Case of the Day: Zanghi v. Ritella

The case of the day is Zanghi v. Ritella (S.D.N.Y. 2020). Francesco Zanghi and Zanghi LLC sued Piergraziano Ritella, Giuseppe Cavallaro, Alessandro Vacca, and Gioia e Vita S.r.L. alleging violations of the securities laws and the RICO Act. “Broadly described, the complaint alleges that defendants defrauded plaintiffs into investing in pizzerias in New York City and Miami.” He served some of the defendants in Italy by FedEx and some by email. The Italian defendants moved to dismiss for insufficient service of process.

The judge recognized that the Hague Service Convention does not authorize service by post or by email, citing Water Splash. So FRCP 4(f)(1) doesn’t apply. She correctly reasoned that FRCP 4(f)(2)(C)(ii) did not apply, because the plaintiffs did not seek to serve process by mail via the clerk, and that FRCP 4(f)(3) did not apply, because the plaintiffs did not seek leave to serve by alternate means in advance. The only potentially applicable rule permitting service by mail was FRCP 4(f)(2)(A), which would require the plaintiffs to show that Italian law permitted the service by mail, and the judge held that the plaintiffs had failed to make the requisite showing. Maybe the plaintiffs didn’t do a great job proving Italian law to the judge, but I am not sure that substantively the conclusion about Italian law was correct.

Anyway, the most interesting aspect of the decision had to do with email. Italy has a system called posta elettronica certificata, or PEC, which is a form of registered email that provides proof of delivery, and which is sanctioned by Italian procedural law. The judge rejected this method of service. Italy has not objected to service by postal channels under Article 10(a), so it is not as simple as saying that the Convention forbids service by email in Italy because the only possible avenue for service by email is Article 10(a), and an objection to service under that article necessarily has the effect of forbidding service by email. Rather, the judge went a step further and held that “postal channels” simply do not include email. (She got there is an odd way, by citing erroneous cases in which the courts held that an objection to service by postal channels did not necessarily mean that the state was objecting also to service by email). Since only Article 10(a) could be read to permit service by email, and since, in the judge’s view, it doesn’t reach email, the service was forbidden. (I note the possibility, which the judge did not discuss, that Article 19 could come into play).

If you look back at all my coverage of the permissibility of service by email in the absence of an Article 10(a) objection, you will see that I have gone back and forth on it. But in light of some recent work I have been doing, I think the best view is that in the absence of an objection by the state of destination to service by postal channels, the Convention should be read to permit service by email, at least in cases like Italy, where the method of email used is defined and regulated by law. This is the best view because of the functional equivalence between email and postal mail and the generally agnostic attitude the Convention takes towards particular technologies. Stay tuned for a paper I expect to have on this topic in the next few months.

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