Reality disagrees with your theory though. Most companies that get their data breached are still in business and class action lawsuits aren't even a thing in most countries in the world (maybe the US is the only country that has that?).

The watermark is an extra threshold. It's like an extra bike lock, they'll get the bike with only one lock instead.

>the company will either go out of business as people claim costs associated with the breach

This is the desired behavior.