Xiaoning et al v. Yahoo! Inc, et al

Filing 33

Reply Memorandum re 22 MOTION FOR AN EARLY CASE MANAGEMENT CONFERENCE and Order filed byYahoo! Inc.. (Petrocelli, Daniel) (Filed on 7/12/2007)

Xiaoning et al v. Yahoo! Inc, et al

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DANIEL M. PETROCELLI (S.B. #97802)
[e-mail]

MATTHEW T. KLINE (S.B. #211640)
[e-mail]

O'MELVENY & MYERS LLP 1999 Avenue Of The Stars Los Angeles, California 90067-6035 Main Number: [phone] Facsimile: [phone] Attorneys for Defendant YAHOO!, INC. and Specially Appearing Defendant YAHOO! HOLDINGS (HONG KONG), LTD. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA OAKLAND DIVISION WANG XIAONING, YU LING, SHI TAO, and ADDITIONAL PRESENTLY UNNAMED AND TO BE IDENTIFIED INDIVIDUALS, Plaintiff, v. YAHOO!, INC., a Delaware Corporation, YAHOO! HOLDINGS (HONG KONG), LTD., a Foreign Subsidiary of Yahoo!, ALIBABA.COM, INC. a Delaware Corporation, AND OTHER PRESENTLY UNNAMED AND TO BE IDENTIFIED INDIVIDUAL EMPLOYEES OF SAID CORPORATIONS, Defendant. Case No. C07-02151 CW REPLY MEMORANDUM IN SUPPORT OF DEFENDANT YAHOO!, INC.'S MOTION FOR AN EARLY CASE MANAGEMENT CONFERENCE AND ORDER Date: July 26, 2007 Time: TBD Location: Courtroom 2 Judge: Hon. Claudia Wilken

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V. VI. VII. III. IV. D. I. II.

TABLE OF CONTENTS Page
INTRODUCTION .............................................................................................................. 1 SOSA REQUIRES A CAUTIOUS, COLLABORATIVE APPROACH............................ 2 A. B. C. Plaintiffs' Claims Are Not Exempt from Sosa........................................................ 2 The United States Government Has Not Endorsed This Lawsuit........................... 4 Plaintiffs' Choice Not To Sue the PRC Does Not Exempt this Case from Sosa ......................................................................................................................... 5 Plaintiffs' Remaining Arguments Are Without Merit ............................................ 7

PLAINTIFFS ARE NOT ENTITLED TO IMMEDIATE DISCOVERY.......................... 8 YAHOO!'S PURPOSE IS NOT DELAY ........................................................................ 10 A. B. C. The Purpose of Phase I.......................................................................................... 10 The Purpose of Phase II ........................................................................................ 12 The Question of Prejudice..................................................................................... 13

PLAINTIFFS KNEW YAHOO! WOULD BE FILING THIS MOTION........................ 14 THE COURT HAS THE POWER TO GRANT THE RELIEF REQUESTED............... 14 CONCLUSION ................................................................................................................. 15

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TABLE OF AUTHORITIES Page
CASES Abeles v. State Bar of Cal., 9 Cal. 3d 610 (Cal. 1973) ........................................................................................................ 10 Allen v. Bayer Corp., 460 F.3d 1227 (9th Cir. 2006)................................................................................................. 15 Banco Nacional de Cuba v. Sabbatino, 376 U.S. 432 (1964) .................................................................................................................. 5 Bertucelli v. Carreras, 467 F.2d 215 (9th Cir. 1972)..................................................................................................... 8 Bowoto v. Chevron, No. C 99-02506, 2006 U.S. Dist. LEXIS 63209, (N.D. Cal. Aug. 21, 2006)........................... 3 Citicasters Co. v. Country Club Communs., 44 U.S.P.Q.2D (BNA) 1223 (C.D. Cal. 1997)........................................................................ 15 Clinton v. Jones, 520 U.S. 706 (1997) ................................................................................................................ 15 DeShazier v. Williams, Case No. CV F 06-0591, 2006 U.S. Dist. LEXIS 64906, (E.D. Cal. Aug. 29, 2006) ..................................................................................................................................... 8, 9 DM Research, Inc. v. College of Am. Pathologists, 170 F.3d 55 (1st Cir. 1999) ................................................................................................... 1, 8 Doe v. Qi, 349 F. Supp. 2d 1258 (N. D. Cal. 2004) .......................................................................... passim Estate of Rabinowitz, 7 Cal. Rptr. 3d 723 (2003) ...................................................................................................... 10 Freeman v. Employment Stds. Admin., 71 Fed. Appx. 638 (9th Cir. July 24, 2003) ............................................................................ 15 In re Sinaltrainal Litigation, 474 F. Supp. 2d 1275 (S.D. Fl. 2006) ....................................................................................... 9 In re South African Apartheid Litig., 346 F. Supp. 2d 554 (S.D.N.Y. 2004)................................................................................... 6, 7 Meredith v. Ionian Trader, 279 F. 2d 471 (2d Cir. 1960)................................................................................................... 10 Mujica v. Occidental Petroleum, 381 F. Supp. 2d 1194 (C.D. Cal. 2005) .................................................................................... 5 Pueblo of Santa Rosa v. Fall, 273 U.S. 319 (1927) ................................................................................................................ 10 Sarei v. Rio Tinto, __ F.3d __, 2007 WL 1079901, (9th Cir. Apr. 12, 2007) ..................................................... 6, 7 Sosa v. Alvarez-Machain, 542 U.S. 728 (2004) ......................................................................................................... passim -iC07-02151 CW

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TABLE OF AUTHORITIES (continued) Page
United States v. Batiste, 868 F.2d 1092 (9th Cir. 1989)........................................................................................... 14, 15 United States v. Wolf, 352 F. Supp. 2d 1199 (W.D. Okla. 2004) ............................................................................... 10 Xuncax v. Gramajo, 886 F. Supp. 192 (D. Mass. 1995) ............................................................................................ 9 STATUTES CAL. CIV. PROC. § 367..................................................................................................................... 9 CAL. PROB. CODE § 4121............................................................................................................... 10 CAL. PROB. CODE § 4122............................................................................................................... 10 CAL. PROB. CODE § 4263(A)(1)..................................................................................................... 10 CAL. PROB. CODE § 4459............................................................................................................... 10 OTHER AUTHORITIES 2-8 MOORE'S FEDERAL PRACTICE, CIVIL § 8.04(4) (2007) .............................................................................................................. 8 5 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1224 (1990) ................................................................ 8 Bill Nichols, China prisoners' supporters look to Bush, USA TODAY (Apr. 18, 2006) .................................................................................................. 13 Curtis A. Bradley et al., Sosa, Customary International Law and the Continuing Relevance of Erie, 120 HARV. L. REV. 870, 924-29 (2007) .................................................................................... 3 Library of Congress, Congressional Research Service Report for Congress, China-U.S. Relations: Current Issues and Implications for U.S. Policy, at CRS-20 (Kerry Dumbough, ed. updated January 20, 2006), http://fpc.state.gov/documents/organization/ 61492.pdf. ............................................................................................................................... 13 Morton Sklar on Yahoo! human rights lawsuit (Apr. 21, 2007), http://www.brightcove.com/title. jsp?title=769385554&channel=27638673 (audio webcast at 06:23-8:16) ............................... 6 Scott Shane, Suit Over C.I.A. Program, N.Y. TIMES, May 31, 2007...................................................................................................... 12 RULES FED. R. CIV. PROC. 8........................................................................................................................ 8 FED. R. CIV. PROC. 11...................................................................................................................... 8 FED. R. CIV. PROC. 12(E) ................................................................................................................. 9 FED. R. CIV. PROC. 16.................................................................................................................... 15 FED. R. CIV. PROC. 17...................................................................................................................... 9 FED. R. CIV. PROC. 26(C) ............................................................................................................... 15 - ii C07-02151 CW C07-02151 CW

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TABLE OF AUTHORITIES (continued) Page
FED. R. EVID. 602 .......................................................................................................................... 12 FOREIGN LAW Zhong hua ren min gong he guo min shi su song fa [1991Civil Procedure Law (P.R.C.)] at Art. 59 .................................................................................................................. 10 Zui gao ren min fa yuan guan yu shi yong <zong hua ren min gong he guo min shi su song fa> ruo gan went i de yi jian, (Opinions of the Supreme People's Court on Certain Issues Concerning Application of PRC Civil Procedure Law 2002), SUP. PEOPLE'S CT. GAZ., Art. 69............................................................................................. 10

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I.

INTRODUCTION Plaintiffs want this Court to treat this case as if it were run of the mill. It is not, and the

case management order Yahoo! proposes makes sense and should be granted. Plaintiffs assert that Yahoo! can be held liable for aiding and abetting human rights abuses allegedly committed by the Chinese government, against its own citizens, on its own soil. Plaintiffs do not allege that Yahoo! engaged in a single act of abuse, intended such acts to occur, or even initiated any contact with the government. Rather, plaintiffs seek to hold Yahoo! liable solely because one of its indirect Chinese subsidiaries, acting pursuant to Chinese law, provided information to the Chinese government in response to the Chinese equivalent of a subpoena. Based on this theory of liability--and the sparsest of factual allegations--plaintiffs seek immediate discovery and the normal pre-trial schedule. There is no basis for proceeding in this manner. "The price of entry, even to discovery, is for the plaintiff to allege a factual predicate concrete enough to warrant further proceedings . . . ." DM Research, Inc. v. College of Am. Pathologists, 170 F.3d 53, 55 (1st Cir. 1999). Plaintiffs fail this basic test, and the caution embodied in Yahoo!'s case management proposal is required given the myriad policy concerns this case implicates. To be clear, plaintiffs ask this Court to hold that companies have a legal duty to disobey local law in certain countries where they do business and, in particular, to refuse requests for information from the PRC. See Mot. at 4 n.3. Such an unprecedented ruling would dramatically impact foreign policy; impede law enforcement efforts around the world; be a direct affront to the Chinese government; and radically expand the scope of the ATS and the other sources of law on which plaintiffs rely. Before this Court takes such a dramatic step, or even recognizes that it has subject matter jurisdiction to hear plaintiffs' claims, it should proceed with "great caution" and solicit the views of the political branches. Sosa v. Alvarez-Machain, 542 U.S. 692, 728 (2004). Great caution is also warranted because plaintiffs' complaint and their proposed means of proving their case are so speculative. For example: · Most of plaintiffs' amended complaint is alleged based on "information and belief," or

facts plaintiffs hope to discover--not facts they know. Plaintiffs rely on "information and
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belief" not to allege facts uniquely known to defendants, but rather to describe what allegedly happened to plaintiffs themselves. Such pleadings are insufficient and improper. · Other than citing hearsay sources, plaintiffs cannot explain how it is they will prove

their case. This proof issue is a real one, and time should not be wasted litigating a case that cannot be proven. · Finally, this case is so unusual that plaintiffs' counsel cannot communicate with two

of the three plaintiffs. Indeed, given this lack of access, it is unclear whether counsel even have the appropriate authority to prosecute this case on these two plaintiffs' behalf. In light of these unique circumstances--and given that at least two of the defendants and two of the plaintiffs have no business being named as parties in this case--Yahoo! proposed a case management order that would allow the Court and parties to address this case in a logical, expeditious manner. The purpose of this proposal was not to delay, but to make sure that (a) the proper parties were identified at the outset; and (b) plaintiffs' theories were properly tested before an expensive and politically sensitive discovery process began. Plaintiffs oppose this proposal, arguing that this case deserves no special treatment under Sosa or otherwise; that they are entitled to discovery right away; that Yahoo!'s real purpose is delay; that Yahoo! broke a deal it made regarding the schedule; and that Yahoo!'s request is not lawful. Each of plaintiffs' arguments is without merit, as we explain below. II. SOSA REQUIRES A CAUTIOUS, COLLABORATIVE APPROACH. Plaintiffs make various arguments why--despite Sosa--this Court need not proceed with caution or take the time to solicit and receive the views of the political branches before defendants file their motions to dismiss on substantive grounds. Plaintiffs' arguments fail. A. Plaintiffs' Claims Are Not Exempt from Sosa.

Plaintiffs first argue that Sosa's requirement of vigilant door-keeping does not apply to their claims, because they have alleged violations of norms against "torture" and "long-term arbitrary detention" that "have been fully recognized and accepted by Congress and by the courts as appropriate foundations for ATCA and TVPA lawsuits." Opp. at 6. They assert that Sosa made "crystal clear that the weighing of political and foreign policy concerns was not appropriate
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in [this] special category of cases." Id. Plaintiffs are wrong for at least three reasons. First, even assuming plaintiffs were right about the "acceptance" of all the theories under which they sue--and they are not--plaintiffs do not raise only torture and detention claims. They have also sued for "cruel, inhuman or degrading punishment" for exercising "free speech and free association" rights and "forced labor." Am. Compl. ¶¶ 75-78, 90-91. They also sue on several California tort law theories and under California's unfair competition statute. See id. at 22-26. Unless plaintiffs are willing to abandon these claims, this Court must proceed with great caution and solicit the views of the political branches before announcing that plaintiffs have to a right to sue private parties based on the acts of the Chinese government, and based on these far from "definite" and "accepted" sources of law. Sosa, 542 U.S. at 732. Second, plaintiffs' torture and detention claims are far from sufficiently established, given they are made against corporate defendants and on an aiding-and-abetting theory. As Sosa noted, one crucial consideration when determining whether a norm is "sufficiently definite to support a cause of action" is "whether international law extends the scope of liability for a violation of a given norm to the perpetrator being sued, if the defendant is a private actor such as a corporation or individual." 542 U.S. at 732 & n.20 (all emphases added unless otherwise indicated). Even assuming plaintiffs have alleged cognizable torture and detention claims--and they have not-- such claims apply only to state actors. They do not apply to private actors such as corporations. See, e.g., Bowoto v. Chevron, No. C 99-02506, 2006 U.S. Dist. LEXIS 63209, at *7-37 (N.D. Cal. Aug. 21, 2006). They especially do not apply on the indirect, aiding and abetting theory of liability plaintiffs espouse, which, contrary to Sosa, would open the doors to waves of ATS litigation of this sort. See, e.g., Curtis A. Bradley et al., Sosa, Customary International Law and the Continuing Relevance of Erie, 120 HARV. L. REV. 870, 924-29 (2007). Third, the only thing Sosa makes "crystal clear" is that weighing foreign policy is essential even assuming the norms at issue are "sufficiently definite to support a cause of action." Id. Sosa went out of its way to note that the requirement that a norm be sufficiently definite and "clearly defined" was "not meant to be the only principle limiting the availability of relief in the federal courts for violations of customary international law." Id. at 733 n.21. Other limiting
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principles included, inter alia, "a policy of case-specific deference to the political branches." Id. In fact, in Doe v. Qi, 349 F. Supp. 2d 1258 (N. D. Cal. 2004), this Court rejected the precise argument made by plaintiffs' counsel here. In Qi, plaintiffs "argue[d] that where a court is presented with a claim based on international norms" of "definite content and acceptance among civilized nations," it was "no longer . . . suitable or appropriate to weigh the proposed standard against potential political or foreign policy consequences." Id. at 1290. This Court disagreed, holding that plaintiffs "misread Sosa." Id. According to this Court, Sosa required "a high degree of specificity and clarity in finding an enforceable common law claim under the ATCA. However, [Sosa] in no way intimated that once that standard is met, that no consideration may be given to similar concerns in determining whether such a case may proceed." Id. Qi also expressly rejected the argument--repeated by plaintiffs here, see Opp. 7, 15-17--that this policy of case-specific deference does not apply to claims under the TVPA or to the other sources of law on which they base their complaint. As this Court noted, Qi, 349 F. Supp. 2d at 1291 n.22: nothing in Sosa suggests that case-specific considerations of deference to political branches should be limited only to common law claims under the ATCA. The basis for such deference . . . is rooted in overarching considerations of separation of powers and the dangers of judicial interference with foreign relations committed to the political branches. These concerns obtain whether an international law claim is based on statute or common law premised on a clear norm of customary international law. B. The United States Government Has Not Endorsed This Lawsuit.

Plaintiffs repeatedly suggest their lawsuit raises no foreign policy concerns and that soliciting the State Department's views is unnecessary, because the United States has "single[d] out China for special criticism for their arbitrary detention and torture practices." Opp. at 8. These arguments are misguided as well. First, plaintiffs neglect to mention that while the United States has been critical of human rights abuses in China, it has consistently encouraged American companies to do business there. The real question this Court needs to ask the executive branch is not whether it thinks China has a good or bad record on human rights (we know the answer to that question), but rather whether this lawsuit--and the theory of liability plaintiffs have espoused--will negatively impact the United States' foreign policy agenda, including its ability (a) to promote human-rights reform through diplomatic channels, and (b) to promote such
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reform by encouraging American investment in China. If this Court rules that American companies doing business in China may not respond to Chinese law enforcement requests for information made in accord with valid legal process, then American companies will either be far more hesitant to invest, or they will risk serious sanction by the Chinese government when they refuse to abide by local law. Indeed, plaintiffs' own sources recognize that companies like Yahoo! are "obliged to abide by laws in countries where [they] do[] business." Human Rights Watch Letter at 2 ¶ 3 (quoted in Am. Compl. ¶ 24), www.hrw.org/press/2002/08/yahooltr073002.htm. Plaintiffs obscure this fact, cf. Opp. at 10, because they now want to deny it. Second, in making arguments about the State Department's positions, plaintiffs fail to mention that the United States has frequently recognized that lawsuits challenging human rights abuses abroad can impede U.S. foreign policy, even if a component of U.S. policy is to criticize the very abuses being challenged. The United States generally has made the judgment that there are more effective means of promoting and protecting human rights than private litigation.1 Indeed, as plaintiffs' counsel well know from Qi, although the State Department has condemned human-rights abuses in China, it also believes lawsuits of this sort are not the answer and actually harm its mission. See 349 F. Supp. 2d at 1296.2 Indeed, the United States has expressed its direct opposition to lawsuits of this sort that proceed on an aiding-and-abetting theory of liability.3 C. Plaintiffs' Choice Not To Sue the PRC Does Not Exempt this Case from Sosa.

Plaintiffs further suggest that soliciting a statement of interest would be inappropriate in this case because the Chinese government and its officials are not defendants. See Opp. at 13. See, e.g., Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 432 (1964) ("[t]he dangers of such adjudication are present regardless of whether the State Department has, as it did in this case, asserted that the relevant act violated international law"); Mujica v. Occidental Petroleum, 381 F. Supp. 2d 1164, 1194 (C.D. Cal. 2005) (State Department asserted that despite officially condemning the actions of the Colombian military, adjudicating the legality of those actions would threaten U.S. interests, including the U.S. government's "approach to encouraging the protection of human rights in Colombia"). 2 See also Statement of Interest of the United States, Doe v. Qi, Case No. C02 0672 CW (EMC), Tab A at 2-3, 7 (filed Jan. 16, 2004) (attached as Ex. A) (condemning human rights abuses by PRC, but urging that diplomatic means are far more effective than litigation). 3 See Mot. Ex. A at 12-27 (Br. of the US. as Amicus Curiae, The Presbyterian Church of Sudan v. Talisman, U.S. Court of Appeal for the Second Circuit, Case No. 07-0016 (filed May 15, 2007)).
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That the plaintiffs made the tactical choice not to sue the PRC--the only alleged direct tortfeasor in this case--is irrelevant to the Sosa analysis. The claims in this case directly implicate the propriety of actions taken by the Chinese government. Indeed, in a public interview, plaintiffs' lead counsel admitted as much: The U.S. Government outlaws these kinds of behaviors [against people] who are in favor of free press and free speech. So when Yahoo! says that the people involved are just abiding by Chinese law, that may be the case, but the laws are unlawful in terms of U.S. and international law and U.S. law requires just the opposite. . . . Foreign governments have the right to request information from Yahoo! pursuant to court orders . . . . China is using it to persecute people for the communication of ideas. And that's not something the United States government or a United States corporation should go along with.4 Plaintiffs could scarcely more directly challenge the ability of the Chinese government to pass laws prohibiting certain forms of speech, its ability to investigate those who commit these crimes, or its ability to incarcerate, try, and penalize those who break the law. Granted, plaintiffs make torture claims as well, which are discussed above, but their complaint is far broader. It alleges that detaining plaintiffs for engaging in acts of political "speech" amounts to "arbitrary arrest" and "prolonged detention" in violation of international law. Am. Compl. ¶¶ 83-88. The Act of State doctrine counsels against U.S. courts passing judgment on the acts of foreign governments, and it is widely recognized that courts may dismiss a case on this ground even if the foreign government is not a named defendant. See, e.g., Sarei v. Rio Tinto, __ F.3d __, 2007 WL 1079901, at *11 (9th Cir. Apr. 12, 2007) ("certain acts of [the Papua New Guinea government] are at issue, even if [it] is not a named defendant"). Similarly, Sosa's policy of casespecific deference and the political question doctrine apply whenever a case threatens to interfere with foreign relations. It does not matter whether a foreign state is named as a defendant, as litigation can threaten foreign policy when it is premised on the notion that a corporation aided and abetted the government's alleged misconduct. Unsurprisingly, courts regularly request and give credence to the views of U.S. government even in cases, such as this one, where the foreign state, who is the alleged tortfeasor, has not been sued. See, e.g., id. at *2-3; In re South African Apartheid Litig., 346 F. Supp. 2d 538, 554 (S.D.N.Y. 2004). Morton Sklar on Yahoo! human rights lawsuit (Apr. 21, 2007), http://www.brightcove.com/title. jsp?title=769385554&channel=27638673 (audio webcast at 06:23-8:16).
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D.

Plaintiffs' Remaining Arguments Are Without Merit.

Plaintiffs suggest that soliciting the views of the political branches would "not be appropriate," Opp. at 11, and go so far as to claim that soliciting those views would be "an unauthorized and uncalled for reliance on the political process[] that is antithetical to the principle of the rule of law." Opp. 12. Sosa is directly contrary. It makes clear that courts must consider the potential foreign relations consequences of adjudicating ATS cases in deciding (1) whether to recognize the particular international law claims asserted; (2) whether to allow plaintiff to sue the particular defendants named; and (3) whether, even if such a claim exists, deference to the political branches requires dismissing the case. See 542 U.S. at 724-28, 732 n.20, 733 n.21. Plaintiffs further contend that "the prevailing trend has been to insulate court cases from political influences, and to substantially reduce opportunities for the intrusion of political and foreign policy considerations into the adjudicatory process." Opp. 17. It is not clear what "trend" plaintiffs reference, but refusing to solicit or take account of the views of the political branches is nothing more than a violation of Sosa's command. It would also be inconsistent with the practice of many courts, including this one, adjudicating these sorts of cases. See, e.g., Rio Tinto, 2007 WL 1079901, at *7; Apartheid Litig., 346 F. Supp. 2d at 554; Qi, 349 F. Supp. 2d at 1296-1303. Plaintiffs' also argue that Sosa's "case-specific deference to the political branches" is limited to situations where a "special mechanism" has been established to permit resolution of the claims elsewhere. Opp. at 7. This argument, too, is without merit. As this Court recognized in Qi, such deference applies broadly, whenever "the dangers of judicial interference with foreign relations committed to the political branches" are implicated. 349 F. Supp. 2d at 1291 n.22. Finally, plaintiffs' assertion that a statement of interest might not be dispositive, see Opp. 14-19, does not mean one should not be solicited. This Court used such a statement to narrow plaintiffs' claims in Qi, 349 F. Supp. 2d at 1301-03, even if it did not dismiss the case outright. For all these reasons, the Court should grant Yahoo!'s motion, which will allow this Court and the parties to brief motions to dismiss after the views of government have been obtained, assuming plaintiffs' claims even survive Phase I.

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III.

PLAINTIFFS ARE NOT ENTITLED TO IMMEDIATE DISCOVERY. Plaintiffs also resist Yahoo!'s case management proposal, arguing they are entitled to

"discovery" and "fact gathering," right away. Opp. at 1-3. Plaintiffs fail to mention that "the price of entry, even to discovery, is for the plaintiff to allege a factual predicate concrete enough to warrant further proceedings, which may be costly and burdensome." DM Research, Inc. v. College of Am. Pathologists, 170 F.3d 53, 56 (1st Cir. 1999); DeShazier v. Williams, Case No. CV F 06-0591, 2006 U.S. Dist. LEXIS 64906, *18 (E.D. Cal. Aug. 29, 2006) (same). In addition to the defects in plaintiffs' legal theories discussed above, their complaint fails even the most basic pleading standards set forth in Rules 8 and 11 of the Federal Rules of Civil Procedure ("Rule"). The primary defect--and proof that this case is anything but a normal one-- comes in the very first sentence of the complaint: Plaintiffs "allege upon personal knowledge and belief as to their own circumstances . . . that substantial evidentiary support exists or will exist after a reasonable opportunity for further investigation and discovery." Am. Compl. at 1:1-5. Rule 8 does not require detailed factual pleading, but it does require pleading facts sufficient to state a claim. Plaintiffs' "belief" that some evidence will turn up in discovery is insufficient. Pleadings based on "information and belief" are allowed, but only when the information is "peculiarly within the knowledge of defendants." Bertucelli v. Carreras, 467 F.2d 214, 215 (9th Cir. 1972); accord 5 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1224 (1990); 2-8 MOORE'S FEDERAL PRACTICE, CIVIL § 8.04(4) (2007). Plaintiffs' own "circumstances" should be uniquely within their own "knowledge." There can be no legitimate reason for plaintiffs to have pled what happened to them based on "belief," unless defendants' concerns about plaintiffs' inability to prosecute this case, provide competent testimony, or even communicate with their counsel are all real. Plaintiffs, moreover, have an affirmative obligation under Rule 11(b)(3) "specifically [to] identify" any factual allegations that lack evidentiary support at the time of filing. The complaint fails to do so. Instead, it states generally that some or all of its allegations may or may not have evidentiary support, and puts the burden on defendants to sort through the claims for themselves. Such vague, ambiguous pleadings do not adequately put defendants on notice of the allegations
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against which they must defend. At a minimum, defendants will require a more definite statement, pursuant to Rule 12(e), before they can fully respond to plaintiffs' claims. Only after such issues are addressed in Phase I should merits issues be addressed in Phase II.5 In addition to requiring a more definite statement, this Court should also require plaintiffs to make a factual proffer before allowing this case to proceed. Plaintiffs seek expensive, burdensome discovery from defendants, but refuse even to positively allege their own injuries. Defendants should not be forced to defend themselves, at considerable expense, against phantom allegations that even plaintiffs acknowledge may have no basis in evidence. See, e.g., DeShazier, 2006 U.S. Dist. LEXIS 64906, at *18 ("Conclusory allegations in a complaint, if they stand alone, are a danger sign that the plaintiff is engaged in a fishing expedition."); In re Sinaltrainal Litigation, 474 F. Supp. 2d 1273, 1275 (S.D. Fl. 2006) (noting in ATS cases "there is . . . a risk that vague, conclusory, and attenuated allegations will allow individuals (and often the interest groups that finance or otherwise support their litigation) to engage in unwarranted international `fishing expeditions' [and] abuse the judicial process in order to pursue political agendas"). That plaintiffs make their allegations on "belief" as to their own circumstances raises a final concern: counsels' authority to represent plaintiffs. In plaintiffs' responsive brief to our motion to shorten time, counsel assert only that they have contact with plaintiff Yu Ling and the mother of Shi Tao, whom they assert is his legal representative. The brief further implies that communications with plaintiffs Wang and Shi are exclusively through members of their families. Under both the ATS and the TVPA, plaintiffs Wang and Shi must sue on their own behalf, see Xuncax v. Gramajo, 886 F. Supp. 162, 192 (D. Mass. 1995), yet even now plaintiffs suggest they may add Shi's mother as a plaintiff, see Opp. at 4, even though she lacks standing, as this Court held in Qi, 349 F. Supp. 2d at 1313. Indeed, under federal and California law, every action must be prosecuted by the real party in interest or a representative of that party authorized by law-- such as a guardian, executor, or party authorized by statute to bring suit--unless that real party lacks capacity to bring suit. See FED. R. CIV. P. 17; CAL. CIV. PROC. CODE § 367. Plaintiffs' Plaintiffs have suggested they might again amend their complaint. Because amendment will not remove the difficult threshold issues the complaint raises, phasing of this case still makes sense.
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counsel have said they represent Shi and Wang, but have not provided us with evidence that they are prosecuting this suit with plaintiffs' express authority or through legally executed and binding powers of attorney. The law requires such documentation.6 Unless defendants' are provided such evidence, it will be prudent to bring a motion to dismiss the case on the basis that the suit is unauthorized--at least by Wang and Shi. See Pueblo of Santa Rosa v. Fall, 273 U.S. 315, 319 (1927); Meredith v. Ionian Trader, 279 F. 2d 471, 474 (2d Cir. 1960); United States v. Wolf, 352 F. Supp. 2d 1195, 1199 (W.D. Okla. 2004); Abeles v. State Bar of Cal., 9 Cal. 3d 603, 610 (Cal. 1973). These representation issues are not idle concerns. Counsel are aware of at least one ATS case in which plaintiffs' counsel prosecuted the case for six years. After the case settled and judgment was entered, several plaintiffs filed motions to vacate the judgment and start the case all over again, on the theory that counsel lacked authority to settle their claims. The court denied plaintiffs' motion, in large because plaintiffs had executed valid powers of attorney on which defendants relied. Proceeding here without such safeguards exposes defendants and the Court to a number of risks, ranging from wasting resources to treading on sensitive foreign policy grounds for no reason. IV. YAHOO!'S PURPOSE IS NOT DELAY. A. The Purpose of Phase I

Yahoo!'s purpose in filing this motion--like Alibaba.com, Inc.'s in joining it--is first, in In California, a plaintiff may grant a general power of attorney with broad powers to sue on his or her behalf. See CAL. PROB. CODE §§ 4263(a)(1), 4459. But it must be dated, signed "either (1) by the principal or (2) in the principal's name by another adult in the principal's presence and at the principal's direction," and "acknowledged before a notary public or [] signed by at least two witnesses." Id. §§ 4121, 4122; Estate of Rabinowitz, 7 Cal. Rptr. 3d 722, 723 (2003). In China, a party may appoint an agent to represent her in a civil action only by submitting to the People's Court a power of attorney, bearing her signature or seal, that specifies the subject matter and the limits of authority granted. An agent must have special authority to recognize, withdraw, or modify claims; to become involved in mediation; to file a counterclaim or to lodge an appeal on behalf of the principal. See Zhong hua ren min gong he guo min shi su song fa [1991Civil Procedure Law (P.R.C.)] at Art. 59. A carte blanche power of attorney, which fails to name the powers granted, precludes an agent any of the above. See Zui gao ren min fa yuan guan yu shi yong <zong hua ren min gong he guo min shi su song fa> ruo gan went i de yi jian, (Opinions of the Supreme People's Court on Certain Issues Concerning Application of PRC Civil Procedure Law 2002), SUP. PEOPLE'S CT. GAZ., Art. 69. Other than general assurances, plaintiffs' counsel have not confirmed they obtained such documents, nor produced them to defendants.
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Phase I, to define who the proper parties are to this suit, if anyone. Plaintiffs pled no facts to suggest that YHKL is subject to this Court's jurisdiction. Nor do any exist. YHKL should be dismissed from this case without delay. Plaintiffs seek to keep it in the case indefinitely and subject it to various forms of discovery. Merely naming YHKL as a defendant was not enough. Plaintiffs need a good faith basis to subject YHKL to suit. Plaintiffs have none. Plaintiffs similarly have been unable to identify a single fact that connects Alibaba.com, Inc. to the allegations made in the case. Indeed, defendants' moving papers highlighted how the amended complaint, on its face, refutes plaintiffs' conclusory and undifferentiated allegation that "defendants" disclosed information about them to the Chinese government. In response, plaintiffs are silent. Their opposition brief never mentions Alibaba.com, Inc., let alone articulates any basis for suing it. Alibaba.com, Inc., like every other Alibaba entity, had no connection to Yahoo! China when the alleged disclosures were made regarding plaintiffs, and it does not and did not maintain Yahoo! China user information, the subject matter of the alleged disclosures. This Court should allow Alibaba.com, Inc. to brief this single issue before it is forced to spend time and money briefing various issues in this case, such as the scope of international law and whether this Court should decline to hear this case on grounds such as international comity, the act of state doctrine, or the scope of the various federal statutes and California law. Plaintiffs Yu and Shi equally have no place in this case, and their claims should be dismissed in Phase I. Yu lacks standing to bring claims on behalf of her husband, see Qi, 349 F. Supp. 2d at 1313, and her own claims, which she brings under California law, are paper thin and have no merit. Plaintiffs' counsel know so little about Shi that they do not even allege that he suffered from specific acts of torture or forced labor. Instead, they say that, because his prison is notoriously abusive, one can merely assume he was abused. See Am. Compl. ¶¶ 57, 64. Even if that surmise is plausible, cases may not proceed in American courts based on such speculation. Finally, Phase I should be used to test questions like whether plaintiffs can prove their case given the fact of their incarceration, and whether their counsel have the authority or ability to prosecute the case. Plaintiffs should also be forced to state their claims more definitively so that whatever defendants, if any, remain in Phase II, know what allegations they are actually
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defending against. To get around these pleading and proof problems, plaintiffs suggest they might add new plaintiffs to the case and that their representatives will testify for them. See Opp. at 4. But plaintiffs have yet to amend their complaint to include such plaintiffs or clarify their claims, and the witnesses plaintiffs presently propose (Shi's mother and Wang's wife) lack sufficient personal knowledge to give competent testimony. See Fed. R. Evid. 602. Plaintiffs further suggest that State Department reports provide the necessary proof. See Opp. at 18. Again, they are wrong. This Court has recognized such reports do not provide "specific and direct evidence substantiating the particular abuses allegedly suffered by . . . individual Plaintiffs." Qi, 349 F. Supp. 2d at 1311 n.39. B. The Purpose of Phase II

As Phase I unfolds, defendants will ask the Court to solicit the views of the Department of State, Department of Justice, and perhaps foreign governments regarding the impact of this case on foreign policy and global law enforcement efforts. Taken to its logical conclusion, plaintiffs' theory of the case could mean that a judge in Amsterdam could require any company with a connection to the Netherlands not to respond to American law enforcement requests in marijuana prosecutions, because laws prohibiting the use of the drug violate an international norm the Dutch court recognizes. More likely, if plaintiffs' case is allowed to proceed, corporations could fear complying with American requests for information or assistance in terrorism cases, on the theory that some court in the United States or abroad could rule that aiding and abetting the United States' "War on Terror" violates international norms. Indeed, such a lawsuit was recently filed against a Boeing subsidiary, on the theory that it assisted the CIA in a so-called "extraordinary rendition" of terrorism suspects, which led to the suspects' apprehension and alleged torture. See Scott Shane, Suit Over C.I.A. Program, N.Y. TIMES, May 31, 2007. Before this Court receives any briefing--or much less makes any rulings (which will no doubt be cited in other cases)--it should have the views of the political branches regarding this case. There is no reason to force defendants to brief the merits issues in this case in the blind and without the benefit of these views, especially when resolution of the Phase I issues may dispose of the case entirely and will keep the parties busy and productive in the coming months.
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C.

The Question of Prejudice

Plaintiffs will not be prejudiced by the delay for Phase II to begin. As one can see from the allegations in the complaint, plaintiffs cannot meaningfully participate in the prosecution of this case and may not be able to do so until they are released from prison several years from now. Plaintiffs have identified no real prejudice if Yahoo!'s motion is granted. First, the notion that discovery of defendants will shed light on plaintiffs' condition or the alleged mistreatment they suffered at the hand of the PRC--the very basis of all their claims--is a non-starter. Defendants have no access to such proof; only plaintiffs and the PRC do. Second, plaintiffs' counsel have argued in our "meet and confer" conferences and suggested in their recent brief, see Opp. at 21, that any delay in this case, even of a few weeks, will mean plaintiffs will have to remain in prison longer. To be clear, no schedule in this case, no court order, and no action defendants could undertake could guarantee or even likely affect plaintiffs' condition except in a negative way. The U.S. government has long urged the release of political prisoners in China, but with only limited success and only by pursuing careful diplomatic channels.7 Moreover, as this Court has recognized, it would "risk enormous implications for our foreign relations" to issue an injunction requiring the Chinese government to take any action, much less to release two prisoners it considers (even if wrongly) threats to its national security. Qi, 349 F. Supp. 2d at 1301. The only real prejudice here would be if plaintiffs' case were allowed to proceed before this Court determines who the proper parties are, whether plaintiffs' counsel have the ability to prosecute the case, whether this case is justiciable, and whether plaintiffs have even stated a

See, e.g., Bill Nichols, China prisoners' supporters look to Bush, USA TODAY (Apr. 18, 2006) ("Human rights activists say prisoner releases have declined since Hu [Jintao] became China's leader in 2002.")' Library of Congress, Congressional Research Service Report for Congress, China-U.S. Relations: Current Issues and Implications for U.S. Policy, at CRS-20 (Kerry Dumbough, ed. updated January 20, 2006), http://fpc.state.gov/documents/organization/ 61492.pdf. ("The PRC government periodically has acceded to this White House pressure and released early from prison political dissidents. . . . On March 4, 2004, for instance, the PRC released on medical parole one of its best-known political prisoners . . . . The same day, the U.S. government announced that it would not introduce a resolution criticizing China's human rights record at the 61st Session of the U.N. Commission on Human Rights . . . .").
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claim. To force defendants to expend a great deal of money defending this speculative case and to respond to discovery, where producing such discovery might violate Chinese law, makes no sense until these threshold questions are answered. In short, defendants do not propose any delay at all. They propose that the Court and the parties march through this case, but do so in a meaningful and sensible fashion. V. PLAINTIFFS KNEW YAHOO! WOULD BE FILING THIS MOTION. Plaintiffs contend they were surprised by Yahoo!'s motion and they would not have agreed to the stipulated schedule the Court ordered had they known Yahoo! would file this brief. See Opp. at 2; Decl. of Morton Sklar passim. Plaintiffs' argument is erroneous. In our very first conversation with plaintiffs' counsel, we raised the issue of filing this motion, bifurcating the case, and plaintiffs' and their counsel's ability to prosecute it. Indeed, in the joint stipulation providing for a brief continuance, which plaintiffs' counsel signed, Yahoo! expressly "reserve[d] [its] right to seek further enlargement of time and propose a modified case management plan." Joint Stip. Request For Order Enlarging Time To Respond To Compl. & Extending Initial Deadlines ¶ 3 (filed June 18, 2007). As the accompanying declaration made clear: [T]he case raises a numerous issues that will require extensive motion practice and briefing. Given the nature of the case, we will also request that the Court seek the views of the U.S. government and perhaps other authorities regarding the impact of this case on foreign and other government policies. . . . I have discussed the scheduling and other issues presented in this Joint Stipulation with Joseph Cyr, counsel for Alibaba.com, Inc., and Morton Sklar, counsel for plaintiffs, including my proposal to have an early case management conference in this case and to request a schedule to address sequentially certain threshold matters, such as the question whether YHKL is subject to jurisdiction in this case. . . . Defendants anticipate promptly filing a motion to address case management issues. Decl. Of Daniel Petrocelli ¶¶ 7, 9 (filed June 18, 2007). Though we quoted both these sources in our motion, see Mot. at 11, plaintiffs offered no response to them. VI. THE COURT HAS THE POWER TO GRANT THE RELIEF REQUESTED. Finally, plaintiffs suggest the Court lacks the authority under the Local Rules or otherwise to grant the relief Yahoo! seeks. See Opp. at 5:3-24. Plaintiffs are mistaken. It is a "well-settled principal that a district court has broad discretion to manage its own calendar," United States v. Batiste, 868 F.2d 1089, 1092 (9th Cir. 1989), and "has broad discretion to stay proceedings as an
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incident to its power to control its own docket," Clinton v. Jones, 520 U.S. 681, 706 (1997). This power is construed broadly, enabling the court to "manage cases so that disposition is expedited, wasteful pretrial activities are discouraged, the quality of the trial ís improved, and settlement ís facilitated." Alley v. Bayer Corp., 460 F.^d 1217, 1227 (9th Cir. 2006). Rule 16 recognizes the need to adopt special procedures "for managing potentially difficult or protracted actions that may involve complex issues, multiple parties, difficult legal questions, or unusual proof problems." Id. Such decisions are entrusted to the court's díscretíon. For example, one district court found ít appropriate to stay proceedings while awaiting an advisory opinion from administrative agencies. Citicasters Co. v. Country Club Communs., 44 U.S.P.Q.2D (BNA) 1223 (C.D. Cal. 1997}. Discovery can also be delayed or denied pursuant to Rule 26(c), upon a showing of good cause. See Fed. R. Civ. P. 26(c); Telemac Corp. v. Teledigital, Inc., 450 F. Supp. 2d 1107, 1110-11 (N.D. Cal. 2006) (Wílken, J.) (patent case). It is also within the court's power to change case management conference dates. Local Rule 16-2 specíf^cally allows a party to "seek relief from an obligation imposed by FRCivP 16 or 26 or the Order Setting Initial Case Management Conference."^ VII. CONCLUSION For the foregoing reasons, Yahooi's motion should be granted. Dated : July 12, 2007 DANIEL M. PETROCELLI MATTHEW T. KLINE O'MELVENY & MYERS LLP

By:

^ Daniel M. Petrocelli Attorneys for Defendant YAHOO!, INC.
CC1:766529.5

Indeed, in an unpublished appeal from a Northern District of California case, the Ninth Circuit held ít was squarely within the court's inherent power to change the date of a case management conference. See Freeman v. Employment Stds. Admin., 71 Fed. Appx. 638 (9th Cír. July 24, 2003) (unpublished, decided without oral argument). Citing Batiste, 868 F. 2d at 1091, the court held that plaintiff's "contention that ít was improper for the district court to change the case management conference date ís unavailing" because "a district court has broad díscretíon to manage its own calendar." Freeman, 71 Fed. Appx. at 638.
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