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.