Luxottica Grp. S.P.A. v. P'ships & Unincorporated Ass'ns Identified On Schedule "A"

• Decision Date: 24 May 2019
• Docket Number: Case No. 18 CV 2188
• Citation: 391 F.Supp.3d 816
• Parties: LUXOTTICA GROUP S.P.A. and Oakley, Inc., Plaintiffs, v. The PARTNERSHIPS AND UNINCORPORATED ASSOCIATIONS IDENTIFIED ON SCHEDULE "A", Defendants.
• Court: U.S. District Court — Northern District of Illinois

391 F.Supp.3d 816

LUXOTTICA GROUP S.P.A. and Oakley, Inc., Plaintiffs,

v.The PARTNERSHIPS AND UNINCORPORATED ASSOCIATIONS IDENTIFIED ON SCHEDULE "A", Defendants.

Case No. 18 CV 2188

United States District Court, N.D. Illinois, Eastern Division.

Signed May 24, 2019

Amy Crout Ziegler, Justin R. Gaudio, Jessica Lea Bloodgood, RiKaleigh C. Johnson, Allyson M. Martin, Greer, Burns & Crain, Ltd., Chicago, IL, for Plaintiffs.

Michael Diaz, Jr., Xingjian Zhao, Brant C. Hadaway, Chad S. Purdie, Gary E. Davidson, Diaz, Reus & Targ, LLP, Miami, FL, Danielle Sylvia McKinley, RM Partners Law LLC, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

Joan B. Gottschall, United States District Judge

Plaintiffs own several trademarks related to Ray-Ban- and Oakley-branded sunglasses, clothing, and accessories. Am. Compl. ¶¶ 12, 20, ECF No. 12. They brought this suit under the Lanham Act, 15 U.S.C. § 1051 et seq., and the Illinois Uniform Deceptive Practices Act, 815 ILCS § 510 et seq. , against the owners of domains and the operators of online marketplaces hosted by companies such as eBay and Alibaba for allegedly offering and selling counterfeits of their goods. See id. ¶¶ 28–38. In their amended complaint, plaintiffs name 906 defendants, id. ¶¶ 1–24, described as "individuals and business entities who, upon information and belief, reside in the People’s Republic of China or other foreign jurisdictions." Id. ¶ 28. Six defendants, referred to here for simplicity as "defendants," move to dismiss the amended complaint, arguing that plaintiffs did not comply with the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters, Nov. 15, 1965 ("Hague Service Convention"), 20 U.S.T. 361, when they served the summons and complaint by email. For the following reasons, the motion is granted.¹

I. BACKGROUND

Over the last five years, this court has presided over several similar cases brought against China-based operators of domains and online marketplaces allegedly selling counterfeit goods. In every case but this one, no defendant appeared, and default judgment was eventually entered. As is typical, this litigation began with the filing of a motion to seal and a sealed complaint identifying the defendants by domain name or online marketplace name. ECF Nos. 1, 7; see also Sched. A to Compl., ECF No. 9 (listing defendants). In this case, plaintiffs amended their complaint the next day. ECF No. 12. They also filed a motion for a temporary restraining order ("TRO"), ECF No. 13, and a separate motion under Federal Rule of Civil Procedure 4(f)(3) for authorization to serve the defendants with the complaint and summons by electronic means, ECF No. 21. The court granted both motions ex parte and entered a sealed TRO, ECF No. 30. Among other things, the TRO stated:

Plaintiffs may provide notice of these proceedings to Defendants, including notice of the preliminary injunction hearing and service of process pursuant to Fed. R. Civ. P. 4(f)(3), by electronically publishing a link to the Amended Complaint, this Order and other relevant documents on a website to which the Defendant Domain Names which are transferred to Plaintiffs' control will redirect, or by sending an e-mail to the e-mail addresses identified in Exhibits 5 and 6 to the Declaration of John Stewart and any e-mail addresses provided for Defendants by third parties that includes a link to said website. The Clerk of the Court is directed to issue a single original summons in the name of "Xiong Hua Ping and all other Defendants identified in the Amended Complaint" that shall apply to all Defendants. The combination of providing notice via electronic publication or e-mail, along with any notice that Defendants receive from domain name registrars and payment processors, shall constitute notice reasonably calculated under all circumstances to apprise Defendants of the pendency of the action and afford them the opportunity to present their objections.

TRO ¶ 8.

AliExpress, the company that hosted defendants' online stores, provided email addresses associated with defendants' accounts but no names or street addresses. Decl. of J. Gaudio ¶ 7, Oct. 24, 2018, ECF No. 114. Plaintiffs sent the complaint, summons, and notice of the TRO to the email addresses. Id. ¶¶ 7–9 (citing id. Ex. 4, 5, ECF Nos. 114-4, 114-5). Plaintiffs received reply emails from eight defendants (some of which number among the group of defendants moving to dismiss), and three different attorneys representing one or more defendants also contacted plaintiffs' counsel, often to insist on service of the summons and complaint in accordance with the Hague Service Convention. See Decl. of J. Gaudio ¶¶ 11, 13; Correspondence at 2, ECF No. 114-6 Ex. 6.

On plaintiffs' motion, the court extended the TRO for 14 days, ECF No. 37, and, after a hearing at which no defendant appeared (and plaintiffs' counsel represented that he knew of no opposition, ECF No. 42), entered a preliminary injunction carrying forward many of the TRO’s provisions. Prelim. Injunction, ECF No. 43. Counsel for the moving defendants appeared approximately five weeks after the entry of the preliminary injunction. See Notices of Appearance, ECF Nos. 53–58 (June 20, 2018). Defendants obtained extensions of the deadline to respond to the complaint and filed the pending motion to dismiss in September 2018. ECF No. 102.

II. LEGAL STANDARD

Every defendant must be served with a copy of the complaint and summons in accordance with Rule 4. Fed. R. Civ. P. 4(b), 4(c)(1). Only proper service vests a district court with personal jurisdiction over a defendant. Cardenas v. City of Chicago , 646 F.3d 1001, 1005 (7th Cir. 2011). Thus, "actual knowledge of the existence of a lawsuit is insufficient to confer personal jurisdiction over a defendant in the absence of valid service of process." Mid-Continent Wood Prods., Inc. v. Harris , 936 F.2d 297, 301 (7th Cir. 1991). For this reason, plaintiffs' evidence that some defendants responded to their email messages regarding this lawsuit does not prove that this court has personal jurisdiction over any defendant.

Plaintiffs bear the burden to show proper service. Defendants rely on Federal Rules of Civil Procedure 12(b)(4) and 12(b)(5). Rule 12(b)(4) motions challenge the form of the process; they test matters such as whether the summons bore the seal of the court, was signed, or was addressed to the proper party. See, e.g., O'Brien v. O'Brien & Assoc., Inc. , 998 F.2d 1394, 1399–1400 (7th Cir. 1993). Rule 12(b)(5) motions, in contrast, challenge the sufficiency of the manner in which the process was served. Because motions under both rules ultimately test the court’s personal jurisdiction over the defendant, the same standards govern motions under both rules. In re Dairy Farmers of Am., Inc. Cheese Antitrust Litig. , 767 F. Supp. 2d 880, 881 n.5 (N.D. Ill. 2011). Under those standards, the plaintiff has the burden to prove that the defendant was properly served such that the court obtained personal jurisdiction. Cardenas , 646 F.3d at 1005 (citing Homer v. Jones–Bey , 415 F.3d 748, 754 (7th Cir. 2005) ).

III. DISCUSSION

With an exception not applicable here, Federal Rule of Civil Procedure 4(f) governs service of a corporation not at a place within the United States. Fed. R. Civ. P. 4(h)(2). Rule 4(f) authorizes two methods of service at issue here. First, service may be made "by any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention...." Fed. R. Civ. P. 4(f)(1). Second, Rule 4(f)(3) authorizes service "by other means not prohibited by international agreement, as the court orders." Defendants argue that the TRO did not comply with Rule 4(f)(3) because the Hague Service Convention prohibits email service.

Intended to simplify and standardize serving process abroad, the Hague Service Convention "specifies certain approved methods of service and ‘pre-empts inconsistent methods of service’ wherever it applies." Water Splash, Inc. v. Menon , ––– U.S. ––––, 137 S. Ct. 1504, 1507, 197 L.Ed.2d 826 (2017) (quoting Volkswagenwerk Aktiengesellschaft v. Schlunk , 486 U.S. 694, 698, 108 S.Ct. 2104, 100 L.Ed.2d 722 (1988) ). The "primary innovation" of the Convention is the requirement that each member nation designate a central authority to receive service of process. Schlunk , 486 U.S. at 698, 108 S.Ct. 2104. The Convention authorizes service by certain other means, but it does not speak directly to service by email and other electronic means. See Water Splash, 137 S. Ct. at 1508 (discussing means of service authorized by the Convention). Federal trial courts have divided over whether the Convention limits their authority to authorize service of process by email.² Before reaching that question, however, the court must be sure that the Hague Service Convention applies, a matter plaintiffs contest. Schlunk , 486 U.S. at 698, 108 S.Ct. 2104.

A. Plaintiffs Did Not Exercise Reasonable Diligence To Determine Defendants' Mailing Addresses.

The court looks to Article 1 to determine whether the Hague Service Convention applies. Article 1 specifies the Hague Service Convention’s scope. Id. at 699, 108 S.Ct. 2104. The first sentence says that the "Convention shall apply in all cases, in civil or commercial matters, where there is occasion to transmit a judicial or extrajudicial document for service abroad." Id. (quoting Article 1 of the Hague Service Convention, 20 U.S.T. at 362 ). Plaintiffs argue that the second sentence’s exception applies. The Hague Service Convention does not apply "where the address of the person to be served with the document is not known." Art. 1, 20 U.S.T. at 362. Obviously, a court cannot determine whether a plaintiff has complied with the Convention if the defendant’s address is unknown because the court has no way to decide, for instance, which member state’s internal law is implicated by certain provisions...