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Products and Ventures International v. Axus Stationary (Shanghai) Ltd.

United States District Court, N.D. California

July 21, 2016

Products and Ventures International, Plaintiff,
Axus Stationary (Shanghai) Ltd., et al., Defendants.


          Yvonne Gonzalez Rogers United States District Court Judge.

         On May 24, 2016, the Court heard oral arguments on the specially appearing defendants’ motion to dismiss this action. (Dkt. No. 71.) The Court dismissed the complaint with leave to amend and ordered that the parties engage in jurisdictional discovery. (Dkt. No. 71; see Dkt. No. 74 (Transcript of May 24 Hr’g) at 4.) On June 7, 2016, the Court issued a written order incorporating its orders on the record at the May 24, 2016 hearing, and further dismissed the claims against defendant Andre Viegas for insufficient service of process because plaintiff Products and Ventures International failed to follow the requirements of Federal Rule of Civil Procedure 4(f) and the Hague Convention. (Dkt. No. 72.) In the order, the Court stated that it would entertain a motion requesting substituted service on Mr. Viegas, if Mr. Viegas did not voluntarily agree to accept service.

         On June 17, 2016, plaintiff filed a motion for substituted service on Mr. Viegas. (Dkt. No. 75, “Mtn.”) Additionally, plaintiff requests that the Court award plaintiff with attorney’s fees and costs associated with filing the instant motion for substituted service. (Id.) On June 24, 2016, Mr. Viegas specially appeared through his U.S.-based counsel to serve an opposition to plaintiff’s motion (Dkt. No. 79, “Opp’n”).[1]

         Having carefully considered the papers submitted, and for the reasons set forth below, the Court hereby Grants the motion for substituted service, but Denies the motion for attorney’s fees and costs. The jurisdictional discovery request plaintiff served on Mr. Viegas through his U.S.-based counsel on June 6, 2016 (see Dkt. No. 76, Decl. of Gaw ¶ 3) shall be deemed properly served as of the date of this Order.


         Plaintiff requests the Court to order substituted service on Mr. Viegas through his U.S.-based counsel pursuant to Federal Rule of Civil Procedure 4(f)(3). Rule 4(f)(3) states that service upon an individual in a foreign country may be perfected by any “means not prohibited by international agreement, as the court orders.” Defendant argues first that plaintiff must demonstrate an “urgency” requiring an order for substituted service-and has failed to do so-and second that plaintiff has provided no reason explaining why service could not be effected on Mr. Viegas pursuant to the Hague Convention. The Ninth Circuit held the following with respect to Rule 4(f)(3):

By all indications, court-directed service under Rule 4(f)(3) is as favored as service available under Rule 4(f)(1) or Rule 4(f)(2). Indeed, Rule 4(f)(3) is one of three separately numbered subsections in Rule 4(f), and each subsection is separated from the one previous merely by the simple conjunction “or.” Rule 4(f)(3) is not subsumed within or in any way dominated by Rule 4(f)’s other subsections; it stands independently, on equal footing. Moreover, no language in Rules 4(f)(1) or 4(f)(2) indicates their primacy, and certainly Rule 4(f)(3) includes no qualifiers or limitations which indicate its availability only after attempting service of process by other means.

Rio Props., Inc. v. Rio Int’l Interlink, 284 F.3d 1007, 1017 (9th Cir. 2002). The Ninth Circuit further explained that a plaintiff need “only to demonstrate that the facts and circumstances of the present case necessitate[] the district court’s intervention.” Id. at 1016.[2] Here, the Court finds sufficient facts and circumstances making the Court’s intervention appropriate.

         Here, Mr. Viegas is not similarly situated to the other defendants who reside in the People’s Republic of China (“PRC”) and for whom plaintiff is working through the prescriptions of the Hague Convention for the purposes of service. Mr. Viegas argues his exclusion at this time would not cause any undue delay because he would be on the same litigation track as the other PRC defendants if plaintiff were to serve him through the Hague Convention. However, unlike these other defendants, Mr. Viegas is a U.S. citizen and was one of the signatories to the contract at issue here. Moreover, Mr. Viegas is alleged to have significant ownership of all of the corporations at issue in this litigation and allegedly has been decommissioning corporations and transferring assets to avoid potential liability in this litigation, necessitating urgent action. Accordingly, the Court finds that the facts and circumstances surrounding Mr. Viegas, narrowly and specifically, as opposed to all the defendants, necessitate the Court’s intervention here in authorizing substituted service. The Court further finds that service on Mr. Viegas’ U.S.-based counsel comports with the rules and is not expressly prohibited by the Hague Convention. See Richmond Techs., Inc. v. Aumtech Bus. Sols., No. 11-CV-02460, 2011 WL 2607158, at *13 (N.D. Cal. July 1, 2011) (“Service upon a foreign defendant’s United States-based counsel is a common form of service ordered under Rule 4(f)(3).”); In re TFT-LCD (Flat Panel) Antitrust Litig., No. 10-CV-04945, 2011 WL 845882, at *3 (N.D. Cal. Mar. 8, 2011) (finding that “service on [defendant] through its U.S. counsel comports with due process”); Brown v. China Integrated Energy, Inc., 285 F.R.D. 560, 566 (C.D. Cal. 2012) (allowing substituted service on individual officer defendants in PRC by serving the company’s authorized agent for service in Delaware or its U.S. counsel).

         Accordingly, the Court Authorizes service on Mr. Viegas to be effected by service on Hogan Lovells U.S. LLP, Mr. Viegas’ U.S.-based counsel. The Court Orders that the jurisdictional discovery requests authorized by the Court and served by plaintiff on Mr. Viegas’ counsel be deemed effective as of the date of this Order.


         Plaintiff also requests attorney’s fees in the amount of $5, 757.50 for the preparation and filing of the motion for substituted service because defendant refused to waive service. The Court declines to grant such a request at this time.[3]

         The case plaintiff cites in support of its request for attorney’s fees recognizes that courts have the inherent power to assess attorney’s fees against counsel but only in “narrowly defined circumstances.” Chambers v. NASCO, Inc., 501 U.S. 32, 45 (1991). Chambers further notes that courts may assess fees when a party “shows bad faith by delaying or disrupting the litigation or by hampering enforcement of a court order.” Id. at 46. Although Mr. Viegas’ refusal to waive service may have the effect of delaying or disrupting the litigation, the Court is unable to find at this time that it has been done in bad faith.[4]

         Accordingly, plaintiff’s instant motion for attorney’s fees and costs ...

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