A U.S. appeals court on Friday reinstated a breach of contract claim against Yahoo Inc by an Oregon woman who said the company failed to remove nude photos and fake profiles posted by her estranged boyfriend after promising to do so.

The Ninth U.S. Circuit Court of Appeals ruled on Thursday that Cynthia Barnes could sue Yahoo for agreeing, then failing to stop the dangerous, cruel, and highly indecent use of its site by the ex-boyfriend.

Contract liability here would come not from Yahoo's publishing conduct, but from Yahoo's manifest intention to be legally obligated to do something, which happens to be removal of material from publication, the opinion said.

The appeals court remanded the case to the district court for further action on the state law claim for breach of contract but did not rule on whether the claim was viable.

The appellate decision also affirmed the lower court's dismissal of a claim for negligent undertaking.

Yahoo said in a statement that it was pleased that part of the dismissal stood, and evaluating the opinion on the remaining claim and looking forward to swift resolution in the district court.

Barnes' attorney Thomas Rask of Kell, Alterman & Runstein LLP in Portland, Oregon, said his client sued only after repeatedly asking Yahoo to remove the profiles, then relying on a promise by a Yahoo employee that they would be taken down.

What an (Internet service provider) has to understand is this is not the wild wild West, Rask said. There has to be some rational logic to it. Don't promise to do something and then not do it.

'BIG IMPLICATIONS'

The ruling could have a big implications for Internet companies that enjoy immunity from lawsuits involving user-posted content under the Communications Decency Act (CDA), said attorney Jeff Neuburger, co-chair of the Technology, Media and Communications practice group at Proskauer Rose LLP.

Neuburger, who is not involved in the case, said the opinion would prompt him to counsel media clients with Web operations, including social networking and blogging features, to consider some safeguards.

There are a number of practical implications that flow from this decision, including educating customer service representatives, modifying terms of use and generally making sure that anything that comes from the publisher of the site cannot be viewed as a promise, Neuberger said.

The Yahoo profiles included nude photos of Barnes and her boyfriend taken without her knowledge, her office phone number, email and address and open solicitations for sex, the opinion said.

Before long, men whom Barnes did not know were peppering her office with emails, phone calls, and personal visits, all in the expectation of sex, the opinion said.

Yahoo did not respond to Barnes' requests to remove the profiles until a TV news crew did a story on her situation and called the company for comment, the ruling said.

An employee then told Barnes she would personally walk the statements over to the division responsible for stopping unauthorized profiles and they would take care of it -- a pledge that could be construed as a contract, the opinion said.

The profiles were not removed until more than two months later, after Barnes filed the lawsuit, the opinion said.

Yahoo said it would hotly contest Barnes allegations at trial, the opinion said.

The case is Barnes v. Yahoo! Inc, CV-05-00926, U.S. District Court for the District of Oregon.

(Reporting by Gina Keating; Editing by Bernard Orr)

Yahoo Lawsuit