United States v. Sinovel Wind Grp. Co.

The U.S. Court of Appeals for the Seventh Circuit concluded that the district court’s denial of defendant Sinovel’s motion to quash service of process is not an appealable order under the collateral order doctrine. The Court also concluded that the requirements for issuance of a writ of mandamus had not been meet and therefore denied Sinovel’s petition regarding mandamus. United States v. Sinovel Wind Grp. Co., Case Nos. 14-3013, -3105 (7th Cir., July 23, 2015) (Wood, C.J.)

In June of 2013 Sinovel, a Chinese corporation, and three individuals were indicted on charges of conspiracy to commit trade secret theft and criminal copyright infringement arising from Sinovel’s alleged scheme to steal computer source code from a company called AMSC. A summons was served on Sinovel USA’s registered agent and was also mailed to its office in Houston and served on its agent in Austin.

Sinovel filed a motion with the district court to quash service of the summonses, complaint and indictment, arguing that service of process on Sinovel USA and its registered agents was not equivalent to service on Sinovel itself. The district court found that Sinovel USA was the alter ego of Sinovel (the Chinese corporation) and that service on Sinovel USA was therefore sufficient for service upon Sinovel. The district court thus denied the motion to quash. Sinovel filed objections and a motion for reconsideration. The district court rejected the objections and denied the motion, concluding that Sinovel USA was not independent of Sinovel and that Delaware law governed the question whether Sinovel USA was Sinovel’s alter ego for service of process purposes. The district court further concluded that under Delaware law, alter ego status of Sinovel USA had been proven. Sinovel appealed the decision and also filed a petition for a writ of mandamus to the 7th Circuit.

The 7th Circuit concluded that it had no jurisdiction to hear Sinovel’s appeal. The 7th Circuit explained that the district court’s decision, denying Sinovel’s motion to quash service of process in action for criminal copyright infringement and theft of trade secrets, is not “collateral order” immediately appealable because it would impermissibly expand the “small class” of appealable collateral orders that are too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated. The 7th Circuit also concluded that the case did not meet the high standards for issuance of a writ of mandamus. The 7th Circuit explained that “defendant’s contentions that requiring it to stand trial will imperil foreign relations of United States, harm comity between United States and China, and interfere with ongoing civil litigation in Chinese courts does not compel finding that denial of motion to quash is reviewable under collateral-order doctrine.”