Tag Archives: Japan

Case of the Day: South Carolina v. Hitachi Displays, Ltd.

The case of the day is South Carolina v. Hitachi Displays, Ltd. (D.S.C. 2013). South Carolina sued Epson Imaging Devices Corp., a Japanese company, for conspiring to fix prices on thin film transistor-liquid crystal display panels. The case had been stayed pending resolution of a petition for certiorari in the Supreme Court. The state asked Epson’s US counsel to accept service by email, but he refused. It then sought to serve Epson in Japan via the Japanese central authority, but its request apparently used an old address for Epson, and the central authority could not effect service.

South Carolina then sought leave under FRCP 4(f)(3) to make service on Epson via its US counsel. The judge denied the motion. For the most part, this seems a permissible exercise of the judge’s discretion, even if it would also have been permissible and probably advisable to allow the state to make service by alternative means: the judge found that Epson’s correct address was readily obtainable, and that because of the stay South Carolina had adequate time to effect service via the Japanese central authority. The only sour note is the judge’s characterization of service on US counsel as “improper.” I think this has the potential to mislead. Service on US counsel wouldn’t be improper; but that doesn’t mean the judge had to permit it.

Case of the Day: Montana Trucks, LLC v. UD Trucks North America, Inc.

The case of the day is Montana Trucks, LLC v. UD Trucks North America, Inc. (D. Mont. 2013). UD Trucks was headquartered in Saitama, Japan. Montana Trucks sought leave under FRCP 4(f)(3) to serve the summons and complaint by mail and courier, and to serve the documents without a translation.

Let’s pause for a moment. Article 10(a) of the Hague Service Convention provides that the Convention does not interfere with the freedom to send judicial documents via the postal channel. Why, then, did Montana Trucks think it necessary to seek leave of court? FRCP 4(f)(1) permits service by “any internationally agreed means of service … such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents,” and FRCP 4(f)(2)(C)(ii) permits service by mail, unless prohibited by the foreign country’s law. But FRCP 4(f)(2)(C)(ii) applies only “if there is no internationally agreed means, or if an international agreement allows but does not specify other means.”

I have previously noted a split of authority about whether the Convention affirmatively authorizes service by mail, or whether, on the other hand, it merely permits service by mail. If the Convention itself authorizes service by mail, then Montana Trucks could simply have mailed the documents under FRCP 4(f)(1), without leave of court. The Hague Convention’s translation requirements apply only when the service of process is to be effected under Article 5, via the foreign state’s central authority. So assuming that on the facts of the case the service of untranslated documents does not pose any Due Process problems, there was no reason for a motion.

If, on the other hand, the Convention does not affirmatively authorize service by mail—and I believe this is the better reading of Article 10—is service by FRCP 4(f)(2)(C)(ii) available? In prior posts, I’ve more or less assumed that it is, noting only that in such cases the mail must be addressed and sent by the clerk rather than the plaintiff, as FRCP 4(f)(2)(C)(ii) requires on its face. But remember that FRCP 4(f)(2) comes into play only “if there is no internationally agreed means, or if an international agreement allows but does not specify other means.” In a Hague Convention case there are internationally agreed means. So the question is whether the Convention “allows but does not specify other means.” It seems to me the answer is “no.” The Convention specifies all of the means it allows, including service by postal channels. It seems to me that the language of FRCP 4(f)(2) doesn’t relate to the Hague Convention, but rather to conventions such as the Inter-American Convention on Letters Rogatory, which are non-exclusive, i.e., which authorize particular methods of service but which do not forbid otherwise applicable methods of service.

So although I don’t know offhand of cases on point, I think that if you want to serve process via postal channels under the Convention, and if you are in a jurisdiction like the Ninth Circuit that holds that the Convention itself does not affirmatively authorize service of process, yes, you should bring a motion for leave of court under FRCP 4(f)(3).

The court, after a longer discussion than was really necessary, approved service by mail. So far so good. But the court then rejected the motion for leave to serve untranslated documents. It did so in part on due process grounds, which is conceivably correct, though given that the defendant was apparently a sophisticated business entity, it’s questionable whether there was really a due process concern here. More troublesome was the judge’s conclusion that the Convention required translations. As I have previously pointed out, translations are only required if the service is to be made via the Central Authority. So the judge got this point wrong.

Case of the Day: Ohno v. Yasuma

The case of the day is Ohno v. Yasuma (9th Cir. 2013). Naoko Ohno was a Japanese national. While working in London, she joined the Saints of Glory Church, and when she returned to Tokyo she continued attending the church’s branch there. Part of the worship services she attended there was a recorded sermon by the Church’s main pastor, Yuko Yasuma, who lived in California. Ohno tithed, as required by the Church, and she claimed that the Church and Yasuma unfairly pressured her to transfer essentially all of her assets to the Church in early 2002, while she was suffering from depression and ataxia. Ultimately she left the Church, and in 2007 she sued Yasuma and the Church in the Tokyo District Court, alleging tort and unjust enrichment claims. After a trial, the court found Yasuma and the Church liable under articles 709, 719, and 715 of the Japanese Civil Code on the grounds that the Church had induced her to tithe “in such a way as to incite anxiety and cause terror to the Plaintiff who was already in a state of depression and was suffering from general ataxia.” The Court awarded restitution in the amount of ¥ 68.67 million, with ¥ 3 million for pain and suffering and ¥ 7.2 million for attorney’s fees. Yasuma and the Church appealed to the Tokyo High Court, which affirmed the judgment.

Ohno sought recognition and enforcement of the judgment in the US District Court for the Central District of California, and she moved for summary judgment. The Church argued that under the First Amendment there could be no recovery in tort for the consequences of protected religious speech. Thus, the Church claimed, the judgment was repugnant to US public policy. 1 The District Court granted Ohno’s motion for summary judgment, and the Church and Yasuma appealed. At issue was California’s enactment of § 4(c)(3) of the UFCMJRA, which provides:

A court of this state is not required to recognize a foreign-country judgment if … the judgment or the cause of action or claim for relief on which the judgment is based is repugnant to the public policy of this state or of the United States.

Yasuma and the Church claimed the judge had abused his discretion under the statute by recognizing the judgment despite their public policy arguments. But the claim was not simply a claim under the UFCMJRA. The Church and Yasuma argued that enforcement of the judgment would be unconstitutional. And so for non-American readers, here is the relevant portion of the First Amendment, on which the defendants relied:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof …

The Constitutional Issue

It’s rare to see a claim that recognition and enforcement of a foreign judgment would be unconstitutional, so the Ninth Circuit’s discussion of the issue is highly interesting. The court didn’t address the substance of the constitutional claim. That is, the court didn’t answer the question whether the underlying judgment would have violated the First Amendment had it been reached by an American court rather than a Japanese court. Instead, the court focused on a threshold question: was there state action, so as to bring the First Amendment into play?

Just by way of background, the First Amendment proscribes only certain actions taken by the state or federal governments, not by others. So for example, if you submit a comment to Letters Blogatory that I refuse to publish, I haven’t violated the First Amendment’s guarantee of free speech, because I am not the government. But it’s clear that the judgments of US courts are a form of state action for constitutional purposes. So there are some interesting cases. For example: in the leading case, Shelley v. Kraemer, 334 U.S. 1 (1948), the question was the enforceability of a so-called “restrictive covenant” in a deed to real property, i.e., a covenant forbidding the conveyance of the property to African-American or Asian-American buyers. The deed itself arose out of a private contract, but because a judgment enforcing the covenant would be a form of state action, the Supreme Court held that it would be unconstitutional under the Equal Protection Clause of the Fourteenth Amendment. On the other hand, suppose I settle a trust that provides for payment of the income to myself for life, then to my surviving children for life, then to my children’s “issue” by right of representation. One of my great-grandchildren is illegitimate because her mother was unmarried and there had never been any legitimation, paternity, or similar proceedings. At the time of the settlement of the trust, it was clear that at common law the word “issue” was construed to exclude illegitimate offspring. These were the facts of Powers v. Wilkinson, 399 Mass. 650 (1987). The trustee sought a declaratory judgment that would permit distributions to the illegitimate great-grandchild, arguing that the common law construction of the term “issue,” if applied by the courts, would violate Shelley. But over the dissent of three justices (dissents are much rarer on our Supreme Judicial Court than they are on the US Supreme Court), the court rejected the trustee’s argument: “When ‘issue’ is used in a legal document, with or without explication, it is the donors and testators who act, not this court nor any other arm of the State.” All of this is just a way of saying that it’s not always clear how the state action doctrine applies in cases where the only state action present is a court’s judgment.

The Ninth Circuit looked to Lugar v. Edmondson Oil Co., 457 U.S. 922 (1982), for the test to apply. Under Lugar, the questions are (1) whether the claimed constitutional deprivation resulted from “the exercise of some right or privilege created by the State or by a rule of conduct imposed by the state or by a person for whom the State is responsible;” and (2) whether the party charged with the deprivation could be fairly described as a state actor. It seems to me that perhaps the Church made a fatal error in challenging the constitutionality of the Japanese judgment rather than the constitutionality, as applied, of the UFCMJRA. Viewed in this light, it seems clear that the Church should lose, because Japanese tort law is not the creation or responsibility of the United States or the State of California, and the Japanese courts are not state actors for constitutional purposes. It’s a little mysterious to me why the Church and Yasuma didn’t instead argue that the UFCMJRA as applied is unconstitutional, since the UFCMJRA is the creation and responsibility of the State of California, but such are the vagaries of litigation. Of course, that’s not to say that the Church and Yasuma would have won had they argued the case differently. They would still have had to show a First Amendment violation, which as the discussion below suggests would not have been easy to do.

The Public Policy Issue

Yasuma and the Church also argued that the judgment should not have been recognized because it was repugnant to public policy. They faced an uphill battle here, because the public policy exception to the ordinary rule of recognition and enforcement is discretionary, i.e., it’s not necessarily improper to recognize a judgment even if it is repugnant to public policy. The Ninth Circuit treated the question whether the judgment was indeed repugnant to public policy as a question of law that it reviewed de novo. Even so, the bar to a determination that a judgment is repugnant to public policy is high. “Simple inconsistency between American state or federal law and foreign law … does not render a foreign judgment unenforceable by reason of repugnancy.”

To be sure, there are cases where foreign judgment have been refused recognition on public policy grounds where the claim was that they offended First Amendment values. Foreign defamation judgments are a good example, and Congress has recently taken such judgments out of the discretion of US courts by enacting the SPEECH Act. But the Ninth Circuit reasoned that foreign libel laws are targeted at conduct that is at the core of First Amendment concerns—namely, speech—while the Japanese tort laws at issue here were laws of general applicability. I suppose the court may have come out the other way had the Japanese law been a law forbidding churches to require tithing, or a law forbidding churches to threaten parishoners with damnation if they didn’t do what their ministers asked, or the like. The court suggested that even American courts could impose liability on a church that committed a tort for religious reasons, as long as the court was not required to judge the validity of the religious beliefs or interfere with the church’s ecclesiastical decision-making on issues such as employment or self-governance. And even an American court, the Ninth Circuit suggested, could find the Church liable on similar facts on theories such as undue influence, fraud, or infliction of emotional distress, although the court acknowledged that the Japanese court’s findings of fact may not have been sufficient to prove all of the elements of a California tort. “[T]hat the Japanese court did not find all the requisite elements of the causes of action for undue influence, fraud, or infliction of emotional distress under California law does not make the judgment antithetical to the basic precepts of tort law in this country, or to constitutional principles.”

Last, the court rejected the claim that the Japanese judgment, by imposing tort liability on the Church, violated the policies of the Free Exercise Clause. Money damages are a burden, but the burden was on the Church’s conduct, not its beliefs. Moreover, even where the state does burden a party’s free exercise rights, it’s necessary to balance the burden against the governmental interest in regulation, and the court concluded that it was not impossible for a California court to conclude that the interest in protecting people from undue influence outweighed the burden.

The Ninth Circuit affirmed the judgment. We will keep an eye out for further developments in this interesting case.

Notes:

  1. The Church also argued that the procedures in the Japanese courts had not met the requirements of due process, but it abandoned that argument on appeal, and I don’t consider it further here.