The case of the day is Cargill Financial Services International, Inc. v. Barshchovskiy (S.D.N.Y. 2024). Taras Barschchovskiy, described in a Minnesota Star Tribune headline as the “Ukrainian fruit juice kingpin,” was the losing party in an LCIA arbitration brought by Cargill on account of financing Cargill had provided to T.B. Fruit Group, Barshchovskiy’s company. Cargill had already obtained a judgment on the award from the High Court in London for $123.94 million. It sought recognition and enforcement of the English judgment in the New York Supreme Court.

According to the Star Tribune, Barshchovskiy has “proved elusive” and “claims no place of residency.” The complaint alleges that he has or does reside in Ukraine but that he has no current known address within or without that country. Cargill sought leave to serve process by email and Facebook under CPLR § 308(5). After service, Barshchovskiy removed the case to the district court and moved to dismiss for insufficient service.¹And, surprisingly, for dismissal of a supposed in rem claim, which makes no sense to me. The court dispatched that argument.

Let me start with a strategy point. Anytime you contest service, your strategy is either to avoid having the case proceed on the merits or at least to delay it. But if your strategy is to avoid having the case proceed rather than just to delay, it’s not clear to me that having your lawyers appear and challenge the service will be a good option in most cases. That’s because whatever the hurdles are to service of process on you before your lawyers enter an appearance, once they appear, even if the judge grants your motion to quash the service, the judge is highly likely to grant a motion for leave to serve process by alternate means, namely, by service on the lawyer. There are of course exceptions. Maybe there is a statute of limitations problem and you want to see if you can persuade the judge to dismiss rather than to quash the service. Or maybe you have a status-based immunity from service of process. But in general, what are you really accomplishing? But then you have to remember just how big a number like 123 million is. It might well be that your return on that figure, over the period you can delay the case, is worth a lot of money, even if you consider the prejudgment interest that accrues over the same period.

Cargill raised one preliminary point. The court correctly rejected its argument that if Barshchovskiy wanted to challenge the state court judge’s decision that the method of service he authorized was sufficient, it should not have removed the case but should instead have challenged the order before the state court judge. That is obviously incorrect, since once a case is removed, the federal court has the power to reconsider any earlier state court order, and since in any case the state court judge entered his order ex parte.

To the merits. New York law requires a showing of impracticability of personal service before it allows alternate methods of service. An attempt at personal service is not required. While the standard of impracticability is difficult to define, Cargill did a pretty good job showing it. Cargill presented an affidavit from their Ukrainian lawyer explaining that Barshchovskiy removed his registered address from the Unified State Register of Ukraine of Legal Entities, Individual Entrepreneurs and Public Organizations and did not register a new address. It showed that Barshchovskiy had stated, in a declaration, that he had “no declared or registered place of residence of whereabouts,” in the court’s words. That would be enough for any judge, I think, despite Barshchovskiy’s argument that Cargill should have conducted a “skip trace” or done more investigative work. That last argument, by the way, shows a remarkable amount of chutzpah!

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  And, surprisingly, for dismissal of a supposed in rem claim, which makes no sense to me. The court dispatched that argument.