Yahoo faces shareholder suit, in talks with News Corp.

The bad news continues for Yahoo. This week, as the Internet company cuts an estimated 1,100 jobs, it's also been hit with a shareholder lawsuit for refusing Microsoft's $44.6 billion buyout offer. Google has also reportedly shied away from an earlier offer to help Yahoo with its search advertising business in order to fend off Microsoft's bid.

Yahoo continues to look for alternatives. According to a source familiar with the matter, News Corp. and Yahoo have been in talks about forging some kind of a deal that would counter Microsoft's offer. The source did not divulge details of the talks. A Yahoo spokeswoman declined to comment.

On Monday, the Wayne County Employee's Retirement System of Michigan, which owns about 13,600 shares of Yahoo, filed a lawsuit in a Michigan court asking that Yahoo be forced to consider the takeover, according to an article from Information Week. The lawsuit was filed after Yahoo rejected Microsoft's offer on the grounds that it undervalued the company.

That lawsuit adds to a previously filed class-action lawsuit against Yahoo. In the first week of February, the law firms Byrne & Nixon in Los Angeles and Barrett, Johnston & Parsley in Nashville, Tenn., filed a complaint against Yahoo for quietly refusing a buyout offer by Microsoft last year. That lawsuit alleges that Yahoo's board declined the offer to hold on to its members' lucrative, six-figure jobs, according to the San Francisco Chronicle.

Yahoo declined comment on any pending litigation. Google declined comment on its offer to help its rival.

CNET News.com's Elinor Mills contributed to this report.