(Hat tip to Ted Folkman, for whom Gurung v. Molhatra is a White Whale. This issue is one of mine, for similarly frustrating reasons.)

Remember that legal analysis hierarchy they told us about as 1L’s? In order of authority:

  • Constitution
  • Statutes
  • Rules promulgated pursuant to statute
  • Precedent (binding and then persuasive, giving obiter dicta less weight than ratio decidendi*)
  • (if the text of any statute or rule is ambiguous) Legislative History

Well, that’s the basis for today’s rant.

A takeaway I gleaned not long ago from The Secret Barrister (which I highly recommend) is this: yes, yes, legislatures make statutes, but courts feel an irresistible, instinctive need to put their own gloss on the text. While it’s critical for courts to fill in legislative gaps, that can a recipe for trouble, and that trouble is alive and well in at least one area of my practice.

My legal writing professor (who saved my career from oblivion) hammered into our brains that we should always go to the source for legal analysis. Don’t just look to case law– go the the statute or rule itself. Why? Because precedents may be out of date, Shepard’s may not catch critical changes in the law, and courts sometimes get it flat-out wrong. When they do, they spawn a line of cases that make matters worse. So here we go with a rant on one such ridiculous line.

Rule 4(d)(1) waiver obligation

Fed. R. Civ. P. 4(d)(1) obliges defendants to waive service. All of them, with the notable exception of governments and their agencies and instrumentalities. This is beyond contestation.

Verbatim:

(1) Requesting a Waiver. An individual, corporation, or association that is subject to service under Rule 4(e), (f), or (h) has a duty to avoid unnecessary expenses of serving the summons.

When you’re suing an offshore individual or entity (other than a government defendant), the defendant is obliged to waive, period.

But back to that gloss that courts feel the need to slather onto the words of various drafters. Here’s where the fun really begins.

Sometimes dicta is a problem child. It’s definitely a problem child when it is neither analyzed, explained, or sensical. I give you the following sentence– dictum, to be sure– from O’Rourke Bros. Inc. v. Nesbitt Burns, Inc. 201 F.3d 948, 951 (7th Cir.2000):

Rule 4(d)(2) provides foreign defendants the ability to waive service but exempts them from costs for a failure to execute the waiver.

Seems pretty straightforward, no?

Well, no, it’s not. For one thing, the ratio decidendi (okay, it’s a fancy word for holding) of O’Rourke Bros. wasn’t even about a 4(d) waiver– it was about a Rule 60 motion to overturn a dismissal. But more importantly, the sentence is manifestly incorrect. The simple fact is, 4(d)(2) doesn’t provide “the ability to waive”– 4(d)(1) mandates the waiver. Rule 4(d)(2) also doesn’t exempt anything.

The Rule 4(d)(2) fee shifting provision

Here’s 4(d)(2), verbatim and in its entirety:

Failure to Waive. If a defendant located within the United States fails, without good cause, to sign and return a waiver requested by a plaintiff located within the United States, the court must impose on the defendant: (A) the expenses later incurred in making service; and (B) the reasonable expenses, including attorney’s fees, of any motion required to collect those service expenses.

Anybody see the word “exempt” there? Anybody see the words “but not if…” or “unless”? Am I the only one who can’t see any reference to non-U.S. defendants whatsoever?

Hmmm. Curious. There is not a single word in that rule pertaining to naughty foreigners. As it turns out, the original 1989 draft of 4(d)(2) didn’t distinguish based on where a defendant was subject to service. It just said that if a defendant didn’t have a good reason for not waiving, the court had to shift costs to him/her/it.

Pretty simple, and pretty reasonable, too, if you ask me.

This was not the view taken by the Court of St. James, whose diplomatic legation threw a hissy fit, objecting to such an affront to the sovereignty of Her Majesty and the freedom of her subjects. The drafting committee didn’t want to have the fight, so they punted.** (Sure, I exaggerate, but still– the last time we let the Court of St. James tell us how to write our rules, a bunch of guys dumped a shipload of tea into Boston Harbor.)

Getting back to that hierarchy… courts should only look to advisory committee notes and legislative history if there’s ambiguity in the rule or statutory text. And there is no ambiguity whatsoever in Rule 4(d)(2). It is a command: thou shalt shift fees onto naughty Americans. It says nary a word about what happens (or doesn’t happen) beyond our shores.

So my question: did the drafters just want to shut the Brits up and make them go away? (I thought we did that at Yorktown in 1781, but still…) Or did they seriously intend to prohibit fee shifting– in which case, why not remove the clear obligation in 4(d)(1)? Recall that defendants subject to service under 4(f) and 4(h)– so, individuals and entities in foreign countries– are obliged. The drafters left that language intact.

Advisory Committee Notes in Conflict

Even at that, the Advisory Committee notes paint a rather interesting picture– a conflicting picture if ever there was one. Regarding the obligation:

The rule operates to impose upon the defendant those costs that could have been avoided if the defendant had cooperated reasonably in the manner prescribed. This device is useful in dealing with defendants who are furtive, who reside in places not easily reached by process servers, or who are outside the United States and can be served only at substantial and unnecessary expense. Illustratively, there is no useful purpose achieved by requiring a plaintiff to comply with all the formalities of service in a foreign country, including costs of translation, when suing a defendant manufacturer, fluent in English, whose products are widely distributed in the United States.

(Emphasis added. I disagree that there’s no useful purpose in it– my stockbroker makes very nice commissions thanks to it. But I digress.)

Continuing:

The opportunity for waiver has distinct advantages to a foreign defendant. By waiving service, the defendant can reduce the costs that may ultimately be taxed against it if unsuccessful in the lawsuit, including the sometimes substantial expense of translation that may be wholly unnecessary for defendants fluent in English.

(Emphasis added.)

Yet regarding fee shifting:

Nor are there any adverse consequences to a foreign defendant, since the provisions for shifting the expense of service to a defendant that declines to waive service apply only if the plaintiff and defendant are both located in the United States.

Um, huh?

On one hand, there’s no useful purpose in making the plaintiff shell out healthy four- or five- (I’ve even seen six!) figures to serve a foreign defendant– and those costs may impliedly be taxed against the defendant anyway– yet there are no adverse consequences to being furtive? Are you kidding me?

Remember the old adage that a camel is a horse designed by a committee? Well, this set of Notes is what we get when one committee member doesn’t know what another committee member is saying.

Mercifully, in that 1L hierarchy, the Notes don’t constitute law, and they only have bearing where the law is ambiguous.

Fee shifting to recalcitrant offshore defendants is not prohibited by 4(d)(2). It’s discretionary, and well within the court’s inherent authority to enforce obligations.

O’Rourke Bros. should be overturned. Or at least, its dunderheaded dictum should be disregarded.


* Yes, I like Latin.

** For a more thorough rundown– and criticism– of the rule drafting story, see Brockmeyer v. May, 383 F.3d 798, 807-808 (9th Cir. 2004).