Case of the Day: In re Application of High Point SARL
Posted on June 23, 2011
In the case of the day, In re Application of High Point SARL (N.D. Ill. 2011), two of our main concerns here at Letters Blogatory, the judicial assistance statute and service of process, collide. High Point, a Luxembourg company, had sued KPN B.V. for infringement of a European patent in the District Court for the Hague. High Point sought discovery from Huawei Technologies Co., a Chinese firm not a party to the Dutch case. It sought information about the operation of products that Huawei supplied to KPN.
The court had previously granted High Point’s ex parte application for leave to serve a subpoena on Huawei. High Point had then issued a subpoena seeking documents and testimony and served it on Huawei’s US subsidiary, Future Wei Technologies, Inc., in Illinois. Huawei sought to quash the subpoena on the grounds of insufficient service of process.
Huawei argued that it was not registered to do business in Illinois, had no registered agent for service of process there, did not maintain any offices there, and did not own property in the state. High Point argued that Huawei had listed Future Wei’s office address as one of its branch offices and that Huawei had sufficient control of Future Wei so as to make service on the subsidiary effective as to the parent.
The court beings with a point that is ultimately correct but that requires more explanation than the court gives:
Service on a corporation is accomplished by following the state law where the district court is located or where service is made; or by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process.
The reason this premise is tricky is that the case is not about service of a summons and complaint, which is governed by Rule 4, but service of a subpoena, which is governed by Rule 45. While Rule 4(e)(1) and 4(f) provide that it is proper to serve a summons according to the law of the state where the district court sits, Rule 45 does not.
To be sure, Rule 45(b)(1), which requires “delivery” of the subpoena to the person to be served, does not expressly explain how to go about serving a corporation. It’s proper to look to Rule 4 for guidance. Rule 4(f) provides that you can serve a summons on a corporation by delivering it to “an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process.” But the question of who is an agent for these purposes is a question of federal law, not state law. See 4A Wright & Miller §1103 n.2. So I question whether the court’s discussion, which focuses on whether Future Wei is an agent of Huawei under Illinois law, is really on the right track.
Right or wrong, the court applied the multi-factor test prescribed by Illinois law:
Illinois courts consider a number of factors to determine, whether a parent so controls its subsidiary that service of process on the subsidiary constitutes service on the parent: (1) the subsidiary was established and wholly owned by the parent; (2) the parent paid the salaries of the subsidiary’s directors; (3) the parent guaranteed the subsidiary’s lease; (4) the subsidiary’s sole business was the sale of parts for the parent; (5) the parent listed the subsidiary’s address in advertisements; (6) the subsidiary existed primarily to promote the sale and distribution of the parent’s products; (7) the subsidiary was obligated to repair and sell parts for the parent’s products; (8) the subsidiary was contractually required to apprise the parent of all aspects of its business; (9) the subsidiary was authorized to prosecute trademark infringement suits in the parent’s name; (10) the parent controlled the subsidiary’s choice of dealers, designation of products and services, stock levels, and methods of ordering; (11) the parent dominated the subsidiary’s board of directors; (12) the subsidiary conducted its board meetings in the domicile of the parent; and (13) the subsidiary was listed on a consolidated financial sheet along with the parent rather than publishing its own annual report.
On balance, the court found that the balance weighed against a finding of agency—because there were so many factors I will not reprise the analysis here. High Point probably was not helped by the fact that in an earlier case (arising out of a domestic lawsuit, not a foreign lawsuit), In re Subpoena to Huawei Techs. Co., 720 F.Supp.2d 969 (N.D. Ill. 2010), another judge on the court had previously found that service on Future Wei failed to constitute service on Huawei, using the same Illinois law analysis.
Since China and the Netherlands are both parties to the Hague Evidence Convention, it may be that if High Point wants the information from Huawei, it will need to seek it via the Convention; China’s Article 23 reservation indicates that China is prepared, in principle, to execute a request for pre-trial discovery of “documents clearly enumerated in the Letters of Request and of direct and close connection with the subject matter of the litigation,” though the prospects for actually obtaining the documents within the required time may not be terribly high.