
I’ll be closely following these discussions and if it should become necessary, the lawsuit. If a lawsuit is filed, we could have a modern-day decision for the ages (and law school textbooks) on proximate cause and negligence…I’m fascinated that even today Delta seeks to cast all blame on CrowdStrike and Microsoft when there is a strong argument that Delta knew the risks of continuing to use old crew scheduling software (after the 2022 Southwest Airlines meltdown) yet deferred a costly upgrade.
image: Delta
That guy is one of the biggest scumbags in the US. He makes politicians look like angels.
He’s a highly competent litigator. Not my choice, but even at his billable rate level he’s got things going for him that do work for his clients more than it would for lower profile but equally skilled litigators.
Didn’t help Theranos, despite the effort
You mean in his role as a member of its board of directors? He is just as I would expect in that regard for a typical non-management director.
Do you mean in a role as litigator? Well, that may just go to show how messed up Theranos was.
Even an excellent litigator won’t win all the cases — and if all they have is a long run of just winning, then they probably aren’t challenging themselves or are so desperate for money that I would second-guess retaining them and hire less expensive litigators for the purpose.
Delta’s failure here is their choice to use a singular provider for many core systems. That leaves them with no contingency plan in a world with increasing cybersecurity incidents that could easily replicate what happened here with Crowdstrike.
Other airlines coming back online quicker suggests they may have multiple providers so that they aren’t as susceptible to a single issue taking down entire core systems. This seems like a choice made to further shareholder value in not expanding that cost. A similar decision tree Boeing has used for years and now finds itself in a whole world of issues.
I expect a settlement here with few details for us aside from whatever Delta reports in future earnings statements, but am rather hopeful that it goes to trial as I’m always excited to hear your take on legal aspects of things.
That’s a bit rude of them. Did they forget about that $10 Uber eats gift card that Crowdstrike sent?
As others have mentioned, Crowdstrike should offer DL a voucher to be used within the next 12 months 🙂
Should have gone with Gloria Allred.
CrowdStrike deserves to go down. They essentially hacked digital certificate validation measures to push out code quickly to the most vulnerable part of the OS without error checking and crashed it. Totally irresponsible. It wasn’t just a technical blunder, but management incompetence as well via cheap labor outsourcing and “yes men” overlooking basic IT precautions. You don’t push out routine code changes worldwide instantaneously without testing.
Confiscate all income paid out to CrowdStrike executives, confiscate all value from the company to pay victims and punish the stockholders. It might make Blackrock think twice about how they do business.
I’m all for Big Government on this.
As per similar situations, DL probably negotiated a flat amount or progressive payments (with a cap) with Mr. Boies based on any settlement from CrowdStrike and/or MicroSoft.
However, should DL get a settlement, then the rest of the airlines, hotels, hospitals, colleges, insurers, retailers, governmental agencies, airports, stock exchanges, broadcasters, etc, etc, etc, will be in line to get their share of any money.
Most likely a settlement fund will be established. Should you partake in the fund, CrowdStrike & Microsoft will not be held responsible for any related damages. In this case, Microsoft has the deepest pockets, but will push back on CrowdStrike to contribute significantly to the kitty.
This could turn into the asbestos trust fund or Deep Water Horizon settlement.
Lots of saber rattling in the beginning, then a coming together of a plan approved by a judge. This could easily take 5 to 7 years to settle.
Indeed. And there is a high chance that Boies won’t be around when it’s settled if it takes an expected 5-7 years to get there. He’s already in his 80s IIRC.
Delta and CrowdStrike have a contract with provisions on both sides. True, CrowdStrike made a mistake but did Delta uphold their end? Discovery will be interesting if this actually goes anywhere and isn’t a PR stunt by Delta. Did the age of Delta‘s IT infrastructure add to the CrowdStrike mistake? Has Delta made any regulatory or legal declarations (e.g. union contracts) that they haven’t adhered to regarding their IT or disaster recovery plan/testing?
I love how DL thinks its entitled, but what about the hospitals and universities, et al? Yesterday (7/30) DL canceled FL 163 AMS-MSP. People I knew–via a friend–were on it, but did not know a thing about EU261. Party of 4, two in paid Delta One and two in the next cabin (business or whatever it’s called that’s a step “down.” They had already checked their bags and DL said they could not have them, so all 4 were sent to the Park Plaza, without so much as a toothbrush. I’m an AA flyer and never had a bag lost in 2 decades, but once when I thought it was, AA was handing me a toiletries kit as I filled out a form (it showed up then).
This family is not very assertive anyway. I relayed info via my friend about their rights to 600 Euros EACH plus duty of care–including the fact they could buy underwear or pay for laundry for something reasonable. The cancellation was mechanical so it was fully on DL. They were rescheduled over 28 hours later. You know what DL gave them? 10K Sky Pesos. They thought that was nice! Obviously I sent on the real compensation form, but my point is that DL is a greedy sucker that treats its top tier elites that way (they are Diamond, forgot that), so I cannot fathom how the poor folks in economy got treated. It was hot in Amsterdam, and I bet the economy section got tossed in some no-tell with no open windows or air con.
I get that you have to know to file and claim, but really, this sort of greed is bad enough. Now Eddy boy will come back from Paris and strategize how to implement those changes because they just have no choice at all due to factors beyond their control.
I am a Mac user, and no fan of Microsoft/Windows, etc. But honestly, what awful precedent if DL sued and won. How much more would they be responsible for? Where does it end? DL was having meltdowns all the time on holidays for a while there too. They don’t have a problem with security patches…
Delta failed too here. If Delta weren’t so cheap it would have sufficient IT resources — with its own people and own equipment — to not be the worst of the major airline lot to bounce back from an IT update gone wrong.
Was waiting for this to happen. In fact, surprised no one else has sued sooner.