Tag Archives | Hong Kong

Case of the Day: Shoham v. Islamic Republic of Iran

By on March 26, 2013 in FSIA, Hague Service Convention, Service by mail, Uncategorized

The case of the day is Shoham v. Islamic Republic of Iran (D.D.C. 2013). Batsheva Shoham alleged that while she was driving in the West Bank with her infant son, she was ambushed by members of the Al-Aqsa Martyrs Brigade, a terrorist group. One of the terrorists threw a stone that struck her son, killing him. In 2011, Mrs. Shoham and victims of similar attacks sued Iran, Syria, and others in the District of Columbia. Judge Collyer severed Mrs. Shoham’s claims from the action and granted her leave to refile with a new caption, noting that the summonses would have to be reissued and that the amended complaint would have to be served.

Mrs. Shoham then filed a new action, with a complaint identical to the complaint in the prior action, but with a new caption. The remaining plaintiffs in the first case managed to serve Iran and its instrumentalities with process via diplomatic channels. After the court ordered Mrs. Shoham to show cause why her new action should not be dismissed for want of prosecution (as she had filed no return of service after six months), Mrs. Shoham moved for entry of default judgment on the theory that despite Judge Collyer’s order, service of the original complaint in the first action sufficed. She cited precedents for the proposition that service of an amended complaint under the FSIA after a default by the foreign state is necesssary only if the amendments are substantial.

Judge Lamberth distinguished these cases on the grounds that they involved the service of an amended complaint in a single action, not, as was the case here, service of a complaint in an entirely new civil action. It hardly matters, from the jurisdictional point of view, whether the complaint in the second action was similar or even identical to the complaint in the first. However, the judge did give her additional time to effect service, and he blasted the government for the high fees it charges to effect service via diplomatic channels under the FSIA.

Mrs. Shoham also sought leave to serve Bank Melli, Bank Saderat, and Iran Air in Austrialia, Canada, France, Italy, Hong Kong, the Netherlands, Sweden, and the UK, by registered mail, return receipt requested. The judge granted the request. All three defendants are agencies or instrumentalities of Iran for purposes of the FSIA. Therefore, service was governed by 28 U.S.C. § 1608(b). Mrs. Shhoam had been unable to make service by registered mail at the defendants’ headquarters in Iran, and therefore her request was proper under § 1608(b)(3)(C), which permits service by delivery of the documents “as directed by order of the court consistent with the law of the place where service is to be made” when other means of service have failed. All of the countries named are parties to the Hague Service Convention, and none has objected to service by postal channels under Article 10(a). 1 The judge held, correctly, that service by mail under Article 10(a) despite the minority view to the contrary.

Note that § 1608(b)(3)(C) asks whether the service is “consistent with the law of the place where service is to be made.” Is there an issue about whether service by postal channels is consistent with the law of the state where service is to be made, particularly if in a particular state the Convention is not self-executing? The decision does not raise this issue, and I simply pose it as a question.

Notes:

  1. Australia requires that such service be by registered mail, return receipt requested, and I refer readers to one of my many discussions with Antonin Pribetić on the issue of service by mail in Canada. ↩
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Service in Hong Kong: McIntire v. China MediaExpress Holdings

By on March 12, 2013 in Hague Service Convention

The case of the day is McIntire v. ChinaMediaExpress Holdings, Inc. (S.D.N.Y. 2013). The case was a putative class action alleging securities fraud against Deloitte Touche Tohmatsu in Hong Kong SAR and others in connection with securities of China MediaExpress Holdings, Inc. The plaintiffs served Deloitte in Hong Kong by private process server on a corporate representative. DTT moved to dismiss on the grounds that the service did not comply with the Hague Service Convention.

The judge denied the motion, citing Article 19 and Article 10(b) and (c), without much discussion. But it’s worth looking a little closer.

The main question was whether the service was permitted under Articles 10(b) or (c), which provide:

Provided the State of destination does not object, the present Convention shall not interfere with—

* * *

(b) the freedom of judicial officers, officials or other competent persons of the State of origin to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination,

(c) the freedom of any person interested in a judicial proceeding to effect service of judicial documents directly through the judicial officers, officials or other competent persons of the State of destination.

The judge cited a State Department circular on Hong Kong judicial assistance which states:

Hong Kong did not make any reservations with respect to service by international registered mail or service by agent. However, Hong Kong advises that service by the Convention is the preferred method.

It’s not really clear what the reference to “service by agent” means here. Hong Kong has, however, made a declaration under Articles 10(b) and (c):

With reference to the provisions of sub-paragraphs b and c of Article 10 of the Convention, documents for service through official channels will be accepted in the Hong Kong Special Administrative Region only by the Central Authority or other authority designated, and only from judicial, consular or diplomatic officers of other Contracting States.

I read this to mean that service under Articles 10(b) or (c) is possible only if the document is sent by an official of the state of origin to the central authority or another authority of Hong Kong, and not, as here, by a party transmitting the document to a private process server for service, even granting that the private process server is a competent person under Hong Kong law.

I think, therefore, that the judge got the Article 10 issue wrong. 1 Interestingly, there was a simpler alternative: Hong Kong has made no reservation under Article 10(a), and therefore, under FRCP 4(f)(2)(C)(ii), the plaintiffs could simply have served the documents by mail.

Notes:

  1. I ignore the reference to Article 19: the judge did not really analyze that provision, so I don’t have much to say about his discussion of it. I also leave aside the question of what provision of the Federal Rules of Civil Procedure authorized the service. ↩
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Case of the Day: Brighton Collectibles v. Winston Brands

By on February 11, 2013 in Uncategorized

The case of the day is Brighton Collectibles, Inc. v. Winston Brands, Inc. (S.D. Cal. 2013). Brighton, which makes and sells women’s fashion accessories, had registered copyrights on several designs, including the “Heart Conch” jewelry design and the “Charmaine Heart” jewelry design. It sued Urban Trend (HK), Ltd., a Hong Kong company, for copyright infringement, and it served process on Urban Trend by serving the registered agent for service of process of a US affiliate, Urban Trend, LLC. Urban Trend moved to dismiss for insufficient service of process.

The judge rejected Urban Trend (HK)’s challenge to the service, in essence applying the rule of Volkswagen, though, oddly, without citing the case. Under FRCP 4(e)(1), service could be made by means prescribed by California law. California law, in turn, permits service on a corporation “by delivering a copy of the summons and the complaint … to … a general manager, or person authorized by the corporation to receive service of process.” A “general manager,” under the California precedents, is “any agent of the corporation ‘of sufficient character and rank to make it reasonably certain that the defendant will be apprised of the service made.” A domestic distributor, salesman, or advertiser for a foreign manufacturer may be a general agent “as long as the domestic entity provides the foreign entity an open channel for the regular flow of business from the foreign entity into California.” Here, although Urban Trend LLC did not sell the particular products at issue in the case, it did generally sell the Hong Kong entity’s women’s fashion products in California. (The court distinguished a colorful hypothetical in which a US subsidiary of a foreign car manufacturer was exclusively in the business of “importing koi fish”, in which case the subsidiary could not be considered the general agent of the foreign company despite the parent/subsidiary relationship). The judge reached the same conclusion under FRCP 4(h)(1)(B), which provides that as a matter of federal law, it is proper to serve a corporation by service on its “managing or general agent.” The Ninth Circuit precedent again provided for a broad construction of the term “managing or general agent”:

Despite the language of the Rule, service of process is not limited solely to officially designated officers, managing agents, or agents appointed by law for the receipt of process. The rules are to be applied in a manner that will best effectuate their purpose of giving the defendant adequate notice. Thus, the service can be made upon a representative so integrated with the organization that he will know what do do with the papers. Generally, service is sufficient when made upon an individual who stands in such a position as to render it fair, reasonable and just to imply the authority on his part to receive service. Generally, the determination of whether a given individual is a ‘managing or general agent’ depends on a factual analysis of that person’s authority within the organization.

Other factors the judge considered included the similarity of the two entities’ business, the fact that press releases described them as a single enterprise with offices in Hong Kong and California, and the fact that they share a website.

I can’t comment on the California law issues that arose in the case under FRCP 4(e). The Ninth Circuit precedent on the interpretation of FRCP 4(h)(1)(B) seems to me liberal but permissible. I would suggest, though, that in cases that depend on the Volkswagen principle—cases, that is, where service would have to be made abroad but for the fact that the court holds that the law of the forum does not require transmission of the document abroad—courts should consider whether reasons of comity or due process suggest they should give the term “managing or general agent” a narrower construction than it would have in a purely domestic case.

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