Yahoo 2015 Annual Report Download - page 139

protection or law enforcement matters, tax matters, labor and employment claims, commercial
claims, as well as actions involving content generated by users, stockholder derivative actions,
purported class action lawsuits, and other matters.
Patent Matters. From time to time, third parties assert patent infringement claims against the
Company. Currently, the Company is engaged in lawsuits regarding patent issues and has been
notified of other potential patent disputes.
Stockholder and Securities Matters. Since May 31, 2011, several related stockholder derivative suits
were filed in the Santa Clara County Superior Court (“California Derivative Litigation”) and the U.S.
District Court for the Northern District of California (“Federal Derivative Litigation”) purportedly on
behalf of the Company against certain officers and directors of the Company and third parties. The
California Derivative Litigation was filed by plaintiffs Cinotto, Lassoff, Zucker, and Koo, and
consolidated under the caption In re Yahoo! Inc. Derivative Shareholder Litigation on June 24, 2011
and September 12, 2011. The Federal Derivative Litigation was filed by plaintiffs 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.com
Co., Ltd. (“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. The Federal
Derivative Litigation was stayed pending resolution of the appeal filed by the plaintiffs in the related
stockholder class actions, which now has concluded as described below. The Company has filed a
motion to dismiss the Federal Derivative Litigation. On December 23, 2015, the court dismissed the
Federal Derivative Litigation with prejudice.
Since June 6, 2011, two purported stockholder class actions were filed in the U.S. 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 purported to represent a class of
investors who purchased the Company’s common stock between April 19, 2011 and July 29, 2011, and
alleged 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 purported to assert claims for relief for violation of Section 10(b) and 20(a) of
the Securities Exchange Act of 1934, as amended, and for violation of Rule 10b-5 thereunder, and
sought unspecified damages, injunctive and equitable relief, fees, and costs. On August 10, 2012, the
District Court granted defendants’ motion to dismiss the consolidated amended complaint. Plaintiffs
appealed. On May 15, 2015, the U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal.
On April 22, 2015, a stockholder action captioned Cathy Buch v. David Filo, et al., was filed in the
Delaware Court of Chancery against Yahoo and all current members of the Board. The complaint
asserts both derivative claims, purportedly on behalf of Yahoo, and class action claims, purportedly
on behalf of the plaintiff and all similarly situated stockholders, relating to the termination of, and
severance payments made to, our former chief operating officer, Henrique de Castro. The plaintiff
alleges that the board members breached their fiduciary duties by enabling or acquiescing in the
payment of severance to Mr. de Castro, and by allowing Yahoo to make allegedly false and
misleading statements regarding the value of his severance. The plaintiff has also asserted claims
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