Delaware Supreme Court Sides with SolarWinds in Shareholder Suit Related to 2020 Cyber Attack

On May 17, 2023, the Delaware Supreme Court upheld a September 2022 decision dismissing a shareholder suit against SolarWinds Corporation. In 2021, shareholders sued SolarWinds (“the Company”) for a 2020 cybersecurity incident, claiming that the Company and its executives breached their fiduciary duties by failing to monitor the Company’s cyber risks, resulting in one of the biggest breaches in recent times. The Delaware Supreme Court upheld the Chancery Court’s dismissal of the suit, holding that the Company and its executives were not liable for negligence or for the breach of their fiduciary duties.

This holding is a change of pace from more recent developments highlighting executive liability in the cybersecurity context. Still, data privacy and cybersecurity is an area that is increasingly scrutinized by courts, federal regulators, and administrative agencies. Officers and directors must continue to be transparent with their company, senior leaders, and regulators to ensure that risks are addressed at the most senior level necessary.

Our Privacy and Cybersecurity practice regularly advises companies on key issues like this. If you have any questions concerning this case or any other data privacy or cybersecurity developments, please do not hesitate to contact any member of our team.