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Case of the Day: MyECheck v. Titan

The case of the day is MyECheck, Inc. v. Titan International Securities, Inc. (E.D. Cal. 2016). MyECheck claimed that it was the victim of a securities fraud perpetrated by Titan and Sweetsun Intertrade, Inc., both located in Belize. MyECheck served process by having a Belizean lawyer serve the documents on the defendants’ registered agents. After they failed to answer, it sought a default judgment.
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Case of the Day: Kim v. Lakeside Adult Family Home

The case of the day is Kim v. Lakeside Adult Family Home (Wash. Ct. App. 2015). Ho Im Bae was an inpatient resident of the Lakeside Adult Family Home, a nursing home. She died of a morphine overdose, and her death was ruled a homicide. The personal representative of her estate, Esther Kim, sued several defendants, including a nurse, Christine Thomas. The claim against Thomas was that she was allegedly negligent for failing to report that Bae was being abused, as required under Washington’s mandated reporter law. Thomas, a Norwegian national living in Norway at the time of the lawsuit, moved to dismiss for insufficient service of process. The trial court ruled that the service was proper, but it dismissed the claim on the merits on summary judgment. Both parties appealed.
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Service by Email and Facebook: FTC v. PCCare247 Inc.

I’ve got an interesting case for you today!

The case of the day is FTC v. PCCare 247 Inc. (S.D.N.Y. 2013). The FTC alleged that the defendants, Vikas Agrawal, Anuj Agrawal, Parmeshwar Agrawal, PCCare247 Solutions Pvt. Ltd., and Connexxions IT Services Pvt. Ltd., all located in India, “operated a scheme that tricked American consumers into spending money to fix non-existent problems with their computers.” On the FTC’s motion, the judge entered a temporary restraining order enjoining the defendants’ business practices and freezing assets. Two days later, the FTC transmitted the summons and complaint to the Indian central authority for service under Article 5 of the Hague Service Convention. The FTC also delivered the summons and complaint to the defendants by email; by FedEx; and by personal service via a process server. Vikas Agrawal was later personally served while he was in the United States. The Indian central authority never proceeded to serve the defendants under the Convention. 1

At the hearing on the FTC’s motion for a preliminary injunction (which the judge granted), which followed the service of process, the defendants were represented by US counsel. However, US counsel later withdrew, after the defendants failed to pay them. Now that the Indian defendants were unrepresented, the FTC faced the question of how to serve them with additional documents in the action. It sought leave, under FRCP 4(f)(3), to serve the subsequent documents by alternate means, namely by email and via Facebook. 2 Since we are talking about documents other than the summons and complaint, the case does raise the question whether the Hague Service Convention applies at all to such documents. I’ve often expressed the view that the Convention does apply to documents other than the summons and complaint. The judge assumed that the Convention applied but held that service by email or Facebook was not inconsistent with the Convention in any event:

Service by email and Facebook are not among the means listed in Article 10, and India has not specifically objected to them. Numerous courts have held that service by email does not violate any international agreement where the objections of the recipient nation are limited to those means enumerated in Article 10.

The judge cited Gurung v. Malhotra—a case I’ve criticized as wrongly decided—in support of his conclusion. 3 I happen to agree with the judge that commercial email is not within the definition of “postal channels” in Article 10. So India’s Article 10 objection does not bear on the permissibility of service by email. But the Convention is exclusive; a plaintiff must use one of the methods of service authorized or at least permitted by the Convention, if the Convention applies. So which provision of the Convention authorizes service by email, or by Facebook? I think the answer is that no provision of the Convention authorizes service by email, let alone by Facebook. 4

Facebook provides an additional complication. The analogy between e-mail and old-fashioned mail is very strong, and it seems difficult to argue that when I send an email to someone in another country, I am not transmitting the email into that country. 5 Since the Convention applies only when there is occasion to transmit judicial documents to another state, it seems that the Convention applies to cases of service by email. But Facebook could present a closer question. Suppose the FTC simply put a notice on its Facebook “wall”: “Hey, Anuj Agrawal, you’ve been sued! Click this link to read the summons and complaint.” This would, it seems to me, be most analogous to service by publication, and I think it’s common ground that if the FTC had obtained approval to serve process by publishing a legal notice in the New York Times, the method of service would not involve transmission of the documents to India and thus the Convention would not apply. But it seems that that wasn’t the FTC’s plan. According to its papers, the FTC planned to send “Facebook messages” to the defendants, which the defendants will receive when they log on to Facebook. This method of transmission seems much more analogous to an email than to publication on the Internet, and I therefore would apply the same analysis to service by Facebook as to service by email.

So I think the judge was right to say that, since the documents had to be served in India rather than on US counsel, the Convention applied, but wrong to say that the Convention does not forbid service by email or Facebook in the circumstances. In short:

  1. The Convention is exclusive. A party must use one of the methods permitted or authorized by the Convention if it applies.
  2. The only provisions of the Convention that seem even arguably to permit either methods are Article 10(a), which permits service via the postal channel, in the absence of an objection, and Article 19, which permits service under the law of the receiving state but which was not in play in this case.
  3. So if email is within the scope of the term “postal channels,” then the service by email was improper under Article 10 in light of India’s objection; and if email is not within the scope of the term “postal channels,” then the service by email was improper because it is not authorized by any other provision of the Convention. The service by Facebook seems improper in either case.
  4. There are plenty of cases approving service by email, but with exceptions such as Gurung, they are mostly cases where the defendant’s address was unknown and the Convention did not apply, or where the defendant was in a non-Convention country.

Notes:

  1. Although the question in the case was not the validity of the service of the summons and complaint, it’s worth considering whether service was valid as to those defendants served in India. I assume for these purposes that the defendants’ addresses are known. India has objected to service under Article 10 of the Convention, which means, I think, that the service by FedEx was invalid insofar as the majority rule is that private couriers are within the scope of the term “postal channel” in Article 10(a). I also believe that service of a summons and complaint by email to a defendant in India was invalid under the Convention, as I describe later in this post. I would say that service by email was invalid even leaving the Convention aside, as under FRCP 4(f)(3) such service requires leave of court. Service by FedEx may have been valid even leaving the Convention aside, if the FTC met the requirements of FRCP 4(f)(2)(C)(ii), as long as Indian law did not prohibit it. Personal service by process server would also seem to be barred, since it is permissible under Article 10(c) of the Convention, but as already noted India has objected to Article 10 in its entirety. There may be an argument that Article 19 permits this method of service, but that requires more knowledge of Indian law than I have. So my initial view is that the service of the summons and complaint, except as to Vikas Agrawal, was improper.
  2. The obvious difficulty here is that Rule 4 applies only to service of a summons and complaint. All other documents are to be served under FRCP 5. The court and the FTC understood this point, and the FTC claimed it was seeking leave under FRCP 4(f)(3) only out of an abundance of caution. Perhaps the motion should have been cast as a motion for leave to serve documents under FRCP 5 by a means not contemplated by the Rule.
  3. In its brief, the FTC also cites MacLean-Fogg Co. v. Ningbo Fastlink Equip. Co. (N.D. Ill. 2008) and Williams-Sonoma, Inc. v. Friendfinder, Inc. (N.D. Cal. 2007), both of which I distinguish in a prior post.
  4. Article 19 provides a possible exception, as I noted in my prior post.
  5. Suppose the recipient of the email is in India but he uses an email service that has its servers in the United States. Is the email transmitted to India? It seems to me that it is, since the recipient must retrieve the email from the server, and so one way or another, the email makes its way from my computer in Boston to his computer in India.