Palace Skateboards Grp. v. Aimeey

• Docket Number: 1:21-cv-03951-GHW
• Decision Date: 04 March 2022
• Parties: PALACE SKATEBOARDS GROUP and GSLT HOLDINGS LIMITED, Plaintiffs, v. AIMEEY, ALZTECH, CONG~690, DENNIS AHO, DGVH~56, ERIC GANDY, FGFH~456, FUBA246, GITROSTORE, GULFCOASTBOUND, HUANGGUANGHAI3221, HUANGRUIXIAN65812, HUANGZHILONGER, JIAYIMNEI, KENGKENG, LINDSAYYYA, LOOM, MUK63211, NEW YEAH, NIKITAMODA, OBD HOME LIVING MUSEUM, SHENPOHUANG21, STAR'S OCEAN CLOTHING MALL, VANGCHENGYUN, WORLD WE, XEE82293, XIEZHIWEI, XIONGHOU DAMIYA BETTER AND ZHUSHIHAO62923, Defendants.
• Court: U.S. District Court — Southern District of New York

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PALACE SKATEBOARDS GROUP and GSLT HOLDINGS LIMITED, Plaintiffs,
v.
AIMEEY, ALZTECH, CONG~690, DENNIS AHO, DGVH~56, ERIC GANDY, FGFH~456, FUBA246, GITROSTORE, GULFCOASTBOUND, HUANGGUANGHAI3221, HUANGRUIXIAN65812, HUANGZHILONGER, JIAYIMNEI, KENGKENG, LINDSAYYYA, LOOM, MUK63211, NEW YEAH, NIKITAMODA, OBD HOME LIVING MUSEUM, SHENPOHUANG21, STAR'S OCEAN CLOTHING MALL, VANGCHENGYUN, WORLD WE, XEE82293, XIEZHIWEI, XIONGHOU DAMIYA BETTER AND ZHUSHIHAO62923, Defendants.

No. 1:21-cv-03951-GHW

United States District Court, S.D. New York

March 4, 2022

Jason M. Drangel, Ashly E. Sands, Danielle S. Futterman, Gabriela N. Nastasi, Karena K. Ioannou EPSTEIN DRANGEL LLP Attorneys for Plaintiff Smart Study Co., Ltd.

ORDER

GREGORY H. WOODS, District Judge:

On March 1, 2022, the Court wrote Professor Benjamin L. Liebman, the Director of the Hong Yen Chang Center for Chinese Legal Studies at Columbia Law School, seeking his assistance to obtain disinterested legal advice regarding whether a foreign plaintiff may, under relevant Chinese law, properly serve via email a defendant located in the People's Republic of China. The Court will share any advice provided to the Court with Plaintiff and will afford Plaintiff time to respond to that advice.

SO ORDERED.

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Mr. Benjamin L. Liebman

The Hong Yen Chang Center for Chinese Legal Studies

Dear Mr. Liebman,

I am writing to request your assistance in obtaining disinterested legal advice with respect to an issue of Chinese law that has come before the Court. The law firm of Epstein Drangel LLP has several cases before the Court in which they represent United States-based intellectual property owners suing alleged infringers located in China. I have at least two such cases pending before me. Because the defendants in the cases before the Court have not appeared, and do not have representation, the Court would benefit from amicus briefing regarding a fundamental issue of Chinese law—whether foreign companies can effectuate service on Chinese entities and individuals by electronic means, such as email or web posting.

There are two cases before the Court for which independent views regarding Chinese law would be very helpful to the Court. The first is Palace Skateboards v. Aimeey, et al., 21-cv-3951, which was filed on May 3, 2021. Its facts are fairly typical for this type of action. The plaintiff has brought a copyright infringement action against a large number of Chinese defendants that allegedly sell infringing goods on Alibaba and AliExpress. At the outset of the case, the plaintiff filed an ex parte application requesting the entry of a temporary restraining order. Dkt. Nos. 10-12. Among the requests made to the Court was a request that the Court authorize service on the defendants by alternative means pursuant to Federal Rule of Civil Procedure 4(f)(3). Dkt. No. 11 at 18-19. Rule 4(f)(3) requires, among other things, that service in the alternative means not be “prohibited by international agreement.” The Court granted the request for service by alternative means based on the briefing presented to it by the plaintiff's counsel. Dkt. No. 4. No. defendant appeared in the case after service by alternative means, and the plaintiff is currently seeking the imposition of default judgment in the case.

The second case revealed the issue that has led to this request. On July 6, 2021, another plaintiff, represented by the same counsel as in the first case, filed Smart Study Co., Ltd. v. HAPPY PARTY-001, et al., 21-cv-5860. That case proceeded along the same path as Palace Skateboard, with an application for service by alternative means, which was granted by the Court based on the briefing presented to it. Dkt. Nos. 11-14. Unlike in Palace Skatehoards, two pro se defendants appeared to challenge the Court's personal jurisdiction over them. In their motions to dismiss, they raised substantial questions about whether service is permitted under Rule 4(f)(3), because, they argued, service by electronic means in China is prohibited by the Hague Convention. Dkt. Nos. 23-

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26; 32, 50. The Court held oral argument regarding those defendants' motions. Before the Court ruled on the motions, the plaintiff voluntarily dismissed its claims against the moving defendants, mooting their motions. Now, the plaintiff in Smart Study is also seeking the entry of default judgment against the remaining defendants.

The Court must resolve an issue of Chinese law in order to rule on the applications for default judgment. The principal question is whether Chinese law permits service of process by electronic means on Chinese residents, whether by email or posting on a website, or other similar means. Confronted by case law in other jurisdictions holding that the Hague Convention prohibits service of process by a means that is not approved by the signatory state, ^[1] the plaintiffs now also argue that service is proper under Federal Rule of Civil Procedure 4(f)(2)(A), which permits service “by a method . . . as prescribed by the foreign country's law for service in that country in an action in its courts of general jurisdiction.”

According to the plaintiffs, Article 87 of the Civil Procedure Law of the People's Republic of China prescribes service via email for Chinese defendants. Article 87 states, “[s]ubject to the consent of the person on which a procedural document is to be served, the document may be served by way of . . . electronic mail, or any other means through which the receipt of the document may be acknowledged . . . .” The plaintiff in the Palace Skateboard case asserts that the defendants in that case have consented to service by accepting the terms of service for Alibaba and AliExpress.^[2]

However, the Court has become aware that Article 277 of the Civil Procedure Law of the People's Republic of China states that “no foreign authority or individual shall, without permission from the competent authorities of the People's Republic of China, serve process . . . within the territory of the People's Republic of China.” At least one federal court has determined that Article 277 precludes service by email on Chinese defendants in cases brought by foreign plaintiffs. See Luxottica Grp. S.p.A. v. Partnerships & Unincorporated Associations Identified on Schedule “A”, 391 F.Supp.3d 816, 826 (N.D.Ill. 2019).

Whether or not a Chinese citizen can be served by foreign litigants by electronic means in an manner that is consistent with Chinese law is a critical legal question in the cases pending before me—and likely in other cases as well. Because no defendants are currently litigating these issues, the Court does not have the benefit of legal analysis of the issue from any party other than the plaintiffs. In order to grant the requested default judgments, the Court must assure itself that it has personal jurisdiction over the defendants, which requires an analysis of Chinese law.^[3] The Court's ruling in these cases may have persuasive authority in the many other cases of this type filed in this district and nationwide. So I seek disinterested legal advice about whether Article 277 prohibits service of process by electronic means in these situations. I also seek such advice regarding whether Article 87

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permits service by electronic means by consent, and, if so, what constitutes proper manifestation of consent. I would appreciate an examination of any other pertinent Chinese legal authority.

Again, this is an area of some importance to the Court in this and other cases. Sadly, the Court cannot offer payment, but invites any help that you can provide with respect to this narrow issue of Chinese law. Whether the amici who provide the requested disinterested legal advice are scholars associated with your program, independent legal counsel, or governmental or non-profit entities with knowledge of Chinese law, the Court would appreciate the assistance. As a leading scholar in the area of Chinese law in this district, I ask if you can help the Court obtain independent, disinterested legal advice with respect to this narrow issue from any knowledgeable source.

The full record of each of these cases is available on PACER. I have also attached the most recent default judgment briefing by the plaintiffs' counsel, the relevant portions of which appear at pages 4-13. There is no deadline, but it would be helpful if any potential amici could identify themselves to the Court by April 7, 2021, so that the Court can establish a schedule for any submissions. Thank you in advance for your assistance.

Sincerely,

Hon. Gregory H. Woods

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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK SMART STUDY CO., LTD., Plaintiff

v.

ACUTEYE-US, APZNOE-US, BEIJINGKANGXINTANGSHANGMAOYOUXIANGONGSI, BLUE VIVI, BONUSWEN, CHANGGESHANGMAOYOUXIANGONGSI, CITIHOMY, CKYPEE, DAFA INTERNATIONAL, DAZZPARTY, FAMING, GAIFEI TRADE CO LTD, GEGEONLY, HAITING$, HAOCHENG-TRADE, HAPPY PARTY-001, HEARTLAND GO, HUIBI-US, JOYS AIL, JYOKER-US1, KANGXINSHENG1, LADYBEETLE, LICHE CUPCAKE STAND, LVYUN, MARY GOOD SHOP, NA-AMZ001, NAGIWART, NUOTING, QINGSHU, QT-US, SALIMHIB-US, SAM CLAYTONDDG, SENSIAMZ BACKDROP, SHENZHENSHIXINDAJIXIEYOUXIANGONGSI, SMASSY US, SMSCHHX, SUJIUMAISUSU, SUNNYLIFYAU, TELIKE, THEGUARD, TONGMUMY, TOPIVOT, TUOYI TOYS, UNE PETITE MOUETTE, VETERANS CLUB a/k/a _____ WCH- US, WEN MIKE, WONDERFUL MEMORIES, WOW GIFT, XUANNINGSHANGWU, XUEHUA INC, XUIYUI7I, YAMMO202, YICHENY US, YLILILY, YONGCHUNCHENGQINGMAOYIYOUXIANGONGSI, YOOFLY and ZINGON US, Defendants

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PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION FOR DEFAULT JUDGMENT AND A PERMANENT INJUNCTION AGAINST DEFAULTING DEFENDANTS

CIVIL ACTION No. 21-cv-5860 (GHW)

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PLAINTIFF'S MEMORANDUM OF LAW IN SUPPORT OF ITS MOTION FOR DEFAULT JUDGMENT AND A PERMANENT INJUNCTION AGAINST DEFAULTING DEFENDANTS

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