updated 08:07 pm EST, Mon December 3, 2012
Yahoo cites procedural errors, application of law
Sources within Yahoo say that the company has solid ground upon which to appeal a surprise $2.7 billion judgment handed down by a Mexican civil court last week. Details in the case remain murky even today, but sources familiar with Yahoo's plans indicate that the company believes the decision rests on shaky procedural ground and that there were multiple errors in the application of laws. Yahoo's appeal will likely be held by a panel of three judges in a superior court in Mexico City, though when that appeal may be filed is unclear.
According to Reuters, the case centers around the commercial relationship between Yahoo and two Mexican companies, Worldwide Directories S.A. de C.V. and Ideas Interactivas S.A. de C.V. Yahoo reportedly entered into a commercial relationship with the two firms in 2002, and terminated that relationship in 2009.
The particulars of the plaintiffs' case remain unclear, as documents from local courts in Mexico are unavailable for public review. Previous reports have the case centering on "alleged claims of breach of contract, breach of promise, and lost profits arising from contracts related to a Yellow Pages listings service."
The announcement on Friday that a $2.7 billion judgment had been handed down against the Internet giant came as a shock to investors, who had not been made aware that the case even existed. Yahoo's most recent 10Q filing, which lists major ongoing legal matters, made no mention of the suit.
Should the decision stand, the $2.7 billion figure would represent about 36 percent of the $7.56 billion in cash Yahoo had as of September 30. Outside observers note that the ruling seems unusually high given the small size of Yahoo's business in Mexico.