When litigants pursue claims against foreign defendants, the question of how to serve them is more than procedural – it's jurisdictional. As many readers of this blog are aware, CPLR 308 authorizes alternate service methods when traditional methods are shown to be impracticable. A recent decision from Manhattan Commercial Division Justice Margaret A. Chan confirms that a lengthy time to complete service under the Hague Convention is not enough to invoke alternate service methods.
Background
In Yolanda Mgt. Corp. v MicroAlgo, Inc., the parties entered into a SPAC transaction (i.e., a merger transaction between a special-purpose acquisition company and a private company) to form defendant Microalgo, Inc. ("MicroAlgo"). Plaintiff brought a breach of contract lawsuit against defendants for allegedly failing to register its shares in MicroAlgo in breach of the parties' agreement.
During the litigation, plaintiff filed a motion under (i) CPLR 306 (b) to extend its time serve defendant Jie Zhao ("Zhao"), a resident of China; and (ii) CPLR 308 (5) to serve Zhao via certain alternate methods, including through the agent designated for service of MicroAlgo's parent company, WiMi, which Zhao owned a stake, and through his email address.
In describing its unsuccessful efforts to serve Zhao, plaintiff stated (i) it hired a private investigator to find Zhao's addresses in Shenzhen, China and Singapore; and (ii) it tried but failed to complete service of process on Zhao at both addresses through the Hague Convention. In opposition, Zhao made no objection regarding plaintiff's request for additional time to serve the Complaint. Instead, Zhao argued that alternate service was improper because (i) MicroAlgo's parent company, WiMi, could only accept service for specific purposes unrelated to the case; (ii) the Hague Convention prohibits email service on defendants in China; and (iii) plaintiff was aware more than a month before commencing the lawsuit that Zhao disclosed his residence in Beijing, China. On reply, plaintiff argued that service through the Hague Convention at Zhao's Beijing address would still be impracticable because it could take upwards of 18 months to complete service.
In its decision, the Court first focused on plaintiff's timing argument for completing service through the Hague Convention. The Court found this argument to be unpersuasive, as plaintiff's only support was an online legal blog which cited no statistics or facts to support its 18 month estimate. In addition, the Court found this estimate to be excessive given plaintiff's first attempt at service through the Hague Convention in China, which took approximately six months.
The Court also dismissed plaintiff's argument that Zhao had no intention of accepting service at the Beijing address, as emails between the parties demonstrate that Zhao's focus was that plaintiff perform adequate service under the Hague Convention. Accordingly, the Court denied plaintiff's motion for alternative service, and directed plaintiff to attempt service on Zhao's Beijing address through the Hague Convention.
Upshot
The Yolanda Mgt. Corp. , decision sharply illustrates that the use of alternate service methods under CPLR 308 (5) is no procedural shortcut. New York courts demand strong evidence, not speculation, showing that every available standard service method is unavailable. Litigants will need to consider building a robust record of service attempts before requesting such relief.
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