SEC v. China Intelligent Lighting and Electronics, Inc., No. 13-cv-05079, 2014 U.S. Dist. LEXIS 11977 (S.D.N.Y. Jan. 30, 2014) [click for opinion]
In connection with an action alleging fraud and other violations of U.S. securities laws against Chinese companies, the United States Securities and Exchange Commission first attempted to effect service of process on Defendants pursuant to the Hague Convention on the Service Abroad of Judicial and Extra-Judicial Documents in Civil and Commercial Matters. The SEC thereafter sought to accomplish service by alternative methods pursuant to Federal Rule of Civil Procedure Rule 4(f)(3), which permit other means of service that are not be prohibited by international agreement. The alternative method must also comport with constitutional notions of due process.
The SEC proposed two methods of alternative service: publication in theInternational New York Times and email. The court found these methods satisfied the first requirement, as neither was prohibited by international agreement. The court found the second requirement lacking, however, as the SEC had not produced competent evidence that the alternative methods were reasonably calculated to provide Defendants notice of the action and an opportunity to be heard. The publication method was found to be inadequate because the SEC did not provide basic information about the publication's circulation, where in China it is distributed, in what languages it is published, or any other facts that would support a finding that the publication would likely reach Defendants. Similarly, the SEC did not show that the proposed service by email was likely to reach Defendants. While the SEC purported to identify two email addresses associated with two of the defendants, the SEC could provide no dated evidence that specifically tied either defendant to a particular email address or that would suggest such email address was currently in use by either defendant.
Accordingly, the court denied the SEC's application for service pursuant to Rule 4(f)(3), but without prejudice to a new application for service by alternative means.