In re BRF Securities Litigation
Posted on January 28, 2019
The case of the day is In re BRF S.A. Securities Litigation (S.D.N.Y. 2019). The lead plaintiff is the Birmingham Retirement and Relief System. It brought an action against BRF, a poultry exporter in Brazil, whose American depository receipts traded on the NYSE. The claim was that BRF and its executives bribed regulators and officials in Brazil, which led to an investigation and criminal charges there. Birmingham brought securities fraud claims, alleging that BRF had made materially misleading statements and omissions. It also sued BRF’s former officers and directors.
BRF’s lawyers told the plaintiffs they were not authorized to accept service of process on the individual defendants. Birmingham thus brought a motion under FRCP 4(f)(3) for leave to serve process by alternate means. It argued that resort to the Inter-American Convention on Letters Rogatory and the Additional Protocol would take a long time and that the Convention is non-exclusive. BRF opposed the motion, and the court agreed to consider its opposition as if it were a submission by an amicus curiae.
The judge noted, correctly, that the Inter-American Convention is not exclusive (unlike the Hague Service Convention). He considered affidavits explaining the time and translation expenses involved in obtaining service under the Convention and concluded that alternate service was appropriate. He approved service on those of the individual defendants who could be served by certified mail addressed to their homes and to their counsel of record in the Brazilian criminal case. But as to others, whom Birmingham proposed to serve my mail addressed to their place of business at firms unrelated to the case, the court found that Birmingham had not shown that the service would comport with due process. It’s permissible to serve process at a person’s place of business, but because Birmingham was only able to say that it had located the business address via “unspecified online research,” without any indicia of accuracy, the judge was not satisfied that the service was reasonably calculated to reach the defendants.
Interestingly, the court suggested that Birmingham consider service by email. The casual Letters Blogatory reader may think I would find that objectionable. But the serious Letters Blogatory reader will understand that because the case arises under the non-exclusive Inter-American Convention rather than the exclusive Hague Convention, I have no complaints.