US Supreme Court to Review Procedure for Service of Process on Foreign Defendants
The United States Supreme Court recently granted certiorari in Water Splash Inc. v. Tara Menon, no. 16-254, to resolve an important issue relating to service of process on foreign entities. In Water Splash, the Court will address whether the Hague Convention permits plaintiffs to effectuate service of process on foreign entities by merely sending them the complaint and corresponding documents via mail. If the Court rules that plaintiffs cannot effectuate service of process via mail, then in many cases plaintiffs will need to employ alternate methods of service that are much more costly and time-consuming.
The Hague Convention is an international treaty intended to simplify service of process abroad and assure proper notice to foreign defendants.1 Compliance with the Hague Convention is mandatory in all cases to which it applies.2 Under the Hague Convention, the “preferred method” of effecting service of process on a foreign defendant involves submitting a request to the Central Authority established by the government of the nation where the foreign defendant is located.3 Under this approach, the Central Authority reviews the plaintiff’s request, and if it determines that the request is proper, it then serves the documents on the foreign company.4 However, dealing with a foreign nation’s Central Authority can be costly, time-consuming, and, sometimes, futile.5 In fact, it often takes plaintiffs several months, if not longer, to properly effectuate service of process on a foreign defendant through a Central Authority. This can delay a plaintiff’s prosecution of its case, or even cause a plaintiff to reconsider whether it wants to pursue an action against a foreign defendant at all.
The Hague Convention also provides exceptions to the rule that a plaintiff must effectuate service through a nation’s Central Authority. Indeed, under Article 10(a) of the Convention, “[p]rovided the State of destination does not object, the . . . Convention shall not interfere with . . . the freedom to send judicial documents, by postal channels, directly to persons abroad.” Thus, depending on the location of the foreign company—China and Germany, for example, have objected to Article 10(a)—plaintiffs can “send judicial documents by postal channels” and effect service of process by sending a complaint and corresponding documents to a defendant via mail while avoiding the delay, expense, and uncertainty of dealing with a nation’s Central Authority. Examples of countries that have not objected to Article 10(a), and, therefore, permit litigants to send judicial documents via postal channels, include England, Canada, Japan, the Netherlands, France, and Israel. By contrast, plaintiffs must employ more onerous methods when effecting service of process on a defendant located in a country that has objected to Article 10(a), such as a defendant located in China or Germany.
However, a split of authority has emerged as to whether Article 10(a) permits plaintiffs to effectuate service of process, or whether it merely permits litigants to “send judicial documents” after a plaintiff has effectuated service of process.6 Courts that have applied the latter approach have reasoned that the Hague Convention uses the word “service” several times, but in Article 10(a), it merely provides that litigants may “send” judicial documents via postal channels.7 For example, in Water Splash, plaintiff sued defendant, a Canadian citizen, in Texas state court. Upon motion by plaintiff, the court permitted plaintiff to effect service on defendant in Canada via certified mail. Defendant subsequently failed to appear, and the court entered a default judgment against defendant. On appeal, the Texas appellate court vacated the default judgment, ruling that Article 10(a) of the Hague Convention did not permit plaintiff to effect service on defendant via postal channels.
If the Supreme Court adopts this reasoning, then plaintiffs will not be able to effect service of process on foreign defendants via postal channels pursuant to Article 10(a), and will be forced to employ more onerous methods. Specifically, under the Federal Rules, plaintiffs will need to either effect service through a nation’s Central Authority or determine whether the laws of the foreign nation permit service of process through different methods, and then comply with the foreign nation’s laws. Alternatively, federal courts are also empowered to permit plaintiffs to employ substitute methods, e.g. service through a defendant’s counsel located in the United States; however, many courts have required plaintiffs to first make a good faith effort to effect service through a more formal process before they granted this relief.8
By contrast, the Supreme Court could also rule that plaintiffs can effect service of process via postal channels pursuant to Article 10(a). In fact, that is the position that the Solicitor General of the United States recently advocated for in an amicus curiae brief filed on January 24, 2017. If the Supreme Court adopts this reasoning, then plaintiffs will be able to effect proper service on a defendant located in a country that does not object to Article 10(a) by simply mailing the complaint and corresponding documents to the defendant. This would remove a substantial procedural hurdle that plaintiffs face when they bring actions against foreign entities, and, consequently, allow them to more expeditiously prosecute their actions. Further, in many cases, foreign entity defendants that would have previously been able to assert improper service of process as a defense in a motion to dismiss, or as a basis to set aside a default judgment, will no longer be able to rely upon that argument.
1 Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 698, 108 S. Ct. 2104, 100 L. Ed. 2d 722 (1988).
2 See, e.g., Caterpillar Inc. v. Brington Indus., 2013 U.S. Dist. LEXIS 190013, at *6-7 (C.D. Ill. Sep. 27, 2013) (quoting Volkswagenwerk, 486 U.S. at 705).
3 Chowaniec v. Heyl Truck Lines, 1992 U.S. Dist. LEXIS1174, at *2 (N.D. Ill. Feb. 3, 1992).
4 RC Int’l., Inc. v. Taifun Feuerloschgeratebau Und Vertriebs Gmbh, 2002 U.S. Dist. LEXIS 17559, at *22 (N.D. Ohio Sep. 4, 2002).
5 See, e.g., Leger v. Rivers Edge Treestands, Inc., 2016 U.S. Dist. LEXIS 30939, at *8 (E.D. Tex. Feb. 8, 2016) (stating that plaintiff had not received a response of any sort from China’s Central Authority six months after it submitted its request).
6 See Duarte v. Michelin N. Am., Inc., 2013 U.S. Dist. LEXIS 73862, at *12-13 (S.D. Tex. May 3, 2013) (collecting cases).
7 See, e.g., Moreland v. Tohnichi Mfg. Co., 1995 U.S. Dist. LEXIS 15563, at *5 (N.D. Ill. Oct. 18, 1995).
8 See, e.g., Ryan v. Brunswick Corp., 2002 U.S. Dist. LEXIS 13837, at *8 (W.D.N.Y. May 31, 2002) ("[t]his threshold requirement . . . is necessary in order to prevent parties from whimsically seeking alternate means of service and thereby increasing the workload of the courts.")