Now that the Supreme Court has resolved the split, circuit and district courts will have to follow its guidance, which will provide uniformity across all U.S. state and federal courts, while avoiding uncertainty over any final judgments against foreign defaulting parties or costly service of process battles.
On March 22, 2017, the United States Supreme Court heard arguments on the issue of international service of process in the case of Water Splash v. Menon. The question before the Court was whether the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the “Hague Service Convention”) allows service of process by mail.
This issue arises quite often in U.S. products liability cases where the defendant is a foreign manufacturer. The Hague Service Convention is a multilateral treaty that allows for service of process of legal documents from one member country to another, without the use of consular or diplomatic channels, to provide a uniform method for delivering notice of a foreign lawsuit to entities overseas. The United States is a signatory to the treaty, along with other prominent countries that host multinational manufacturers within their borders, such as Canada, Mexico, China, Japan, Germany and Spain.
Under the default provisions of the treaty, service must be performed through a lengthy and expensive process involving a state designated central authority that would funnel service from foreign courts to the defendants residing in that state. To avoid the expense of serving a foreign entity through its country’s designated central authority, claimants have relied on Article 10(a) of the Hague Service Convention to convince U.S. courts that service of process on a foreign entity through U.S. mail is a sufficient method for service of process under the treaty. Article 10(a) of the Hague Service Convention states, in pertinent part: “Provided the state of designation does not object, the present Convention does not interfere with … the freedom to send judicial documents by postal channels directly to the person abroad.”
Through Water Splash Inc. v. Menon, 2017 WL 2216933 (May 22, 2017), the Supreme Court ended years of lower court division and held that the Hague Service Convention does not prohibit service by mail. Thus, in cases governed by the Hague Service Convention, a party may serve documents in a foreign country by mail as long as that country authorizes service by mail. The decision will have a particularly significant impact on foreign entities defending products liability suits in the United States as the Supreme Court has finally resolved the circuit court split over the interpretation of Article 10 of the Hague Service Convention.
The suit arose out of an employment dispute between Petitioner Water Splash, an aquatic playground business, and Respondent Menon, a former employee. Water Splash sued Menon in Texas state court and alleged that she had worked for a competitor while still employed by Water Splash. Although the case involved an employment dispute, the procedural issue and resulting holding are not limited to the facts of this case.
“Because Menon resided in Canada, Water Splash sought and obtained permission to effect service by mail.” Id. at *3. Menon did not answer or enter an appearance, and the trial court issued a default judgment in Water Splash’s favor for actual and exemplary damages and attorneys’ fees. Menon moved to set aside the motion and argued that she was not properly served. In response, Water Splash asserted that service had been diligently sought and accomplished by sending a letter to Menon’s Quebec address by “first class mail, certified mail, and Federal Express.” The trial court denied the motion, and Menon appealed. The Texas Court of Appeals found that the Hague Service Convention prohibits service of process by mail. After the Texas Court of Appeals denied en banc review, and the Texas Supreme Court denied discretionary review, the U.S. Supreme Court granted certiorari to resolve the general issue of whether the Hague Service Convention prohibits service by mail.
The Historical Circuit Split
Contrary to the Texas appellate court’s decision in Water Splash, the “majority view” held that the Hague Convention allows service of process by mail, as long as the state of destination does not object. Courts following this view include the Second, Fourth, Seventh, and Ninth Circuits. The Fifth Circuit, Eighth Circuit, and district courts in the Third and Eleventh Circuits, however, rejected the “majority view” and held that service must be effectuated by the specific methods authorized by the terms of the Hague Convention. Federal and state courts have frequently addressed this issues—more than 120 times by a count of recent cases.
The Court’s Analysis
The U.S. Supreme Court ended this circuit split. The Court used “traditional tools of treaty interpretation” and examined the text, the Convention’s drafting history, the views of the Executive Branch, and the views of other signatories in reaching its conclusion. Id. at *4, 6, 8. As to the text, the Court recognized that the main issue is the interpretation of Article 10 of the Convention. Article 10 refers to methods of service that are permitted by the Convention absent the relevant state’s objection. However, Article 10(a), which refers to the ability to “send judicial documents” by postal channels, does not contain the word “service.” The Court found that since Article 10(a) contained the word “send,” and the scope of the Convention as a whole is limited to service of documents, the section must refer to a party’s ability to send documents via mail for the purpose of service. Based on this reasoning, the Court rejected the argument that Article 10(a) referred only to “post-answer judicial documents.”
Furthermore, the Court cited to the fact that three extratextual sources also indicated that Article 10(a) allows a party to serve documents abroad via mail, unless the state has laws to the contrary. First, the delegates that participated in drafting the Convention indicated that Article 10 permitted service by mail. Second, the Court recognized that the Executive Branch “has consistently maintained that the Hague Service Convention allows service by mail.” Id. at *7. And third, other signatories to the Convention have adopted the view that Article 10 allows for service by mail.
Water Splash clarifies that the Hague Service Convention does not bar U.S. plaintiffs from serving entities in foreign countries via mail as long as the state of destination does not does have a law to the contrary. The Court clarified that its holding “does not mean that the Convention affirmatively authorizes [sic] service by mail,” but rather that the Convention does not interfere with the freedom to serve documents by mail. Id. at *8. Thus, a party serving documents abroad should not rely on the Convention as the authority on whether service by mail is permitted. Rather, the decision means that “in cases governed by the Hague Service Convention, service by mail is permissible if two conditions are met: first, the receiving state has not objected to service by mail; and second, service by mail is authorized under otherwise-applicable law.” Id.
Now that the Supreme Court has resolved the split, circuit and district courts will have to follow its guidance, which will provide uniformity across all U.S. state and federal courts, while avoiding uncertainty over any final judgments against foreign defaulting parties or costly service of process battles. As service by mail is often the most efficient and cost-effective method of serving process on foreign products liability defendants, companies with manufacturing facilities overseas can expect plaintiffs to take advantage of service by mail whenever possible.