Konecranes Global Corporation v. Mode Tech (Beijing) Co. Ltd.

• Court: District Court, D. Nevada
• Decided: August 5, 2019
• Docket: 2:18-cv-02015
• Status: Unknown

Opinion

1 UNITED STATES DISTRICT COURT

2 DISTRICT OF NEVADA

3 KONECRANES GLOBAL CORPORATION, ) 4 ) Plaintiff, ) Case No.: 2:18-cv-02015-GMN-NJK 5 vs. ) 6 ) ORDER MODE TECH (BEIJING) CO., LTD., ) 7 ) Defendant. ) 8 ) 9 10 Pending before the Court is the Motion to Dismiss, (ECF No. 30), filed by Defendant 11 Mode Tech (Beijing) Co., Ltd. (“Mode Tech”). Plaintiff Konecranes Global Corporation 12 (“Plaintiff”) filed a Response, (ECF No. 41), and Mode Tech filed a Reply, (ECF No. 42). 13 For the reasons addressed below, the Motion to Dismiss is GRANTED in part and 14 DENIED in part. 15 I. BACKGROUND 16 This dispute arises from Mode Tech’s alleged attempt to market and sell products that 17 infringe upon Plaintiff’s patent at a trade show in Las Vegas, Nevada. Plaintiff is assignee of 18 U.S. Patent No. 8,096,528 (the “‘528 Patent”), entitled “Chain Sprocket with Increased 19 Capacity,” and issued on January 17, 2012. (See Compl. ¶ 6, ECF No. 1). Contemporaneous 20 with the Complaint, Plaintiff filed an ex parte emergency motion for temporary restraining 21 order (“TRO”) and a motion for preliminary injunction. (See Mot. for TRO, ECF No. 3); (Mot. 22 for Prelim. Inj., ECF No. 4). Plaintiff sought immediate relief upon discovering that Mode 23 Tech, a Chinese corporation, would be promoting products that infringe the ‘528 Patent at the 24 Live Design International Show and Conference (the “LDI Show”) in Las Vegas, Nevada. 25 (Mot. for TRO 1:20–28, 3:13–17). 1 Relevant to the instant Motion, the Court granted Plaintiff’s motion for TRO, enjoining 2 Mode Tech from producing, marketing, and selling products that infringe the ‘528 Patent and 3 authorizing Plaintiff to seize and impound infringing products with the aid of a U.S. Marshal. 4 (See Order Granting TRO 3:3–17, 3:22–5:8, ECF No. 9). The Court ordered that the U.S. 5 Marshal serve a copy of the Court’s Order granting the TRO, summons, and Complaint, at 6 Mode Tech’s place of business, with Mode Tech’s agent, or “at the place where infringing 7 products are found, with any person of suitable age and discretion.” (Id. 5:15–22). The Court 8 also set forth a briefing schedule on Plaintiff’s motion for preliminary injunction and ordered 9 that Plaintiff post a $1,000 bond. (Id. 3:13–20). 10 On October 23, 2018, Plaintiff filed proof of service indicating an employee of 11 Plaintiff’s counsel effectuated in-person service upon David Liu (“Liu”), Mode Tech’s booth 12 operator at the LDI Show. (Proof of Service 2:5–8, ECF No. 13). The filing also states Liu was 13 served twice through email, and that Mode Tech was served through federal express and 14 certified mail. (Id. 1:25–2:3, 2:10–18). Plaintiff subsequently withdrew the proof of service 15 and filed an affidavit from Shayla Whitaker (“Whitaker”), a licensed private investigator and 16 process server, specifying Liu was personally served at the LDI Show on October 20, 2018. 17 (Whitaker Aff., ECF No. 17-4). Plaintiff also filed a notice identifying the allegedly infringing 18 products Plaintiff seized from Mode Tech and items purportedly evidencing infringement. (See 19 Notice of Compliance, ECF No. 16). 20 The Court entered an order to show cause “as to why the Court’s [TRO] should not be 21 dissolved for failure to effect service pursuant to the Court’s [TRO].” (See Minute Order, ECF 22 No. 18). Plaintiff responded with an amended affidavit of service recounting the details of 23 Whitaker’s personal service upon Liu and representing that the manner of service was 24 consistent with the Court’s TRO. (Am. Aff. of Service, ECF No. 21). 25 1 The Court held a hearing on Plaintiff’s motion for preliminary injunction at which the 2 Court extended the TRO by fourteen days. (See Mins. of Proceedings, ECF No. 22). On 3 October 30, 2018, Plaintiff withdrew its motion for preliminary injunction, stating that upon 4 inspection, the seized chain sprockets “do not appear to show that Mode Tech has infringed the 5 ‘528 Patent.” (Notice of Withdrawal 2:5–9, ECF No. 23). Plaintiff later filed a notice 6 summarizing its efforts to return the non-infringing hoists to Mode Tech, which were 7 unsuccessful due to Plaintiff’s inability to discover Mode Tech’s contact information. (See 8 Notice, ECF No. 26). On November 14, 2018, in response to Plaintiff’s counsel’s prior emails, 9 Liu responded stating he would be in contact “soon” and would “check with [Mode Tech’s] 10 attorney” as to the process for retrieving Mode Tech’s seized items. (See Liu Email 11 Correspondence, Ex. 1 to Statute Report, ECF No. 27-1). 12 On February 11, 2019, Mode Tech filed the present Motion, seeking dismissal of this 13 action on the basis that Plaintiff’s method of service is improper under the Federal Rules of 14 Civil Procedure. (See Mot. to Dismiss (“MTD”), ECF No. 30). 15 II. LEGAL STANDARD 16 A. Rule 12(b)(5) 17 A federal court does not have jurisdiction over a defendant unless the defendant has been 18 served properly under Federal Rule of Civil Procedure 4. See Direct Mail Specialists, Inc. v. 19 Eclat Computerized Tech., Inc., 840 F.2d 685, 688 (9th Cir. 1988). As such, Rule 12(b)(5) 20 authorizes a defendant to move for dismissal due to insufficient service of process. See Fed. R. 21 Civ. P. 12(b)(5). The plaintiff has the burden of demonstrating that service of process was 22 valid. See R. Griggs Grp. Ltd. v. Filanto Spa, 920 F. Supp. 1100, 1102 (D. Nev. 1996). If 23 service of process is insufficient or otherwise invalid, the court has discretion to dismiss an 24 action or to simply quash service. See Fed. R. Civ. P. 4(m); S.J. v. Issaquah Sch. Dist. No. 411, 25 470 F.3d 1288, 1293 (9th Cir. 2006); Filanto Spa, 920 F. Supp. at 1102. Actual notice of a 1 lawsuit will not subject a defendant to personal jurisdiction “if service was not made in 2 substantial compliance with Rule 4.” Crowley v. Bannister, 734 F.3d 967, 975 (9th Cir. 2013) 3 (quotation omitted). 4 III. DISCUSSION 5 Mode Tech moves to dismiss on the basis that Plaintiff’s service of process was 6 improperly effectuated. (See generally MTD, ECF No. 30). According to Mode Tech, 7 Plaintiff’s service was deficient under Rule 4(h)(1)(B) because Plaintiff did not serve an 8 authorized agent, and improper under Rule 4(f)(3) for lack of compliance with the procedures 9 set forth by the Hague Convention, to which China is a signatory. (Id. 5:5–9:14). 10 Plaintiff disputes Mode Tech’s contentions, arguing that service of process was proper 11 under both Rule 4(h)(1)(B) and 4(f)(3). (Pl.’s Resp. (“Resp.”) 5:1–9:17, ECF No. 41). 12 Alternatively, Plaintiff requests an extension of time to properly serve Mode Tech in the event 13 the Court concludes service was defective. (Id. 9:20–10:10). 14 A. Sufficiency of Service of Process 15 1) Rule 4(h)(1)(B) 16 Mode Tech contends that Plaintiff’s service ran afoul of Rule 4(h)(1)(B) because Liu has 17 neither express nor implied authority to receive process on Mode Tech’s behalf. (MTD 7:9–24). 18 Plaintiff argues that Mode Tech’s evidence of Liu’s position in the company—Liu’s 19 Declaration—contains too many inaccuracies and inconsistencies to carry weight on the 20 question of his authority to accept service of process. (Resp. 5:17–6:4). 21 Under Rule 4(h)(1)(B), a domestic or foreign corporation may be served “by delivering 22 a copy of the summons and of the complaint to an officer, a managing or general agent, or any 23 other agent authorized by appointment or by law to receive service of process.” Fed. R. Civ. P. 24 4(h)(1)(B). “Despite the language of the Rule, service of process is not limited solely to 25 officially designated officers, managing agents, or agents appointed by law for the receipt of 1 process.” See Direct Mail, 840 F.2d at 688 (explaining that the rules governing service of 2 process “are to be applied in a manner that will best effectuate their purpose of giving the 3 defendant adequate notice.”). Accordingly, “service can be made ‘upon a representative so 4 integrated with the organization that he will know what to do with the papers. Generally, 5 service is sufficient when made upon an individual who stands in such a position as to render it 6 fair, reasonable and just to imply the authority on his part to receive service.’” Id. (quoting Top 7 Form Mills, Inc. v. Sociedad Nationale Industria Applicazioni Viscosa, 428 F.Supp. 1237, 1251 8 (S.D.N.Y. 1977)). 9 Here, Mode Tech, for its part, has put forth Declarations from Liu and Su Hang, Mode 10 Tech’s sales manager and chief executive officer, respectively, establishing the scope of Liu’s 11 agency with respect to service of process. (See Liu Decl. ¶ 5, ECF No. 31); (Hang Decl. ¶ 3, 12 Ex. A to Reply, ECF No. 42-1). Liu declares that in his capacity as “ordinary sales person,” 13 Mode Tech prohibits him from receiving, or signing for, legal service of process. (Liu Decl. ¶¶ 14 5–6). Hang’s Declaration echoes Liu’s testimony, stating Liu is a standard “sales 15 representative,” rather than an “officer, managing or general agent, or the registered agent,” and 16 is without authorization to accept service of process. (Hang Decl. ¶¶ 4–6). 17 Plaintiff, on the other hand, has not adduced evidence or put forth factual averments to 18 rebut these Declarations in any material way. For example, Plaintiff asserts that the Liu 19 Declaration misstates the process server’s gender and falsely claims Liu was not directly served 20 in person. (Resp. 5:23–6:4). The existence of these purported inaccuracies, however, does not 21 negate the uncontroverted evidence that Liu was not authorized to accept service on Mode 22 Tech’s behalf in the first instance. 23 Plaintiff also points out that Mode Tech has been on notice of the pendency of this 24 action since November 2018, shortly after the Court issued the TRO. While the Court 25 recognizes that “Rule 4 is a flexible rule that should be liberally construed so long as a party 1 receives sufficient notice of the complaint[,]” United Food & Commercial Workers Union v. 2 Alpha Beta Co., 736 F.2d 1371, 1382 (9th Cir.1984), substantial compliance is nevertheless 3 required. See Jes Solar Co. v. Chung, 725 F. App’x 467, 471 (9th Cir. 2018) (“Service must be 4 completed ‘in substantial compliance with Rule 4’ even with actual notice.”) (quoting Crowley, 5 734 F.3d at 975). That is, notwithstanding Mode Tech’s notice of the pendency of this case, 6 Plaintiff must still make a showing that Liu was authorized to receive service of process for 7 Mode Tech or else that Liu’s position within Mode Tech is sufficiently consequential such that 8 it would be “fair, reasonable and just to imply the authority on his part to receive service.” 9 Direct Mail, 840 F.2d at 688. Because Plaintiff has not made such a showing, the Court is 10 without a basis to find substantial compliance under Rule 4(h)(1)(B). 11 2) Rule 4(f)(3) 12 Next, the parties dispute whether Mode Tech was properly served under Rule 4(f)(3). 13 (See Resp. 8:1–9:17); (Reply 8:9–9:14). Under this rule, an “individual . . . may be served at a 14 place not within any judicial district of the United States . . . by other means not prohibited by 15 international agreement, as the court orders.” Fed. R. Civ. P. 4(f)(3). “As obvious from its 16 plain language, service under Rule 4(f)(3) must be (1) directed by the court; and (2) not 17 prohibited by international agreement.” Rio Props. v. Rio Int’l Interlink, 284 F.3d 1007, 1014 18 (9th Cir. 2002). 19 Plaintiff contends that because Ninth Circuit courts have authorized service through 20 email on foreign corporations under Rule 4(f)(3), this Court should do the same. (See Resp. 21 8:7–9:3). Plaintiff’s position is without merit. This Court did not issue—and Plaintiff did not 22 seek—an order authorizing substituted service under Rule 4(f)(3). Because obtaining a Court 23 order is a prerequisite to application of Rule 4(f)(3), Plaintiff cannot rely upon this rule to 24 validate its attempted service. See Brockmeyer v. May, 383 F.3d 798, 808–09 (9th Cir. 2004) 25 (holding service of process ineffective under Rule 4(f)(3) where the plaintiffs failed to seek the 1 court’s affirmative pre-authorization); Neumont Univ., LLC v. Nickles, 304 F.R.D. 594, 599 (D. 2 Nev. 2015) (“[Plaintiff] missed a critical step that prevents me from validating this 2012 3 substituted service: it never obtained a court order authorizing service via email before it sent 4 the August 16, 2012, transmission.”). 5 In summary, Plaintiff’s attempt to serve Mode Tech through Liu neither satisfies Rule 6 4(h)(1)(B) nor Rule 4(f)(3). Nevertheless, the Court declines to dismiss the Complaint on this 7 basis, as Mode Tech requests. Instead, the Court will exercise its discretion by quashing 8 service and permitting Plaintiff to properly serve Mode Tech as directed below. See Issaquah 9 Sch. Dist., 470 F.3d at 1293. 10 B. Plaintiff’s Request for Leave 11 Plaintiff requests a seven-day extension of the service deadlines to serve Mode Tech 12 under Rule 4(f)(3). (Resp. 9:20–10:10). Specifically, Plaintiff seeks an order permitting 13 substituted service through which it may serve Mode Tech by emailing Liu and copying Mode 14 Tech’s counsel on the correspondence. (Id. 10:1–10:10). Mode Tech opposes Plaintiff’s 15 request on the ground that the instant suit is frivolous and in contravention of Rule 11. (Reply 16 9:17–12:15, ECF No. 42). Alternatively, Mode Tech urges the Court to require Plaintiff to 17 effect service pursuant the Hague Convention’s procedures and Rule 4(f)(1). (Id. 12:16–24). 18 1) Extension of Time 19 District courts retain broad discretion to permit service-of-process extensions under Rule 20 4(m). See Mann v. Am. Airlines, 324 F.3d 1088, 1090 (9th Cir. 2003). In considering whether 21 to grant an extension, “a district court may consider factors ‘like statute of limitations bar, 22 prejudice to the defendant, actual notice of a lawsuit, and eventual service.’” Efaw v. Williams, 23 473 F.3d 1038, 1041 (9th Cir.2007) (quoting Troxell v. Fedders of N. Am. Inc., 160 F.3d 381, 24 383 (7th Cir.1998)). 25 1 The Court, in its discretion, will grant Plaintiff a seven-day extension of time to serve 2 Mode Tech. As noted above, there is no dispute that Mode Tech is currently on notice of this 3 action. Additionally, given the modest delay in this case, the Court cannot discern any 4 prejudice Mode Tech would suffer as a result of permitting Plaintiff to properly effectuate 5 service. The only prejudice Mode Tech identifies—having to defend against an allegedly 6 frivolous patent infringement suit—would be realized even if Plaintiff had properly effected 7 service. Cf. Efaw, 473 F.3d at 1041. Stated differently, to the extent Mode Tech is prejudiced, 8 it is not attributable to Plaintiff’s failure to comply with applicable service-of-process 9 requirements. 10 2) Substituted Service by Email 11 “The decision whether to allow alternative methods of serving process under Rule 12 4(f)(3) is committed to the ‘sound discretion of the district court.’” Brockmeyer, 383 at 805 (9th 13 Cir. 2004) (quoting Rio Props., 284 F.3d at 1016). Service under this rule must “comport with 14 constitutional notions of due process,” which require that the method of service be “reasonably 15 calculated, under all the circumstances, to apprise interested parties of the pendency of the 16 action and afford them an opportunity to present their objections.” Rio Props., 284 F.3d at 1016 17 (quoting Mullane v. Cent. Hanover Bank & Tr. Co., 339 U.S. 306, 314 (1950)). 18 The Court finds it appropriate to permit Plaintiff’s service upon Liu and Mode Tech’s 19 counsel through email. Plaintiff points out that Mode Tech is a Chinese company with no 20 regular presence in the United States and despite three attempts, Plaintiff has been unsuccessful 21 at serving Mode Tech consistent with the Federal Rules of Civil Procedure. (Resp. 8:15–9:17). 22 These efforts satisfy the Court that “the facts and circumstances of the present case 23 necessitate[] the district court’s intervention,” with respect Rule (4)(f)(3) service. Rio Props., 24 284 F.3d at 1016. 25 1 The Court further finds that service by email is reasonably calculated to apprise Mode 2 Tech of the pendency of this action. Indeed, there is no dispute that Mode Tech is presently on 3 notice of this action. (See generally MTD); (see also Hang Decl. ¶ 3, Ex. A to Reply, ECF No. 4 42-1). It is also undisputed that prior to Mode Tech filing the present Motion to Dismiss, 5 Plaintiff and Liu exchanged email messages on the email address to which Plaintiff seeks to 6 address Court-ordered service. (See Liu Email Correspondence, Ex. 1 to Statute Report, ECF 7 No. 27-1). These uncontroverted facts persuade the Court that service upon Liu and Mode 8 Tech’s counsel through email easily meets the threshold of being “reasonably calculated” to put 9 Mode Tech on notice of this action and to allow Mode Tech an opportunity to mount a defense. 10 See Rio Props., 284 F.3d at 1014–19 (authorizing service upon foreign entity’s U.S. counsel 11 under Rule 4(f)(3) where it “seemed clear” counsel was in contact his client); In Re TFT-LCD 12 (Flat Panel) Antitrust Litig., No. M07-1827 SI, 2010 WL 1337743, at *3 (N.D. Cal. Apr. 2, 13 2010) (“[T]he Court finds it reasonable to infer that Chunghwa has sufficient notice of this case 14 and that service of defendant through its U.S. counsel will comport with due process.”); see 15 also Fru Veg Mktg., Inc. v. Vegfruitworld Corp., 896 F. Supp. 2d 1175, 1182 (S.D. Fla. 2012) 16 (collecting cases). 17 The Court declines to order that Plaintiff effect service pursuant to the Hague 18 Convention and its corresponding requirements, as Mode Tech urges. (See Reply 12:16–14). 19 Rule 4(f)(3), like any other method of service under Rule 4(f), “is merely one means among 20 several which enables service of process on an international defendant.” Rio Props., 284 F.3d at 21 1015. Applying this rationale, the Ninth Circuit Court of Appeals has expressly rejected the 22 argument that a party requesting service under Rule 4(f)(3) must first exhaust all feasible 23 alternative means of service. Id. at 1014–15. This Court, likewise, rejects Mode Tech’s request 24 and will permit Plaintiff to serve Liu and Mode Tech’s counsel via email. 25 /// 1 IV. CONCLUSION 2 IT IS HEREBY ORDERED that Mode Tech’s Motion to Dismiss, (ECF No. 30), is 3 GRANTED in part and DENIED in part. The Motion is GRANTED insofar as it requests 4 that Plaintiff’s service of the Complaint, summons, and TRO be quashed pursuant to Rule 5 12(b)(5). Mode Tech’s Motion is DENIED with respect to the request for dismissal for failure 6 to effectuate service of process. 7 IT IS FURTHER ORDERED that pursuant to Plaintiff’s request, Plaintiff shall have 8 seven (7) days from the filing of this Order to serve Liu and Mode Tech’s counsel by email 9 addressed to junling_li@modehoist.com. Plaintiff shall serve a copy of the summons, 10 Complaint, and the Court’s Order granting Plaintiff’s Motion for TRO. Plaintiff shall file proof 11 of service with the Court within ten (10) days after service is effectuated. 12 DATED this _3___ day of August, 2019. 13 14 ___________________________________ Gloria M. Navarro, Chief Judge 15 United States District Judge 16 17 18 19 20 21 22 23 24 25