Yahoo Search Marketing

A class action lawsuit has been filed against Yahoo, the search engine giant, accusing them of ad placement on low quality sites and spyware vendor sites.

The lawsuit has been filed on behalf of Yahoo advertisers which accuse Yahoo of charging high rates for advertising and promising premium placement while placing the ads on low quality sites such as spyware vendor sites and sites featuring misspellings of popular brands.

The lawsuit aims to recover money and could run into the hundreds of millions of dollars.

The accusations are that Yahoo placed advertising on sites run by Intermix Media and Direct Revenue. These two companies have been associated in another lawsuit of being distributors of spyware and pop-up adware. Both companies have disputed these charges.

Also Yahoo is accused of including advertising on typosquatting sites which have URLs that are misspellings of popular brand names. These sites include large amounts of Yahoo’s ads.

Victims have a right to take part in the class action suit. If you believe there has been harmed caused you may be entitled to compensation. Class action lawsuits are brought about to protect the public from corporate wrong doings.

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

WESTERN DIVISION

CHECKMATE STRATEGIC GROUP, INC.,
a Florida corporation,
individually, and purportedly on behalf of all others similarly situated,

Plaintiff, vs.

YAHOO! INC., a Delaware corporation, and DOES 1 THROUGH 100, Inclusive,

Defendants.

Case No.: CV 05-4588 CAS (FMOx)
NOTICE OF PENDENCY OF CLASS ACTION, PROPOSED SETTLEMENT AND PROPOSED HEARING DATE FOR COURT APPROVAL

THIS NOTICE MAY AFFECT YOUR RIGHTS

PLEASE READ ALL OF IT CAREFULLY

ATTENTION: ALL PERSONS OR ENTITIES WHICH BID AND PAID FOR ADVERTISING PLACEMENT IN YAHOO!’S SEARCH MARKETING SYSTEM BETWEEN JANUARY 1, 1998 AND JULY 31, 2006

Dear Yahoo!, Inc. Customer,

This notice (the “Notice”) informs you of a proposed settlement of class action claims against Yahoo!, Inc. (defined as Yahoo!, Inc., Yahoo! Search Marketing, Overture Services, Inc., and GoTo.com, Inc.). For the sake of brevity and clarity, Yahoo!, Inc. will be referred to for the remainder of this Notice simply as Yahoo!. This Notice describes the proposed settlement and informs you of your rights as a settlement class person. You are being sent this Notice because you have been identified as a Yahoo! customer who paid for advertising services between January 1, 1998 and July 31, 2006. Yahoo! has agreed, under the terms of the Settlement, to provide you with the opportunity to submit a valid and timely claim form through which you may be eligible to receive advertising credits.

READ THIS FIRST

1. WHY SHOULD I READ THIS?

This Notice, given pursuant to an Order of the Court dated June 28, 2006, describes a proposed settlement of a class action against Yahoo!, and you have been identified as a Class Person.

2. WHY DID I RECEIVE THIS NOTICE?

You received this Notice because a search of Yahoo!’s computer records indicates that you are a current or former Yahoo! account holder who bid and paid for advertising placement on Yahoo!’s Search Marketing System at some point between January 1, 1998 and July 31, 2006. This Notice provides a summary of the terms of the proposed settlement. It also explains the lawsuit, your legal rights under the settlement, what benefits are available to you under the settlement, and how to get them.

3. WHAT IS A CLASS ACTION?

In a class action, one or more individuals or businesses, called Class Representatives (in this case, Checkmate Strategic Group, Inc.) sue on behalf of others that have similar claims. All of these other individuals or businesses are members of the “class.” One court resolves the issues for all Class Members, except for those who exclude themselves from the Class. United States District Judge Christina A. Snyder is in charge of this class action.

4. WHAT ARE THE CRITICAL DATES?

Event Date
The last date to submit your Assertion of Right to Participate in Additional Claims Review Process form, if you wish to be eligible to possibly receive advertising credits. November 20, 2006
The last date to submit your written request to be excluded from the settlement if you are not willing to be bound by it and do not want to be eligible to receive advertising credits. October 14, 2006
The last date to submit any written objection to the settlement. October 14, 2006
The hearing on any objections and to give final approval to the settlement. November 20, 2006

5. DO I HAVE TO DO ANYTHING?

The settlement is subject to the approval by the Court. If the Court approves the settlement and it becomes effective, you will automatically be eligible to submit the Assertion of Right to Participate in Additional Claims Review Process form (hereinafter “Assertion of Right to Participate”), indicating that you intend to file a claim form for Yahoo! advertising credits and will give up your ability to sue Yahoo! over the subject matter of this case. The Assertion of Right to Participate form is available for download at www.checkmatesettlement.com . The form must be printed out, filled out completely, and mailed via certified or registered mail to the Claims Administrator at Claims Administrator, PO Box 1340, Minneapolis, MN, 55440-1340, by November 20, 2006. You may attend the court hearing described below if you wish, but your attendance or non-attendance will not affect your eligibility to submit the Assertion of Right to Participate form. You do not need to appear in court, and you do not need to hire an attorney in this case. You may object to the proposed settlement if you so desire.

6. WHAT IS THIS CASE ABOUT?

Plaintiff Checkmate Strategic Group, Inc. claims that Yahoo! has breached its contracts with Class Person and committed unfair business practices under California Business & Professions Code § 17200 et seq., including improperly collecting revenue by charging and/or overcharging Class Persons for clicks that were click fraud, click through fraud, fraudulent clicks, click spam, invalid clicks, unwanted clicks, unqualified clicks, improper clicks, non-converting clicks, inadequately converting clicks, clicks that were not reasonably expected by Class Persons or otherwise claimed by Class Persons as clicks for which Class Persons should not have been charged, and improperly collecting revenue by charging and/or overcharging Class Persons for clicks where users did not actively choose the Class Persons’ listings (hereinafter “Challenged Clicks”).

A. The Proposed Settlement

Since filing the action, Plaintiff, through Class Counsel, has conducted an investigation of the facts, including review of Yahoo!’s billing procedures and Yahoo!’s click filtering systems, interviews with key Yahoo! personnel, and has analyzed the relevant legal and factual issues. Class Counsel obtained substantial information about the nature and extent of Yahoo!’s challenged practices through this process.

Although Yahoo! does not believe it has done anything wrong and continues to deny all claims and allegations of wrongdoing asserted in the Action, Plaintiff and Yahoo! agreed to enter into a settlement agreement after an extensive exchange of information and vigorous arms-length negotiation. If approved by the Court, the settlement agreement will result in dismissal of this case and final resolution of all claims raised. Such dismissal will release Yahoo! from future liability for the acts and practices complained of. The settlement terms are described in full in a document known as Stipulation and Settlement Agreement (hereinafter “Agreement”)1. The Agreement is available for your inspection at the clerk’s office of the United States District Court, Central District of California, Western Division. The terms of the settlement, in summary form, are as follows:

i) Yahoo! shall launch an online traffic quality center, which will be available to its advertisers within 90 calendar days of the Effective Date of the settlement. The traffic quality center will include a resource center which will contain FAQs, best practices documents, traffic quality articles, enforcement guidelines, and an advice column.

ii) Yahoo! shall designate a Yahoo! employee as a traffic quality advocate who will be part of a traffic quality group to fulfill the function of fielding advertisers’ concerns regarding traffic quality, including its click fraud prevention efforts, within 90 calendar days of the Effective Date of the settlement.

iii) Within 90 calendar days of the Effective Date of the settlement, Yahoo! shall start a program in which it chooses at least three advertisers per year who will be invited to Yahoo! to obtain special access to the traffic quality team and additional information with respect to Yahoo!’s click protection system, subject to the advertisers’ execution of nondisclosure agreements.

iv) Yahoo! shall work with third parties in an effort to develop industry-wide standards that define click fraud, set forth standards with respect to the detection of click fraud and provide the public with periodic general evaluations regarding the effectiveness of providers’ efforts to filter and prevent the charging of click fraud to customers.

v) Yahoo! will temporarily lift its 60-day contractual provision to allow Class Members to make click fraud claims for the period from January 1, 2004 to July 31, 2006. Any Class Member that wishes to participate in the additional claims review process will have to complete the Assertion of Right to Participate form, and mail by certified or registered mail the completed form to the Claims Administrator on or before November 20, 2006.

B. Attorneys’ Fees and Class Representative Compensation

Class Counsel will request that the Courts award them attorneys’ fees and expenses. They intend to request $4,950,000 in attorneys’ fees plus costs in an amount not to exceed $25,000. The fees and costs figures were determined independently of negotiation of the other terms of the settlement.

Class Counsel’s petition for fees and expenses will be filed with the court no later than October 30, 2006, and may be reviewed by any interested party. The amount paid for attorneys’ fees, expenses, and costs will be paid by Yahoo! and so will not diminish or affect any Credits which Class Members may receive.

7. WHAT AM I GIVING UP IF I PARTICIPATE IN THE SETTLEMENT?

The settlement provides that once the Court enters an order finding the proposed settlement fair, adequate, and reasonable and all appeals have been resolved or all appeals periods have expired, those Class Members who have not timely requested exclusion from this Action shall be deemed to have and by operation of the Final Judgment shall have fully, finally and forever released, relinquished, and discharged all Released Claims as set forth below.

Specifically, the settlement is intended to settle any and all known and unknown claims from January 1, 1998 through July 31, 2006 against Yahoo! that Class Members have asserted or could have asserted based upon or in any way relating to, referring to, or arising out of the charging or overcharging for Challenged Clicks (the “Released Claims”).

The settlement provides that once the Court enters an order finding the proposed settlement fair, adequate, and reasonable and all appeals have been resolved or all appeals periods have expired, those Class Members who have not timely requested exclusion from this Action shall be deemed to have and by operation of the Final Judgment shall have fully, finally and forever released, relinquished, and discharged all Released Claims as set forth below.

The release will extend to Yahoo! and its past or present directors, officers, employees, partners, principals, agents, predecessors, successors, parents, affiliated and sister corporations, subsidiaries, licensees, divisions, and related or affiliated entities, and the Yahoo! Ad Partners (defined as all Persons together with any past or present directors, officers, employees, partners, principals, agents, controlling shareholders, predecessors, successors, parents, affiliated and sister corporations and subsidiaries of same, that disseminated, displayed, distributed, delivered, served, published, and/or otherwise provided any Yahoo! Ad (defined as the participation and/or the ability to participate in a system which displays advertising, including without limitation, titles and descriptions, uniform resource locators, images, text and all other content delivered, served, published, and/or otherwise displayed by Yahoo! and the Yahoo! Ad Partners, including without limitation, via any and all web sites, e-mails, applications, and software, including without limitation domain channels, downloadable applications, content match, domain match, adware, spyware, arbitrage, and e-mail campaigns)).

If the settlement is approved by the Court and not otherwise terminated, the Court will dismiss the Action with prejudice, and bar and permanently enjoin the named Plaintiff and each Class Member from prosecuting the Released Claims. As a result, once the judgment of the Court in accordance with this settlement has become final, each of the Class Members and their legal successors-in-interest shall be deemed to have forever given up any Released Claims against Yahoo! and the other Released Parties. If you have purchased advertising on the Yahoo! Search Marketing System between January 1, 1998 and July 31, 2006, and do not elect to exclude yourself from the Class, you will be deemed to have entered in to this release and to have released the above-described claims. If the settlement is not approved by the Court or does not become final for some other reason, the litigation will continue.

8. HOW DO I EXERCISE MY RIGHT TO ADDITIONAL REVIEW OF MY YAHOO! ACCOUNT?

To exercise your right to additional review of your Yahoo! account, go to www.checkmatesettlement.com and print a copy of the Assertion of Right to Participate form. Fill out the form completely and mail by certified or registered mail to the Claims Administrator at Claim Administrator, PO Box 1340, Minneapolis, MN 55440-1340, on or before November 20, 2006.

9. WHY ARE CLASS COUNSEL RECOMMENDING THIS SETTLEMENT?

Relative to the risks and costs of continuing the litigation, Class Counsel believe this settlement provides a favorable recovery which is in the best interest of the Class. Class Counsel’s collective evaluation in this regard is based on the extensive investigation and discovery they have undertaken, and upon their experience prosecuting similar cases. Absent settlement, Plaintiff would have to secure class certification on the claims set forth in the Action over the opposition of Yahoo!. Additionally, at trial, Plaintiff would have the burden of proof to establish liability and the amount of damages. The case involves many unresolved factual and legal issues, some of which could be decided against Plaintiff at or before trial, and which would jeopardize Plaintiff’s ability to certify a class or to obtain a favorable judgment and preserve it on appeal.

In addition, settling the case now has the further advantage of avoiding the very substantial additional costs and delay that further litigation would involve. Yahoo! has made it clear that it would likely seek appellate review of a grant of class certification outside the settlement context and any final adverse result at trial. Thus, absent settlement, it is likely to be years before the litigation ends and Class Members receive Credits, if any. Given the costs involved in further litigation and the time-value of money, even if a favorable judgment were obtained at trial, it could well produce less net recovery to the Class Members than the present settlement.

10. WHAT IF I DO NOT WISH TO PARTICIPATE IN THE SETTLEMENT?

A. Your Right to Exclude Yourself from the Settlement

As a Class Person, you may elect to exclude yourself from the class settlement. If you wish to exclude yourself from the class, you must submit a written statement requesting exclusion from the Class on or before October 14, 2006 (hereinafter “Request for Exclusion”). Such request to be excluded must be personally executed by the Class Person, contain the full name, address, telephone number, and account number(s) of the Class Person requesting exclusion and the date(s) of the advertising campaign with Yahoo!, and must be returned to the Claims Administrator at Claim Administrator, PO Box 1340, Minneapolis, MN 55440-1340, by certified or registered mail. If you exclude yourself from the Class and the proposed settlement with Yahoo! is finally approved, you will not be entitled to receive any benefits of the settlement and will remain free to pursue any legal rights you may have against Yahoo! at your own expense, but the representative plaintiff and their lawyers will not represent you as to any claims against Yahoo!.

B. Your Right to Appear and Object to the Proposed Settlement

Any Class Member may appear at the Final Approval Hearing in person or by a duly appointed authorized attorney and show cause, if any, why the settlement should not be approved; provided that (except by special permission of the court) no Class Member shall be heard unless, on or before, October 14, 2006, the Class Member files with the court a written “Notice of Intent to Appear” to the clerk’s address set out below, setting forth all of the Class Member’s objections to the settlement, and mails copies of all such papers to Plaintiff’s and Yahoo!’s counsel at the addresses specified below. Any objection must contain (a) a heading which refers to the Action; (b) the objector’s name,address, telephone number, and Yahoo! account number(s); (c) a statement whether the objector intends to appear at the Final Approval Hearing, either in person or through counsel, and, if through counsel, identifying counsel by name, address, and phone number; and (d) a statement of the grounds supporting the claim.

Office of the Clerk Plaintiff’s Counsel Yahoo’s Counsel
United States District Court
312 N. Spring St.
Attention: Civil Intake Section
Los Angeles, CA 90012 Brian S. Kabateck
Richard L. Kellner
KABATECK BROWN KELLNER LLP
350 South Grand Avenue 39th Floor
Los Angeles, CA 90071 Larry W. McFarland
Dennis L. Wilson
KEATS McFARLAND & WILSON LLP
9720 Wilshire Boulevard
Penthouse Suite
Beverly Hills, CA 90212

C. The Final Approval Hearing

The court will conduct a hearing (the “Final Approval Hearing”) at the United States District Court, Central District of California, Western Division, in the courtroom of the Honorable Christina M. Snyder on November 20, 2006 at 10:00 a.m. (or at the dates and times to which the court may, without further notice, reschedule the hearing). The purpose of the Final Approval Hearing will be to determine whether the proposed settlement is fair, adequate, and proper; and whether the courts should enter judgments approving the settlement, awarding attorneys’ fees and expenses, and dismissing the class action. You have the right, but are not required to attend. Attendance or non-attendance will not affect any Credits to which you may be entitled under the settlement.

11. HOW DO I GET MORE INFORMATION?

A. Availability of the Pleadings, the Agreement, and Other Papers in this Action

The Agreement, with its exhibits and all other papers filed with the court relating to this action, are available for inspection in the offices of the clerk of the court identified above. The documents on file with the court may be examined by any Class Member in person or by counsel during normal court hours each day other than on Saturdays, Sundays, and legal holidays.

Do not call or write the courts, other than as provided above.

B. Settlement Administration Line

If you have questions, you may call a special Settlement Administration line at 1-877-347-6449 weekdays, 9:00 a.m to 5:00 p.m., Pacific Standard Time.

C. Change of Address

If your present address is different from the address on the envelope in which you received this Notice, or if you did not receive this Notice directly but believe you should have, you should call the Settlement Administration line at 1-877-347-6449 and provide your new address.

 

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