Case of the Day: Regal Games v. SellerX Eight

Hopscotch drawn with chalk on the sidewalk.

The case of the day is Regal Games, LLC v. SellerX Eight GmbH (S.D.N.Y. 2024). Regal had a contract with SellerX, a German Company, for the sale of its Chalk City line of sidewalk chalk. Regal brought a claim for breach of contract. It asked SellerX to waive service under FRCP 4(d), but SellerX refused. and served process on SellerX in Germany via the Hague Service Convention. SellerX moved to compel arbitration.

The court granted the motion to compel arbitration, but that wasn’t the end of the case. Regal sought an award of the fees incurred in serving process, arguing that SellerX should have waived service and allowed it to save the nearly $5,000 it spent in service.

Rule 4(d) provides that defendants—even defendants who are subject to service outside the United States—have a “duty to avoid unnecessary expenses of serving the summons.” The rule also requires the court to impose the expenses of service on a defendant who “fails, without good cause,” to waive service upon request, but only if the defendant is “located within the United States.” So it seems pretty clear from the text of the rule that cost-shifting, which is an exception to the ordinary American Rule, should only happen when a domestic defendant fails to waive service.

Regal pointed out that the rule, which does impose a duty to waive on foreign defendant and which does require imposition of costs on domestic defendants, doesn’t actually say that costs can’t be imposed on foreign defendants. Full marks for creativity. But the cases are pretty clear on this point: you can only impose costs on recalcitrant domestic defendants. And that’s what the judge concluded here.

I think the rule the court followed here is not just a consequence of the text of FRCP 4(d) but an important point about comity. We may think of service of process as just about notice and not give it much mind. But it much of the rest of the world it’s the exercise of judicial sovereignty. And sending a piece of paper abroad that imposes a legal consequence if ignored seems to cross the line between merely making a request and haling someone into court.

Photo credit: FranHogan (CC BY-SA)

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