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Case of the Day: Murtech Energy Services v. ComEnCo Systems

Great Seal of the United States
Happy birthday, America!
The case of the day is Murtech Energy Services, LLC v. ComEnCo Systems, Inc. (E.D. Mich. 2014). ComEnCo, a Canadian firm, was in the business of manufacturing HVAC equipment. Murtech was its exclusive sales representative in Ontario and Michigan. The business relationship soured, and Murtech sued ComEnCo as well as its wholly owned subsidairy, ComEnCo (Hangzhou) Environmental Equipment Co., and its president, Raymond Hsu. Hangzhou was a Chinese firm, and Hsu was a Canadian national living in Toronto.

Murtech served process on Hsu at a business meeting held in Michigan. It served process on ComEnCo by mail sent to its headquarters in Ontario. And it sought to serve process on Hangzhou via the Chinese central authority. All of the defendants moved to dismiss on grounds of insufficient service of process.

Die drei Affen
Hear No Evil, Speak No Evil.
Credit: blu-news.org
Hsu’s main argument was that he had been lured from Canada to Michigan under false pretenses not to have a real meeting but only in order to be served with process. The fact of the matter was disputed. But the judge noted that some courts have adopted a bright-line rule forbidding service of process whenever a party enters a jurisdiction in order to attend settlement discussions or a business meeting. The judge adopted this rule and quashed the service.
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Case of the Day: Dow Chemical Co. v. Daniel

The case of the day is Dow Chemical Co. v. Daniel (E.D. Mich. 2014). Pablo Daniel Segismun Edelstein (the court calls him Edelstein, though the case is captioned Daniel) was a former employee of Dow. After he left the company, he sued Dow in Brazil on a wage and hour claim. Dow then sued Edelstein in the United States for breach of contract, fraudulent misrepresentation, and unjust enrichment. Edelstein moved to dismiss for insufficient service of process.
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Case of the Day: Drew Technologies v. Robert Bosch LLC

I have a very interesting case for you today, which nearly came in under the radar. The case of the day is Drew Technologies, Inc. v. Robert Bosch, LLC (E.D. Mich. 2013). The claim was for patent infringement. The plaintiff sought leave to serve Robert Bosch GmbH and Bosch Engineering GmbH under FRCP 4(f)(3) by service on related US parties or on Bosch’s US lawyer. The judge granted the motion, and Bosch LLC moved for reconsideration.

The judge, in an unusual decision, concluded that FRCP 4(f)(3) never authorizes service on a foreign defendant by service on a person or entity in the United States. He noted that Rule 4(f), on its face, applies only to service “at a place not within any judicial district of the United States,” and he concluded that the plain language of the Rule forbids service by delivery to a person or entity in the United States.

There are, of course, many precedents to the contrary, including cases where the courts have permitted service on a foreign defendant by service on its US lawyer and cases where the courts have permitted service on a foreign defendant by service on a US entity affiliated with the foreign defendant. Readers may want to look at my archive of FRCP 4(f)(3) cases for examples. But the judge has a point about the language of the rule, so I think it’s important to address the language of the rule head-on.

I think it is possible to square the precedents with the language of the rule as follows. When I serve a defendant in Germany by delivering the documents to his US lawyer, I am serving the defendant in Germany, not the US lawyer. Rule 4(f) is limited to cases of service outside of the United States, not delivery of documents outside of the United States. So if delivery of documents within the United States effects service on a defendant abroad, the language of the rule is satisfied. It is obviously preferable, in my view, to read the rule this way, if for no other reason than it is consistent with a large number of precedents and judges should strive to rule in harmony with earlier precedents. But I do want to congratulate Judge Terrence G. Berg for a clear opinion that reads the rule with fresh eyes and for the courage to come to a conclusion he thought right despite the precedents.