Yahoo! Data Breach Results in Another Lawsuit Against Corporate Directors and Officers

A number of claims have been made against companies’ directors and officers alleging a breach of fiduciary duty for failing to adequately oversee data security programs.  To date, the defendants’ oversight of the programs and their documentation of that oversight have been sufficient enough so as to allow courts to rule in directors’ and officers’ favor. The past several years have seen a number of high-profile data breaches involving public companies, including Wyndham Worldwide, Home Depot, Target and, most recently, Yahoo!  Each of the earlier cases yielded lawsuits against the companies’ boards of directors and/or officers, and, last week, plaintiffs filed a class action lawsuit against Yahoo! and its CEO, CFO and board member alleging federal securities law violations relating to Yahoo!’s disclosure of the data breach.     The plaintiffs’ claims against directors and officers in previous cases have generally revolved around breaches of fiduciary duty, and, more specifically, the respective boards’ oversight of data security.  To date, the cases have been dismissed by motions at various stages.  In each of those cases, the courts have examined the nature and extent of boards’ oversight of data security programs.  A brief summary of the cases … Continue reading

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