Case of the Day: Louis Dreyfus Commodities Suisse v. Financial Software Systems

The case of the day is Louis Dreyfus Commodities Suisse SA v. Financial Software Systems, Inc. (3d Cir. 2017). FSS, a Pennsylvania corporation, licensed software to Dreyfus, a Swiss company, in 1996. In 2012, they amended the license agreement to include an exclusive choice of forum clause providing that disputes would be litigated in England. Dreyfus brought an action against FSS for breach of contract in the High Court. It received leave of the English court to serve process on FSS at its headquarters in Pennsylvania. Dreyfus hired a process server, who personally served the papers on one of FSS’s directors. FSS defaulted, and eventually the English court entered a default judgment for more than $700,000.

In 2014, Dreyfus sought recognition and enforcement of the judgment in the district court. The court granted summary judgment for Dreyfus, and FSS appealed, arguing that it had not properly been served with process. In particular, FSS argued that Pennsylvania law required service to be effected by the sheriff, not a private process server—an interesting role reversal, since in the more common case a French defendant (or German, or whatever) is arguing that the uncouth Americans and their private process servers were infringing on the exclusive turf of the huissiers.

There are a few ways of looking at this. The validity of service is a question of the law of the forum, here the law of England. Of course, it’s relevant to know whether the method of service used is forbidden by the law of the place where service is effected, for two reasons: first, the law of the forum often does not allow methods of service that are illegal in the place where service is to be made, see FRCP 4(f)(2)(C)), though this is not invariable the rule, cf. FRCP 4(f)(3); and second, as a practical matter, the courts in the place where the judgment is to be enforced may, in some circumstances, not enforce a judgment if the service was by a method illegal under their own law, even if the service was valid under the law of the forum. But the rule in Pennsylvania is not a rule that forbids service of process by means other than the sheriff. If Dreyfus had sued FSS in Pennsylvania in the first instance, it could have sued in federal court, in which case service could have been served by any person not a party. And Pennsylvania courts would of course recognize and enforce sister-state judgments even if the method of service used was, for example, service by mail or some other method authorized by the law of the forum state. So it doesn’t make any sense to point out that Pennsylvania law requires service to be made by a sheriff in state court cases as a defense to the recognition of the English judgment.

But the court didn’t look at it quite this way. The court instead noted, correctly, that when you’re considering a foreign default judgment, the question about service of process is not a question about minimal due process, about technical requirements for service of process. The court focused on the existence of the exclusive choice of forum agreement, but it seems to me that the point is true even in the absence of such an agreement, as long as the foreign court had personal jurisdiction (which can’t really be doubted when there is an exclusive choice of forum agreement).

In any event, the court correctly held that the service of process defense failed, and thus the judgment was entitled to recognition.

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