Mexican companies sue Yahoo, law firm, allege conspiracy to avoid $2.7 billion judgment

[September 12, 2014] By Joseph Ax

NEW YORK (Reuters) - Two Mexican companies have sued Yahoo Inc and law firm Baker & McKenzie in New York federal court, accusing them of engineering a conspiracy to avoid a $2.7 billion judgment issued by a Mexican court in 2012.

In a lawsuit filed on Thursday, Worldwide Directories S.A. de C.V. and Ideas Interactivas S.A. de C.V. said Yahoo and Baker & McKenzie enlisted the help of a senior Mexican judge and other court personnel to "corrupt the appeals process and overturn the judgment."

"This is a frivolous attempt to revive interest in a meritless lawsuit, and we will vigorously defend against these baseless claims," said a Yahoo spokeswoman.

A Baker & McKenzie spokesman did not respond to requests for comment.

The case stems from a contractual dispute over deals between Yahoo and the companies over an online search project in Mexico. The companies filed a lawsuit in 2011 in Mexico, claiming Yahoo had breached its duties by terminating the agreements prematurely.

A Mexican judge issued a $2.7 billion preliminary judgment in December 2012. The size of the damages came as a surprise to investors and other observers of the tech industry.

According to Thursday’s lawsuit, Yahoo and its lawyers at Baker & McKenzie successfully reduced the award to $172,500 by instructing a corrupt Mexican federal judge to meet in secret with the appellate chief judge and “intimidate” her into slashing the damages.

The appeals court also granted Yahoo a $3 million judgment on its counterclaims against the companies as a result of the coercion, the lawsuit said.

The evidence of the conspiracy, the lawsuit claimed, consists of sworn statements from witnesses who directly observed the misconduct, including the original trial judge who issued the judgment.

David Stone, a lawyer for the companies based in New Jersey, said the lawsuit was intended to prevent two major U.S. corporations from "interfering with the Mexican judicial process."

(Reporting by Joseph Ax; Editing by Noeleen Walder and Cynthia Osterman)

[© 2014 Thomson Reuters. All rights reserved.]

Copyright 2014 Reuters. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.