Thursday, January 22, 2009

Serving la vita loca

Professor Siegel's Law Digest for January 2009 notes that the recent Court of Appeals case in Morgenthau v. Avion Resources Ltd., 11 N.Y.3d 383, .... N.Y.S.2d .... (Nov. 20, 2008) holds that a summons may be served outside NY using NY service rules (including CPLR 308) unless there is a treaty that requires that the country's SOP rules must be followed. Where the Hague Convention applies, the country's service rules must be followed, but where the Inter-American Convention on Letters Rogatory applies, NY rules may be followed (because the IACLR is permissive, not mandatory.

In Morgenthau, the DA served numerous parties in Brazil via various means, including methods set forth in CPLR 308 and 311, to pursue a civil forfeiture action against $21 million that was illegally transferred from Brazil to NY (then NJ).

Professor Siegel's comment:

The Court of Appeals has handed down a major decision on the service of process outside the state. The Court holds that as long as a basis for extraterritorial jurisdiction exists, CPLR 313 – the main statute in point – provides that all of the methods of service, whether on individuals or corporations, that are available for service inside the state may be used for the service outside the state, regardless of the methods the foreign state may use as an internal matter. And this includes all of the substituted service methods for individuals available under the several paragraphs of CPLR 308 as well as the substituted method for service on corporations available under CPLR 311(b).

In this case, Morgenthau v. Avion Resources Ltd., 11 N.Y.3d 383, .... N.Y.S.2d .... (Nov. 20, 2008), Brazil was where the defendants were and the service on them was made there, exploiting a number of the methods supplied by CPLR 308 and 311. As long as there’s no treaty that requires deference to the law of the foreign state as to method of service, the New York provisions have an unfettered run, the Court holds, and there was no treaty barrier here.
Brazil does require that service by a foreign party on a local domiciliary be made by a letter rogatory – a request by one state’s court addressed to another’s to lend a hand with something – and a treaty, the Inter-American Convention on Letters Rogatory, to which both Brazil and the U.S. are signatories, addresses the letter rogatory. The treaty doesn’t make the letter rogatory exclusive, however, thus leaving the door open to the New York's methods, the Court finds. Another treaty, on the other hand, the well known Hague Convention, which does require that foreign process honor local requirements respecting service and would seem to require the honoring of the Brazilian letter rogatory rule, does not – alas for the defendants – apply here: Brazil never signed the treaty. Thus CPLR 313 and its small parade of New York's internal service methods are found to have free reign in Brazil as well.

The case was a civil forfeiture action seeking seizure by the district attorney of local assets of the defendants based on their alleged multi-million dollar wrongdoings inBrazil. There appeared to be no question but that the defendants were subject to New Yorkjurisdiction, which left the validity of the foreign service methods as the sole issue.

Nor was the amorphous doctrine of comity found to require deference to Brazil. In an opinion by Judge Ciparick, the Court explains that while it has sometimes applied comity when a party to New York litigation has asked that effect be given to a foreign law, “we have never applied the doctrine to import the laws of a foreign country into a New York lawsuit – and we decline to do so in this case”. Hence the removal of another fetter that might have qualified the extraterritorial reach of the New York methods of service.

The Court admonishes not to read too much into a statute that has a simple and straightforward instruction, such as CPLR 313 has here when it authorizes extraterritorial service. We must look, the Court says, not only at what the statute requires, but also at what it does not require. Absent in the plain text [of CPLR 313] is any requirement to fulfill a foreign locale’s service of process ­requirements in order to effectuate service in a New York ­action upon a defendant in another country.


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