Case of the Day: State Farm v. Amazon

The case of the day is State Farm Fire & Cas. Co. v., Inc. (D. Ariz. 2017). It’s an example of how not to do it. State Farm filed its complaint in June 2017. A month later, the court (for reasons that are unclear) issued an order requiring service by September 21. State Farm gave the judge the following information about service on Wallygadgets, Shenzhen Bo Rui Ze Technology Co., LG Shenzhen Technology Co., and LG Chem, all of which were in China:

Plaintiff has contacted an expert in foreign service, Rick Hamilton of ABC Legal and he has reported the following: his company, as well as other foreign service companies, are having problems with China. He has not received a complete service request from China in two (2) years. However, he indicates that Article 15 of the Hague Convention allows the court to move forward with the case even if proof of service has not been provided by the Chinese authorities. Plaintiff’s counsel hereby seeks leave of the Court to lodge for the Court’s consideration an order pursuant to Article 15 of the Hague Convention. Plaintiff’s counsel will have Mr. Hamilton continue to monitor the situation involving China and let Plaintiff’s counsel know if the situation changes.

The judge, mystified, granted leave to “lodge … an order pursuant to Article 15.” Then two days before the deadline for service, State Farm sought an extension:

Due to the high cost of service in China, prior to expending the money for service in China, Plaintiff’s counsel requests an order from this Court extending the deadline for service in China to April 18, 2017 (6 months pursuant to Article 15 of the Hague Convention and an additional month to allow for this motion to be ruled upon), and that if no certificate of service or delivery can be obtained by that date, that the Court pursuant to Article 15 of the Hague Convention will enter an order that the Chinese entities are deemed served.

The court denied the motion, but State Farm did not take any other steps before the deadline for service expired. The court order State Farm to show cause why the case should not be dismissed, and State Farm said:

Because this Court denied the motion [to extend time], and due to the great cost for even attempting service in China, before undertaking this process, Plaintiff’s counsel wanted to make sure that the Court would extend the deadline for service and would consider deeming the Chinese Defendants served after the period of time required pursuant to Article 15 of The Hague Convention. Undersigned counsel did not want to waste his client[‘s] money on a possible service method that he reasonably knew would not be able to be completed within the service deadline. If this Court will kindly reconsider reasonably extending the deadline for service for an additional eight (8) months (2 months to have the documents translated and served/communicated, and 6 months for them to be with the Chinese authorities before this Court can deem them served pursuant to Article 15 of the Hague Convention), then Plaintiff’s counsel will move forward and pay the cost to reasonably attempt to have the Chinese entities served—and will file with the Court a Notice letting the Court know when the 6 months begins to run for purposes of Article 15 of the Hague Convention. Respectfully, Plaintiff in good faith believes that it has shown good cause that these Chinese defendants should not be dismissed and that the deadline for service upon them should be extended. …

Here is how the court summarized the issue to that point:

Thus, to summarize the proceedings to date regarding serving the Defendants located in China: 1) from whenever Plaintiff became aware of this case (at the latest the filing of the complaint on June 23, 2017) until August 1, 2017, Plaintiff made one phone call to inquire how to accomplish service in China; 2) from August 1, 2017 until September 19, 2017, Plaintiff did nothing; 3) from September 20, 2017 (the denial of the request for extension of time) to October 5, 2017 (the Court’s deadline for the show cause response) Plaintiff did nothing; and 4) presumably Plaintiff still has taken no action to begin service in China.

More concerning than the sheer inaction is State Farm’s view that the court should approve a default judgment in advance under Article 15 of the Convention. One gets the feeling that State Farm’s view was that the Convention is about pushing paper around: sending a request to China knowing that it would not be executed, waiting six months, and obtaining a default judgment. That’s not the point of Article 15. First, State Farm could hardly say that it had made every reasonable method to obtain a certificate of service, as Article 15 requires. I won’t repeat my other arguments on Article 15 here.

The bottom line: the plaintiff didn’t do a great job. The court, unimpressed, dismissed the claims against the Chinese defendants.

How could State Farm have done better? Well, it could have started sooner with actual attempts at service. It could have considered alternate methods of service if any were available. Anything, really, other than doing nothing would have been preferable.

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