Case of the Day: Ackelson v. Manley Toys

The case of the day is Ackelson v. Manley Toys Ltd. (Iowa Ct. App. 2015). The plaintiffs, Tammie Ackelson, Robin Drake, and Heather Miller, sued their employers, Manley Toy Direct LLC, Toy Network LLC, alleging violations of the Iowa Civil Rights Act. They later amended the complaint to add Manley Toys Ltd., and Toy Quest, Ltd., two related entities, both Hong Kong companies without agents for service of process in the United States.

The employees sought to make service on the Hong Kong companies by way of the Hong Kong central authority under the Hague Service Convention. The bailiff’s affidavit stated that the address where he served the documents “was operating (sic) by two companies named Manley Toys Limited and Toy Quest Limited, of which a female staff member, Ms. Lo Ming informed me that the aforesaid address was the registered office of the said party for service.” Looks good! But the two Hong companies moved to quash the service on the grounds that they had no employe or agent named Lo Ming (as far as the decision reveals, they did not claim that service had been made at the wrong address). The trial judge granted the motion, citing a similar decision from the US District Court for the Southern District of Iowa in another case involving the same defendants (but not, apparently, involving the same plaintiffs). I believe that the federal decision at issue was this decision in Rennenger v. Manley Toy Direct LLC (S.D. Iowa 2013), which also featured the mysterious Lo Ming. The employees then sought to make service on the Hong Kong companies’ US counsel under Iowa Rule of Civil Procedure 1.305(14). The trial judge agreed, and the Hong Kong companies took an interlocutory appeal.

The actual issue in the case is very simple, and the court decided it correctly. The defendants claimed that the service violated the Hague Service Convention, which in their view required the documents to be transmitted abroad for service of process. But as we know from the Volkswagen case, the Convention is exclusive but not mandatory. That is, it applies whenever a document is transmitted abroad for service, but it does not determine when a document must be transmitted abroad for service. The law of the forum does that.

Indeed, service on a foreign entity by serving the entity’s US lawyers may be even more clearly correct under the law of Iowa than under federal procedural law. It seems that the relevant Iowa rule of civil procedure applies whenever service cannot be made by another means, whereas there is an argument to be made that FRCP 4(f)(3), the rule that federal courts point to when authorizing this method of service, does not permit such service, because FRCP 4(f) applies only to service “at a place not within any judicial district of the United States.”

So the result of the case is clearly correct. I want to draw attention to a point the appellate court wasn’t called on to decide, namely whether the trial court should so easily have quashed the first attempt at service. As we know, a certificate of service under Article 6 of the Convention establishes the fact of the service at least prima facie. (I assume there was an Article 6 certificate here, though the opinion isn’t really clear on that point). Even assuming everything the Hong Kong entities said was true, it’s not clear, to me anyway, that the service was insufficient under Chinese law. The whole point of the Article 6 certificate is to relieve the court hearing the case from having to decide on the sufficiency of service under the foreign law once the foreign central authority certifies that service has been made. Another point, maybe a smaller one: to the extent the Iowa court was giving some sort of preclusive effect to the earlier federal decision, was it right to do so, given that the plaintiffs in the Iowa case were not parties in the federal case and (it seems) not in privity with them?

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