Case of the Day: ATN Industries v. Gross

The case of the day is ATN Industries, Inc. v. Gross (S.D. Tex. 2016). ATN alleged that Rafael Schwartz and others wer part of a “massive scheme that defrauded Plaintiffs out of millions of dollars.” It sued him for violations of the RICO statute and on other claims. Schwartz was in Venezuela. ATN sent the documents to an “international process-server to serve Schwartz pursuant to the Hague Convention.” Schwartz was served in August 2015 in Caracas, but according to the plaintiffs, “Schwartz refused to sign the summons.” Apparently under Venezualan law, because Schwartz refused to sign, it was necessary to take steps to confirm that service had been made. The plaintiffs petitioned the Venezuelan court for an order “ratifying” that service had been made. The Venezuelan court obliged, and ATN gave the papers to the Venezuelan central authority, but the central authority never transmitted a certificate of service under Article 6. Schwartz moved to dismiss, asserting insufficient service of process.

There is an odd point here: under Article 5, the Venezuelan central authority is supposed to effect service under Venezuelan law. So if it’s necessary to bring a proceeding in the Venezuelan court to complete the service, the central authority, not the foreign plaintiff, should have the burden to bring it. One other point: you don’t have to hire an “international process-server” to transmit the papers to the foreign central authority: you can do it yourself, and if you’re not sure you can do it yourself, there are lawyers out there who can help you with this sort of thing. I’m just sayin’.

Anyway, the court gave ATN additional time to file a certificate of service, even though it also took judicial notice that Schwartz had been personally served in Caracas.

Schwartz argued that ATN had not exercised due diligence in making service of process and that it was guilty of laches. But the court found that the delay in service was caused by Schwartz’s refusal to sign the summons when he was personally served. This seems obviously correct. I would add that as I understand Article 6, the receipt of an Article 6 certificate is not absolutely necessary to valid service, at least in cases such as this where it apparently was not disputed that service was complete but for the certificate.

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.

2 thoughts on “Case of the Day: ATN Industries v. Gross

  1. The facts recorded in the opinion do suggest a certain confusion on the part of the plaintiffs and their advisers and, perhaps as a consequence, the court.

    It seems to me that the plaintiffs intended to personally serve the defendant directly through a process server. This would have been in accordance with Article 10(b) or (c) of the Convention, as Venezuela’s objection is only to postal service under Article 10(a) (which, I note, is the only aspect of Article 10 that the court mentions in its discussion at 7-8).

    Further, it seems to me that that is exactly what the plaintiffs actually did. As the Convention is silent on how the fact of service under any of the limbs of Article 10 is to be established, this must be a question solely for the court whose process is being served. Would not the process server’s affidavit have been sufficient for a US district court considering whether a defendant has been served in accordance with FRCP 4(f)(1)?

    Thereafter the confusion begins, and I think they tried to turn their (successful) attempt at direct service into service by the central authority in accordance with Venezuelan law, which of course it was not. Hence the failure of the central authority to issue an Article 6 certificate: no actual request had been made.

    1. Interesting observations, which could be right, though as you say the decision is quite unclear.

      The only point I’ll raise about your comment is that service under article 10(b) or (c) is not solely a matter of the law of the forum–the question of who is competent to make the service under those articles is a question for the law of the state where the service is made, and the method of service at least must not be one forbidden by that law (since it is the officer of the foreign state who effects the service).

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