Brandenburg Gate, Ondřej Žváček via Wikimedia Commons.
Brandenburg Gate, Ondřej Žváček via Wikimedia Commons.

An interesting Catch-22 sometimes faces U.S. lawyers when they try to serve a complaint with punitive damages on a German defendant.  Germany’s public policy disdains punitive damages– indeed, until recently (that is, until the last couple of decades), they didn’t even conceptualize punitives in their legal thought process.  But an increase in American litigation has made the idea part of the zeitgeist, as it were.

The scenario:  lawyer files product liability suit against U.S. company and its German parent.  Suit is fairly straightforward and routine, including actual and punitive damages, no different than a garden-variety personal injury case.  Lawyer knows that she has to properly serve the German company, so she calls me or somebody like me, and we get a Hague request submitted to the appropriate German authority.  Three weeks later, a letter arrives that says “sorry, R.A.* Lukken, but we will not serve these documents because Missouri has a split-recovery statute.”

“Huh?” she and I both say in response.

I’ve seen rejections that include punitive damages, and I’ve seen requests including punitives make it through the process without a second glance.  Ted Folkman has addressed the issue many times at Letters Blogatory.  It was in connecting the dots between a Ted post and a recent split recovery rejection that I realized… in order to get around the problem, a bit of nuance illustrates why the Germans reject some, but  not all, punitive damage requests.  I leave the theoretical/jurisprudential analysis to Ted– this is about the nuts & bolts of how to get around the problem.

It is not that Germany disdains punitive damages.  Truly, such a rejection would violate the terms of the Hague Service Convention, which sets out two bases for rejection:  (1) you screwed up your paperwork,  and (2) the request somehow violates the destination state’s national sovereignty or security.  End of list.

  • “Sorry, but we think we have jurisdiction here”… not a valid basis for rejection.
  • “What you say they did?  Yeah, that’s not a bad thing, so we’re not going to serve this.”  Also not a valid basis for rejection.
  • “That company is owned by the state.”  Not technically valid, and the Germans will reluctantly serve as requested (although I’ve seen these get rejected, too).

So the “we won’t serve a complaint that includes punitive damages” is, on its face, also not a valid reason for rejection.  They will reluctantly serve those.  The question doesn’t turn so much on the scope of the verdict as on cui bono— who benefits– from it.

Who benefits from split recovery?  The state— usually to the detriment of the plaintiff and often of the lawyers who bore the cost to bring the matter to trial (bravo to Utah, which recently found split recovery unconstitutional).  This makes the civil suit seem not solely like a civil suit, but one with an element of criminal or (at least) administrative retribution to it.  And that is where foreign governments find the easiest basis to reject.  If it’s a criminal or administrative proceeding– thus leading to a fine or penalty, rather than compensation for a tort victim– it falls outside the scope of the Hague Service Convention.  Why?  Because the Convention pertains to Civil or Commercial Matters.

Simply put, in the German equation:

  1. This complaint will not only benefit the plaintiff, but the state of Missouri (or one of 9 others) as well.
  2. Such a retributive penalty falls outside the scope of a civil or commercial lawsuit.
  3. As it falls outside that scope, it also falls outside the Convention.
  4. Result: we aren’t going to serve it via the Hague procedure.**

The net result?  The nuts & bolts way around the problem?  Don’t worry about Hague channel rejection.  Don’t just jump to self-help, either, but know that with the right motion, you should be able to serve by an alternative method under the regular rules of the court.  That actually makes things easier in some cases.

Just make sure you have a plan for enforcing the judgment down the road.

*  R.A. stands for Rechtsanwalt— attorney– and lawyers are addressed as such.  In fact, we’re addressed formally in lots of places.  (R.A. stood for Resident Assistant during my sophomore year in college, but that was long ago and far away.)

** Egypt, historically, has rejected service requests for divorce petitions on similar grounds, determining that divorce is a family and religious law issue rather than a civil one.  We make no such distinction, but they do.  Since the fall of the Mubarak regime, Egypt’s judiciary has waffled a bit– and has allowed a few dissolutions to get through.