Luxottica Grp. S.P.A. v. P'ships & Unincorporated Ass'ns Identified On Schedule \A\""
Luxottica Grp. S.P.A. v. P'ships & Unincorporated Ass'ns Identified On Schedule \A\""
Opinion of the Court
Plaintiffs own several trademarks related to Ray-Ban- and Oakley-branded sunglasses, clothing, and accessories. Am. Compl. ¶¶ 12, 20, ECF No. 12. They brought this suit under the Lanham Act,
I. BACKGROUND
Over the last five years, this court has presided over several similar cases brought against China-based operators of domains and online marketplaces allegedly selling counterfeit goods. In every case but this one, no defendant appeared, and default judgment was eventually entered. As is typical, this litigation began with the filing of a motion to seal and a sealed complaint identifying the defendants by domain name or online marketplace name. ECF Nos. 1, 7; see also Sched. A to Compl., ECF No. 9 (listing defendants). In this case, plaintiffs amended their complaint the next day. ECF No. 12. They also filed a motion for a temporary restraining order ("TRO"), ECF No. 13, and a separate motion under Federal Rule of Civil Procedure 4(f)(3) for authorization to serve the defendants with the complaint and summons by electronic means, ECF No. 21. The court granted both motions ex parte and entered a sealed TRO, ECF No. 30. Among other things, the TRO stated:
Plaintiffs may provide notice of these proceedings to Defendants, including notice of the preliminary injunction hearing and service of process pursuant to Fed. R. Civ. P. 4(f)(3), by electronically publishing a link to the Amended Complaint, this Order and other relevant documents on a website to which the Defendant Domain Names which are transferred to Plaintiffs' control will redirect, or by sending an e-mail to the e-mail addresses identified in Exhibits 5 and 6 to the Declaration of John Stewart and any e-mail addresses provided for Defendants by third parties that includes a link to said website. The Clerk of the Court is directed to issue a single original summons in the name of "Xiong Hua Ping and all other Defendants identified in the Amended Complaint" that shall apply to all Defendants. The combination of providing notice via electronic publication or e-mail, along with any notice that Defendants receive from domain name registrars and payment processors, shall constitute notice reasonably calculated under all circumstances to apprise Defendants of the pendency of the action and afford them the opportunity to present their objections.
TRO ¶ 8.
AliExpress, the company that hosted defendants' online stores, provided email addresses associated with defendants' accounts but no names or street addresses. Decl. of J. Gaudio ¶ 7, Oct. 24, 2018, ECF No. 114. Plaintiffs sent the complaint, summons, and notice of the TRO to the email addresses.
*821On plaintiffs' motion, the court extended the TRO for 14 days, ECF No. 37, and, after a hearing at which no defendant appeared (and plaintiffs' counsel represented that he knew of no opposition, ECF No. 42), entered a preliminary injunction carrying forward many of the TRO's provisions. Prelim. Injunction, ECF No. 43. Counsel for the moving defendants appeared approximately five weeks after the entry of the preliminary injunction. See Notices of Appearance, ECF Nos. 53-58 (June 20, 2018). Defendants obtained extensions of the deadline to respond to the complaint and filed the pending motion to dismiss in September 2018. ECF No. 102.
II. LEGAL STANDARD
Every defendant must be served with a copy of the complaint and summons in accordance with Rule 4. Fed. R. Civ. P. 4(b), 4(c)(1). Only proper service vests a district court with personal jurisdiction over a defendant. Cardenas v. City of Chicago ,
Plaintiffs bear the burden to show proper service. Defendants rely on Federal Rules of Civil Procedure 12(b)(4) and 12(b)(5). Rule 12(b)(4) motions challenge the form of the process; they test matters such as whether the summons bore the seal of the court, was signed, or was addressed to the proper party. See, e.g., O'Brien v. O'Brien & Assoc., Inc. ,
III. DISCUSSION
With an exception not applicable here, Federal Rule of Civil Procedure 4(f) governs service of a corporation not at a place within the United States. Fed. R. Civ. P. 4(h)(2). Rule 4(f) authorizes two methods of service at issue here. First, service may be made "by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention...." Fed. R. Civ. P. 4(f)(1). Second, Rule 4(f)(3) authorizes service "by other means not prohibited by international agreement, as the court orders." Defendants argue that the TRO did not comply with Rule 4(f)(3) because the Hague Service Convention prohibits email service.
Intended to simplify and standardize serving process abroad, the Hague Service Convention "specifies certain approved methods of service and 'pre-empts inconsistent methods of service' wherever it applies." Water Splash, Inc. v. Menon , --- U.S. ----,
A. Plaintiffs Did Not Exercise Reasonable Diligence To Determine Defendants' Mailing Addresses.
The court looks to Article 1 to determine whether the Hague Service Convention applies. Article 1 specifies the Hague Service Convention's scope.
Nevertheless, courts have interpreted the second sentence of Article 1 consistently. A plaintiff cannot close its eyes to the obvious to avoid the Hague Service Convention; the plaintiff must make reasonably diligent efforts to learn the defendant's mailing address. See, e.g., Advanced Access Content Sys. Licensing Admin., LLC v. Shen ,
When it issued the TRO, the court had no reason to think that defendants' addresses could be determined with reasonable diligence. Plaintiffs had submitted screenshots of defendants' websites. The screenshots showed that plaintiffs purchased counterfeit products from the defendants' online stores and had them shipped to Illinois addresses. See, e.g., ECF No 17-1. The parties have not directed the court to a screenshot listing a contact email or physical address for the defendants. See
*823Decl. of J. Gaudio ¶ 3, Mar. 28, 2018, ECF No. 23. Plaintiffs' attorney made no similar averments about defendants who used online marketplaces. See
Evidence submitted by defendants in support of their motion to dismiss shows that plaintiffs neglected to mention an important source of information.
Plaintiffs do not dispute that the packing slips for the products they ordered included return addresses in China.
A generalized suspicion about an address's validity does not make it "unknown" under the Hague Service Convention. Plaintiffs remind the court that recent statistics released by U.S. Customs and Border Protection show that goods exported by China and Hong Kong represent the lion's share of counterfeit imported goods seized in 2017. See Report 13, ECF No. 114-3. But the fact that defendants allegedly offer counterfeit goods for sale does not automatically mean that every address listed for them is invalid or that they are evading service of process. More specific proof is needed. Once a plaintiff learns of a defendant's purported mailing address, courts require specific proof of a "reasonable investigation" of the address's validity before finding that it is "unknown" under Article 1. Advanced Access ,
The plaintiffs here point to no evidence that they specifically investigated the validity of the return addresses for the products they ordered from defendants' stores. They have therefore failed to carry their burden to show that defendants' addresses were unknown. Consequently, the Hague Service Convention applies.
B. Plaintiffs Have Not Shown that China's Official Action Makes the Hague Service Convention Inapplicable.
Plaintiffs next argue that the Hague Service Convention does not apply due to the length of time it takes China's central authority to deliver process. The court in In re Potash Antitrust Litigation ,
The plaintiffs here have not attempted to show that China has refused to cooperate with the Hague Service Convention for substantive reasons. They submit an affidavit filed in a case in Delaware averring that China's central authority takes one to two years to serve process. Decl. of C. Ingalls ¶ 11, ECF No. 114-10. The declaration expresses frustration with the delays but does not explain why they occur. See
C. Plaintiffs Have Not Shown That Service By Email In China Is Consistent With The Hague Service Convention.
Again, the authority to order alternative service exercised in the TRO comes from Rule 4(f)(3). The rule permits service "by other means not prohibited by international agreement, as the court orders." Fed. R. Civ. P. 4(f)(3). To decide whether ¶ 9 of the TRO was proper, the court must therefore ask whether the Hague Service Convention prohibits service by email or posting on a web page.
Plaintiffs appear to treat answering this question as a search of the Convention's text for prohibitory language. They point to their attorney's averments that he has reviewed the Convention and concluded that it does not preclude service by email. Decl. of J. Gaudio ¶ 15, Oct. 24, 2018, ECF No. 114. The attorney does not explain *825further. See
The Supreme Court has stated that the drafters of the Hague Service Convention intended to prohibit a method of service not mentioned in its text. The Court took a broad view of the Convention in 1988, holding that it "pre-empts inconsistent methods of service ... [wherever] it applies." Schlunk,
The Seventh Circuit has not spoken on this question. This court has located one case in this district holding that email service is consistent with the Hague Service Convention, but the conclusion is stated without any further analysis. See MacLean-Fogg Co. v. Ningbo Fastlink Equip. Co., Ltd. ,
1. Article 19: China's Internal Law
Plaintiffs argue that Chinese law allows them to serve process by email. Article 19 of the Hague Service Convention leaves intact "internal laws of its signatories that permit service from abroad via methods not otherwise allowed by the Convention." Water Splash ,
I located an English language version of the Civil Procedure Law of the People's Republic of China (Revised in 2017) [....] A true and correct copy is attached hereto as Exhibit 11. Chapter VII, Section 2, of the Civil Procedure Law governs service of process [....] I am informed and believe that the law does not preclude the service of process by e-mail and allows for alternate service of process in certain circumstances.
Decl. of J. Gaudio ¶ 17, Oct. 24, 2018, ECF No. 114.
Plaintiffs' excerpts of the Code of Civil Procedure of the People's Republic of China do not include Article 277, see ECF No. 114-11. But if the text is accurate, the language of Article 277 is dispositive. It is quoted in Rockefeller Technology Investments (Asia) VII v. Changzhou Sinotype Technology Co.,
2. Article 10(a): Objections to Service by "Postal Channels"
Courts generally approach the problem of email service through the prism of Article 10(a). Article 10(a) says that "[p]rovided the State of destination does not object, the present Convention shall not interfere with ... the freedom to send judicial documents, by postal channels, directly to persons abroad." 20 U.S.T. at 361. The cases disagree about how to interpret Article 10(a) objections. Typical of one line of authority is Elobied v. Baylock ,
*827Elobied interpreted this objection as prohibiting service by postal and electronic mail.
Sulzer Mixpac AG v. Medenstar Indus. Co. Ltd. ,
This court is persuaded by the cases treating Rule 10(a) objections as precluding service by email. Because email would bypass the methods of service the Hague Convention authorizes, the Convention preempts it as inconsistent. See Schlunk ,
China's Article 10 objection embraces all forms of service the Article allows. China "oppose[s] the service of documents in the territory of the People's Republic of China by the methods provided by Article 10 of the Convention."
The remaining authority cited by plaintiffs does not persuade the court otherwise. Plaintiffs submit a chart listing three pages of TRO's and orders authorizing service issued ex parte by judges of this court, including this judge. ECF No. 114-8. These orders, plaintiffs claim, reflect a broad consensus that authorizing email service on a defendant located in China is compatible with the Hague Service Convention. The orders were issued at the early stage of litigation in similar counterfeiting cases. See
IV. CONCLUSION
The TRO gave plaintiffs sufficient reason to believe that the manner of service authorized was adequate, but, like many such orders in similar cases, it was obtained ex parte and under seal. Paragraph nine of the TRO does not withstand scrutiny under full adversary briefing. Defendants'
*828motion to dismiss is therefore granted. The court will set a status hearing at which plaintiffs should be prepared to tell the court how, if at all, they intend to serve the defendants who have been dismissed.
Defendants also argue that the amended complaint inadequately pleads an element of plaintiffs' Lanham Act claims. At a hearing held October 3, 2018, plaintiffs sought leave to file an amended complaint in lieu of responding to defendants' Lanham Act arguments. Defendants opposed the oral motion for leave to amend. After hearing argument, the court directed the parties to brief the service of process issue. Defendants have preserved their Lanham Act arguments.
See generally Michael A. Rosenhouse, Annotation, Permissibility of Effectuating Service of Process by Email Between Parties to Hague Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters , 14 A.L.R. Fed. 3d Art. 8 (West 2019).
Particularly because plaintiffs in these types of cases often proceed ex parte, it is hoped that counsel will bring to the court's attention in future cases any mailing addresses of which they are aware, even if the address is believed to be invalid. Similarly, the court should be informed if counsel reasonably believes that mailing addresses may be available from online marketplaces.
Defendants attached evidence of the packing slips to their reply. The court nevertheless considers this evidence because plaintiffs sought and obtained leave to file a surreply.
Plaintiffs also cite Rio Properties Inc. v. Rio International Interlink ,
As it turns out, the Hague Convention did not apply in the Northern District of California case the MacLean-Fogg court cited because the plaintiff "presented evidence that physical addresses for a number of the named defendants cannot be located or that defendants have refused to accept service." Williams-Sonoma ,
For a similar reason, the court finds unpersuasive a Fifth Circuit case not cited by the parties. In Nagravision SA v. Gotech International Technology Limited ,
Hague Convention on Private International Law, https://www.hcch.net/en/instruments/conventions/status-table/notifications/?csid=393&disp=resdn (last visited May 1, 2019).
Reference
- Full Case Name
- LUXOTTICA GROUP S.P.A. and Oakley, Inc. v. The PARTNERSHIPS AND UNINCORPORATED ASSOCIATIONS IDENTIFIED ON SCHEDULE \A\""
- Cited By
- 40 cases
- Status
- Published