Case of the Day: CFTC v. Aliaga

The case of the day, U.S. Commodity Futures Trading Commission v. Aliaga (S.D. Fla. 2011), involves alternative means of service where the defendant is in a country not party to a convention on service of process. The government alleged that Claudio Aliaga swindled retail investors in a Ponzi scheme supposedly involving investments in the foreign exchange markets. The government obtained a temporary restraining order, but the Marshal was unable to serve the TRO on Mr. Aliaga or his wife, Betty (who was sued on an unjust enrichment theory but who was not alleged to have committed fraud) at their last known addresses in Florida. The government sought to communicate with Mr. Aliaga by email, sought to serve process on his lawyer, who was not authorized to accept service, and sought to locate the Aliagas by making inquiries with the Postal Service and the Customs and Border Protection bureau. The government’s investigation suggested that the Aliagas were now living in the Dominican Republic, which is not a party to the Hague Service Convention or to the Inter-American Convention. It sought leave to serve Claudio Aliaga and his company and Betty Aliaga by service on Mr. Aliaga’s local counsel and by email.

Under Rule 4(f)(3) of the Rules of Civil Procedure, service on a person in a foreign country is permissible “by other means not prohibited by international agreement, as the court orders.” Such service must, of course, also comply with the Due Process Clause.

The court held that since the Dominican Republic was not party to any convention on service of process, service by email or by service on local counsel did not violate any international agreement. Given that the government’s investigation gave reasonable grounds for believing that certain email addresses belonged to the Aliagas, and given that Claudio Aliaga’s attorney had filed a motion to dismiss and thus was evidently still in communication with his client, the court held that service by email and by service on the attorney was proper as to Claudio Aliaga. But because there was no evidence that the Aliagas were living together or in communication with one another, and because the attorney did not represent Betty, the court held that the proposed means of service did not comport with due process as to her.

About Ted Folkman

Ted Folkman is a shareholder with Murphy & King, a Boston law firm, where he has a complex business litigation practice. He is the author of International Judicial Assistance (MCLE 2d ed. 2016), a nuts-and-bolts guide to international judicial assistance issues, and of the chapter on service of process in the ABA's forthcoming treatise on International Aspects of US Litigation, and he is the publisher of Letters Blogatory, the Web's first blog devoted to international judicial assistance, which the ABA recognized as one of the best 100 legal blogs in 2012, 2014, and 2015.

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