Archive | Hague Service Convention

Case of the Day: Henry F. Teichmann, Inc. v. Caspian Flast Glass OJSC

By on April 26, 2013 in Hague Service Convention, Service by email

The case of the day is Henry F. Teichmann, Inc. v. Caspian Flat Glass OJSC (W.D. Pa. 2013). The facts of the case are not clear from the decision, but it appears that Caspian Flat Glass, the defendant, was a Russian company. Russia, as we know, has unilaterally suspended cooperation with the United States under the Hague Service Convention, and letters rogatory, while technically possible, are never effective in practice. Teichman sought leave to make service by email under FRCP 4(f)(3). The judge, understandably but wrongly, granted the motion. Rule 4(f)(3) authorizes the court to grant leave to serve process by means that violate the foreign law, but not by means that violate applicable international agreements. Here, the judge concluded that the Convention does not prohibit service by email, citing In re Potash Antistrust Litig., 667 F. Supp.2d 907 (N.D. Ill. 2009), MacLean-Fogg Co. v. Ningbo Fastlink Equip. Co., 2008 WL 5100414 (N.D. Ill. 2008), and RSM Prod. Corp. v. Fridman, 2007 WL 1515068 (S.D.N.Y. 2007). As I noted in my 2011 year in review post on service by email, MacLean-Fogg was a case where the defendant’s address was unknown and the Convention therefore did not apply. RSM is not a service by email case, and it’s not clear to me why the judge cited it. As I noted in the prior post, I read Potash as a case about whether service by email in Russia specifically is permitted (perhaps under Article 19 of the Convention) because Russian law permits it; but it’s important not to confuse that point with a general, and, I think, erroneous statement that the Convention itself permits service by email. For the most recent statement of my view on service by email under the Convention, you can refer to my post on the PCCare247 case. I continue to be on the warpath about this.

I understand why judges don’t want to leave US plaintiffs with no good options for service of process in Russia. Russia’s refusal to comply with the Convention is highly problematic. But the Convention is pretty specific on this point. Under Article 14, “Difficulties which may arise in connection with the transmission of judicial documents for service shall be settled through diplomatic channels.”

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Case of the Day: Absolute Activist Master Value Fund, Ltd. v. Ficeto

By on April 25, 2013 in Hague Service Convention

The case of the day is Absolute Activist Master Value Fund, Ltd. v. Ficeto (S.D.N.Y. 2013). The Absolute Activist Master Value Fund and several other Cayman Islands hedge funds sued several principals and employees of the company they hired to manage their assets, Absolute Capital Management, including Florian Homm. The claim was that Homm, a German national who also held a Liberian passport, masterminded a scheme to manipulate the defendants’ fees and commissions and the share price of penny stocks. After Homm resigned in 2007, he “went into hiding and has been heard from or seen only sporadically since, although he maintains an address in the UK.” He was arrested in Italy in March 2013 and is now in custody while the United States seeks his extradition.

Homm was in default because he had not answered the First Amended Complaint, but when the plaintiffs filed a Second Amended Complaint, Homm moved to dismiss on grounds of insufficient service of process, arguing that he had not properly been served with the Second Amended Complaint. (The plaintiffs had served the Second Amended Complaint, and apparently the First Amended Complaint, on Homm via the UK central authority at the UK address Homm owned and which he had used to receive correspondence and given as his residential address when he was questioned by Swiss prosecutors in 2010). The judge rejected Homm’s argument on two grounds. First, because he had been served properly with the First Amended Complaint, and because the Second Amended Complaint was similar enough to the First Amended Complaint, there was no requirement that the plaintiffs serve the document on him: a party in default is not entitled to service of documents as a general matter. Second, in any case the service under the Hague Service Convention was proper. Homm’s contention that his address was unknown is baffling and that the Convention does not apply is baffling. It’s true that the Convention does not apply if the defendant’s address is unknown, and let’s assume (contrary, apparently, to fact) that the Convention did not apply. But Article 5 of the Convention generally requires a central authority to serve documents “by a method prescribed by its internal law for the service of documents in domestic actions upon persons who are within its territory.” Thus the methods that a central authority would use to serve a document under the Convention, if the Convention applied, are almost certainly going to be the methods “prescribed by the foreign country’s law for service in that country in an action in its courts of general jurisdiction,” and such methods are permissible under FRCP 4(f)(2)(A) in cases where the Convention does not apply.

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Case of the Day: Lac Vieux Desert Band of Lake Superior Chippewa Indians v. Cardona

By on April 24, 2013 in Hague Service Convention, Service by email

The case of the day is Lac Vieux Desert Band of Lake Superior Chippewa Indians Holdings Mexico, LLC v. Cardona (Ariz. Ct. App. 2013). The Lac Vieux Desert Band of Lake Superior Chippewa Indians loaned more than $6 million to Arturo Rojas Cardona, Juan Jose Rojas Cardona, Juegos De Entretenimiento Y Videos de Guadalupe, Entretenimiento de Meico, Atlantica de Inversiones Corporativas, and Guadalupe Recreation Holdings LLC in return for an ownership share in a casino to be built in Guadalupe. The tribe claimed that the defendants breached the contract and converted funds to their own use. The procedural history of the case is confused but ultimately unimportant for our purposes. The tribe moved for leave to make service of process by alternate means, namely, by service on the defendants’ attorneys of record by certified mail, service on all defendants by Fedex in Mexico, and service of Juan Cardona via email. The judge also deemed service on Arturo Cardona complete because he had been served by mail at his US addresses (though there was no return receipt).

The foreign defendants—not including Guadalupe Recreation Holdings, a Nevada LLC—moved to dismiss for insufficient service of process, and the judge denied the motion. On an interlocutory appeal, the Arizona Supreme Court held that the only avid method of service was service via the Mexican Ministry of Foreign Affairs, and it vacated the judge’s order denying the defendants’ motion and remanded the case. Cardona v. Kreamer, 235 P.3d 1026 (Ariz. 2010). On remand, the judge dismissed the action as to all defendants, including GRH. The tribe appealed.

On appeal, the court held that the judge had erred in dismissing the claims against GRH, which was a domestic company served with process in the United States and which in any case had not moved for dismissal on grounds of insufficient service of process. But the court affirmed the dismissal as to all of the other defendants. The court’s decision rests mostly on points of Arizona law that I will not comment on here. I note, however, that as to the service by email on Jose Cardonna, the court was in my view correct in holding that such service was impermissible in Mexico. Mexico is a party to the Hague Service Convention, and readers will recall my view that the Convention does not permit service by email when it applies.

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