The case against Yahoo! was brought by two French civil rights groups, La Ligue Contre le Racisme et l'Antisemitisme and L'Union des Etudiants Juifs de France, which successfully sued the company in France for violating the country's laws against racism.
Yahoo! did not appeal the French court's decision in France; instead, it sought a declaration from a federal court in California. It claimed that the order to ban French users from accessing certain auction sites affected the operations of its US servers, and was therefore unenforceable under the First Amendment provisions regarding free speech.
The federal court accepted Yahoo!'s arguments and ruled that the French court could not regulate the company's speech on the internet. The two French groups appealed the decision to the 9th US Circuit Court of Appeals, arguing that the First Amendment cannot prevent the order from being enforced. They also argue that Yahoo! has made no attempt to comply with the order before suing in the US.
According to a report at Law.com, the 9th Circuit panel was uncomfortable with the issues arising from Yahoo!'s decision to challenge the order in the US instead of France.
According to the legal site, one of the judges told the company: "All the French court's saying is, 'Whatever you do, don't impact France.' See? That's called homeland security." He continued: "For some reason you abandoned that appeal. And now you're coming to America and saying 'Help me'".