Yahoo Must Face Suit From Former Chinese Prisoners

(CN) — Chinese citizens who were imprisoned for online political speech against their government can proceed with a lawsuit against Yahoo claiming a trust fund meant to help them was a sham, the D.C. Circuit ruled Friday.

Reversing the lower court’s dismissal, a unanimous panel revived claims made by seven former prisoners in China that the internet giant violated a settlement agreement by draining the trust it had built to aid Chinese dissidents.

The Yahoo logo is displayed outside of the offices in Santa Clara, Calif., on April 18, 2011. (AP Photo/Paul Sakuma, File)

“We conclude that the complaint in this case plausibly alleges both that Yahoo created a charitable trust and that the plaintiffs’ ‘special interest’ in the trust is sufficient to give them standing to enforce it,” U.S. Circuit Judge Merrick Garland, a Bill Clinton appointment, wrote in the 19-page opinion.

The tech company set up the Yahoo Human Rights Fund Trust in 2007 as part of a settlement of an earlier lawsuit that claimed it had turned over to the Chinese government the personal information of dissidents who used Yahoo email to communicate. China used the account information to imprison them.

The fund was supposed to provide financial assistance to political prisoners in China, but only $700,000 – or 4% of the fund’s original assets – went to that purpose, while most of the rest went to a nonprofit one of the fund’s overseers owns, according to a lawsuit filed by Wang Xiaoning, Shi Tao and their family members in 2017.

Yahoo settled the case under the stipulation that it make payments of $3.2 million to each family and another payment of $17.3 million to be used for humanitarian and legal aid for other political prisoners in China – primarily for those who were imprisoned for expressing views through Yahoo accounts.

According to Garland’s opinion, six of the plaintiffs in the case allege they previously received money from the assistance program and remain potential recipients. One of the plaintiffs who brought the case, however, alleges that he applied for funding from the charitable trust but was told the money was gone.

“As the case proceeds, additional evidence may come to light that either supports or undermines those allegations,” Garland wrote. “But ‘however the evidence may eventually turn out to be, we are not persuaded that any decision on this issue can be based on an inadequacy in the complaint.’”

The federal judge that dismissed the case found the former prisoners failed to adequately state a claim, but Garland wrote that the plaintiffs “plausibly allege an opportunity to benefit from the fund that differs from the incidental and indirect benefit the public may realize from the fund’s humanitarian and legal assistance program.”

Garland was joined on the panel by U.S. Circuit Judge Robert Wilkins, a Barack Obama appointee. Chief U.S. Circuit Judge Sri Srinivasan, another Obama appointee, sat on the panel for oral arguments but did not participate in Friday’s opinion.

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