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Case of the Day: Norrenbrock Co. v. Ternium Mexico S.A. de C.V.

The case of the day is Norrenbrock Co. v. Ternium Mexico S.A. de C.V. (W.D. Ky. 2014). The action was for enforcement against Ternium of a judgment Norrenbock had obtained against Galvamet America Corp., a wholly-owned subsidiary of Ternium. Norrenbrock attempted to effect service on Ternium, a Mexican firm, by asking the Kentucky Secretary of State to serve the documents on Ternium’s affiliate in Texas, Ternium International. But Ternium moved to dismiss for insufficient service of process.
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Case of the Day: Harper v. W.W. Grainger, Inc.

The case of the day is Harper v. W.W. Grainger, Inc. (W.D. Ky. 2013). Larry Harper sued Dayton Electric Manufacturing Co. in the Jefferson Circuit Court in Kentucky, alleging that he was severely injured when using a hand truck that Dayton manufactured or sold. Dayton removed the case to the District Court for the Western District of Kentucky. The parties then stipulated that W.W. Grainger, Inc., Dayton’s parent company, was substituted as a defendant for Dayton. Harper then amended his complaint to allege that Li & Fung (Trading) Ltd., a Hong Kong company, was liable for negligent design or manufacture of the hand truck.

Harper hired APS International, Ltd. to handle the service of process. APS transmitted the documents by Fedex to the Hong Kong central authority. There was no response from the central authority for more than six months, despite two follow-up letters from APS. (I recommend follow-up letters as a way of establishing that you acted with the appropriate diligence when it comes time to seek a default judgment under Article 15).

Harper moved for a default judgment, but Li & Fung, which said it had learned of the lawsuit from W.W. Grainger, submitted an affidavit stating that it had never been served with the documents by the central authority. The judge therefore properly denied entry of a default judgment. The lesson here is that while it’s permissible to enter a default judgment in the event a central authority fails to respond after six months, it’s not mandatory, particularly where, as here, the defendant submits an affidavit denying service.

But of course, by submitting the affidavit, Li & Fung created some pretty easy opportunities for Harper to effect service, and in fact Harper correctly moved for leave to serve process on Li & Fung’s US counsel under FRCP 4(f)(3). The judge granted the motion, as courts generally do in such cases.

There was no great strategy here for Li & Fung. If it refused to appear, it ran the risk of a default judgment under Article 15. If it appeared to deny receipt of service, it ran the risk that the court would authorize service on its attorneys. Parties in Li & Fung’s position might ask themselves whether it’s worth the time and money to fight service of process in such situations.

Case of the Day: Moore v. Lowe’s Companies

The case of the day is Moore v. Lowe’s Companies (W.D. Ky. 2013). David Alexander Moore claimed that he was injured when he used a table saw that was manufactured by Rexon Industrial Corp. Rexon was a Taiwanese firm. Moore first tried to serve Rexon by service on the Kentucky Secretary of State. The Secretary of State forwarded the summmons and complaint to Rexon by sending it via certified mail to Power Tool Specialists, Inc., a Massachusetts corporation with its office in South Carolina. According to Moore, PTS was Rexon’s subsidiary. Rexon moved to dismiss for insufficient service of process.

The judge denied the motion. The facts were somewhat noteworthy because it was particularly clear that PTS and Rexon were sufficiently intertwined to make the outcome of the case pretty clear. For one thing, two other courts, in two different cases, had found PTS was an agent of Rexon for service of process. For another thing, Rexon itself, in testimony, had admitted that it did business in the US as PTS.

The judge treated the question as one of federal law, only turning to Kentucky law at the end of the opinion, to amplify his decision. I have previously opined that federal law does indeed govern, though as I have noted, there is not an enormous amount of federal common law on the question of agency.