Opinion ID: 8312489
Heading Depth: 2
Heading Rank: 1

Heading: whether the wang settlement created a charitable trust

Text: An initial issue is whether plaintiffs have plausibly alleged that Yahoo established a charitable trust through the Wang Settlement in 2007. Plaintiffs' trust claims-Counts One, Three, Four, and Five-are founded on the proposition that they are beneficiaries of the alleged charitable trust; thus, if there is no trust, these claims must be dismissed. A charitable trust, as opposed to a private trust, is designed to accomplish objects that are beneficial to the community.  Restatement (Third) of Trusts § 28 cmt. a. (2003); see George G. Bogert, George T. Bogert, & Amy Hess, The Law of Trusts and Trustees § 361 (3d ed. 2017) [hereinafter Bogert]. To state viable trust claims, plaintiffs must establish that there 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] beneficiar[ies], to whom the trustee owes such duties; ... [3] trust property, which is held by the trustee for the beneficiar[ies] ... [4] [and an] intention [by the settlor] to create a trust, which may be manifested 'by written or spoken language or by conduct.'  Duggan v. Keto , 554 A.2d 1126 , 1133 (D.C. 1989) (citation omitted). Plaintiffs contend that these elements are easily met, and they place great stock in the fact that payments were made in trust to the LRF. Pls.' Opp'n at 10 (citing FAC ¶¶ 36 & n.3, 40). But courts have recognized that there is nothing talismanic about inclusion of the term in trust in an agreement. See In re Ames Dep't Stores, Inc. , 144 Fed.Appx. 900 , 901-02 (2d Cir. 2005) ([A]dding the words 'trust' or 'agency' to a contract does not, without more, convert [the agreement] into a trust or agency relationship.); Meima v. Broemmel , 117 P.3d 429 , 444-46 (Wyo. 2005) (finding no trust established even though the parties used the words in trust in the relevant agreement). Plaintiffs also assert that a settlement agreement can[ ] result in the creation of a trust-indeed, numerous cases involve just that scenario. Pls.' Opp'n at 11. But just because a settlement agreement can create a trust does not mean that it does . Each of the cases cited by plaintiffs for this proposition involved express language in a settlement agreement that created a trust. See Athey v. United States , 132 Fed.Cl. 683 , 687 (Fed. Cl. 2017) (settlement required payments to be made to an administrator who would then establish an 'Athey Class Settlement' Trust), appeal docketed , 17-2277 (Fed. Cir. filed July 10, 2017); In re Diet Drugs Prods. Liab. Litig. , No. 99-cv-20593, 2001 WL 283163 , at  (E.D. Pa. Mar. 21, 2001) (settlement created [trust] fund [that] must be administered by ... seven court appointed trustees). Here, such language is absent from the Wang Settlement. Defendants, in turn, provide several arguments why the Wang Settlement did not create a charitable trust. As an initial matter, the Wang Settlement is a contract and, unlike the 2009 amendment, it does not purport to be a trust document. Compare Wang Settlement with LHRO and YIHRT 2009 Documents. Defendants also contend that plaintiffs have wholly failed to support their conclusory allegations that they are charitable beneficiaries of the purported trust. The term charitable beneficiaries is never mentioned in the Wang Settlement; indeed, the agreement expressly disclaims the creation of any third-party beneficiaries. See Wang Settlement at 119 (This Agreement shall bind and inure to the benefit only of, and be enforceable only by, the Parties hereto and their respective successors and assigns .... There are no express or implied third party beneficiaries of this Agreement.). Defendants also assert that plaintiffs have failed to plausibly allege that Yahoo intended to establish a charitable trust. See Bogert § 323 (The conduct of the alleged settlor of the charitable trust must show an intent to create a trust and not some similar relationship or some other effect.); Duggan , 554 A.2d at 1136 (intent must be clearly manifested by the settlor). Plaintiffs have acknowledged that Yahoo has never publicly or privately referred  to the YHRF as a trust. 4 See Pls.' Opp'n at 2. Moreover, Yahoo's intent as stated in the settlement was its desire ... to resolve [its] disputes, and all claims, causes of action and controversies with plaintiffs in the Wang litigation without further expenditure of time and expense on litigation. Wang Settlement at 111. That stated intent plainly is not a manifestation of an intent to create a trust. See Morrow v. United States , 723 F.Supp.2d 71 , 77 (D.D.C. 2010) (Where 'more likely explanations' than those alleged by the plaintiff exist, the Court should be wary of finding that the plaintiff's allegations have sufficiently nudged the claims into the realm of plausibility. (quoting Iqbal , 556 U.S. at 681 , 129 S.Ct. 1937 ). 5 Ultimately, plaintiffs have not plausibly alleged that the Wang settlement created a charitable trust. Hence, all of the claims that sound in trust will be dismissed. Even assuming that the Beneficiary Plaintiffs have plausibly alleged that Yahoo created a charitable trust for their benefit, their trust claims would still fail for an independent reason: they have failed to establish that they have standing under principles of trust law. The general rule with respect to charitable trusts is that  'only a public officer, usually the state Attorney General, has standing to bring an action to enforce the terms of the trust.'  Family Fed'n for World Peace v. Hyun Jin Moon , 129 A.3d 234 , 244 (D.C. 2015) (quoting Hooker v. Edes Home , 579 A.2d 608 , 612 (D.C. 1990) ). This limitation is based on the 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 on the trust res and trustee of vexatious litigation that would result from recognition of a cause of action by any and all of a large number of individuals who might benefit incidentally from the trust. Id. However, courts have recognized exceptions to the general rule when an individual seeking to enforce the trust has a special interest in the trust, or is a member of a small and distinct beneficiary class. See id. ; Hooker , 579 A.2d at 614 . Plaintiffs have not shown that an exception applies here. To start, the Beneficiary Plaintiffs have not plausibly alleged that they have the type of special interest necessary for standing. In Family Federation for World Peace , for example, the court found that a few plaintiffs had the requisite special  interest based on their exceptionally close connection to the charitable corporation. 129 A.3d at 244 . The plaintiffs included: two ousted former directors who were also successor trustees; an entity that was a major beneficiary from [the charity] for three decades; an entity that was a co-settlor of the trust; and another entity with close interests in [the charity's] operation[s]. Id. at 238 n.2, 244-45, 245 n.19. Plaintiffs have alleged no similarly close connection to the charitable trust here. Rather, they merely allege that they are potential beneficiaries of the trust. See FAC ¶¶ 10-16. It is well-established that the mere fact that a person is a possible beneficiary is not sufficient to entitle him to maintain a suit for the enforcement of a charitable trust. Restatement (Second) of Trusts § 391 cmt. c; see Schalkenbach Found. v. Lincoln Found. , 208 Ariz. 176 , 91 P.3d 1019 , 1024 (2004) ([A] party must show that they have a special interest in the trust, such as being a current beneficiary, and not merely being a potential or prior beneficiary of a large class of potential beneficiaries.); Bogert § 414 (As a general rule, no private citizen can sue to enforce a charitable trust merely on the ground that he believes he is within the class to be benefitted by the trust ....). The Beneficiary Plaintiffs likewise fail to support the conclusory allegation that they are members of a small, sharply defined, and numerically limited class. FAC ¶ 119. Indeed, their own complaint alleges that, as of 2007,  many Yahoo users [had been] imprisoned [by Chinese authorities] based on evidence provided by Yahoo. Id. ¶ 28 (emphasis added). Yet plaintiffs' proposed class is even broader than the many Yahoo users imprisoned as of 2007. The proposed class: (1) includes individuals persecuted for expressing their views online through Yahoo or another medium , Wang Settlement at 113 (emphasis added); FAC ¶ 119; (2) is primarily, but not exclusively, limited to individuals in China, see Wang Settlement at 113; and (3) is not temporally limited at all. Plaintiffs' many number through 2007 has undoubtedly grown much larger today because China has more than 700 million active Internet users, and is considered one of the world's most active censors of online dissent. 6 At bottom, the Beneficiary Plaintiffs have failed to identify any case where a court conferred standing on a beneficiary class as large as the one they allege here: the cases they rely on involve smaller and more limited classes. 7 In Williams v. Board of Trustees , 589 A.2d 901 (D.C. 1991), the court held that a class comprised of those who regularly attended and financially contributed to a single church in Washington  was too uncertain and limitless to confer standing, id. at 909 . Plaintiffs proposed class of political dissidents persecuted for using any Internet platform in the world's most populous country is far more limitless and uncertain than the beneficiary class in Williams . Plaintiffs' reliance on Hooker is similarly unhelpful. In that case, the court conferred standing on a beneficiary class that consisted of female, indigent, aged widowed residents of Georgetown who were in good health Hooker , 579 A.2d at 615 . Moreover, the court found that the class was limited because the number of applications from the group of beneficiaries ... ha[d] decreased significantly and the home had difficulty finding qualifying individuals. Id. at 615-16 . In other words, in Hooker the potential beneficiaries came from a single neighborhood of a single city with a population that is just a small fraction the size of China's 700 million internet users. And here, unlike in Hooker , it appears that the beneficiary class is expanding rather than shrinking. 8 In sum, the Beneficiary Plaintiffs have not satisfied their burden of showing that they have standing to bring their claims under the principles applicable to charitable trusts. 9