Opinion
MDL Docket No. 3:03CV1516.
September 23, 2004
MEMORANDUM and ORDER Denying Nan Ya Taiwan's Motions To Dismiss
THIS MATTER comes before the Court on Defendant Nan Ya Plastics Corporation's ("Nan Ya Taiwan" or "NYT") Motion To Dismiss and Notice Of Intent To Rely On Foreign Law And Request For Judicial Notice, Plaintiffs' Responses, Defendant's Reply, and Class Plaintiffs' Surreply. Defendant Nan Ya Taiwan moves for dismissal pursuant to Rules 12(b)(2) and (5), alleging lack of personal jurisdiction and insufficiency of service of process.
For purposes of the instant Order, the term "Plaintiffs" will refer to all of the Class Plaintiffs, Individual or Non-Class Plaintiffs, as well as all putative class members. In the event the Court wishes to refer to a particular group (or sub-group) of plaintiffs, the Order will expressly identify that group.
I. Factual Background
These cases arise out of allegations by individual and class plaintiffs that beginning as early as 1995, and continuing at least through 2001, Defendants and their co-conspirators agreed, combined and conspired with each other to fix, raise, maintain and/or stabilize the price of polyester staple and to allocate markets and/or customers for the sale of polyester staple in the United States. (Consol. Am. Compl. at 2.) Plaintiffs collectively allege that as a result of Defendants' unlawful conduct and conspiracy, Plaintiffs paid artificially inflated prices for polyester staple. Therefore, Plaintiffs assert that Defendants violated Sections 4 and 16 of the Clayton Act, 15 U.S.C. §§ 15 and 26, and Section 1 of the Sherman Act, 15 U.S.C. § 1.
Nan Ya Taiwan is a Taiwanese company with its principal place of business in Taipei, Taiwan. (Jen Decl., ¶¶ 2-3) Nan Ya Taiwan's principal business is the production and processing of plastics, petrochemical, polyester fiber and electronic materials with smaller investments in other industries, such as dyeing and finishing. (Jen Decl., ¶ 3) Nan Ya Taiwan's Polyester Fiber Division consists of four (4) plants and twelve (12) factories dedicated to the manufacture of polyester staple fiber, all located in Taiwan. (Jen Decl., ¶ 6) Nan Ya Taiwan does not produce any polyester staple fiber in the United States.
Although most of its business is conducted in Asia, Nan Ya Taiwan exports a form of polyester staple known as "fiber-fill" to the United States. (Jen Dec., ¶¶ 4,7) According to Nan Ya Taiwan, its fiber-fill is exported to independent brokers within the United States who then resell the material to their own customers. (Jen Decl., ¶ 9) Nan Ya Taiwan describes its fiber-fill export business as "approximately 0.95% of its total worldwide annual sales revenue during this period" and "less than 4% of the polyester staple fiber market in the United States." (Jen Decl., ¶ 8) Class Plaintiffs contend that this 0.95% of Nan Ya Taiwan's total worldwide annual sales, which is reported to be approximately 3 billion dollars for the relevant period, translates into approximately $28.5 million dollars worth of fiber-fill being shipped into the United States. (Class Plaintiffs' Mem. at 2.)
Fiber-fill is typically used to stuff pillows, sleeping bags and jackets, and is also used in upholstery. Id.
According to Defendant Nan Ya Taiwan, it does not have any offices or facilities in the United States, does not maintain any telephone listings, mailing address, or bank accounts in the United States, does not solicit business in the United States, and does not employ any agents, salespersons or distributors within the United States. (Jen Decl., ¶ 9) However, Nan Ya Taiwan has two wholly-owned subsidiaries operating in the United States, Nan Ya Plastics Corporation, America ("Nan Ya America"), and Nan Ya Plastics Corporation, U.S.A. ("Nan Ya USA"). (Jen Decl., ¶¶ 13, 16) Nan Ya USA produces rigid PVC film while Nan Ya America is in the polyester staple fiber industry. (Jen Decl., ¶¶ 12, 16) Each of these Nan Ya entities is part of the "Formosa Plastics Group," which is the largest private enterprise in Taiwan, with significant investments in the United States. (Class Plaintiffs' Exhibits 2, 4)
Nan Ya America is named as a Defendant in this litigation along with Nan Ya Taiwan. Nan Ya America is a Delaware corporation with its headquarters in Livingston, New Jersey. (Jen Decl., ¶ 10) Nan Ya America has three plants in the United States and produces fine denier polyester staple fiber (or "spinning fiber") at its Lake City, South Carolina plant. (Jen Decl., ¶ 12) According to Nan Ya Taiwan, Nan Ya America is an "independent corporate entity" that makes its own decisions with respect to manufacturing, producing, marketing, pricing, and selling polyester staple fiber in the United States. (Jen Decl., ¶ 13)
As described in more detail, supra, the evidence presented during the criminal trial of Robert Bradley Dutton, 3:02CR202, does not support Mr. Jen's declaration regarding Nan Ya America's independence.
Nan Ya Taiwan does not sell any raw material or finished product to its subsidiary, Nan Ya America. (Jen Decl., ¶ 14) However, Nan Ya Taiwan concedes it provides regular support to Nan Ya America via annual training. (Jen Decl., ¶ 15) According to Nan Ya Taiwan, during the annual training, its employees "usually stay [in the United States] for a period of weeks," but "never longer than several months." (Jen Decl., ¶ 15) The parties disagree about the significance of the training Nan Ya Taiwan provides to Nan Ya America. Similarly, the parties characterize the relationship between Nan Ya Taiwan and its subsidiary, Nan Ya America, differently.
II. Standard Of Review Burden Of Proof
"When personal jurisdiction is properly challenged under Rule 12(b)(2), the jurisdictional question is to be resolved by the judge, with the burden on the plaintiff ultimately to prove grounds for jurisdiction by a preponderance of the evidence."Carefirst Of Maryland, Inc. v. Carefirst Pregnancy Centers, Inc., 334 F.3d 390, 396 (4th Cir. 2003) ( citing Mylan Laboratories, Inc. v. Akzo, N.V., 2 F.3d 56, 59-60 (4th Cir. 1993)). However, when the Court decides a pretrial personal jurisdiction motion without conducting an evidentiary hearing, the plaintiff is only required to establish a prima facie case for the exercise of personal jurisdiction. Id. ( citing Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989) (emphasizing standard of review when personal jurisdiction inquiry is limited to the allegations within the complaint, motions, and legal memoranda)). In determining whether a plaintiff has made the requisite showing, the Court must construe all relevant facts in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction. Combs, 886 F.2d at 676; Carefirst, 334 F.3d at 396 ( citing Mylan Labs., 2 F.3d at 60).
III. Personal Jurisdiction Analysis/FED. R. Civ.P. 12(b)(2)
"[B]efore a federal court can exercise personal jurisdiction over a defendant in a federal question case, the court must determine whether an applicable statute potentially confers jurisdiction by authorizing service of process on the defendant, and whether the exercise of jurisdiction would satisfy the requirements of due process." Deprenyl Animal Health, Inc. v. Univ. of Toronto Innovations Found., 297 F.3d 1343, 1349 (Fed. Cir. 2002) (patent case); ESAB Group, Inc. v. Centricut, Inc., 126 F.3d 617, 626-27 (4th Cir. 1997) (applying RICO's nationwide service of process statute).
A. Section 12 Of The Clayton Act Provides A Statutory Basis For Exercising Personal Jurisdiction Over Nan Ya Taiwan
Section 12 of the Clayton Act, provides:
Any suit, action, or proceeding under the antitrust laws against a corporation may be brought not only in the judicial district whereof it is an inhabitant, but also in any district wherein it may be found or transacts business; and all process in such cases may be served in the district of which it is an inhabitant, or wherever it may be found.15 U.S.C. § 22. As noted by the parties, there is a split among the circuits regarding the proper interpretation of Section 12. More specifically, courts have disagreed about whether the worldwide service of process authorization is contingent upon satisfaction of the section's venue provision. The significance is this — if construed as the exclusive means of establishing venue for purposes of The Clayton Act, a litigant is limited to demonstrating that the defendant is an "inhabitant," is "found," or "transacts business" in the relevant forum. If construed as an additional means of establishing venue, general venue provisions within the United States Code, such as the Alien Venue Act, 28 U.S.C. § 1391(d), would also apply.
The antitrust laws, referred to in the above text, are defined in Section 12 of this title.
The Alien Venue Act provides that "[a]n alien may be sued in any district," 28 U.S.C. § 1391(d).
Although the Fourth Circuit has not addressed this issue, other courts have looked to the plain language of the statute, the structure of the provision, the manner in which other special venue provisions and general venue statutes have been interpreted, legislative history and overall purpose of the Clayton Act, and prior dicta. Compare Go-Video, Inc. v. Akai Electric Co., Ltd., 885 F.2d 1406 (9th Cir. 1989) (relying primarily on antitrust policy and cases interpreting other special venue provisions, holding that Section 12 is a supplemental means for establishing venue over an alien defendant) and GTE New Media Services v. BellSouth Corp., 199 F.3d 1343 (D.C. Cir. 2000) (plain language requires holding that Section 12's venue and worldwide service of process provisions are interdependent); In Re Vitamins Antitrust Litigation, 94 F.Supp.2d 26 (2000).
For a note suggesting the broader interpretation of Section 12 is more consistent with case law, congressional history, and public policy, See 56 Fla. L.Rev. 673 (2004).
The Court first considers the plain language of Section 12.GTE, 199 F.3d at 1350; United States Dept. of Labor v. North Carolina Growers Ass'n, 377 F.3d 345, 350 (2004) ( citations omitted). "It is well established that when the statute's language is plain, the sole function of the courts — at least where the disposition required by the text is not absurd — is to enforce it according to its terms." Id. In interpreting the plain language of a statute, the words of a statute should be given their "ordinary, contemporary, common meaning, absent an indication Congress intended them to bear some different import." Id. In addition, the statutory language "must be read in context because a phrase gathers meaning from the words around it." Id.
As evidenced by the split of authority, the language of the statute is subject to more than one interpretation and is, therefore, ambiguous. The confusion arises as a result of the phrase "in such cases" that immediately precedes the worldwide service of process language. Certain courts have opined that "in such cases" refers only to those cases that satisfy the special venue provision within Section 12, while other courts have determined that "in such cases" refers to "[a]ny suit, action, or proceeding under the antitrust laws." Due to poor drafting, the ambiguity of Section 12 lies in determining which kind of cases are being referred to — antitrust actions generally, or antitrust actions where the special venue provision has been satisfied.
Defining "such" does not itself present a problem. The word "such" means "Of this kind; Of a kind specified or implied; Of a degree or quality indicated." The American Heritage Dictionary Of The English Language, Third (1992). The word "such" has also been defined as "the aforementioned." Webster's Third Int'l Dictionary (1963).
The structure of Section 12 lends itself to the stricter interpretation adopted by the District of Columbia Circuit. GTE New Media Services, 199 F.3d at 1350-51; Management Insights, Inc. v. CIC Enterprises, Inc., 194 F.Supp.2d 520, 531 (N.D.TX. 2001). In GTE New Media Services, the D.C. Circuit stated:
Indeed, it seems quite unreasonable to presume that Congress would intentionally craft a two-pronged provision with a superfluous first clause, ostensibly link the two provisions with the "in such cases" language, but nonetheless fail to indicate clearly anywhere that it intended the first clause to be disposable.Id. at 1351. The Court then explained that this interpretation would render the venue provision "wholly redundant." Id. ( citing Go-Video, Inc., 885 F.2d at 1413) (recognizing commentators' similar suggestions may be correct)). The undersigned agrees.
It is true that courts, including the Fourth Circuit, have generally interpreted special venue provisions to supplement, rather than preempt, general venue statutes. Pure Oil Co. v. Suarez, 384 U.S. 202 (1966) (15 CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE, § 3818 (2d ed. 2004);Barclays Leasing, Inc. v. Nat'l Business Systems, Inc., 750 F.Supp. 184, 186 (W.D.N.C. 1990) (statutory provisions should be given a liberal construction in order to ensure that North Carolina courts maintain the full jurisdictional powers permissible under federal due process) ( citing Vishay Intertechnology, Inc. v. Delta Int'l. Corp., 696 F.2d 1062 (4th Cir. 1982)). Indeed, considering a motion to dismiss for improper venue, the Fourth Circuit stated that the venue provisions within the Clayton Act were not exclusive. Ballard v. Blue Shield of Southern W.Va., Inc., 543 F.2d 1075, 1979-80 (4th Cir. 1976) ( citing Adams Dairy Co. v. Nat'l Dairy Products Corp., 293 F.Supp. 1135, 1140-41 (W.D.Mo. 1968)). However, because the plaintiff in Ballard was not relying on the worldwide service of process provision within Section 12 to establish personal jurisdiction, Ballard did not address the interplay between the venue and service of process clauses and, therefore, is not controlling. In other words, the exclusivity of the venue provision is not necessarily determinative. Rather, the relationship between the two provisions, if any, must be reconciled.
Congressional intent cannot be gleaned from the legislative history. As the Ninth Circuit stated, "the manner in which Congress believed the provisions would interact . . . is not apparent." Go Video, Inc., 885 F.2d at 1410. One reason for this is because the worldwide service of process provision was added by the Senate without debate or objection. Id.; 51 Cong.Rec. 14324, 63d Cong., 2d Sess. (Aug. 27, 1914). Some courts have relied in part on Congress's failure to act since the enactment of the Alien Venue Act. See General Electric Co. v. Bucyrus-Erie Co., 550 F.Supp. 1037, 1040 (1982) (because Section 12 and the Alien Venue Act were not enacted contemporaneously, and Congress has not since acted with respect to Section 12 following Alien Venue Act, no reason to infer Congress intended Section 12's venue provision to be exclusive). This argument lacks persuasive force.
Despite argument to the contrary, the overall purpose of the Clayton Act is also consistent with the Court's interpretation. Section 12 of the Clayton Act was enacted "to enlarge the jurisdiction given by Section 7 of the Sherman Act over corporations." Go-Video, Inc., 885 F.2d at 1413; Scophony, 333 U.S. at 806-08. Indeed, Section 12 has effectively done just that in at least two ways. First, by including the "transacts business" category within the venue provision, Section 12 has expanded the means for establishing venue over a corporate entity. Scophony, 333 U.S. at 806-07; 3 A.L.R. Fed. 120 (2004) ("transacting business" clause within Section 12 is the broadest section and the easiest test to meet).
Secondly, by authorizing worldwide service of process, Section 12 has provided additional bases for establishing personal jurisdiction over a foreign corporation. "Where Congress has authorized nationwide service of process by federal courts under specific federal statutes, so long as the assertion of jurisdiction over the defendant is compatible with due process, the service of process is sufficient to establish the jurisdiction of the federal court over the person of the defendant." ESAB Group Inc., 126 F.3d at 626 ( quoting Hogue v. Milodon Engineering, Inc., 736 F.2d 989, 991 (4th Cir. 1984) (bankruptcy)). The Fourth Circuit explained in Hogue that "[t]he propriety of process issuing from federal courts sitting in cases arising under federal law is not tested by the same yardstick as is the constitutional limitation upon service of process issuing from state courts because the issues involved necessarily are often national in character." Hogue, 736 F.2d at 991. Moreover, the nationwide service of process clause guarantees the exercise of personal jurisdiction over any United States corporation. Management Insights, 194 F.Supp.2d at 523 ("defendants residing within the four corners of the nation" have minimum contacts with the United States).
For the reasons stated herein, this Court finds that the venue provision within Section 12 must be satisfied before worldwide service of process is authorized. Accord (15 CHARLES ALAN WRIGHT ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE, § 3818 (2d ed. 2004) ("A better approach is to interpret section 12 the way it is written. Worldwide service is proper only when the action is brought in the district where the defendant resides, is found, or transacts business.")
B. Venue Is Proper Under Section 12 Because Nan Ya Taiwan "Transacts Business" In The Relevant Fora
"The test of venue for has been described by the Supreme Court as the practical, everyday business or commercial concept of doing or carrying on business "of any substantial character."" Chrysler Corp. v. Gen. Motors Corp., 589 F.Supp. 1182, 1195 (D.D.C. 1984) ( quoting United States v. Scophony Corp., 333 U.S. 795, 807 (1948)). In other words, it is not necessary to demonstrate day-to-day control over the subsidiary existed in order to find that venue is proper.Id. at 1202 (federal trial courts have abandoned the day-to-day control test in favor of the more practical business concept approach); Campos v. Ticketmaster Corp., 140 F.3d 1166, 1173 (8th Cir. 1998). Further, this practical standard is not altered because the defendant is a company incorporated outside of the United States. Id. at 1195 ( quoting Scophony, 333 U.S. at 810).
"This 'practical nontechnical business standard' is not altered because the defendant is a company incorporated outside of the United States." Id.
In order for a parent corporation to be amenable to suit in a particular district based on the activities of its subsidiary there, it must exercise a control relationship over its subsidiary. Chrysler Corp., 589 F.Supp. at 1200 ( citing Tiger Trash v. Browning Ferris Indus., Inc., 560 F.2d 818, 822 (7th Cir. 1977)). Despite a formal separation between the parent and subsidiary, where the parent exercises continuing supervision and intervention in the subsidiaries' affairs, the subsidiaries' activities are attributable to the parent for Clayton Act venue purposes. Id. ( citing Scophony Corp., 333 U.S. at 814.)
Nan Ya Taiwan "transacts business" in the relevant fora, including the Western District of North Carolina, for purposes of the Clayton Act's venue provision. Evidence presented during the related criminal proceedings revealed that Nan Ya Taiwan is directly involved in, if not in complete control of, many aspects of Nan Ya America's business. More specifically, evidence was presented that Bill Lin (or William Lin), an executive serving both entities, was in daily contact with the Assistant Sales Director of Nan Ya America, David Lin. (Dutton Trial Tr. at 504:6-9.) There was also testimony that all authority rested in Taiwan and that David Lin did not have authority for "any term or any price." (Dutton Trial Tr. at 669:3-13.) Rather, Bill Lin approved all price quotes and all shipments of product leaving Nan Ya America's South Carolina plant. (Dutton Trial Tr. at 668: 4-24.) In addition, Bill Lin made quarterly visits to the United States to "oversee" operations at the South Carolina plant. (Dutton Trial Tr. at 692:7-16.) There is sufficient evidence that Nan Ya Taiwan exerted the degree of control over Nan Ya America to satisfy the venue provision within Section 12.
Bill or William Lin serves as Vice President for Nan Ya Taiwan and Executive Vice President Director for Nan Ya America. Bill Lin is not related to David Lin.
C. The Exercise of Personal Jurisdiction Over Nan Ya Taiwan Comports With The Fifth Amendment's Due Process Requirements
Due process requires that the defendant has purposefully established "minimum contacts" with the forum state. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L. Ed. 95 (1945). The touchstone of the "minimum contacts" analysis is that an out-of-state person have engaged in some activity purposefully directed toward the forum. Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985). In addition, the court's exercise of personal jurisdiction must comport with traditional notions of "fair play and substantial justice." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980).
A court's exercise of personal jurisdiction may be either specific or general. If the cause of action is unrelated to the Defendant's activities in the forum state, Plaintiff must prove that the contacts are "continuous and systematic" to support the exercise of general jurisdiction over the Defendant.Helicopteros Nacionales de Columbia S.A. v. Hall, 466 U.S. 408, 415-16, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984). If the cause of action is related to or arises out of Defendant's actions within the state, the Plaintiff can seek to establish "specific jurisdiction." Id. at 414 n. 8.
1. Fifth Amendment "National Contacts" Theory
Because nationwide service is proper under Section 12, the Court applies a "national contacts" test in considering the due process requirements. ESAB Group, Inc., 126 F.3d at 626-27 (Fifth Amendment analysis appropriate under RICO nationwide service of process statute); Schrader v. Trucking Employees of North Jersey Welfare Fund, Inc., 232 F.Supp.2d 560, 572 (M.D.N.C. 2002) (following ESAB, applying national contacts test in ERISA context); Boon Partners v. Advanced Financial Concepts, Inc., 917 F.Supp. 392, 397 (E.D.N.C. 1996) (national contacts theory applicable where federal statute authorizes nationwide service of process); Management Insights, 194 F.Supp.2d at 532; 4 WRIGHT MILLER, FEDERAL PRACTICE AND PROCEDURE, Civ. § 1068.1 (3d ed. 2004) (recognizing propriety of applying a national contacts test when defendant is served with process pursuant to a provision in a federal statute).
2. General Jurisdiction
a. Nan Ya Taiwan's United States Sales As Prima Facie Showing For Exercise Of General Jurisdiction
Because there is evidence that Defendant engaged in systematic and continuous contacts with the United States, Plaintiffs make a prima facie showing of general jurisdiction. It is undisputed that Nan Ya Taiwan exports a significant amount of fiber-fill to the United States. (Jen Dec., ¶¶ 4,7) Given the weight of authority in this circuit, the Court could exercise general jurisdiction based on Nan Ya Taiwan's systematic and continuous export business. State of North Carolina, v. Alexander Alexander Services, Inc., 680 F.Supp. 746, 751 (E.D.N.C. 1988) ("Business contacts in the form of letters, telephone calls, and personal visits are significant enough to give defendants the reasonable expectation of being called into court."); Dowless v. Warren-Rupp Houdailles, Inc., 800 F.2d 1305, 1308 (4th Cir. 1986) (sale and use of defendant's products in the forum enough to satisfy minimum contacts test).
b. Relationship Between Nan Ya Taiwan Nan Ya America As Basis For Exercising General Jurisdiction
As is the case with venue, in some instances, a subsidiary's contacts may be imputed to the parent corporation for purposes of determining the existence of personal jurisdiction. Personal jurisdiction of Nan Ya Taiwan may be established as a result of Nan Ya America's "minimum contacts" with the forum. In re Automotive Refinishing Paint Antitrust Litigation, 2002 WL 31261330, *10-11 (E.D.Pa.) (July 31, 2002) (distinguishable in that no facts present to suggest parent performed business functions that subsidiary would normally conduct through its own agents and functions). As already discussed, supra, Nan Ya Taiwan exerted sufficient control, in a systematic and continuous manner, over Nan Ya America's business operations to justify exercising general jurisdiction. ( See Section "III, A") Therefore, Nan Ya Taiwan's purposeful availment in the United States is established via its relationship with its subsidiary Nan Ya America.
No party would seriously dispute Nan Ya America's minimum contacts with any of the original fora or where respective transferor courts lie. In these consolidated multidistrict proceedings, this transferee court can exercise personal jurisdiction to the same extent any of the transferor courts could. Moreover, under a national contacts analysis, Nan Ya America's actual physical presence within the United States is sufficient to warrant exercising general personal jurisdiction.
3. Specific Jurisdiction
Plaintiffs allege that Nan Ya Taiwan directed the alleged anticompetitive actions of its subsidiary, Nan Ya America. This allegation, taken as true for purposes of the instant motion, is sufficient to establish specific jurisdiction. Isostatic Graphite Antitrust Litigation, 2002 WL 31421920 (E.D.Pa.) (Sept. 19, 2002) (finding that exercising personal jurisdiction does not offend the traditional notions of fair play and substantial justice where the allegedly anti-competitive actions of the American subsidiaries were directed, at least in part, by their foreign parent corporation).
For all of the reasons discussed herein, the Court finds that exercising personal jurisdiction over Nan Ya Taiwan comports with both the statutory requirements of Section 12 of the Clayton Act as well as Fifth Amendment's Due Process requirements. Defendant's motion to dismiss for lack of personal jurisdiction will be denied. IV. Insufficiency Of Service Of Process Analysis/FED. R. Civ.P. 12(b)(5)
Nan Ya Taiwan contends that the various methods used by Plaintiffs for serving process are insufficient, providing an independent basis for dismissal of the claims against it. The Court first notes that even if process were deemed to be insufficient, dismissal would not be appropriate given Nan Ya Taiwan's actual notice of the claims against it. Thomas v. Shelley's Jewelry, Inc., 2000 WL 33422738, at *3 (W.D.N.C.) ( quoting Karlsson v. Rabinowitz, 318 F.2d 666, 668-69 (4th Cir. 1963)). As long as there is "reasonably conceivable means" of serving valid process, Defendant's motion must be denied. Grant-Brooks v. NationsCredit Home Equity Servs. Corp., 2002 WL 424566, at *4 ( quoting Stanga v. McCormick Shipping Corp., 268 F.2d 544, 554 (5th Cir. 1959)).
Prior to transfer to this district, Direct Purchaser Class Plaintiffs in New Jersey served Nan Ya Taiwan under FED. R. Civ. P. 4(h)(2) and 4(f)(2)(C)(ii). (Class Plaintiffs' Exhibit E) Following consolidation and transfer by the JPML, Class Plaintiffs attempted to serve the Consolidated Amended Class Complaint on Nan Ya Taiwan 1) by serving counsel of record for Nan Ya Taiwan, and 2) by twice mailing copies of the Consolidated Amended Complaint via certified mail, return receipt requested, on Y.C. Wang, Chairman of Nan Ya Taiwan (Class Plaintiffs' Exhibits F, L). Plaintiff American Fiber attempted to serve Nan Ya Taiwan by certified mail sent to Taiwan and also indicated that it was attempting to re-serve Nan Ya Taiwan. (American Fiber's Mem. at 3; Def.'s Mem. at 15.) At least one Plaintiff sought appointment of an international process server — WestPoint Stevens, Inc., but the record does not show that service has been effected. (3:03CV560; Docs. #33, #34) As to Plaintiffs American Fiber and WestPoint Stevens, Nan Ya Taiwan agrees to hold its motion in abeyance. (Defendant's Reply, at 19.)
Rule 4(h)(2) of the Federal Rules of Civil Procedure provides for service of process upon a corporation in a place "not within" any judicial district of the United States. FED. R. Civ. P. 4(h)(2). Under Rule 4(h)(2), service of process can be accomplished in any manner permitted under Rule 4(f) except paragraph (2)(C)(i) of that provision. Id. In the absence of any international agreement, Rule 4(f)(2) governs service of process outside the United States. Rule 4(f)(2) states that service may be accomplished in the following ways:
Subsection (1) of Rule 4(f) is not applicable here in that Taiwan is not a party to the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents, nor is it a party to any other relevant international agreement on service of process. (Def.'s Mem. at 14.)
(A) in the manner prescribed by the law of the foreign country for service in that country in an action in any of its courts of general jurisdiction; or (B) as directed by the foreign authority in response to a letter rogatory or letter of request; or (C) unless prohibited by the law of the foreign country, by . . . (ii) any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the party to be served.
FED. R. CIV. P. 4(f)(2) ( emphasis added). The options for service under Rule 4(f)(2), identified as subsections (A) thru (C), are stated in the disjunctive. Therefore, although the federal rules provide that service on a foreign corporation can be accomplished in "the manner prescribed by the law of the foreign country," service under foreign law is not required.Friend v. Internor Trade Inc., 1987 WL 7855, at *2 (E.D.Pa. March 16, 1987). The same is true for service directed by the foreign authority in response to a letter rogatory.
In this case, Nan Ya Taiwan submitted a Notice Of Intent To Rely On Foreign Law And Request For Judicial Notice indicating its desire to apply the Taiwan Code of Civil Procedure ("TCCP"). (Document #85) Defendant initially suggested in support of its motion to dismiss that personal service of the summons and complaint is required under the TCCP. ( See Def.'s Notice, Exhibit A, at 762.) In its reply, Defendant submits a Declaration from a Taiwanese attorney indicating that service by international registered mail may be accomplished under Taiwanese law if certain conditions are met. (Def.'s Reply, Exhibit 1) In addition to the materials referenced earlier, Nan Ya Taiwan now relies on Articles 123, 124, and 402 of the Republic Of China's ("ROC") Code of Civil Procedure as well as the "Law Governing Extension of Judicial Assistance to Foreign Courts." (Exhibit 1/Zen Decl. at 2-4; Exhibits A, B.) Class Plaintiffs assert that, in addition to being inconsistent with its original argument, Nan Ya Taiwan should be precluded from advancing this position regarding applicable service rules because it would run afoul of the advance disclosure requirement within FED. R. CIV. 44.1.
Rule 44.1 of the Federal Rules of Civil Procedure, which describes how a determination of foreign law is made, provides in pertinent part:
A party who intends to raise an issue concerning the law of a foreign country shall give notice by pleadings or other reasonable written notice. The court, in determining foreign law, may consider any relevant material or source, including testimony, whether or not submitted by a party or admissible under the Federal Rules of Evidence. The court's determination shall be treated as a ruling on a question of law.
FED. R. CIV. 44.1 (2004). Notwithstanding any issue regarding complete or partial notice, the Court rejects Plaintiffs' contention that the new foreign law materials submitted by Defendant should not be considered. Failure to consider these materials would be inconsistent with the directive of Rule 44.1 that the Court's review not be limited to materials submitted by the parties, or otherwise limited by the federal rules of evidence. The Court turns now to the proper manner of service upon Nan Ya Taiwan.
Because the Court's determination of foreign law is a question of law as opposed to a question of fact, the standard favoring a non-moving party does not assist Class Plaintiffs to the same degree as is typically the case on a motion to dismiss.SEC v. Dunlap, 253 F.3d 768, 777 (4th Cir. 2001) ("The determinations of a district court on foreign law are treated as rulings on questions of law . . . and, as such, are subject to de novo review on appeal.")
According to Professor Yang Shwu-Wen, civil procedure professor at the National Cheng-Chi University Department of Law in Taiwan, service by registered mail is not prohibited by Articles 131 and 136 of the TCCP. (Class Plaintiffs' Exhibit K/Yang Decl., ¶ 3) While this may be true, Articles 123 and 124 of the ROC's Code of Civil Procedure indicate that service of the summons and complaint by mail should be effected by the "court clerk" as opposed to the individual litigant. As explained by Attorney C.V. Chen, the appropriate "court clerk" is the ROC — not the foreign court. (Reply Exhibit 1/C.V. Chen Decl., ¶ 3iii) Chen goes further to explain this fundamental distinction between how service of summons and complaint for purposes of initiation of an action is accomplished in Taiwan and how commencement of an action is triggered in the United States — namely, that commencement of a civil action in Taiwan is channeled through the courts. (Id., ¶ 3v-vii) At a minimum, this raises a question regarding the validity of the service by registered mail Class Plaintiffs have already attempted, as well as the other methods of service — none of which utilized the Taiwan courts or otherwise sought judicial assistance.
Article 131 of the TCCP reads:
"If an action is one relating to business transactions, the service thereof may be executed on the manager concerned."
Article 136 provides:
"Service shall be executed at the domicile, residence, business office, or business establishment of the person to be served on; but, when the person to accept service is found at some other place, service may be executed at the place where he is found."
Article 123 provides:
"Except where it is otherwise provided, service shall be effected moto proprio by a clerk of the court."
Article 124 provides:
"Service shall be effected by a court clerk by delivering the documents to the court process-server or the post office for execution.
If service is executed by the post office, the postman will be regarded as the serving officer."
Following the initiation of the civil action under the ROC's Code of Civil Procedure, Article 265 allows for direct service on a party without assistance from the ROC court clerk. (Reply Exhibit 1/C.V. Chen Decl., ¶ 3vi, vii) Accordingly, all future filings may be served on Nan Ya Taiwan via registered mail.
After reviewing the foreign law materials submitted, and information obtained by the U.S. Department of State, the Court finds, as a matter of law, that service by international registered mail is not prohibited by Taiwanese law. Nonetheless, the U.S. Department of State advises that:
"If enforcement of a judgment is anticipated, however, Taiwan may not consider service by registered mail or by agent acceptable and may require that service be effected pursuant to a letter rogatory."
( See "http://travel.state.gov/law/taiwan legal") Indeed, absent the ability to enforce any judgment obtained against Nan Ya Taiwan, valid service under the federal civil rules will be meaningless. (Chen Decl., ¶¶ 3(c) and (d)) For this reason, this Court will require service on Nan Ya Taiwan pursuant to a letter rogatory in accordance with the guidelines set forth by the U.S. Department of State and Taiwan's Law Governing Extension of Assistance to Foreign Courts. (Chen Decl., ¶ 3(b); Reply Exhibit B) Given the time and expense involved in briefing this issue, in addition to the efforts utilized in pursuing the other methods of service, the undersigned can't help but question why Plaintiffs didn't originally proceed in the method preferred by Taiwanese law.
Specific detailed procedures are described by the American Institute in Taiwan in the State Department's website section titled "Letters Rogatory."
V. Order
IT IS, THEREFORE, ORDERED THAT:
1) Defendant Nan Ya Taiwan's Motions To Dismiss Pursuant To Rule 12(b)(2) are hereby DENIED;
2) Defendant Nan Ya Taiwan's Motions To Dismiss Pursuant To Rule 12(b)(5) are also DENIED;
3) Class Plaintiffs shall prepare and forward a letter rogatory to the Taiwanese Government seeking assistance with service of process pursuant to the guidelines set forth by the U.S. Department of State and Taiwan's Law Governing Extension of Assistance to Foreign Courts;
4) Unless directed otherwise, this Memorandum and Order shall be applicable in all future tag-along actions in these consolidated pretrial proceedings; and
5) The Deputy Clerk is directed to forward a copy of the instant Memorandum and Order to all Liaison Counsel appointed by the undersigned and/or designated by Defendants.