Aaron's Rants

Subscribe to Aaron's Rants
This guy *still* can’t serve for you in China.  Even if a contract says so. (Chengsbroethers, via Wikimedia Commons.)

An interesting case popped up on my newsfeed this afternoon (hat tip to Hwan Kim, writing for Sheppard Mullins’ Construction and Infrastructure Law Blog): Rockefeller Technology Investments (Asia) VII v. Changzhou SinoType Technology Co., Ltd., handed down by the Second District, California Court of Appeals.  The parties, one an American company, the other Chinese, had agreed in their contract that in the event of a dispute they would accept service by FedEx.

Oops.

You already know how this is going to go.  A dispute arises, the Yanks use FedEx to send process to the Chinese defendant, the Chinese don’t answer, the Yanks get a default, hilarity ensues.

Except there’s nothing funny about it.  Right now, the Chinese Central Authority is taking well over a year to serve defendants pursuant to a Hague Service Convention request.  But you can’t just use FedEx because it’s quick & expedient and the package absolutely, positively needs to get there overnight needs to get there in fewer than three weeks.  The Court of Appeals got it right; using FedEx was manifestly wrong given China’s objection to Article 10(a).  And if you dig even deeper, that’s because a Chinese party lacks the capacity to accept process that isn’t served by a Chinese court official.

What the drafting attorneys didn’t realize is that you simply can’t do it by mail– the Hague Service Convention controls, and the “postal channels” option is only allowable where the destination country doesn’t object.  More likely, the Chinese company’s lawyers knew exactly what was going on, and the U.S. party’s attorneys were unfamiliar with the Chinese government’s declarations to the Convention (they object!).

To be blunt…

No, Article 10 doesn’t give you an out in China.

Two thoughts come to mind— two easy methods which I’ve addressed before, multiple times, and which would have prevented this fiasco and saved everybody a whole lot of heartache– except the Chinese defendant:

1.  Designate an agent for service.

Addressed initially in Five Essential Things… and later, elaborated on in the aptly titled Five Essential Things– Elaborated, Part 1: Service Agent.

Had the contract directed service to the Chinese party’s counsel or other appointed representative in the United States, there’s no occasion to transmit the documents abroad, so the Convention would not apply.  Those are the magic words straight out of Article 1.*  It’s perfectly legal; in fact, it’s the whole bleepin’ point to registered agents.  And it’s easy, too.  Look no further than Dover, Delaware, where you can’t throw a rock without hitting a registered agent of one sort or another.

Sure, this may be a challenge, depending on the foreign party (a challenge getting them to agree, that is).  But it would avoid the jurisprudential problems that the Rockefeller Tech agreement ran into.

2.  Contractually agree to waive service.

Addressed in “Waive” vs. “Accept” service… massive difference, addressed in Serving Overseas: The Carrot and Stick of Waiver.

There really is a massive difference between the two ideas– and in federal court, defendants are required to waive, even if they’re overseas.**  Again, if the offshore defendant waives, then there’s no occasion to transmit the documents abroad; magic words again, Hague inapplicable.

Sure, you’ll probably have to duke it out over the refusal to waive, and thus will probably have to serve anyway, but at least it’s better than flying blind.

In short, don’t throw that “we agree to accept service by FedEx” clause into a contract when you can’t reasonably predict that it’ll be enforced.

* As the Rockefeller Technology court points out,”(the present Convention shall apply in) all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad.”  Pretty straightforward, and the heart of the seminal case in Hague Service Convention doctrine, Volkswagenwerk Aktiengesellschaft v. Schlunk.

** Rule 4(d)(1):  “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.”  Lest ye rely on 4(d)(2) to refute that idea, recognize that 4(d)(2) is about mandatory fee shifting, which only applies to domestics.  The tricky detail of 4(d)(1) is that it specifically mentions 4(f), which only applies to service abroad.

(Public Domain, courtesy Jayess, via Wikimedia Commons.)

My family is populated on both sides by blue-collar workers and farmers, going way back to the Old Country (ie: various parts of northern Europe).  Part of the ethos I gained from all four of my grandparents is “fix the damned thing yourself.”

Put another way, if that doo-hickey is so complicated that you need to hire somebody to fix it for you, you don’t need it that badly.  As a result, our houses have historically been a mishmash of DIY plumbing, wiring, plastering, and various code violations.  We never hired a plumber at $100 an hour– we just fixed the damned thing ourselves.  Or we called the old man (my maternal grandfather, Clyde*) and he fixed it.  But the old man wasn’t concerned with aesthetics.  Or efficiency.

Although we saved a few bucks in the process, we wasted a whole bunch of time and created a whole bunch of ugly-but-functional physical plant.  “Does it work?” and “did you save a buck?” trumped other considerations like “is it efficient?” or “could your time have been better spent elsewhere?”

Going way back to the Old Country, my family didn’t have much choice.  Saving a buck was critical to having food on the table– and we hated having to take the government cheese, although it made better sandwiches than the expensive stuff.**

As I started practicing law, I began to recognize the wisdom in hiring someone else to do the job.  I now hire plumbers and drywall guys and painters– not because I don’t know how to do those things.  I hire them because I don’t do them well, because it takes me six times as long to produce functional-but-ugly, and because I bill more than they do, so it just makes sense.  When I vary from that practice, bad things happen.  Peggy and I needed a new kitchen faucet earlier this winter.  Simple stuff, putting in a faucet, so off to Sutherland’s we go.  This ain’t rocket science, we said.  And it’s true.  Putting the thing in took all of twenty minutes.

Getting the old one out took two hours.  Had it been done by a pro, it would have cost me about twenty minutes of billable time.  I should have adhered to the theory and outsourced it.

An interesting article popped up in my newsfeed from the Business Journal a few weeks ago.  Jim Blasingame laid out a simple three-question test to determine whether a particular task or process ought to be outsourced…

Blasingame’s Outsourcing Power Question: Must this task be done in-house? 

The answer will come from these three questions:

  1.  How much control do we lose, and can we live with it?

  2.  What impact will our decision have on customers?

  3.  How much of not using outsourcing is about ego?

Now, I’m biased here, but I think much of what makes a law firm run should be farmed out.  IT, translation, investigation & process service, appellate work, accounting & billing, coffee service.  Those processes do require that a lawyer cede some control.  But they can have a huge positive impact on a client’s checkbook– efficiency does that naturally.

Far be it for me to ever challenge anybody’s ego.  I’m a lawyer.  All of my clients are lawyers.  And although we may not all have massive, outsized, bigger-than-life egos… it’s a rebuttable presumption.  And I’ll presume that much of the hesitation lawyers feel about outsourcing is as much about ego as about fear.  (Fear?  Yes.  Fear of a malpractice suit or disbarment.)

But we get a whole bunch of functional-but-ugly if we don’t call in some help– and functional-but-ugly is usually pretty inefficient.

* Clyde was an Air Force fighter jet mechanic in the early 1950s, and joined the union at the Sioux City Stockyards the same day he met a young U.S. Senator named John F. Kennedy.  I never saw a piece of machinery he couldn’t fix, and he could tune up a Ford truck engine so well that it would sing Puccini arias– it just wouldn’t look pretty.  Regardless, I did not inherit this talent.

** For the uninitiated, the USDA gave away surplus food decades ago– the chief give-away being in the form of processed American cheese.  It benefited struggling farmers, it benefited poor and working class families who’d fallen on hard times, and it gave conservatives a huge political punching bag.  But I gotta tell you, there has never been a better grilled cheese sandwich than the ones we made with day old bread from the Metz Baking thrift store, a couple of slices of government cheese, and the surplus butter that came with it.

NASA photo.

A huge segment of the legal community thinks that international law equals immigration law.  My local bar association even conflates the two ideas in its committee structure, which is so baffling that both the international lawyers and the immigration lawyers in town have given up trying to convince everybody else.  It staggers the imagination that a profession so concerned with precise language can’t see the distinction.

When somebody asks me about my specialty,* I tell them that I handle “anything that crosses a border.”  Naturally, they respond with “oh, great, I have a neighbor whose cousin’s housekeeper is being deported– I’ll send her your way.”

No.  Just… no.

So now, I always follow “anything that crosses a border” with a clarification: “paper– not people.”

Technically, I don’t practice in International Law– what I handle is Transnational, but I’ve abandoned the fight on that distinction.  The point is, I don’t handle immigration.  But I have a whole bunch of friends– spectacularly talented advocates– who do handle immigration, and I wouldn’t want to touch their specialty with a ten-foot pole.**

Even at that, it cannot be said that there’s such a thing as “immigration law”.  As I found out recently, it’s a bifurcated discipline, so it’s critical to identify the client in order to determine which kind of immigration law the attoney handles:

  • Business immigration lawyers serve business clients.  When they apply for an H1B visa, it’s on behalf of the employer– not the immigrant.
  • Individual & family immigration attorneys serve individual immigrants & their families– and even then, there are sub-specialties.

What I do is outward looking– cases originating here in the U.S. and Canada, dispatching procedural issues abroad.  I cannot prevent your neighbor’s cousin’s housekeeper’s deportation.

* Acknowledging that the words “specialty” and “specialize” get lawyers into trouble with their respective disciplinary authorities, I contend that such trouble is unwarranted.  If a guy says he specializes in traffic law, but doesn’t know how to plead down his wife’s speeding ticket in Kansas City Municipal, then they should get him on misrepresentation and false advertising.  Don’t smack down a family law attorney who says she specializes in divorce and custody disputes when she actually does so.  The simple linguistic fact is that we do specialize.  We have to.  Lawyers who don’t specialize are dead in the marketplace– a jack of all trades is a master of none, and clients need mastery.  Don’t ever come to me with a complex tax question or an estate planning issue or criminal defense matter (et cetera) unless there’s a cross-border element to it.  Even then, I’m a support guy– not primary counsel.

** One sub-specialty that skirts what I do:  refugee & asylum law– an area to be described later, in a different post.  But it’s only a very small portion of the immigration universe.