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CrowdStrike accepts award for biggest failure and denies Delta liability


CrowdStrike accepts award for biggest failure and denies Delta liability

During the Def Con hacker conference in Las Vegas this week, CrowdStrike President Michael Sentonas accepted the Pwnie “Most Epic Fail” award for his company’s role in the July 19 global IT disaster that caused 8.5 million computers, including those of many airlines and airports around the world, to display the blue screen of death. Accepting the ignominious award has earned Sentonas praise for his shrewd PR crisis management. The company’s response to Delta Air Lines’ $500 million lawsuit seeking damages over the software update bug has been far less forthcoming.

Accepting the award, Sentonas said, “I’m going back to headquarters and taking the trophy with me. It will have a place of honor because I want every CrowdStriker who comes to work to see it.”

CrowdStrike could also show the price to its lawyer. The company’s lawyers sent a scathing letter in response to Delta’s lawsuit, in which CrowdStrike accuses the airline of being responsible for the delays in recovering from the incident. At the heart of the dispute is whether Delta Air Lines made the dire situation worse by not accepting CrowdStrike’s offer to help on the ground.

Microsoft, which is also embroiled in litigation over the outage, accused Delta Air Lines of not accepting help. The strongest argument made by both tech companies is that Delta Air Lines’ competitors were able to recover much more quickly from the “biggest failure” of CrowdStrike’s software update. But that may not be enough to mitigate CrowdStrike’s responsibility for the failure of critical systems. While the company’s president has taken credit for the massive failure in Las Vegas, its prominent New York lawyers have taken a different tactic.

“As you can imagine, while a lawsuit would be unfortunate, CrowdStrike will respond aggressively if forced to do so to protect its shareholders, employees and other stakeholders,” wrote Michael B. Carlinsky, co-chief executive of Quinn Emanuel, in a letter responding to Delta’s lawsuit.

Delta responded with equal vehemence, accusing CrowdStrike of dishonesty as the company denies its role in the outage.

“Instead of continuing to try to evade responsibility, I would like to see CrowdStrike immediately share everything it knows,” said David Boies, chairman of Boies, Schiller, Flexman, Delta’s attorney in the lawsuit, in a letter responding to CrowdStrike’s claims. “Everything will come out in litigation anyway. If CrowdStrike is truly trying to avoid a lawsuit from Delta, it must accept real responsibility for its actions and compensate Delta for the severe harm it has caused to Delta’s business, reputation and goodwill.”

In a filing with the SEC, Delta claims the software glitch resulted in 7,000 flight cancellations within five days.

“A service disruption of this length and magnitude is unacceptable, and our customers and employees deserve better. Since the incident, our people have returned operations to an industry-leading position consistent with the level of performance our customers expect from Delta,” Delta CEO Ed Bastian said in the filing.

The airline estimated the direct impact of the incident on its quarterly revenue at $380 million in customer refunds for flight cancellations and other compensation to customers “in the form of cash and SkyMiles.”

A report from aviation data firm Cirium shows that North American airlines’ operations were significantly impacted by July’s global IT outage, “the highest number of flight cancellations of any region, with a staggering 98% increase. A total of 23,393 flights were canceled, compared to 11,806 in June.” In addition, Cirium found that the system outage “also led to a decline in on-time performance scores for most airlines and airports in the region.”

While CrowdStrike and Microsoft are at odds with Delta over liability for the system outage, CrowdStrike’s problems extend well beyond Delta and include a class-action lawsuit filed by both the passengers themselves and the company’s investors.

Delta Air Lines is also facing class action lawsuits from passengers and an investigation by the U.S. Department of Transportation in connection with the incident. International law firm Scott+Scott announced that it had launched an investigation on behalf of investors to determine “whether members of Delta Air Lines’ board of directors or senior management failed to manage Delta Air Lines in an acceptable manner” and whether “Delta Air Lines and its shareholders suffered harm as a result.”

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