Quick Fix: Judge Corrects Ruling and Orders Insurer to Repay $550,000 to Yahoo Over Cancelled NCAA Contest

On Thursday, March 24, 2016, a Texas federal judge ordered insurer SCA Promotions Inc. to repay $550,000 to Yahoo, adjusting a ruling in November entitling Yahoo Inc. to recover half of what it paid SCA under an agreement pertaining to an NCAA March Madness contest. It is unclear what the reason behind the correction was due to confidentiality agreements, which were also the subject of dispute earlier in the litigation.

SCA originally brought a breach of contract suit against Yahoo after Yahoo cancelled an NCAA March Madness bracket competition. The competition rules provided that a participant would receive a $1 billion prize if he or she correctly chose the result of all 63 Men’s Basketball March Madness games; the odds of which, assuming each team has a 50 percent chance of winning each game it plays (though odds may improve when considering additional factors) are as low as 1 in 9,223,372,036,854,775,808. SCA agreed to pay this in the unlikely event that there was a winner, in exchange for an $11 million fee to be paid by Yahoo.

The competition was dissolved over a month before the first game started, thereby requiring SCA, pursuant to its agreement with Yahoo, to refund half of the fee. At the time the competition was dissolved, Yahoo had only paid SCA $1.1 million of the $11 million pursuant to a payment schedule detailed by their agreement. SCA sued, claiming Yahoo owed an additional $4.4 million to reach the $5.5 million constituting half of the total fee, while Yahoo argued it was entitled to a refund of half of that which it had already paid up to the point of cancellation — $550,000. The U.S. District Judge ruled in Yahoo’s favor on that issue in November.

SCA has since appealed the judgment to the Fifth Circuit, while Yahoo has appealed the District Court’s denial of summary judgment on counterclaims it filed against SCA.

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