Last year, we covered a decision in which the Southern District of New York permitted alternate service on defendants residing in China after plaintiffs were unable through the exercise of reasonable diligence to discover the defendants’ physical addresses. (Analysis available HERE.)
In Orient Plus International Ltd. v. Baosheng Media Group Holdings Ltd., 2024 WL 2317715 (S.D.N.Y. May 22, 2024), the Southern District of New York further developed that line of case law, holding that service of process by email upon Chinese nationals was permissible under the Federal Rules of Civil Procedure and consistent with the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents (the “Hague Convention”).
In Orient Plus, a group of plaintiffs sued thirteen corporate and individual defendants, alleging violations of federal securities laws. Specifically, plaintiffs alleged that defendant Baosheng Media Group Holdings Ltd. (“BAOS”) failed to disclose in a registration statement that it was under investigation by the Chinese government in the months before BAOS’ initial public offering, and that this investigation could (and did) result in the loss of BAOS’ biggest client and the company being fined and shut down by the Chinese government.
Plaintiffs served a summons and complaint upon BAOS via its New York registered agent and upon other corporate defendants but were unable to serve certain individual defendants (the “Individual Defendants”), each of whom was a director or officer of BAOS. Plaintiffs attempted to serve the Individual Defendants through either BAOS’ registered agent or counsel, but both rejected service. Plaintiffs sought the Individual Defendants’ residential addresses from BAOS’ counsel, as well as in publicly available data and websites in both the U.S. and China, but plaintiffs could locate no residential addresses—only email addresses for three of the Individual Defendants. Plaintiffs then moved for leave to serve those three Individual Defendants by alternate methods pursuant to Federal Rule of Civil Procedure 4(f), including to serve them via email. The court granted their motion.
Under FRCP 4(f), a court may order service by any alternate means that (1) is not prohibited by international agreement and (2) comports with constitutional notions of due process.
The court held that the proposed means of service met those criteria. The court noted that the Hague Convention prohibits service by email on litigants located in China. However, the Hague Convention does not apply where the address of the litigant is “not known.” For an address to be “not known,” a plaintiff must exercise reasonable diligence in attempting to discover a physical address for service. The court was satisfied that plaintiffs had demonstrated reasonable diligence through their searches of public records and company websites in the U.S. and China. The court rejected the argument that plaintiffs were obligated to do more, such as conduct in-person visits or subpoena domain and email providers. Thus, the court found that the three Individual Defendants’ addresses were not known and service by email was not prohibited by the Hague Convention.
On the second factor, the court found that the proposed service comported with due process. Because their website biography pages and non party annual reports that listed the email addresses of the Individual Defendants, serving them at those email addresses was reasonably calculated to give actual notice to the Individual Defendants.
In concluding its analysis, the court recognized that the Federal Rules grant it discretion to reject the proposed alternate service as unwarranted, even if permissible. The court, however, found no reason to exercise that discretion because of plaintiffs’ diligence in seeking ways to serve the Individual Defendants, as well as the delay and uncertainty of service via the Hague Convention in China.
The Orient Plus case serves as a reminder of the fact-specific nature of service of process on international litigants and the interaction between the Federal Rules of Civil Procedure and the Hague Convention.
If you have any questions about service of process on international parties, please contact Michael C. Rakower or Daniel F. Gilpin.
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