A US court has dismissed a lawsuit filed by shareholders against CrowdStrike over a large software outage in July 2024 that disrupted more than 8 million Windows computers worldwide. The case accused the cybersecurity firm of hiding weaknesses in its software testing and quality controls before the incident.
The lawsuit was led by the New York State Common Retirement Fund, one of the largest pension funds in the US. Shareholders claimed that CrowdStrike prioritised speed and profits over proper testing and quality assurance. However, US District Judge Robert Pitman ruled that there was not enough evidence to show that CrowdStrike or its executives intended to defraud investors or made statements that were materially misleading.
The outage on July 19 was caused by a faulty update to CrowdStrike’s Falcon software and affected key sectors such as airlines, banks, hospitals and emergency services. Delta Air Lines said the disruption led to losses of $500 million and forced the cancellation of more than 7,000 flights. Delta has filed a separate lawsuit against CrowdStrike in Georgia state court and that case has moved past a motion to dismiss. In addition, a lawsuit from airline passengers is under appeal, meaning CrowdStrike still faces potential legal exposure.
Judge Pitman dismissed the shareholder lawsuit without prejudice, allowing the plaintiffs to file an amended complaint. The ruling set a high standard for securities fraud by requiring proof of intent to defraud, but it did not validate CrowdStrike’s testing practices, leaving reputational concerns unresolved. Guy Carpenter, a global reinsurance broker, has estimated that insured losses from the outage could exceed $1 billion, adding pressure beyond lawsuits. Following the incident, sectors such as airlines, banks and hospitals are planning to invest in safer software deployment. The US Cybersecurity and Infrastructure Security Agency worked with CrowdStrike during recovery alongside more than 1,000 federal agency representatives. A 2024 survey by PagerDuty found that 88% of IT executives expect another major incident within 1 year, pushing demand for staged updates, quick rollback systems, canary deployments and kill switch features.
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