Update: Yahoo settles Chinese dissident lawsuit

Jailed Chinese dissidents have settled a lawsuit they filed earlier this year against Yahoo in which they alleged the Internet company should be held accountable for their imprisonment and torture.

The settlement comes after Yahoo executives last week went to Capitol Hill to apologize to family members of the dissidents and to get a tongue-lashing by lawmakers for the company's role in the jailings.

On Tuesday, the company and the plaintiffs settled, ending the lawsuit that was filed in April in U.S. District Court for the California Northern District.

In their joint stipulation filed with the court, the parties said they had agreed to dismiss with prejudice all claims "based on a private settlement understanding." In addition, Yahoo agreed to cover the plaintiffs' legal costs.

The document doesn't contain any other details about the settlement agreement.

The dissidents remain in jail, which is obviously something that this settlement doesn't resolve, said Theresa Harris, international justice project director at the World Organization for Human Rights USA, the Washington, D.C., group representing the plaintiffs.

By settling the case under terms they consider fair, the families of the plaintiffs can focus all their energies on helping their loved ones regain their freedom, Harris said.

In a written statement, Yahoo said it will provide "financial, humanitarian and legal support to these families" and create a separate "humanitarian relief fund" for other dissidents and their families.

"After meeting with the families, it was clear to me what we had to do to make this right for them, for Yahoo and for the future," Yahoo CEO Jerry Yang said in the statement, adding that Yahoo is committed to matching its actions with its values worldwide.

Although this particular lawsuit has been settled, Yahoo and other Internet companies will continue grappling with the larger problem: complying with local laws and regulations that may violate human rights and freedom of speech.

Shareholders, human rights groups, press freedom watchdogs and lawmakers have turned on the heat on Yahoo, Google and other U.S.-based Internet companies for what they consider questionable policies abroad.

Some of these practices are providing information to governments so that they can hound individuals and curtail their freedom of expression, as well as censoring search-engine results that governments find politically objectionable.

In late August, Yahoo requested that the court dismiss the case with its chief argument being that the U.S. justice system was the wrong venue for the case.

"This is a lawsuit by citizens of China imprisoned for using the Internet in China to express political views in violation of China law. It is a political case challenging the laws and actions of the Chinese government. It has no place in the American courts," the 51-page filing read.