Altaba Must Set Aside $400M for Verizon Over Yahoo Data Breach Settlement Appeal

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Altaba/Verizon Yahoo Data Breach Settlement Appeal Case Overview: 

• Who: A Chancery judge is requiring Altaba Inc to set aside $400 million to indemnify Verizon Inc. 
• Why: Verizon and Altaba are on the hook for a $117.5 million class action settlement which, if successfully appealed, could end up becoming much larger.
• Where: The class action is being heard in the Court of Chancery of the State of Delaware.

Altaba Inc must set aside $400 million to indemnify Verizon Communications Inc in the event an ongoing appeal of a $117.5 million settlement over a Yahoo data breach succeeds, a Delaware Chancery judge ruled.  

Vice Chancellor J. Travis Laster ruled Altaba, a parent company of Yahoo which is currently liquidating, failed to prove that $58.7 million it already paid towards the settlement would be enough in the event of a successful appeal, reports Law360.

Verizon, which reportedly acquired Yahoo’s internet operations in 2017, has asked for Altaba to be forced to set aside $400 million, a number the vice chancellor agreed with. 

“Verizon’s expert opined persuasively that if the case proceeds to trial and a jury finds in favor of the plaintiffs, then a judgment greater than $1 billion would be ‘easy to imagine,'” Laster said, reports Law360. 

During pre-merger negotiations, Verizon and Altaba agreed to retain 50 percent liability for a number of class action lawsuits stemming from a data breach which reportedly affected Yahoo’s servers from 2012-2016. 

Ataba On The Hook for Yahoo Data Breach Class Actions

Plaintiffs in the putative consumer-oriented class action lawsuits argued Yahoo failed to fully disclose the data breaches, reports Law360. 

Altaba, which chose to dissolve itself back in 2019, is currently in the midst of a three-year wind down period and has argued it shouldn’t have to contribute any more money.

Laster, however, claims that Verizon should not be responsible for all of the costs in the “unlikely event,” an appeal of the class action settlement currently sitting with the Ninth Circuit  is successful. 

“If the parties agreed to a higher-valued settlement, then Verizon would bear all of the increased cost. If the case went to trial, then Verizon would bear all of the excess liability,” Lester wrote, reports Law360. 

Verizon reportedly sold the majority of its stake in Yahoo on Sept. 1 to private equity company Apollo Global Management Inc.

Should Altaba have to set aside more money to properly indemnify Verizon in the event of a successful settlement appeal? Let us know in the comments! 

The Altaba/Verizon Yahoo Data Breach Settlement Appeal Case is In re Altaba Inc., Case No. 2020-0413, in the Court of Chancery of the State of Delaware. 

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