Case of the Day: Bazarian International v. Aerohotelco

The case of the day is Bazarian International Financial Associates LLC v. Desarrollos Aerohotelco CA (D.D.C. 2016). Bazarian sued Aerohotelco for breach of an investment banking agreement. Aerohotelco was a Venezuelan firm.

The decision’s account of Bazarian’s attempt at service seems somehow garbled. According to the decision, Bazarian tried to serve process in Venezuela via the Hague Convention’s central authority mechanism. But the decision recites that “as required by the [Convention],” the documents to be served were “provided to the State Department’s contracted international process server, Process Forwarding International, for forwarding to the Venezuelan central authority.” Huh? This, of course, is not what the Hague Service Convention requires. But in any case, the central authority failed to make service, so Bazarian sought leave to serve process on Aerohotelco by serving its US lawyer. After service, Aerohotelco sought to dismiss the action for insufficient service of process. The argument was the same argument we saw in Drew Technologies v. Robert Bosch LLC: FRCP 4(f) applies only to service “at a place not within any judicial district of the United States.” So despite the many cases authorizing service on the US lawyer under FRCP 4(f)(3), Aerohotelco suggested that the service was improper because the documents were delivered to the lawyer in the United States and thus FRCP 4(f) simply didn’t apply.

The court rejected this argument for reasons similar to the reasons I suggested in my post on Drew Technologies. The judge suggested that the service was not complete upon delivery of the documents to the US lawyer, but rather that the US lawyer functioned as a conduit to transmit the papers to the defendant in the foreign country. I am not sure I like this approach, because it seems to imply that the lawyer has to transmit the documents to the defendant abroad to effect the service, and why shouldn’t that transmission have to comply with the Convention? (The court rejected this conclusion, but not, it seems to me, very convincingly). It seems preferable to me to say that the service on the defendant in the foreign country is complete upon delivery of the documents to its lawyer in the United States, for reasons similar to the reasons we say in some circumstances, as in Volkswagen, that service on a foreign parent can be complete upon delivery of the documents to a US subsidiary. By operation of law, in such cases, doing something in the United States effects service on a defendant abroad. This is not a perfect solution, but it seems the best solution available, as long as you think, as I do, that it is important to try to save the many precedents authorizing service under FRCP 4(f)(3) by doing something only in the United States.

If you’ll let me stretch a bad metaphor, I’ll suggest that FRCP 4(f)(3), when invoked, creates a kind of entanglement between the foreign defendant and its US lawyers. Delivery of documents to the lawyer changes the status of the foreign defendant, effecting service on it even if the lawyer and the foreign defendant never communicate. That’s my suggestion, anyway.

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.

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