Case 2:17-cv-00517-JRG Document 70 Filed 06/13/18 Page 1 of 9 PageID #: 995
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`AGIS SOFTWARE DEVELOPMENT,
`LLC,
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`Plaintiff,
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`Case No. 2:17-cv-517-JRG
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`JURY TRIAL DEMANDED
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
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`PLAINTIFF AGIS SOFTWARE DEVELOPMENT, LLC’S REPLY
`IN SUPPORT OF ITS MOTION FOR ALTERNATIVE SERVICE OF DEFENDANT
`ZTE CORPORATION PURSUANT TO FED. R. CIV. P. 4(f)(3) (Dkt. 64)
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`v.
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`ZTE CORPORATION, ET AL.,
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`Defendants.
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`Case 2:17-cv-00517-JRG Document 70 Filed 06/13/18 Page 2 of 9 PageID #: 996
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`Plaintiff AGIS Software Development, LLC (“AGIS”) submits this reply in support of its
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`motion for alternative service on Defendant ZTE Corporation (“ZTE Corp.”) pursuant to Federal
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`Rule of Civil Procedure 4(f)(3) (Dkt. 64) seeking an order permitting AGIS to serve ZTE Corp.
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`via its domestic counsel McDermott Will & Emery LLP and Pillsbury Winthrop Shaw Pittman
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`LLP (collectively, “ZTE Corp.’s U.S. Counsel”), or in the alternative, ZTE Corp.’s U.S. wholly
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`owned subsidiary ZTE (USA), Inc. (“ZTE Corp.’s Domestic Subsidiary”)
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`I. THE REQUESTED ALTERNATIVE SERVICE IS PERMITTED BY RULE 4(f)(3)
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`Federal Rule of Civil 4(h)(2) governs service of a corporation outside of the United
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`States, like ZTE Corp., and provides service is permitted in any manner prescribed by Rule 4(f)
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`except for personal delivery. Pursuant to Rule 4(f)(3), the Court may authorize service on a
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`foreign defendant by other means not prohibited by international agreement so long as it is
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`reasonably calculated to apprise the defendant of the pendency of the action. Affinity Labs of
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`Texas, LLC v. Nissan N. Am. Inc., 2014 WL 11342502, at *1 (W.D. Tex. July 2, 2014).
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`Defendants are incorrect that Rule 4(f)(3) only authorizes service outside of the U.S. Dkt. 68 at
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`4, 8-10. Rather, courts routinely order alternative service on a foreign defendant via its domestic
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`counsel or domestic subsidiaries. See e.g., Nuance Comms., Inc. v. Abbyy Software House, 626
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`F.3d 1222, 1239 (Fed. Cir. 2010); Affinity Labs, 2014 WL 11342502, at *4.
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`A. Service on ZTE Corp.’s Domestic Subsidiary is Permitted by Rule 4(f)(3)
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`Serving ZTE Corp.’s Domestic Subsidiary complies with Rule 4(f)(3). See, e.g., Affinity
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`Labs, 2014 WL 11342502, at *4. Service on ZTE Corp. via its Domestic Subsidiary is
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`permissible because such service does not transmit documents abroad, and therefore, does not
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`implicate or violate the Hague Convention. Rule 4(f)(3) governs requests for court ordered
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`alternative methods of service and permits service by means other than the Hague Convention.
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`Case 2:17-cv-00517-JRG Document 70 Filed 06/13/18 Page 3 of 9 PageID #: 997
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`See Nuance, 626 F.3d at 1239; Affinity Labs, 2014 WL 11342502, at *1, 4.1 Thus Defendants
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`are incorrect that alternative service must comply with Texas's long arm statute and that ZTE
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`Corp. is entitled to service exclusively through the Hague Convention. Dkt. 68 at 11-12.
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`Service on ZTE Corp.’s Domestic Subsidiary also comports with due process.
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`Defendants do not contest: (1) the close relationship between ZTE Corp. and ZTE (USA), Inc., a
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`defendant in this action; (2) that ZTE Corp. and ZTE (USA), Inc. share at least two executive
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`officers—Messrs. Cheng and Bell; or (3) that Messrs. Cheng and Bell are on notice of the instant
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`action. Dkt. 68 at 8-11.2 Based on these uncontested allegations, service on ZTE Corp. via its
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`Domestic Subsidiary is “reasonably calculated” to apprise ZTE Corp. of the action (to the extent
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`ZTE Corp. is not already aware of the action). Nuance, 626 F.3d at 1240. Contrary to
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`Defendants’ contention, AGIS does not argue that ZTE Corp. should be considered served
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`because of its knowledge of the pending lawsuit. Rather, ZTE Corp.’s knowledge of the lawsuit
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`is a factor in ensuring that the method of service requested by AGIS comports with due process.
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`Defendants’ argument that notice of the lawsuit to Messrs. Cheng and Bell is not sufficient to
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`provide “ZTE Corp. with notice of the events and theories” of the case (Dkt. 68 at 10) is
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`unavailing. Due process requires only that service on ZTE (USA), Inc. be reasonably calculated
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`to “apprise” ZTE Corp. “of the pendency of the action.” Affinity Labs, 2014 WL 11342502, at
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`*4. The close relationship between ZTE Corp. and its Domestic Subsidiary, including Messrs.
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`1 Defendants’ reliance on Lisson v. ING GROEP N.V., 262 Fed. App’x 567 (5th Cir. 2007), Sheets v. Yamaha
`Motors Corp., U.S.A., 849 F.2d 179 (5th Cir. 1988) (“Sheets I”), and Sheets v. Yamaha Motors Corp, U.S.A., 891
`F.2d 533 (5th Cir. 1990) (“Sheets II”) (Dkt. 68 at 11-12) is inapposite. Lisson, 262 F.3d App’x at 570-71 (remanding
`for analysis of the validity of service on a foreign defendant’s subsidiary in connection with motion for improper
`service, not for alternative service); Sheets I, 849 F.2d at 185, 185.5 (remanding for clarification of sanctions
`explaining that is no basis for awarding sanctions on defendant who refuses to waive formal service of process
`pursuant to the Hague Convention); Sheets II, 891 F.2d at 537 (explaining in dicta that transmittal of documents
`abroad triggers application of Hague Convention procedures).
`2 Indeed, based on the uncontested overlap in these key executives and their uncontested knowledge of the instant
`action, it is reasonably certain that ZTE Corp. is already on notice of the instant action.
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`Case 2:17-cv-00517-JRG Document 70 Filed 06/13/18 Page 4 of 9 PageID #: 998
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`Cheng’s and Bell’s employment at both entities, makes it reasonably certain that if ZTE (USA),
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`Inc. is served with the pleadings, ZTE Corp. will be apprised of the action.
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`B. Service on ZTE Corp.’s U.S. Counsel is Permitted by Rule 4(f)(3)
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`In March, the Northern District of Texas permitted alternative service under Rule 4(f)(3)
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`on ZTE Corp. via its U.S. counsel McDermott Will & Emery—the same relief AGIS seeks
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`here—because such method of service “would not require the transmittal of documents abroad,
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`so the Hague Convention would not apply;” and “would provide ZTE Corporation with notice of
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`the action.” Fundamental Innovation Sys. Int’l, LLC v. ZTE Corp., No. 3:17-cv-1827, Dkt. 91 at
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`11 (N.D. Tex. Mar. 16, 2018). Here, service on ZTE Corp. via its U.S. Counsel is permitted by
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`Rule 4(f)(3) for the same reasons. Defendants do not contest that serving a foreign defendant’s
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`domestic counsel does not transmit documents abroad, and therefore, does not implicate or
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`violate the Hague Convention. Dkt. 68 at 8-11. Defendants also do not contest that ZTE Corp. is
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`in contact with its U.S. Counsel (id. at 8-11). Thus, it is reasonable to conclude that, if the U.S.
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`Counsel received the pleadings, they could and would apprise ZTE Corp. of the pendency of the
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`action. See Fundamental Innovation Sys., No. 3:17-cv-1827, Dkt. 91 at 11; Gramercy Ins. Co. v.
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`Kavanagh, 2011 WL 1791241, at *1 (N.D. Tex. May 10, 2011).
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`Defendants argue, without citing to a single authority, that serving ZTE Corp.’s U.S.
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`Counsel is insufficient because neither U.S. Counsel has appeared on behalf of ZTE Corp. in this
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`case. Dkt. 68 at 9. However, due process merely requires that service on ZTE Corp.’s U.S.
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`Counsel will reasonably apprise ZTE Corp. of the instant litigation. See e.g., Gramercy Ins.,
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`2011 WL 1791241, at *1; Nuance, 626 F.3d at 1239-1222.3
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`3 Nuance is applicable here because, in that case, the Federal Circuit held that service on defendant’s domestic agent
`was proper pursuant to Rule 4(f)(3). That the defendant was also personally served in Russia is irrelevant, as the
`court expressly declined to opine as to the sufficiency of that form of service. Nuance, 626 F.3d at 1238-39.
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`Case 2:17-cv-00517-JRG Document 70 Filed 06/13/18 Page 5 of 9 PageID #: 999
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`C. AGIS Is Not Required To Demonstrate Justification To Avail Itself of Rule 4(f)(3)
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`Contrary to Defendants’ contention, the overwhelming majority of courts do not require
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`any showing of justification by plaintiffs for seeking alternative service. See e.g., Canal Indem.
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`Co. v. Castillo, 2011 WL 13234740, at *2 (W.D. Tex. Mar. 30, 2011); Brown v. China
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`Integrated Energy, Inc., 285 F.R.D. 560, 565 (C.D. Cal. 2012). In arguing that “justification” is
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`required Defendants cherry-pick certain facts from the case law cited by AGIS and argue that
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`those facts “justified” the courts’ decisions to authorize alternative service. Dkt. 68 at 7. But in
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`each of these cases, the court authorized alternative service because it determined that, based on
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`a totality of the circumstances, the method of service would provide notice to the defendant
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`sufficient to comport with due process. That test is satisfied here, and nothing more is required.
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`See e.g., Brown, 285 F.R.D. at 565.
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`Even if AGIS was required to justify its request for alternative service, the facts of this
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`case warrant granting the request. AGIS provided the Central Authority with the Complaint over
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`ten months ago. Dkts. 64-2; 64-3. The earliest ZTE Corp. will be served is August 2018, but
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`even this date is uncertain because of the Central Authority’s practice of purposefully delaying
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`service of U.S. documents. Id. Alternative service methods have been found to be appropriate
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`where, like here, the Central Authority has been dilatory in its obligation to effectuate service.
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`RSM Prod. Corp. v. Fridman, 2007 WL 2295907, at *3 (S.D.N.Y. Aug. 10, 2007).4 Defendants’
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`argument that AGIS is not entitled to alternative service because it has not attempted to serve the
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`Amended Complaint on ZTE Corp. through the Hague Convention (Dkt. 68 at 7) is unavailing.
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`The Complaint is the operative pleading as to ZTE Corp. because an initial complaint is only
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`4 “The Advisory Committee Notes to the sweeping amendments of Rule 4(f) in 1993 plainly contemplated
`alternative avenues of service when it noted that if the Hague Service Convention procedures are unavailable to a
`plaintiff, such as when a signatory state is ‘dilatory or refuse[s] to cooperate for substantive reasons,’ court-directed
`service pursuant to Rule 4(f)(3) may be available.” Id.
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`Case 2:17-cv-00517-JRG Document 70 Filed 06/13/18 Page 6 of 9 PageID #: 1000
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`superseded “when the amended complaint is properly served, not when it is filed.” Doe v.
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`Unocal Corp., 27 F. Supp. 2d 1174, 1180 (C.D. Cal. 1998), aff’d and adopted, 248 F.3d 915 (9th
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`Cir. 2001). Moreover, service of the Amended Complaint through the Hague Convention is
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`unduly burdensome, as, based on current experience, it will take nearly a year or more (if ever)
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`to effectuate service and will cost AGIS approximately $25,000. Ex. 20; Dkt. 64-3. Courts
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`permit alternative service to avoid such unnecessary delay and expense. See, e.g., Affinity Labs,
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`2014 WL 11342502, at *3 (collecting cases).
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`D. This Case Merits The Court’s Discretionary Authority to Permit Alternative Service
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`Rule 4(f)(3) empowers the court with the sound discretion of determining “when the
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`particularities and necessities of a given case require alternative service of process.” SEC v.
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`Millennium Bank, No. 7:09-cv-050, 2009 WL 10689097, at *1 (N.D. Tex. Oct. 21, 2009); see
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`Fundamental Innovation, No. 3:17-cv-1827, Dkt. 91 at 10. The facts of this case, including as
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`discussed in Section II.C supra, weigh in favor of the Court using its broad discretion to permit
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`alternative service on ZTE Corp. See, e.g., Affinity Labs, 2014 WL 11342502, at *1.
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`II. THE TIME LIMIT SET FORTH IN RULE 4(M) DOES NOT APPLY TO ZTE CORP.
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`Defendants’ argument that ZTE Corp. should be dismissed from the case because ZTE
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`Corp. was not served within the time limits set forth in Rule 4(m) (Dkt. 68 at 14) is unavailing.
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`The time limit for service set forth in Rule 4(m) “does not apply to service in a foreign country
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`under Rule 4(f).” Fed. R. Civ. P. 4(m). Because AGIS seeks service of ZTE Corp. under Rule
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`4(f)(1) for the Complaint and Rule 4(f)(3) for the Complaint and Amended Complaint, the time
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`limit set forth in Rule 4(m) does not apply, and Defendants’ request should be denied.
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`III. CONCLUSION
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`AGIS respectfully requests that the Court grant its Motion for Alternative Service.
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`Case 2:17-cv-00517-JRG Document 70 Filed 06/13/18 Page 7 of 9 PageID #: 1001
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`Dated: June 13, 2018
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`Respectfully submitted,
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`BROWN RUDNICK LLP
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`/s/ Alfred R. Fabricant
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`Alfred R. Fabricant
`NY Bar No. 2219392
`Email: afabricant@brownrudnick.com
`Peter Lambrianakos
`NY Bar No. 2894392
`Email: plambrianakos@brownrudnick.com
`Vincent J. Rubino, III
`NY Bar No. 4557435
`Email: vrubino@brownrudnick.com
`Joseph M. Mercadante
`NY Bar No. 4784930
`Email: jmercadante@brownrudnick.com
`Alessandra C. Messing
`NY Bar No. 5040019
`Email: amessing@brownrudnick.com
`Shahar Harel
`NY Bar No. 4573192
`Email: sharel@brownrudnick.com
`John A. Rubino
`NY Bar No. 5020797
`Email: jrubino@brownrudnick.com
`Daniel J. Shea
`NY Bar No. 5430558
`Email: dshea@brownrudnick.com
`BROWN RUDNICK LLP
`7 Times Square
`New York, NY 10036
`Telephone: 212-209-4800
`Facsimile: 212-209-4801
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`Samuel F. Baxter
`Texas State Bar No. 01938000
`sbaxter@mckoolsmith.com
`Jennifer L. Truelove
`Texas State Bar No. 24012906
`jtruelove@mckoolsmith.com
`McKOOL SMITH, P.C.
`104 East Houston Street, Suite 300
`Marshall, Texas 75670
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`Case 2:17-cv-00517-JRG Document 70 Filed 06/13/18 Page 8 of 9 PageID #: 1002
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`Telephone: 903-923-9000
`Facsimile: 903-923-9099
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`ATTORNEYS FOR PLAINTIFF, AGIS
`SOFTWARE DEVELOPMENT, LLC
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`Case 2:17-cv-00517-JRG Document 70 Filed 06/13/18 Page 9 of 9 PageID #: 1003
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`The undersigned hereby certifies that all counsel of record who are deemed to have consented to
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`CERTIFICATE OF SERVICE
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`electronic service are being served with a copy of this document via the Court’s CM/ECF system per
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`Local Rule CV-5(a)(3) on June 13, 2018.
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`/s/ Alfred R. Fabricant
`Alfred R. Fabricant
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`8
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