The 10 Biggest Yahoo! Lawsuits in Company History
The late renowned French judge Montesquieu said the law should be like death, sparing no one. For this reason, giants and pigmies have walked down the corridors of justice, sometimes as plaintiffs, other times as defendants.
One of the giants is Yahoo, a leading internet service provider that has seen its share of legal battles; some it has won, while others it has lost. Among the biggest Yahoo lawsuits in company history, here are ten.
10. SCA Promotions, Inc. v. Yahoo, Inc.
Yahoo sponsored a sweepstake in 2012 with a $5 million award to the person who would correctly predict the winner of all the games in the NCAA Men’s Basketball Tournament. SCA agreed to pay the amount upon Yahoo paying a fee.
Since Yahoo wanted to hold another sweepstake with a $1 billion award, it still sought SCA’s help. SCA charged an 11-million-dollar fee and Yahoo paid $1.1 million. However, later, Yahoo partnered with Quicken which was sponsoring a sweepstakes similar to the one it had planned.
Yahoo sued for breach of contract
SCA filed a lawsuit against Yahoo for breaching the contract; since it had not paid the remaining $9.9 million, it should have paid $4.4 million in cancelation fees. Yahoo countersued for fraud and fraudulent inducement.
Eventually, it was awarded over $1.5 million – $914,000 in attorney fees and $550,000 to refund half the amount it had paid to SCA.
9. Yahoo, Inc. v. National Union Fire Insurance Co. of Pittsburg
According to BBC, a Californian judge ruled senders and receivers of email from Yahoo Mail users from October 2, 2011, were eligible to sue the company as a group.
The plaintiff claimed that Yahoo spied on the emails and used the information to create targeted advertisements that would boost its revenue. Since the breach of privacy lawsuit had over a million members, Yahoo stood to lose millions of dollars.
Yahoo requests National Union Fire Insurance Co. of Pittsburg for coverage
Yahoo asked the insurer to cover the expenses but the insurance company declined. As a result, Yahoo battled the class action lawsuit alone.
Years later, the internet service provider requested the insurance company to reconsider its stand on tendering the defense. National Union Fire Insurance Co. of Pittsburg agreed but only if Yahoo reimbursed any expenses the insurer spent on the defense.
Yahoo sues insurer on the coverage claim
However, Yahoo disagreed and sued the insurance company. The internet company claimed that since the insurer had already rejected the tender initially, it was not liable for reimbursing the expenses. Instead, the internet service provider expected the insurer to pay for the settlement and defense costs.
The judge rejected the breach of contract and bad faith claim, so Yahoo proceeded to trial, where it was awarded $600,000. Still, it was not a satisfactory amount for Yahoo which wanted a multi-million award, but the court declined.
8. Barnes v. Yahoo Inc.
Cecilia Barnes’ love life went sour, and her ex-boyfriend took revenge to another level by posting her nude pictures on a website run by Yahoo. The plaintiff claimed the photos were taken without her knowledge, and her ex created a profile using Barnes’ picture.
On the profile, he revealed Barnes’ real address and telephone number at her workplace. The former boyfriend then used the photos to solicit male correspondents in chat rooms who wound up at Barnes’ workplace expecting sex.
Yahoo sued over nude photos
Barnes emailed her photo ID copy and signed statement to Yahoo so they could take down the profile. She then waited a month for Yahoo and unfortunately, Yahoo did not respond. So, she contacted them again regarding the issue and an executive promised to personally work on resolving it.
Still, no action was taken, resulting in Barnes filing a lawsuit against the internet service provider accusing it of negligence and breaking its promise. Shortly after, the profiles were permanently deleted.
Yahoo found immune against liability
The court ruled that Yahoo was immune against any liability for the ex-boyfriend’s actions. However, Barnes could sue Yahoo for its broken promise. Had Yahoo’s employees been involved in posting the nude photos, then Barnes would have had legal recourse against the company.
7. Checkmate Strategic Group, Inc. v. Yahoo Inc. et al
Checkmate Strategic Group Inc. filed a lawsuit against Yahoo on June 23, 2005, in the California Central District Court where Judge Christina Snyder and Magistrate Judge Fernando Olguin oversaw the case. According to NBC News, the class action Yahoo lawsuit alleged that the internet company had been generating profits from fake sales referrals. Advertisers felt search engines such as Yahoo and Google were charging them for fraudulent clicks on paid search advertisements.
Yahoo settles click fraud lawsuit
Yahoo agreed to settle and refund money to the advertisers. Considering that there were thousands of advertisers and the company agreed to refund them from as early as January 2004, Yahoo had to dig deep into its reserves. Besides, there was an extra expense of $4.95 million in attorney fees. The judges approved the settlement and Yahoo also committed itself to collaborate with other internet service providers on the issue of click fraud.
Yahoo’s war against click fraud
In March 2008, Yahoo announced it would be working with Click Forensics in the war against click fraud. A year earlier, it had announced Reggie Davis as the first click fraud czar as it worked towards reducing the click fraud rate.
6. $17 Million – Xiaoning v. Yahoo Inc.
According to The New York Times, two journalists, Wang Xiaoning and Shi Tao, and a family member sued Yahoo HK, Yahoo’s Hong Kong subsidiary. They accused the company of illegally aiding the Chinese government to jail and torture the journalists.
The journalists alleged that Yahoo had given the Chinese government emails containing pro-democracy literature. As a result, they were sent to jail where they were tortured thus the plaintiffs held Yahoo responsible for their woes.
Yahoo sued for cooperating with the Chinese government
Yahoo denied responsibility for the journalists’ distress claiming that it had to comply with Chinese law by sharing information regarding the online activities of the two journalists. Yahoo’s admittance to the compliance resulted in a public relation nightmare for the company and it was referred to as a moral pigmy despite it being a technological giant.
World Organization for Human Rights represents plaintiffs in the Yahoo lawsuit
The case attracted the attention of the World Organization for Human Rights which represented the two journalists. Yahoo sought to dismiss the case but later agreed to a private settlement whose details remained confidential. Unfortunately, Yahoo failed to honor the deal and in 2017 political activists sued it for failing to oversee the $17 million fund created to help Chinese writers, lawyers, and human rights activists involved in the initial lawsuit.
5. Anderson v. Yahoo Inc.
According to Yahoo Finance, Scott Ard and Gregory Anderson filed a lawsuit against Yahoo alleging that female managers were pushing male employees out of the way to allow female employees climb the corporate ladder. The plaintiffs also alleged that Yahoo had implemented a ranking system to conduct mass layoffs but it was disguised as eliminating low performers.
Yahoo’s top managers accused of gender discrimination
Ard was fired in 2015 after being with the company for three and a half years. He claimed Marissa Mayer had planned to remove any male employees and replace them with women. He also added that Kathy Savitt and Megan Liberman were complicit to skew the gender composition at Yahoo.
Ard alleged that when Savitt began working at Yahoo, less than 20% of the female top managers were female but within a year and a half, the number increased to more than 80% female. In line with this alleged plan, Liberman fired Ard over a phone call, claiming that his work was unsatisfactory.
A judge dismissed the claims against Yahoo except for one. The judge agreed there was disparate treatment when Yahoo hired a female employee to be the editor-in-chief before dismissing Ard who was the editorial director. Seeing that Google settled a gender discrimination lawsuit for $118 million, Yahoo was lucky to have the suit tossed.
4. $117.5 Million – In re: Yahoo Inc. Customer Data Security Breach Litigation
According to UpGuard, Yahoo ranks at the top of the list of the biggest data breaches in U.S. history. The breach by Russian hackers affected over 3 billion user accounts as the hackers used stolen backups, backdoors, and access cookies to steal data.
Class action filed against Yahoo for data breach
Although the number in 2013 was initially a billion user accounts, the figure had grown to 3 billion user accounts by 2017 when Verizon acquired Yahoo. The slow response to the stolen data resulted in 41 class action lawsuits. In October 2018, Yahoo agreed to a $50 million settlement to compensate victims of the data breach and cover the lawyer fees, which amounted to $35 million.
Yahoo lawsuit settled for $117.5 million
However, a judge denied the settlement in January 2019, explaining that the proposed deal did not have enough information regarding ways the company would improve data security.
Eventually, in July 2019, a federal judge approved a $117.5 million settlement. Additionally, Yahoo agreed to have a $300 million security budget over the next four years.
3. $610 Million – Yahoo, Inc. v. XYZ Companies et. al.
Between 2006 and 2009, many Yahoo users fell for fake lottery tickets. The spammers sent email alerts to Yahoo users, informing them that they had won “one million United State dollars.” The emails seemed legit since they had Yahoo logos and originated from the “Division of Yahoo Internet Lottery.”
The recipients were directed to contact a prize coordinator to whom they divulged their credit card information, personal data, and other details to facilitate “prize collection.”
Yahoo sues spammers
Information obtained was used to apply for loans, steal money from bank accounts, and sold to other criminals. The judge ruled in favor of Yahoo which was entitled to $27 million in statutory damages for trademark infringement and $583 in statutory damages for the federal CAN-SPAM Act violation.
2. $2.7 Billion – Directories v. Yahoo Inc.
Worldwide Directories, S.A. de C.V. is the holding company of Ideas Interactivas, S.A. de C.V. In 2002, Interactivas got into a business relationship with Yahoo, in which Yahoo would produce physical and online telephone directories in Mexico. Later, Yahoo was tasked with providing telecommunication services in Mexico and abroad.
Yahoo’s business relationship with Interactivas turns sour
For the next three years, both Worldwide Directories and Interactivas signed various contracts with Yahoo regarding their business transactions. Unfortunately, Yahoo did not keep its end of the deal. Once it was acquired by Interactivas’ competitor, Yahoo severed ties with Interactivas.
Yahoo sued for breach of contract
Consequently, a Yahoo lawsuit was filed for breach of contract, lost profits, and breach of promise. In 2012, an American court ruled that Yahoo should pay $2.7 billion. In 2014, the plaintiffs filed another lawsuit accusing Yahoo of conspiring with a judge to reduce the $2.7 billion judgment to $172,500.
1. $4 Billion – Universal Image, Inc. v. Yahoo, Inc.
In July 2002, Yahoo completed its acquisition of Broadcast.com which previously held a contract with Chalkboardtalk.com to share information about its users. Broadcast.com would provide information such as age, occupation, name, and personal data in exchange for using Universal’s video on its website. Upon the acquisition, Broadcast.com stopped sharing the information with Chalkboardtalk.com
CNET explained that companies such as Yahoo required users to provide basic information but consumer privacy had become a pertinent issue. On its website, Yahoo states that it does not share information with third parties.
Yahoo sued for $4 billion
Therefore, Universal, which had already struck a deal with Broadcast.com, felt shortchanged and sued. In December 1999, Universal sought $3 billion in punitive damages and $1 billion in damages after amending the complaint it had filed in June 1999.