Case of the Day: Tuckerbrook Alternative Investments v. Banerjee

The case of the day is Tuckerbrook Alternative Investments, LP v. Banerjee (D. Mass. 2013). I considered a related case in May 2011. According to the complaint, Tuckerbrook, an investment adviser that manages hedge funds, alleges that Sumanta Banerjee, former manager of Tuckerbrook’s Global Distressed Fund and Global Special Situations Fund, breached a settlement agreement in an earlier dispute by disclosing it terms with a third party, tortiously interefering with Tuckerbrook’s relationships with others, disparaging Tuckerbrook, and so forth.

Tuckerbrook made attempts to serve process on Banerjee. First, its lawyer sent Banerjee two emails attaching the summons and complaint. Second, he sent the documents to Banerjee by certified mail “at his residence in Connecticut.” Tuckerbrook moved ex parte for an order deeming service to have been made, and the judge granted the motion. Banerjee then moved to vacate the judge’s order and to dismiss for insufficient service of process. Importantly, Banerjee asserted that he lived in India, not Connecticut. In a very terse order, Judge O’Toole denied the motions: “The defendant’s motion to vacate and dismiss is DENIED. Plaintiff has gone to great lengths to serve the defendant and provided evidence that the defendant was adequately served via electronic mail.”

The judge’s decision is apparently erroneous. Let’s assume that Banerjee resides in India rather than Connecticut. In the earlier case, Tuckerbrook had sought to serve process on him at a particular address in India, and because nothing in the new case leads me to think otherwise, I assume that Banerjee’s address in India today is the same as it was the last time around. So the Hague Service Convention applies—the exception under Article 1 for defendants whose addresses are unknown is inapplicable. Long-time readers know that I believe that when the Convention applies, service by email is always impermissible under the Convention, and doubly so when, as in the case of India, the state of destination has objected to service by postal channels under Article 10(a) (since Article 10(a) is apparently the only method permitted by the Convention that could possibly permit service by email). So if Banerjee resides in India and his address was known to Tuckerbrook, then the service by email was invalid. And to reach this result, it’s not even necessary to observe that Tuckerbrook failed to seek leave to serve process by alternative means under FRCP 4(f)(3) before sending the emails.

Let’s assume that Banerjee resides in Connecticut (which I have to say seems unlikely in light of the emails in the records in which Banerjee emphasizes to Tuckerbrook’s lawyer that he has lived in India for several years). The service by email is obviously insufficient, since nothing in either federal procedural law or Massachusetts procedural law (or, I assume, Connecticut procedural law) permits service by email within the United States. So if Banerjee resides in Connecticut, then the validity of the service turns only on the certified mail. Under FRCP 4(e)(1), service by certified mail would be proper if permitted under either Massachusetts or Connecticut law. Massachusetts law provides for service outside of the Commonwealth “by any form of mail addressed to the person to be served and requiring a signed receipt.” Under Chapter 223A, § 6(b) of the General Laws, when service is made by mail, “proof of service shall include a receipt signed by the addressee or other evidence of personal delivery to the addressee satisfactory to the court.” Tuckerbrook didn’t produce a signed receipt or other evidence of actual receipt, and so it seems to me that the service was insufficient under Massachusetts law. What about Connecticut law? Here I disclaim any special knowledge, but it appears to me after a very quick search that under § 52-59b of the Connecticut statutes, service by certified mail on a nonresident also requires service on the Connecticut Secretary of State (which apparently didn’t happen here), and I don’t see a statute authorizing service of process on a resident by mail.

So assuming that if Banerjee resided in India his address was known to Tuckerbrook, and assuming that I haven’t made a gross mistake of Connecticut law in case Banerjee, contrary to appearances, resided in Connecticut, the service seems clearly improper and the judge’s order erroneous. The next question—what to do about it—poses difficult strategic questions for Banerjee.

Case of the Day: Royal Caribbean Cruises v. Jackson

The case of the day is Royal Caribbean Cruises, Ltd. v. Jackson (S.D. Fla. 2013). Royal Caribbean sued for exoneration after Darren Jackson and Susan Moravec were injured parasailing while on a Royal Caribbean cruise. Jackson and Moravec filed a counterclaim and a third party complaint for negligence against Nino Abarquez and Ramon Musngi, two Royal Caribbean employees, alleging negligence.

Jackson and Moravec served process by mailing a copy of the documents to the Florida Secretary of State, who accepted service on their behalf and then sent the documents by certified mail to Royal Carribean’s office in Miami. Abarquez and Musngi were Philippine nationals who did not reside in Florida and who received the complaint by mail from Royal Caribbean in Labadee, Haiti. Jackson and Moravec also sent the documents to the defendant in care of Royal Caribbean by registered mail, return receipt requested. Royal Caribbean was not their authorized agent for service of process. According to Jackson and Moravec, Labadee is an “isolated enclave controlled by” Royal Caribbean “and which is closed to the public.” They claimed not to have access to the enclave and thus to have no way to serve Abarquez or Musngi. The judge rejected this interesting argument for reasons that are not really clear. If Jackson and Moravec’s claim is true, it poses an interesting problem, though one that the case leaves undecided.

The only basis for substituted service on the Secretary of State is a Florida statute, which is incorporated into federal law under FRCP 4(e)(1). But FRCP 4(e)(1) only applies to service “in a judicial district of the United States.” I think it was probably a mistake for the court even to consider whether the Florida statute permitted the service, because Abarquez and Musngi were abroad. But in any event, the judge held that the Florida statute did not apply for reasons of Florida law that are unimportant here.

The judge also rejected the service by registered mail, holding that Jackson and Moravec had failed to comply with FRCP 4(f)(2)(C)(ii) because the mail was addressed to Abarquez and Musngi’s employer rather than to them. This seems right, on the assumption that the employer is not the agent of the employees for service of process.

There is an easy answer to Jackson and Moravec’s problem …

Case of the Day: Brighton Collectibles v. Winston Brands

The case of the day is Brighton Collectibles, Inc. v. Winston Brands, Inc. (S.D. Cal. 2013). Brighton, which makes and sells women’s fashion accessories, had registered copyrights on several designs, including the “Heart Conch” jewelry design and the “Charmaine Heart” jewelry design. It sued Urban Trend (HK), Ltd., a Hong Kong company, for copyright infringement, and it served process on Urban Trend by serving the registered agent for service of process of a US affiliate, Urban Trend, LLC. Urban Trend moved to dismiss for insufficient service of process.

The judge rejected Urban Trend (HK)’s challenge to the service, in essence applying the rule of Volkswagen, though, oddly, without citing the case. Under FRCP 4(e)(1), service could be made by means prescribed by California law. California law, in turn, permits service on a corporation “by delivering a copy of the summons and the complaint … to … a general manager, or person authorized by the corporation to receive service of process.” A “general manager,” under the California precedents, is “any agent of the corporation ‘of sufficient character and rank to make it reasonably certain that the defendant will be apprised of the service made.” A domestic distributor, salesman, or advertiser for a foreign manufacturer may be a general agent “as long as the domestic entity provides the foreign entity an open channel for the regular flow of business from the foreign entity into California.” Here, although Urban Trend LLC did not sell the particular products at issue in the case, it did generally sell the Hong Kong entity’s women’s fashion products in California. (The court distinguished a colorful hypothetical in which a US subsidiary of a foreign car manufacturer was exclusively in the business of “importing koi fish”, in which case the subsidiary could not be considered the general agent of the foreign company despite the parent/subsidiary relationship). The judge reached the same conclusion under FRCP 4(h)(1)(B), which provides that as a matter of federal law, it is proper to serve a corporation by service on its “managing or general agent.” The Ninth Circuit precedent again provided for a broad construction of the term “managing or general agent”:

Despite the language of the Rule, service of process is not limited solely to officially designated officers, managing agents, or agents appointed by law for the receipt of process. The rules are to be applied in a manner that will best effectuate their purpose of giving the defendant adequate notice. Thus, the service can be made upon a representative so integrated with the organization that he will know what do do with the papers. Generally, service is sufficient when made upon an individual who stands in such a position as to render it fair, reasonable and just to imply the authority on his part to receive service. Generally, the determination of whether a given individual is a ‘managing or general agent’ depends on a factual analysis of that person’s authority within the organization.

Other factors the judge considered included the similarity of the two entities’ business, the fact that press releases described them as a single enterprise with offices in Hong Kong and California, and the fact that they share a website.

I can’t comment on the California law issues that arose in the case under FRCP 4(e). The Ninth Circuit precedent on the interpretation of FRCP 4(h)(1)(B) seems to me liberal but permissible. I would suggest, though, that in cases that depend on the Volkswagen principle—cases, that is, where service would have to be made abroad but for the fact that the court holds that the law of the forum does not require transmission of the document abroad—courts should consider whether reasons of comity or due process suggest they should give the term “managing or general agent” a narrower construction than it would have in a purely domestic case.