Yahoo 2011 Annual Report Download - page 105

On July 12, 2001, the first of several purported securities class action lawsuits was filed in the U.S. District Court
for the Southern District of New York against certain underwriters involved in Overture Services Inc.’s
(“Overture”) IPO, Overture, and certain of Overture’s former officers and directors. The Court consolidated the
cases against Overture. Plaintiffs allege, among other things, violations of the Securities Act of 1933 and the
Securities Exchange Act of 1934 (the “Exchange Act”) involving undisclosed compensation to the underwriters,
and improper practices by the underwriters, and seek unspecified damages. Similar complaints were filed in the
same court against numerous public companies that conducted IPOs of their common stock since the mid-1990s.
All of these lawsuits were consolidated. On October 5, 2009, the Court granted class certification and granted
final approval of a stipulated global settlement and plan of allocation. On October 6, 2010, various individuals
objecting to the settlement filed opening appeal briefs with the U.S. Court of Appeals for the Second Circuit, and
in early February 2011 Yahoo! and other appellees filed reply briefs in support of the settlement. The Second
Circuit dismissed one appeal and remanded a second appeal to the District Court for a determination on standing.
On remand, the District Court held on August 25, 2011 that the individual objector lacked standing and was not a
class member. That ruling was appealed to the Second Circuit and, on January 13, 2012, the Second Circuit
approved a stipulation withdrawing the appeal, thereby resolving the remaining objection to the settlement.
On June 14, 2007, a stockholder derivative action was filed in the U.S. District Court for the Central District of
California by Jill Watkins against members of the Board and selected officers. The complaint filed by the
plaintiff alleged breaches of fiduciary duties and corporate waste, similar to the allegations in a former class
action relating to stock price declines during the period April 2004 to July 2006, and alleged violation of
Section 10(b) of the Exchange Act. On July 16, 2009, the plaintiff Watkins voluntarily dismissed the action
against all defendants without prejudice. On July 17, 2009, plaintiff Miguel Leyte-Vidal, who had substituted in
as plaintiff prior to the dismissal of the federal Watkins action, re-filed a stockholder derivative action in Santa
Clara County Superior Court against members of the Board and selected officers. The Santa Clara County
Superior Court derivative action purports to assert causes of action on behalf of the Company for violation of
specified provisions of the California Corporations Code, for breaches of fiduciary duty regarding financial
accounting and insider selling and for unjust enrichment. On September 19, 2011, the Court sustained Yahoo!’s
demurrer to plaintiff’s third amended complaint without leave to amend. On December 21, 2011, plaintiff filed a
notice of appeal.
Since May 31, 2011, a total of eight stockholder derivative suits were filed either in the Santa Clara County
Superior Court or the United States District Court for the Northern District of California purportedly on behalf of
Yahoo! stockholders against certain officers and directors of the Company and third parties. The actions allege
breaches of fiduciary duties, corporate waste, mismanagement, abuse of control, unjust enrichment,
misappropriation of corporate assets, or contribution and seek damages, equitable relief, disgorgement and
corporate governance changes in connection with Alibaba Group’s restructuring of its subsidiary Alipay and
related disclosures. The Santa Clara County actions filed by plaintiffs Cinnoto, Lassoff, Zucker, and Koo were
consolidated under the caption In re Yahoo! Inc. Derivative Shareholder Litigation on June 24, 2011 and
September 12, 2011 (“California Derivative Litigation”). On February 1, 2012, the court approved a stipulation
to stay the California Derivative Litigation for 180 days. The federal actions filed in the Northern District of
California by plaintiffs Salzman, Tawila, and Iron Workers Mid-South Pension Fund were consolidated under the
caption In re Yahoo! Inc. Shareholder Derivative Litigation on October 3, 2011 (“Federal Derivative
Litigation”).
Since June 6, 2011, two purported stockholder class actions were filed in the United States District Court for the
Northern District of California against the Company and certain officers and directors by plaintiffs Bonato and
the Twin Cities Pipe Trades Pension Trust. In October 2011, the District Court consolidated the two actions
under the caption In re Yahoo! Inc. Securities Litigation and appointed the Pension Trust Fund for Operating
Engineers as lead plaintiff. In a consolidated amended complaint filed December 15, 2011, the lead plaintiff
purports to represent a class of investors who purchased the Company’s common stock between April 19, 2011
and July 29, 2011, and alleges that during that class period, defendants issued statements that were materially
false or misleading because they did not disclose information relating to the restructuring of Alipay. The
103