"A software company could not face "downstream" liability for a data breach that resulted in an end-user having to settle a class action suit, the 1st U.S. Circuit Court of Appeals has decided. The end-user, Zoll Services, purchased defendant Barracuda Network's email archiving service through Fusion, a third-party reseller. Vulnerabilities in Barracuda's technology apparently caused Zoll to suffer a data breach."
"After Zoll's insurer, plaintiff Axis Insurance Co., paid out a settlement in the subsequent class action, the insurer - standing in the shoes of both Zoll and Fusion - sued Barracuda, seeking recoupment of the damages under a theory of "equitable indemnification." A U.S. District Court judge, applying Massachusetts law, granted summary judgment to Barracuda, finding no derivative or vicarious relationship between Barracuda and Zoll to support such a theory."
A software vendor's email archiving vulnerabilities allegedly caused a data breach that forced an end-user to settle a class action. The end-user, Zoll Services, obtained the archiving service from the vendor through reseller Fusion. Zoll's insurer, Axis Insurance Co., paid the settlement and sued the vendor, seeking recoupment of damages via equitable indemnification while standing in the shoes of Zoll and Fusion. A U.S. District Court applied Massachusetts law and granted summary judgment for the vendor, finding no derivative or vicarious relationship between the vendor and the end-user to support indemnification. The 1st U.S. Circuit Court of Appeals affirmed the judgment.
Read at DataBreaches.Net
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