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Settlement proposed in Yahoo data breach securities litigation

Settlement proposed in Yahoo data breach securities litigation

An $80 million settlement has been proposed in a securities class litigation filed in connection with Yahoo Inc. data breaches in 2013 and 2014.

The proposed settlement in In re Yahoo Inc. securities litigation, filed in U.S. District Court in San Francisco on Friday, was publicized Monday.

In December 2016, Yahoo announced a 2013 breach affecting 1 billion accounts. And in March 2017, the United States charged two Russian intelligence agents and two hackers with masterminding a separate 2014 theft of 500 million Yahoo accounts.

The hacks forced Yahoo to accept a $350 million discount on what had been a $4.83 billion deal to sell its main assets to Verizon Communications Inc. The company’s name has since been changed to Alibata.

Two putative class actions filed against Yahoo and company officials were consolidated in the District Court in San Francisco in April 2017.

The proposed settlement, which must be approved by the court, says defendants have concluded continuing the litigation “could be protracted, burdensome, expensive, and distracting.”

“The Defendants have also taken into account the uncertainty, risks, and costs inherent in any litigation, especially complex cases such as this action,” states the proposed settlement.

It states the plaintiffs “recognize and acknowledge the expense and length of continued proceedings necessary to prosecute this action against defendants, such as opposing a second motion to dismiss and, potentially a motion for class certification, motions for summary judgment, trial, and appeals.”

The settlement class is all those who purchased or acquired Yahoo securities on the open market between April 30, 2013, and Dec. 14, 2016.

The settlement proposal does not say how the settlement would be funded. A company spokesperson could not be reached for comment.

Cyber-related claims against directors and officers have been largely unsuccessful to date. Cyber D&O cases have generally been dismissed on the basis the breaches have not caused companies any material harm.

However, in this case, plaintiffs could point to the $350 million discount in the price Verizon paid for Yahoo following disclosure of the hacking.

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