Archives

US Court Approves International Service of Process by Facebook

Letters Blogatory welcomes esteemed fellow blogger Chris Neumeyer, who practices law in Taipei. Chris has a new post on today’s case of the day, FTC v. PCCare247 Inc., which will be cross-posted on his blog. Readers may also be interested in my take on the case. Suffice it to say that in my view service by Facebook is impermissible if the Convention applies.

As technologies develop, courts worldwide are increasingly open to allowing service of legal documents by new means, including by FedEx, e-mail, Facebook and Twitter. In line with that general trend, last week a District Court in New York authorized service upon certain defendants located in India by means of e-mail and Facebook.

The case, FTC v. PCCare247 Inc. (S.D.N.Y. 2013), involves allegations that several individuals located in India operated a scheme that tricked American consumers into spending money to fix non-existent problems with their computers. The FTC applied to the court and obtained a temporary restraining order enjoining defendants’ business practices and freezing some of their assets.

Because India is a signatory to the Hague Convention on Service Abroad, the FTC submitted the Summons and Complaint to the Indian Central Authority, requesting service of process pursuant to Federal Rule of Civil Procedure (FRCP) Rule 4(f)(1) and Article 3 of the Hague Convention. The FTC also attempted to serve process on the defendants by e-mail, FedEx and personal service. FedEx confirmed delivery for most of the defendants and a process server personally served all of the defendants.

However, for five months the Indian Central Authority failed to act, failing to formally serve the defendants and failing to respond to the FTC’s inquiries regarding the status of the service, so the FTC filed a motion requesting leave to serve all subsequent documents, other than the Summons and Complaint, on the defendants by e-mail and Facebook, only. On March 7, the Court granted that motion.

As the Court explains, FRCP 4(f)(3) authorizes the Court to “fashion means of service on an individual in a foreign country, so long as the ordered means of service (1) is not prohibited by international agreement; and (2) comports with constitutional notions of due process.” Cases hold that Rule 4(f)(3) is neither a last resort nor extraordinary relief, but merely one of the possible means of service on foreign defendants. Nor is a plaintiff required to first attempt service through other provisions of Rule 4(f), although a Court may require proof that the party first attempted service by other means before requesting the court’s intervention under Rule 4(f)(3).

Ordinarily, service of judicial documents in a member state of the Convention is handled by the Central Authority in the foreign state, as stated at Article 2 of the Convention. However, the Court noted that Article 10 of the Convention also allows for service through certain alternative means, such as “postal channels,” provided the destination state does not object to those means. The Court further noted that India had objected to the methods specified at Article 10, although it had not specifically objected to service by e-mail or Facebook. Consequently, the Court found the Hague Convention did not bar such service.

Ted Folkman makes a convincing argument that the court was mistaken in that respect. First, compliance with the Hague Convention is mandatory in all cases to which it applies. That is, so long as the party to be served is located in a member state and no exception applies (e.g., Article 1 provides an exception where the address of the party to be served is not known), service of judicial and extrajudicial documents must be effected by means authorized under the Convention. Second, no provision of the Convention authorizes service by e-mail or Facebook.

In other words, the Court was wrong to find the Convention doesn’t prohibit service by e-mail and Facebook, so it must be allowed. Instead, service by such means is proper only if the Convention expressly permits it, and the only provision that might be seen as permitting such service is Article 10, which refers to “postal channels” (bear in mind that the Convention was drafted in 1965 and has never been amended, so it’s no surprise it doesn’t expressly refer to electronic communications), but India has formally objected to service under Article 10.

Perhaps the Court was exasperated with the lack of cooperation from the Indian authorities. As the court explained, “This litigation must move forward, and it is not tolerable to wait five months (or more) for every motion in this case to be served by the Central Authority.” However, the Convention doesn’t appear to authorize other means of service in cases where a member state fails to comply with its responsibilities.

Aside from the Hague Convention, it should be noted that the Court also examined whether the proposed means of service would deprive the defendants of due process, and the Court found—based on the facts at issue—that it would not. The service was reasonably calculated to provide the defendants with actual notice, because defendants had used the same e-mail addresses in connection with the accused activities and to send e-mails to the FTC and the Court. There was evidence the Facebook accounts had been set up by the defendants and not by some other party. And, it was already established that the defendants had actual notice of the lawsuit.

So, what can one learn from this case?

First, whether it was decided rightly or wrongly, the question was whether service by e-mail and Facebook may be authorized when the defendant is located in a Hague Convention member state and its address is known (so the Convention is applicable). Many countries are not members, including most of Southeast Asia, South America, Africa and the Middle East. The question was also complicated by the fact that India has objected to Article 10 of the Convention, which refers to service by “postal channels.”

Second, when considering whether to attempt service of process by less orthodox means, once should always keep in mind the nature of the relief being sought and whether foreign assistance may eventually be required. For example, a plaintiff seeking monetary damages from a foreign defendant that lacks assets in the U.S. should recognize the strong likelihood that foreign courts may refuse to enforce a judgment if service of process was made by e-mail or Facebook.

Case of the Day: Charleston Aluminum, LLC v. Energomex, S.A. de C.V.

I love today’s case of the day, Charleston Aluminum, LLC v. Energomex, S.A. de C.V. (D.S.C. 2013), because it deals with the rarely-construed Article 3 of the Hague Service Convention. Charleston Aluminum sued Energomex, a Mexican company; the facts of the case are not apparent from the decision. Charleston filed a “motion for Hague service,” requesting that the clerk “sign and affix an apostille to Spanish language versions of the summons and complaint … and forward these documents to the appropriate Mexican Central Authority for service on Defendant.” Charleston Aluminum apparently believed that the Hague Service Convention “requires that the court effectuate service of process.”

Of course this is wrong. Article 3 of the Convention provides:

The authority or judicial officer competent under the law of the State in which the documents originate shall forward to the Central Authority of the State addressed a request conforming to the model annexed to the present Convention, without any requirement of legalisation or other equivalent formality.

Who is a competent person under US law to transmit a request for service of process to a foreign central authority? Here is an excerpt from § 2.3.4(b) of International Judicial Assistance (MCLE 2012):

In an action in federal court, the attorney for the plaintiff should be able to forward the request to the foreign central authority, because under Fed. R. Civ. P. 4(c)(2), the attorney is authorized to serve process. See Greene v. Le Dorze, No. CA 3-96-CV-590-R, 1998 U.S. Dist. LEXIS 4093 (N.D. Tex. Mar. 24, 1998); Marschhauser v. Travelers Indem. Co., 145 F.R.D. 605 (S.D. Fla. 1992). The United States, in its response to the Hague Conference’s 2003 questionnaire, has stated that “any court official, any attorney, or any other person or entity authorized by the rules of the court” may forward the request to the foreign central authority.

Judge Seymour, citing both Greene and Marschhauser, squarely held that an attorney is competent under Article 3. A nice, concise decision.

Case of the Day: Chamberlain v. Integraclick, Inc.

The case of the day, Chamberlain v. Integraclick, Inc. (N.D. Fla. 2011), involves an attempt to serve process on a Canadian defendant. I am not a fan of the reasoning in this case. Chamberlain, Newcomer, and Adler, on behalf of themselves and other similarly situated, sued 1021018 Alberta Ltd., d/b/a Just Think Media, an Alberta corporation, and Integraclick, Inc., d/b/a Clickbooth, a Delaware corporation, accusing them of a scheme to defraud consumers on the internet; the details are unimportant. The defendants removed the case from the Leon County (Florida) Circuit Court to the U.S. District Court in Tallahassee. Just Think Media then moved to dismiss for insufficient service of process.

The plaintiffs sent a request for service abroad to the Alberta competent authority requesting service under Article 5(a) of the Hague Service Convention. (Practice pointer: the Applicant identified on the Request is apparently a professional process server. She identified Fed. R. Civ. P. 4(c)(2) as a source of her authority to make an application under the Convention. But how could Rule 4 apply if service was attempted before the case had been removed? She also referenced a “Florida Circuit Court Order”, but without the order attached, I can’t really comment on whether she met the requirement of Article 3, namely, that she be an “authority or judicial officer competent under the law of the State in which the documents originate.” It seems to me that even when it is proper for an attorney or a process server to act as the applicant, it is usually good practice to request appointment of a special process server, or service by the marshal, under Rule 4(c)(3), because in some cases foreign central authorities have objected to letters of request naming U.S. lawyers or process servers as the applicant).

The Alberta authorty’s certificate stated that service had not been made because “no one will accept service of the document.” As I point out below, it appears that the Alberta authority did not do everything it could to effect service under Alberta law.  But that is water under the bridge. The plaintiffs proceeded to serve process on the Florida lawyer who had appeared for both Just Think Media and Clickbooth. 

The court rejected Just Think’s motion to dismiss for two reasons. First, it held that Just Think could not complain of failure to make service as required by the Hague Convention when it appeared that Just Think had been ducking service in Alberta: “As Plaintiffs point out, Defendant  should not be permitted to ‘demand that Plaintiffs serve process under the Hague Convention, refuse to accept service when they do, and then cry foul.'” I don’t find this argument persuasive. It seems to me that if you can’t make service under Article 5(a), the appropriate remedy is to use an alternative method of service under Rule 4(f)(2) or (3), not to waive the requirement of service. Nor would the plaintiffs in this case be prejudiced by the court’s insistence on valid service, since another method of service appears readily available. Canada has not objected to service by mail in Hague Convention cases. Alberta law appears to permit service by mail in the circumstance of this case, even if the corporation refuses to accept the mail. I reason as follows. First, under § 20 of the Alberta Business Corporations Act, Just Think must have had a registered office on file with the Alberta government (or else it could not have incorporated). Second, under Section 256 of the BCA, service by registered mail to the registered office is permissible. Third, under Rule 11.2 of the Alberta Rules of Court, “Service by mail or recorded mail is not invalid by reason only that” the addressee refuses the mail or “the addressee no longer resides or is otherwise not present at the address and has not provided the postal service with a current mailing address.” So unless I am misreading the Alberta rules on this—no doubt a distinct possibility—the plaintiffs could easily have effected service that would be valid under Alberta law and thus valid under Rule 4(f)(2)(A).

Second, the court held that service on the law firm that had entered an appearance for Just Think was sufficient because the lawyer was the agent of the client, even though there was no indication that the lawyer had been expressly authorized to accept service of process. This can’t possibly be right, since if it were, no one could ever successfully challenge the adequacy of service of process—service on the lawyer making the challenge would always be sufficient. The general understanding is that U.S. lawyers are not, by virtue of their status as attorneys, agents for receipt of service of process. That’s not to say that the court couldn’t have authorized service of process on the lawyer pursuant to Rule 4(f)(3), but I think the court was wrong to say that as a general matter service on the lawyer is sufficient to effect service on the client.