Discretion to Authorize Hague Alternative Service on Foreign Defendant—It’s All About Time and Cost

Thursday, September 23, 2021

The US Court of Appeals for the Federal Circuit denied a petition for a writ of mandamus, directing the US District Court for the Western District of Texas to dismiss multiple infringement actions for insufficient service of process and lack of personal jurisdiction where the plaintiff used alternative methods to effect service of process on a foreign defendant instead of the more conventional Hague Convention. Although the Court expressed reservations about the district court’s authorization of alternative service methods solely because of the Hague Convention’s slower and more expensive procedures, it found the decision to be within the district court’s discretion. In re: OnePlus Tech. (Shenzhen) Co., Ltd., Case No. 21-165 (Fed. Cir. Sept. 10, 2021) (non-precedential) (per curiam).

OnePlus is a Chinese consumer electronics manufacturing company. WSOU Investments d/b/a Brazos Licensing and Development is a non-practicing entity headquartered in Texas. Brazos filed five patent infringement actions against OnePlus and alleged that OnePlus had no place of business or employees in the United States. Although the People’s Republic of China is a signatory to the Hague Convention, Brazos decided not to attempt service on OnePlus by invoking the Hague Convention because of the burdens involved. Instead, Brazos requested that the district court grant leave under Fed. R. of Civ. Pro. 4(f)(3) to use alternative methods to effect service. Brazos made no showing that service under the Hague Convention had been tried and failed, would have been unlikely to succeed or was otherwise impracticable. The district court regarded the Hague Convention procedure as slow and expensive and granted the motion. Brazos served the complaint and summons on lawyers who represented OnePlus in the past and on OnePlus’s authorized agent for service in California.

OnePlus made a special appearance to challenge the sufficiency of the service and the district court’s jurisdiction over OnePlus. The district court rejected the challenge on the basis that Rule 4(f)(3) gave it discretion to order service on a foreign defendant by means other than those prescribed by the Hague Convention, and that the service was effective to grant the district court personal jurisdiction over OnePlus. OnePlus sought mandamus.

OnePlus’s mandamus petition requested that the Federal Circuit compel the district court to vacate its order authorizing alternative service and require that Brazos effect service pursuant to Hague Convention procedures. OnePlus argued that:

Brazos’s service was ineffective because it did not satisfy Texas state law.
As a result of the ineffective service, the district court lacked personal jurisdiction over OnePlus.
It was an abuse of discretion for the district court to authorize alternative service absent showing of a need to forego Hague Convention procedures.

OnePlus argued that the district court had jurisdiction over it only if OnePlus was subject to jurisdiction in Texas under the Texas long-arm statute. Because valid service under Texas law required the transmittal of documents abroad and triggered the Hague Convention (which Brazos did not use), OnePlus contended that there was no valid service and the district court therefore lacked personal jurisdiction over OnePlus. The Federal Circuit rejected this jurisdictional argument as conflicting with its precedent. Restrictions on service under the forum state’s long-arm statute do not foreclose substituted service on other grounds under Rule 4(f)(3). OnePlus’s argument confused service of process under Rule 4(f)(3), which provides for court-directed service “by any means not prohibited by international agreement” with service under Rule 4(e)(1), which does not require a court order and provides for service by “following state law.” The Court also rejected OnePlus’s argument that Rule 4(f) applies only to service of process effected abroad, rendering the district court’s order authorizing service in the United States invalid. Rule 4(f)(3) can be used to authorize alternative service that is effected within the United States.

The Federal Circuit also found that the district court did not abuse its discretion by authorizing alternative service under Rule 4(f)(3). While expressing concerns about the district court’s authorization of alternative means of service under Rule 4(f)(3) based solely on the fact that service under the Hague Convention is more cumbersome than more informal means of service on a foreign defendant, the Court declined to find a clear abuse of discretion that would warrant a writ of mandamus. The Court noted that although Rule 4(f)(3) was not meant to displace the other rules for service where alternative means of service are more convenient, it also is not a “last resort” or a type of “extraordinary relief” for a plaintiff seeking to serve process on a foreign defendant. The district court also had not granted relief under Rule 4(f)(3) in all cases where more conventional means of service would be merely inconvenient nor had it announced an intention to do so. On that record, the Court found the district court’s decision to be properly within its broad discretion in determining whether to grant relief under Rule 4(f)(3).