Why Lawyers Sue Yahoo? 

On Wednesday afternoon, Yahoo disclosed that it had discovered a data breach exposing the private information of more than one billion user accounts.

Less than 12 hours later that same day, a plaintiffs’ firm in Los Angeles had cranked out and filed in federal court a class-action complaint against the internet company.

“Despite Yahoo’s assurances, Yahoo has failed, and continues to fail, to provide adequate protection of its users’ personal and confidential information, as evidenced by Yahoo’s announcements regarding egregious user data breaches affecting over one billion Yahoo User accounts since 2013,” states the lawsuit filed by Capstone Law APC in federal court in San Francisco.

The turnaround time raises the question: Why the rush? What’s the advantage for showing up first when it comes to filing class actions?

In complex, multi-state class-action litigation, you’ll often see virtually the same complaint filed by numerous firms in courts around the country, with each firm representing different named plaintiffs. Typically, after a lengthy process, the complaints are lumped together and a federal judicial panel transfers the litigation to a judge in a particular jurisdiction. That judge eventually picks a lead counsel. Because lead counsel stands to collect a larger share of attorneys’ fees — usually after a settlement — the jockeying among firms for that role can be intense.

The worm, though, doesn’t necessarily go to the early bird, says New York University law professor Arthur R. Miller, a civil procedure expert.

“You’re laying a claim, but in the long run, the mere fact that you were 24 hours ahead of someone else doesn’t mean you’re going to get the brass ring,” Prof. Miller told Law Blog.

In theory, being first could help raise a firm’s profile in the eyes of the courts. “Psychologically,” he said, “it may make a difference in getting everyone’s attention.”

But he said other factors matter a lot more, such as where the case is ultimately consolidated and the size and reputation of the firms competing to be top banana.

Capstone senior counsel Lee Cirsch, who filed the firm’s Yahoo complaint, told Law Blog that he doesn’t expect the turnaround speed to be a decisive factor down the road. But “it doesn’t hurt to have your case filed first,” he said.

Mr. Cirsch said Capstone had already been preparing to join the ongoing class-action litigation around Yahoo’s earlier disclosed hack, so it wasn’t that much of a stretch to pivot and incorporate Wednesday’s breaking news.

He also said there’s a decent chance that complaints about the larger 2013 data breach could be folded into the earlier litigation, consisting of more than a dozen class actions recently consolidated in San Francisco federal court before U.S.District Judge Lucy Koh.

Yahoo on Wednesday said it’s “taken steps to secure” the compromised accounts and is working closely with law enforcement. “We continuously enhance our safeguards and systems that detect and prevent unauthorized access to user accounts,” the company said.

Source: WSJ

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