Increasingly, federal courts are permitting plaintiffs to effect service of process by email upon foreign defendants pursuant to Rule 4(f)(3) of the Federal Rules of Civil Procedure. When applying FRCP 4(f)(3), the courts continue to exercise broad discretion to grant or deny the use of email service on foreign defendants on a case by case basis, depending upon the specific factual circumstances and demonstrated compliance with the Rule. .
The recent case of Bazarian Int’t Fin. Assoc. v. Desarollos Aerohotelco, et. al., 2016 WL 471273 (D.D.C. 2016) analyzes this email service issue, but with a new twist: Whether email service upon a foreign defendant’s U.S. counsel is also good service.
Quick Snapshot of Federal Rules for Service of Process
FRCP 4(h) provides that service upon foreign corporations may be effected in a variety of ways, including any manner provided for in FRCP(f), when service is accomplished “at a place not within any judicial district of the United States.” FRCP(f)(1) authorizes service by any internationally agreed means of service that is reasonably calculated to give notice, such as service authorized under the Hague Convention. FRCP(f)(3) authorizes service by any other means not prohibited by international agreement, as the court orders.
Email service is not specifically enumerated as an acceptable form of service under either FRCP(f)(1) or FRCP(f)(3).
The Facts: The plaintiff, a U.S company, filed suit in the federal district court for the District of Columbia against Venezuelan, Curacaoan, and Aruban companies, among other defendants, for breach of an investment agreement to lease and develop a luxury hotel resort in Aruba. The investment agreement was signed by the lead defendant, a Venezuelan company, but the agreement purported to be binding upon any successors or related entities. The plaintiff alleged that the other corporate defendants were successors or related entities to the lead defendant, and the agreement contained a forum selection clause providing that the District of Columbia courts would have jurisdiction to adjudicate any and all rights of the parties under the agreement.
After commencing the suit, the plaintiff attempted without success to effect service of the complaint upon the defendants. As to the lead defendant, the plaintiff attempted to effect service pursuant to FRCP(f)(1) and the Hague Convention. However, after a period of months, the plaintiff obtained no confirmation from the U.S. Embassy in Venezuela regarding the Venezuelan’s Central Authority’s efforts to complete service of the complaint upon the Venezuelan company. As to the other remaining foreign defendants, the plaintiff alleged that it was unable to identify any addresses in Venezuela, Curacao or Aruba.
Faced with these service problems, the plaintiff filed a motion with the district court for leave under FRCP(f)(3) & (h) to serve the defendants by registered mail and email to their U.S. counsel who was located in Florida and currently representing them in a separate, unrelated action pending in Connecticut. The court granted this motion and authorized the email service. After service was effected, the defendants moved to dismiss the complaint.
The Court’s Decision
The court denied the defendants’ motion to dismiss the complaint. The court first determined that it could exercise personal jurisdiction over all the defendants by virtue of the forum selection clause that was contained in the investment agreement. In short, the court found that the forum selection clause was binding upon the lead defendant that signed the investment agreement and binding upon the remaining defendants, which the court found were sufficiently alleged by the plaintiff to be successors or related entities to the lead defendant.
The court then denied the defendants’ motion to dismiss for insufficient service of process, rejecting three principle arguments that were raised by the defendants: (1) email service to their U.S. counsel was not proper because FRCP(f)(3) was not applicable for serving a foreign defendant within the U.S., (2) plaintiff failed to show a sufficient prior effort to effect service via the Hague Convention pursuant to FRCP(f)(1), and (3) email service was not permitted by the Hague Convention and violated the local rules of Curacao and Aruba, which did not authorize email service to their counsel.
We discuss each argument in turn and the court’s rulings.
Email Service upon U.S. Counsel
The defendants argued that email service could not be effected upon their U.S. counsel pursuant to FRCP(f)(3) because such service occurred within the U.S and, therefore, was expressly prohibited by FRCP(h). In rejecting this first argument, the court reasoned that email service to defendants’ U.S. counsel did not constitute service on the defendants within in the U.S., because the defendants’ counsel merely functioned as a “conduit” or “mechanism” to complete the service of process and give notice of the suit to the defendants in their own countries. Interestingly, the court also concluded that this email service was proper without requiring a showing that the defendants had specifically authorized their counsel to accept service of the complaint on their behalf.
The court also placed great emphasis on three additional factors: (1) the defendants had negotiated a forum selection clause in the investment agreement and had deliberately chosen the D.C. courts as the venue to litigate claims arising from the investment agreement, (2) the defendants had availed themselves of the U.S. legal system by specially appearing in the other unrelated U.S. litigation, and (3) the service upon U.S counsel was reasonably calculated to notify the defendants about the suit.
No Requirement of Exhaustion of Other Means of Service
The defendants next argued that the plaintiff was required to first show that it had made sufficient efforts to serve the defendants pursuant to the Hague Conventions as provided in FRCP(f)(1). The court flatly disagreed holding that email service under FRCP(f)(3) is not dependent upon a finding of prior exhaustion of all other possible methods to effect service upon a foreign defendant. Instead, the court found that court-directed email service is as favored as other possible methods of service under FRCP(f), and the plaintiff was not required to show any minimum threshold effort to serve the defendants via the Hague Convention or other international agreement.
Email Service Not Prohibited by International Law
Finally, the defendants argued that the email service was not permitted under the Hague Convention and not authorized under the laws of Aruba and Curacao. However, the court found these arguments unavailing after determining that email service was not expressly prohibited by either the Hague Convention or the laws of the defendants’ host countries. According to the court’s analysis, the Hague Convention simply does not list email service as a possible method of service, but this is not tantamount to a rejection of the use of email service in appropriate situations. In addition, the court determined that so long as not prohibited by international agreement the court has discretion to authorize email service — even if not authorized by the host countries’ laws — when the service is reasonably calculated to notify the defendants of the suit in a timely manner.
• In appropriate circumstances, email service upon a foreign defendant’s U.S, counsel may be good service without having to first resort to traditional service of process that is recognized under international agreements such as the Hague Convention – particularly where the foreign defendant has previously appeared in other U.S. actions.
• In contract disputes, forum selection clauses not only can be enforced to establish personal jurisdiction upon a foreign defendant, but they also may have some relevance in defeating a motion to dismiss the action for insufficient service of process.