Yahoo 2015 Annual Report Download - page 141

On September 10, 2014, the same plaintiffs in the Mexico litigation described above filed an action in
U.S. District Court for the Southern District of New York against Yahoo! Inc., Yahoo! Mexico, Baker &
McKenzie, and Baker & McKenzie, S.C. Plaintiffs allege that defendants conspired to influence the
Mexican courts and “illegally obtain a favorable judgment” in the above litigation. Plaintiffs advance
claims for relief under the Racketeer Influenced and Corrupt Organizations Act of 1970 (“RICO”),
which provides for treble damages in certain cases, conspiracy to violate RICO, common-law fraud,
and civil conspiracy. Their operative amended complaint seeks unspecified damages. The Company
and Yahoo! Mexico have filed a motion to dismiss the amended complaint. The Company believes the
plaintiffs’ claims in this action are without merit.
TCPA Litigation Concerning Yahoo Messenger. On March 21, 2014 and April 16, 2014, civil complaints
were filed in the United States District Court for the Northern District of Illinois by plaintiffs Rachel
Johnson and Zenaida Calderin, respectively, against Yahoo, alleging that the process by which Yahoo
Messenger sends a notification SMS message in addition to delivering a user’s instant message to a
recipient’s cellular telephone constitutes a violation of the Telephone Consumer Protection Act
(“TCPA”), 47 U.S.C. § 227. The penalty per violation ranges from $500 to $1,500. The complaints,
which are consolidated, seek statutory damages for a purported class of plaintiffs. In January 2016,
the District Court denied class certification treatment proposed by plaintiff Calderin, but certified a
class proposed by plaintiff Johnson comprising more than 300,000 potential members. The
Company sought permission from the United States Court of Appeals for the Seventh Circuit to
appeal the District Court’s certification order, which the Court of Appeals denied. No decision has
been made on the merits of plaintiffs’ claims, which the Company is defending vigorously. The
Company is also defending related litigation in the United States District Court for the Southern
District of California, which denied class certification in September 2015.
The Company has determined, based on current knowledge, that the amount or range of reasonably
possible losses, including reasonably possible losses in excess of amounts already accrued, is not
reasonably estimable with respect to certain matters described above. The Company has also
determined, based on current knowledge, that the aggregate amount or range of losses that are
estimable with respect to the Company’s legal proceedings, including the matters described above,
other than the remaining Mexico matter, would not have a material adverse effect on the Company’s
consolidated financial position, results of operations or cash flows. Amounts accrued as of
December 31, 2015 were not material. The Company did not accrue for the judgment in Mexico, which
was reversed as explained above. The ultimate outcome of legal proceedings involves judgments,
estimates and inherent uncertainties, and cannot be predicted with certainty. In the event of a
determination adverse to Yahoo, its subsidiaries, directors, or officers in these matters, the Company
may incur substantial monetary liability, and be required to change its business practices. Either of
these events could have a material adverse effect on the Company’s financial position, results of
operations, or cash flows. The Company may also incur substantial legal fees, which are expensed as
incurred, in defending against these claims.
Note 13 Stockholders’ Equity
The Board has the authority to issue up to 10 million shares of preferred stock and to determine the
price, rights, preferences, privileges, and restrictions, including voting rights, of those shares without
any further vote or action by the stockholders.
Stock Repurchases.In November 2013, the Board authorized a stock repurchase program with an
authorized level of $5 billion. The November 2013 program, according to its terms, will expire in
December 2016. The aggregate amount remaining under the November 2013 repurchase program
was approximately $930 million and $726 million at December 31, 2014 and 2015, respectively. In
March 2015, the Board authorized an additional stock repurchase program with an authorized level of
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