Dallas-based SCA Promotions filed the suit after Yahoo allegedly illegally backed out of a "Tourney Pick 'Em" promotion a week after Warren Buffet announced a similar contest also offering a $1 billion prize.
"If any contestant correctly predicted in advance of the tournament the winner of each of the 63 games, and both Yahoo! and the contestant complied with the applicable material terms of the contract and the sponsor's official promotion rules, then SCA was obligated to pay the contestant a $1 billion prize as specified in the promotion,” the complaint reads.
According to SCA, Yahoo paid $1.1 million of the $11 million it agreed to fork over in policy premiums and then canceled the deal.
"Despite canceling the contract, Yahoo! has refused to pay the required cancellation fee," the complaint states. "Instead, Yahoo! claims that it owes no such fee and has even demanded return of the initial $1.1 million payment."
SCA is seeking actual damages for breach of contract. Yahoo Sports public relations manager Sean Hamel declined to comment on the lawsuit.