More on Serving Foreign Defendants’ U.S. Counsel to Avoid the Hague Service Convention

 

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In April, one of us wrote a post describing a case in which Judge Carol Bagley Amon (Eastern District of New York) relied on New York rules to order service on foreign defendants through their U.S. counsel. Because the service was completed in the United States, there was no occasion to transmit documents for service abroad, making the Hague Service Convention inapplicable. Lawyers who represent plaintiffs in U.S. courts may consider this an advantage, since the Convention’s procedures are sometimes criticized as slow and unreliable.

New York’s rules allowing service through counsel made us wonder whether other states have similar rules. It turns out that twenty-two states, besides New York, allow judges to order alternative methods of service, which could include service on U.S. counsel. In a few states, service through counsel seems well established. In other states, it seems never to have been tried.

In this post, we explain what we found. We start by describing when the Hague Service Convention applies and when it doesn’t. We also explain why federal courts cannot use FRCP 4(f)(3) to order service on foreign defendants through U.S. counsel and why they can use FRCP 4(e)(1) instead, if state law allows such service. After briefly discussing the law in those states that do allow service through counsel (and even more briefly the law in those states that don’t), we flag a few important questions that courts will have to answer before ordering such service. These questions include: (1) whether state law requires an attempt at service under the Convention before alternative means may be ordered; (2) whether service is deemed complete when counsel is served or only when service is transmitted to the foreign defendant; and (3) whether service on counsel is reasonably calculated to give the foreign defendant notice of the suit.

The Hague Service Convention and the Federal Rules

The Convention

The Hague Service Convention is a treaty to which the United States and 83 other countries are parties. It serves the twin purposes of facilitating service of process through the specific means it permits and of protecting sovereignty by prohibiting service by other means (since many other countries consider service a sovereign function). Under the Convention, each country designates a “Central Authority” to receive and execute requests for service from other countries. The Convention also allows other specific means of service (e.g., the use of “postal channels”) to which the receiving country has not objected or has affirmatively agreed. One commonly litigated issue is whether the Convention permits service by email. As explained here, the Convention does not permit email service, at least not in countries that have objected to the use of “postal channels.”

Rule 4(f)

FRCP 4(f), which governs service on individuals in foreign countries—and which also applies to corporations through FRCP 4(h)—is written to work together with the Hague Service Convention. Oversimplifying a bit, Rule 4(f)(1) authorizes service through the Convention. Rule 4(f)(2) authorizes other specific means when the Convention does not apply. And Rule 4(f)(3) allows a district court to order service by any means “not prohibited by international agreement.”

A shocking number of federal courts have relied on Rule 4(f)(3) to authorize service on foreign defendants through their U.S. counsel. Probably the leading case is the Tenth Circuit’s decision in Compania de Inversiones Mercantiles v. Grupo Cementos de Chihuahua (2020). Despite being common, ordering such service under Rule(f)(3) is impermissible for two reasons.

Most fundamentally, Rule 4(f)(3) applies only to service “at a place not within any judicial district of the United States.” Service on a foreign defendant’s U.S. counsel occurs in the United States and is therefore not authorized under Rule 4(f). The Tenth Circuit tried to avoid this logic by reasoning that service does not actually occur until the papers are delivered to the foreign defendant abroad.

But if the Tenth Circuit is right about that, then the Hague Service Convention would apply because “there is occasion to transmit a judicial or extrajudicial document for service abroad” under Article 1. The Convention does not expressly permit service through counsel. And because its listed methods are exclusive—contrary to what the Tenth Circuit thought—such service is “prohibited by international agreement” and so forbidden under Rule 4(f)(3). As one of us has written previously, it is not possible to have service that is outside the United States for purposes of Rule 4(f)(3) but inside the United States for purposes of the Hague Service Convention.

Rule 4(e)

This is where Rule 4(e) comes in. Rule 4(e) governs service “in a judicial district of the United States.” The U.S. Supreme Court held in Volkswagenwerk AG v. Schlunk (1988) that when service can be completed within the United States, there is no “occasion to transmit a judicial or extrajudicial document for service abroad,” which means that the Hague Service Convention does not apply. Schlunk involved substituted service on a foreign defendant’s U.S. subsidiary, which is permitted under Illinois law. (For further discussion of avoiding the Hague Service Convention by serving a subsidiary, see here.)

Rule 4(e)(2) authorizes personal service, service at a person’s dwelling, or service by “delivering a copy of each to an agent authorized by appointment or by law to receive service of process.” One might suppose that a foreign defendant’s lawyer could be considered an agent for this purpose. But U.S. courts have consistently rejected that argument unless the lawyer has been specifically authorized to receive service of process. “The mere relationship between a defendant and his attorney does not, in itself, convey authority to accept service,” noted one court. Thus, “service of process on an attorney not authorized to accept service for his client is ineffective,” concluded another.

That leaves Rule 4(e)(1), which authorizes service 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.” In other words, federal courts may use state service rules. State courts obviously also use state service rules. Therefore, whether the Hague Service Convention can be avoided by serving a foreign defendant through its U.S. counsel depends on the applicable state law in both federal and state courts.

State Law on Serving Counsel

For present purposes, we can divide state rules on service into two categories. Some states allow courts to order alternative methods of service, which may include service through counsel, when specifically authorized methods are unavailable or ineffective. Other states do not, which means that service through counsel would only be available if counsel has been specifically authorized to receive service.

It is worth noting that federal courts may authorize service by following the law of either the state in which they sit or the state where service is to be made. Thus, a federal court in California could order service on a foreign defendant through counsel in New York because New York law permits such service even though California law does not. State courts, on the other hand, may be limited to their own rules on service, unless of course those rules (like the Federal Rules) have a provision borrowing the rules of a state where service is to be made.

We discuss New York first and separately because it is a significant jurisdiction for transnational litigation and because many lawyers are based there. We then discuss the twenty-two other jurisdictions with rules that potentially permit service through counsel. Finally, we briefly discuss states that do not allow such service.

New York

As described in an earlier post, New York Civil Practice Law and Rules § 311(a) sets forth specific means for serving a corporation and then provides in subsection (b): “If service upon a domestic or foreign corporation within … one hundred twenty days … is impracticable under paragraph one of subdivision (a) …, service upon the corporation may be made in such manner, and proof of service may take such form, as the court, upon motion without notice, directs.” CPLR § 308(5) has a similar provision for service on natural persons. New York courts appear to order service on foreign defendants through U.S. counsel with some regularity. Notably, these courts have also held that such service avoids the Hague Service Convention because it is completed within the United States. Thus, as Judge Amon held in Zobay v. MTN Group Ltd., “[b]ecause substituted service via U.S. counsel is complete under New York law when counsel receives the complaint, the Hague Convention is not implicated under Schlunk.”

Other States Permitting Service on Counsel

In some other states, service through counsel appears to be well established. Iowa Rule 1.305(14) says that if service “cannot be made” through any of the listed methods, “any defendant may be served as provided by court order, consistent with due process of law.” (Iowa Rule 1.306 says essentially the same thing.) The Iowa Supreme Court recently reaffirmed that Rule 1.305(14) permits service through counsel, though holding that such service in that case did not comport with due process. In Ackelson v. Manley Toys Ltd. (2015), the Iowa Court of Appeals held that service was properly ordered on Chinese companies in Hong Kong through counsel for affiliated companies in Iowa. Such service was reasonably calculated to provide notice, the court of appeals reasoned, because “local counsel are in direct and substantial contact with [the defendants’] attorneys.” Notably, the court also ruled that the Hague Service Convention did not apply because service was completed in Iowa. “Here, the district court ordered local counsel to accept service of process in Iowa,” the court reasoned, “and not Hong Kong.”

Although other states have not considered this issue in the international context, involving the Hague Service Convention, they have addressed it in domestic cases. Under Maryland Rule 2-121(c), when good faith efforts to serve through listed means have failed and service by mail is impracticable, “the court may order any other means of service that it deems appropriate in the circumstances and reasonably calculated to give actual notice.” At least two federal courts have relied on this provision to order service through counsel.

In Michigan, Rule 2.105(J) says that when service “cannot reasonably be made” through listed means, “the court may by order permit service of process to be made in any other manner reasonably calculated to give the defendant actual notice of the proceedings and an opportunity to be heard.” Federal courts haverepeatedly relied on this provision to order service through counsel. New Jersey Rule 4:4-4(b)(3) provides: “If service cannot be made by any of the modes provided by this rule, any defendant may be served as provided by court order, consistent with due process of law.” At least two federal courts have relied on this rule to order service through counsel.

Oklahoma § 2004(C)(6) says, if service cannot be made by personal delivery or mail, the defendant “may be served as provided by court order in a manner which is reasonably calculated to give the defendant actual notice of the proceedings and an opportunity to be heard.” Courts in Oklahoma have relied on this provision to order service through counsel. In Pennsylvania, Rule 430(a) allows “the plaintiff may move the court for a special order directing the method of service” if service cannot be made under another rule. At least one court has used this provision to order service through counsel. And Utah Rule 4(d)(5) allows courts, under limited conditions, to order service “by some other means,” and at least one court has relied on this provision to order service through counsel.

In other states, some rules permit courts to order alternative means of service, but we could find no cases ordering service through counsel: Arkansas (Rule 4(g)(4)), Florida (F.S. § 48.102), Indiana (Rule 4.14),Maine (Rule 4(g)), Massachusetts (Rule 4(d)(1) & (2)), Nebraska (§ 25‑517.02), Nevada (Rule 4.4(b)), New Mexico (Rule 1-004(J)), South Carolina (Rule 4(e)), and Texas (Rule 109a),

Two states have rules of narrower scope. In Illinois, § 5/2-203.1 allows service on individual defendants by alternative means if other listed means prove “impractical,” and courts in Illinois have used this provision to order service through counsel. However, there do not appear to be similar provisions allowing courts to order alternative means of service for corporations or partnerships. Rhode Island also has a narrow provision, Rule 4(f)(2), which allows a court to order service “by any other method,” but it applies only to serving foreign corporations outside Rhode Island but inside the United States. It could apply if the defendant has a lawyer in another U.S. state.

A few other states have somewhat similar rules, but with additional requirements that make it hard to avoid the Hague Service Convention. Arizona Rule 4.1(k), Colorado Rule 4(f), and Oregon Rule 7(D)(6) permit a court to order alternative methods of service. But each requires mailing the process to the party being served, which would implicate the Hague Service Convention. New Hampshire § 510:4 permits a court to order service on nonresident defendants “as justice may require.” But it appears that attempted substituted service on the New Hampshire Secretary of State is a precondition to this authority, and substituted service on the Secretary of State requires sending a copy of the process to the defendant, which would make the Hague Convention applicable.

States Not Permitting Service on Counsel

Other states do not permit courts to order alternative methods of service. California is a prominent example. California Code of Civil Procedure § 416.10 sets forth means of service upon a corporation, and § 416.90 sets forth means for service upon “a person not otherwise specified in this article,” which covers natural persons. Both permit service on an agent only if the agent is “authorized … to receive service of process.” Like federal courts interpreting Rule 4(e)(2), discussed above, courts in California have held that “the attorney-client relationship by itself is insufficient to convey authority to accept service.” Section 413.30 goes on to say that “Where no provision is made in this chapter or other law for the service of summons, the court in which the action is pending may direct that summons be served in a manner which is reasonably calculated to give actual notice to the party to be served ….” But courts in California have been unwilling to rely on § 413.30 to “circumvent” provisions such as § 416.10 and § 416.90.

Like California, many states refer to service on an agent “authorized to receive service.” However, such rules will not permit service through counsel unless counsel has been explicitly designated as an agent for service. These jurisdictions include Alabama, Alaska, Connecticut, Delaware, the District of Columbia, Hawaii,Idaho, Kansas, Kentucky, Louisiana, Minnesota, Mississippi, Missouri, Montana, North Carolina, North Dakota, Ohio, South Dakota, Tennessee, Vermont, Virginia, Washington, West Virginia, Wisconsin, andWyoming. Unlike the states discussed in the previous section, none of these jurisdictions appears to have a provision authorizing courts to order alternative methods of service when the listed methods are unavailable.

West Virginia Rule 4.1 might appear to be an exception, but the West Virginia Supreme Court has held that it applies only to service of extraordinary writs. Kentucky also has an unusual provision (Rule 4.07) that allows a court to issue a “warning order” and appoint an attorney “to inform the defendant, by mail, concerning the pendency and nature of the action against him.” Although this appears superficially to be an alternative method of service, it would not avoid the Hague Service Convention because it requires the attorney to transmit documents for service abroad.

Further Questions

After this survey of state law, a few important questions remain—questions a court will have to answer before authorizing service on a foreign defendant through U.S. counsel.

Do State Rules Require Trying the Hague Convention First?

As noted above, New Jersey Rule 4:4-4(b)(3) provides: “If service cannot be made by any of the modes provided by this rule, any defendant may be served as provided by court order, consistent with due process of law.” One of the modes provided by this rule is service “in accordance with any governing international treaty or convention,” and the word “cannot” suggests a demanding standard. A court in New Jersey might reasonably conclude that service through U.S. counsel could not be ordered until the plaintiff had first tried service under the Hague Convention.

New York law appears less demanding. Civil Practice Law and Rules § 311(b) allows a court to order alternative means of service on a foreign corporation if service within “one hundred twenty days … is impracticable” under any of the listed methods. Service in accordance with an international convention is not among the listed methods, “impracticable” is a more forgiving standard, and 120 days is a sufficiently short period that impracticability might be found even if a foreign country diligently executes requests for service under the Hague Convention.

When Is Such Service Complete?

When a foreign defendant is served through U.S. counsel, service might be considered complete when U.S. counsel is served, or it might be considered complete only later, when the papers are delivered to the foreign defendant. Whether the Hague Service Convention applies depends on the answer. If service is complete when U.S. counsel is served, then service has been accomplished within the United States, and under Schlunk the Convention would not apply. But if service is not complete until the papers have been delivered to the foreign defendant, then the Convention would apply because, under Article 1, “there is occasion to transmit a judicial or extrajudicial document for service abroad.”

As discussed above, courts in New York have held that service is complete when counsel has been served. So have courts in Iowa. Interestingly, Utah Rule 4(d)(5) expressly allows the court to “specify … the event upon which service is complete,” which means that a court in Utah could avoid the Hague Service Convention by specifying that service is complete when the papers are delivered to counsel in the United States.

In most other states, the answer is not clear. The rules do not address it, and we could not find relevant case law. In these states, foreign defendants may argue that service is not complete until they have received the documents, which means that the Convention must be complied with. We do not suggest that there is a correct answer to this question; we suggest only that is a question that courts must answer.

Is Such Service Reasonably Calculated to Provide Notice?

A court must also ask whether service through U.S. counsel is reasonably calculated to provide notice to the foreign defendant. Some of the state rules authorizing courts to order alternative means of service expressly require this, including Arkansas (Rule 4(g)(4)), Colorado (Rule 4(f)), Florida (F.S. § 48.102), Illinois (§ 5/2-203.1), Indiana (Rule 4.14), Iowa (Rules 1-305(14) and 1-306), Maryland (Rule 2-121(c)), Michigan (Rule 2.105(J)), Nebraska (§ 25‑517.02), New Jersey (Rule 4:4-4(b)(3)), Oklahoma (§ 2004(C)(6)), Oregon (Rule 7(D)(6)), and Rhode Island (Rule 4(f)(2)),

But even when state rules do not expressly include such a requirement, the Constitution does. The U.S. Supreme Court held in Mullane v. Central Hanover Bank & Trust Co. (1950) that due process requires “notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.”

Whether service through counsel meets this requirement depends, as the Iowa Supreme Court recently observed, “on the particular circumstances of the case.” In that case, the court held that service on an attorney hired by a liability insurer, who did not even know how to contact the defendant, was insufficient to satisfy due process.

Clearly, service on a foreign defendant’s counsel in the same (or closely related) litigation will generally be reasonably calculated to provide adequate notice. In the Zobay case, mentioned above, the magistrate judge concluded that due process would be satisfied by serving the foreign defendants’ U.S. counsel in unrelated but ongoing litigation. And one court has held that service on U.S. counsel for separate companies affiliated with the foreign defendants was sufficient under the circumstances, reasoning that the U.S. counsel were “in direct and substantial contact” with counsel for the foreign defendants.

Conclusion

Serving foreign defendants can be difficult. The Hague Service Convention was designed to address this problem by establishing a mechanism for service through a central authority in the receiving state. But plaintiffs and their lawyers sometimes feel that the Convention’s procedures are too slow or unreliable. The question then becomes whether the Convention can be avoided.

The Convention obviously does not apply when the foreign defendant is in a country that has not joined (for a list, see here). The Convention also does not apply when “the address of the person to be served with the document is not known” (although U.S. courts have required plaintiffs to use “reasonable diligence” to locate a physical address before excluding the Convention on this basis). Finally, the Convention does not apply when service can be completed in the country where the proceedings are taking place so that there is no “occasion to transmit a judicial or extrajudicial document for service abroad.”

Service through U.S. counsel is one possible way of completing service on a foreign defendant within the United States. Federal courts cannot order such service under FRCP 4(f)(3) because it applies only to service outside the United States. But federal courts can order such service under FRCP 4(e)(1) if state law allows such service, state law considers service complete when the papers have been delivered to counsel, and such service is reasonably calculated to provide notice to the foreign defendant.