USA data breach victims can sue Yahoo

Jeannie Matthews
March 15, 2018

Verizon lowered the price it offered for Yahoo to about $4.5 billion after the data breaches were revealed.

US District judge Lucy Koh rejected a bid from Verizon Communications, the firm that bought Yahoo's internet business in June previous year, to dismiss a number of claims, including for negligence and breach of contract.

The remains of Yahoo! will be forced to defend the class action complaint filed by customers whose data was exposed in the 2014 megahack.

Koh said the amended complaint highlighted the importance of security in the plaintiffs' decision to use Yahoo.

U.S. District Judge Lucy Koh in San Jose on Friday rejected the bid by Verizon, Yahoo's owner, to dismiss many claims, such as negligence, breach of contract, fraud and deceit by executives who are accused of knowing about the security problems, but doing nothing and hiding them from the public.

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Verizon Communications, now Yahoo's parent company, attempted to have the suits brought against them thrown out of court, arguing Yahoo had been targeted by "relentless criminal attacks", according to Reuters, mitigating their responsibility.

Yahoo first admitted in 2016 that it was hacked two years previously, claiming that 500 million users were affected by the breach.

The remainder of Yahoo, which include stock in China's Alibaba Group Holding Inc. and Yahoo Japan worth more than US$40 billion, went into New York-based Altaba Inc.

Koh added that customers may have "taken measures to protect themselves" if they were aware of the breaches sooner. Verizon and Altaba agreed to evenly split all costs tied to lawsuit liability over the data breaches as part of the Yahoo acquisition deal. The three million users impacted by the hacks wound up being almost three times what Yahoo had originally claimed. A lawyer for the plaintiffs did not immediately respond to requests for comment.

"A recovery of 12 cents a share doesn't sound like a victory for shareholders", said Erik Gordon, a professor at the University of Michigan's Ross School of Business.

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