United States District Court, D. Arizona
ORDER
Dominic W. Lanza, United Slates District Judge.
In
April 2018, Plaintiff American Express Company
(“AmEx”) filed this lawsuit against a former
executive, Defendant Xiongwen Rui (“Rui”), in an
effort to claw back certain compensation Rui had received
before quitting to work for a China-based competitor. (Doc.
1.) In November 2018, after unsuccessfully attempting to
serve Rui at a home he owns in Arizona, AmEx filed an ex
parte motion requesting permission to use
“alternative service”-specifically, permission to
serve Rui by emailing the complaint to his U.S.-based
attorney. (Doc. 18.) In this motion, AmEx intimated that Rui
lives in Arizona and stated that Rui merely “spend[s]
part of his time in China” in connection with his new
job. (Id. at 4-7.) AmEx also provided a declaration
from one of its in-house attorneys, who averred that
“American Express's records reflect [an Arizona
address] as the last-known address for Mr. Rui.” (Doc.
18-1 ¶ 6.) Based on these representations, the Court
granted the ex parte motion and authorized service
by email. (Doc. 19.) Service was completed a few days later.
(Doc. 20.)
Rui[1] now moves to either dismiss
the complaint for lack of sufficient service or to “set
aside” the Court's earlier order authorizing
alternative service. (Doc. 24.) Rui argues, among other
things, that AmEx misled the Court in its ex parte
motion by suggesting he lives in Arizona, as he and his
attorney had specifically informed AmEx's in-house
counsel, well before the motion was filed, that he actually
lives in China. (Id. at 3.) In support of this
contention, Rui has provided a declaration in which he states
that “[i]n March 2017 . . . I had a telephone
conversation with [AmEx's in-house counsel] . . . and we
discussed the fact that I was living and working in
China.” (Doc. 24-1 at 2-3.) Rui has also provided a
declaration from his attorney, who states that “[i]n
October 2017 . . . I had a telephone conversation with
[AmEx's in-house counsel] . . . [and] told him that Mr.
Rui was working and living in China.” (Id. at
8-9.) Accordingly, Rui argues that AmEx should have been
required to attempt to serve him in China via the Hague
Convention before seeking permission to use alternative
service methods.
In its
response, AmEx doesn't dispute the accuracy of the
declarations from Rui and Rui's attorney. (Doc. 26.)
Instead, AmEx simply argues that the Hague Convention
isn't the exclusive means of serving a party living in a
foreign country and that it's permissible to seek an
order authorizing alternative service methods (such as
service via email) without first making an attempt to serve
through the Hague Convention. (Id. at 7-10.)
In his
reply, Rui argues that “it is one thing to have
discretion to order alternative service outside the Hague
Convention and another to actually exercise that discretion
in a given case.” (Doc. 31 at 1.) Rui contends that
Rule 4(f)(3) requires a party seeking permission to use
alternative service methods to demonstrate
“necessity” and that AmEx can't make such a
showing here because it hasn't even tried to utilize the
Hague Convention's procedures. (Id. at 3-7.)
The
Court largely agrees with Rui and will thus vacate, in part,
its November 16, 2018 order authorizing alternative service
and quash the service effectuated on Rui in compliance with
that order. The root of the problem here is that AmEx's
ex parte motion was misleading and omitted important
details. The motion suggested that Rui still lived in Arizona
and simply traveled to China from time to time for business.
Among other things, it referred repeatedly to Rui's
“last known” Arizona address and was accompanied
by a declaration from an AmEx in-house attorney, who
mentioned that he'd engaged in several conversations with
Rui and Rui's attorney in 2017 but didn't provide any
relevant details about those conversations. Yet Rui has now
submitted uncontradicted evidence showing that, during those
2017 conversations, he and his attorney specifically told the
AmEx attorney that Rui now lives in China. The Court is
struggling to understand how AmEx could have thought it
appropriate to omit that particular detail from its ex
parte motion or the accompanying declaration.
This
omission matters for two reasons. First, AmEx's ex
parte motion primarily sought relief under Federal Rule
of Civil Procedure 4(e). (Doc. 18 at 5-7.) That provision,
however, only applies to serving individuals within
the United States. The applicable provision governing
“Serving an Individual in a Foreign Country” via
alternative methods is Rule 4(f)(3), which was mentioned only
in passing in AmEx's motion. (Id. at 7.)
Notably, the proposed order that AmEx submitted with its
motion (Doc. 18-8), which the Court ultimately issued (Doc.
19), only authorized service under Rule 4(e). It's
therefore unclear whether AmEx's reliance on that order
to serve Rui-who, again, apparently lives in China-was even
valid.
Second,
and more important, the decision whether to authorize
alternative service under Rule 4(f)(3) is a discretionary one
that turns, in part, on whether the movant has shown
necessity. Rio Properties, Inc. v. Rio Int'l
Interlink, 284 F.3d 1007, 1016 (9th Cir. 2002) (a
plaintiff seeking permission to serve a foreign defendant via
alternative service methods “need not have attempted
every permissible means of service of process before
petitioning the court for alternative relief” and
“[i]nstead . . . need[] only to demonstrate that the
facts and circumstances of the present case
necessitate[] the district court's
intervention”) (emphasis added). Here, the information
AmEx provided in its ex parte motion seemed to
demonstrate necessity. After all, it would have been futile
to require AmEx to attempt to serve Rui in China via the
Hague Convention if Rui didn't even live in China and
only traveled there occasionally for business. However, now
that it's been established that Rui lives in China (and
that AmEx knew this at the time it filed its ex
parte motion), the necessity calculus changes.
To be
sure, the Ninth Circuit in Rio rejected the argument
that “Rule 4(f) should be read to create a hierarchy of
preferred methods of service of process.” 284 F.3d at
1014. The court elaborated that “Rule 4(f)(3) is
neither a ‘last resort' nor ‘extraordinary
relief'” and, instead, “is merely one means
among several which enables service of process on an
international defendant.” Id. at 1015.
Accordingly, the Rio court left it within each
district court's discretion to “determin[e] when
the particularities and necessities of a given case require
alternate service of process under Rule 4(f)(3).”
Id. at 1016; see also In re LDK Solar Sec.
Litig., 2008 WL 2415186, *3 (N.D. Cal. 2008)
(“FRCP 4(f)(3) stands independently of FRCP 4(f)(1); it
is not necessary for plaintiffs to first attempt service
through ‘internationally agreed means' before
turning to ‘any other means not prohibited by
international agreement.'”).
Nevertheless,
even though Rule 4(f)(3) is not intended to be a “last
resort, ” courts have required a much greater showing
of necessity than what has been presented here. In
Rio, for example, the plaintiff “presented the
district court with its inability to serve an elusive
international defendant, striving to evade service of
process, ” and the Ninth Circuit emphasized that those
factual circumstances showed “the district court
properly exercised its discretionary powers to craft
alternative means of service.” 284 F.3d at 1016. Other
cases authorizing alternative service under Rule 4(f)(3) have
involved similar circumstances. See, e.g., In re
LDK Solar Sec. Litig., 2008 WL 2415186 at *3 (granting
motion for alternative service under Rule 4(f)(3) where
“[d]efense counsel ha[d] refused to accept service on
behalf of the unserved defendants” and
“[a]ccording to the sworn declaration of
plaintiffs' counsel, defense counsel ha[d] said that
‘it might be impossible to serve some of [the unserved
defendants]'”); Hydentra Hlp Int. Ltd. v.
Porn69.org, 2015 WL 8064770, *2-3 (D. Ariz. 2015)
(granting motion for alternative service under Rule 4(f)(3)
and allowing email service where “Plaintiff ha[d]
demonstrated that it ha[d] been unable to obtain a physical
address for Defendant and [was], thus, unable to serve
Defendant by any other means”). In contrast, courts
have denied requests for alternative service under Rule
4(f)(3) where “Plaintiffs only argue[d] that the
requested alternative methods of service [were] the most
efficient and effective methods of service” and
“ha[d] not shown that the circumstances of this action
necessitate[d] the Court's intervention.”
Fourte Int'l Ltd. BVI v. Pin Shine Indus. Co.,
2018 WL 1757776, *2 (S.D. Cal. 2018).
In
short, courts typically authorize alternative service on a
foreign defendant's domestic attorney “where the
address of the foreign defendant is unknown, the foreign
defendant has successfully evaded service, and/or failure to
permit such service will result in unduly long delays in the
litigation of a matter.” Codigo Music, LLC v.
Televisa S.A. de C.V., 2017 WL 4346968, *10 (S.D. Fla.
2017). These factors aren't present here. Rui has agreed
to provide his Chinese address and there's no evidence
Rui has evaded service (AmEx's unsuccessful service
attempts at Rui's former Arizona home don't
demonstrate evasion, as he wasn't living there at the
time of the attempts). Moreover, although this case has been
pending for about a year, the delay is due in significant
part to the fact that AmEx declined to make any effort to
utilize the Hague Convention to effectuate service at the
outset of the case, then filed a misleading motion with the
Court for permission to authorize alternative service. AmEx
can hardly complain about such a self-created delay.
The
Court thus agrees with Rui that some relief is warranted
here. The question is what form that relief should take. The
first type of relief requested in Rui's motion- dismissal
under Rule 12(b)(5) based on insufficient service of
process-doesn't seem appropriate. Rui was, after all,
served pursuant to a court order authorizing alternative
service. Alternatively, Rui asks the Court to “set
aside” the November 16, 2018 order authorizing
alternative service. This request seems better tailored to
the facts of the case. As discussed, the Court wouldn't
have authorized alternative service as to Rui if all of the
relevant facts had been presented in AmEx's motion. Thus,
reconsideration of the portion of the November 16, 2018 order
authorizing such service upon Rui is warranted. See
LRCiv 7.2(g) (reconsideration may be granted upon “a
showing of new facts . . . that could not have been brought
to [the Court's] attention earlier with reasonable
diligence”).
Finally,
the Court declines to revisit the November 16, 2018 order
insofar as it authorized alternative service against
co-defendant Wu. Defendants concede that Wu “maintains
her domicile in Arizona” and merely note that she has
made a few visits to China to see her husband. (Doc. 24 at
2.) It's therefore unclear why Wu contends she should
have been served pursuant to Rule 4(f), given that
Defendants' overall argument concerns the proper method
of service “when the party to be served is a resident
of a signatory nation to the Hague Convention.”
(Id. at 14.) Because none of the arguments in the
pending motion seem to pertain to whether the alternative
service methods the Court authorized were proper for serving
Wu, the Court will not revisit its ruling regarding Wu.
Accordingly,
IT ...