Last month a U.S. district court asked, “When service of process absolutely, positively has to be effected on a Taiwanese defendant pursuant to Federal Rule of Civil Procedure 4(f)(2)(C)(ii), is Federal Express enough?”
The case, SignalQuest v. Chou, involved allegations of U.S. patent infringement. After filing the Complaint and failing to convince defendant’s counsel to accept service of process on defendant’s behalf, plaintiff’s counsel filed a request for consent to serve Mr. Chou at his business in Taiwan by FedEx.
Federal Rule of Civil Procedure (FRCP) Rule 4 allows process to be served on a foreign defendant by any internationally agreed means of service, such as means permitted by the Hague Convention, but Taiwan is not a party to most international agreements, including the Hague Convention.
Rule 4 also authorizes service by letters rogatory or pursuant to the foreign country’s laws governing domestic service of process. However, the letters rogatory process takes months to complete, as it requires the assistance of courts and government offices in both countries. Service of foreign process pursuant to Taiwan’s laws is no less cumbersome, because Taiwan’s law requires service to be made by the clerk of Taiwan’s court.
So the plaintiff turned to FRCP 4(f)(2)(C)(ii), which permits process to be served on a foreign defendant – unless prohibited by the foreign country’s law – by mail that the clerk addresses and sends, which requires a return receipt. Upon plaintiff’s request, the U.S. clerk mailed the summons and complaint to the defendant’s office in Taiwan by FedEx and one of defendant’s employees signed the delivery receipt.
The defendant then moved to dismiss the action for insufficient service of process, claiming service by FedEx is not permitted under Taiwan law, so it must be deemed prohibited, for purposes of FRCP 4(f)(2)(C)(ii). The court disagreed, holding service is not prohibited under foreign law unless it is expressly prohibited and it found the service by FedEx was proper.
Incidentally, the plaintiff also could have turned to FRCP 4(f)(3), which permits process to be served “by other means not prohibited by international agreement” (upon court order). It should be noted that courts are not unanimous in approving fast-track solutions to international service of process (See Emine v. Aten, in which service against a Taiwanese defendant by international mail was rejected). However, numerous Western courts have approved expedited solutions, allowing international service by e-mail, facebook and by service on the foreign company’s U.S. counsel.
As a practical matter, service by FedEx may have been an acceptable solution for SignalQuest, where plaintiff was seeking only a declaratory judgment of non-infringement in the U.S., but a plaintiff should think twice before attempting such a tactic in a case where enforcement may be required in the defendant’s country. In Taiwan, a foreign judgment cannot be enforced until it has been recognized by a Taiwan court and there’s a fair likelihood Taiwan courts may refuse to recognize any judgment where service was made by mail, e-mail or other unorthodox means.
Finally, defendants should be reminded to never ignore attempted service of process, regardless of how improper it appears, as the plaintiff may then take defendant’s default and obtain a default judgment, which may be near impossible to overturn. As explained emphatically in the sobering case of Standard Microsystems v. Winbond Electronics, best practice dictates that the defendant should always file a motion to quash the attempted service.
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If you require legal assistance, please contact our Taiwan Service of Process Attorneys.
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Great post, especially on the necessity of separating the issue of the the validity of service of process for US purposes from the question whether a judgment based on a particular method of service of process will be recognized in Taiwan.
I do think, though, that the question whether defendants should always move to quash defective service of process if they want to avoid litigation in the US is more complicated than your post suggests. The Israeli defendant acted foolishly in the Standard Microsystems case you cite, but I think that’s primarily because it got the law wrong: the service of process was valid, and even if it had been invalid, it was not so clearly invalid that the defendant should have had any confidence that it would prevail. In that situation, of course the defendant should move to quash rather than risk a default.
But consider a case where the service is plainly defective. For example, suppose the US plaintiff serves a defendant in China by mail. China, a party to the Hague Convention, has objected to service by postal channels. There really is no argument that the service is valid in that case. If the Chinese defendant hires a US lawyer to appear in the case and to move to dismiss, the US plaintiff–if it is well-advised–is likely to seek leave to proceed under Rule 4(f)(3) and to serve the Chinese defendant by service on the US lawyer. In that case, if the Chinese company does not want to litigate in the US, its better move is probably to ignore the service, since (though nothing is certain in litigation) it is highly likely to prevail on a motion for relief from the judgment. Other questions may factor into the decision, such as whether the Chinese company has assets outside of China that the US plaintiff could attach, or what treatment Chinese counsel think a Chinese court would accord to a US judgment based on such faulty service of process. But in any event, I don’t think there is one simple answer to the question whether a defendant should challenge supposedly faulty US service of process rather than awaiting the default judgment.
Thanks for the comments, Ted. Much appreciated.
I agree that international service of process (and other legal subjects) is far more complex than the brief summary in my blog post, and I agree that in some cases — where service is clearly, unquestionably invalid — perhaps it might be reasonable to ignore the attempt. But that can be a risky proposition. I do think the Winbond case was a terrific wake-up call. The attorney there, an experienced international attorney with a first-class global law firm, believed that service was invalid, so he advised his clients to ignore it, resulting in a huge increase in costs and hassles for the defendants (not to mention for himself). As the trial court explained in refusing to set aside those default judgments:
“Defendants’ mistaken belief that service was improper does not amount to excusable neglect or a mistake of law which would justify relief in this instance. If defendants believed service to be improper, defendants could have filed a motion to quash.”
You’re right that there’s never one simple answer. However, given that entrance of default is a mere administrative act that pays no heed to whether service was proper or not, the reality that even the most experienced attorney can at some point have an erroneous opinion, and such errors can have extremely costly consequences, as demonstrated in the Winbond case, I felt the scales tipping in favor of the cautious, prudent approach of objecting early to the attempted service, rather than ignoring it and possibly dealing with it later. But, I agree, in some cases that might not be necessary.
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