Civil Procedure/Conflict of Laws Flashcards
Summary
Absent a governing international agreement, the district court has authority to order service of process by e-mail so long as the service is reasonably calculated to give notice to Copyco of the suit. Once it obtains jurisdiction over Copyco, the court should use State A’s “most significant relationship” approach to determine the proper law to apply to the unfair-competition claim. The proper choice of law depends on several factors, including the policies underlying the competing laws. Here, given the many connections of the case to State A, it is likely that a court sitting in State A would apply State A law.
Do the Federal Rules of Civil Procedure permit a federal district
court to authorize service of process on a foreign defendant by
e-mail?
Rule 4 of the Federal Rules of Civil Procedure permits service of process on a foreign corporation outside of the United States by any means directed by the court as long as it is not prohibited by international agreement.
Do the Federal Rules of Civil Procedure permit a federal district
court to authorize service of process on a foreign defendant by
e-mail? Rule
In a proper case, a federal court has the power to permit a plaintiff to serve a foreign corporate defendant by e-mail. Rule 4 authorizes service of process upon a corporation outside the United States “in any manner prescribed by Rule 4(f) for serving an individual, except personal delivery . . . .” FED. R. CIV. P . 4(h)(2). Subdivision (f) of Rule 4, in turn, permits service in places outside the United States by a variety of methods, including means of service allowed by international agreement, by foreign law, and by general international practice. Importantly, subdivision (f) gives the district court broad authority to direct service by any “means not prohibited by
international agreement.” FED. R. CIV. P . 4(f)(3). In other words, the court can authorize any method of making service of process abroad, including e-mail, in its discretion, if no international agreement prohibits it. Moreover, the court’s authority to direct non-traditional means of service “is neither a ‘last resort’ nor ‘extraordinary relief,’” Rio Props., Inc. v. Rio Int’l Interlink , 284 F.3d 1007, 1015 (9th Cir. 2002); it is simply one of the tools the court has to ensure that procedural matters are handled sensibly and fairly.
Do the Federal Rules of Civil Procedure permit a federal district
court to authorize service of process on a foreign defendant by
e-mail? Application
On the facts of this case, it is likely that e-mail service of process would be approved by the court. First, the facts state that there are no applicable international treaties, so the court’s power
to direct any “means” of service, including e-mail, is not limited by international agreement.
Second, this seems like a perfect case for e-mail: the defendant’s street address cannot be ascertained, and the defendant’s business conduct evinces a preference for communication through the Internet. It would seem that service by e-mail would be convenient for the defendant and reasonably calculated to give the defendant notice of the action. It would, moreover, prevent the significant hardship to the plaintiff that might result if the plaintiff were required to find other means to track down and serve this elusive corporate defendant. For these reasons, the court is likely to authorize e-mail service in this situation. For other recent cases authorizing e-mail service under such circumstances.
Is e-mail service of process constitutional under the circumstances
of this case?
Service by e-mail is constitutional where it is reasonably calculated to give notice.
Even if permitted by the Federal Rules of Civil Procedure, a method of service of process cannot be employed if it would violate the United States Constitution. The due process clause guarantees litigants “notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. . . . The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.” Mullane v. Central Hanover Bank & Trust Co ., 339 U.S. 306, 314–15 (1950). Service by e-mail is reasonably calculated to reach Copyco,
which lists its e-mail address on its website but does not list a street address or post office box. In fact, in these circumstances, service by e-mail may be the method of service most likely to reach
Copyco. Since service via e-mail is reasonably calculated to reach Copyco, it comports with due process.
Which jurisdiction’s choice-of-law rules should be used to select
the applicable unfair-competition law?
A federal court exercising diversity jurisdiction over non-federal claims must apply the choice-of-law rule of the state in which it sits.
In Klaxon Co. v. Stentor Electric Manufacturing Co ., 313 U.S. 487 (1941), the Supreme Court of the United States held that a federal district court sitting in diversity must apply the choice-of-law approach prevailing in the state in which it sits. The Klaxon rule is designed to ensure that a federal court sitting in diversity and the state court sitting next door would reach the same result if presented with the same case. If federal courts were free to craft their own choice-of-law rules, then the federal court might choose a different jurisdiction’s substantive law to govern the dispute than the state court would, and the goals of uniformity and equal administration of justice would be frustrated. Id . at 496–97. Thus, the federal district court sitting in State A should apply the choice-of-law approach followed by the courts of State A. The facts indicate that State A applies the Second Restatement of Conflict of Laws.
Under the “most significant relationship” test, what factors govern
the choice among State A, Country X, and State B unfair competition
law?
Because the federal court will apply State A’s choice-of-law rule, the Restatement (Second) of Conflict of Laws (the methodology employed by State A) applies here. Under the Second Restatement’s approach, issues in tort are governed by the law of the state that has the most significant relationship to the occurrence and the parties.
Unfair competition is a tort claim governed by § 145 of the Restatement (Second) of Conflict of Laws (cmts. e & f (1971)). Section 145 states that “the rights and liabilities of the parties with respect to an issue in tort are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties under the principles stated in § 6.” Id . § 145(1). Section 145 lists four contacts to be considered in performing this analysis: “(a) the place where the injury occurred, (b) the place where the conduct causing the injury occurred, (c) the . . . place of incorporation, and place of business of the parties, and (d)
the place where the relationship, if any, between the parties is centered. These contacts are to be evaluated according to their relative importance with respect to the particular issue.” Id . §
145(2).
Application
Here, an evaluation of the § 145 contacts reveals that a number of jurisdictions have important connections to the parties and the transaction. First, Bearco’s injury—the loss of customers who
bought Copyco’s knockoff “Griz” bears—occurred in all 50 states and would have been felt most acutely in State A (where Bearco maintains its corporate and administrative offices) and State B
(where Bearco’s factories are located). Copyco’s conduct occurred both in Country X, where it manufactured the knockoff bears, and also in all 50 states, where it sold bears in competition with Bearco. The two companies are incorporated in different locations, State A (Bearco) and Country X (Copyco), and their places of business are likewise in different locales. Where the contacts are so thoroughly split among so many jurisdictions, courts applying the Second Restatement will pay special attention to the principles for making choice-of-law decisions as stated in § 6 of the Restatement. In a tort case like this one, a court will ordinarily focus its attention on the policies of the laws that are in conflict and, in particular, on any interest of its own state in having its policies apply to the case. Id . at § 6(2)(b) & (c).
More application
Here it is likely that the purpose of State A’s unfair-competition law is to protect businesses from the economic harm caused by the kind of unfair competition involved in this case. Given that Bearco is a local business, incorporated and headquartered in State A, and that the injury from Copyco’s unfair competition will be felt in State A, State A would certainly have an interest in seeing its policy applied to force Copyco to compensate Bearco. On the other hand, Country X
would be interested in seeing its law apply to protect Copyco if the policy behind Country X’s failure to regulate unfair competition is intended to facilitate competition by its companies and to
encourage their manufacturing operations in Country X.
Here, a federal court sitting in State A is likely to conclude that State A has the “most significant relationship” to the case. In a situation of conflict between local and foreign law, where both the local and foreign jurisdictions’ policies would be furthered by applying their law, most courts will apply local law and further local policies unless there is a strong reason not to do so. There is nothing unfair in subjecting Copyco to State A law where its activities were directed in part at customers in State A, it injured a State A corporation, and it was foreseeable that it could be subject to State A law on account of its activities. The federal court will likely apply State A’s unfair-competition law.
Note
[NOTE: An applicant’s conclusion is less important than his or her ability to state and use the relevant principles of the Restatement (Second) of Conflict of Laws. Applicants are expected to
know that the federal court will apply State A’s choice-of-law methodology to choose the law governing the supplemental state claim and that the Second Restatement requires application of
the law of the state with the most significant relationship to the parties and the occurrence. They should also know that the Second Restatement requires consideration of a variety of personal and
territorial factors and an analysis of the policies underlying the laws competing for application. Applicants are not expected to recall specific Restatement sections or comments, nor are applicants expected to reach the same results as the model analysis.]
