Yahoo Inc owes a prize promoter US$5.5mil (RM23.5mil) for backing out of a contract to pay US$1bil (RM4.29bil) for predicting every winner in the 2014 NCAA men’s basketball tournament, and entering a similar contract with Quicken Loans Inc and Warren Buffett’s Berkshire Hathaway Inc, a court decided on Monday.

The 5th US Circuit Court of Appeals in New Orleans said SCA Promotions Inc was entitled to half of its US$11mil (RM47.1mil) contract with Yahoo as a cancellation penalty.

It rejected Yahoo’s claim that Dallas-based SCA improperly leaked the promotion to Buffett and Berkshire, while trying to line up insurance coverage for the grand prize.

Berkshire is well-known for insuring against potentially costly events with long odds, such as picking a perfect “March Madness” bracket, as the National Collegiate Athletic Association tournament is known.

“Any information that SCA disclosed to Berkshire Hathaway was not confidential information,” Circuit Judge Edith Brown Clement wrote for a three-judge panel.

Because SCA had kept Yahoo’s US$1.1mil (RM4.7mil) deposit, the appeals court on Monday awarded it another US$4.4mil (RM18.8mil).

The decision reversed a lower court ruling ordering SCA to return US$550,000 (RM2.3mil) of the deposit to Yahoo.

“It is a long battle what we thought was a simple contractual provision,” Jon Patton,  said in an interview.

Verizon Communications Inc bought Yahoo’s Internet business in June, and put it in a unit called Oath.

Charles Stewart, an Oath spokesman, said the unit does not discuss litigation.

Berkshire and Quicken announced their “Billion Dollar Bracket Challenge” three weeks after Yahoo and SCA signed their contract, and Yahoo quickly agreed to co-sponsor it.

No one won the top prize.

Berkshire now sponsors a bracket contest for its roughly 368,000 employees.

This year, a West Virginia factory worker won US$100,000 (RM429,000) for correctly choosing winners of the tournament’s first 29 games.

The case is SCA Promotions Inc v Yahoo Inc, 5th US Circuit Court of Appeals, No. 15-11254. — Reuters

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