Baddog is right in that it could go either way in court. Proving gross negligence is a rather difficult bar to surpass, and thus it's probably not even worth doing unless you want to take it on for the principle of the matter.
In general though, it might be easier in this particular case since it's happened before, and a number of other issues with this company.
I still cannot fathom a hosting company not immediately notifying customers and trying their ass off to mitigate fallout on this though. It seriously baffles me!
If this goes to court, the hosting company has already lost 500 steps previously to it getting that far. All companies have shit happen, but it really comes down to how you deal with the situation (and take steps to make sure that situation doesn't happen again).
Best of luck to you! And thanks for the kind comments folks
-Phil