E-mail Service Denied but Substituted Service through Domestic Counsel Permitted on Foreign Defendant: D. Or. | Practical Law

E-mail Service Denied but Substituted Service through Domestic Counsel Permitted on Foreign Defendant: D. Or. | Practical Law

In Calista Enterprises Ltd. v. Tenza Trading Ltd., the US District Court for the District of Oregon held that substituted service of process by domestic counsel was the preferable method to serve a counterclaim-defendant who was a foreign resident.

E-mail Service Denied but Substituted Service through Domestic Counsel Permitted on Foreign Defendant: D. Or.

by Practical Law Litigation
Published on 29 Aug 2014 • USA (National/Federal)
In Calista Enterprises Ltd. v. Tenza Trading Ltd., the US District Court for the District of Oregon held that substituted service of process by domestic counsel was the preferable method to serve a counterclaim-defendant who was a foreign resident.
On August 26, 2014, in Calista Enterprises Ltd. v. Tenza Trading Ltd., the US District Court for the District of Oregon held that substituted service of process on the counterclaim-defendant's US-based counsel was the least problematic method of service, as the counterclaim-defendant was a foreign resident of a Hague Convention signatory country and the court lacked information to determine whether e-mail service was permissible under foreign law (No. 3:13-cv-01045, (D. Or. Aug. 26, 2014)).

Background

After being sued by the plaintiff Calista Enterprises Ltd., the defendant Tenza Trading Ltd. moved to add the counterclaim-defendant Alexander Zhukov, a citizen of the Czech Republic. The defendant claimed that evidence and testimony uncovered during discovery demonstrated that Zhukov was the alter ego of the plaintiff. The court denied the defendant's motion to enter default judgment against Zhukov and the defendant attempted service on Zhukov. After one attempt at service failed, the defendant moved for alternative service of process, requesting permission to serve Zhukov by one or more of the following three methods:
  • By e-mail.
  • By service on Zhukov's domestic counsel.
  • By mail to both of Zhukov's addresses in the Czech Republic and Russia.

Outcome

The court granted in part the defendant's motion, permitting the defendant to serve Zhukov by substituted service on his domestic counsel only. Citing FRCP 4(f), the court stated that the decision to allow alternative service rests with the district court, subject only to the FRCP 4(f)(3)'s limitations that service be directed by the court and not prohibited by any international agreement, such as the Hague Convention. The court preferred the substituted service method to the others because:
  • Service would be completed entirely within the United States and therefore would not trigger the Hague Convention.
  • Service on counsel would give Zhukov sufficient notice to satisfy the due process clause of the US Constitution.
  • Zhukov's American attorneys are in reasonable contact with him as they also represent the plaintiff, the corporation of which Zhukov is sole owner and designated representative.
In denying service by mail, the court observed difficulties in completing service in both proposed countries because:
  • The Czech Republic is a signatory to the Hague Convention and has objected to service by post.
  • Russia has unilaterally suspended all judicial cooperation with the US and Zhukov was not residing in Russia, therefore offending notions of due process.
The court also denied service by e-mail because it was not clear in which country Zhukov's e-mail server was located, which is where service would have been completed.

Practical Implications

Practitioners should be aware that federal courts will permit alternative methods of service if the movant can demonstrate that the party being served will receive notice sufficient to satisfy due process and be in full accordance with the Hague Convention (see Legal Update, Service Through E-mail and US-Based Counsel Permitted Against Foreign Defendant: W.D.N.C.). Service by e-mail is permissible only where the movant provides information sufficient to enable a court to determine the legal requirements where service would be completed.