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Yahoo is embroiled in a lawsuit with a former Mexican partner, Worldwide Directories, with which it ran a telephone-directory project for years.A Mexican court awarded Worldwide Directories $2.7 billion in damages.
Yahoo recently appealed the loss and asked the court instead to award Yahoo 3.9 billion Mexican pesos—the equivalent of $309 million—in legal costs, El Economista reports.
That’s very strange on many levels.
First of all, that’s a material figure for Yahoo’s finances. If Yahoo had actually incurred that amount in legal fees, it might have been required to disclose that number to shareholders in a filing with the SEC. None of Yahoo’s quarterly or annual reports mentioned the Worldwide Directories case before the company surprised shareholders with the disclosure of the $2.7 billion judgment against it.
And while legal expenses can run high, it’s hard to fathom how you’d spend $309 million on a case like this.
One possibility: that this is some sort of legal manoeuvre.
But that seems strange, too, because according to a paper published by Baker & McKenzie, an international law firm, Mexico’s system of awarding legal costs is, if anything, less generous than the United States.
“The rules to determine the amount of legal fees payable by the losing party varies depending on
the procedural rules applicable to each case (but is rarely the full amount actually incurred),” the paper’s authors write.
Baker & McKenzie, by coincidence, initially handled the lawsuit for Yahoo; Yahoo recently hired new lawyers for the appeal.
So Yahoo appears to be asking for a sum far higher than it actually spent, that—according to the same law firm that represented it in the case—it has almost no chance of getting.
A Yahoo spokesperson declined to comment on the company’s legal strategy.