The Dodgers pulled Ted Lilly back off of waivers after the Yankees won the claim on the left-hander, according to Jon Heyman of SI.com (Twitter links). This means virtually every team in baseball let Lilly through (the Rays being the lone possible exception). When the Dodgers placed Lilly on waivers last week, they did not seem inclined to trade him, so their decision is not a surprise.
Earlier in the month, the Yankees maintained that they weren't interested in adding starting pitching. Clearly, something changed this week. Andy Pettitte has been progressing slowly and Dustin Moseley has not fared well in his last four starts, so perhaps the Yankees decided it was time to be aggressive.