June 7, 2017
Prize promotion and risk management company SCA Promotions, Inc. (“SCA”) recently asked the Fifth Circuit to overturn a Dallas federal court’s judgment on appeal in SCA’s March Madness sweepstakes lawsuit against Yahoo! Inc. (“Yahoo”).
How can contest and sweepstakes sponsors protect themselves?
Promotion and Sweepstakes Lawsuit
Yahoo planned to offer a March Madness sweepstakes contest in 2014 where any entrant who correctly predicted the winner of all 63 games in the NCAA Men’s Basketball Tournament would win a $1 billion prize. In connection therewith, Yahoo contracted to pay an $11 million fee to SCA, who agreed to pay out the full $1 billion prize in the event of a winner. Yahoo made an initial scheduled payment of $1.1 million to SCA soon after signing the agreement.
In January 2014, Yahoo changed its plans and worked out a deal with Quicken (and without SCA) to co-sponsor a very similar “Billion Dollar Bracket Challenge.” That same month, SCA filed a sweepstakes lawsuit against Yahoo, alleging breach of contract and claiming that Yahoo owed SCA nearly $10 million. As we reported in 2015, the district court ultimately granted Yahoo’s motion for summary judgment and dismissed the sweepstakes lawsuit, ruling that Yahoo was actually entitled to a refund of $550,000 from SCA and further awarding Yahoo over $913,000 in attorneys’ fees.
SCA Briefs Appeal
SCA appealed the adverse district court ruling to the Fifth Circuit Court of Appeals (Case No. 17-10239). On May 24, 2017, SCA filed its brief seeking reversal of the district court’s award of attorneys’ fees to Yahoo. SCA alleges that Texas law does not allow defendants to recover for defending against (rather than asserting) a claim, and contends that the vast majority of discovery-related legal work in the case dealt solely with Yahoo’s various counterclaims, which were dismissed on summary judgment.
How a Sweepstakes Lawyer Can Help
Although Yahoo prevailed at the federal district court level, the wheels of litigation continue to spin, and the fate of Yahoo’s contractual obligations to SCA will once again be determined by a court of law. For sponsors of sweepstakes and promotional contests hoping to avoid sweepstakes lawsuits of their own, it makes good business and legal sense to speak with an experienced marketing and promotions attorney before launching a contest or signing any related agreements.
If you are interested in learning more about this topic, pursuing a sweepstakes-related venture, or if you have been served with legal process in connection with your marketing practices, please e-mail us at info@kleinmoynihan.com or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice, nor is it a substitute for obtaining legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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