United States District Court, District of Columbia
D. BATES UNITED STATES DISTRICT JUDGE
the Court is  plaintiffs' motion to alter or amend
this Court's judgment of March 30, 2018 and for leave to
amend their first amended complaint, both of which defendants
oppose. Plaintiffs' first amended complaint alleged that
a settlement agreement arising from a 2007 lawsuit brought by
imprisoned Chinese activists against Yahoo established a
charitable trust of which plaintiffs are beneficiaries and
that defendants, all of whom are allegedly trustees,
improperly depleted the trust's assets and unlawfully
terminated the trust's humanitarian purpose. See Depu
v. Yahoo! Inc.. 306 F.Supp.3d 181, 185 (D.D.C. 2018).
Defendants moved to dismiss the complaint, arguing that the
settlement agreement did not establish a charitable trust and
that plaintiffs lack standing to enforce any trust.
Id. This Court dismissed the complaint with
prejudice, holding that the settlement did not establish a
trust and that even if it had, plaintiffs lack standing to
enforce it. Id. at 189, 191. Now, plaintiffs move
the Court to set aside the judgment and for leave to file a
second amended complaint that, they assert, will cure some of
the first amended complaint's defects, allowing some of
plaintiffs' claims to survive a motion under Rule
12(b)(6). For the reasons explained below, the Court will
deny plaintiffs' motion to alter or amend the March 30,
2018 judgment and will deny plaintiffs' motion for leave
to amend their complaint.
full facts and procedural history of this case are laid out
in this Court's earlier memorandum opinion. See
Depu, 306 F.Supp.3d at 185-87. In short, as part of a
settlement agreement to end a 2007 lawsuit filed by Chinese
political activists (the "Wang Settlement"), Yahoo
agreed to pay $17.3 million to the Laogai Research Foundation
("LRF"), a non-profit corporation founded by Harry
Wu, to establish the Yahoo Human Rights Fund
("YHRF" or "YHR Fund"). See
Id. at 185. In 2017, plaintiffs filed a lawsuit
alleging that the YHRF is a charitable trust established for
plaintiffs' benefit and contending that
defendants-all of whom are allegedly
trustees-unlawfully breached and modified the purported trust
under D.C. law. See id. at 186-87; FAC ¶¶
Court granted defendants' subsequent motions to dismiss
the trust-based claims under Federal Rules of Civil Procedure
12(b)(6) and 12(b)(1). First, the Court held that plaintiffs
failed to allege plausibly that the Wang Settlement
created a charitable trust. See Depu, 306 F.Supp.3d
at 187-89. Second, the Court held that even if the
Wang Settlement had somehow established a charitable
trust, plaintiffs failed to allege plausibly that they had
standing to enforce the trust, both under the principles of
trust law and, as to six of seven plaintiffs, under Article
III. See Id. at 189-91 & n.9. Because
the Court's order dismissing the FAC did not specify
whether the complaint was dismissed with or without
prejudice, the claims were dismissed with prejudice
under Federal Rule of Civil Procedure 41(b). See Rollins
v. Wackenhut Servs., Inc., 703 F.3d 122, 131 (D.C. Cir.
2012) ("[Rule] 41(b) provides, in part, that
'[u]nless the dismissal order states otherwise, [an
involuntary dismissal]-except one for lack of jurisdiction,
improper venue, or failure to join a party under Rule
19-operates as an adjudication on the merits.").
Plaintiffs now move to set aside the judgment and for leave
to amend their trust claims in a proposed second amended
complaint that they claim will survive. See Rule
59(e) Mot. to Alter J. from Dismissal With Prejudice to
Dismissal Without Prejudice, Rule 15(a) Mot. for Leave to
Amend, and Mem. of P. & A. in Support Thereof
("Pls.' Mot. to Amend") [ECF No. 42].
may move to "amend their complaint after it was
dismissed with prejudice 'only by filing ... a [Federal
Rule of Civil Procedure] 59(e) motion to alter or amend the
judgment combined with a [Federal Rule of Civil Procedure]
15(a) motion requesting leave of court to amend their
complaint.'" Brink v. Cont'l Ins. Co.,
787 F.3d 1120, 1128 (D.C. Cir. 2015) (quoting Firestone
v. Firestone, 76 F.3d 1205, 1208 (D.C. Cir. 1996) (per
curiam)). Plaintiffs followed that procedure here, filing a
combined Rule 59(e) and Rule 15(a)(2) motion requesting that
the Court grant leave to amend. See Pls.' Mot.
to Amend at 3.
59(e) motions to amend or alter a judgment provide "a
limited exception to the rule that judgments are to remain
final" and, because they "are aimed at
'reconsideration, not initial consideration, '"
"may not be used to relitigate old matters, or to raise
arguments or present evidence that could have been raised
prior to the entry of judgment." Leidos, Inc. v.
Hellenic Republic, 881 F.3d 213, 217 (D.C. Cir. 2018)
(citations omitted). Instead, a Rule 59(e) motion may be
granted "under three circumstances only: (1) if there is
an 'intervening change of controlling law'; (2) if
new evidence becomes available; or (3) if the judgment should
be amended in order to 'correct a clear error or prevent
manifest injustice.'" Id. (citation
15(a)(2), by contrast, is a flexible measure by which
plaintiffs may request leave to amend their complaint.
"The Supreme Court has explained that 'the grant or
denial of an opportunity to amend [under Rule 15] is within
the discretion of the District Court,' but leave to amend
should be freely given '[i]n the absence of any apparent
or declared reason-such as . . . repeated failure to cure
deficiencies by amendments previously allowed, undue
prejudice to the opposing party by virtue of allowance of the
amendment, [or] futility of amendment." In re
McCormick& Co., Pepper Prods. Mktg. & Sales Practices
Litig, 275 F.Supp.3d 218, 224 (D.D.C. 2017) (quoting
Foman v. Davis, 371 U.S. 178, 182 (1962)).
the Court may not consider leave to amend an inoperative
complaint, the Court turns first to plaintiffs' Rule
59(e) motion seeking to alter or amend the Court's order
dismissing plaintiffs' trust claims with prejudice.
The Court Did Not "Clearly Err" By Dismissing
Plaintiffs' Complaint With Prejudice Plaintiffs assert
that the Court committed "clear error" within the
meaning of Rule 59(e)
dismissing plaintiffs' complaint with prejudice.
Pls.' Mot. to Amend at 3-4. In Firestone, the
D.C. Circuit instructed that "dismissal with
prejudice is warranted only when a trial court
'determines that the allegation of other facts
consistent with the challenged pleading could not
possibly cure the deficiency.'" 76 F.3d at 1209
(second emphasis added) (citation omitted). And because
dismissal with prejudice "operates as a rejection of the
plaintiff[s'] claims on the merits and precludes further
litigation of them," Rudder v. Williams, 666
F.3d 790, 794 (D.C. Cir. 2012) (alteration and citation
omitted), the D.C. Circuit has since observed that the
standard for dismissing a complaint with prejudice is
"high," Brink, 787 F.3d at 1129.
to plaintiffs, the Court failed to clear that high bar here,
dismissing the FAC with prejudice absent any clear
determination that plaintiffs "could not possibly cure
the deficienc[ies]" in its trust claims. Pls.' Mot.
to Amend at 4 (quoting Firestone, 76 F.3d at 1209).
For their part, defendants respond that the Court met the
Firestone standard because plaintiffs' trust
claims were "predicated on whether the Wang
Settlement created a charitable trust," and the
Court's opinion was sufficiently clear that "new
factual allegations" could not "change the plain
language of the Wang Settlement, which disclaims any
intention to create a ...