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Judge allows gross negligence, fraud claims

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Software update went 'horribly wrong'

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CrowdStrike ( CRWD ) eyes eventual dismissal or limited damages

By Jonathan Stempel

May 19 (Reuters) - Delta Air Lines ( DAL ) can pursue

much of its lawsuit seeking to hold cybersecurity company

CrowdStrike ( CRWD ) liable for a massive computer outage last

July that caused the carrier to cancel 7,000 flights, a Georgia

state judge ruled.

In a decision on Friday, Judge Kelly Lee Ellerbe of the

Fulton County Superior Court said Delta can try to prove

CrowdStrike ( CRWD ) was grossly negligent in pushing a defective update

of its Falcon software to customers, crashing more than 8

million Microsoft Windows-based computers worldwide.

"Delta has specifically pled that if CrowdStrike ( CRWD ) had tested

the July update on one computer before its deployment, the

programming error would have been detected," the judge wrote.

"As CrowdStrike ( CRWD ) has acknowledged, its own president publicly

stated CrowdStrike ( CRWD ) did something 'horribly wrong.'"

The Atlanta-based judge also let Delta pursue a computer

trespass claim, and a narrowed claim that CrowdStrike ( CRWD )

fraudulently promised not to introduce an "unauthorized back

door" into the carrier's computers.

In a statement on Monday, CrowdStrike's ( CRWD ) lawyer Michael

Carlinsky said he was confident the judge will find Delta's case

has no merit, or will limit damages to the "single-digit

millions of dollars" under Georgia law.

Delta, based in Atlanta, said it was pleased with the

decision and remained confident in the merits of its case.

The carrier sued Austin, Texas-based CrowdStrike ( CRWD ) three

months after the July 19, 2024 outage disrupted travel for 1.4

million Delta passengers.

Delta has said the outage cost $550 million in lost revenue

and added expenses, offset by $50 million of fuel savings.

On May 6, a federal judge in Atlanta said Delta must face a

proposed class action by passengers whose said it unlawfully

refused full refunds after the outage upended their travel.

The outage also disrupted other airlines, but those

disruptions eased faster.

The case is Delta Air Lines Inc ( DAL ) v CrowdStrike Inc, Georgia

Superior Court, Fulton County, No. 24CV013621.