FEDEX SEEKS DISMISSAL FROM SHAREHOLDER DERIVATIVE SUIT OVER RANSOMEWARE ATTACK
April 27, 2020
On March 13, 2020, FedEx, its executives and board of directors filed a brief in support of a motion to dismiss a shareholder derivative suit filed over a 2017 cyberattack, arguing the investors never raised concerns to the board that the company was downplaying the impact of the hack.
The consolidated suit, first filed in September 2019, accused FedEx of making “materially false and misleading statements” about the company’s response after European subsidiary TNT Express BV was among a number of companies targeted in the “NotPeyta” cyberattack, which wreaked havoc on computer systems worldwide and caused as much as $10 billion in damage. The plaintiffs raised claims of federal securities violations, breach of fiduciary duty, waste of corporate assets, and unjust enrichment. These allegations are similar to those filed in a July 2019 proposed securities class action in New York federal court.
In the recently filed brief, the FedEx defendants rebutted allegations that the board minimized the severity of the “NotPeyta” cyberattack. FedEx claims that the plaintiffs have failed to link the executives and directors to the alleged misstatements about the “NotPetya” attack and have not put forth sufficient support to show that they knew the statements were false or misleading at the time they were made. The FedEx defendants also claim that the complaint fails to adequately plead facts that show a substantial likelihood of liability for the board of directors. The court has yet to rule on the defendant’s motion to dismiss.
If you have any questions, please contact Evelyn Sahr (esahr@eckertseamans.com or 202-659-6622); Drew Derco (dderco@eckertseamans.com or 202-659-6665), or Andy Orr (aorr@eckertsemans.com or 202-659-6625).
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