It will be difficult for Delta Air Lines Inc (NYSE:DAL) to prove that CrowdStrike Holdings Inc (NASDAQ:CRWD)'s conduct related to the recent global IT outage amounted to “gross negligence” or “wilful misconduct,” analysts at Wedbush believe.
The US airline claims it suffered $500 million in losses as the result of the outage last month, which forced Delta to cancel thousands of flights.
In a letter to CrowdStrike, Delta’s lawyer David Boies wrote that the airline intends to pursue litigation against CrowdStrike if no adequate compensation is offered for the “reputational and operational” damage it claims was caused by CrowdStrike.
Delta’s lawyer also rejected the “single-digit million” “liability cap” CrowdStrike had claimed as part of its user contract, claiming this does not exist when there is “gross negligence” or “willful misconduct.”
The airline believes CrowdStrike’s conduct opens it up to much greater liability.
During a call with legal experts, the Wedbush analysts tried to understand if there are scenarios under which the terms and conditions of CrowdStrike’s user contract could be overwritten, thus exposing the company to liability or damages higher than the single-digit million figure.
“We were told that proving that an entity engaged in ‘gross negligence’ and ‘willful misconduct’ has a high bar,” analysts wrote.
“Hence, the legal experts had opined that based on the information available in the public domain on what led to the outage, it would be difficult to prove that CrowdStrike’s conduct amounted to ‘gross negligence’ or ‘willful misconduct’.”