The opinion of the court was delivered by: D. LOWELL JENSEN
There are three motions before the Court. First, several defendants have filed a motion to quash service of process. Second, other defendants have filed a motion for summary adjudication of the issue of whether certain elements of plaintiffs' benefit package constitute "wages" under 46 U.S.C. § 10313. Third, plaintiffs have filed a motion to certify an interlocutory appeal. A hearing was held on the first two motions on January 15, 1992, and the third motion was heard on January 29, 1992. At both hearings, plaintiffs were represented by Marvin Stender and defendants were represented by Frederick Wentker. Having considered the papers submitted and the arguments of counsel, the Court GRANTS defendants' motion to quash service of process, GRANTS in part and DENIES defendants' motion for summary adjudication, and DENIES plaintiffs' motion to certify an interlocutory appeal.
The four defendants bringing this motion are foreign corporations doing business outside the United States which plaintiffs attempted to serve by certified mail. Defendant Universal Sea Transport, S.A. (UST) is a Panamanian corporation with its principal place of business located in Japan. See Defendant Universal Sea Transport, S.A.'s Memorandum of Points and Authorities re Motion to Quash Attempted Service of Process Upon Defendant Universal Sea Transport, S.A. Under Rule 12(b)(5), at 1 [hereinafter UST Memorandum]. During 1990, in order to comply with Phillipine law, UST designated Trans-Phil Marine Enterprises, Inc. (Trans-Phil) as its agent for service of process in Manila. Id. at 7-8. This agency relationship was terminated by UST effective January 5, 1991. Id. at 2. Despite this termination, in September 1991 plaintiffs attempted to effect service of process on UST by sending the complaint and summons by certified mail to Trans-Phil. Id. Although Trans-Phil was no longer serving as UST's agent, someone at Trans-Phil signed for the letter and a receipt was returned to plaintiffs. Id. UST now claims that service was insufficient because Trans-Phil was not its agent.
Defendants Vesta Co., Ltd. (Vesta), Nippon Yusen Kaisha Ship Management Co., Ltd. (NYK), and Orion Shipping Co., Ltd. (Orion) are Japanese corporations with their principle places of business in Japan. In September 1991, plaintiffs attempted to effectuate service of process on these defendants by sending the complaint by certified mail to them in Japan. See Memorandum of Points and Authorities in Support of Motion to Quash Service of Process Against Vesta Co., Ltd., Nippon Yusen Kaisha Ship Management Co., Ltd., and Orion Shipping Co., Ltd., at 1 [hereinafter Japanese Defendants' Memorandum]. All three of the defendants refused to accept the letters and they were returned unopened to the United States. Id. Vesta, however, participated in this litigation anyway, filing motions to dismiss on September 18, 1990 and December 19, 1990.
The Court cannot exercise personal jurisdiction over a defendant unless there has been proper service over a defendant pursuant to Federal Rule of Civil Procedure 4. Direct Mail Specialists v. Eclat Computerized Technologies, Inc., 840 F.2d 685, 688 (9th Cir. 1988) (citing Jackson v. Hayakawa, 682 F.2d 1334, 1347 (9th Cir. 1982)). Without substantial compliance with Rule 4, it is irrelevant whether a defendant has notice of a plaintiff's claims. Id.
Under Rule 4, there are two ways to serve overseas defendants.
First, Rule 4(e) permits service according to a state statute if a defendant resides outside of the state in which the federal court sits. In this case, California Code of Civil Procedure § 415.40 allows service by "sending a copy of the summons and of the complaint to the person to be served by first class mail, postage prepaid, requiring return receipt." (West 1973 & Supp. 1992). Second, service may be made according to Rule 4(i), which permits, among other methods, the sending of "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(i)(1)(D). Implicit in both of these methods is the requirement that the letters be sent to the defendant or the defendant's legal agent. See Eclat, 840 F.2d at 688. The burden is generally on the plaintiff to demonstrate that the service of process was sufficient. See Wells v. City of Portland, 102 F.R.D. 796, 799 (D.Or. 1984).
If a service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint and the party on whose behalf such service was required cannot show good cause why such service was not made within that period, the action shall be dismissed as to that defendant without prejudice upon the court's own initiative. . . . This subdivision shall not apply to service in a foreign country pursuant to subdivision (i) of this rule.
The Ninth Circuit has held that dismissal under this provision is mandatory if plaintiff waits longer than 120 days after the complaint has been filed. See Wei v. Hawaii, 763 F.2d 370, 372 (9th Cir. 1985). "Good cause" for delay longer than 120 days generally means that service had been attempted but not completed, that plaintiff was confused about the requirements of service, or that plaintiff was prevented from serving defendants by factors beyond his control. Id.
Insufficiency of process is not a favored defense. Rule 12 permits a defendant to raise the defense of insufficiency of process in either the answer or in a pre-answer motion to dismiss. Fed. R. Civ. P. 12(b). However, if a defendant files a motion to dismiss and does not argue that process was insufficient, the defense is deemed to have been waived. See Fed. R. Civ. P. 12(g), (h)(1).
UST argues that service of process was insufficient for two reasons. First, Trans-Phil was not UST's agent in September 1991, meaning that UST did not receive the complaint and summons within the meaning of California Code of Civil Procedure § 415.40. UST's Memorandum, at 2. Second, UST argues that because Trans-Phil was appointed as an agent to receive process in the Phillipines due to the requirements of Phillipine law, an American plaintiff filing in this country should not be able to serve UST through Trans-Phil. Id. at 7-8.
Plaintiffs respond that the Court may exercise personal jurisdiction over defendants even without exact compliance with the California statute. Due process only requires that a defendant have notice of an action and an opportunity to defend against the claims. See Plaintiffs' Opposition to Defendants' Motion to Quash Service Upon Defendant Universal Sea Transport, S.A., at 2-3 [hereinafter Plaintiffs' Opposition to UST Motion]. As UST had both notice and the opportunity to hire counsel to represent it, there need not be exact compliance with the rules governing service. Id. Plaintiffs also argue that whether Trans-Phil was UST's agent is a matter of fact, meaning that they should be allowed to pursue discovery before the complaint is dismissed for lack of service. Id. at 4-5.
The Court finds UST's arguments to be persuasive. First, plaintiffs waited too long to attempt service on defendants. The complaint in this action was filed on August 17, 1990 and was amended on December 3, 1990. Plaintiffs did not attempt service until September 1991, which was at least nine months later. This delay is far longer than the 120 days provided by Rule 4(j).
There is no question that the time limitation in Rule 4(j) applies in this case. Although the rule specifically exempts attempts at service under Rule 4(i), plaintiffs in this case apparently attempted to serve UST pursuant to Rule 4(e) and the California statute as the certified letter was not sent by the clerk of the court (as it would if service was attempted pursuant to Rule 4(i)). Moreover, Rule 4(j) explicitly invites the Court to dismiss complaints on its own initiative due to tardy attempts to effect service. As plaintiffs have not made a showing of "good cause," the complaint will be dismissed pursuant to Rule 4(j).
C. Japanese Defendants' Motion to Quash
In 1972, the United States signed the Convention on Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters,  20 U.S.T. 361, TIAS No. 6638 [hereinafter Hague Convention]. Commonly known as the Hague Convention, this treaty governs the international service of process between the United States and other countries that have signed it. Newport Components v. NEC Home Electronics, 671 F.Supp. 1525, 1541 (C.D. Cal. 1987). As Japan entered into the Hague Convention in 1970, the service of process on defendants in Japan is governed by its terms. See id.
Under the Hague Convention, parties seeking to serve a defendant in a signatory country generally must send their request for service to a "central authority" in that country. Hague Convention, Art. 2. In Japan, that authority is apparently the Ministry of Foreign Affairs. See Japanese Defendants' Memorandum, at 3. Once it has the request for service, the central authority either serves the document in accordance with local law or according to another requested method that is not inconsistent with local law. Hague Convention, Art. 5. ...