Making a Mess of Service of Process

Last Friday, Magistrate Judge Paul Kohler (District of Utah) granted a motion for alternative service of process, allowing the plaintiff in Univera Brands, LLC v. Hawk Sports Industries, Germany, GmbH to serve the defendants through their U.S. lawyers and by email to an address in Germany. The decision is remarkable for the number of things it gets wrong about serving foreign defendants and, perhaps, instructive for those interested in getting such things right.

An Emergency Motion

According to the complaint, defendants claimed to be owners of a trademark and obtained Amazon Standard Identification Numbers (ASINs) for products sold by plaintiff. Without the ASINs, plaintiff cannot ship its own goods bearing the trademark through Amazon. Understandably, plaintiff filed an emergency motion for a temporary restraining order and preliminary injunction. Plaintiff also asked the court to authorize alternative service of process through two lawyers who previously represented defendants and by courier to an address in Germany.

Germany and the United States are parties to the Hague Service Convention. The Convention requires each state-party to establish a central authority to receive and execute requests for service of process. It also permits certain other means of service, including “postal channels,” if the receiving state has not objected. Germany has objected to other methods, however. Because of Germany’s objection to using “postal channels,” the court correctly denied plaintiff’s request to serve the defendants by courier.

Service Through Counsel

The court allowed the plaintiff to serve the summons, complaint, and emergency motion by emailing them to two lawyers who previously represented the defendants. One lawyer represented defendants in another matter before the U.S. Patent and Trademark Office and, allegedly, with respect to the trademark that defendants used to obtain the Amazon ASINs. The other lawyer represented the defendants in a case before the Trademark Trial and Appeal Board.

In granting the motion for alternative service, the court relied on Federal Rule of Civil Procedure 4(f)(3), which provides that a defendant “may be served at a place not within any judicial district of the United States … (3) by other means not prohibited by international agreement, as the court orders.” The problem is that both lawyers apparently work in the United States, one in Florida and one in New York. Because Rule 4(f) applies only to service “at a place not within any judicial district of the United States,” it cannot be used to effect service in the United States. To be fair to Judge Kohler, the Tenth Circuit has previously approved using Rule 4(f)(3) to serve foreign defendants through their U.S. counsel. But the Tenth Circuit is just wrong on this, as I have previously noted.

To be clear, a federal court may sometimes authorize service on foreign defendants through their U.S. counsel under Rule 4(e), which governs service “in a judicial district of the United States.” Rule 4(e)(1) allows a defendant to be served by “following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made.” Thus, the permissibility of service through counsel depends on state law—in this case, on the law of Utah (where the district court is located) or alternatively the laws of Florida and New York (where service on the lawyers would be made).

Last year, Mehrunnisa Chaudhry and I looked at the laws of all fifty states to find out which permit service through counsel. Utah Rule 4(d)(5) allows a court to order service by “other means” but it appears to require a showing that regular means are “impracticable,” and it is not clear that service through Germany’s central authority under the Hague Service Convention would be considered impracticable under this rule. Florida Statutes § 48.102 also allows service by “other means” if, “after due diligence,” a plaintiff is not able to effectuate service. New York Civil Practice Law and Rules § 311(b) allows service as the court directs if service through regular means within 120 days is impracticable, as it may well be under the Hague Convention. As discussed in our earlier post, courts in New York have repeatedly relied on this provision to order service through on foreign defendants through U.S. counsel.

When permitted, service through U.S. counsel has the advantage of allowing a plaintiff to avoid the Hague Service Convention, which applies only “where there is occasion to transmit a judicial or extrajudicial document for service abroad.” As the U.S. Supreme Court held in Volkswagenwerk AG v. Schlunk (1988), when service is complete within the United States, the Convention does not apply. New York considers service through counsel to be complete when counsel has been served, and Utah’s rule permits the judge to specify the event that will complete service.

Thus, the problem is not that the district court could not order service through counsel on the defendants in this case. The problem is that the judge did so under Rule 4(f)(3), which does not apply, and without reference to the requirements of state law, which limit a federal court’s authority to order alternative service under Rule 4(e)(1).

Service by Email

Judge Kohler also ordered service by email to defendants in Germany at an address they used to communicate with Amazon. He did this in part because he was not convinced that defendants were still in touch with the two lawyers, so he worried that serving the lawyers would not be reasonably calculated to provide the notice that due process requires. Because sending an email to the defendants in Germany is service “at a place not within any judicial district of the United States,” Rule 4(f)(3) governs and the court is free to order such service if it is “not prohibited by international agreement.”

The problem is that service by email is prohibited by international agreement, at least in Germany. Judge Kohler noted that the Tenth Circuit has not yet addressed whether the Hague Convention prohibits service by email. But two other circuits recently have. Both the Second and the Seventh Circuits have correctly concluded that the Convention’s means of service are exclusive and thus preclude service by unlisted means such as email. Email might be permitted under the Convention if it were considered a “postal channel,” which the U.S. government says it is. But this is no help in Germany because Germany has objected to the use of postal channels. In short, the same objection that prevented the court from ordering service by courier should also have prevented it from ordering service by email.

Overlooking Rule 65

It is completely understandable that the plaintiff would seek a temporary restraining order and preliminary injunction in this case to ensure that it could continue to ship its products through Amazon. But Judge Kohler did not have to order alternative service to consider those motions. Rule 65 allows a district court to issue a preliminary injunction “on notice to the adverse party.” A court may enter a temporary restraining order without even notice if immediate and irreparable injury will result.

Notice may be given without serving process and so without violating the Hague Service Convention, which (again) applies only “where there is occasion to transmit a judicial or extrajudicial document for service abroad.” Judge Kohler could have had the plaintiff give notice of the emergency motion by email to the defendants without violating the Convention.

Of course, service is necessary for the court to decide the merits of the case and award damages or a permanent injunction. But it was not necessary for the court to grant temporary relief. A temporary restraining order or preliminary injunction might well have brought the defendants to court, allowing Judge Kohler to hear arguments from the other side about service (and to identify the defendants’ current counsel).

Conclusion

The rules governing service of process on foreign defendants are admittedly complex. They involve two different federal rules, depending on whether service is made inside or outside the United States. If inside, they require the court to consider what state law permits. And if outside, they may require the court to consider what the Hague Service Convention permits. Judge Kohler was asked to grant the motion for alternative service ex parte, without hearing arguments on the other side. Ironically, none of this hurried decisionmaking was necessary. Rule 65 would have allowed the court to grant emergency relief without having to rule on service.