Yahoo 2013 Annual Report Download - page 114

Salzman, Tawila, and Iron Workers Mid-South Pension Fund and consolidated under the caption In re Yahoo!
Inc. Shareholder Derivative Litigation on October 3, 2011. The plaintiffs 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. On June 7, 2012, the courts
approved stipulations staying the California Derivative Litigation pending resolution of the Federal Derivative
Litigation, and deferring the Federal Derivative Litigation pending a ruling on the motion to dismiss filed by the
defendants in the related stockholder class actions, which are discussed below. On December 16, 2013, United
States District Court for the Northern District of California granted the Company’s motion to stay the Federal
Derivative Litigation pending resolution of the appeal filed by the plaintiffs in the related stockholder class
actions.
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 of the Company 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 Alibaba Group’s
restructuring of Alipay. The complaint purports to assert claims for relief for violation of Section 10(b) and 20(a)
of the Exchange Act and for violation of Rule 10b-5 thereunder, and seeks unspecified damages, injunctive and
equitable relief, fees, and costs. On August 10, 2012, the court granted defendants’ motion to dismiss the
consolidated amended complaint. Plaintiffs have appealed.
On July 30, 2013, a stockholder derivative action captioned Zucker v. Loeb, et al. was filed in the Supreme Court
of New York for the County of New York against current and former members of the Board, Third Point LLC,
and entities related to Third Point LLC. The complaint filed by the plaintiff asserts claims for alleged breach of
fiduciary duty, waste, and unjust enrichment in connection with the Company’s repurchase of 40 million shares
of Company common stock beneficially owned by Third Point LLC. The complaint seeks a judgment declaring
that the defendants breached their fiduciary duties, an award of restitution, and corporate governance changes.
The Company has filed a motion to dismiss the action.
Mexico Matter. On November 16, 2011, plaintiffs Worldwide Directories, S.A. de C.V. (“WWD”), and Ideas
Interactivas, S.A. de C.V. (“Ideas”) filed an action in the 49th Civil Court of Mexico against the Company,
Yahoo! de Mexico, S.A. de C.V. (“Yahoo! Mexico”), Yahoo International Subsidiary Holdings, Inc., and Yahoo
Hispanic Americas LLC. The complaint alleged claims of breach of contract, breach of promise, and lost profits
in connection with various commercial contracts entered into among the parties between 2002 and 2004, relating
to a business listings service, and alleged total damages of approximately $2.75 billion. On December 7, 2011,
Yahoo! Mexico filed a counterclaim against WWD for payments of approximately $2.6 million owed to Yahoo!
Mexico for services rendered. On April 10, 2012, plaintiffs withdrew their claim filed against Yahoo
International Subsidiary Holdings, Inc. and Yahoo Hispanic Americas LLC.
On November 28, 2012, the 49th Civil Court of Mexico entered a non-final judgment against the Company and
Yahoo! Mexico in the amount of USD $2.75 billion and a non-final judgment in favor of Yahoo! Mexico on its
counterclaim against WWD in the amount of $2.6 million. The judgment against the Company and Yahoo!
Mexico purported to leave open for determination in future proceedings certain other alleged damages that were
not quantified in the judgment. The judgment was issued by a law clerk to the trial court judge who presided over
the entire case during the trial court proceedings but stepped down from his position shortly before the judgment
was entered.
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