«JOURNAL OF LAW, ECONOMICS & POLICY VOLUME 10 SPRING 2014 NUMBER 2 EDITORIAL BOARD 2013-2014 Steve Dunn Editor-in-Chief Crystal Yi Meagan Dziura Sarah ...»
Rule 4(h)(1) of the Federal Rules of Civil Procedure allows a “managing agent” of the corporation to receive service.115 However, in some cases, a court may disregard a corporate entity and pierce the veil of limited liability where the corporation is merely the alter ego or business conduit of another person or entity. This doctrine fastens liability on the individual or entity that uses a corporation merely as an instrumentality to conduct that person’s or entity’s business.116 Although originally a state law concept, courts have tried to apply this socalled alter-ego doctrine to federal common law.117 The court in Automotriz Del Golfo de Cal. S.A. v.
116 Peetoom v. Swanson, 334 Ill. App. 3d 523, 527 (Ill. App. Ct. 2002) (internal citations omitted).
117 Piercing the Corporate Law Veil: The Alter Ego Doctrine Under Federal Common Law, 95 HARV. L. REV. 853, 866 (1982) [hereinafter Alter Ego].
118 Automotriz Del Golfo de Cal. S.A. v. Resnick, 306 P.2d 1, 3 (Cal. 1957).
120 Alter Ego, supra note 117, at 854.
121 Id. at 866.
122 Id. at 867. A court may be less likely to pierce a veil when monetary damages are sought, but
The Federal Rules of Criminal Procedure do not explicitly provide for this alternative to service of process.125 The court in United States v. Public Warehousing Co. interpreted this omission alongside the spirit of Rule 2 of the Federal Rules of Criminal Procedure126 to find that service was proper when the government effectuated service on the president of the defendant parent corporation’s subsidiary within the United States.127 However, the mailing requirement problem persists in cases where the foreign parent corporation does not have a subsidiary within the United States. For example, in United States v. Dotcom, Megaupload does not have a subsidiary located in the United States, so the government would not be able to pierce the corporate veil to reach the foreign corporation. It is possible that the government could argue that Dotcom is the alter ego of Megaupload and potentially serve him upon his entry into the United States. However, as Dotcom’s extradition proceedings continue to be delayed in New Zealand, it is uncertain whether Dotcom will ever be held responsible for his criminal acts.128 Moreover, because Dotcom is not the sole executive of Megaupload, the government would need to establish “unity of interest and ownership.”129
3. Letters Rogatory, Mutual Legal Assistance Treaties (MLATs), and Memoranda of Understanding (MOUs) The Federal Rules of Civil Procedure explicitly allow for service “by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents.”130 One such means is a letter rogatory.131 A letter rogatory is a “medium, in effect, whereby one country, speaking through one of its courts, requests another country, acting through its own courts and by methods of court procedure peculiar 125 See FED. R. CRIM. P. 4.
126 Rule 2 of the Federal Rules of Criminal Procedure provides that the “rules are to be interpreted to provide for the just determination of every criminal proceeding, to secure simplicity in procedure and fairness in administration, and to eliminate unjustifiable expense and delay.” FED. R. CRIM. P. 2.
127 United States v. Pub. Warehousing Co., No. 1:09-CR-490-TWT, 2011 WL 1126333 (N.D. Ga.
Mar. 28, 2011).
128 Extradition procedures, first delayed to March 25, 2013, are now being delayed further to August 2013, with a possibility for further delay if the Supreme Court of New Zealand decides to hear Dotcom’s appeal. See Nick Perry, Indicted Megaupload founder Kim Dotcom plans website reboot while fighting extradition, YAHOO.COM (Oct. 11, 2012), http://news.yahoo.com/indicted-megauploadfounder-kim-dotcom-plans-website-reboot-062016159.html; U.S. Government Wins Appeal in Kim Dotcom Extradition Battle, TORRENTFREAK (Mar. 1, 2013), http://torrentfreak.com/u-s-governmentwins-appeal-in-kim-dotcom-extradition-battle-120301/.
129 Automotriz Del Golfo de Cal. S.A. v. Resnick, 306 P.2d 1, 3 (Cal. 1957).
130 FED. R. CIV. P. 4(f)(1).
131 The letter rogatory is codified in 28 U.S.C. § 1781.
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thereto and entirely within the latter’s control, to assist the administration of justice in the former country.”132 Letters rogatory may be used for “providing notice, serving summons, locating individuals, [and] examining both voluntary and involuntary witnesses.”133 Because letters rogatory allow foreign countries to use their own judicial officers to effectuate service, foreign governments may be more willing to comply than with other measures of effectuating personal service abroad.134 An MLAT is another potential internationally agreed-upon means of service. MLATs “impose a treaty obligation on [each party’s] law enforcement to assist... prosecutors and to provide representatives on their behalf in local courts.”135 MLATs merely supplement existing international agreements and are designed to provide a direct link between the law enforcement agencies of different countries.136 Thus, they can be more effective than letters rogatory, which must often travel through numerous bureaucratic channels.137 Although courts may not use them directly because MLATs are in the “province of the executive branch,”138 they are available for use by prosecutors.139 Finally, an MOU is a bilateral agreement that can expressly provide for mutual assistance in such matters as investigations of copyright infringement violations.140 MOUs are generally not legally binding in courts, but like MLATs, are binding on a political level in the realm of internationThe Signe, 37 F. Supp. 819, 820 (E.D. La. 1941).
133 Bruce Zagaris & Jessica Resnick, The Mexico–U.S. Mutual Legal Assistance in Criminal Matters Treaty: Another Step Toward the Harmonization of International Law Enforcement, 14 ARIZ. J.
INT’L & COMP. L. 1, 8 (1997).
134 Harry Leroy Jones, International Judicial Assistance: Procedural Chaos and a Program for Reform, 62 YALE L.J. 515, 537 (1953).
135 Robert Neale Lyman, Compulsory Process in a Globalized Era: Defendant Access to Mutual Legal Assistance Treaties, 276 VA. J. INT’L L. 261, 276 (2006). As of 2012, the United States has fiftysix MLATs in force with the following countries: Antigua & Barbuda, Argentina, Australia, Austria, the Bahamas, Barbados, Belgium, Belize, Brazil, Canada, Cyprus, the Czech Republic, Dominica, Egypt, Estonia, France, Germany, Greece, Grenada, Hong Kong, Hungary, India, Ireland, Israel, Italy, Jamaica, Japan, Latvia, Lichtenstein, Lithuania, Luxembourg, Malaysia, Mexico, Morocco, the Netherlands, Nigeria, Panama, the Philippines, Poland, Romania, Russia, St. Lucia, St. Kitts & Nevis, St.
Vincent & the Grenadines, South Africa, South Korea, Spain, Sweden, Switzerland, Thailand, Trinidad & Tobago, Turkey, Ukraine, the United Kingdom (including the Isle of Man, Cayman Islands, Anguilla, British Virgin Islands, Montserrat and Turks, and Caicos), Uruguay, and Venezuela. 2012 International Narcotics Control Strategy Report: Treaties and Agreements, U.S. DEP’T OF STATE (Mar. 7, 2012), http://www.state.gov/j/inl/rls/nrcrpt/2012/vol2/184110.htm.
136 Bruce Zagaris, Developments in International Judicial Assistance and Related Matters, 18 DENV. J. INT’L L. & POL’Y 339, 352 (1990).
138 Lyman, supra note 135, at 276. “[U]ltimately, MLATs are intended to facilitate law enforcement cooperation, not to expand the power of courts.” Id.
139 Id. at 282.
140 Pamela Jimenez, International Securities Enforcement Cooperation Act and Memoranda of
al relations.141 They are advantageous because they “promote international cooperation by providing a mutually acceptable method” for exchanging information.142 MOUs also allow for the (1) detailed creation of procedures in specific areas of interest, (2) establishment of timetables in handling requests for information, and (3) cooperation of two countries without the need for formal ratification procedures.143 Rule 4 of the Federal Rules of Criminal Procedure does not explicitly authorize overseas service by international agreement.144 However, as with piercing the corporate veil, if viewed in the spirit of Rule 2 of the Federal Rules of Criminal Procedure, international agreements such as letters rogatory, MLATs, and MOUs may facilitate service in foreign countries in criminal cases. Nevertheless, these methods also have their drawbacks.
The use of letters rogatory can be restrictive. First, the process of sending a letter rogatory is slow.145 Therefore, the execution of the request may not be completed within the timeline of a trial. Second, “execution of letters [of] rogatory by the foreign government is entirely a matter of comity.”146 Thus, there is no guarantee that a foreign government will execute it, especially if the foreign government is sympathetic to the criminal.147 Third, although in the United States, “assistance in response to letters rogatory is unlimited,”148 a “foreign country can only honor requests which fall within its court’s procedures and control.”149 In other words, the foreign court must have the power to execute the act that the United States wants the foreign court to perform.150 As a result, there are few, if any, cases where service has been effected through letters rogatory.151 MLATs may provide a more direct means of interacting with foreign governments, but similar timeliness and legal jurisdiction problems still 141 William Thomas Worster, Between a Treaty and Not: A Case Study of the Legal Value of Diplomatic Assurances in Expulsion Cases, 21 MINN. J. INT’L L. 253, 289 (2012).
142 Jimenez, supra note 140, at 311.
143 Harvey L. Pitt, David B. Hardison & Karen L. Shapiro, Problems of Enforcement in the Multinational Securities Market, 9 U. PA. J. INT’L BUS. L. 374, 435 (1987) (quoting S. REP. NO. 461, 100TH CONG. 2 (1988)).
144 See Rebuttal Mem. of Law in Further Support of Mot. of Specially Appearing Def. Megaupload Ltd. to Dismiss Indictment for Lack of Personal Jurisdiction at 17-18, United States v. Dotcom, No.
1:12-cr-3, 2012 WL 4788433 (E.D. Va. Oct. 5, 2012) (No. 118), 2012 WL 3070963 [hereinafter Rebuttal in Supp.].
145 Lyman, supra note 135, at 273.
149 Mark K. Gyandoh, Foreign Evidence Gathering: What Obstacles Stand in the Way of Justice?, 15 TEMP. INT’L & COMP. L.J. 81, 86 (2001).
151 See, e.g., Sayles v. Pac. Eng’g & Constructors, Ltd., No. 08-CV-676S, 2009 WL 791332, at *3– 4 (W.D.N.Y. 2009) (granting plaintiff’s motion for the issuance of a letter rogatory, only to have the Taiwanese defendants agree to waive service of process defenses).
exist. In DeJames v. Magnificence Carriers, Inc., the court held service to be invalid when the service was effectuated in a manner inconsistent with the Federal Rules but through an international treaty.152 The court stated, [T]he purpose and nature of the treaty demonstrates that it does not provide independent authorization for service of process in a foreign country. The treaty merely provides a mechanism by which a plaintiff authorized to serve process under the laws of its country can effect service that will give appropriate notice to the party being served and will not be objectionable to the country in which that party is served.153 Thus, service through MLATs must be effectuated in a manner consistent with both American procedural rules and the foreign country’s procedural rules. Although courts may have suggested through dicta the possibility of using MLATs as a solution to the service requirement problem, courts have never held that service of summons through an MLAT treaty satisfies the Rule 4 mailing requirement.154 In fact, in United States v. Pangang Group Co., the court recognized that an MLAT may not even be a viable alternative to service of process on a foreign corporation.155 The terms of the MLAT between the United States and Hong Kong in United States v. Dotcom seem to reinforce the inapplicability of MLATs in such cases. The MLAT provides in relevant part that “[t]he Requested Party may affect service of any document by mail or, if the Requesting Party so requests, in any other manner required by the law of the Requesting Party that is not prohibited by the law of the Requested Party.”156 In other words, the United States would be limited to the procedural rules of the foreign country, which are often insufficient to fulfill the requirements of American procedural rules.157 Furthermore, the defendants in Dotcom insisted that the MLAT between the United States and Hong Kong did not purport to expand the personal jurisdiction of the courts of this country or otherwise alter the express terms of the Federal Rules.158 It is merely a mechanism to serve documents extraterritorially where U.S. law already 152 See DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 287–290 (3d Cir. 1981).
153 Id. at 288.