Case of the Day: SEC v. Cluff

The case of the day is SEC v. Cluff (S.D.N.Y. 2018). The SEC moved for leave under FRCP 4(f)(3) to serve process on James Shaoul by email. Shaoul was in Israel. Israel is a party to the Hague Service Convention and has not objected to service by postal channels under Article 10(a).

This case is harder than similar cases in countries such as China or India that have objected to service under Article 10(a). In those cases, the correct answer is clear (though it hasn’t been clear to most district courts that have considered it):

  1. The Convention is exclusive, which means you have to use a method of service that the Convention authorizes or permits.
  2. If any provision of the Convention authorizes or permits service by email, it’s Article 10(a), assuming that it’s proper to analogize email to postal mail.
  3. But in states that have objected to service by mail, Article 10(a) isn’t available.

So in a state like Israel, what’s the answer? Here’s an excerpt from my chapter on service in the new ABA treatise (without footnotes):

It is apparent that with the exception of Article 19, and leaving aside cases in which the foreign central authority serves process by e-mail when authorized by the law of the requested state, the only potential provision of the convention under which service of process by e-mail might be permissible is Article 10(a). The question is whether e-mail passes through the postal channel.

In principle, e-mail could be a postal service: Article 14 of the Universal Postal Convention (UPC) defines “electronic mail” as “a postal service involving the electronic transmission of messages.” Member countries of the Universal Postal Union or their “designated operators” “may agree with each other to participate in” electronic mail service. But the United States does not now offer an “e-post” service, and ordinary commercially available e-mail does not fit within the definition of electronic mail service in the UPC. Thus there are strong grounds for asserting that ordinary e-mail is not part of the postal channel and that Article 10(a) does not make service by e-mail permissible.

If this analysis is right, then service by email is improper even in Israel. In fact, the judge denied the motion for leave, though not for this reason: the judge noted the lack of evidence that use of the Central Authority in Israel would cause undue delay and on doubts about the sufficiency of Shaoul’s email address from the due process perspective.

The court did make one point that is 100% right but that I’m not sure I’ve ever seen before:

The plaintiff’s contention that “Israel does not oppose Article 10(a)” of the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters is irrelevant, since Article 10(a) deals with “the freedom to send judicial documents, by postal channels, directly to persons abroad,” and the plaintiff is not seeking leave to serve James Shaoul “by postal channels, directly to persons abroad.”

This is refreshing because often a district court will say that the an objection to Article 10(a) that does not expressly object to service by email (no country’s objection does) is, in effect, consent to service by email. This is the fundamental mistake in the ur-case, Gurung v. Malhotra.

2 thoughts on “Case of the Day: SEC v. Cluff”

  1. It seems the foundation of the argument in this Letter Blogatory is faulty.

    Article 10(a) of the Hague Service Convention concerns the transmission of judicial documents via “postal channels;” a term that is not further defined. The Permanent Bureau on the Hague Conference has taken the position that “private couriers” of judicial documents (viz. Federal Express) constitute a method to transmit judicial documents via postal channels. (Practical Handbook at 70.) But the Permanent Bureau has been silent on whether email constitutes a postal channel for the transmission of judicial documents. After reviewing Article 14 of the Universal Postal Convention (UPC), Mr. Folkman takes the position that email does not constitute a postal channel for the United States because email “ordinary commercially available e-mail does not fit within the definition of electronic mail service in the UPC.”

    The problem with Mr. Folkman article is that the definitions in Article I of the UPC makes it clear that the scope of this convention concerns the transmission of physical items. Thus, it is not surprising that a subsequent Article in the UPC would exclude email as a postal channel. Moreover, the UPC which is not Hague Convention document can be traced back to an International Conference held in Ottawa in 1958 (the current version dates from 2012). Thus it seems that by selecting a definition for “postal channel” from the UPC was of necessity tantamount to stacking the deck against finding that email constitutes a postal channel within the meaning of Article 10(a) of the Hague Service Convention.

    This is not to say that I disagree with Mr. Folkman’s conclusion; it is just that there are better arguments for considering email not to be a postal channel within the meaning of Article 10(a). For example, postal channels—whether governmental or private—contemplate that transmission of any documents within the channel will remain confidential. This clearly is not the case with email. Alternatively, the transmission of judicial documents under Article 10(a) contemplates that sender will receive some sort of confirmation that the documents were actually delivered to defendant. In the case of email, unless the defendant affirmatively acknowledges receipt, the sender receives no confirmation that the documents were delivered to the intended defendant.

    1. Thanks, Tom, for that detailed comment!

      I am not sure you are right to say that the Permanent Bureau has not taken a position on this, or at least expressed a view. While the new Practical Handbook discusses the issues and notes the differing opinions, it ultimately concludes that service by email is permissible under Article 10(a) “to the extent that documents are sent by postal agencies,” and it notes that the requirement of postal agency involvement “would ensure that the transmission has the ‘postal’ character provided for under Article 10(a) …” (Annex 8, ¶¶ 36-37). Moreover, it continues by looking to the UPC, just as I did, to help understand what counts as “postal.” So while there is room for debate, I think my view is supported by the Permanent Bureau’s Practical Handbook.

      Also, I do not think you are correct to distinguish postal service from email by pointing out that postal service contemplates a receipt showing delivery. While US procedural law (e.g., FRCP 4(f)(2)(C)(ii)) may require a receipt for the validity of the service, ordinary first-class mail does not come with a receipt, and if a party obtains leave to serve process by first-class mail under FRCP 4(f)(3), it seems to me that the service would be valid, because nothing in Article 10(a) requires a receipt.

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