UNITED STATES COURT OF INTERNATIONAL TRADE

Slip Op. 24-97

Before the Court in United States v. Koehler Oberkirch Gmbh, f/k/a Paierfabrik August Koehler SE, f/k/a Papierfabrik August Koehler AG and Koehler Paper SE, Court No. 24-00014, Slip Op. 24-97 (August 21, 2024) was an action by the government to recover a sum of $200 million in unpaid antidumping duties and interest owed to the United States. The government filed a summons and complaint with the U.S. Court of International Trade on January 24, 2024, serving copies of the summons and amended complaint on both defendants in accordance with USCIT R. 4(b)(1). In the motion before the Court, the government requested that the court order service through Koehler’s U.S.-located counsel, arguing that this method of service constitutes “means not prohibited by international agreement” and is in accordance with  USCIT R. 4(e)(3).

The issue turned on whether the government’s proposed method of service complied with international or federal law. Koehler opposed the government’s motion, insisting that the government instead effect service through the issuance of diplomatic letters rogatory to the government of Germany. However, the Court granted the government’s motion because it found that the USCIT rules “should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding,” and that the government’s proposed alternative method of service did not violate international or federal law.

The government initiated this lawsuit to recover unpaid duties and interest, alleging that Koehler was involved in a scheme to evade payment and defraud Customs by transferring assets between affiliated companies. After starting this action, the government attempted to serve Koehler with the Summons and Complaint using the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents, which both the United States and Germany are parties to. The Government’s request for service was sent to a district court in Freiburg im Breisgau, Germany, where Koehler’s headquarters are located. However, the court determined that the case involved public law issues rather than civil or commercial matters, making the Hague Convention inapplicable. The court thus recommended that the Government use diplomatic channels for service. While the Hague Convention request remained pending, the government attempted to serve Koehler through Steptoe LLP, a law firm whose Washington, DC-based counsel actively represent both Koehler GmbH and Koehler SE in separate ongoing litigation pertaining to a different antidumping duty order on thermal paper from Germany. See Matra Ams., LLC v. United States, No. 21-00063 (CIT filed Dec. 22, 2021). The government corresponded with Steptoe by sending an email inquiry on January 2024 to which Steptoe counsel indicated that Steptoe is not representing the defendants, but suggesting that they may be open to negotiating a settlement with the U.S. through new counsel, provided this communication does not imply consent to service or waive objections to service, and indicating that the U.S. will not attempt to effectuate service through that counsel. The government replied with openness to consider a reasonable settlement proposal from defendants. The government further indicated that while it is in the process of serving the defendants pursuant to the Hague Convention, it did not have a reason to attempt service through alternative means. The government conveyed agreement to the proposed terms (i.e., that the defendants are not consenting to, nor waiving any objections to, service by negotiating, and are not authorizing their U.S. counsel to accept service; and that we will not to attempt to effect service on such counsel unless authorized). Following this exchange, and after the government’s receipt of the German court’s letters, the court noted that the government made no further attempt to serve Koehler with the voluntary cooperation of either the German government or U.S.-based counsel. Instead, the government proceeded to seek a judicial order from the U.S. Court of International Trade, filing the instant motion for alternative service on April 2024, seeking “an order authorizing the Government to effect service on defendants . . . through their U.S. counsel of record” in the Matra litigation (Steptoe). At the time the government filed this motion, Koehler did not have legal representation and stayed unrepresented for three weeks. However, in May 2024, attorneys from Holland & Knight, LLP in Washington, DC, filed notices of appearance to represent all defendants and concurrently filed a response in opposition to the Government’s motion. The action lied under 28 U.S.C. § 1582(3), which vests the U.S. Court of International Trade with exclusive jurisdiction over “any civil action which arises out of an import transaction and which is commenced by the United States . . . to recover customs duties.”

The Court analyzed the sole issue of how the Government may serve copies of the Summons and Amended Complaint on Koehler GmbH and Koehler SE. The Court referenced Rule 4(e) of the U.S. Court of International Trade, which pertains to “Serving an Individual in a Foreign Country,” and provides that “[u]nless federal law provides otherwise, an individual—other than a minor, an incompetent person, or a person whose waiver has been filed—may be served at a place not within any judicial district of the United States:

(1) 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;

(2) if there is no internationally agreed means, or if an international agreement allows but does not specify other means by a method that is reasonably calculated to give notice:

(A) as prescribed by the foreign country’s law for service in that country in an action in its courts of general jurisdiction; or

(B) as the foreign authority directs in response to a letter rogatory or letter of request; or

(C) unless prohibited by the foreign country’s law, by (i) delivering a copy of the summons and of the complaint to the individual personally; or (ii) using any form of mail that the clerk addresses and sends to the individual and that requires a signed receipt; or

(3) by other means not prohibited by international agreement, as the court orders.

The Government sought to invoke subdivision (3), which it asserted “was built for these circumstances,” and asked the court to order service on Koehler either through Koehler’s U.S.-located counsel or through email since other means of service, according to the Government, would constitute “time-consuming” and “unnecessary” processes. Koehler opposed the government’s request on two grounds: (1) Koehler contended that USCIT Rule 4(e) does not allow service on a foreign defendant through its U.S. counsel, as it specifies that service must occur in the foreign country, not the U.S; and (2) Koehler argued that, based on international comity and due process, alternative service under USCIT Rule 4(e)(3) is inappropriate until the Government has exhausted diplomatic channels, as suggested by the German court.

The court determined that USCIT Rule 4(e) allows for serving a foreign defendant through their U.S.-based counsel. It found that, given the specifics of this case, principles of international comity and due process do not prevent service through Koehler’s U.S. counsel. Additionally, the court concluded that the government met its burden under USCIT Rule 4(e) by demonstrating that its proposed method of serving Koehler complies with both federal law and international agreements. The court cited Convergen Energy LLC v. Brook, where the district court reasoned that by their “plain language,” FRCP Rules 4(e) and 4(f)7 “speak not to whether the individual to be served is located or resides outside of the United States but to where the individual ‘may be served’ or the ‘place’ where service is to be made.” 2020 WL 4038353, at *8 (S.D.N.Y. 2020). In Convergen, precluded service on the defendant through its counsel in New York City. Id. The Court noted the divergence from this approach which was decided in United States v. Mrvic. In that case, the district court did not reject Convergen’s premise that FRCP Rule 4(f)(3) permits service only “at a place not within any jurisdiction of the United States,” but it held that the provision nevertheless “permits service through U.S. counsel, because ‘the relevant circumstance is where the defendant is, and not the location of the intermediary.’” Id. (collecting cases) (quoting Wash. State Inv. Bd. v. Odebrecht, S.A., 2018 WL 6253877, at *4 (S.D.N.Y. 2018)). The court followed Mrvic, as it considered to be the approach representing the majority view among the federal judiciary in parsing the heading of USCIT Rule 4(e).