Case of the Day: Freedom Watch v. OPEC
Posted on June 22, 2015
Freedom Watch, a right-wing organization that accuses the “Obama-Clinton regime” of “using the economic crisis as an excuse to turn our nation into a socialist Euro-style welfare state,” sued OPEC on antitrust theories. I am going to go out on a limb here and guess that its claims lacked merit. OPEC moved to dismiss for insufficient service of process. According to OPEC’s motion to dismiss, “Plaintiff’s counsel, Mr. Larry Klayman, personally handed an envelope containing a summons, the complaint and other documents, all in English, to an Austrian police officer (not an employee of OPEC) who was present at the reception desk in the lobby of OPEC’s headquarters in Vienna.” On the other hand, according to the return of service, filed after the motion to dismiss, Courtney Butcher of Beverly Hills, California served the summons at OPEC headquarters on Frederich Luger, “intake officer of OPEC,” who supposedly was designated by law to accept service of process on OPEC.
The district court held that the service failed because it violated Austrian law. The DC Circuit agreed, but in what seemed to me to be a strange decision, it remanded for consideration whether the court should grant leave to serve process by alternate means under FRCP 4(f)(3). (The decision was strange because Freedom Watch had never sought leave to serve process by alternate means). Now the case was on remand for a consideration of Freedom Watch’s FRCP 4(f)(3) motion, which sought leave to serve process on OPEC’s US counsel.
Judge Walton denied the motion for two reasons. First, he noted that FRCP 4(f) applies only to service “at a place not within any judicial district of the United States.” And so he seemed to say that service on a foreign defendant’s US lawyer should never be permissible under FRCP 4(f)(3). I noted this issue in my post on Drew Technologies v. Bosch. I think this is a fair reading of the rule, though not a correct one, if only because it is contrary to so many precedents permitting such service. As I suggested in the Drew post, in light of all the cases permitting service on a US lawyer, I think the best way to read the rule is to say that when you serve a foreign defendant’s lawyer, you are serving the defendant in the foreign country, even though you are only delivering the documents in the United States. Interestingly, Judge Walton seems to get this: he noted Lincoln Hockey LLC v. Semin, a D.D.C. case that authorized service on a foreign defendant’s agent in the United States “where an uncontested agency relationship existed.” Isn’t that precisely the case here?
The second reason for denying the motion fares no better in my view. FRCP 4(f)(3) allows service that violates foreign law, but not service that is “prohibited by international agreement.” The OPEC Headquarters Agreement permits service on OPEC only via diplomatic channels. The obvious problem with this argument is that the United States is not a party to the Agreement. I read FRCP 4(f)(3) to prohibit service that is prohibited by international agreements to which the United States is a party. The evident intention of the rule is to avoid putting the United States in default of its international obligations. If FRCP 4(f)(3) permits service on a defendant in Country A. by means forbidden by Country A’s laws, then surely Country A cannot forbid such service by reaching an agreement with Country B to forbid it!
What’s unfortunate about the decision is that it invites an appeal that will, I suspect, be successful. Judges have discretion under FRCP 4(f)(3). But rather than decide the motion as a matter of discretion, Judge Walton held that he had no power to grant it. If my discussion of the two issues he flagged is correct, then he made an error of law that is liable to be corrected on appeal. And I say this despite my reluctance to take the side of a person like Larry Klayman.
On the other hand, there are now a couple of decisions holding, against the weight of the precedents, that service on a defendant’s US lawyer under FRCP 4(f)(3) is improper. So perhaps an appeal is a good thing, as we might get some clarity on this question!
Just to keep things interesting, Freedom Watch has filed a petition for a writ of mandamus. The main problem with such a petition seems to me to be that Freedom Watch has another remedy, namely an appeal.
Perhaps the strangest thing about this case is that in 2015, anyone would be interested in suing OPEC on an antitrust theory. Has OPEC ever had less market power than it has now?