In the immediate aftermath of the Delaware Supreme Court’s 2019 decision in Marchand v. Barnhill, which revitalized so-called Caremark claims for breach of the duty of oversight, one question I was asked was whether claimants might seek to assert breach of the duty of oversight claims in the context of cybersecurity and data privacy issues. Claimants did, in fact, subsequently raise Caremark claims in connection with the high-profile date breaches at Marriott and SolarWinds, but in each case, the Delaware Chancery Court granted the defendants’ motions to dismiss (as discussed here and here, respectively), raising questions about the viability of duty of oversight claims in the cybersecurity context.
Notwithstanding the less than promising track record for these kinds of claims, in a recent article, NYU Law Professor Jennifer Arlen argues that cybersecurity-related claims for breach of the duty of oversight should support Caremark liability in at least one class of cases – that is, cases relating to companies for whom cybersecurity is a “mission critical legal risk” and in which it is alleged that the company had inadequate cybersecurity that risked (and later caused) substantial harm to businesses and government agency customers, and that the company had misled the customers through statements that were designed to defraud the customers into believing that the company’s cybersecurity systems were materially better than they were. Professor Arlen’s March 18, 2025, post on the Harvard Law School Forum on Corporate Governance about Caremark claims in the cybersecurity context can be found here.Continue Reading Cybersecurity and the Duty of Oversight
In numerous prior posts I have examined efforts by plaintiffs’ attorneys to try to impose civil liability on corporate executives in D&O claims following cyber security incidents. Two recent cases show that, in addition to potential civil litigation liability exposure, corporate executives may also face potential regulatory liability and even criminal liability exposure for cyber security incidents at their company. The two recent cases are discussed in an October 27, 2022 memo from the White and Case law firm, 
The payment technology firm Block, Inc. (formerly known as Square) has been hit with a securities class action lawsuit related to the company’s announcement earlier this year that a former employee had improperly accessed and downloaded company customer data. The new lawsuit is the latest example of the ways in which data security incidents can translate into D&O claims. The complaint, filed on October 11, 2022, can be found 
Readers of this blog know that in recent years, plaintiffs’ lawyers have filed a number of D&O lawsuits against companies that experience cybersecurity-related incidents. Overall, the plaintiffs’ track record on these cases is at best mixed, and a number of high-profile cases have been dismissed. In the latest example of the dismissal of a cybersecurity-related securities suit, the court in the Capital One Financial Corporation data breach-related securities class action lawsuit has granted the defendants’ motion to dismiss. The September 13, 2022 dismissal order in the case can be found 
Regular readers of this site know that one of the continuing D&O litigation trends over the last several years has been the incidence of securities class action lawsuits and other litigation arising out of cybersecurity incidents at the defendant company. While in many instances these suits have not fared particularly well, plaintiffs’ lawyers have nevertheless continued to file the suits. In the latest suit filing of this type, on May 20, 2022, a plaintiff shareholder filed a securities suit against the cybersecurity firm Octa, Inc., relating to the decline in the company’s share price following revelations of a data breach at the firm. Although in many ways this latest suit is similar to previously filed cybersecurity-related securities suits, there are certain distinct aspect of the suit that make it noteworthy, as discussed below. A copy of the May 20, 2022 complaint in the new lawsuit can be found