Every once in a while, a colleague will call me with a story similar to this one:
“A client just walked into my office three days ago with what looks to be a rock-solid case. We can establish duty, breach, causation, and damages* without a whole lot of difficulty, but the defendants are in Beijing and Toronto. The statute of limitation runs next week, so we’ve GOT to get them served before then or we’re out of luck.”
Relax, I say. Continue Reading Time to file versus time to serve
[UPDATE, May 3, 2019… The tsunami now begins. Title III of the Helms-Burton Act has been implemented.]
With all the fanfare this month over the government shutdown and the Kansas City Chiefs’ coin-toss defeat in the AFC Championship, a little-noticed story out of the Trump Administration could prompt a tsunami of litigation (yeah, I’ve wanted to use that expression for a while now) against offshore companies doing business with Cuba. I withhold comment here about the broader ramifications of such suits,* but an important element of the puzzle lies squarely within my wheelhouse, and it bears discussion.
Title III of the Helms-Burton Act (HBA) allows U.S. litigants whose Cuban property was expropriated following the 1959 Revolution– for the most part native Cubans who’ve emigrated north– to sue entities who have profited from that expropriated property. An example: let’s say “Autohersteller GmbH“, a fictional German carmaker, wants to develop a parts plant outside Havana, and the Cuban state grants a 99-year lease to the land on which they build it. Prior to 1959, the plot of land was owned by a group of citizens loyal to President Fulgencio Batista; after his overthrow, the Castro government seized the land and title thereto.
Sixty years later, those citizens and their kids now live in Fort Lauderdale, and if the Trump Administration reverses a quarter-century of waivers, they’ll be marching into the United States District Court for the Southern District of Florida and filing suit. Not against the Cuban government– there’s no realistic mechanism for that.**
Instead, they’ll be suing Autohersteller GmbH for damages under Helms-Burton. Again, set aside any discussion of the practical impacts of the statute; but recognize that the only proper way to serve that company in Germany is by filing a Hague Service Request. HBA establishes a cause of action (and, necessarily, jurisdiction) but does not override the procedural rules applicable to serving overseas defendants. It does not supersede the mandatory and exclusive nature of the Hague Service Convention. And it does not dispense with the defendants’ due process right to proper notice.
Plaintiffs, do it the right way, and remove at least one obstacle to an eventual verdict.
* Just Google “Helms-Burton III” to see much debate on the issue. It’s a doozy.
** Cuba is not party to the Hague Service Convention, and it’s highly doubtful that Cuban courts would entertain Letters Rogatory in such a case anyway. Service can still be effected by diplomatic note under the Foreign Sovereign Immunities Act, but the Cuban government may have a pretty compelling argument against jurisdiction under customary international law. Regardless, they would have to be served in order for that discussion to ripen.
Pardon the very esoteric pun. For the uninitiated, see here. You know the tune. But most of us Yanks don’t know the words:
Bear with me here. From time to time, a problem will come across my desk that is simply baffling. And frustrating. American lawyers still occasionally fail to inquire about the proper procedure to serve an overseas defendant, preferring to simply do it the way they do it around home. But it doesn’t work that way. France governs how to serve process in France. China dictates how to serve process in China. And Britannia rules the ways a defendant can be served in Britannia. (I’ll move on to an illustration.)
Billy Bob Baggins, an attorney in Bree, Missouri (the county seat of Eriador County), has the idea that, well, his case is being heard in the District Court for the 236th Judicial District of Missouri, so the Missouri Code of Civil Procedure* governs the manner in which a defendant must be served. The MCCP says you should serve an out-of-state defendant by affixing a copy of the summons and petition to the door of his residence with blue masking tape (not red, not white, not battleship gray… blue).
When Billy Bob finds out his defendant, Jimmy Aragorn, is a Rhodes Scholar living in Oxford, England, he gets on the internet and finds the yellow pages for Oxford. He finds a fellow he likes and instructs the fellow to print off the documents and take them to the defendant’s address, St. Edmund Hall, Queen’s Lane, Oxford OX1 4AR. The process server knows full well that this situation is pretty silly– St. Edmund Hall is one of the colleges of Oxford University, and it houses well over a thousand students. All of them have the same address– and they’re cloistered, protected by a security guard that isn’t about to let just anybody in the gate. –>
Despite the silliness, having been denied entrance to the college by the guard in the porter’s lodge (yeah, they still have those in Oxford), the process server dutifully pulls out the roll of blue masking tape he picked up at the Boot’s on High Street, and plasters the papers to the door of the porter’s lodge, with Jimmy’s name in big block letters on the front.
SUCCESS, he reports to the Missouri lawyer. Tally ho, good chap… proceed with the hunt. That’ll be a few hundred quid.
But it’s all for naught.
See, serving process in England is governed by the Hague Service Convention. The Convention– and the seminal case regarding the Convention, Volkswagenwerk Aktiengesellschaft v. Schlunk (1988)– requires deference to the law of the location where a defendant is served. And that requires plaintiff’s counsel to not only read the treaty, but also the destination country’s declarations thereto.
The law of the forum doesn’t apply. And why? Because the Supremacy Clause says so.
This is disconcerting to the judges of Missouri’s 236th Judicial District, because they keep their dockets moving like a well-oiled machine (really, they do!) and they don’t need some prissy Brit telling them how to run their courtroom. Their ire is to no avail, because the U.K. has made pretty clear that American lawyers are welcome to hire a private process server– they just have to make sure the process server is instructed by a solicitor. Their rules also require a bit more respect for due process than the blue tape method would provide. College students are college students, so this particular defendant’s summons has a life expectancy of about thirty-eight seconds once a group of undergrads sees it on their way home from the Eagle & Child.** In short, Jimmy never gets actual notice, and English law isn’t respected, so Billy Bob, back home in Bree, is out of luck. The service he thought was solid, really isn’t.
Pity there isn’t a search engine that could guide him to the right way.
* Okay, so I tweaked the terms a bit. We have trial court circuits in Missouri, not districts. And our Rules of Civil Procedure aren’t referred to as a “Code”, so this MCCP is purely fictional.
** St. Edmund Hall, or “Teddy Hall” to those in the know, is the site of UMKC’s annual summer CLE Abroad program on English Law. A heck of a nice way to spend two weeks in August. The Hall sits less than a mile from The Eagle & Child— reputedly, J.R.R. Tolkien’s favorite pub, where he invented Hobbits and Orcs over several pints with C.S. Lewis.
A client emailed me the other day, asking how to serve a foreign defendant. A pretty common occurrence that prompts either a “take a look at this blog” reply or a short & sweet rundown on what they need to do. It comes up pretty regularly, and there’s really no good answer for it: how do you best serve a defendant that isn’t in a Hague country?
The answer that I quickly dashed off … “forgive the law school answer here, but it depends“, followed by some brief detail. One of the double-edged swords of the Hague Service Convention is that (on one hand) it provides certain, specific avenues to service, but it also (on the other hand) frequently limits those avenues. Sure, a considered analysis is needed for serving defendants in England, France, and Canada. But Mexico, China, and India… there’s one way to do it—period.
But what of those non-Hague places? Well, a whole bunch of important questions will determine how to best serve. For the purpose of illustration, let’s say your defendant is in the SIJORI Growth Triangle—an industrial compact of sorts, between Singapore, Malaysia, and Indonesia. I pick that area because it’s seen a massive growth rate in recent years, and because all three countries two of them lie outside Hague (update: Singapore joined in 2023). Let’s also say you’re in federal court, just for the sake of a simpler illustration. Rule 4(f) will govern how you serve regardless of the defendant’s overseas location.
It should be apparent that there isn’t an easy answer to the question, so the SIJORI defendant– whether in Singapore or Malaysia or Indonesia– necessitates some analysis. To be sure, this isn’t an exhaustive list—but the ultimate point is that if the defendant doesn’t have accessible assets, you will have to enforce the judgment abroad, so that procedure should always be foremost in your mind when deciding how to serve.
“Just mail it” could be the worst thing you can do. [Oh, and if you do decide to mail it, do it the right way!]
As if the earth-shattering scandal surrounding Volkswagen’s EPA “defeat device” were old news, we have become accustomed to story after story of the company’s wrongdoing. When the spotlight was cast on VW subsidiary Audi earlier this year, the story didn’t make many waves, seemingly because it was expected. If the parent did it, why not the sub, too?
Next, we learned that yet another European conglomerate sought to defraud U.S. environmental regulators. Fiat Chrysler Automobiles, N.V. (FCA) was also caught in the proverbial net, with perhaps more to follow.
Of course, the litigation floodgates opened, with suits brought by consumers and state attorneys-general across the United States. Unfair and deceptive marketing practices, specific violations of merchandising practices statutes, conspiracy, pervasive fraud…
Last week, a newly-released study alleged that the hub of the wheel in the whole scandal was Robert Bosch GmbH*, the massive German engineering & electronics firm. According to researchers at UC-San Diego and Ruhr University-Bochum, Bosch wrote the code that got the automakers around EPA testing and allowed them to achieve better scores on emissions tests than more scrupulous competitors. The thought that such a highly respected company would undertake such a massive campaign of underhandedness makes American car-buyers wonder who else was involved. And so the lawsuits come.
This poses specific, though not insurmountable, challenges to plaintiffs’ lawyers across the country. All three automakers, as well as Bosch, are chartered and domiciled in nations that are party to the Hague Service Convention. When they are sued in U.S. courts, service of process must be effected according to very specific guidelines mapped out in the Convention, or the effort to bring suit is a colossal waste of time.
In the case of FCA (now the parent company of Chrysler), the best way to go is pretty straightforward: serve in England, even though it’s originally an Italian company now chartered in the Netherlands. Fiat’s head office is in London.
As for the others—VW, Audi, Bosch—it’s Germany. All Germany, all the time. And folks over there are very particular about the application of the Hague Service Convention. Simply put, folks, ain’t but one way to do it. At least, ain’t but one way to do it right. And that’s the key.
Specifics on How to Serve Process in Germany can be found here. It’s a fairly regular procedure, but the machine has lots of intricate and finely tuned moving parts. Be meticulous about it.
* GmbH in Germany = LLC in the United States. [Whereas N.V., the entity type selected by the creators of Fiat Chrysler, is a Dutch corporation. A great Wiki defines just about any foreign type of entity you can imagine.]
You’ve served the complaint on all of your defendants, they’ve entered their appearances, and everybody is girded up for battle. Discovery commences. In one of your depositions, you learn that one of the defendants was somehow selling a knock-off of your client’s product in Europe through a British distributor, and you are convinced that somewhere in that company’s vast filing system lies the smoking gun.
[The author intones, as if in a Gregorian chant…]
For you, glorious and gentle counselor, have preached the gospel of truth. You have spoken the word! Echoing the wisdom of Moses, Hammurabi, Augustine… James Brown.
[You’re getting a bit of a big head, don’t you think?]
You implore your fellow pilgrims to create an epistle of truth for the ages!
Alrighty, then. You tell your paralegal to draft a subpoena, and you tell her to run a Google search to find out how to serve that thing on the British company at its office in Berkshire. She puts together the subpoena in about twenty minutes, and comes back to you with the name of a guy who says he handles process service in other countries.
Outstanding, you think, and off to the mission field you go. You plunk down $1,000 to have Joe Bob the Process Server to pull the paperwork together, and then you wait.
Three months later, you get a nasty-gram from the a solicitor in London, telling you that “oh, sorry, dear boy. Quite bad form. You’ve blundered the whole thing.” [That’s nasty in English legal circles. And it’s funnier if you read it in Hugh Grant’s voice. It’s nastier if you read in Ralph Fiennes’ voice… as Voldemort.]
Where did the wheels fall off?
So, let’s tee this up again, and try a more subtle approach to getting the smoking gun you so gleefully seek.
Here are the THREE CARDINAL RULES for Hague Evidence Requests (condensed from this):
Give me a shout if any of this doesn’t make sense. Enough said.
Just hope the custodian of documents isn’t this guy–>
No, really, this guy is a twit. And apparently, he now fancies himself a rock star. Sheesh.
[I enjoyed the original British version of The Office far more than the successful American version. Both make you want to cringe, but David Brent was simply funnier than Michael Scott.]
I hate to be the guy who breaks this to you, I said to the client, but there is no chance that you’ll be able to get that notice of hearing served in time. Not properly, anyway.
Poor fellow was a first-year associate, trying to get a notice of a guardianship hearing served on an absent father. The judge insisted that he have the guy served personally. By Tuesday. “So, please get this done for us.”
The problem: absent father is in the People’s Republic of China.
Sorry, I said. It can’t be done. The Hague Service Convention has to be observed, and when you’re serving in China, that means a request to the government in Beijing (same as in Mexico or Germany or Switzerland or India). That’ll take months to get through—not hours or days like we’ve come to expect in America.
“Okay,” he said. “Let me go talk to the partner running the case.”
The story took an unexpected turn when he called me a half hour later to say “the partner told me that you just need to hire a Chinese courier to do it & then send an affidavit. So can you get it done?”
Oh, where to begin?
For starters, and setting aside the mandatory nature of the Hague Service Convention, China is not a common law country—Hong Kong S.A.R. excepted—and they prohibit service by anybody but judicial officers (this is a characteristic of civil law jurisdictions). If a courier tried to do what the partner wanted, the courier would be subject to criminal penalties under Chinese law. You can’t just usurp the government’s authority and walk away clean in such a situation.
If this thing is going to be properly served, we have to file a Hague Request.
The junior associate’s response: “No, you don’t. The partner says that because the father isn’t a party to the case, we can serve him ‘normally.’ The Hague Service Convention only applies to process.”
Process? Just have the partner call me, wouldja? He didn’t. And he probably won’t, which is too bad for his client. And his malpractice carrier.
Normally?! Does he mean that in China they don’t do things normally?
Folks, this is a massive misconstruction of the Convention, and one I had heard of before, but hadn’t seen actually in play. To be sure, there is caselaw out there that distinguishes between process and other notification in a Hague context, and those cases hold that Hague strictures don’t apply unless process is being served.* But those holdings are wrong– or at least arguable– and you don’t want to be the fellow on the losing end when they get overturned. That’s expensive and unnecessary. My reasoning…
The word “process” doesn’t even appear in the text (seriously, click here and run a word search on the page). It doesn’t delve into jurisdictional questions, which is a very big deal if something deals only with process. In fact, the only mention of jurisdiction in the entire treaty is the flat denial of jurisdiction as a basis for a country’s refusal to serve.
The name of the treaty is the Convention on the Service Abroad of Judicial and Extrajudicial Documents, not the Convention on Service of Process. And it applies to just about any sort of court-related document you can think of, if that document must be served.**
Bottom line, if the thing has to be served, then you have to observe Hague Service Convention procedures wherever the Convention applies.
Says who? Says this lady:
* It isn’t completely unreasonable to conclude what my prospective client did. Ted Folkman points to dicta from the Schlunk decision as a basis for arguing that the HSC does only apply to process. He’s a whole lot more diplomatic than I am– although he disagrees with the Hyundai decision he described back in 2012 and in his excellent follow-up column last month (for an even more thorough discussion, see Ted’s chapter in the latest ABA deskbook, International Aspects of U.S. Litigation). Ted calls it a difficult question, but I see it as pretty straightforward, and Ted’s been at it a whole lot longer than I have. Still, the Hyundai court bungled it. You don’t start parsing legislative history and its parallel language to determine intent when there’s no ambiguity in the very text you’re working in. The HSC is unambiguous– it applies to service. Rule 4 requires service. Rule 5 requires service. If the document has to be transmitted to another Hague member country for service, the Convention applies. Full stop.
** One huge exception to “just about any sort of court-related document”: subpoenas. You can’t just serve them abroad and expect a third-party (aside from a U.S. national) to show up. Full stop. For my reasoning on that issue, see here.
[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?”
Continue Reading You Can’t Simply Serve the Secretary of State
Much has been made lately of the Volkswagen “defeat device” scandal, and it seems to now encompass Audi as well. For the uninitiated, the un-refuted story is that VW programmed its diesel vehicles to perform differently under EPA testing conditions that they would in the real world, on actual roads while driven by actual people. Better EPA rating, higher sales, but no benefit to the environment. A whole bunch of people thought they were buying a greener car, but they were being duped. When the story broke, all hell broke loose with it, and the Volkswagen name was severely tarnished, maybe never to recover its former reputation. Lawsuits piled up, and the company took great pains to diffuse the damage.
Last week, German investigators went after the company’s Audi subsidiary, and searched the sub’s Ingolstadt headquarters for evidence that Audi, too, was part of the scheme to defraud the EPA. To be sure, Audi suits are sure to come as well, even as claims against Volkswagen mount. Very likely, the parent is likely to be named in suits against the subsidiary, and it thus becomes crucial for plaintiffs to serve process in a meticulous manner.
Regardless of which company is on the hook, the Hague Service Convention fully controls how notice is officially given to the defendants in Germany. There is but one proper avenue to service in Germany (described here), and FedEx ain’t it, so don’t even try it.
Know, too, that you cannot simply serve Audi and assume that Volkswagen will show up to defend. You’ll need two separate Hague requests sent to two separate Central Authorities– one in Lower Saxony and the other in Bavaria (don’t forget to translate!). And you’ll need to wait a couple of months until proof comes back. The Germans are pretty quick compared to the rest of the world, but measure the response time with a calendar– not a clock.
[UPDATE, April 21, 2019… National Security Advisor Jonathan Bolton on Wednesday announced the Trump Administration’s decision to implement Title III: “Americans who have had their private and hard-earned property stolen in Cuba will finally be allowed to sue,” as quoted by the BBC and described further by the Miami Herald. Accordingly, the tsunami now begins.]
[UPDATE: A mere four hours after this post went live, the Miami Herald published a story asserting that Secretary Kerry notified Congress on January 4th of President Obama’s intent to suspend Helms-Burton actions for another six months. The suspension, it seems, took effect on the 19th, but I cannot find any other verification that the suspension indeed happened. The State Department website is utterly mute on the subject. That said, President Trump may yet rescind the suspension as part of the Administration’s wholesale review of Cuba policy. Stay tuned here for more information as it comes out.]
Subchapter III of the Helms-Burton Act (22 U.S. Code § 6081 et seq., 1995) provides a private cause of action for parties whose property was expropriated by the Cuban government following the Castro Revolution in 1959. To be sure, the Cuban government is not the defendant. Rather, foreign persons who have profited from the expropriation are subject to suit.
A hypothetical, to illustrate: say the Hernandez* family has owned land in Cuba since 1898. After the 1959 Revolution, the land is seized by the Castro government, and the family flees to the U.S. Thirty years on, the land is given by the Castro government to Petróleos de Venezuela S.A., the Venezuelan national oil company, who builds a refinery on the land. (You may be more familiar with Citgo, the U.S. oil conglomerate which is owned by PDVSA.)
Under Helms-Burton, the Hernandez heirs have a statutory claim against PDVSA for its profits from that land, and if they can get the case into court, they can collect damages. But the Act is subject to suspension every six months by the President, and since 1995, they haven’t been able to get into court.
Obama. The Donald Trump Administration, however, has not issued a suspension, so the door is currently open to the cause of action.
Aggrieved owners of Cuban property—like the hypothetical Hernandez family—may now file suits against the various individuals and companies around the world who have benefited from the expropriations.
But contrary to a quick read of Helms-Burton, there is no special method of serving the defendants, no matter where they may be. Rule 4(f) still controls the manner, but it is affected by two other pieces of federal law: the Foreign Sovereign Immunities Act (FSIA) and the Hague Service Convention (HSC).**
Rule 4 provides the general framework for service of process in federal actions. Helms-Burton does not effect its structure. Of greatest import is 4(f)(1), which specifically names the Hague Service Convention as the appropriate channel to serve a defendant in another Hague country. Frankly, this tacitly codifies the 1988 Schlunk decision, in which Justice O’Connor and eight of her colleagues (do the math there) mandate such Hague application. Even more frankly, the language of 4(f)(1) does not go far enough to reflect the Convention’s mandatory character. But that doesn’t mean it goes away.
Foreign Sovereign Immunities Act
The service provisions of 28 U.S.C. §1608 provide a hierarchy of steps necessary to serve foreign governments and their instrumentalities.*** This code section, too, refers to the HSC, though not by name, in requiring service “in accordance with an applicable international convention on service of judicial documents”. 1608(a)(2) and 1608(b)(2). Again, under Schlunk, the HSC is mandatory where it applies, so FSIA doesn’t have any real effect.
There’s really not much to say here. If the Convention applies, follow it—neither Helms-Burton nor the FSIA purport to abrogate it.
In our hypothetical, PDVSA must be served via the Central Authority (yeah, good luck with that) or by a Venezuelan judicial officer (a bit more likely , but still doubtful). That’s it. You can’t mail it, because Venezuela specifically objects to HSC Article 10(a). You can’t send a guy to the general counsel’s office because they don’t define the terms of 10(b) or 10(c)—you have to approach the matter as if the action is filed in a Venezuelan court.
Elsewhere, be it in China or Vietnam or Russia or other countries that have historically enjoyed good relations with Cuba since 1959, Hague doctrines must be observed. As you might expect, this means different things in different jurisdictions. (Give us a shout to discern those different things.)
* The name Hernandez is chosen here solely for illustrative purposes, owing to its commonality among Cubans. This doesn’t refer to specific persons at all. Citgo and PDVSA, though real entities, are likewise chosen solely for illustrative purposes.
** Yes, the Convention is U.S. law. Don’t make me throw the Supremacy Clause at you again, pal.
*** For a more thorough discussion of service abroad under FSIA, see The Foreign Sovereign Immunities Act’s Crippling Effect on United States Businesses, in the Michigan State International Law Review.
