Marketing Company Wins Appeal in Basketball Promotion Dispute Against Yahoo

You know those fun March Madness promotions where if someone guessed all of the games correctly, they win a bunch of money? Marketing loves them. But they can get expensive in the courtroom when all parties don’t agree on what certain things mean as part the actual agreement.

A federal appeals court has reversed a lower court ruling and awarded $4.4 million to a marketing company in a contract dispute with Yahoo Inc. over a basketball promotion that indirectly involved Warren Buffett and Berkshire Hathaway Inc.

According to Business Insurance News, In late 2013, Sunnyvale, California-based Yahoo signed a contract with Dallas-based SCA Promotions Inc. in which SCA agreed to pay a $1 billion prize if any contestant predicted the winner of all 63 games of the 2014 NCAA Men’s Basketball Tournament. Under the contract, SCA would arrange to obtain coverage to pay the $1 billion from insurers with an A+ A.M. Best rating, according to the ruling. Yahoo paid SCA an initial $1.1 million deposit, with another $9.9 million due. (Nothing more exciting than mixing college basketball and insurance, right?)

And the plot thickens — In January 2014, Detroit-based Quicken Loans Inc. revealed it was sponsoring a similar $1 billion perfect bracket contest with Omaha, Nebraska-based Berkshire Hathaway and its CEO, Mr. Buffet. Yahoo and Quicken agreed Yahoo would co-sponsor the Quicken contest. Yahoo then canceled the SCA contract and demanded repayment of the $1.1 million.

SCA filed suit against Yahoo for breach of contract, alleging that under its contract’s cancellation provision, Yahoo owed it $4.4 million, or 50% of the $11 million contract fee, minus the $1.1 million deposit Yahoo had already paid.

Here’s a “fast break” look at what happened next —
  • Yahoo won the first round in district court and was awarded a $550,000 refund. (slam dunk, right?)
  • A three-judge appeals court panel unanimously reversed the district court’s summary judgment and ruled SCA was entitled to the $4.4 million. (…he shoots, he scores…)

“The parties dispute the meaning of the ‘50% of the fee,’” said the ruling. SCA argued it was $5.5 million, while Yahoo argued it was $550,00 because the phrase referred to 50% of the $1.1 million that Yahoo had paid in its initial deposit, according to the ruling. The District Court agreed with Yahoo’s interpretation, but the appeals court did not. “It is clear to us that ‘50% of the fee’ means 50 percent of the $11 million contact fee,” said the ruling.

And after all of this, nobody won and claimed the $1 billion prize. (because picking all of the NCAA Tournament games and winners is pretty tough).

Disputes can come at you from all places including some well-intended marketing promotions. And when they affect YOUR business, you can look down your bench and bring and in your most dangerous player, Dean Sperling, who will work to resolve YOUR matter with YOUR best interests in mind.  

More on the case:

Marketing firm prevails in contract fight with Yahoo