Case of the Day: v. United States

The case of the day is Sp. z.o.o. v. United States (D. Del. 2018). G2A was a Polish company. The Polish government requested judicial assistance from the US government under the US/Poland Tax Treaty in connection with a Polish tax investigation concerning G2A. Specifically, the Polish government sought evidence from the Corporation Trust Co., a firm that acts as registered agent and provides other services for many Delaware entities, concerning Gate Arena LLC, a Delaware company. I’m just speculating, but perhaps the Polish government believed there was a connection between Gate Arena and G2A that was not publicly known but that discovery could prove.

The IRS served an administrative third-party summons on CT, and G2A moved to quash. One of G2A’s arguments was that the IRS’s service of the summons on G2A in Poland by mail was invalid under the Hague Service Convention.

G2A was right to point out that Poland has objected to service by postal channels under Article 10 of the Convention. The court could have questioned whether the tax investigation was “civil or commercial” (if not, the Convention would not apply at all), but instead, it asked whether there was any obligation to serve the summons on G2A in the first place. Under the Internal Revenue Code, the IRS did not have to “serve” the summons on the taxpayer (here, G2A), it only had to “give notice of the summons.” The government, in other words, was distinguishing service of process, in the strict sense, from mere service of a notice.

There are sound grounds in the precedents for making this distinction. But I have argued that this distinction, while reflected in some US cases, is a bad reading of the Convention itself. The Convention applies whenever there is occasion to transmit a judicial or extrajudicial document for service abroad. If it only applies to service of process, then how do we account for extrajudicial documents, which are never process in the strict sense? Moreover, when we use the word service, we don’t necessarily mean service of process: under FRCP 5, lawyers “serve” documents on each other all the time, even though the documents aren’t process.

The practical point, however, was that G2A had had actual notice of the summons in plenty of time. Because there was no question of service of process, the US court’s jurisdiction did not depend on the service being performed in a proper way. It’s possible that there could be some statutory reason why the notice had to be served as if it were process or else the summons would be liable to be quashed, but barring that, I think the court was right to say that in the absence of any prejudice G2A had no grounds for complaint.

One response to “Case of the Day: v. United States”

  1. […] case of the day is Sp. z.o.o. v. United States (3d Cir. 2019). I previously wrote about the case in September 2018. The Polish authorities were conducting a tax investigation of G2a, a Polish […]

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