RoyaltyStat, LLC v. IntangibleSpring, Corp. et al

Filing 44

MEMORANDUM OPINION. Signed by Judge Paula Xinis on 3/9/2017. (aos, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
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ROYALTYSTAT, LLC,

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Plaintiff,

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v.

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Civil Action No. PX 15-3940

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INTANGIBLESPRING CORP., et al.,
Defendants.

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MEMORANDUM OPINION

Currently pending before the Court is Plaintiff RoyaltyStat, LLC’s (“Plaintiff” or
“RoyaltyStat”) Motion for Approval of Alternative Service pursuant to Federal Rule of Civil
Procedure 4(f)(3). ECF No. 40. Plaintiff moves to serve Defendant Raul Pacheco Quintanilla, a
Mexican resident, individually and on behalf of Defendant Institute for IntangibleSpring Corp.
(“IntangibleSpring”), a Panamanian corporation, via their United States attorneys currently
representing them in this matter. The issues are fully briefed, and the Court now rules pursuant to
Local Rule 105.6 because no hearing is necessary. For the reasons stated below, Plaintiff’s
motion shall be GRANTED.
I.

BACKGROUND

Defendant IntangibleSpring is a corporation organized under the laws of the Republic of
Panama. Defendant Pacheco is a former independent contractor of RoyaltyStat and an owner of
shares in IntangibleSpring.
Plaintiff first believed that Defendant Pacheco resided in France, where they focused
their efforts on perfecting service. Plaintiff attempted to serve Pacheco in France in compliance
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with Rule 4(f)(1) and the Hague Convention on the Service Abroad of Judicial and Extrajudicial
Documents in Civil or Commercial Matters, November 15, 1965, 20 U.S.T. 361 (the “Hague
Convention”), with no success. At the same time, Plaintiff also attempted to serve
IntangibleSpring through it attorney, John Di Giacomo, who eventually entered his appearance in
this case. Plaintiff also attempted service of process on IntangibleSpring’s resident agent in
Panama to no avail.
After a hearing on Defendant’s Motion to Quash service on attorney John Di Giacomo,
the Court granted Defendants’ motion but made clear that Plaintiff would be given an
opportunity to move for alternative service under Rule 4(f) of the Federal Rules of Civil
Procedure.1 ECF No. 37. At that same hearing, Defendants’ counsel agreed in open court that
service of process on Defendant Pacheco, an officer of IntangibleSpring, would also satisfy
service of process on Defendant IntangibleSpring. See M. Hr’g Tr., Jan. 18, 2017, ECF No. 41-4
at 4.
During the litigation of Defendants’ Motion to Quash, Plaintiff then became aware that
Pacheco purportedly lives in Mexico, and Plaintiff engaged a Mexican investigator in an attempt
to find Pacheco’s address. ECF No. 41-1 at 4. Plaintiff’s Mexican investigator ran multiple
searches but could not confirm a physical address registered in Pacheco’s name. ECF No. 41-1 at
4. Then, after Plaintiff once again expended additional time and energy attempting to locate
Pacheco, Pacheco’s counsel provided Pacheco’s address in Mexico to the Plaintiff on January
30, 2017, ECF No. 41-3 at 10, only three days before Plaintiff’s motion for alternative service
was due to the Court. ECF No. 37.

1
Defendants’ motion at ECF No. 20 was captioned as a motion to dismiss but was converted to a motion
to quash process. ECF No. 36 at 1.

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Plaintiff argues that its extensive efforts to locate Pacheco and to serve IntangibleSpring
demonstrate that it has exhausted all reasonable avenues to obtain service, and therefore seeks
leave under Rule 4(f) to serve Defendants’ attorneys, John Lynch and John Di Giacomo instead.
Defendants argue that Plaintiff should be required to provide more evidence justifying the need
to resort to alternative service under Rule 4(f)(3).
II.

ANALYSIS

Rule 4(f) governs service of process upon individuals in foreign countries and provides
three mechanisms of service:
(1) by any internationally agreed means reasonably calculated to
give notice, such as those means authorized by the Hague
Convention on the Service Abroad of Judicial and Extrajudicial
Documents; or
(2) if there is no internationally agreed means of service or the
applicable international agreement allows other means of service,
provided that service is reasonably calculated to give notice: . . . or
(3) by other means not prohibited by international agreement as
may be directed by the court.
Fed. R. Civ. P. 4(f).
Service of process under either prong of Rule 4(f) of the Federal Rules of Civil Procedure
must also satisfy constitutional due process notice requirements. Lipenga, No. GJH-14-3980,
2015 WL 9484473, at *2 (D. Md. Dec. 28, 2015) (citing Enovative Tech., LLC v. Leor, No. JKB14-3956, 2014 WL 7409534, at *1 (D. Md. Dec. 24. 2014)). Notably, Rule 4(f) does not denote
any hierarchy or preference of one method of service over another. Rio Props., Inc. v. Rio Int’l
Interlink, 284 F.3d 1007, 1015 (9th Cir. 2002). In other words, service under Rule 4(f)(3) can be
sought and obtained at any time provided that service is directed by the court and not prohibited
by international agreement. Id. In this way, Rule 4(f)(3) alternative service is neither a ‘last

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resort’ nor ‘extraordinary relief.’ It is merely one means among several which enables service of
process on an international defendant.” Id. (internal citation omitted).
However, “a district court, in exercising the discretionary power permitted by Rule
4(f)(3), may require the plaintiff to show that they have ‘reasonably attempted to effectuate
service on defendant and that the circumstances are such that the district court's intervention is
necessary to obviate the need to undertake methods of service that are unduly burdensome or that
are untried but likely futile.’” FMAC Loan Receivables v. Dagra, 228 F.R.D. 531, 534 (E.D. Va.
2005) (quoting Ryan v. Brunswick, 2002 WL 1628933, *2 (W.D.N.Y. 2002)). Plaintiff’s efforts
to find Defendant Pacheco and serve Defendant IntangibleSpring, as detailed supra and in the
Court’s prior memorandum opinion (Royaltystat, LLC v. IntangibleSpring Corp., No. CV PX 153940, 2017 WL 219372 (D. Md. Jan. 19, 2017), ECF No. 36), satisfy the Court’s requirement.
Accordingly, the Court must now determine whether the requested method of service is
“reasonably calculated” to give notice to defendant and is not prohibited by international
agreement. See Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950). Each
is addressed in turn.
First, the proposed service on Defendants’ attorneys is not otherwise prohibited by any
international agreement. Defendant IntangibleSpring is a Panamanian corporation. Both Panama
and the United States are signatories to the Inter-American Convention on Letters Rogatory
(“IACLR”), which is intended to replace the traditional letters of request2 and allow for service
of process in a manner recognized by both countries.3 Elcometer, Inc. v. TQC-USA, Inc., No. 12                                                            
2
“Letter of request” is synonymous with “letter rogatory.” Fed. R. Civ. P. 4 advisory committee's note to
1993 amendment. (“Although these words are synonymous with ‘letter rogatory,’ ‘letter of request’ is
preferred in modern usage.”)
3

See U.S. Department of State, Inter-American Service Convention and Additional Protocol,
https://travel.state.gov/content/travel/en/legal-considerations/judicial/service-of-process/iasc-andadditional-protocol.html (last visited Jan. 17, 2017).

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CV-14628, 2013 WL 592660, at *2 (E.D. Mich. Feb. 14, 2013); Inter-American Convention on
Letters Rogatory, January 30, 1975, S. TREATY DOC. No. 27, 98th Cong., 2d Sess. (1984).
However, the IACLR “merely provides a mechanism for transmitting and delivering letters
rogatory when and if parties elect to use that mechanism.” Dow Chem. Co. v. Daniel, No. 1314745, 2014 WL 1304289, at *7 (E.D. Mich. Mar. 28, 2014) (quoting Kreimerman v. Casa
Veerkamp, S.A. de C.V., 22 F.3d 634, 642 (5th Cir. 1994)) (emphasis in original). The IACLR
does not set forth the only means of service, nor does it “foreclose other methods of service
among parties residing in different signatory nations, if otherwise proper and efficacious.”
Kreimerman, 22 F.3d at 647. Because the IACLR does not prohibit service of process upon the
attorney of record, this requirement of Rule 4(f)(3) is met regarding Defendant Intangible Spring.
As to Defendant Pacheco, he currently resides in Mexico according to his counsel. ECF
No. 41-3 at 10. Mexico is also a signatory of the IACLR. Kreimerman v. Casa Veerkamp, S.A.
de C.V., 22 F.3d 634, 637 (5th Cir. 1994); Nicor Int’l Corp. v. El Paso Corp., 292 F. Supp. 2d
1357, 1372 n.9 (S.D. Fla. 2003). But Mexico and the United States are also signatories to the
Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents.4 Compass
Bank v. Katz, 287 F.R.D. 392, 394 (S.D. Tex. 2012); Unite Nat’l Ret. Fund v. Ariela, Inc., 643 F.
Supp. 2d 328, 333 (S.D.N.Y. 2008). Notably, however, the Defendant attorneys are based in the
United States (Michigan and Maryland respectively), and so the Hague Convention does not
apply because “transmittal abroad” would not be “a necessary part of service.’” FMAC Loan
Receivables v. Dagra, 228 F.R.D. 531, 533 (E.D. Va. 2005) (quoting and citing Volkswagenwerk
Aktiengesellschaft v. Schlunk, 486 U.S. 694, 707 (1988) (“Where service on a domestic agent is

4
Hague Convention on Private International Law, 14: Convention of 15 November 1965 on the Service
Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters, April 7, 2016, available
at https://www.hcch.net/en/instruments/conventions/statustable/?cid=17.

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valid and complete under both [governing authority] and the Due Process Clause, our inquiry
ends and the Convention has no further implications”)); accord Atlas One Fin. Grp., LLC v.
Alarcon, No. 12-CV-23400, 2014 WL 12571403, at *3 (S.D. Fla. Feb. 28, 2014) (“The Hague
Convention does not apply to service in the U.S. or where the address of the person to be served
is unknown.”).5 Thus, service upon domestically based attorneys is not prohibited by any
applicable international agreement and so meets the requirements of Rule 4(f)(3). The Court
next turns to its due process analysis.
The record in this case clearly indicates that service on Defendants’ attorneys John Di
Giacomo and John Lynch is reasonably calculated to provide the Defendants with formal notice
of the immediate action. Defendants’ initial motion to quash demonstrates as much. There,
counsel was able to confer with his client enough to address both insufficiency of process and the
merits of the claims. ECF No. 21. Through counsel, therefore, Defendants were able to
meaningfully participate in the defense. Indeed, Defendant Pacheco’s sworn affidavit submitted
as part of his Motion to Quash, ECF No. 21-2, demonstrates unequivocally that he has actual
notice of this litigation.
Since the Courts’ hearing on Defendants’ motion to quash the prior summons,
Defendants’ counsel now also knows where Defendant Pacheco’s currently lives in Mexico.
This is not an insubstantial feat given the difficulties that Plaintiff has encountered in locating
Defendant Pacheco after many good-faith attempts. Finally, given counsels’ professional and
ethical obligations to keep Defendant Pacheco informed about the status of the case going

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Defendants insisted that Plaintiff had failed to show that the proposed method of service was not
prohibited by Mexico’s laws under Rule 4(f)(2)( C). Both Parties provide legal opinions of Mexican
lawyers on that issue. ECF No. 42-1 and 41-3. However, Plaintiff’s request was made under Rule
4(f)(3) which does not require a showing that the method of service is not prohibited by the foreign
country’s laws. See also Atlas One Fin. Grp., LLC v. Alarcon, No. 12-CV-23400, 2014 WL 12571403, at
*3 (S.D. Fla. Feb. 28, 2014).

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forward, see Md. Rules of Prof’l Conduct 19-301.4, counsel must have some mechanism for
contacting Defendants. Serving Mr. Di Giacomo and Mr. Lynch, therefore, would be reasonably
calculated to provide Defendants notice of the pendency of this action.
Granting alternative service under Rule 4(f)(3) on a foreign defendant’s counsel is not
new. See Fru Veg Marketing, Inc. v. Vegfruitworld Corp., 896 F. Supp. 2d 1175, 1182-83 (S.D.
Fla. 2012) (collecting cases); In GLG Life Tech Corp. Sec. Litig., 287 F.R.D. 262, 263 (S.D.N.Y.
2012); Prediction Co. LLC v. Rajgarhia, No. 09 CIV.7459, 2010 WL 1050307, at *1 (S.D.N.Y.
Mar. 22, 2010); FMAC Loan Receivables v. Dagra, 228 F.R.D. 531, 534 (E.D. Va. 2005); BP
Prod. N. Am., Inc. v. Dagra, 232 F.R.D. 263, 265 (E.D. Va. 2005); Forum Fin. Group, LLC v.
President and Fellows of Harvard College, 199 F.R.D. 22, 23 (D. Me. 2001) (directing service
on a defendant residing in Russia to be made on the defendant’s attorney representing him in
another matter). Where, as here, Plaintiffs have made several good faith attempts to serve
Defendants directly, service on defense counsel would reasonably provide notice of the suit to
Defendants, and this alternative method is not prohibited by any international agreement, service
on defense counsel is proper. Plaintiff’s motion is thus granted. A separate order will follow.

3/9/2017
Date

/S/
Paula Xinis
United States District Judge

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