Data Breaches Hit the Board Room: The Growing Trend of Claims Against Directors and Officers Arising From Data Breaches and What You Can Do About It

News headlines about data breaches are becoming more and more common. During the last year alone, major retailers, restaurants, and financial institutions have all reported data breaches. The traditional aftermath of a data breach can involve regulatory investigations and lawsuits against the company by consumers or financial institutions claiming to have been harmed by the data breach. A new trend also is emerging: shareholder derivative cases and securities class actions filed against directors and officers alleging claims for breach of fiduciary duty, or even securities fraud, relating to the data breach. The recent dismissal of one such lawsuit against the directors and officers of Wyndham Worldwide Corporation provides insight on steps directors and officers can take to protect themselves from claims of breach of fiduciary duty in these lawsuits.

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