Iowa State House, Stephen Matthew Milligan, via Wikimedia Commons.
Iowa State House, Stephen Matthew Milligan, via Wikimedia Commons.

[Update, 2022:  For a more academic view of this issue, see William S. Dodge, Substituted Service and the Hague Service Convention, 63 Wm. & Mary L. Rev. 1485 (2022).]

Two weeks ago, I posted that you can’t simply serve a U.S. subsidiary of a foreign company & get the parent on the hook in a lawsuit.  For such an idea to work, your state’s public policy has to disregard the corporate veil.  Only one state has done so– and under very limited circumstances.  [That was Illinois, where they did it by statute– that I know of– and where the idea only pertains to Illinois subsidiaries.  That’s how we got Schlunk, the seminal case in Hague Service Convention jurisprudence.  No other state does it, that I know of.]

Another misconception seems to pop up from time to time: the thought that you can serve a foreign* corporation by delivery to the Secretary of State wherever the case is being heard because the Secretary is a statutory agent.  Sorry, but it just ain’t so.  When you do serve via the SoS, ask yourself, “what do they do with it?”

They don’t just stick it in a drawer and affirm that notice has been given.  They actually take steps to deliver the summons to the defendant.  Due Process must be observed, after all.  In that light, regardless of the venue, service must be effected via a means reasonably calculated to put the defendant on notice of a claim against him.**  The idea is to make sure that he (1) knows about it and (2) has an opportunity to refute the claims.  A summons essentially says “show up and defend this thing or we’ll take your toys away from you.”  And key to the analysis is determining when service is considered effective– at the moment of delivery to the Secretary, or when the Secretary conveys it into the defendant’s hands.  States’ views vary as to whether the conveyance is the completion of service or mere notice.

Either way, if a defendant corporation is domiciled in another U.S. jurisdiction– that is, it’s foreign in the “across State Line Road” sense– your SoS will probably just drop a notice in the mail to the corporation’s registered agent in the other state.  Usually, when a U.S. company gets any notice from a state agency, somebody is going to read it, so it’s reasonable to deem the defendant on notice and given an opportunity to defend.

But what if the defendant is foreign in the “you need a passport to go there” sense?

The SoS staff aren’t likely to forward it properly, because it’s not their duty to ensure compliance with the various doctrines of international law that govern how you undertake the procedure.

  • They’re going to forward the documents by mail, even though mail service may be prohibited, and even though it probably can’t be substantiated.
  • They aren’t going to hire a process server or a judicial officer in the foreign country.
  • They aren’t going to bear the cost of translating the documents.
  • They aren’t going to coordinate with the Clerk of Court (federal) to ensure compliance with FRCP 4(f)(2)(C)(ii).

It simply doesn’t work the way you might think it does.  [Although, if the foreign company has designated an agent for service, the SoS can certainly serve at the designated address.]

Allow me to illustrate.  Imagine you’re suing Hyundai, the Korean automaker, in federal court in the Middle District of Iowa.***  Hyundai has no registered agent in the Hawkeye State, and it obviously isn’t headquartered there, so you send the summons & complaint to the SoS in Des Moines.

What comes next?  The SoS simply jets the summons off to Hyundai’s HQ in Seoul, and you’re gleeful that it was so easy to put the defendant on notice.  Three months later, you’ve gotten no response from Hyundai, so you move for a default judgment.  (Cue ominous theme music, ’cause something bad’s about to happen.)

The judge knows that, by its own terms, the Hague Service Convention applies whenever there is “occasion to transmit” documents to another member country for service, and this is definitely such an occasion.  She also happens to read my blog, so she knows a few other things.

Korea is a member of the Convention, so certain procedures must be followed.

  • Korea objects to Article 10, so service by mail is out, and you can’t just hire a guy in Seoul to serve for you.
  • Korea requires all documents to be translated into… Korean.

But did the SoS staff know any of that?  Maybe, maybe not.  If they knew, did they tell you?  Nope.  It’s not their job to make sure you know the applicable law.

[Aside: in some states, service is considered complete upon delivery to the Secretary, and the Secretary’s forwarding constitutes “mere notice” in order to fulfill the due process requirements of Mullane.  In those few states, you’re okay.  But in the rest of the states who (in my estimation, correctly) view service as incomplete until it reaches the defendant… you’ve got problems, counsel.]

So the judge tells you to back up the truck and do it the right way– learn how to fill out a USM-94, or perhaps consult with another lawyer who lives & breathes Hague stuff in his/her daily practice (hint hint, nudge nudge).  Either way, the judge is not amused that you tried to short circuit the process.

Default motion denied.  Oh, and you whiffed Rule 4(m), too, so you’re dismissed sua sponte.

How happy is your client?

*  A bit of lexical housekeeping here…  foreign is a term of art, meaning “from outside this jurisdiction.”  California is foreign to Missouri, Quebec is foreign to Missouri, and China is foreign to Missouri.  Context is key.

**  Magic words!  See Mullane, 1950 for the source of the magic.  It’s been codified in FRCP 4(f)(1) and 4(f)(2).

*** Completely fictional, that district.  Likewise, the judge.  (It’s a hypo, for Pete’s sake.)