Gone are the days when business deals were made only between regional or national partners. An increasing number of U.S. companies are the product of foreign investment or leadership. As a result, business litigators will likely find themselves initiating a lawsuit against a company or individual residing in a foreign country. For Federal Court practitioners, that hurdle will be less daunting if you keep the following three things in mind (note: we’ll address the same concerns for state court cases in a future posting):
First, do not assume that service pursuant to the Hague Convention or Letters Rogatory is required before alternative service is permitted. In federal cases, FRCP 4(h)(2) authorizes service of process on a foreign business in the manner prescribed by Rule 4(f) for individuals. Rule 4(f)(1) and 4(f)(2) provide for service in a more traditional manner such as those means authorized by the Hague Convention (Rule 4(f)(1)) or as directed by the foreign authority in response to a letter rogatory (Rule 4(f)(2)(B)). Rule 4(f)(3) provides for a wide range of alternative service methods as it authorizes service “by other means not prohibited by international agreement as may be directed by the court.” Notably, service of process under Rule 4(f)(3) is neither a “last resort” nor “extraordinary relief.” Rio Properties, Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1015 (2002). As a result, plaintiffs need not necessarily first attempt service in accordance with international treaty (e.g., the Hague Convention), diplomatic channels or letters rogatory before seeking the Court’s permission to effect service by alternate means. Id. at 1014-15.
Second, consider seeking alternative service via electronic means. The Ninth Circuit has recognized that service of process on a foreign defendant by email comports with the constitutional notions of due process and is an acceptable means of alternative service. See Rio Properties, 284 F.3d at 1017. District courts have followed suit and “routinely authorize[d] email service under Rule 4(f)(3).” Tatung Co., Ltd. v. Shutze Hsu, No. SACV 13-1743-DOC, 2015 WL 11089492 at *2 (C.D. Cal. May 18, 2015). See also Microsoft Corp. v. Goldah.com Network Tech. Co., Ltd., No. 17-CV-2896-LHK, 2017 WL 4536417 (N.D. Cal. Oct. 11, 2017) (allowing email service of process of defendants residing in China); Facebook, Inc. v. Banana Ads, LLC., No. C-11-3619 YGR, 2012 WL 1038752 (N.D. Cal. March 27, 2012) (allowing email service of foreign defendants with no known physical address). At least one district court has even allowed alternative service through the defendants’ “virtual storefronts” via the AliExpress.com messaging system. Keck v. Alibaba.com, Inc., No. 17-cv-05672-BLF, 2018 WL 3632160 (N.D. Cal. July 31, 2018). To address the constitutional concern that service by email will be “reasonably calculated to provide actual notice,” plaintiffs seeking such an alternative means of service have offered various types of supporting evidence, including:
evidence that the foreign defendant is involved in commercial internet activities (Facebook, 2012 WL 1038752 at *2);
evidence that the foreign defendant regularly uses email in conducting business (id.; Tatung, 2015 WL at *3);
evidence that plaintiff’s counsel had emailed the foreign defendant, and the email was not returned as undeliverable (id.; Keck, 2018 WL 3632160 at *2);
interrogatory responses provided by other defendants confirming their receipt of emails from that address (Tatung, 2015 WL at *3); and
sending registered email through a third-party service, such as RPost, that confirms the day of receipt and that the email was opened (Microsoft, 2017 WL 4536417 at *5).
Third, consider alternative service via a U.S. corporate office, where applicable. Rule 4(f)(3) has also provided a convenient hook for effecting service of process on foreign-resident subsidiaries, officers or directors of U.S. companies. In In re LDK Solar Securities Litigation, the Court allowed plaintiff to serve the Chinese subsidiary of a U.S. company and several of its China-resident officers and directors via the U.S. parent company. No. C 07-05182, 2008 WL 2415186 (N.D. Cal. June 12, 2008). The Court further found that the plaintiff did not need to show a lack of judicial assistance by Chinese authorities before resorting to alternative service. See id. at *3. A similar manner of alternative service has been allowed by other district courts. See Morningstar v. Dejun, No. CV 11-00655 DDP, 2013 WL 502474 (Feb. 8, 2013) (allowing service of process on Chinese residents via the U.S. company of which they were officers); Guifu Li v. A Perfect Day Franchise, Inc., 281 F.R.D. 373 (N.D. Cal. 2012) (allowing service of Chinese resident via the U.S. company of which he was the sole owner and only corporate officer).
For more information regarding litigation strategy involving international parties or other complex disputes, please contact one of Alto Litigation’s experienced litigation partners: Bahram Seyedin-Noor, Bryan Ketroser, Ellen London.
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