News & Events

Dot Your i’s and Cross Your t’s Before Service: It Could Be Worth $2.5 Million

When De Gazelle Group, Inc. sought to use FedEx for service of process of a Saudi Arabian company, Tamaz Trading Establishment, it reliably arrived at the Saudi Arabian post office. In fact, a Tamaz agent, seeking legal representation, even called De Gazelle’s lawyer stating that he received it. Yet, the Eleventh Circuit recently found that service was improper, likely resulting in a reversal of a $2.5 million default judgment entered in the case.

The Eleventh Circuit based its discussion on the plain words of Federal Rule of Civil Procedure 4(h), which permits the service of corporations outside of the United States “in any manner prescribed by Rule 4(f) for serving an individual except personal delivery.” Thus, remaining methods of service are: (1) an internationally agreed upon means of services reasonably calculated to give notice; (2) if there is not an internationally agreed upon means of service then as prescribed by a foreign country’s law for service, as the foreign country directs in response to a letter, or mailing service addressed and sent by the clerk if not prohibited by the foreign country’s law; and (3) “by other means not prohibited by international agreement, as the court orders.” (emphasis added).

De Gazelle successfully sent a summons and complaint to Tamaz’s Saudia Arabian post office box via FedEx. When Tamaz did not respond within 21 days, De Gazelle moved for default. The magistrate judge initially denied the motion due to concerns about service of process. After De Gazelle showed that Tamaz received the summons and complaint, however, the magistrate judge found that the method of service did not prejudice Tamaz and recommended the entering of default.

When De Gazelle sought to enforce the default judgment, Tamaz argued that it was void for improper service of process and therefore, lack of personal jurisdiction. The district court denied Tamaz’s motion on the ground that the service did not prejudice him.

On appeal, however, the Eleventh Circuit Court of Appeals disagreed. Applying Rule 4(f)(3), the court found that “as the court orders” requires that the litigant seek authorization and obtain an order prior to effecting service. Notice, or prejudice, to the defendant is inconsequential. Notice does not confer personal jurisdiction on a defendant not served in accordance with Rule 4. The Eleventh Circuit, therefore, reversed the ruling on Tamaz’s motion and remanded for consistent proceedings.

As routine as service of process may be at times, it is important to check the rules and follow them “to a T.” It could mean the difference between an easily entered default judgment or an appeal to a Circuit Court of Appeals before the complaint is even answered.

Carol Thetford Montgomery