UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLUMBIA

HE DEPU et al.,

Plaintiffs,

v.

OATH HOLDINGS, INC. et al.,

Defendants.

Civil Action No. 17-635 (RDM)

MEMORANDUM OPINION AND ORDER

In 2007, two Chinese dissidents, Wang Xiaoning and Shi Tao, and Wang’s wife, Yu 

Ling, sued Yahoo for allegedly abetting Wang and Shi’s prosecution and imprisonment in China 

by disclosing their Yahoo email account information to the Chinese government. Yahoo agreed 

to settle the case (1) by paying $3.2 million each to the Wang family and the Shi family and (2) 

by paying $17.3 million to the Laogai Research Foundation (“Foundation”), a nonprofit 

dedicated to educating the public about the Chinese prison system, to establish the Yahoo 

Human Rights Fund (“YHR Fund”). With respect to the latter, the settlement agreement 

required that the Foundation maintain those funds separately from its other funds and stipulated 

that the funds could be used only for three purposes: (1) to provide humanitarian and legal 

assistance to Chinese dissidents who had been imprisoned for expressing their views through 

Yahoo and other media; (2) to resolve claims against Yahoo brought by those and other 

dissidents; and (3) subject to a $1 million annual cap, to cover the Foundation’s operating 

expenses and to pay for its educational work conducted in support of human rights.

Ten years later, Plaintiffs brought this suit against Yahoo, the Foundation, the Estate of 

the Foundation’s former executive director Harry Wu, the Laogai Human Rights Organization,
2

former Yahoo employees Ronald Bell and Michael Callahan, and other “Doe Defendants.”

Plaintiffs are six Chinese dissidents who either received some money from the YHR Fund or 

who applied for funding but were denied. The crux of their claim is that the settlement 

agreement created a charitable trust; Defendants are its trustees; and Defendants violated their 

fiduciary duties by improperly depleting the trust’s assets and, ultimately, terminating the trust’s 

humanitarian and legal assistance program altogether. 

This Court initially dismissed Plaintiffs’ case for failure plausibly to allege that the 

settlement agreement established a charitable trust or that they have standing to sue under D.C. 

law. The D.C. Circuit reversed and remanded, and, on remand, three sets of Defendants filed 

renewed motions to dismiss, which the Court granted in part and denied in part. At the parties’ 

request, the Court then set a schedule for addressing whether the settlement agreement created a 

charitable trust before turning to the remaining issues posed by the litigation. That schedule 

culminated with an evidentiary hearing held on October 29, 2021.

Based on the evidence presented at the hearing and the parties’ briefs, the Court finds that 

the settlement agreement created a charitable trust.

I. BACKGROUND

Plaintiffs filed this lawsuit on April 11, 2017, invoking the Court’s diversity jurisdiction. 

Dkt. 1. Their complaint named seven defendants—Yahoo, Inc. (“Yahoo”), the Estate of Harry 

Wu, the Foundation, the Laogai Human Rights Organization, the YHR Fund, Yahoo’s former 

general counsel Michael Callahan, and his successor, Ronald Bell—in addition to twenty 

unknown “Doe Defendants” who were employees or agents of the named defendants. Dkt. 26 at 

11–13 (1st Am. Compl. ¶¶ 19–27). Among other things, Plaintiffs alleged that the settlement 

agreement established a trust for purposes of distributing the portions of the YHR Fund that were 
3

set aside for humanitarian purposes and that the Defendants, as trustees, breached their fiduciary 

duties by permitting the depletion of the trust’s assets for purposes unrelated to its humanitarian 

purpose. Id. at 41–43 (1st Am. Compl. ¶¶ 125–31). Plaintiffs also asserted claims for civil 

conspiracy against all Defendants.1 Dkt. 26 at 45–46 (1st Am. Compl. ¶¶ 146–49). In response, 

Defendants filed four separate motions to dismiss. See Dkt. 27 (Foundation); Dkt. 28 (Laogai 

Human Rights Organization); Dkt. 29 (Yahoo, Bell, and Callahan); Dkt. 30 (Wu Estate).2

On March 30, 2018, this Court (Bates, J.) granted the motions to dismiss. He Depu v. 

Yahoo!, Inc., 306 F. Supp. 3d 181, 185 (D.D.C. 2018) (“Depu I”). The Court concluded that 

Plaintiffs “ha[d] not plausibly alleged that Yahoo established a charitable trust in 2007 and, even 

if they had, they lack[ed] standing to bring these claims.” Id. Plaintiffs then moved to alter or 

amend the Court’s judgment and for leave to amend their complaint, and the Court rejected both 

requests. He Depu v. Yahoo!, Inc., 334 F. Supp. 3d 315, 317 (D.D.C. 2018) (“Depu II”).

Plaintiffs appealed and, on February 28, 2020, the D.C. Circuit reversed. He Depu v. 

Yahoo!, Inc., 950 F.3d 897, 908 (D.C. Cir. 2020) (“Depu III”). The D.C. Circuit first held that 

Plaintiffs had plausibly alleged that the 2007 settlement agreement established a charitable trust. 

Id. at 901–05. As the court explained, the elements of a trust under D.C. law are “1) a trustee, 

who holds the trust property and is subject to equitable duties to deal with it for the benefit of 

another; 2) a beneficiary, to whom the trustee owes such duties; [and] 3) the trust property, 

which is held by the trustee for the beneficiary.” Id. at 901 (alteration in original) (quoting 

1 Plaintiffs brought other claims, including claims sounding in tort and contract law. Because 

those claims were dismissed in 2018 and because Plaintiffs did not appeal their dismissal, the 

Court’s recitation of the procedural history omits reference to those claims. 

2 The parties refer in their briefs to the Laogai Research Foundation and the Laogai Human 

Rights Organization collectively as the “Laogai Defendants,” and Yahoo, Bell, and Callahan 

collectively as the “Yahoo Defendants.” See, e.g., Dkt. 122 at 1; Dkt. 123-1 at 1. The Court 

adopts this shorthand when referring to a distinct group of defendants. 
4

Cabaniss v. Cabaniss, 464 A.2d 87, 91 (D.C. 1983)). Most importantly, the law requires “proof 

of the settlor’s intention to create a trust.” Id. (quoting Duggan v. Keto, 554 A.2d 1126, 1133 

(D.C. 1989)). For a charitable trust, like the one alleged by Plaintiffs, “the obligation of the 

trustee is to apply the trust res for some form of public benefit.” Id. (quoting Hooker v. Edes 

Home, 579 A.2d 608, 611 (D.C. 1990)). 

Looking first to the text of the 2007 settlement agreement, the D.C. Circuit concluded 

that the agreement “plausibly identifies . . . a trustee (the Foundation), trust property ($17.3 

million), and a charitable purpose (‘humanitarian and legal assistance’ to persons meeting 

specified criteria).” Id. at 902. The court further noted that the settlement agreement directed 

“that Yahoo’s payments to the Foundation be ‘made in trust’” and that the settlement agreement 

“subject[ed] the Foundation’s handling of the Fund to trust-like restrictions” using “imperative 

language” like “shall,” “shall not,” and “only” in describing how the money in the Fund could be 

spent. Id. (internal quotation marks omitted). The D.C. Circuit also emphasized that the 

settlement barred the Foundation from spending more than $1 million per year on its operating 

expenses and required regular reports on the Foundation’s activities. Id. at 903. “All of this 

together,” the court explained, “plausibly signals the hallmark of a charitable trust: ‘a fiduciary 

relationship with respect to property, subjecting the person by whom the title to the property is 

held to equitable duties to deal with the property for a charitable purpose.’” Id. (quoting 

Restatement (Second) of Trusts § 348 (Am. L. Inst. 1959)). Finally, the D.C. Circuit observed 

that “circumstances surrounding the creation of the Fund” were “probative of trust intent,” 

including Yahoo’s public statements promoting the Fund’s humanitarian purpose. Id. 

The D.C. Circuit also rejected various counterarguments pressed by Defendants. Most 

notably, it rejected Defendants’ argument that the terms of the settlement agreement permitted 
5

the Foundation to deplete the YHR Fund, if necessary, to settle claims against Yahoo, leaving 

nothing for the Fund’s humanitarian purpose. That argument did not move the court because

“trustees must act ‘impartially in . . . [the distribution of] trust property,’ paying ‘due regard’ to 

the ‘respective interests’ of each.” Id. at 904 (alteration in original) (quoting D.C. Code § 19-

1308.03). The D.C. Circuit also rejected Defendants’ argument that a 2009 amendment to the 

settlement agreement—which established the Yahoo Irrevocable Human Rights Trust—showed 

that Defendants knew how to create a trust when they wanted to do so. Id. at 905. As the court 

explained, one can infer little, if anything, about “Yahoo’s intent in executing the 2007 

[s]ettlement [a]greement” from the fact that “two years later it used more formal documents to 

create a different trust.” Id. (emphasis added). 

Having concluded that Plaintiffs had plausibly alleged that the settlement agreement 

established a charitable trust, the D.C. Circuit also held that Plaintiffs had plausibly alleged that 

they have standing to enforce that trust under D.C. law. Id. at 905–08. Only those with “a 

‘special interest’ in continued performance of the trust distinguishable from that of the public at 

large” may sue to enforce a charitable trust. Id. (quoting Fam. Fed’n for World Peace v. Hyun 

Jin Moon, 129 A.3d 234, 244 (D.C. 2015)). To satisfy this requirement, the plaintiff must satisfy 

two conditions: first, the action must “challenge an ‘extraordinary measure threatening the 

existence of the trust,’ not just an ‘ordinary exercise of discretion’ committed to the trustees;”

and, second, “the plaintiff[] [must] belong to a class of potential beneficiaries that is ‘sharply 

defined’ and ‘limited in number.’” Id. at 906 (quoting Hooker, 579 A.2d at 614–15). Here, the 

D.C. Circuit held that Plaintiffs had plausibly alleged that they satisfied both requirements.

The D.C. Circuit, accordingly, reversed and remanded for further proceedings. Id. at 908.
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On remand, Plaintiffs filed a second amended complaint. Dkt. 64 (2d Am. Compl.). This 

complaint names the same Defendants, except that Oath Holdings, Inc., a subsidiary of Verizon, 

is substituted for Yahoo as a Defendant.

3

 Id. at 12 (2d Am. Compl. ¶ 16). The Second Amended 

Complaint includes six counts. The first four are substantially the same claims for breach and 

modification of trust set forth in Plaintiffs’ earlier complaints. Id. at 56–60 (2d Am. Compl. 

¶¶ 170–88). The fifth count realleges a civil conspiracy, id. at 60–61 (2d Am. Compl. ¶¶ 189–

92), and the sixth count seeks restitution against the Doe Defendants on the ground that they 

allegedly received trust property despite knowledge of the breach, id. at 61–62 (2d Am. Compl. 

¶¶ 193–96). 

Defendants again moved to dismiss. See Dkt. 65, Dkt. 67; Dkt. 69. On March 22, 2021, 

the Court granted those motions in part and denied them in part. He Depu v. Oath Holdings, 

Inc., 531 F. Supp. 3d 219, 225 (D.D.C. 2021) (“Depu IV”). Specifically, the Court (1) dismissed 

Count II—which sought to modify the trust by removing Callahan, Bell, and the Wu Estate as 

trustees—as moot, and (2) dismissed Plaintiffs’ civil conspiracy claims (Count V) against the 

Laogai Defendants and the Wu Estate for failure to state a claim. Id. at 247. In all other 

respects, the Court denied the motions to dismiss. Id. 

In the wake of the Court’s ruling, the parties proposed, and the Court adopted, a 

discovery schedule. See Dkt. 97. But, on May 25, 2021, Plaintiffs filed a partial motion for 

judgment on the pleadings pursuant to Federal Rule of Civil Procedure 12(c) on the ground that

the D.C. Circuit’s opinion “establish[ed] the existence of an irrevocable charitable trust.” Dkt. 

103-1 at 5. Upon consideration of Plaintiffs’ motion, the Court ordered Plaintiffs to address

3 Plaintiffs also added greater specificity to their allegations directed at the Doe Defendants, who 

Plaintiffs intend to name after discovery. Id. at 14–15 (2d Am. Compl. ¶¶ 28–30); see also Dkt. 

93 at 19. 
7

whether Federal Rule of Civil Procedure 12(c) provides a vehicle for resolution of a discrete 

legal issue—such as whether the settlement agreement established a charitable trust—when 

resolution of that legal issue would not, standing alone, dispose of any claim asserted in the 

litigation. See Min. Order (May 26, 2021). In response, Plaintiffs conceded that “there is no 

controlling authority on [the] issue,” Dkt. 104 at 1, and noted that, “[o]utside this district, courts 

directly considering the question have split,” id. at 2. 

The Court then held a status conference on Plaintiffs’ motion. See Min. Entry (June 2, 

2021). The Court expressed doubt that it could resolve the question whether the settlement 

agreement established a trust in the context of Plaintiffs’ motion for judgment on the pleadings 

(or a motion for summary judgment) because Plaintiffs were not seeking the entry of judgment 

on any claim. June 6, 2021 Hrg. Tr. (Rough at 1–2). In response, counsel for Plaintiffs stated 

that they were indifferent with respect to the proper procedural vehicle but that, however 

possible, they wanted to obtain an early decision on “the existence of a trust.” Id. at 5. The 

parties agreed to confer regarding how the case should proceed, id. at 18, and the Court denied 

the motion for judgment on the pleadings without prejudice, see Min. Order (June 2, 2021). 

On June 9, 2021, the parties submitted a joint status report requesting that the Court 

“schedule an evidentiary hearing” on or after October 7, 2021 “to adjudicate the question 

whether the Settlement Agreement . . . created a charitable trust within the meaning of the law of 

the District of Columbia.” Dkt. 105 at 1–2. The parties further proposed a focused schedule for 

discovery on the “[t]rust [i]ssue,” to begin on June 25, 2021, and to continue on a “rolling basis.” 

Id. In addition, Plaintiffs notified the Court of their intention to file a motion for preliminary 

injunction, “seeking to preclude the [Foundation] and the [Laogai Human Rights Organization] 

from further spending funds it obtained from the Settlement Agreement,” except for making cash 
8

payments to Chinese dissidents and their families. Id. at 2. In light of the parties’ joint status 

report, the Court ordered focused discovery “on the question of whether the Settlement 

Agreement . . . created a charitable trust within the meaning of D.C. law;” approved the parties’ 

proposed briefing schedule; and scheduled an evidentiary hearing for October 29, 2021. Min.

Order (June 10, 2021). The Court stayed “all discovery and discovery-related deadlines 

unrelated to the question of whether the settlement agreement created a trust.” Id. 

On July 2, 2021, Plaintiffs moved for a preliminary injunction, arguing that “absent an 

injunction requiring [the Laogai Defendants] to spend [YHR Fund] assets only on the trust’s 

humanitarian purpose, a post-litigation judgment requiring them to pay damages to that purpose 

is likely to be an empty victory.” Dkt. 108-1 at 28. The Court held a hearing on that motion on 

September 8, 2021, see Min. Order (Sept. 8, 2021), and denied the motion on September 27, 

2021, see He Depu v. Oath Holdings, Inc., No. 17-cv-635, 2021 WL 4399528, at *1 (D.D.C. 

Sept. 27, 2021) (“Depu V”). Among other things, the Court concluded that Plaintiffs “failed to 

carry their burden of demonstrating that they [would] suffer imminent and irreparable injury in 

the absence of preliminary injunctive relief,” id. at *3–4; failed to show that the balance of 

hardships weighed in favor of granting preliminary relief; id. at *5; and failed to demonstrate that 

they are likely to succeed on merits, id. In particular, the Court was unpersuaded that a marginal

diminution in the value of the YHR Fund justified preliminary relief, particularly given the 

burden an injunction would have placed on the ability of the Laogai Defendants to litigate the 

case and the exceedingly thin evidentiary showing that Plaintiffs offered on the merits. Id. 

On October 29, 2021, the Court held an evidentiary hearing on the question whether the 

2007 settlement agreement created a charitable trust. In advance of the hearing, the parties 

submitted trial briefs, Dkt. 121; Dkt. 122; Dkt. 123; Dkt. 124, and responses, Dkt. 126; Dkt. 127; 
9

Dkt. 128; Dkt. 129. At the hearing, the Court heard testimony from Defendant Michael 

Callahan, who served as Yahoo’s general counsel from August 2003 to July 2012 and also 

served on the Board of the Laogai Human Rights Organization, and Jeffrey Fiedler, who cofounded the Foundation in 1992. See Dkt. 135 at 39 (Callahan); id. at 111 (Fiedler); Dkt. 121-2 

at 10 (Callahan Dep. 9:15–11:8). The parties also introduced more than eighty exhibits, see Dkt. 

135 at 3–7, including deposition testimony from Jerry Yang, Yahoo’s co-founder and former 

CEO, see Pl. Ex. 1; Michael Samway, former Yahoo deputy general counsel and YHR Fund 

Board member, see Pl. Ex. 3; and Theresa Harris, a former YHR Fund Board member, see Pl. 

Ex. 4. 

II. FINDINGS OF FACT

Based on the entire record before the Court, including the evidence and testimony offered 

at the October 29, 2021 hearing, the Court makes the following factual findings:

Yahoo is a global web services provider. Founded by Jerry Yang and David Filo in 1995, 

the company quickly became “one of the major players in the dot-com frenzy of the late 1990s.” 

Yahoo! American company, Britannica, https://www.britannica.com/topic/Yahoo-Inc (last visited 

May 11, 2022); see also Dkt. 123-1 at 20 (Yang Decl. ¶ 1). In 2007, Yang became Yahoo’s 

Chief Executive Officer. Id. That same year, two imprisoned Chinese dissidents, Wang 

Xiaoning and Shi Tao, and Wang’s wife, Yu Ling, sued Yahoo, alleging that the company

abetted their arrest and imprisonment in China. See generally Complaint, Wang v. Yahoo! Inc., 

No. 07-cv-2151, 2007 WL 1230526 (N.D. Cal. Apr. 18, 2007); Amended Complaint, Wang v. 

Yahoo! Inc., No. 07-cv-2151, 2007 WL 1908759 (N.D. Cal. May 19, 2007); see also Depu III, 

950 F.3d at 899. According to the Wang plaintiffs, Yahoo’s Chinese subsidiary turned Wang 

and Shi’s private email records and other information over to Chinese authorities after they 
10

expressed pro-democracy views, and Yahoo’s actions aided and abetted their arrest, 

imprisonment, and torture. Amended Complaint at 1, Wang v. Yahoo! Inc., No. 07-cv-2151, 

2007 WL 1908759.

After the lawsuit was filed, Yang and Yahoo’s general counsel at the time, Michael 

Callahan, were called to testify before the U.S. House Committee on Foreign Affairs about 

assistance that Yahoo provided to the Chinese government, which the Chinese government used 

to oppress dissidents. Dkt. 123-1 at 4, 6 (Yang Dep. 12:20–21, 14:10-18); Yahoo! Inc.’s 

Provision of False Information to Congress: Hearing Before the H. Comm. on Foreign Affs., 

110th Cong. 16, 22 (2007) (hereinafter “2007 House Hearing”). Yu Ling and Shi Tao’s mother, 

Gao Qinsheng, attended the hearing with Harry Wu, executive director of the Laogai Research 

Foundation in Washington, D.C. Dkt. 123-1 at 4–5 (Yang Dep. 12:23–13:9); see also 2007 

House Hearing at 7, 12. The Laogai Research Foundation is a non-profit organization that Wu 

established to educate the public about China’s “exploitative prison system,” also known as the 

“Laogai.” Dkt. 122-1 at 2 (Fiedler Decl. ¶ 3). Wu himself had been imprisoned for eighteen 

years in the Laogai system. Id. 

During the congressional hearing, Members of Congress criticized Yahoo for failing to 

provide relief to the Wang plaintiffs and for its activities in China more broadly. Committee 

Chairman Tom Lantos called the company’s behavior “outrageous” and admonished Yang and 

Callahan that, “while technologically and financially you are giants, morally you are pygmies.” 

2007 House Hearing at 50 (statement of Rep. Lantos). Some committee members urged Yang 

and Callahan to settle with the Wang plaintiffs as soon as possible. See, e.g., id. at 39 (statement 

of Rep. Smith) (“So settle [the case] and settle it, I would say, generously in their favor. That 

would be one way you could convey to the committee and I think to your shareholders, the 
11

American people, and especially to the victims that you . . . recognize that there are true victims 

because of this complicity.”). At the same time, the committee members praised Wu as “one of 

freedom’s heroes in the world.” Id. at 12 (statement of Rep. Pence). 

After the hearing, Yang met with Wu, Gao, and Yu—as members of the committee had 

urged. Dkt. 123-1 at 4–5 (Yang Dep. 12:20–13:20); 2007 House Hearing at 39 (statement of 

Rep. Smith); id. at 56 (statement of Rep. Delahunt). Yang had never met Wu before. Dkt. 123-1 

at 5 (Yang Dep. 13:10–23). The meeting was short but emotional for all involved, including 

Yang. Id. at 7 (Yang Dep. 15:13–15); id. at 8 (Yang Dep. 16:5–10). Before the meeting’s end, 

Yang told Wu that he would like to reach a negotiated resolution with the Wang Plaintiffs and to 

“do[] something to support human rights efforts more broadly.” Id. at 9 (Yang Dep. 17:11–22).

There was no specific discussion of creating a fund during that meeting. Id. (Yang Dep. 17:19). 

The Wang plaintiffs assigned power of attorney to Wu, who then engaged in discussions

with Yang about a possible settlement agreement. Dkt. 123-1 at 20 (Yang Decl. ¶ 3). The YHR

Fund was the product of those discussions. See Pl. Ex. 23 at 1–3. On November 9, 2007, 

Yahoo, the Wang plaintiffs, Gao, Wu, and the Foundation entered a Memorandum of 

Understanding setting forth their intent to execute a “Final Settlement and Release Agreement” 

pursuant to which Yahoo would take certain actions “[i]n exchange for the dismissal with 

prejudice” of the Wang lawsuit. Yahoo Defs. Ex. 4 at 1. Yahoo agreed to make payments of 

$3.2 million to the Wang family and $3.2 million to the Shi family and, as relevant here, to

“establish a fund,” which would become the YHR Fund, “with the payment terms to be finalized 

[in the agreement] in the amount of $17.3 million with the Laogai Research Foundation to be 

used to further its humanitarian activities and projects in the People’s Republic of China.” Id. 
12

Yahoo’s goal in negotiating the settlement agreement was twofold: first, to address 

litigation against Yahoo, and, second, to “help people who have suffered from expressing their 

views online,” regardless of “whether or not they were Yahoo! users.” Pl. Ex. 1 at 6–7 (Yang 

Dep. 18:16–23:9). With respect to the second purpose, “the idea was to ask” Wu, who was an 

expert on human rights, particularly with respect to China, “to help [Yahoo] assess, evaluate, 

and, if needed, provide[] . . . humanitarian or financial assistance to people that he saw as those 

people who are affected” by government repression. Id. at 6 (Yang Dep. 18:18–19:12). In other 

words, the settlement was intended to resolve litigation and, beyond that business interest, to 

“partner” with Wu to provide humanitarian and legal assistance to Chinese dissidents (and 

perhaps others) who were imprisoned for expressing their political views using Yahoo or other

online services or media. Id. at 7 (Yang Dep. 22:4–23:9). 

On November 13, 2007, Yang emailed Wu a draft agreement and noted, “if we can agree 

to the spirit, then we can let our lawyers work out the details.” Pl. Ex. 13 at 1. Wu, the 

Foundation, and the Wang plaintiffs’ families were represented by Foley Hoag, while Yahoo was 

represented by O’Melveny & Myers. Dkt. 135 at 81 (Callahan). The draft agreement included 

provisions for “the dismissal with prejudice of the [Wang lawsuit];” the payment of “a total of

$3.2 million USD jointly to Shi Tao and his family, and a total of $3.2 million USD jointly to 

Wang Xiaoning and his family;” and the payment of $17.3 million to the Foundation to establish 

the YHR Fund. Pl. Ex. 13 at 2–3. The draft agreement specified that the $17.3 million “sum 

shall be maintained separately from other Foundation funds and shall be known at the ‘Yahoo! 

Human Rights Fund.’” Id. at 3. The draft further provided: “All Payments Made in Trust to 

Foundation. The payments to the Foundation shall be made to the Foundation in four equal 

installments on ____ [DATES TO BE NEGOTIATED].” Id. 
13

The draft agreement stipulated that “[t]he YHR Fund may be used for three purposes 

only: (a) to provide humanitarian and legal assistance primarily to persons in the People’s 

Republic of China who have been imprisoned for expressing their views through Yahoo! or 

another online service or medium; (b) to resolve claims primarily by such persons, or persons 

threatened with prosecution or imprisonment, against the Yahoo! Entities or any Yahoo! 

Subsidiary or affiliate; and (c) for payment of Foundation operating expenses,” subject to various 

restrictions. Id. Those restrictions included, most notably, a requirement that the Foundation 

and Wu “use their best efforts to maximize the benefits achieved through their use of a portion of 

the YHR Fund for humanitarian and legal assistance,” and a $500,000 annual cap on the amount 

that the Foundation could “use for its operating expenses.” Id. at 3–4. Finally, the draft 

agreement required that the Foundation provide Yahoo with “semi-annual reports . . . regarding” 

certain activities. Id. at 4.

That same day, and just one week after the congressional hearing, Yahoo issued a press 

statement titled, “Yahoo! Inc. Reaches Settlement on Lawsuit and Works to Establish Human 

Rights Fund.” Pl. Ex. 25 at 1. According to the statement, Yahoo was “working to create a 

separate humanitarian relief fund to provide support to . . . political dissidents and their 

families.” Id. The statement then quoted Yang, stating that Yahoo was “committed to making 

sure our actions match our values around the world” and that, in light of that commitment, 

Yahoo would “establish a Human Rights Fund to provide humanitarian and legal aid to 

dissidents who have been imprisoned for expressing their views online.” Id. In a document 

circulated internally and entitled “Background Q and A on Litigation Settlement,” Yahoo’s staff 

was instructed to emphasize the humanitarian nature of the settlement agreement. Id. If asked, 

for example, “Did Yahoo! decide to settle the case because of pressure from Congress?” staff 
14

was instructed to respond, “[t]his was not a legal calculation but a humanitarian decision made 

by [Yang] and the company.” Id. at 2. And, if asked “[w]ho is eligible to apply to the Human 

Rights Fund?” staff was directed to respond that “Yahoo! is working to establish a humanitarian 

fund for . . . dissidents and their families.” Id. The announcement attracted significant press 

attention. See, e.g., Yahoo Settles Lawsuit by Families of Chinese Journalists, N.Y. Times (Nov. 

14, 2007), https://www.nytimes.com/2007/11/14/business/worldbusiness/14ihtyahoo.1.8330877.html. 

Yahoo and Wu exchanged more drafts of the settlement agreement, each of which

included the following caption to the paragraph requiring Yahoo to make payments to the 

Foundation to establish the YHR Fund: “All Payments Made in Trust to Foundation.” See, e.g.,

Pl. Ex. 29 at 3 (Nov. 14, 2007 draft); Pl. Ex. 32 at 3 (Nov. 16, 2007 draft); Pl. Ex. 57 at 6 (Nov. 

19, 2007 draft); Pl. Ex. 33 at 3 (Nov. 20, 2007 draft). According to Callahan, the parties never 

discussed the inclusion of this language or its significance. See Dkt. 135 at 84 (Callahan). Nor 

did they discuss whether the agreement would create a charitable trust. Id. They added more 

“trust” language to the portion of the agreement about the Wang plaintiffs, however; as of 

November 14, 2007, “payments to the [Wang plaintiffs] [would] be made to the Foundation and 

[would] be held by the Foundation in separate trust accounts in the name of” the families. Pl. 

Ex. 29 at 3. There was a sense of urgency, especially on Yahoo’s part, to finalize the agreement. 

On November 20, 2007—just two weeks after the censorious congressional hearing where Yang 

met Wu for the first time, and one week after the first draft of the settlement agreement had been 

shared—Yang sent Wu an updated draft of the agreement with a cover message stating “thank 

you for your patience!” Pl. Ex. 33 at 1. By November 26, 2007, Wu had opened a bank account 

for the YHR Fund, and he had shared that account information with Yang. Pl. Ex. 14 at 3. 
15

The final settlement agreement, signed in December 2007 but made “effective as of 

November 9, 2007,” comprises ten pages and contains three “terms and conditions” in section II. 

See Pl. Ex. 14 at 11–22. First, section II.A, titled “Dismissal of All Pending Litigation Between 

the Parties,” provides that, “[i]n consideration of the promises contained in this Agreement, [the 

Wang plaintiffs], directly or through their authorized representatives, have agreed to the 

dismissal with prejudice of the Action against Yahoo!, Inc. and Yahoo! Hong Kong Ltd.” Id. at 

11. 

Second, section II.B, titled “Payment by Yahoo! Inc. to the Families,” states that Yahoo 

“will pay a total of $3.2 million” to each plaintiff and his family. Id. at 12. It further states:

1. Monies to Be Held In Trust For Families by Laogai Research Foundation

(“The Foundation”). The payments to the Wang and Shi Families will 

be made to the Foundation and will be held by the Foundation in separate 

trust accounts in name of the Wang Family and the Shi Family. The 

monies from the separate trust accounts will be distributed by the Laogai 

Research Foundation to the respective families, and will not be used for 

any other purpose.

2. Foundation Obligations to Wang and Shi Families. The Foundation shall 

take responsibility for distributing the $3.2 million USD trust accounts 

to the Wang and Shi Families in a manner that best effectuates the 

Parties’ intention that those families’ needs are provided for while Wang 

and Shi remain imprisoned. In fulfilling that responsibility, the 

Foundation shall be guided by the wishes and instructions of Wang 

Xiaoning and Yu Ling for the Wang family, and Shi Tao and Gao 

Qinsheng for the Shi family.

Id. 

Finally, section II.C is titled “Payment by Yahoo!, Inc. to the Foundation to Establish the 

Yahoo! Human Rights Fund.” Id. It states: “Yahoo! Inc. will make payments totaling a 

maximum of $17.3 million to the Foundation subject to the conditions noted below. These 

payments shall be maintained separately from other Foundation funds and shall be known as the 
16

‘Yahoo! Human Rights Fund’ or ‘YHR Fund.’” Id. Following this introductory paragraph, the 

agreement includes Section II.C.1, titled “All Payments Made in Trust to Foundation.” Id. That 

paragraph provides that “[t]he payments to the Foundation shall be made in four installments,” 

and it establishes quarterly dates for each, with the first payment required “upon signing.” Id. 

This paragraph further provides that “[p]ayment of the Second, Third[,] and Fourth Installments 

is contingent upon a satisfactory review by Yahoo!, Inc. of the disbursements from the YHR 

Fund during the previous quarter. For purposes of this paragraph, a ‘satisfactory review’ is one 

that confirms that such disbursements conform with the purposes of the YHR Fund.” Id.

Section II.C.2 of the agreement is titled “Foundation Use of Yahoo! Human Rights 

Fund.” Id. at 13. That section provides as follows:

Foundation Use of Yahoo! Human Rights Fund. The YHR Fund may be used 

for three purposes only: (a) to provide humanitarian and legal assistance 

primarily to persons in or from the People’s Republic of China who have been 

imprisoned for expressing their views through Yahoo! or another medium; (b) 

to resolve claims primarily by such persons, or persons threatened with 

prosecution or imprisonment, against the Yahoo! Entities or any Yahoo! 

subsidiary or affiliate; and (c) for payment of Foundation operating expenses 

and the Foundation’s educational work conducted in the United States in support 

of human rights, to the extent provided below. 

(i) In their implementation of paragraph 2(a), above, the Foundation and its 

Executive Director, Harry Wu, agree to use their best efforts to maximize 

the benefits achieved through their use of a portion of the YHR Fund for 

humanitarian and legal assistance. 

(ii) In their implementation of paragraph 2(b), above, the Foundation and its 

Executive Director, Harry Wu, agree to use their best efforts to evaluate 

and, as appropriate, use YHR Fund monies to settle claims against the 

Yahoo! Entities or any Yahoo! subsidiary or affiliate (collectively, 

“Yahoo!”). Yahoo! may refer such claimants to the Foundation, which 

will attempt to settle their claims using the YHR Fund. The Foundation 

shall not make any such settlement payment without first obtaining a 

release in a form approved in advance in each case by Yahoo!. Persons 

entering into such settlements or providing such releases shall not be 

deemed third-party beneficiaries of this Agreement. The Foundation 

hereby agrees to use the YHR Fund to indemnify and hold Yahoo!
17

harmless from and against any claims, liabilities, damages, attorneys’

fees, or costs arising out of any legal or administrative proceeding 

initiated by or on behalf of any person referred to the Foundation by 

Yahoo!. 

(iii) Pursuant to paragraph 2(c), above, the Foundation may use for its 

operating expenses up to $1 million USD of the YHR Fund in each 

calendar year (prorated for 2007). The Foundation will provide 

notification to Yahoo! concerning the amount of the YHR Fund that is 

used each year for the operating and educational expenses of the 

Foundation. 

Id. Those paragraphs set forth the exclusive “three purposes” of the Fund. See Hr. Tr. at 45 

(Callahan) (describing the agreement as “settl[ing] litigation and creat[ing] the Yahoo Human 

Rights Fund with the three purposes”). Section II.C.2 goes on to impose further requirements on 

the Fund, however: 

(iv) The YHR Fund shall not be used to fund or support in any manner, 

directly or indirectly, any litigation, claim, or complaint, before any 

court, administrative body, legislative body, or any other forum, 

anywhere in the world, by any person or entity, against Yahoo!.

(v) The YHR Fund shall be used only in conformity with the civil and 

criminal laws of the United States and of other countries in which it may 

be expended. The YHR Fund shall not be used for political purposes of 

any kind and shall not be given to, or used to support or assist, directly 

or indirectly, any governments, political parties, or armed organizations. 

(vi) The Foundation shall provide the Yahoo! Entities semiannual reports, in 

June and December of each year, regarding all of its activities pursuant 

to paragraphs II.B. and II.C. of the Agreement.

Id. at 13–14. 

The agreement also contains various “waivers and releases” and “additional and 

miscellaneous provisions.” Id. at 14–20. One provision, section IV.C.3, states that 

Harry Wu and the Laogai Research Foundation hereby warrant and represent 

that they will establish a Board of Directors for the YHR Fund. The Board of 

Directors shall have the power and authority to direct the activities and 

expenditures of the YHR Fund, subject to the restrictions set forth in this 

agreement. Harry Wu and the Laogai Research Foundation shall consult with 
18

Yahoo! regarding the composition and membership of the Board of Directors 

before making any appointments to the Board. 

Id. at 16. Of relevance here, section IV.L, titled “Headings,” states that “[s]ection and paragraph 

headings contained in this Agreement are for convenience and shall not be considered for any 

purpose in construing this Agreement.” Id. at 19. 

On November 26, 2007, the Foundation opened three new accounts at Bank of 

America—two for the Wang plaintiffs, and one for the YHR Fund. Dkt. 121-13 at 2–3. The 

“Title on Account” for each, respectively, was listed as (1) “The Laogai Research Foundation 

Fundraising Account: Harry Wu/Yu Ling,” (2) “The Laogai Research Foundation Fundraising 

Account: Harry Wu/Gao Qinsheng,” and (3) “The Laogai Research Foundation Fundraising 

Account: Harry Wu/YHR Fund.” Id. at 3. On or about December 7, 2007, Jamie Vogel, a 

member of Yahoo’s finance team, instructed Yahoo’s treasury office to make payments to the

Foundation pursuant to the settlement agreement. Dkt. 123-2 at 7. Vogel instructed that three 

payments be made: two separate payments of $3.2 million to each of the Wang plaintiffs’ 

families, “to be held in a trust by Laogai Research Foundation,” and one payment of $4.4 million 

“to establish Yahoo! Human Rights Fund at Laogai Research Foundation.” Id. The latter 

payment was to be made to “the Laogai Research Foundation—Harry Wu/YHR Fund” at Bank 

of America. Id. 

On or around February 25, 2008, the Foundation posted a statement on its website 

announcing the creation of the YHR Fund.4

 The two-page statement was entitled “Yahoo! 

4 The record does not contain the statement in its final, posted form and, instead, includes the

final draft and an email from a Foundation employee dated February 25, 2008, indicating that 

she would “post [the statement] on the [Foundation] . . . site[] this afternoon.” Pl. Ex. 6 at 1. 

The Court finds that the statement was posted on the Foundation’s website on or around that 

date. 
19

Human Rights Fund Established to Help Chinese Cyber-Dissidents.” Pl. Ex. 7 at 2. It said: “On 

January 1, 2008, Yahoo! and the Laogai Research Foundation created the Yahoo! Human Rights 

Fund to assist victims of Internet censorship and other political prisoners in China.” Id. It also

explained that the Fund would “provide humanitarian and legal assistance to persons in the 

People’s Republic of China who have been imprisoned or persecuted for expressing their views 

using the Internet,” and that “[i]ndividuals who used Yahoo!’s services to express themselves 

[would] be given the highest priority.” Id. at 3. The statement noted that the Foundation was 

“honored to act as the steward of this endowment” and was “taking strategic steps to ensure the 

prompt and prudent use of th[e] fund.” Id. at 2. “In fulfilling its responsibilities as the Fund’s 

steward,” the Foundation stated that it would expand its “human rights network,” provide 

“humanitarian and legal assistance,” and enhance its “educational work.” Id. at 3.

As required by the settlement agreement, see Pl. Ex. 14 at 16, the Foundation and Wu 

established a Board of Directors for the YHR Fund, see Dkt. 121-22 at 1–4; Dkt. 123-2 at 18. 

Although the Foundation referred to the Board as an “advisory board,” see, e.g., Dkt. 121-22 at 

2, the settlement agreement granted the Board “the power and authority to direct the activities 

and expenditures of the YHR Fund, subject to the restrictions set forth in [the settlement] 

agreement,” Pl. Ex. 14 at 16, and not merely the opportunity to advise the Foundation or others 

regarding YHR Fund expenditures. The Board had five members: Tienchi Liao, Director of the 

Foundation; Michael Samway, Vice President and Deputy General Counsel of Yahoo; Lucie 

Morillon, Washington Bureau Director of Reporters Without Borders USA; Theresa Harris, 

Deputy Director of the World Organization for Human Rights USA; and Wu. Dkt. 123-2 at 18; 

see also Pl. Ex. 8 at 2. Samway—the only Board member from Yahoo—was added to the Board 

after he and Wu met and they agreed that Samway should join the Board, provided that Callahan 
20

and Yang agreed. Dkt. 123-2 at 24–25. Callahan and Yang indicated via email to Wu that they 

thought Samway “would be a great addition to your Board.” Id. at 25. The Board met at least 

four times in 2008, on March 20, May 30, August 27, and October 15, and at least once in 2009, 

on April 15. See Pl. Ex 8 (March 2008 meeting minutes); Pl. Ex. 10 (May 2008 meeting 

minutes); Pl Ex. 11 (August 2008 meeting minutes); Pl. Ex. 36 (October 2008 meeting minutes); 

Pl. Ex. 53 (April 2009 meeting minutes).5 

Prior to the Board’s first meeting on March 20, 2008, Liao distributed two documents to 

the group: a “Yahoo! Human Rights Fund Advisory Board Member Agreement with the Laogai 

Research Foundation” and “Yahoo! Human Rights Fund in the Laogai Research Foundation 

Guidelines for Providing Assistance.” Dkt. 121-8 at 12; see also Dkt. 121-22 at 2 (member 

agreement); id. at 3–4 (guidelines). The Board member agreement was a one-page 

acknowledgment of each Board member’s “duties and responsibilities.” Dkt. 121-22 at 2. Those 

duties and responsibilities included the following:

1. My function on the advisory board is to provide direction for the activities 

of the YHRFund.

2. As a member of the board, I am responsible for carrying out the YHRFund’s 

mission of (a) providing humanitarian and legal assistance primarily to 

persons in or from the People’s Republic of China who have been 

imprisoned for expressing their views through Yahoo! or another medium, 

and (b) supporting the educational work of the Laogai Research Foundation.

3. I am responsible for annually reviewing and providing advice on the 

YHRFund’s general strategies for achieving this mission, as developed by 

the director and staff of the Laogai Research Foundation.

5 Plaintiffs’ Exhibit 53 is a copy of Board meeting minutes dated “April 15, 2008.” Pl. Ex. 53 at 

1. Plaintiffs’ exhibit list, however, refers to the document as “April 15, 2009 YHRF Board 

minutes.” Dkt. 133 at 6. According to the minutes, Harris “has resigned from the Board” due to 

a conflict of interest. Pl. Ex. 53 at 1. But Harris attended Board meetings in August and October 

2008, and she testified that she left the Board “sometime in late 2008.” Pl. Ex. 4 at 21 (Harris 

Dep. 80:4–7). Based on those facts, the Court finds that the date in the minutes is incorrect and 

that the April meeting occurred in 2009. 
21

4. I am fiscally responsible for the financial wellbeing of the YHRFund. It is 

my duty to review and approve the semi-annual reports of the YHRFund’s 

activities, to ensure that the mission is being advanced. The Laogai 

Research Foundation, as administrators of the YHRFund, will provide me 

with these financial reports, which allow me to meet the prudent person 

section of the law.

5. I will attend advisory board meetings and be available for phone 

consultation.

6. All advisory board discussions and materials are strictly confidential. I shall 

not disclose confidential information about the YHRFund or its activities to 

any other person, except to the extent that such disclosure is required by 

law. In the case of either of these exceptions, I will promptly notify all other 

advisory board members of the disclosure.

7. If a majority of the members of the Advisory Board determine that I have 

failed to act in good faith, I must resign.

Id. At the March 20 Board meeting, Wu read the Board member agreement aloud to the others. 

Dkt. 121-8 at 12. After Wu did so, Liao “expressed her understanding . . . that the term ‘fiscally 

responsible’ require[d] that there [would] be professional audits of the Fund.” Id. at 13. The 

Board “unanimously agreed.” Id. 

Wu also read aloud a section of the draft YHR Fund guidelines that discussed how the 

Fund would be administered to individuals. Id.; see also Dkt. 121-22 at 3–4 (guidelines). The 

draft guidelines stated that, “[u]pon receipt of each application from an individual, the staff of 

the Laogai Research Foundation [would] examine the application” and make determinations 

regarding the individual’s qualifications for aid. Dkt. 121-22 at 3. They also stated that 

“[s]upport to individuals” and “organizations” “shall be made at the discretion of the Laogai 

Research Foundation.” Id. at 3–4. After Wu read that portion of the draft guidelines aloud,

Samway—Yahoo’s representative on the Board—“asked whether the [Foundation] staff was to 

make determinations or if the Advisory Board would be involved also.” Dkt. 121-8 at 13. Wu 
22

“suggested that [Foundation] staff make determinations and consult with the Board if the 

appropriate response was not clear.” Id. The Board tabled the issue, agreeing to “finalize[]” 

“[c]riteria and procedures for making determinations on assistance applicants . . . at future 

meetings.” Id. 

On May 6, 2008, Samway circulated more detailed draft YHR Fund guidelines for the 

Board’s consideration, titled “Yahoo! Human Rights Fund of the Laogai Research Foundation 

Mission and Operational Guidelines.” Pl. Ex. 9 at 1–3. These draft guidelines stated that the 

Fund “shall be administered by a Board of Directors.” Id. The Board would “initially be 

composed of five members, including the Executive Director of the Foundation, who shall act as 

Chair.” Id. Samway’s proposed guidelines would have required that the Board include “at least 

one member appointed by the Yahoo! Entities.” Id. His draft guidelines also provided that 

“[f]unds shall not be disbursed from the YHRF except with the authorization of the Board, which 

shall be by consensus,” id. at 4, and they included parameters for how the Board would make 

decisions approving or denying “[a]pplications for [a]ssistance [f]unding,” id. at 6. Samway’s 

proposed guidelines thus differed from the Foundation’s proposal, which would have granted 

discretion to the Foundation to make YHR Fund award decisions. See Dkt. 121-22 at 3. At a 

Board meeting on May 30, 2008, the Board “unanimously agreed to endorse” the new draft 

guidelines “as a framework which the Board could further develop in the next few months.” Pl. 

Ex. 10 at 4. In practice, however, the Board did not review individual applications to determine 

who should receive funding, although it did review “spreadsheets” listing “who was being 

considered and the amounts that were being considered,” which is why it sought “to come up 

with criteria” to clarify the “process.” See Dkt. 123–1 at 55–56 (Harris Dep. 104:2–105:8). 
23

On July 11, 2008, the Foundation sent Yahoo its request for the fourth and final 

installment payment for the YHR Fund, along with the semi-annual report for the YHR Fund. 

See Dkt. 123-2 at 16–20. In response, Samway wrote that he was “arranging payment by 

Yahoo!” and that, in the meantime, he wanted to “re-emphasize” two points that were discussed 

at the Board meeting: first, “[w]e should agree on professional guidance to evaluate the tax 

implications the [YHR] Fund will have on [the Foundation] and Yahoo!, and consider any

sensible changes or restructurings to best protect everyone and also further the goal of the Fund.” 

Id. at 47. Samway explained that he was working with Susan Dorn, an attorney representing the 

Foundation Board, to “understand potential tax issues” and to “formalize the documents 

described in the [new YHR Fund] Guidelines we all agreed [to] in principle.” Id. Samway 

added that this process “should include transparency mechanisms for the Board to have better 

visibility into the applications for assistance and payments from the Fund and also with respect 

to the overall expenses of the Fund.” Id. 

Second, Samway noted that, “[a]s a general principle, we need to use the Fund for its 

intended purposes regarding online dissent.” Id. He explained that “certain limited exceptions, 

all for good purposes,” had been made for uses of the Fund, “including supporting some of the 

preparatory work for the [Foundation] Museum.” Id. But, he added, “[w]e should be sure to 

keep focused on the [YHR] Fund’s purpose though.” Id. Samway proposed that “[o]ne 

approach would be to seek Board approval for distribution of funds of more than a certain 

amount, say, $10,000.” Id. He added that “[w]e should also establish criteria for what types of 

projects the [YHR Fund] Board should consider and also decide if they’re within the scope of the 

Fund.” Id. 
24

On August 27, 2008, the Board met again, and Wu updated it on the YHR Fund’s work. 

See Pl. Ex. 11 at 3. According to the meeting minutes, he “distributed a chart listing all the 

beneficiaries of humanitarian support from the Fund to date, [which] indicated that 26 victims 

had been provided assistance so far.” Id. The “total amount of financial assistance disbursed 

equal[ed] $120,034.” Id. At that point, however, notwithstanding the goal of helping dissidents 

targeted by the Chinese government based on their online, pro-democracy activity, “[n]ot many 

of the cases supported . . . involved internet issues.” Id. Some, for instance, “involved persons 

with connections to the China Democracy Party.” Id. Wu also updated the Board on “his plans 

to offer financial support from the Fund to several other organizations” and the progress of a new 

“Laogai Museum,” which the Foundation was constructing with funds from the YHR Fund. Id. 

at 2–3. The Board met at least two more times in October 2008 and April 2009. See Pl. Ex. 36; 

Pl. Ex. 53. During those meetings, Wu continued to update the Board on the Fund’s activities 

and proposals for projects that he wished to support with Fund monies. Pl. Ex. 36 at 4–6. The 

Board discussed those projects, the status of applications for assistance, and other administrative 

matters. Id. 

Problems arose when some Chinese dissidents refused to accept funding from the YHR

Fund, opting instead to ask for higher payments or to sue Yahoo. Pl. Ex. 11 at 3–4. At the 

August 2008 meeting, there was “uncertainty and disagreement among the members of the Board 

as to what would be an appropriate role for the Fund to play in addressing” these individuals’ 

claims against Yahoo. Id. at 5. Wu “indicated that he was strongly opposed to the notion that 

[the Foundation] would in any way represent Yahoo! from a legal standpoint.” Id. “To do so,” 

Wu posited, “would jeopardize [the Foundation’s] non-profit status.” Id. “Samway assured . . . 

Wu that Yahoo! did not want to instruct [the Foundation] how to act on humanitarian cases,” but 
25

he stressed that Yahoo wanted “some form of legal protection for itself from those who benefit 

from the Fund.” Id. Harris suggested that “the best way to deal with these issues might be to 

give money to a third party to disburse as compensation and that perhaps the Board should look 

into setting up something like a[n] LLC to do so.” Id. Based on this discussion, it was agreed 

that Samway and Harris would “work with . . . Dorn and the representatives of Yahoo! to 

determine if and how the Fund can function so as to offer support to individuals with claims 

against Yahoo! while (1) affording some form of legal protection to Yahoo! from said 

individuals and (2) protecting the non-profit status of” the Foundation. Id.

In September 2008, Samway received a copy of a memorandum that Dorn prepared for 

Wu and the Foundation earlier in the year. Dkt. 123-2 at 50–57. The memorandum addressed 

“whether the [settlement] [a]greement or the [YHR] Fund’s structure poses any tax or other legal 

problems for the Laogai Research Foundation.” Id. at 53. Dorn’s topline conclusion was that 

“[t]he settlement agreement between Yahoo! and the Laogai Research Foundation [and the Wang 

plaintiffs] was not structured as would be a typical claim settlement” and that “the settlement 

appear[ed] to create a variety of liabilities and penalties that [would] be imposed on the 

[Foundation] and Yahoo.” Id. Among Dorn’s concerns was that, under the settlement 

agreement, “the [Foundation] is to hold monies in trust and acting as a de facto trustee” that 

would “determine how to distribute monies to families of individuals who have suits against 

Yahoo.” Id. at 54. According to Dorn, that fact, and “frankly, the entire construct of the Fund,” 

would “undercut the [Foundation’s] § 501(c)(3) status as an organization operated ‘exclusively’ 

for a charitable purpose.” Id. Dorn recommended “amending and restating the agreement” to 

preserve the Foundation’s tax-exempt status. Id. at 55. 
26

In 2009, Yahoo, the Foundation, and Wu sought to address these concerns by amending

the settlement agreement to create two new organizations: the Yahoo Irrevocable Human Rights 

Trust and the Laogai Human Rights Organization (“LHRO”). Dkt. 123-2 at 58–78. The 

amendment provided that the Foundation would (1) transfer $3.55 million from the YHR Fund to 

the Yahoo Irrevocable Human Rights Trust, which was to be created in a separate “Agreement 

and Declaration of Trust,” and (2) transfer “the remaining funds” from the YHR Fund to the 

LHRO, a “newly established 501(c)(3) organization with the purpose of supporting the activities 

of the [Foundation] in accordance with the terms of the [settlement] [a]greement.” Id. at 59. The 

separate agreement and declaration of trust, in turn, established the Yahoo Irrevocable Human 

Rights Trust “to resolve claims against Yahoo!, Inc. entities, subsidiaries or affiliates[] by . . . 

persons primarily in or from the People’s Republic of China . . . who have been imprisoned for 

expressing their views through Yahoo![] or . . . persons threatened with prosecution or 

imprisonment for expressing their views through Yahoo!.” Id. at 61–62. The trust agreement 

contemplated that Samway (or another person designated by Yahoo) and Wu would serve among 

the trustees. Id. at 63. Separately, the parties established the LHRO as a § 501(c)(3) 

organization “[t]o receive, maintain and administer assets in perpetuity, and to use and apply the 

whole or any part of the principal and income therefrom, to fund the projects and programs and 

administrative expenses” of the Foundation. Id. at 74–78. The initial Board of Directors 

included Wu, Samway, and Liao. Id. at 76.

III. CONCLUSIONS OF LAW

The question whether the 2007 settlement agreement created an enforceable charitable

trust is governed by D.C. law. See Depu III, 950 F.3d at 901. Under D.C. law, the elements of a 

trust are: (1) “a trustee, who holds the trust property and [who] is subject to equitable duties to 
27

deal with it for the benefit of another;” (2) “a beneficiary, to whom the trustee owes such duties;” 

and (3) “trust property, which is held by the trustee for the beneficiary.” Id. (quoting Cabaniss, 

464 A.2d at 91). “As distinguished from a private trust, which is characterized by identified 

beneficiaries, . . . in a charitable trust the obligation of the trustee is to apply the trust res for 

some form of public benefit.” Id. (alteration in original) (quoting Hooker, 579 A.2d at 611); see 

also D.C. Code § 19-1304.05(a).

Regardless of whether a trust is private or charitable, “[a] trust is created only if the 

settlor properly manifests an intention to create a trust.” Restatement (Second) of Trusts § 23; 

see also Cabannis, 464 A.2d at 91 (“Essential to the creation of a trust is the settlor’s 

manifestation or external expression of his intention to create a trust.” (citing Restatement 

(Second) of Trusts §§ 2 cmt. g, 23 cmt. a)). In cases involving oral trusts and trust reformation, 

the D.C. Court of Appeals “demand[s] clear and convincing evidence” that the “settlor has 

created a trust.” In re Estate of Tuthill, 754 A.2d 272, 275 (D.C. 2000); see also Duggan, 554 

A.2d at 1133–34. Although it is unclear whether this rule applies to cases, like this one, that turn 

on whether a written instrument created a trust, the Court need not resolve that question here 

because, under either a preponderance or clear and convincing standard, the Court finds that the 

2007 settlement agreement created a charitable trust.6

6 The Yahoo Defendants argue that the “clear and convincing evidence” standard governs in all 

cases where trust creation is at issue. Dkt. 123 at 28. For several reasons, the Court is not so 

sure. To start, the D.C. Circuit expressed skepticism about Defendants’ similar contention that 

“the intention to create a trust should be clearly manifested.” Depu III, 950 F.3d at 902 n.3 

(quotation marks omitted). In addition, although the D.C. Court of Appeals observed in Tuthill 

that “[i]n cases where a determination must be made as to whether a settlor has created a trust, 

we demand clear and convincing evidence,” 754 A.2d at 275, that case dealt with the reformation 

of a trust (i.e. the correction of an error in a trust instrument), not the initial creation of a trust. 

To the extent that Tuthill addressed trust creation, then, it did so in dicta. The quoted text in 

Tuthill, moreover, purported only to restate a rule laid down in an earlier opinion, Duggan v. 

Keto, 554 A.2d 1126 (D.C. 1989). See 754 A.2d at 275. But Duggan did not sweep so broadly. 
28

As the D.C. Circuit observed in Depu III, “[t]he principal dispute in this case centers on 

whether Yahoo manifested the requisite intent to create a trust.” 950 F.3d at 902. Determining 

whether a settlor intended to create a trust requires more than a review of the relevant instrument 

to see if it uses the word “trust” or refers to “trustees.” Rather, “[n]o particular form of words or 

conduct is necessary to manifest an intention to create a trust.” Cabaniss, 464 A.2d at 91. 

Indeed, so long as the settlor “manifest[s] an intention to create such a relationship as constitutes 

a trust,” it is “immaterial whether or not the settlor [even] knows that the intended relationship is 

called a trust, and whether or not he [even] knows the precise characteristic of the relationship 

That opinion, which concerned the creation of an oral trust, determined only that “[t]he test for 

proving an intent to create a testamentary trust from oral evidence is . . . clear and convincing 

evidence.” Duggan, 554 A2d at 1133 (emphasis added).

Developments in the law since Tuthill and Duggan confirm that a heightened standard of 

proof was warranted in those cases because they concerned issues not present in this case. In 

2004, the Council of the District of Columbia codified the Uniform Trust Code (“UTC”), which 

requires clear and convincing evidence to prove trust reformation (as in Tuthill) and oral trusts 

(as in Duggan). See D.C. Code § 19-1304.07 (oral trusts); id. § 19-1304.15 (trust reformation). 

The UTC’s commentary explains that those contexts call for a heightened standard of proof 

because “[oral trusts] are viewed with caution,” Unif. Tr. Code § 407 cmt. (Unif. L. Comm’n 

2003), and reformation may require “evidence relevant to the settlor’s intention even though it 

contradicts an apparent plain meaning of the text [of the trust],” id. § 415 cmt. In contrast, the 

UTC includes no such requirement for proving the creation of a written trust, nor does it contain 

any warnings about the perils of interpreting such agreements. Furthermore, and perhaps in light 

of these statutory developments, no D.C. court has held that the clear and convincing evidence 

standard applies in cases concerning the creation of a written trust. Rather, on two occasions, the 

D.C. Court of Appeals has cited Tuthill for the narrower proposition that “[f]or purposes of trust 

reformation . . . clear and convincing evidence must support reformation.” In re Durosko 

Marital Trust, 862 A.2d 914, 924 (D.C. 2004); accord In re Ingersoll Trust, 950 A.2d 672, 693 

(D.C. 2008). As the D.C. Superior Court explained in a cy pres proceeding, it is likely that a 

case that “does not involve a dispute over an oral trust or a mistake in the terms of the trust 

document . . . do[es] not require a heightened burden of proof to ensure that the challenged 

actions are consistent with the settlor’s original intent, and instead can be resolved under the 

burden of proof that typically applies in civil cases.” Trs. of the Corcoran Gallery of Art v. 

District of Columbia, No. 2014 CA 003745 B, 2014 WL 5080058, at *13 (D.C. Super. Ct. Aug. 

18, 2014). For present purposes, however, the Court need not decide that question because 

Plaintiffs prevail under either a preponderance or clear and convincing standard. 
29

which is called a trust.” Restatement (Second) of Trusts § 23 cmt. a; see also Restatement 

(Third) of Trusts § 13 cmt. a (Am. L. Inst. 2003) (same). In short, “[a] property arrangement is a 

trust as long as it has the characteristics, and gives rise to the rights and duties, the law 

recognizes as a trust.” Restatement (Third) of Trusts § 5 cmt. a. 

Plaintiffs advance two arguments in support of their contention that the 2007 settlement 

agreement created a charitable trust. First, they argue that “[t]he four corners of the Agreement 

unambiguously manifest trust intent.” Dkt. 121 at 25. In Plaintiffs’ view, “the D.C. Circuit has 

already construed [the agreement’s] terms to support the existence of a trust,” id., leaving little if 

anything for this Court to decide. Second, they argue that the extrinsic evidence

“overwhelmingly supports the existence of a trust.” Id. at 26. That evidence includes evidence 

from the drafting process and the conduct of the parties during and after the agreement was 

executed. Id. at 26–30. 

Defendants raise three arguments in response. First, Defendants dispute that the D.C. 

Circuit’s threshold decision in Depu III “somehow preordains the outcome” at this later stage of 

the litigation. Dkt. 123 at 44. Second, they argue that “Yahoo did not want to impose on anyone 

equitable or fiduciary duties to unknown numbers of Chinese dissidents, because to do so would 

be against its own interest in minimizing future potential liability after settling the Wang 

[l]awsuit.” Id. at 38. Finally, Defendants urge the Court to credit the testimony of “the 

individuals responsible for creating the Fund directly and implementing it,” each of whom 

maintains that Yahoo and the Foundation “never intended to create a trust or impose enforceable 

fiduciary duties on a trustee.” Id. at 29; see also Dkt. 122 at 6–10. 

In assessing the parties’ competing arguments, the Court starts where the D.C. Circuit left 

off in Depu III. That decision is neither dispositive (as Plaintiffs suggest) nor irrelevant (as 
30

Defendants suggest). As Defendants correctly observe, the D.C. Circuit considered only whether 

Plaintiffs “state[d] a claim to relief that is plausible on its face,” Depu III, 950 F.3d at 901 

(quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)), which required the court to accept 

Plaintiffs’ factual allegations as true and to draw all reasonable inferences in Plaintiffs’ favor. 

The D.C. Circuit was clear, moreover, that the question whether the evidence conclusively 

established “the existence of a trust” was “not before [it].” Id. at 903. But, despite that limited 

focus, the D.C. Circuit’s opinion is illuminating with respect to the governing legal standards and 

relevant “indicia of trust intent” in this unique context, including the text of the 2007 settlement 

agreement and “the circumstances surrounding the creation of the Fund.” Id. 902–03. 

Considering those same factors but applying the more demanding standard that governs for 

purposes of a bench trial, the Court finds that Plaintiffs have now proven what the D.C. Circuit 

held that they adequately alleged.

A. The Settlement Agreement

As the D.C. Circuit observed in Depu III, “[a]n intention to create a trust may . . . be 

revealed by articulation of ‘the specifics necessary to implement and administer the trust’” in a 

written instrument. Depu III, 950 F.3d at 902 (quoting Beckett v. Air Line Pilots Ass’n, 995 F.2d 

280, 287 (D.C. Cir. 1993)). A charitable trust is “a fiduciary relationship with respect to 

property arising as a result of a manifestation of an intention to create it, and subjecting the 

person by whom the property is held to equitable duties to deal with the property for a charitable 

purpose.” Restatement (Second) of Trusts § 348. Here, the 2007 settlement agreement contains 

each of “the specifics necessary to implement and administer” a charitable trust.

See In re Strack, 524 F.3d 493, 499 (4th Cir. 2008) (“At bottom, ‘[i]f the intention is that the 

money shall be kept or used as a separate fund for the benefit of the payor or a third person, a 
31

trust is created.’” (alteration in In re Strack) (quoting Broaddus v. Gresham, 26 S.E.2d 33, 36

(Va. 1943)). 

As the D.C. Circuit explained, the settlement agreement “subjects the Foundation’s 

handling of the [YHR] Fund to trust-like restrictions, and does so in imperative language.” Depu

III, 950 F.3d at 902. To form a trust, a donor must create a “binding obligation on the recipient 

of the property.” Elizabeth Deleery et al., Bogert’s The Law of Trusts and Trustees § 48 (2021) 

(hereinafter “Bogert on Trusts”). In trust litigation, it is common for courts to confront questions 

about whether a donor intended to “control or direct the disposition intended,” which would 

evince trust intent, or merely intended to “advise or influence the discretion of the [recipient],” 

which would not. Id. (quoting Phillips v. Phillips, 19 N.E. 411, 413 (N.Y. 1889)); see also 

Cabaniss, 464 A.2d at 91–92 (explaining that the use of “imperative, as distinguished from 

precatory,” language is indicative of trust intent). The 2007 settlement agreement employs 

mandatory language: It specifies that the YHR Fund “may be used for three purposes only,”

including the provision of “humanitarian and legal assistance primarily to persons in or from the 

People’s Republic of China who have been imprisoned for expressing their views through 

Yahoo! or another medium,” resolving claims against Yahoo!, and paying for a portion of the 

Foundation’s operating and educational expenses. Pl. Ex. 14 at 13 (emphasis added). It requires 

the Foundation and Wu “to use their best efforts to maximize the benefits achieved through their 

use of a portion of the YHR Fund for humanitarian and legal assistance.” Id. It imposes a $1 

million per year limit on the Foundation’s use of the Fund to pay its operating expenses and 

requires the Foundation to report those expenditures to Yahoo. Id. It forbids the Foundation 

from using the YHR Fund to support litigation or administrative or legislative action against 

Yahoo. Id. It provides that “[t]he YHR Fund shall be used only in conformity with the civil and 
32

criminal laws of the United States and other countries in which it may be expended.” Id.

(emphases added). It provides that “[t]he YHR Fund shall not be sued for political purposes of 

any kind shall not be given to, or used to support or assist, directly or indirectly, any 

governments, political parties, or armed organizations.” Id. at 13–14 (emphasis added). And, as 

the D.C. Circuit stressed, the settlement agreement “includes specific mechanisms to remedy 

‘any disbursements that do not conform with the stated purposes’ of the Fund.” Depu III, 950 

F.3d at 902. 

The requirement that the Foundation “maintain[]” the YHR Fund “separately from other 

Foundation funds” provides further confirmation of Yahoo’s intent to create a charitable trust. 

Pl. Ex. 14 at 12. “[A] trust is created” when the settlor manifests “the intention . . . that 

[property] shall be kept or used as a separate fund for the benefit of the payor or a third person.” 

In re Strack, 524 F.3d at 499 (quoting Broaddus, 26 S.E.2d at 36); see also In re Pro. Air Traffic 

Controllers Org. (PATCO), 26 B.R. 337, 343 (Bankr. D.D.C. 1982), aff’d, 724 F.2d 205 (D.C. 

Cir. 1984). In contrast, no trust is created when “property is transferred by one person to another 

who agrees in consideration thereof to assume a personal liability to a third person.” 

Restatement (Second) of Trusts § 14 cmt. f. The following example from the Restatement 

(Second) of Trusts illustrates the difference: Suppose A pays $1,000 to B, who, in turn, agrees to 

pay the money to C. If the agreement permits B to spend the $1,000 as his own, so long as he 

agrees to pay $1,000 to C, then there is no trust. But, if the agreement requires B to set aside the 

$1,000 and to pay those funds to C, then B is a trustee with respect to those funds. See 

Restatement (Second) of Trusts § 14 cmt. f, illus. 1. Here, the settlement agreement required the 

Foundation to set aside the $17.3 million in a separate account, which was designated as the 

YHR Fund; specified how those funds could—and could not—be used; and limited the amount 
33

of those funds that the Foundation could draw on to pay its operating expenses. Pl. Ex. 14 at 12–

13. Any suggestion that the Foundation was the beneficiary of the YHR Fund or that it was 

entitled to use the Fund as it saw fit—and without regard for the interests of the charitable 

beneficiaries—is put further to rest by Section IV.C.3 of the settlement agreement. That 

provision requires the Foundation and Wu to “establish a Board of Directors for the YHR Fund,” 

provides that the Board “shall have the power and authority to direct the activities and 

expenditures of the YHR Fund,” and requires that the Board abide by “the restrictions set forth 

in” this settlement agreement. Id. at 16.

The D.C. Circuit also relied on the agreement’s use of the words “in trust” when referring 

to the YHRF. Depu, 950 F.3d at 902. The agreement uses the word “trust” in two places: first, 

in paragraph II.B, which describes Yahoo’s payments to the two plaintiff families, and, second, 

in paragraph II.C, which establishes the YHR Fund and requires Yahoo to make four 

“installment” payments totaling $17.3 million to the Fund. Pl. Ex. 14 at 12. The heading for the 

paragraph setting forth the payment schedule reads as follows: 

“All Payments Made in Trust to Foundation.” Id. (emphasis added). Citing the Bogert treatise, 

the D.C. Circuit observed that the use of the words “in trust” in the header “may be used to find 

an intent to make [a] corporation a trustee.” Depu III, 950 F.3d at 902 (citing Bogert on Trusts 

§ 324). 

In response, the Yahoo Defendants now point to Section IV.L of the agreement, which 

provides that “[s]ection and paragraph headings contained in this Agreement are for convenience 

and shall not be considered for any purpose in construing this Agreement.” Pl. Ex. 14 at 19. 

According to the Yahoo Defendants, this clause is “fatal to Plaintiffs’ argument.” Dkt. 123 at 42. 

The Court is unpersuaded for two reasons.
34

First, to the extent the Yahoo Defendants maintain that the Court must ignore the use of 

the word “trust” in the heading of the settlement agreement and that, in the absence of that word 

or a similar term in the text of the agreement itself, there is no basis to conclude that the 

settlement agreement created a trust, both the D.C. Circuit and this Court have already rejected 

that proposition. As discussed above, “[n]o formal or technical language is required” to create a 

trust. Bogert on Trusts § 45. “[I]n some cases, courts have found that settlors expressed intent to 

create a trust even though they did not use the words ‘trust’ or ‘trustee,’ and did use language 

seemingly appropriate to” other kinds of legal relationships. Id. § 45 & n.11 (citing cases); see 

also Cabaniss, 464 A.2d at 91; Valentini v. Shinseki, 860 F. Supp. 2d 1079, 1105 (C.D. Cal. 

2012) (“No ‘magic words’ are needed to create a charitable trust.”). 

Second, even if the disclaimer precludes the Court from relying on headers for purposes 

of construing the settlement agreement, the central question before the Court is whether Yahoo

intended to create a trust, and the use of the word “trust” has some bearing on that question. 

Defendants tell the Court that they had no intent to create a trust and, indeed, that the possibility 

never crossed their minds. See Dkt. 135 at 84–86 (Callahan). The presence of the word “trust” 

in the section of the settlement agreement that established the YHR Fund is at odds with that 

contention. Defendants’ sole answer to this problem is that “none of the witnesses know” how 

or why the word “trust” appears in a provision that, according to Defendants, was not intended to 

impose “fiduciary obligations” on the Foundation or others. Id. at 28. According to Defendants, 

if Yahoo, “a sophisticated party,” had intended to create a trust, it would have engaged in formal 

processes for doing so, such as “engag[ing] counsel experienced in creating trusts.” Dkt. 123 at 

32. But Yahoo did engage sophisticated counsel when drafting the settlement agreement, and 

those lawyers surely saw the phrase “Payments Made in Trust to Foundation” in each iteration, 
35

including the final, executed version. Indeed, the settlement agreement occupies fewer than ten 

pages, and the header at issue appears in one of a handful of key provisions. To be sure, in the 

absence of other indicia of intent to establish a trust, the Court might disregard the heading. 

Here, however, just the opposite is the true. The settlement agreement required the Foundation 

to place the funds at issue in a separate account, required the Foundation to use those funds for a 

charitable purpose, and limited the Foundation’s authority to use the funds for other purposes. 

Under these circumstances, the Court declines to credit Defendants’ contention that they never 

even considered the possibility that the agreement would create a charitable trust.7 

Defendants make little effort to reconcile their position with the settlement agreement’s 

“trust like restrictions” and “imperative language” highlighted in the D.C. Circuit’s opinion. 

Depu III, 950 F3d at 902. They make no effort, for example, to explain why, if the parties did 

not intend to create a charitable trust, the Foundation is required to maintain the YHR Fund 

assets in a separate account; why the Foundation may not spend more than $1 million a year on 

operating expenses; why the Foundation and Wu were required to establish a Board of Directors 

for the Fund; or why the Fund “may be used for three purposes only.” Pl. Ex. 14 at 13. Instead, 

the Yahoo Defendants argue that the settlement agreement “does not articulate all the essential 

elements of a trust” because it “name[s] no trustees,” Dkt. 123 at 20, and “does not purport to 

7 This case, accordingly, is unlike United States Conference of Mayors v. Great-West Life & 

Annuity Insurance Co., 288 F. Supp. 3d 4 (D.D.C. 2017), which the Yahoo Defendants cite as 

support for their contention that this Court must ignore the use of the word “trust” in the section 

header. See Dkt. 123 at 43. That case stands for the unremarkable proposition that courts should 

heed a “contract’s instruction not to rely on the headings for substantive guidance.” Great-West, 

288 F. Supp. 3d at 9–10. Here, in contrast, the Court is relying on the word “trust” not for 

substantive guidance, but rather as evidence that undermines Defendants’ contention that the 

parties to the settlement agreement never even considered whether they were creating a trust. 
36

impose equitable duties on anyone, an essential element to form a trust,” Dkt. 126 at 13. The 

Court is unpersuaded. 

In considering Defendants’ motions to dismiss, this Court and—more importantly—the 

D.C. Circuit rejected the contention that the settlement agreement failed to establish a charitable 

trust because it did not name any trustees. As the Court explained in Depu IV, “the settlement 

agreement ma[k]e[s] clear that the [Foundation] would be a trustee of the Fund.” 531 F. Supp. 

3d at 238. Similarly, the D.C. Circuit held in Depu III that the settlement agreement “plausibly 

identifies” all of the elements of a trust, include “a trustee (the Foundation).” 950 F.3d at 902. 

Although a more demanding standard applies at this stage of the proceeding, the plain 

language of the settlement agreement requires the same result. As the Court explained in Depu 

IV, the Restatement (Second) of Trusts defines a “trustee” as a “person holding property in 

trust.” Id. (quoting Restatement (Second) of Trusts § 3). Here, the settlement provides that

Yahoo, as the trust’s settlor, would “make payments totaling a maximum of $17.3 million to the

Foundation subject to [several] conditions,” adding that “[t]hese payments shall be maintained

separately from other Foundation funds and shall be known as the ‘Yahoo! Human Rights 

Fund.’” Pl. Ex. 14 at 12. And, in fact, Yahoo transferred $17.3 million to a bank account 

controlled by the Foundation, titled “The Laogai Research Foundation Fundraising Account: 

Harry Wu/YHR Fund.” Dkt. 121-13 at 3. Those conditions are sufficient to establish that the 

Foundation serves as trustee, even if the word “trustee” is not used in the agreement. The 

principle that “[n]o ‘magic words’ are needed to create a . . . trust” applies with equal force to the 

word “trustee,” and it is of no consequence that the word does not appear in the agreement 
37

because the agreement charges the Foundation with holding the Fund in a separate account to 

serve the charitable purposes of the trust.

8

 Valentini, 860 F. Supp. 2d at 1105. 

The settlement agreement’s requirement that the Foundation establish a Board to direct 

the Fund’s activities is not at odds with the Foundation’s designation as a trustee. As noted 

above, the settlement agreement required the Foundation and Wu to establish a Board of 

Directors, which would have the “power and authority to direct the activities and expenditures of 

the YHR Fund,” Pl. Ex. 14 at 16, while the Fund assets were to be held by the Foundation. A 

trust instrument “may divide responsibilities between trustees, for example, between trustees 

who hold and invest the trust assets,” such as the Foundation, and “a committee who makes 

decisions about distributions for charitable purposes,” such as the Board of Directors. Bogert on 

Trusts § 391. “This method of administration is not uncommon” in charitable trusts. Id.; see 

also, e.g., Petition of U.S. on Behalf of and For Benefit of Smithsonian Inst., 485 F. Supp. 1222, 

1238 (D.D.C. 1980) (“[T]he trustee of a charitable trust may join with another in administering 

the trust.”); Perkins v. Citizens & S. Nat’l Bank, 8 S.E.2d 28, 34 (Ga. 1940); Bank of Del. v. 

Allmond, 183 A.2d 188, 191 (Del. Ch. Ct. 1962). Here, moreover, although the parties have yet 

to present evidence regarding the actual allocation of trust duties, there is some evidence before 

the Court that at least suggests that the Foundation took it upon itself to make decisions 

regarding the expenditure of YHR Fund assets, without obtaining advance approval from the 

Board of Directors. See, e.g., Dkt. 123–1 at 55–56 (Harris Dep. 104:2–105:8). In any event, as 

8 The Yahoo Defendants argue that Plaintiffs’ claims against them “should be dismissed with 

prejudice” because Plaintiffs “offer no evidence that Yahoo, . . . Callahan, or . . . Bell were 

‘trustees’ of any trust or had any fiduciary duties under the Settlement Agreement.” Dkt. 126 at 

7–8. That question, however, is not properly before the Court at this time. Rather, at the parties’ 

request, the Court permitted focused discovery and an early trial on the question whether the 

settlement agreement created a trust. The Yahoo Defendants remain free to press this alternative 

argument at an appropriate time.
38

discussed below, both entities had at least certain duties relating to their administration of the 

Fund. 

The fact that the settlement agreement does not specify particular “equitable duties” that 

the trustees must perform does not mean that the agreement failed to create a trust. The Yahoo 

Defendants are correct that “the role of a trustee is far more complex than a person who pays out 

money to a beneficiary” because “[a] trustee . . . is ‘subject to equitable duties.’” Dkt. 123 at 34.

(quoting Cabannis, 464 A.2d at 91). But those equitable duties follow from the creation of a 

trust; they need not be specified to create a trust in the first place. “The creation of a trust . . . 

results . . . in the creation of duties of the trustee to the beneficiary; but the duties result from the 

trust relation, and are not based upon an agreement or contract.” Restatement (Second) of Trusts 

§ 74 cmt. a; see also Depu III, 950 F.3d at 904. The Yahoo Defendants argue, for example, that 

“the Settlement Agreement does not impose any duties to invest the Fund or administer it 

prudently as required under D.C. Code §§ 19-1308.03[–.04].” Dkt. 123 at 36. But the 

agreement need not spell out that duty; D.C. trust laws, which are adopted from the Uniform 

Trust Code, “govern[] the duties and powers of a trustee” by default, “[e]xcept as otherwise 

provided in the terms of the trust.” D.C. Code § 19-1301.05. 

Nor is there any doubt that the Foundation understood that it was undertaking these 

duties. At the first meeting of the Board of Directors on March 20, 2008, the Foundation’s 

Director read to the Board the “Board Member Agreement with the Laogai Research 

Foundation,” which identified the “duties and responsibilities” of the Board. Dkt. 121-22 at 2. 

Those “duties and responsibilities” included “fiscal[] responsib[ility] for the financial wellbeing 

of the [Fund]” and the “duty to review and approve the semi-annual reports of the [Fund’s]

activities to ensure that the [Fund’s purpose] is being advanced.” Id. The Foundation, as 
39

“administrators of the Fund,” undertook to “provide [Board members] with these financial 

reports, which [would] allow [Board members] to meet the prudent person section of the law.” 

Id. Finally, if the Board determined that a particular Board member “failed to act in good faith,” 

that Board member agreed pursuant to his “duties and responsibilities” to resign. Id. These 

duties, which were proposed by the Foundation and agreed to by the Board, mirror the types of 

fiduciary duties that trustees traditionally assume. See, e.g., Restatement (Third) of Trusts § 76

(“The trustee has a duty to administer the trust, diligently and in good faith, in accordance with 

the terms of the trust and applicable law.”). Moreover, as noted above, the Court need not decide 

for present purposes whether the Board’s assumption of these duties relieved the Foundation of 

the same obligations or whether those obligations were shared. See Smithsonian, 485 F. Supp. at 

1238 (“[A] trustee is not relieved of his obligations when they are voluntarily assumed and 

performed by another.”). The parties remain free to address the proper allocation of 

responsibility, if necessary, at a later date. What matters for now is that the settlement agreement 

did, in fact, create a charitable trust.

The Yahoo Defendants also argue that the settlement agreement imposes no enforceable 

duties on the Foundation. See Dkt. 123 at 34; Dkt. 126 at 21. The Restatement (Second) of 

Trusts explains that “[a] charitable trust is not created unless the settlor manifests an intention to 

impose enforceable duties.” Restatement (Second) of Trusts § 351 cmt. c. As a result, “if the 

settlor merely expresses a suggestion or wish that the transferee should apply the property to 

charitable purposes, leaving it to the transferee to follow the suggestion or comply with the wish 

only if he desires to do so, a charitable trust is not created and the transferee holds the property 

for his own benefit.” Id. But, as explained above, the settlement agreement does far more than 

make suggestions or express aspirations; it directs that the Foundation to use the Fund assets “for 
40

three purposes only,” and it further directs that those assets “shall not be used” for various, 

specified activities. Pl. Ex. 14 at 13–14. The Yahoo Defendants respond that it could have 

expended all of the Fund’s assets on activities unrelated to humanitarian and legal assistance to 

Chinese dissidents. See Dkt. 123 at 36–37. But the D.C. Circuit rejected a similar contention in 

Depu III, noting that “where a trust has multiple beneficiaries, trustees must act ‘impartially in

. . . [the distribution of] trust property,’ paying ‘due regard’ to the ‘respective interests of each.’” 

950 F.3d at 904 (quoting D.C. Code § 19-1308.03).

Finally, the Yahoo Defendants argue that the agreement does not signal that Yahoo 

wanted to impose on a trustee “duties to unknown numbers of Chinese dissidents.” Dkt. 126 at 

10. It bears emphasis, however, that this case involves a charitable trust, which—unlike a 

private trust—is not “characterized by identified beneficiaries who enjoy equitable ownership of 

the property and for whose benefit the trustees are obliged to act.” Hooker, 579 A.2d at 610. 

“[I]n a charitable trust,” by contrast, the trustee must “apply the trust res for some form of public 

benefit, and persons who receive[] advantages from the administration of the trust do so because 

they are conduits through whom the social gains flow.” Id. (alteration in Hooker) (quoting 

Bogert on Trusts § 411). Given this lack of identified beneficiaries, “the traditional rule” for 

charitable trusts has been that

only a public officer, usually the state Attorney General, has standing to bring 

an action to enforce the terms of [a charitable] trust. Principally, the rationale 

for vesting exclusive power in a public officer stems from the inherent 

impossibility of establishing a distinct justiciable interest on the part of a 

member of a large and constantly shifting benefited class, and the recurring 

burdens . . . of vexatious litigation . . . would result from recognition of a cause 

of action by . . . individuals. 

Id. at 612 (citations omitted). The fact that the settlement agreement fails to specify particular 

beneficiaries, accordingly, carries little weight in the context of a charitable trust.
41

To be sure, as the D.C. Circuit explained in Depu III, Plaintiffs face a separate hurdle: to 

establish that they have “special interest” standing, they must prove that “the action challenge[s] 

an ‘extraordinary measure threatening the existence of the trust,’ not just an ‘ordinary exercise of 

discretion’ committed to the trustees[] and that [they] belong to a class of potential beneficiaries 

that is ‘sharply defined’ and ‘limited in number.’” 950 F.3d at 906 (quoting Hooker, 579 A.2d at 

614–15). Because this requirement “is distinct from Article III standing, which all parties and 

[the D.C. Circuit] agree the plaintiffs have,” id. at 905 n.11, the Court need not decide at the 

threshold whether Plaintiffs are entitled to bring an action to enforce the terms of the trust. And, 

at the parties’ request, the Court has agreed to decide whether the settlement agreement created a 

charitable trust first. Although recognizing that this presents a substantial question, it is 

premature to reach the question on the limited record and briefing that is currently before the 

Court.

B. Extrinsic Evidence 

As the D.C. Circuit explained in Depu III, in addition to considering the written 

instrument, D.C. law also “expressly authorizes examination of ‘extrinsic circumstances’” to 

determine whether a settlor intended to create a trust. 950 F.3d at 903 n.7 (quoting Cabaniss, 

464 A.2d at 91–92); see also Cabaniss, 464 A.2d at 91–92 (citing Restatement (Second) of 

Trusts §§ 23–25) (identifying “extrinsic circumstances and evidentiary factors pertinent to a 

determination of a settlor’s intention to create a trust”). Plaintiffs highlight a litany of extrinsic 

evidence that, in their view, “overwhelmingly supports the existence of a trust.” Dkt. 121 at 26. 

That evidence includes: (1) “[t]he drafting process,” (2) “[t]he lack of a pre-existing relationship 

between Yahoo and the [Foundation],” (3) “[t]he fact that Yahoo was also a beneficiary,” (4) 

“[t]he lack of any reversion or condition subsequent,” (5) “[t]he fact that Yahoo transferred Fund 
42

monies to a bank account controlled by the [Foundation],” (6) “[t]he fact that [the] account was 

titled in the name of . . . the Fund,” and (7) “[t]he parties’ words and conduct with respect to the 

Fund.” Id. at 26–32. For their part, Defendants rely principally on testimony from witnesses, 

including Yang, Callahan, and Harris, who assert that they never intended to establish a trust. 

See Dkt. 123 at 29. In the Court’s view, four categories of extrinsic evidence are probative of 

Yahoo’s intent.

First, Yahoo’s impetus for negotiating a settlement agreement that provided humanitarian 

assistance to Chinese dissidents who expressed their views through Yahoo and other online 

media supports Plaintiffs’ contention that the agreement established a charitable trust. Yahoo 

was severely rebuked at the 2007 hearing of the House Committee on Foreign Relations, see 

generally 2007 House Hearing, and it entered into the settlement agreement just days after that 

hearing, see Pl. Ex. 14 at 20. Chairman Lantos, for example, told Yang: “I described in some 

detail, and I trust with some clarity, what in our view Yahoo! did wrong. Yahoo! collaborated 

with the Chinese police apparatus in the imprisonment of a freedom-loving Chinese journalist.” 

2007 House Hearing at 28. Although focused on only a handful of identified dissidents, 

Chairman Lantos (and other members of the committee) made clear that their concern was more 

pervasive, asserting that Yahoo “should have taken every conceivable step to prevent the 

automatic compliance with a request from the Chinese police apparatus, and to this day, Yahoo! 

has failed to change any of its practices in order to prevent such collaboration in the future.” Id.

at 4. To this, he added: “I do not believe that America’s best and brightest companies should be 

playing integral roles in China’s notorious and brutal political repression apparatus.” Id. 

Immediately after the hearing, Yang met with Wu and two family members of Chinese 

dissidents. According to Yang’s own account, this “was an emotional meeting for everyone, 
43

including” Yang. Pl. Ex. 1 at 5 (Yang Dep. 16:2–22). It was, then, shortly after that difficult 

hearing and meeting that Yahoo agreed to provide “humanitarian or financial assistance to 

people that [Wu] saw as those people who are affected” by Chinese political repression. Id. at 6–

7 (Yang. Dep. 18:16–22:6). “[T]he motives which may reasonably be supposed to have 

influenced the settlor in making the disposition” are among the relevant circumstances that the 

Court must consider, Cabaniss, 464 A.2d at 92, and, here, Yahoo’s motive was—in its own 

words—“to mak[e] sure our actions match our values around the world” by “establish[ing] a 

Human Rights Fund to provide humanitarian and legal aid to dissidents who have been 

imprisoned for expressing their views online,” Pl. Ex. 25.

Against this backdrop, it is difficult to believe that Yahoo intended merely to make a gift 

to the Foundation or that it did not intend to bind the Foundation to use the YHR Fund to provide 

humanitarian and legal assistance to Chinese dissidents who are imprisoned for expressing their 

views through Yahoo or other online media. Anything short of the creation of a charitable trust 

would have done little to squelch the criticism that Yahoo faced or to meet Yang’s goal of 

“help[ing] people,” regardless of whether they were Yahoo users, “who have suffered from 

expressing their views online.” Pl. Ex. 1 at 7 (Yang Dep. 22:18–23:9).

Second, the fact that Yahoo chose Wu and the Foundation to administer the YHR Fund 

further supports the Court’s finding that Yahoo intended to create a charitable trust. Like 

motive, “the relationship between and financial position of the parties” matters for purposes of 

discerning the settlor’s intent, Cabaniss, 464 A.2d at 92, and, here, Yahoo had no prior 

relationship with Wu or the Foundation. Yahoo chose Wu and the Foundation because it viewed 

them “as experts in issues related to human rights in China and capable of using the Fund monies 

for the intended purposes set forth in the [s]ettlement [a]greement.” Dkt. 123-1 at 21 (Yang 
44

Decl. ¶ 8). Yahoo also “viewed Harry Wu as someone who was respected by Congress as a 

human rights expert.” Id. (Yang Decl. ¶ 9); see also Pl. Ex. 1 at 6–7 (Yang Dep. 20:19–22:6). 

Yahoo owed Wu and the Foundation nothing and had no history with either. What it valued is 

precisely what one would value in a trustee: expertise regarding the relevant subject matter and 

the capacity to make decisions consistent with the charitable purpose of the trust.

Third, the Foundation’s actions in implementing the agreement are also probative of its 

understanding that it had assumed the role of a trustee. In public statements, the Foundation 

referred to itself as a “steward” of the Fund, and as “taking strategic steps to ensure the prompt 

and prudent use of th[e] fund.” Pl. Ex. 7 at 2–3. Wu and the Foundation, at least at times, 

referred to Fund recipients as “beneficiaries.” Dkt. 121-9 at 1; Dkt. 121-10 at 3. The Foundation

also recognized its responsibilities to act as the “administrator[] of the” Fund and to provide the

Board with “financial reports” to enable the Board to “meet the prudent person section of the 

law.” Dkt. 121-22 at 2. The Foundation also understood that the Board had “duties and 

responsibilities” for “carrying out the [Fund’s] mission of (a) providing humanitarian and legal 

assistance primarily to persons in or from the People’s Republic of China who have been 

imprisoned for expressing their views through Yahoo! or another medium, and (b) supporting the 

educational work of the . . . Foundation.” Id. This language, although not exclusive to trust law, 

reflects the Foundation’s understanding that the YHR Fund was created as a charitable trust and 

that this status carried with it certain fiduciary duties. It does not reflect, as the Laogai 

Defendants claim, that “the parties created a contract that [merely] resulted in a gifting to [the 

Foundation] of $17.3 million to be used for [the] three [designated] purposes.” Dkt. 128 at 21

(emphasis added). 
45

Fourth, Yahoo’s participation in the administration of the Fund is also probative of the 

company’s efforts to “control or direct [its] disposition,” which, although not dispositive, is 

consistent with the intent to create a trust. Bogert on Trusts § 48. The Yahoo Defendants insist 

that the agreement did not “give Yahoo any right of control or oversight over how the Funds 

were spent.” Dkt. 126 at 15. But the agreement required the Foundation to “consult with 

Yahoo! regarding the composition and membership of the Board of Directors before making any 

appointments to the Board.” Pl. Ex. 14 at 16. That consultation resulted in Samway’s

appointment to serve as one of the Board’s five members. In that role, Samway sought to “reemphasize” the “need to use the Fund for its intended purposes regarding online dissent.” Dkt. 

123-2 at 47 (email from Samway to Liao). He also advanced proposals for the Board to 

“establish criteria for what types of projects the [YHR Fund] Board should consider and also 

decide if they’re within the scope of the Fund,” id., and to adopt a rule that “[t]he members of the 

Board shall . . . consist of at least one member appointed by the Yahoo! Entities,” Pl. Ex. 9 at 3. 

Those proposals, which the Board agreed to in principle, see Pl. Ex. 10 at 4, signal Yahoo’s 

initial and continuing interest in ensuring that the Fund was used for the purposes envisioned by 

Yang and Yahoo, including its charitable purpose, which is probative of trust intent. 

In response, the Yahoo Defendants argue that Plaintiffs have failed to carry their burden 

because “every witness who has testified” will say there was “never inten[t]. . . to create a trust.” 

Dkt. 123 at 28. According to the Yahoo Defendants, when courts determine whether a party 

intended to create a trust, they typically “rely on ‘language or . . . conduct[] in light of all 

surrounding circumstances’ because the settlor is often deceased.” Id. at 29 (quoting Cabaniss, 

464 A.2d at 91). “[T]his case is distinguishable,” the Yahoo Defendants maintain, “because 

here, there is no need to guess at the settlor’s intent. Key players and decision makers, except for 
46

. . . Wu, are alive and will be able to testify about their intent, and thus the Court has the benefit 

of hearing from the individuals responsible for creating the Fund directly.” Id. 

Although this testimony bears consideration, the Court is unpersuaded that it carries the 

near-conclusive weight that the Yahoo Defendants assign it. As the D.C. Court of Appeals

explained in reversing a grant of summary judgment to the settlor of an inter vivos trust on a 

question of trust interpretation, a settlor’s “affidavit is not dispositive” because “[i]t is only his 

after-the-fact factual assertion as to what he intended” when the trust was supposedly formed. In 

re Durosko Marital Trust, 862 A.2d 914, 924–25 (D.C. 2004). The court further observed that 

“[t]he terms of a trust are determined by the settlor’s intention at the time of creation of the trust, 

and not by his subsequent intention.” Id. Other courts have reached similar conclusions. See, 

e.g., D’Agrosa v. Coniglio, No. 2909/06, 2006 WL 1867968, at *4 (N.Y. Sup. Ct. July 6, 2006) 

(unpublished); see also, e.g., Beckett, 995 F.2d at 287 (holding that a party intended to create a 

trust despite the party’s assertions to the contrary); Weiner v. Mullaney, 59 Cal. App. 2d 620, 631 

(Ct. App. 1943) (same). Some courts, moreover, have embraced the broad principle that “[a]n 

express trust may arise even though the parties in their own minds did not intend to create a trust 

. . . [A]n objective rather than a subjective test is applied. It is a manifestation of intention 

which controls and not the actual intention where that differs from the manifestation of 

intention.” McGhee v. Bank of Am., 131 Cal. Rptr 482, 485 (Ct. App. 1976) (quoting 1 Scotts on 

Trusts (3d. ed. 1967)); see also Long Green Valley Ass’n v. Bellevale Farms, Inc., 46 A.3d 473, 

495 (Md. Ct. Spec. App. 2012) (citing Austin Wakeman Scott & William Franklin Fratcher, The 

Law of Trusts § 2.8 (4th ed. 1989)) (same), aff’d, 68 A.3d 843 (Md. 2013); Weststeyn Dairy 2 v. 

Eades Commodities Co., 280 F. Supp. 2d 1044, 1077 (E.D. Cal. 2003) (same). For present 

purposes, the Court need not decide whether the District of Columbia has adopted (or would 
47

adopt) that rule because the evidence, considered as a whole, firmly supports Plaintiffs’ claim 

that the settlement agreement established a charitable trust.

The testimony of Yahoo’s witnesses, in any event, cuts both ways. To be sure, those

witnesses testified that they did not intend to create a “trust.” See, e.g., Dkt. 135 at 42–43

(Callahan); id. at 131 (Fielder); Dkt. 123-1 at 37 (Samway Dep. 133:13–17). But whether Yahoo 

intended to create a “trust” in the formal sense is immaterial. See Restatement (Third) of Trusts 

§ 13; Restatement (Second) of Trusts § 23 (same). What matters is that it intended to enter an 

agreement that included the essential “elements of a trust”—that is, Yahoo intended to contribute 

the trust property, it intended that the Foundation (and possibly the Board) serve as a trustee, and 

it designated a beneficiary (or here, a charitable purpose). See Depu III, 950 F.3d at 902. The 

Yahoo witnesses’ testimony supports a finding that Yahoo intended each of these things, even if 

it (at least arguably) failed to recognize that the “precise characteristics of a trust relationship” 

were contained in the settlement agreement. Restatement (Third) of Trusts § 13.9

9 As discussed above, it is far from clear that the parties to the settlement agreement were 

oblivious to the possibility that they were, in fact, creating a charitable trust. None of the 

witnesses could explain why the settlement agreement contains a heading stating: “All Payments 

Made in Trust to Foundation.” Pl. Ex. 14 at 12. Callahan, for example, testified that he 

“d[oesn’t] know why ‘in trust’ appears in the header” and he “[doesn’t] know if it was a mistake 

or not.” Dkt. 135 at 50 (Callahan). Counsel for the Yahoo Defendants represented at the 

evidentiary hearing that “none of the witnesses know” why the term “in Trust” was used, but that 

it might have been “carryover language.” Id. at 28. Counsel for the Laogai Defendants posited 

that “in Trust” is “similar to use of the phrase ‘in God we trust,” a “term of art used to say ‘we 

trust you’. . . [and] nothing more.” Id. at 32. Given the sophistication of the parties and their 

representation by counsel in drafting the settlement agreement, it seems unlikely that no one

noticed that multiple iterations of the agreement, including the final version, referred to the 

creation of a “trust.” It may well be that no one focused on this aspect of the agreement because 

it was not the most pressing issue at hand. But failing to focus on a question is different than 

having no knowledge whatsoever that a legally significant term appears in one of the key 

paragraphs of a relatively short, and presumably thoroughly reviewed, contract.
48

Jerry Yang, for example, testified in his deposition that he “would say [the agreement is] 

a contract. It’s a contract between us and [the Foundation], and that’s what contracts are.” Dkt. 

123-1 at 17–18 (Yang Dep. 80:25–82:3). But Yang, who is not a lawyer, see Pl. Ex. 1 at 23 

(Yang Dep. 88:3), also testified that Yahoo “structured the [s]ettlement [a]greement” so that 

“Yahoo’s . . . obligation was to pay money to create the Fund,” and “Wu and the [Foundation]

were then obligated . . . to use the Fund for its intended purposes.” Dkt. 123-1 at 21 (Yang Decl. 

¶ 10). Notably, those purposes included the charitable purpose of “provid[ing] humanitarian and 

legal assistance primarily to persons in or from . . . China.” Pl. Ex. 14 at 13. Similarly, Callahan 

testified that “Yahoo did not intend to create a trust at the settlement agreement stage.” Dkt. 135 

at 42–43 (Callahan). He also testified, however, that “[t]he overall intention was just obviously 

to settle the two [lawsuits], but also to create the Human Rights Fund that would be used to the 

[Foundation’s] discretion for the purposes that were enumerated in the settlement agreement.” 

Id. at 85 (Callahan). That structure—a donor paying money to a donee, who maintains an 

obligation to spend the money for a charitable purpose—is demonstrative of trust intent. Cf. In 

re Strack, 524 F.3d at 499 (“At bottom, ‘[i]f the intention is that the money shall be kept or used 

as a separate fund for the benefit of the payor or a third person, a trust is created.’” (alteration in 

In re Strack) (quoting Broaddus, 26 S.E.2d at 36); see also Restatement (Second) of Trusts § 14 

(explaining the difference between a trust and a contract for the benefit of a third party). In any 

event, even if the Foundation was permitted to exercise discretion in the expenditure of the trust 

funds, “discretion is hardly remarkable as a matter of trust law; the terms of a trust often give the 

trustee discretion in carrying out a duty, while leaving the duty itself mandatory.” Beckett, 995 

F.2d at 287.
49

CONCLUSION

For all of these reasons, the Court finds by clear and convincing evidence that the 2007 

settlement agreement established a charitable trust under D.C. law. 

SO ORDERED.

 /s/ Randolph D. Moss 

 RANDOLPH D. MOSS 

 United States District Judge 

Date: May 12, 2022