Home Depot Evades Shareholder's Derivative Suit For 2014 Data Breach

Public companies that are proactively working to mitigate "cyber" risks and prepare to respond to potential incidents frequently ask whether a "breach" will lead to litigation, loss of customers, stock price decline, and shareholder actions. There are a lot of factors that influence what adverse consequences follow disclosure of a breach. Of the hundreds of incidents that have been disclosed over the past few years by public companies, less than five were followed by a shareholder derivative action. To date, all derivative actions brought after an incident were unsuccessful. That trend continued with the November 30, 2016 ruling by a federal court dismissing a derivative against Home Depot and its directors following a payment card security incident Home Depot disclosed in 2014 that may have affected 56 million payment cards.