Seeking Second Circuit Review of Service in Smart Study

Last summer, Bill Dodge highlighted a thoughtful decision from the Southern District of New York (SDNY) regarding email service on Chinese defendants. In Smart Study Co., Ltd. v. Acuteye-US, Judge Gregory Woods determined that service by email was not permitted by the Hague Service Convention, at least when the relevant state party has objected to service by postal channels (as China has). Judge Woods thus denied the plaintiff’s request for a default judgment against defendants in China who had been served only by email (and whose physical addresses the plaintiff had not reasonably tried to ascertain). As Bill explained, Judge Woods’ analysis of this question was correct.

The Smart Study plaintiff subsequently filed an interlocutory appeal of Judge Woods’s decision, submitting its brief to the Second Circuit in December 2022. Ideally the Second Circuit will hear the Smart Study appeal and affirm the district court’s decision. Not only is this an important and recurring question that implicates U.S. treaty obligations, but it is also one that has divided district courts, including within the SDNY. The prior leading case in that district, Sulzer Mixpac AG v. Medenstar Indus. Co. (2015), held that the Service Convention did not prohibit service by email, and Judge Woods gathered a dozen other district court decisions from the SDNY and across the country that have reached similar conclusions. In just the few months since Judge Woods issued his decision, at least one judge has adopted his reasoning while two others have stayed similar cases pending the Smart Study appeal.

The Importance of the Issue

A decision by the Second Circuit would be especially helpful because—as Judge Woods experienced—plaintiffs’ requests for service by email typically arise in an ex parte context, with no one incentivized to bring the difference in opinion to the judge’s attention. Indeed, many of the defendants so served will never appear in U.S. court, creating a default judgment mill that generates additional litigation down the road in enforcement proceedings.

This lack of adversarial presentation is a problem that pervades Rule 4(f)(3) requests for alternative methods of service. Even if judges agree that the Hague Service Convention prohibits service by email, plaintiffs can find other routes to skirt the Convention, Federal Rules, or due process requirements, for example by seeking substituted service on defense counsel or other third parties (the potential problems of which are described here and here). It also may not take plaintiffs much effort to convince judges that they have been unable to ascertain the defendants’ physical addresses, in which case the Convention, by its own terms, doesn’t apply.

Routes for Appellate Review

There is a potential problem, however, with the Smart Study appeal. It appears from its brief that the Smart Study plaintiff is asserting appellate jurisdiction based on 28 U.S.C. § 1292(a)(1), which covers the granting, modification, or dissolution of preliminary injunctions. A defendant in Smart Study did request that the district court dissolve its preliminary injunction—a request that first flagged for the court the potential problem with service by email on Chinese defendants. But it appears that this request was mooted by the plaintiff’s voluntary dismissal of that defendant from the case in January 2022. The July 21, 2022, order that the plaintiff is specifically appealing appears only to have denied the plaintiff’s request for a default judgment against the remaining absentee defendants.

In the alternative, the plaintiff claims that the July order was a final judgment from which there is an appeal as of right because Judge Woods subsequently issued an order to show cause why the case should not be dismissed in light of his decision. But Judge Woods did not dismiss the case; rather, he stayed the case once the appeal was filed.

The proper vehicle for the plaintiff’s interlocutory appeal is 28 U.S.C. § 1292(b). That route requires both the district judge and the Second Circuit to approve the request for an interlocutory appeal. In explaining his decision to stay the case, Judge Woods noted that the appeal “involve[s] substantial concerns regarding the treaty obligations of the United States and the People’s Republic of China” and observed that “the lack of adversarial briefing regarding the propriety of email service on defendants located in China—the issue central to the resolution of this case—can present a significant obstacle to a court’s analysis” by way of explaining why amicus counsel might be appointed on appeal. It seems likely that Judge Woods would be willing to certify, as § 1292(b) requires, that his July order “involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation.”


I hope the jurisdictional question can be resolved as the underlying issue deserves clear resolution by the Second Circuit, and Judge Woods’ decision would be an excellent vehicle for doing so.