By: Tom On: September 3, 2020 In: Hague Service Convention, International Service of Process Comments: 0
Spread the love

Nobel Prize winner Ronald H. Coase once observed that “if you torture the data long enough, it will confess to anything.”[1] In the case of Commodity Futures Trading Commission v. Fingerhut, Case No. 1:20-cv-21887-GAYLES, (SD Fl 2020), the Court’s ruling seems to attempt to modernize Coase’s quote to “if you torture the Hague Service Convention rules long enough, it will confess to anything (and produce another bad legal opinion).”

In March 2020, we examined the poorly reasoned opinion in Commodity Futures Trading Commission v. Caniff, Case No. 19-cv-2935 (ND Il 2020). We discussed how the Caniff court ignored the holding in Water Splash, Inc. v. Menon, 137 S. Ct. 1504 (US 2017) and made several errors of fact as to translation and the cost of service of process.

In the July 2020 Fingerhut opinion we see yet another court torture the Hague Convention rules. Read on to learn what went wrong and how the ruling failed on three key points.

A Background of the Case

In Fingerhut, the Commodity Trading Commission (CFTC) filed a complaint for a TRO and then filed “an Expedited Motion for Alternative Service for the Israeli Defendants.” At the time

the CFTC filed the first service motions, it had not attempted service [upon the Israeli Defendants] through the Convention. For that reason, and because the CFTC had not alleged that the Foreign Defendants’ addresses were unknown, that they were actively evading service, or that service via the Convention would cause undue delay, the Court denied the CFTC’s first service motions on May 29, 2020.

Subsequently,

(1) the CFTC sent the original pleadings and summonses to the Israeli Defendants through the Convention on May 29, 2020; (2) the service packets for the Israeli Defendants were received in Israel on June 1, 2020, but were held for security reasons and released from customs on June 10, 2020; (3) the CFTC filed an Amended Complaint on June 12, 2020; and (4) the CFTC sent the Amended Complaint and summonses to the Israeli Defendants through both the Convention and United Parcel Service (“UPS”) on June 15, 2020.

Where the Trouble Began

Because not all of the Israeli Defendants were successfully served by the above methods, the CFTC sought service by alternate means. This makes sense, and yet the Court’s opinion reads as if it is ordering the CFTC to re-effect service on all of the Defendants.

Not mentioned in the Court’s opinion is Volkswagen Aktiengesellschaft v. Schlunk,[2] which held that all service of process to countries that are signatories to the Hague Convention must be pursuant to the Convention. But this rule only applies to the first attempt at service.

So, for those Defendants served by the Israeli Central Authority, Hague service was successful and, consequently, they should not need to be served again.

Conversely, for those defendants whose addresses for service were known to be valid, but were not served by the Israeli Central Authority or UPS (subject to the discussion below), Hague service was unsuccessful. In those situations, courts almost universally grant service by alternative means.

Had the Court’s opinion considered this rule, the opinion would have come to a swift end (or the focus would have shifted to whether the addresses for service were valid).

A Breakdown of the Court’s Opinion

The Court’s opinion began by noting that when FRCP 4(f)(1) (i.e., Hague Service) fails, service under “Rule 4(f)(3) is as favored.” Service under Rule 4(f)(3) is proper

as long as the alternative method of service is not expressly prohibited by the Convention or objected to by the receiving state.” Alternative service “must also comport with constitutional notions of due process.” That is, it must be “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.”[3]

The Court then observed correctly that Israel does not object to mail service.

Israel is a signatory to the Convention and has not objected to service by mail. Considering that service through the Convention may take another few months and that a hearing is set on the CFTC’s motion for a preliminary injunction for July 28, 2020, the Court finds that the CFTC has made a sufficient showing of urgency to justify alternative service via UPS. The Court also finds that service via UPS comports with due process. In light of the fact that the Israeli Defendants are represented by counsel who have made limited appearances in this case, service via UPS is reasonably calculated to apprise the Israeli Defendants of the pendency of this action and to afford them the opportunity to present their objections. Thus, the Court authorizes service via UPS for the Israeli Defendants under Rule 4(f)(3).

The court then delivered bad news to the CFTC:

Although the Court finds that alternative service via UPS is appropriate in this case, the CFTC has not perfected service upon the Israeli Defendants because the CFTC failed to obtain court approval prior to attempting alternative service… Now having proper authorization from the Court, the CFTC may again attempt service upon the Israeli Defendants via UPS under Rule 4(f)(3).[4]

Where the Court Went Wrong

The Court is correct that service by other means does require the Court’s pre-approval. But if we take the Court’s opinion of the steps the CFTC took to effect service at face value,[5] then the CFTC effected service properly when it sent the documents to be served to the Israeli Central Authority. This action does not require the Court’s prior approval.

Although a bit more complicated, the same conclusion applies to mail service to Israel. Because Israel has made no objection to mail service,[6] such service is proper without the court’s prior approval. What complicates the analysis of said mail service, is that it requires an assumption: The service was not mailed by the CFTC, but by the Clerk of the Court.[7]  Unfortunately the Court’s opinion does not provide such detail.

In summary, this opinion strays from the logic of the Hague Convention’s rules for service of process abroad by:

  1. Failing to distinguish Defendants already properly served by the Israeli Central Authority or via mail;
  2. Failing to recognize that the Court’s pre-approval is required for primary Hague service; and
  3. Failing to examine whether the CFTC properly routed mail service to Israel through the Clerk of the Court.

What do you think of the Court’s ruling? Let us know in the comments below.

How LLS Can Help

International service of process is complex and should never be attempted without the help of experienced professionals. At LLS, we have more than 35 years of experience effecting service in 90+ countries.

Contact LLS today to learn more about how we can assist you.

Call 1-800-755-5775 or simply fill out our free quote form.

Notes
[1] Timothy Akinyomi: If you torture the data long enough, it will confess to anything. Business Day 29 January 2020; https://businessday.ng/opinion/article/if-you-torture-the-data-long-enough-it-will-confess-to-anything/.
[2] 486 U.S. 694 (1988).
[3] Citation omitted.
[4] Id.
[5] See supra, the paragraph being with “Subsequently.”
[6] See https://www.hcch.net/en/states/authorities/details3/?aid=260.
[7] Brockmeyer v. May, 383 F.3d 798 (9th Cir. 2004).

Spread the love
0 0 vote
Article Rating
Subscribe
Notify of

This site uses Akismet to reduce spam. Learn how your comment data is processed.

0 Comments
Inline Feedbacks
View all comments