NYKCool A.B. v. Pacific International Services, Inc., No. 12-cv-5754 (S.D.N.Y. July, 15, 2014) [click for opinion]

In an effort to collect a multi-million dollar judgment entered against several companies owned by Ecuadorian businessman Alvaro Fernando Noboa Ponton, Plaintiff sued Noboa under an alter-ego theory of liability. The magistrate judge authorized service of process via an email address listed on the website of Noboa's humanitarian organization. The email address was in the "Contact Us" section of the website on which the organization disclaimed authority to accept communications, messages, or other information and stated that such messages were not monitored by or forwarded to any person. Noboa moved to dismiss the complaint for insufficiency of service of process and lack of personal jurisdiction.

A federal court may authorize service of process on an individual in a foreign country provided that the method is reasonably calculated to apprise the defendant of the action. The district court found that the email service did not satisfy this standard. Although courts often have allowed service via email, those cases involved addresses undisputedly connected to the defendants and that the defendants had used for business purposes. In this case, there was no evidence Noboa ever used or checked the email address, for business purposes or otherwise, or that an email sent to the address would have reached him.

Despite concluding that the email service was not reasonably calculated to give Noboa notice of the lawsuit, the court authorized Plaintiff to effect service by emailing the summons and compliant to his attorneys who appeared in the case on his behalf, given Noboa's actual knowledge of the lawsuit.

Noboa also challenged the court's exercise of personal jurisdiction. The court began by noting the Supreme Court's recent decision in Daimler AG v. Bauman, 134 S. Ct. 746 (2014), in which the Court expressed doubt about the constitutionality of subjecting a company to personal jurisdiction under an agency theory. The Court did not, however, express doubt about the soundness of the alter-ego theory of personal jurisdiction, which applies when one person truly dominates another so that the two are practically indistinguishable. Indeed, in a case decided after Daimler, the Second Circuit recognized this distinction and reaffirmed the viability of the alter-ego theory of jurisdiction.

Since Plaintiff alleged that Noboa owns and controls his companies, that money was, and is, routinely funneled through all of his companies at his whim, and that his companies are not entitled to be treated as legal entities separate from him, Plaintiff made out a prima facie case that Noboa and his companies are alter egos and hence Noboa is, like his companies, subject to personal jurisdiction.