Case of the Day: Haan Corp. v. Sparkling Drink Systems
Posted on January 2, 2018
The case of the day is Haan Corp. Korea v. Sparkling Drink Systems Innovation Center Hong Kong (N.D. Ill. 2017). Haan brought a claim against Aaron Serge Bueno, alleging a RICO conspiracy and fraud. The claim was that Bueno and the other defendants had “operated a successful pod-based beverage system (akin to the well-known Keurig system) and that they had secured large orders from prominent retailers like Walmart, Target, and Bed Bath & Beyond,” knowing that “their pods were, in fact, worthless due to a ‘clumping’ defect.” Haan claimed the misrepresentations induced it to make payments to the defendants.
Haan served the summons and complaint on Bueno when he was outside a courtroom in the federal courthouse in Chicago. Bueno, a citizen of French and Israel, was at the courthouse to attend an evidentiary hearing in another, unrelated case in which he was a defendant. Bueno moved to dismiss for insufficient service of process.
The rule is that “suitors, as well as witnesses, coming from another State or jurisdiction, are exempt from the service of civil process while in attendance upon court, and during a reasonable time in coming and going.” There is an exception when the second action is related to the first action and pending in the same court. But in the case that outlined the exception, Lamb v. Schmitt, 285 U.S. 222 (1932), the Court noted that the policy of the rule “is founded, not upon the convenience of the individuals, but of the court itself … [t]he test is whether the immunity itself, if allowed, would so obstruct judicial administration in the very cause for the protection of which it is invoked as to justify withholding it.”
The judge granted the motion (though he quashed the service rather than dismissing the action). He held that the two cases were unrelated, and he pointed to the policy of the rule:
Bueno is a non-resident who operates foreign companies, and he may not have chosen to come to the forum to attend court proceedings in [the other case] if he feared being served in other lawsuits. Withholding immunity from Bueno in this case could undermine rather than promote the due and efficient administration of justice in this district.
The result is correct, and the judge correctly applied the policy of the rule given by the Supreme Court in Lamb. But I wonder whether the policy makes much sense—whether it makes sense to say that the immunity is there to serve the convenience of the court, not the parties. Suppose Bueno had no immunity and he therefore decided not to attend the hearing in the second case. What’s that to the court? Even if he had decided not to testify rather than simply not to attend, again, why is that the court’s concern?
If I had to explain the policy behind the rule, I would say that it is there to prevent unfairness to witnesses. The case is strongest in the case of a witness who is compelled to testify in a foreign forum. It is probably the weakest in the case of a plaintiff who travels to attend a hearing where he’s not testifying. Bueno’s case is somewhere in the middle: he was a party; he was not compelled to be present; but he was a defendant.