Case of the Day: Harper v. W.W. Grainger, Inc.

The case of the day is Harper v. W.W. Grainger, Inc. (W.D. Ky. 2013). Larry Harper sued Dayton Electric Manufacturing Co. in the Jefferson Circuit Court in Kentucky, alleging that he was severely injured when using a hand truck that Dayton manufactured or sold. Dayton removed the case to the District Court for the Western District of Kentucky. The parties then stipulated that W.W. Grainger, Inc., Dayton’s parent company, was substituted as a defendant for Dayton. Harper then amended his complaint to allege that Li & Fung (Trading) Ltd., a Hong Kong company, was liable for negligent design or manufacture of the hand truck.

Harper hired APS International, Ltd. to handle the service of process. APS transmitted the documents by Fedex to the Hong Kong central authority. There was no response from the central authority for more than six months, despite two follow-up letters from APS. (I recommend follow-up letters as a way of establishing that you acted with the appropriate diligence when it comes time to seek a default judgment under Article 15).

Harper moved for a default judgment, but Li & Fung, which said it had learned of the lawsuit from W.W. Grainger, submitted an affidavit stating that it had never been served with the documents by the central authority. The judge therefore properly denied entry of a default judgment. The lesson here is that while it’s permissible to enter a default judgment in the event a central authority fails to respond after six months, it’s not mandatory, particularly where, as here, the defendant submits an affidavit denying service.

But of course, by submitting the affidavit, Li & Fung created some pretty easy opportunities for Harper to effect service, and in fact Harper correctly moved for leave to serve process on Li & Fung’s US counsel under FRCP 4(f)(3). The judge granted the motion, as courts generally do in such cases.

There was no great strategy here for Li & Fung. If it refused to appear, it ran the risk of a default judgment under Article 15. If it appeared to deny receipt of service, it ran the risk that the court would authorize service on its attorneys. Parties in Li & Fung’s position might ask themselves whether it’s worth the time and money to fight service of process in such situations.

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