State Farm Fire and Casualty Company v. Gree USA, Inc. et al
Filing
31
OPINION AND ORDER denying 18 Motion to Dismiss. State Farm's service on Gree Electric in China and Gree Electric in Hong Kong through Gree USA was proper under bother federal and state law. Signed by Judge Robert L Miller, Jr on 09/25/2019. (jat)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
SOUTH BEND DIVISION
STATE FARM FIRE AND CASUALTY
COMPANY, as subrogee of
DENNIS HOLDREN,
Plaintiff
v.
GREE USA, INC., et al.,
Defendants
)
)
)
)
)
)
)
)
)
)
Cause No. 3:18-CV-349 RLM-MGG
OPINION AND ORDER
Gree Electric Appliances, Inc. and Gree Electric Appliance Sales in Hong
Kong (both foreign corporations) moved to dismiss the claims asserted against
them under Fed. R. Civ. P. 12(b)(5) contending that they weren’t properly served
under the Hague Convention. For the following reasons, the court denies their
motion.
State Farm Fire and Casualty Company, as subrogee of its insured, Dennis
Holdren, filed this products liability suit after Mr. Holdren’s home was damaged
in a fire allegedly caused by a defective dehumidifier manufactured by Gree
Electric Appliances in China, exported to the United States by Gree Electric
Appliance Sales in Hong Kong, and distributed by Gree USA and MJC America,
Ltd.1 State Farm served its compliant on the defendants at the California address
listed for Gree USA (a California corporation and wholly-owned subsidiary of Gree
1
Gree USA was formed in conjunction with MJC America (both citizens of
California) for the purpose of facilitating Gree Electric Appliances’s penetration of the
United States’ consumer market.
Electric Appliance Sales in Hong Kong, which, in turn, is a wholly-owned
subsidiary of Gree Electric Appliances in China).
Gree Electric in China and Gree Electric in Hong Kong moved to dismiss
the claims asserted against them under Rule 12(b)(5), contending that State
Farm’s service at the California address of Gree USA didn’t comply with the Hague
Convention. State Farm maintains that because Gree USA was a wholly owned
subsidiary of the foreign corporations, service upon their U.S. subsidiary was
sufficient to denote service upon the foreign parent company.
When a defendant challenges the sufficiency of service, the plaintiff bears
the burden of demonstrating that proper service occurred. See Homer v.
Jones–Bey, 415 F.3d 748, 754 (7th Cir.2005); Day v. Multi–Temp, No. 08 C 5981,
2010 WL 3835886, at*1 (N.D. Ill. Sept.23, 2010). When a foreign corporation is
served within a United States judicial district, service may follow the procedure
outlined in Rule 4(e)(1), which governs the service of an individual. Rule 4(e)(1)
makes service proper when the process “follow[s] state law for serving a summons
in an action brought in courts of general jurisdiction in the state where the district
court is located or where service is made.” If a foreign corporation isn’t served
within a United States judicial district, the corporation must be served according
to Rule 4(f). A person “may be served at a place not within any judicial district of
the United States . . . by any internationally agreed means of service that is
reasonably calculated to give notice.” Fed. R. Civ. Pro. 4(f)(1). While the court can
2
expand the time for service, it can’t excuse the requirement of service altogether.
See McMasters v. United States, 260 F.3d 814, 817 (7th Cir. 2001). “Actual notice
to the defendant is insufficient; the plaintiff must comply with the directives of
Rule 4.” Id.
The Hague Service Convention is a multilateral treaty formulated in 1964
by the Tenth Session of the Hague Conference of Private International Law.
Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694, 698 (1988). The
Convention revised parts of the Hague Conventions on Civil Procedure of 1905
and 1954, intending to provide “a simpler way to serve process abroad, to assure
that defendants sued in foreign jurisdictions would receive actual and timely
notice of suit, and to facilitate proof of service abroad.” Id. The primary innovation
of the Convention is that it requires each state to establish a central authority to
receive requests for service of documents from other countries. Volkswagenwerk
v. Schlunk, 486 U.S. at 698-699 (citing 20 U.S.T. 362, T.I.A.S. 6638, Art. 2).
China, Hong Kong, and the United States are all parties to the Hague Convention.
See Home Casual Enter. Ltd. v. Home Casual, LLC, No. 11-CV-661-WMC, 2012
WL 13042156, at *4-*6 (W.D. Wis. Nov. 13, 2012).
Gree Electric in China and Gree Electric in Hong Kong contend that State
Farm’s service didn’t comply with the terms of the Hague Convention, citing in
support Volkswagenwerk Aktiengesellschaft v. Schlunk, 486 U.S. 694 (1988). The
court disagrees.
3
In Volkswagenwerk v. Schlunk, the plaintiff served Volkswagen of America,
an Illinois corporation and wholly owned subsidiary of Volkswagen AG.
Volkswagen AG, like Gree Electric in China and Gree Electric in Hong Kong, cited
the Hague Convention and moved to dismiss the claim for improper service. In
upholding the Illinois state court’s ruling, the Supreme Court held that service on
a U.S. subsidiary of a foreign corporation is proper service on the parent. 486 U.S.
at 707 (“Where . . . service on a domestic agent is valid and complete under both
state law and the Due Process clause, our inquiry ends and the [Hague]
Convention has no further implications . . . .”). California courts have also found
that the Hague Convention doesn’t apply to service of a foreign defendant under
California law if the complaint was served on a California subsidiary of the foreign
parent. See Yamaha Motor Co. v. Superior Court, 174 Cal. 4th 264, 273-276
(2009).
Foreign corporations must be served “in a judicial district of the United
States: (A) in a manner prescribed by Rule 4(e)(1) for serving an individual; or (B)
by delivering a copy of the summons and of the complaint to an officer . . . or any
other agent authorized by appointment or by law to receive service of process.”
Fed. R. Civ. P. 4(h)(1). Rule 4(e)(1) deems service proper “following state law for
serving a summons in an action brought in courts of general jurisdiction in the
state where the district court is located or where service is made.” Fed. R. Civ. P.
4(e)(1) (emphasis added).
4
Because Gree USA was served in California, Rule 4 dictates that California
law controls whether service was proper. California Civil Procedure Code §
416.10(b) provides that “a summons may be served on a corporation by delivering
a copy of the summons and the complaint to a . . . general manager, or a person
authorized by the corporation to receive service of process.” Cal. Civ. Proc. Code
§ 416.10(b) (West 2017).
Gree Electric in China and Hong Kong argue that unlike the scenario in
Yamaha Motor Co., the individual who accepted service wasn’t Gree USA’s
designated agent for service of process, or any of the other listed positions
contemplated by § 416.10(b). But the term “general manager” has a broad
interpretation under California law. See e.g., Yamaha Motor Corp., 174 Cal. 4th
264 (2009); Falco v. Nissan North America Inc., 987 F. Supp. 2d 1071;
Khachatryan v. Toyota Motor Sales, U.S.A., Inc., 578 F. Supp. 2d 1224 (C.D. Cal.
2008). For the purposes of § 416.10(b), a California subsidiary is considered a
“general manager” of a foreign parent corporation for which the subsidiary is the
parent's distributor in the country. See Falco v. Nissan North America Inc., 987
F. Supp. 2d at 1076-1077.
State Farm’s service on Gree Electric in China and Gree Electric in Hong
Kong through Gree USA was proper under both federal and state law. Accordingly,
the defendants’ motion to dismiss and/or quash that service [Doc. No. 18] is
DENIED.
5
SO ORDERED.
ENTERED:
September 25, 2019
/s/ Robert L. Miller, Jr.
Judge
United States District Court
6
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?